# EDGAR Filing Document

**Accession Number:** 0001883313
**File Stem:** 0001193125-23-027209
**Filing Date:** 2023-2
**Character Count:** 1859596
**Document Hash:** 99255932b36e0feeaa8127b1e157a6b3
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-23-027209.hdr.sgml**: 20230208

**ACCESSION NUMBER**: 0001193125-23-027209

**CONFORMED SUBMISSION TYPE**: S-1/A

**PUBLIC DOCUMENT COUNT**: 34

**FILED AS OF DATE**: 20230208

**DATE AS OF CHANGE**: 20230207

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Savers Value Village, Inc.
- **CENTRAL INDEX KEY:** 0001883313
- **STANDARD INDUSTRIAL CLASSIFICATION:** RETAIL-MISCELLANEOUS RETAIL [5900]
- **IRS NUMBER:** 834165683
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** S-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-261850
- **FILM NUMBER:** 23596413

**BUSINESS ADDRESS:**
- **STREET 1:** 11400 SE 6TH ST., #220
- **CITY:** BELLEVUE
- **STATE:** WA
- **ZIP:** 98004
- **BUSINESS PHONE:** 425-462-1515

**MAIL ADDRESS:**
- **STREET 1:** 11400 SE 6TH ST., #220
- **CITY:** BELLEVUE
- **STATE:** WA
- **ZIP:** 98004

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** S-Evergreen Holding LLC
- **DATE OF NAME CHANGE:** 20210916

##### [**Table of Contents**](#toc)
**As filed with the Securities and Exchange Commission on February 7, 2023.** 

**Registration Statement No. 333-261850** 

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**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**WASHINGTON, D.C. 20549** 

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**Amendment No. 6 to** 

**FORM S-1** 

**REGISTRATION STATEMENT** 

*UNDER* 

*THE SECURITIES ACT OF 1933* 

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**Savers Value Village, Inc.** 

**(Exact name of registrant as specified in its charter)** 

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| | | |
|:---|:---|:---|
| **Delaware** | **5900** | **83-4165683** |
| **(State or other jurisdiction of<br>incorporation or organization)** | **(Primary Standard Industrial<br>Classification Code Number)** | **(I.R.S. Employer<br>Identification Number)** |

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**11400 S.E. 6<sup>th</sup> Street, Suite 125** 

**Bellevue, WA 98004** 

**425-462-1515** 

**(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)** 

**Mark Walsh** 

**Chief Executive Officer** 

**Savers Value Village, Inc.** 

**11400 S.E. 6th Street, Suite 125** 

**Bellevue, WA 98004** 

**425-462-1515** 

**(Name, address, including zip code, and telephone number, including area code, of agent for service)** 

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| | |
|:---|:---|
| **Lawrence G. Wee, Esq.<br>Paul, Weiss, Rifkind, Wharton & Garrison LLP<br>1285 Avenue of the Americas<br>New York, NY 10019-6064<br>212-373-3000** | **Marc D. Jaffe, Esq.<br>Gregory P. Rodgers, Esq.<br>Brittany D. Ruiz, Esq.<br>Latham & Watkins LLP<br>1271 Avenue of the Americas<br>New York, NY 10020<br>212-906-1200** |

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**Approximate date of commencement of proposed sale to the public:** 

**As soon as practicable after the effective date of this registration statement.** 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

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| | | | |
|:---|:---|:---|:---|
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | Non-accelerated Filer ☒  | Smaller reporting company ☐ |
|  |  |  | Emerging growth company ☒ |

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act of 1933. ☐

**The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.** 

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##### [**Table of Contents**](#toc)
**This information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, and it is not soliciting an offer to buy, these securities in any jurisdiction where the offer or sale is not permitted.** 

**Subject to Completion, dated February 7, 2023** 

**Prospectus** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Shares**![LOGO](g264743g30c01.jpg)

**Common Stock** 

This is an initial public offering of shares of common stock of Savers Value Village, Inc. We are offering shares of common stock. Prior to this offering, there has been no public market for our common stock. We anticipate that the initial public offering price for our common stock will be between $ and $ per share.

We intend to apply to list our common stock on the New York Stock Exchange under the symbol "SVV." After giving effect to this offering, certain funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares Management Corporation, will hold approximately % of our outstanding common stock (% if the underwriters exercise their option to purchase additional shares in full). Accordingly, we expect to be a "controlled company" as defined in the corporate governance rules of the New York Stock Exchange and will be exempt from certain corporate governance requirements of those rules. We are also an "emerging growth company" as defined under the U.S. federal securities laws, and as such may elect to comply with reduced public company reporting requirements. Please see "Prospectus Summary—Implications of Being an Emerging Growth Company."

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| | | |
|:---|:---|:---|
|  | **Per share** | **Total** |
|  Price to the public | $| $|
|  Underwriting discounts and commissions | $| $|
|  Proceeds, before expenses, to us(1) | $| $|
|  Proceeds, before expenses, to the selling stockholders | $| $|

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(1) See "Underwriting" for additional information regarding underwriting compensation.

The selling stockholders have granted the underwriters a 30-day option to purchase up to additional shares at the initial public offering price, less the underwriting discount. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders, including upon the sale of shares of our common by the selling stockholders if the underwriters exercise their option.

Investing in our common stock involves risks. See "[Risk Factors](#rom264743_1)" beginning on page 36.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares on or about , 2023.

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| | | | |
|:---|:---|:---|:---|
| **J.P. Morgan** | **Goldman Sachs & Co. LLC** | **Jefferies** | **UBS Investment Bank** |

---

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| | | | |
|:---|:---|:---|:---|
| **Baird** | **CIBC Capital Markets** | **Guggenheim Securities** | **Piper Sandler** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**, 2023** 

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##### [**Table of Contents**](#toc)
**TABLE OF CONTENTS** 

**Prospectus** 

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| | |
|:---|:---|
|  [A LETTER FROM OUR CHIEF EXECUTIVE OFFICER](#rom264743_001) | 1 |
|  [PROSPECTUS SUMMARY](#rom264743_101) | 4 |
|  [THE OFFERING](#rom264743_102) | 27 |
|  [RISK FACTORS](#rom264743_1) | 36 |
|  [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](#rom264743_2) | 77 |
|  [USE OF PROCEEDS](#rom264743_3) | 79 |
|  [DIVIDEND POLICY](#rom264743_5) | 80 |
|  [CAPITALIZATION](#rom264743_6) | 81 |
|  [DILUTION](#rom264743_7) | 83 |
|  [UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION](#rom264743_7a) | 85 |
|  [SELECTED FINANCIAL DATA](#rom264743_8) | 97 |
|  [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#rom264743_9) | 99 |
|  [BUSINESS](#rom264743_10) | 148 |
|  [MANAGEMENT](#rom264743_11) | 175 |
|  [EXECUTIVE COMPENSATION](#rom264743_12) | 184 |
|  [DIRECTOR COMPENSATION](#rom264743_13) | 193 |
|  [PRINCIPAL AND SELLING STOCKHOLDERS](#rom264743_15) | 197 |
|  [DESCRIPTION OF CAPITAL STOCK](#rom264743_16) | 199 |
|  [SHARES ELIGIBLE FOR FUTURE SALE](#rom264743_17) | 206 |
|  [MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS](#rom264743_18) | 209 |
|  [UNDERWRITING](#rom264743_19) | 213 |
|  [VALIDITY OF COMMON STOCK](#rom264743_20) | 223 |
|  [EXPERTS](#rom264743_21) | 223 |
|  [WHERE YOU CAN FIND ADDITIONAL INFORMATION](#rom264743_22) | 223 |
|  [INDEX TO FINANCIAL STATEMENTS](#rom264743_23) | F-1 |

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Neither we, the selling stockholders, nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We, the selling stockholders and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of common stock only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock.

You should rely only on the information contained in this prospectus. No dealer, salesperson or other person is authorized to give information that is not contained in this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

For investors outside the United States: Neither we, the selling stockholders, nor any of the underwriters have done anything that would permit this offering or the possession or distribution of this prospectus in any jurisdiction where action for those purposes is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, this offering of common stock and the distribution of this prospectus outside the United States.

i

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Through and including , 2023 (the 25th day after the commencement of this offering), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

**PRESENTATION OF FINANCIAL INFORMATION** 

**March 2019 Transactions** 

On March 28, 2019, pursuant to a Restructuring Support Agreement, TCW/Crescent Mezzanine Partners V, L.P., TCW/Mezzanine Partners VB, L.P., TCW/Crescent Mezzanine Partners VC, L.P., Trust Company of the West (as Trustee for TCW Capital Trust), TCW/Crescent Mezzanine Partners VI, L.P., TCW/Crescent Mezzanine Partners VIB, L.P., and TCW/Crescent Mezzanine Partners VIC, L.P. (collectively, "Crescent"), certain other holders and certain of the Ares Funds (as defined below), effectuated various refinancing and recapitalization transactions (collectively, the "March 2019 Transactions"), including (among others):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• through a series of transactions, our predecessor company, S-Evergreen Holding
Corp., a Washington corporation (the "Predecessor"), became a subsidiary of S-Evergreen Holding LLC, a Delaware limited liability company (the "Successor");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all of the outstanding capital stock of the Predecessor was cancelled and extinguished, and new equity in the Successor was
issued in exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Crescent and certain other existing lenders, as well as such Ares Funds, paid cash for new equity securities of the
Successor, constituting 92.5% of the outstanding equity securities of the Successor, and other indebtedness of the Predecessor was settled for the remaining 7.5%; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the existing indebtedness of the Predecessor was refinanced under new debt facilities of the Successor.

The March 2019 Transactions were accounted for as a business combination, and the total purchase price in the March 2019 Transactions was allocated to the assets acquired and liabilities assumed at their fair value as of March 28, 2019. As a result, our fiscal year ended December 28, 2019 consists of a Predecessor period from December 30, 2018 to March 27, 2019 and a Successor period from March 28, 2019 to December 28, 2019. See Note 3 to our Audited Consolidated Financial Statements included elsewhere in this prospectus for more information regarding the March 2019 Transactions.

On April 26, 2021, certain of the Ares Funds, pursuant to a Purchase and Sale Agreement with Crescent, purchased for cash all of the outstanding equity securities of the Successor held by Crescent (the "Ares Share Purchase Transaction").

***Corporate Conversion***

Prior to January 7, 2022, we operated as a Delaware limited liability company under the name S-Evergreen Holding LLC. On January 7, 2022, we converted into a Delaware corporation and changed our name to Savers Value Village, Inc. In the conversion, all of our outstanding equity interests were converted into shares of common stock. The foregoing conversion and related transactions are referred to herein as the "Corporate Conversion."

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The purpose of the Corporate Conversion was to reorganize our structure so that the entity that is offering our common stock to the public in this offering is a corporation rather than a limited liability company and so that our existing investors and new investors purchasing in this offering will own our common stock rather than equity interests in a limited liability company.

**Fiscal Year End** 

We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to the last day of December. Accordingly, references herein to "fiscal year 2019" relate to the 52-weeks ended December 28, 2019, and references herein to "fiscal year 2020" relate to the 53-weeks ended January 2, 2021, references herein to "fiscal year 2021" relate to the 52 weeks ended January 1, 2022, and references herein to "fiscal year 2022" relate to the 52 weeks ended December 31, 2022. Because of the March 2019 Transactions, our fiscal year 2019 consists of a Predecessor period from December 30, 2018 to March 27, 2019 and a Successor Period from March 28, 2019 to December 28, 2019.

**Rounding** 

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables or charts and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

**CERTAIN TRADEMARKS** 

This prospectus includes trademarks and service marks owned by us, including "Savers Value Village<sup>™</sup>," "Savers<sup>®</sup>," "Value Village<sup>™</sup>," "Village des Valeurs<sup>™</sup>," "Unique<sup>®</sup>," "Super Savers Club<sup>®</sup>," "Community Donation Center<sup>®</sup>," "Thrift Proud<sup>®</sup>," "2nd Ave<sup>®</sup>," "2nd Ave Value Stores<sup>®</sup>," and "GreenDrop<sup>®</sup>." This prospectus also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this prospectus may appear without the <sup>®</sup>, <sup>™</sup> or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

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![LOGO](g264743g01s52.jpg)

savers® \| value villageTM

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![LOGO](g264743g56a55.jpg)

What if a business could revolutionize the relationship between people, planet and profit? Welcome to the Savers® family of thrift stores and the reuse economy. For nearly 70 years, we've run a proven, successful, triple bottom line company. This is a business model consumers demand, and it's already here. savers \| value villageTM \| village des valeursMD \| unique® \| Thrift Superstore

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![LOGO](g264743g58r10.jpg)

OUR MISSION Our mission is to champion reuse and inspire a future where secondhand is second nature. From the thrill of the hunt to the joy of decluttering, we help communities harness the power of reuse to keep clothing and household items around for years to come.

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![LOGO](g264743g06w59.jpg)

OUR BRAND At Savers® pre-loved becomes re-loved by our thrifting community. They celebrate and share their finds wherever they can. Why? Ask them and they will tell you: the excitement of a one-of-a-kind discovery at an exceptional price. Fashion statements become environmental ones, too. That's Thrift Proud®. @__reme_ @lifewithkails @justinhamm_ @amandadaises @lusfinds @soa.ma.eva @thriftedstylez @niftee_thrifteee @thevillagelook thrift proud®.

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![LOGO](g264743g76d17.jpg)

OUR IMPACT What's good for people, communities and the planet, is also good for business. Thrift is proof the reuse economy works and is the future of retail. 1. BUSINESS 2. PLANET 3. PEOPLE REVENUE ___ $1.2B1 COMP STORE SALES ___ +16.4%2 vs. 2019 +64.8%2 vs. 2020 NET INCOME $83.4MM1 ADJUSTED EBITDA_ $223.4MM1 LOYALTY MEMBERS ___ 4.5MM active loyalty members drive 70.3% of total point-of-sale transaction value3 AVERAGE UNIT RETAIL PRICE ___ <$5 3.2B+ lbs. of goods diverted from North American landfills4 +33,000 reusable items merchandised per store every week5 Each year on average our thrifters purchase6: 73 Million tops & pants 6 million coats 11 Million accessories 22 million books 5 million dresses 10 Million pairs of shoes 12 Million pieces of kitchenware 90%+ of our supply is locally sourced6 $615MM+ paid to our non-profit partners for secondhand clothing and household goods7 25+ year average relationship with our top 10 non-profit partners 87% of open salaried management positions filled by internal promotions8 61% of management roles held by team members identifying as female8 49% of U.S. workforce is represented by diverse backgrounds and ethnicities8 1 During fiscal year 2021 • 2 U.S. comparable store sales growth (for fiscal year 2021 versus fiscal year 2019 and versus fiscal year 2020, as indicated above) • 3 U.S. & Canada during the 12 months ended October 2, 2022 • 4 For fiscal year 2017 through fiscal year 2021 • 5 During the 12 months ended October 1, 2022 • 6 Yearly average for fiscal year 2017 through fiscal year 2021 7 Total amount paid for fiscal year 2017 through fiscal year 2021 • 8 As of January 1, 2022 • OUR IMPACT What's good for people, communities and the planet, is also good for business. Thrift is proof the reuse economy works and is the future of retail. 1. BUSINESS 2. PLANET 3. PEOPLE REVENUE ___ $859.3MM1 COMP STORE SALES ___ +16.3%2 vs. 2019 +77.4%2 vs. 2020 NET INCOME $83.4MM1 LOYALTY MEMBERS ___ 4.5MM active loyalty members drive 70.3% of total point-of-sale transaction value3 AVERAGE UNIT RETAIL PRICE ___ <$5 3.4B+ lbs. of goods diverted from North American landfills4 +38,000 reusable items merchandised per store every week5 Each year on average our thrifters purchase6: 82 Million tops & pants 6 million coats 13 Million accessories 25 million books 6 million dresses 12 Million pairs of shoes 13 Million pieces of kitchenware 90%+ of our supply is locally sourced7 $670MM+ paid to our non-profit partners for secondhand clothing and household goods8 25+ year average relationship with our top 10 non-profit partners 87% of open salaried management positions filled by internal promotions9 61% of management roles held by team members identifying as female10 49% of U.S. workforce is represented by diverse backgrounds and ethnicities10 1 YTD Q3 2021 • 2 U.S. comparable store sales growth (YTD Q3 2021 vs. YTD Q3 2019 and vs. YTD Q3 2020) • 3 U.S. & Canada 12 months ended October 1, 2022 • 4 2016 - 2020 • 5 2019 internal company data • 6 2015 to 2019 7 Cumulative between 2017-2021 • 8 Average between 2015-2019 • 9 U.S. & Canada since January 2021 • 10 As of August 2021

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A LETTER FROM OUR CHIEF EXECUTIVE OFFICER At Savers Value VillageTM, our mission is to champion reuse and inspire a future where secondhand is second nature. I believe in it today, and I see the immense potential ahead as more consumers come to believe in it too. If you are new to our company and the thrift industry, we are excited to welcome you. If you know us already, thank you for remaining with us on this incredible journey. The Savers(R) family of thrift stores is the largest for-profit thrift operator in the United States and Canada. We have over 300 stores in the United States, Canada and Australia and 21,000 team members who are engaged and committed to our mission. Our position is strong because our business model-vertically integrated across supply and processing, brick and mortar retail, and sales to wholesale reuse customers-differentiates us from others in the industry, and we believe our scale and capabilities cannot be easily replicated. We've made a promise to affect the world for the better as we grow: to benefit local communities by partnering with non-profits, to benefit the planet, and to benefit our shareholders. That is our triple bottom line. In 1954 we opened our first thrift shop in an old San Francisco movie theater, and since then, we've been innovating our stores and operations to redefine the modern thrift experience. Through economic and fashion cycles, and across generations, we've shown resiliency and remain Thrift Proud(R)-a mantra that has brought us to today: the most exciting time in our company's history. Whether you refer to us as "secondhand," "thrift" or "reuse," Savers is the place for anyone and everyone to buy necessities and to explore one-of-a-kind products-all with an average price tag of under $5. Our value proposition attracts customers from all walks of life who are embracing thrift for an authentic experience that creates shareable moments. For many, thrifting is about the thrill of the treasure hunt. You don't know you need it until you see it-that 70's daisy print salad bowl... a football jersey from your alma mater... a kid's toy that makes the perfect gift. While thrifting should always be fun, we take secondhand seriously, and we are committed to our local impact.

![LOGO](g264743g09a00.jpg)

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![LOGO](g264743g10h20.jpg)

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![LOGO](g264743g11h11.jpg)

As we look to the future, we are focused on and excited about our growth plan: First, grow the footprint. The things people love most about thrift are best executed in-store, and we have identified approximately 2,200 potential new stores, the vast majority of which is comprised of infilling the markets where we already exist. Both current and new markets are underpenetrated, particularly in the South and West of the United States and in Central Canada. Second, continue to drive consistent comparable store sales growth. Capitalizing on strong secular trends, this will continue to be a priority as we enhance our product offerings, improve the shopping experience, expand our loyal customer base and drive brand awareness. Third, keep innovation and operational excellence at the center. This has been a part of our culture since the beginning and a major differentiator of our for-profit model. We are directing investment to elevate the retail experience and leverage new technology like our innovative CPCs. Finally, pursue inorganic growth opportunities. The thrift sector is fragmented and ripe for consolidation. There are strong regional players that may benefit from our infrastructure and would offer us the opportunity to scale in new or underpenetrated markets. We are also looking at businesses that could add value on the operational side. To make this plan a reality, I am honored to work alongside our leadership team of thrift veterans and technology, manufacturing and supply chain experts. I'm also immensely grateful to our Savers team members who work tirelessly to deliver for our customers, non-profit partners, and the planet. Thank you for taking the time to learn more about our company. Our model is powerful, the thrift industry is resilient and poised for significant growth, and our future is bright. Sincerely, Mark Walsh, CEO savers® \| value villageTM \| village des valeursMD \| unique®

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**PROSPECTUS SUMMARY** 

*The following summary contains selected information about us and about this offering. It does not contain all of the information that is important to you and your investment decision. Before you make an investment decision, you should review this prospectus in its entirety, including matters set forth under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our Consolidated Financial Statements and the related notes included elsewhere in this prospectus. Some of the statements in the following summary constitute forward-looking statements. See "Special Note Regarding Forward-Looking Statements." Unless the context otherwise requires, all references in this prospectus to "Savers Value Village, Inc.," "S-Evergreen Holding LLC," the "company," "we," "us," "our" or similar terms refer to S-Evergreen Holding LLC and its consolidated subsidiaries (including the accounting Predecessor with respect to periods prior to March 28, 2019), and after the Corporate Conversion, Savers Value Village, Inc. and its consolidated subsidiaries. On November 8, 2021, we acquired Thrift Intermediate Holdings I., Inc. ("2nd Ave.") for purchase price consideration of $238.5 million in cash (the "2nd Ave. Acquisition"). Where we present information on a "pro forma basis," it means that such information is presented giving pro forma effect to the "Transactions", which include the April 2021 Refinancing, the 2nd Ave. Acquisition and the related financing, the December 2022 Dividend (as defined below), the Notes Offering (as defined below) and the use of proceeds therefrom and the Initial Public Offering and the use of proceeds therefrom. For more information about the Transactions, please read the section of this prospectus under the heading, "Unaudited Pro Forma Condensed Combined Financial Information." See also, "—Recent Developments."* 

**<u>Company Overview</u>**

***Our mission***

To champion reuse and inspire a future where secondhand is second nature.

From the thrill of the hunt to the joy of decluttering, we help communities harness the power of pre-loved stuff to keep reusable items around for years to come.

***Who we are***

We are the largest for-profit thrift operator in the United States and Canada based on number of stores. With over 21,000 team members, we operate a total of 309 stores under the Savers, Value Village, Village des Valeurs, Unique, and 2nd Ave. banners. We are committed to redefining secondhand shopping by providing one-of-a-kind, low-priced merchandise ranging from quality clothing to home goods in an exciting treasure-hunt shopping environment. We purchase secondhand textiles (i.e., clothing, bedding and bath items), shoes, accessories, housewares, books and other goods from our non-profit partners ("NPPs"), either directly from them or via on-site donations ("OSDs") at Community Donation Centers at our stores. We then process, select, price, merchandise and sell these items in our stores. Items that are not sold to our retail customers are marketed to wholesale customers, who reuse or repurpose the items they purchase from us. We believe our hyper-local and socially responsible procurement model, industry-leading and innovative operations, differentiated value proposition and deep relationships with our customers distinguish us from other secondhand and value-based retailers.

We offer a dynamic, ever-changing selection of items, with an average unit retail ("AUR") under $5. We have a highly engaged customer base, with over 4.5 million active loyalty program members in the United States and Canada who shopped with us, driving 70.3% of point-of-sale transaction value

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during the last 12 months ended October 1, 2022. Our business model is rooted in environmental, social and corporate governance ("ESG") principles, with a mission to positively impact our stakeholders—thrifters, NPPs and their donors, our team members and our stockholders. As a leader and pioneer of the for-profit thrift category, we seek to positively impact the environment by reducing waste and extending the life of reusable goods. The vast majority of the clothing and textiles we source are sold to our retail or wholesale customers. In fiscal year 2019, we processed over one billion pounds of secondhand goods. During fiscal year 2021 and the nine months ended October 1, 2022, we processed 860 million pounds and 751 million pounds of secondhand goods, respectively. During fiscal year 2021, we generated $1,204.1 million of net sales, $83.4 million of net income and $223.4 million of Adjusted EBITDA, resulting in a 6.9% net income margin and a 18.6% Adjusted EBITDA margin. During the nine months ended October 1, 2022, we generated $1,070.4 million of net sales, $58.3 million of net income and $222.6 million of Adjusted EBITDA, resulting in a 5.4% net income margin and a 20.8% Adjusted EBITDA margin. Adjusted EBITDA and Adjusted EBITDA margin are considered non-GAAP financial measures under the SEC's rules because they exclude certain charges included in net (loss) income calculated in accordance with GAAP. For additional information on our use of non-GAAP financial measures and a reconciliation to the nearest GAAP measure, see "Prospectus Summary—Summary Financial and Other Data—Key business metrics and non-GAAP financial measures."

The U.S. secondhand market, which is a subset of the broader retail market, reached approximately $35 billion in 2021 and is expected to grow 127% by 2026, reaching $82 billion. Thrift accounted for approximately 60% of the total secondhand market in 2021, and we believe we benefit from the powerful secular trends driving growth in the sector. We also believe consumers are increasingly concerned about the environmental impact of the clothes they wear. As of June 2022, more than one in three U.S. shoppers and nearly half of Canadian shoppers surveyed reported caring more about the environmental impact of their apparel choices today than they did three years ago. There is a growing awareness that the textile and clothing industry is one of the most environmentally damaging sectors of the economy.

Meanwhile, discarded clothing remains the largest source of textile waste in the world, with the average U.S. citizen throwing away 81 pounds of clothing each year, 95% of which could have been re-worn or repurposed; yet 85% of this material ends up in landfills. To put this another way, the Ellen MacArthur Foundation reports that one garbage truck of textiles is landfilled or incinerated every second. Thrift as a business model provides one of the most effective solutions in mitigating the environmental cost of clothing and extending its life.

***Track record of consistent growth and recent performance***

We have a proven track record of consistently delivering comparable store sales growth across the United States and Canada. Prior to the start of the COVID-19 pandemic in March 2020, we achieved over ten years of positive comparable store sales growth across the United States and Canada and our business has recovered strongly from COVID-19-related disruptions in 2021.

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![LOGO](g264743g11i13.jpg)

10+ years of consistent comparable store salesgrowth in the U.S. and Canada (pre-COVID) 3.7% 2.6% 2.4% 5.1% 3.4% 4.7% 3.6% 4.5% 5.3% 4.6% 4.5% 4.8% 3.7% 7.1% 3.9% 4.3% 4.8% 7.2% 1.1% 7.9% 0.9% 1.4% 4.4% 3.2% 7.8% 3.4% -29.3% -27.8% 64.8% 24.3% FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021U.S. Canada

**<u>Powerful, Vertically Integrated Business Model</u>**

We have innovated and invested to develop significant operational expertise and integrate the three highly-complex parts of thrift operations—supply and processing, retail, and sales to wholesale markets. Our business model enables us to provide value to our NPPs and our customers, while driving attractive profitability and cash flow.

![LOGO](g264743g00t67.jpg)

Three vertically integrated businesses Supply & processing Retail Wholesale

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***Supply and processing***

We source our merchandise locally by purchasing secondhand items donated to our NPPs primarily through two distinct and strategic procurement models:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on-site donations, or "OSDs," which are donations of items by individuals
to our local NPPs made at the Community Donation Centers located at our stores; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delivered supply, which includes items donated to and collected by NPPs through a variety of methods, such as neighborhood
collections and donation drives, and delivered to our stores or Centralized Processing Centers, or "CPCs."

Our business model is predicated on sourcing and selling quality secondhand items to our customers in local communities. We are able to meet our customer demand given our deep relationships with an extensive network of locally-based NPPs that is unmatched in the thrift industry. Our local sourcing strategy also reduces transportation costs and emissions typically associated with the production and distribution of new merchandise.

The quantity and quality of our supply of secondhand items has continued to evolve and improve, particularly as OSDs have grown as a percentage of the pounds of goods we process. While it is strategically important for us to maintain a diverse supply mix, items sourced through OSDs have a cost per pound that is on average one-third that of delivered supply from our NPPs. Because OSD volume is primarily driven by convenience, the more we are able to expand our footprint and geographic reach, the more we will be able to attract and procure additional OSD supply, which benefits our supply cost and yields. OSDs have grown at a 5.8% compound annual growth rate ("CAGR") from fiscal year 2018 through fiscal year 2021, and its contribution to total pounds processed has expanded from 48.6% to 70.4% during the same period. Although we processed 475 million pounds from OSDs during the nine months ended October 1, 2022 compared to 453 million pounds in the nine months ended October 2, 2021, our percentage of supply from OSDs decreased to 63.2% as our Canadian stores fully reopened and we began accepting more delivered supply from our NPPs. We do not expect a material decrease in the percentage of supply from OSD going forward, as our stores were fully reopened during the nine months ended October 1, 2022 in the United States and Canada.

Our acquisition of 2nd Ave. in November 2021 included GreenDrop, which allows donors to drop off their items at attended donation stations that are movable and can be placed in attractive, high traffic areas that are convenient to donors. We are currently considering expanding the use of GreenDrop for our other locations. In addition, data analytics have played a critical role in elevating the quality of our delivered supply by enabling us to concentrate on supply sources with quality goods, which has been a significant driver of our gross product margin.

Nearly all of our retail stores have space dedicated to handle the processing of secondhand goods that provide the inventory to be sold on our retail sales floors. In fiscal year 2019, we processed over one billion pounds of secondhand goods. During fiscal year 2021 and the nine months ended October 1, 2022, we processed 860 million pounds and 751 million pounds of secondhand goods, respectively.

We are currently implementing our CPC strategy, having opened our first CPC in the third quarter of fiscal year 2021 and an additional CPC in the second quarter of fiscal year 2022. The CPC system is an offsite, semi-automated processing facility that mechanizes the flow of clothing, accessories and shoes through an integrated series of conveyor belts, robotics, sensors, and other technology. The CPC unlocks new store expansion by allowing for a more flexible store layout and loading configuration thereby improving access to more densely populated urban areas.

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![LOGO](g264743g05l66.jpg)

***Retail***

Our continued investment in our stores has both elevated and modernized the thrift shopping experience, transforming our stores into a destination for all generations with increasing traffic from younger generations.

Our store experience directly reflects our mission to make secondhand second nature. We deliver a well merchandised environment that maximizes customer engagement and supports a core tenet for any thrifter—the treasure hunt. Our stores offer a wide selection of quality items across clothing, home goods, books and other items at convenient locations. More than 33,000 items are merchandised per store every week, as of October 1, 2022. Our merchandise is also regularly rotated and refreshed, with inventory turns of roughly 15 times a year, providing our customers with an extensive, ever-changing selection at tremendous value.

We are enhancing our visual presentation with the roll out of our updated "Thrift Proud" sign package that has a great new look, while communicating who we are and what we do. In addition, we have enhanced the customer experience with the introduction of self-checkout kiosks that significantly shorten and, at most times of the day, eliminate payment lines.

![LOGO](g264743g04u18.jpg)

We have a continuous feedback loop on the customer experience. Our REactions surveys take the pulse of our customers on a weekly basis regarding the shopping experience and environment. This information is proactively shared with our leadership team and cascaded to store managers, who are measured on their ability to improve operations.

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***Wholesale reuse and repurpose***

Historically, we have displayed approximately 50% of all textile items we receive on our retail sales floors, approximately 50% of which are sold to thrifters. In support of our efforts to extend the life of reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textile items unsold at retail to our wholesale customers, predominately comprised of textile graders and small business owners, who supply local communities across the globe with gently-used, affordable items like clothing, housewares, toys, and shoes. Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste.

![LOGO](g264743g35c82.jpg)

Our powerful, vertically integrated model Reusable goods Supply 1. Onsite donations: 70% 1 2. Delivered supply: 30% 1 Processing Items sorted for retail or wholesale. Goods unable to be reused or repurposed. Retail Thousands of items are priced and merchandised. Customers Unsold reusable goods. Wholesale The majority of unsold textiles, shoes and books go into the global reuse economy. Customers Extend the life of items through: Items reused as secondhand. Textiles repurposed into other items. Textiles turned into post-consumer fibers. FY2021

***ESG impact***

***Environmental:*** Our business model is designed to maximize the life of reusable goods, and we found a reuse for over 3.2 billion pounds of secondhand items from 2017 to 2021.

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![LOGO](g264743g04a01.jpg)

Our impact 3.2bn+ lbs. of reusable goods diverted from North American landfills2017-2021 $615mm+ paid to our non-profit partners for secondhand clothing and household goods 2017-2021 From 2017 to 2021, on average, our thrifters purchased: 73 million tops and pants 5 million dresses 6 million coats 10 million pairs of shoes 11 million accessories 12 million pieces of kitchenware 22 million books

The environmental impacts of textile manufacturing are well documented. The textile industry largely relies on non-renewable resources such as oil for synthetic fibers, fertilizer to grow cotton, and chemicals associated with the production, dyeing, and finishing of fibers and textiles. Between 2002 and 2017, the Ellen MacArthur Foundation ("EMF") found that clothing production approximately doubled, while utilization decreased by 36%. In addition, textile production is both energy-intensive and water-intensive. EMF estimates that the production of textiles resulted in 1.2 billion tons of carbon dioxide equivalent in 2015, which outpaced the year's carbon dioxide emissions from all international flights and marine shipping, with additional impacts on local environments. With respect to water usage, which includes cotton farming, EMF also found that the textile industry used approximately 93 billion cubic meters of water each year, while contributing to water scarcity in many parts of the world. Since less than 1% of the material used to produce new clothing can be recycled into new clothing, the reuse of clothing, rather than the purchase of new clothing, is key to mitigating the environmental impacts of the textile industry. In order to achieve the 2030 Paris climate objectives, 20% of garments worldwide must be traded through circular business models.

In 2021, we purchased enough Renewable Energy Certificates to match our electricity usage with renewable energy at our three corporate offices and our largest U.S. and Canadian Wholesale Distribution and Reuse Centers. Additionally, we are committed to further reducing our emissions and energy consumption whenever feasible. We also recently completed a LED lighting retrofit for more than 90% of our U.S. and Canadian stores and warehouses.

***Social:*** Our business model is predicated on sourcing our supply from local non-profit organizations in the communities where we do business. Our relationships with our top 10 NPPs average more than 25 years. Over the last five years, we have paid our NPPs more than $615 million for secondhand goods, providing them with unrestricted revenue to support their community-focused missions. From 2017 to 2021, over 90% of our supply was locally sourced, delivering a broad and diverse selection to our customers and fostering a sense of community.

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Our leading "people" metric across our organization is team member engagement, which is scored across various areas, including overall job satisfaction, whether the team member would recommend us as a place to work, personal commitment, being energized at work and intent to remain employed. Our team member engagement is considered best-in-class, as measured by an external consultant, comparing our results to other companies in the retail sector. Team member engagement is crucial to customer satisfaction and the satisfaction of our NPPs and their donors.

We also invest in the training, development and advancement of our team members. Through the first seven months of fiscal year 2022, more than 87% of open salaried management positions in the United States and Canada were filled by internal promotions. As of January 2022, more than 61% of the management roles in our stores and corporate operations were held by team members identifying as female.

***Governance*:** We are committed to ethical practices in every aspect of our business and have adopted a Savers Code of Conduct that outlines our expectations for internal interactions and helps us maintain compliance with local laws and regulations. Our five core values guide our strategic direction and how our team members interact with one another, our communities and our customers: (1) make service count; (2) celebrate uniqueness; (3) do the right thing; (4) find a better way; and (5) make an impact.

**<u>Our Market Opportunity</u>**

We operate within the large, fragmented and fast-growing secondhand market, which is a subset of the broader retail market. In addition to being recession-resilient, growth in the secondhand market is accelerating due to a number of powerful secular trends. These trends have been confirmed by a consumer survey we commissioned, which was conducted by Transom Consulting Group LLC ("Transom") during 2022.

***The emergence of conscious consumerism***

Consumers are increasingly taking into consideration the ESG impacts of their shopping decisions and the brands with which they choose to interact. As of June 2022, 92% of consumers surveyed reported that they expect to spend as much or more on secondhand apparel compared to their current spending, and 95% of consumers surveyed indicated that they expect to spend as much or more on key non-apparel categories including books, home décor, and furniture.

***Growing importance of value retail and treasure hunt experience***

The relevance of value shopping and treasure hunting has grown stronger in recent years. Our thrift model provides a highly compelling, differentiated customer proposition and experience that gives us a competitive advantage over traditional retail and other existing secondhand options. Today's consumers, and thrifters specifically, are seeking experiential shopping opportunities and compelling value propositions, combined with the multifaceted possibilities of brands and styles. They are drawn to the excitement of finding great value through a treasure hunt experience. That experience, combined with our low AUR, makes us more attractive to customers than traditional retail. As of June 2022, approximately 60% of shoppers surveyed indicated that thrift shopping is becoming more cool, popular, and/or acceptable, and 66% indicated that they would gladly receive an item purchased at a thrift store as a gift.

Furthermore, our in-store experience and broad, ever-changing inventory cannot be replicated online. The in-store thrift shopping experience is overwhelmingly preferred by consumers over online resale. As of June 2022, approximately 70% of secondhand shoppers surveyed reported preferring to shop in-store for reasons associated with convenience, the in-store experience (e.g., the thrill of the treasure hunt) and cost savings. We believe that we operate leading brands within the thrift industry offering consumers this unique experience.

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***Fast-growing secondhand market across both demand and supply***

***Secondhand demand-side total addressable market:*** The secondhand market is rapidly growing and continues to gain share in the total retail market from a wide range of traditional retailers, including department stores, fast fashion brands and off-price retailers. The secondhand market consists of both resale (e.g., consignment) and thrift goods, with thrift accounting for approximately 60% of the total market during 2021. In the United States alone, the secondhand market reached approximately $35 billion in 2021 and is expected to grow to more than $82 billion by 2026, representing a CAGR over this period of 18%. Additionally over this period, the U.S. secondhand share of consumer spending as a percentage of the total U.S. apparel market is expected to increase from an estimated 14% in 2022 to 22% in 2026.

![LOGO](g264743g07b24.jpg)

U.S. secondhand apparel market growth expected to accelerate +21% CAGR to $77bn by 2025. Size of the total U.S. approval market Secondhand % of total U.S. apparel. $253 $258 $263 $270 $270 $276 $286 $290 $226 $283 $294 $302 $310 4% 5% 5% 6% 7% 7% 8% 10% 12% 14% 15% 18% 21% 25% ($bn) =12% '12A-'20A secondhand CAGR +21% '21E-'25E secondhand CAGR $11 $12 $14 $15 $18 $20 $24 $28 $27 $36 $43 $53 $64 $77 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: GlobalData 2021 market sizing and growth estimates, Euromonitor.

Our total market opportunity continues to grow due to a general rise in demand for secondhand goods in part as consumers continue to expand the occasions for shopping for secondhand goods. As of June 2022, more than 80% of consumers surveyed reporting having engaged with a thrift store in the last twelve months as shoppers, donors, or both. As of December 2021, Salvation Army and Goodwill, the two leading non-profit thrift operators in the United States, operated approximately 7,300 locations and 3,200 retail locations, respectively, further indicating that there is a robust market for secondhand goods.

***Secondhand supply-side total addressable market:*** There is an abundant and growing source of supply that facilitates the availability of secondhand and thrift goods. As this market continues to develop and expand with the opening of new points of collection, there is significant opportunity to unlock and drive further OSDs to our NPPs at our stores. OSDs are typically driven by a combination of location, convenience, ease of drop and a fast and friendly experience at our Community Donation Centers at our stores.

In fiscal year 2019 alone, we processed over one billion pounds of secondhand goods. During fiscal year 2021 and fiscal year 2020, periods that were affected by the COVID-19 pandemic, we processed 860 million and 682 million pounds of secondhand goods, respectively. As donations

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continue to grow and awareness of secondhand shopping increases, we believe more consumers are likely to become thrift shoppers. As of June 2022, 80% of consumers surveyed reported that they donated secondhand apparel within the last twelve months, and 95% of consumers surveyed cited that, three years from now, they plan to donate as much or more across all of our major product categories. Furthermore, consumers strongly prefer donating apparel over reselling it, with consumers donating approximately two-thirds of their unwanted apparel and reselling less than 10% of it as of June 2022.

**<u>Competitive Strengths</u>**

We have been able to delight millions of customers each year and grow our business consistently through the following competitive strengths:

***A leader in the industry with a powerful business model***

We are the largest for-profit thrift operator in the United States and Canada. With 309 retail stores under our Savers, Value Village, Village des Valeurs, Unique and 2nd Ave. banners, we are nine times larger than the next largest for-profit thrift operator. In Canada, our principal brand, Value Village, is the largest in thrift volume and had over 93% aided brand awareness as of January 2021. We believe our significant scale advantage allows us to deliver extreme value and a superior shopping experience to customers, while generating strong cash flow that can be reinvested in our business.

We have innovated and integrated three highly-complex parts of thrift operations—supply and processing, retail and sales to wholesale markets—through significant operational expertise and investments. This has created a compelling business model which is differentiated against online competition and traditional retail, based on our treasure-hunt experience and low AUR. Our AUR, which is under $5, is approximately 70% lower than that of our retail competitors. Further, our business has demonstrated resilience through economic cycles. Such advantages of our business model provide compelling value to customers, drive attractive profitability for the business, and underpin positive comparable store sales growth from 2009 to 2019. As interest in the secondhand market continues to grow, we will have the opportunity to elevate and define the thrift experience for decades to come.

![LOGO](g264743g35h35.jpg)

Clear differentiation from traditional retail Traditional retailers Savers(R) Sustainability is often an add-on Sustainability is intrinsic Limited breadth of product offerings Wide variety of product offerings Macro-level sourcing risks Long-term strategic sourcing relationships High seasonality Low seasonality Standardized product offering Treasure hunt E-commerce threat high E-commerce threat low Substantial advertising expenditures Low advertising expenditures Significant investment in inventory Low inventory investment / favorable working capital dynamic Cyclical Cycle-resistant Significant exposure to supply chain disruptions Minimal exposure due to hyper-local supply model

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***Unmatched value proposition driving exceptional customer engagement***

We offer quality items at one of the deepest values across all of our product categories and an exciting, engaging treasure hunt experience in a contemporary in-store atmosphere, which underpins strong customer loyalty. Our most engaged customers are members of our Super Savers Club<sup>®</sup> loyalty program. As of October 1, 2022, we had 4.5 million active members enrolled in our U.S. and Canadian loyalty programs who have made a purchase within the last 12 months compared to 3.8 million active members as of October 1, 2021. Our members earn points or store credit, which further enhances the value shopping experience. Members in both the United States and Canada receive exclusive coupons and offers via email, as well as a special birthday coupon.

During the last 12 months ended October 1, 2022, U.S. loyalty members spent approximately 31% more per shopping trip than non-members. During the same period, U.S. loyalty members shopped at our stores an average of 6.8 times annually. As of the last 12 months ended October 1, 2022, the top three loyalty segments, which represent approximately 50% of active members in the United States, shopped with us more than 12 times per year. In addition, as of January 1, 2022, 35% of our loyalty members had annual household incomes of over $75,000, and 85% identified as female.

We have a particularly active presence on social media platforms, including Facebook, Instagram and Pinterest, to connect with our customers, and we also partner with a number of social media "influencers" who generate further awareness of our brands through sponsored content. At the core of our "Thrift Proud" movement, our customers and followers on social media serve as influential peer-to-peer brand ambassadors and are tagging our brand and banners in thousands of photos and videos weekly. We enjoy highly engaged communities on social media who are inspired by thrift hauls, shopping cart photos, do-it-yourself and upcycling, creating "new from used." As of August 2022, Savers, Value Village, Village des Valeurs and Thrift Proud branded hashtags had more than 188 million organic views on TikTok alone.

***Supply model with proven capacity to drive growth***

Quality and volume of supply play a critical role in driving traffic and customer frequency and engagement. We have developed a proven strategy to continuously improve our supply model. In order to maximize supply quality, we periodically assess sales yield, which we define as revenues generated per pound processed, from each supply source to make informed decisions on supplier selection. This approach ultimately improves both our revenue and profitability. We have been strategically focused on increasing our OSDs, particularly in increasing convenience and proximity to potential donors. OSDs not only drive profitability but also enhance the consistency and reliability of supply to each of our stores. We expect our focus on increasing OSDs will contribute to further improvement and growth in our supply.

***Culture of innovation and operational excellence***

Our culture of innovation underpins our key decisions and the way we run our business. We continue to be an industry leader with innovation to improve the customer experience, while enhancing operational efficiency. We have continuously improved our thrift operations across sourcing, processing, and retailing. We have recently launched major initiatives that will further reinforce our competitive advantage and have a measurable impact on our financial profile:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Centralized Processing Centers (CPCs)*** *:* The CPC system is an offsite, semi-automated processing
facility that mechanizes the flow of clothing, accessories, and shoes through an

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integrated series of conveyor belts, robotics, sensors, and other technology. It significantly improves upon our traditional process by driving labor efficiencies and enabling grader specialization and pricing precision. CPCs also allow for a more flexible store layout and loading configuration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Automated Book Processing (ABP)*** *:* The ABP system is an integrated set of technologies that efficiently
identify, price, and sort books based on their critical attributes (e.g., genre, author, market price). The system design consists of high-speed conveyors, optic recognition, robot tagging and an automated book distribution system working in concert
to increase throughput over traditional, manual processes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Self-checkout*** *:* We are rolling out self-checkout kiosks in many of our stores in order to enhance the
customer experience, with shorter lines and more access points. We estimate that self-checkout kiosks also can save up to 80 labor hours per week per store, which reduces our labor costs.

***Attractive financial profile with proven track record of consistent growth***

We achieved positive comparable store sales growth from 2009 through 2019, even throughout recessionary periods. We have also delivered steady and consistent gross product margin expansion over the last five years, from 46.4% for fiscal year 2015 to 60.6% for fiscal year 2021. We define gross product margin as net sales minus cost of merchandise sold, exclusive of depreciation and amortization, divided by net sales. We have utilized multiple levers that are unique to our business model to drive margin improvements, especially the growth of OSDs as part of our supply mix and sales yield improvement. As a result of our attractive financial profile, we have significant flexibility with respect to capital allocation, giving us the ability to drive long-term shareholder and stakeholder value through various operating and financial strategies.

***Highly experienced and strategic leadership***

Our strategic vision and culture are directed by a leadership team that combines deep industry expertise and advanced operational capabilities to continuously innovate our business. Given the unique needs of the business, our leadership team has diverse backgrounds across not only retail but also technology, manufacturing, and supply chain. We are committed to ethical practices in every aspect of our business and are guided by people who fundamentally do the right thing.

**<u>How We Plan to Grow</u>**

***Strategically grow our store base***

Our goal is to expand our position as the leading for-profit thrift operator by expanding our store footprint. We have identified approximately 2,200 potential new locations across the United States and Canada based on a third-party analysis prepared for us by Transom. To date we have opened seven new stores during fiscal year 2022, and we plan to open five additional stores by the end of the year. We target opening approximately 20 net new stores in 2023 and more than 20 new stores annually from 2024 through 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***In-fill opportunities:*** We will continue to identify attractive
locations in our existing markets by leveraging our brand awareness and operational capabilities, and where we have the advantage of both attractive supply and demand. These in-fill opportunities will include
both traditional and alternative format stores.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Adjacent store opportunities:*** We also will pursue opportunities to expand our regional footprint in adjacent
areas where we can leverage our operational capabilities and regional market knowledge.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Greenfield store opportunities:*** **  We are currently underpenetrated in multiple important regional
markets, including the South and West regions of the United States and in Central Canada.

![LOGO](g264743g32t53.jpg)

Expansive new store opportunity Locational strategy based on demographic data and third-party analysis.Current stores1 297In-fill Stores ~1,400Adjacent Stores ~500Greenfield Stores ~300Systematic, data-driven new store opening frameworkDeep understanding of supply and demand dynamicsAll stores leases singed for 2022 openingsTeam with a track record of new store openingsTotal new store potential: ~2,2002As of 01/01/2022.1 Current stores consists of open stores as of October 1, 2022 including those acquired in the 2nd Ave. Acquisition. 2 Based on a third-party analysis prepared for us. This is a goal / target and is forward-looking, subject to significant, business, economic, regulatory and competitive uncertainties and contingencies, many of which arebeyond the control of the Company and its management and is based upon assumptions with respect to future decisions, which are subject to change. See the section titled "Risk Factors" in the Registration Statement. Actual results will vary, and those variations may be material. Nothing in this presentation should be regarded as a representation by any person that these goals and targets will be achieved, and the Company undertakes no duty to update its goals.

Our CPC strategy is designed to support approximately 35% of our new and existing stores in the United States and Canada by 2026. As a result, we believe we can unlock significant new store potential given that a CPC-served store can have a more flexible store layout and size. In more densely populated areas specifically, CPCs enable in-fill opportunities in alternative store formats without the need for a full-scale processing facility in the back-of-store.

Driven by our disciplined real estate selection approach, we expect to deliver attractive return on investment and store-level profitability. We target most of our new stores to achieve a payback period of two and half years or less. Of the 13 new stores opened since 2019, five have already returned their initial investment despite the impacts of the pandemic. Our alternative store format is designed to capitalize on high real estate availability in in-fill markets through smaller formats.

***Drive consistent comparable store sales growth***

Our goal is to drive consistent growth in comparable store sales growth by maintaining a superior value proposition to our customers and continuing to offer a compelling selection of quality secondhand items. Benefitting from secular tailwinds, we expect to further drive comparable sales growth with the following strategies:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Quality product offerings*** *:* We will continue to procure ample supply of quality items to delight our
customers. Our compelling selection of offerings enables us to drive both frequency with existing customers and the acquisition of new customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Improving shopping experience*** *:* We will continue to invest in the in-store shopping experience to facilitate the treasure hunt dynamics for our customers. We have invested in

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renovations to modernize our stores; new technologies to optimize store operations; and alternative store formats supported by CPCs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Expanding engagement with our loyalty program members*** *:* Our loyalty program members have increased
shopping frequencies, stronger retention, more transactions, and larger basket sizes. Our marketing efforts are designed to continue to increase our loyalty program member base.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Conducting brand marketing*** *:* We will continue to increase our brand marketing spend to improve our
brand awareness, bolstered by the broader adoption of thrift shopping overall to drive new customer acquisition.

***Continue to implement strategic initiatives to drive efficiency and expand margin***

Compared to our traditional retail competitors, we have multiple levers within our control that have been critical in driving our profitability and Free Cash Flow. For instance, our data analysis has improved our sales yield, defined as sales per pound processed, which has been a primary driver of comparable store profitability. Our deliberate strategy of increasing the penetration of OSDs as a percentage of total supply has had a significant impact on our gross product margin. In addition, our recent initiatives, including CPCs, ABPs and self-checkout, are expected to generate combined incremental savings of at least $200,000 per store per year, based on anticipated savings per store of approximately $125,000 for CPCs, $25,000 for ABPs, and $50,000 for self-checkout. These savings are based on management estimates of the average savings for each of our stores from these initiatives. Our CPC initiative, which we expect to be the greatest contributor towards these future savings, assumes significant cost reductions in labor and freight costs associated with the sorting, processing, and distribution of inventory. We also anticipate further labor cost reductions from our ABP and self-checkout initiatives. Our culture of innovation and data orientation has been critical to driving operational efficiencies, and we will continue to lead in terms of innovating the thrift business model.

***Selectively pursue other growth opportunities***

In addition to our organic growth initiatives, we will also take an opportunistic yet disciplined approach toward potential inorganic growth opportunities. Given the fragmented nature of the thrift category, we believe there are significant opportunities for growth. This can be conducted through the acquisition of well-operated regional players where we believe we can build upon our infrastructure and scale to accelerate the growth of a potential target and generate synergies. Our acquisition criteria include a significant regional presence; access to a robust flow of quality supply; strong brand awareness; and a complementary cultural fit for our company. For example, in November 2021, we completed the acquisition of 2nd Ave., which added 12 stores in the Northeastern and Mid-Atlantic regions of the United States, representing a complementary store footprint for our existing store network and offering new store expansion opportunities. The 2nd Ave. Acquisition also included the GreenDrop system used to provide supply to 2nd Ave. stores, which allows donors to drop off their items at attended donation stations that are movable and can be placed in attractive, high traffic areas that are convenient to donors. We are currently expanding GreenDrop to locations in certain other markets.

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**Recent Developments** 

***Preliminary Estimated Unaudited Financial Results for the Three Months and the Fiscal Year Ended December 31, 2022***

Our preliminary estimated unaudited net sales, operating income, Adjusted EBITDA, comparable store sales growth, number of stores and pounds processed for the three months and the fiscal year ended December 31, 2022 (the "preliminary estimated financial results") are set forth below. We have provided a range for these preliminary estimated financial results because our closing procedures for our fiscal quarter and year ended December 31, 2022 are not yet complete. Our preliminary estimates of the financial results set forth below are based solely on information available to us as of the date of this prospectus and are inherently uncertain and subject to change. Our preliminary estimated financial results contained in this prospectus are forward-looking statements. Our actual results remain subject to the completion of management's final review and our other closing procedures, as well as the completion of the audit of our annual financial statements. These preliminary estimated financial results are not a comprehensive statement of our financial results for the three months and the fiscal year ended December 31, 2022 and should not be viewed as a substitute for financial statements prepared in accordance with GAAP. In addition, these preliminary estimated financial results for the three months and the fiscal year ended December 31, 2022 are not necessarily indicative of the results to be achieved in any future period. Accordingly, our preliminary estimated financial results are subject to change, and you should not place undue reliance on these preliminary estimated financial results. See "Risk Factors," "Special Note Regarding Forward-Looking Statements," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of certain factors (many of which are beyond our control) that could result in differences between the preliminary estimated financial results reported below and the actual results.

The preliminary estimated financial results included in this prospectus have been prepared by, and are the responsibility of, our management. Our independent registered public accounting firm, KPMG LLP, has not audited, reviewed, compiled or performed any procedures with respect to the preliminary estimated financial results. Accordingly, KPMG LLP does not express an opinion or any other form of assurance with respect thereto.

Our fiscal year ends on the Saturday nearest December 31. Our fiscal year 2021 consists of the 52 weeks ended January 1, 2022. Our fiscal year 2022 consists of the 52 weeks ended December 31, 2022. The three months ended December 31, 2022 and January 1, 2022 both consisted of 13 weeks.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | | | |
|  | **December 31, 2022** | **December 31, 2022** | **January 1,<br>2022** | **Fiscal Year 2022** | **Fiscal Year 2022** |<br>**Fiscal<br>Year 2021** |
|  | **Low** | **High** | | **Low** | **High** | |
| **(Dollar amounts in thousands)** | **(estimated)** | **(estimated)** | **(actual)** | **(estimated)** | **(estimated)** | **(actual)** |
|  Net sales | $364802 | $366802 | $344833 | $1435299 | $1437299 | $1204124 |
|  Operating income | $42934 | $46434 | $29709 | $203000 | $206500 | $182236 |
|  Adjusted EBITDA | $73543 | $78543 | $57093 | $296917 | $301667 | $223379 |

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For the three months ended December 31, 2022, we estimate net sales in the range of $364.8 million to $366.8 million, representing a change of $21.0 million or 6.1%, using the midpoint of the estimated net sales range when compared to the three months ended January 1, 2022. This increase in net sales resulted primarily from the 2nd Ave. Acquisition, which occurred in November 2021, increased Comparable Store Sales for the period, and the opening of new stores.

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For the three months ended December 31, 2022, we estimate operating income in the range of $42.9 million to $46.4 million, representing a change of $15.0 million or 50.4% using the midpoint of the estimated operating income range when compared to the three months ended January 1, 2022. This increase in operating income resulted primarily from increased Comparable Store Sales, higher yields and reduced processing costs year over year. We did experience a partially offsetting increase in cost of merchandise sold per pound, as we purchased a larger percentage of our inventory from delivered supply sources, even as the number of pounds of OSDs we received increased. We also experienced an increase in salaries, wages and benefits expense as labor costs were generally higher. In addition, our depreciation and amortization expense during the three months ended December 31, 2022 was higher than the comparable prior period as a result of the opening of new stores, an increase of CPCs, the operational use of self-checkouts, and additional depreciation and amortization of assets acquired in the 2nd Ave. acquisition.

For the three months ended December 31, 2022, we estimate Adjusted EBITDA in the range of $73.5 million to $78.5 million, representing a change of $18.9 million or 33.2%, using the midpoint of the estimated Adjusted EBITDA range when compared to the three months ended January 1, 2022. This change resulted from the same factors (other than changes in depreciation and amortization expense) that led to the increase in our operating income year over year.

For fiscal year 2022, we estimate net sales in the range of $1.435 billion to $1.437 billion, representing a change of $232.2 million or 19.3%, using the midpoint of the estimated net sales range when compared to fiscal year 2021. The increase in net sales resulted primarily from increased Comparable Store Sales, partially due to a reduction in COVID-19 related store closures in Canada compared to the prior year period, the 2nd Ave. Acquisition, which occurred in November 2021, and an increase in sales yield.

For fiscal year 2022, we estimate operating income in the range of $203.0 million to $206.5 million, representing a change of $22.5 million or 12.4% using the midpoint of the estimated operating income range when compared to fiscal year 2021. This increase in operating income resulted primarily from increased Comparable Store Sales, higher sales yields and reduced processing costs year over year. We did experience a partially offsetting increase in cost of merchandise sold per pound, as we purchased a larger percentage of our inventory from delivered supply sources, even as the number of pounds of OSDs we received increased. We also experienced an increase in salaries, wages and benefits expense as labor costs were generally higher. In addition, our depreciation and amortization expense during the three months ended December 31, 2022 was higher than the comparable prior period as a result of the opening of new stores, an increase of CPCs, the operational use of self-checkouts, and additional depreciation and amortization of assets acquired in the 2nd Ave. acquisition.

For fiscal year 2022, we estimate Adjusted EBITDA in the range of $296.9 million to $301.7 million, representing a change of $75.9 million or 34.0%, using the midpoint of the estimated Adjusted EBITDA range when compared to fiscal year 2021. This change resulted from the same factors (other than changes in depreciation and amortization expense) that led to the increase in our operating income in fiscal year 2022 compared to fiscal year 2021.

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Adjusted EBITDA is a non-GAAP financial measure. For more information about this non-GAAP financial measure, including its definition, see "—Summary Financial and Other Data—Non GAAP measures." We are not currently able to calculate net income for fiscal year 2022 or the quarter ended December 31, 2022, so we are reconciling Adjusted EBITDA to operating income, as presented in the following table:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | | | |
|  | **December 31, 2022** | **December 31, 2022** | **January 1,<br>2022** | **Fiscal Year 2022** | **Fiscal Year 2022** | **Fiscal<br>Year 2021** |
|  | **Low** | **High** | | **Low** | **High** | |
| **(Dollar amounts in thousands)** | **(estimated)** | **(estimated)** | **(actual)** | **(estimated)** | **(estimated)** | **(actual)** |
|  Operating income | $42934 | $46434 | $29709 | $203000 | $206500 | $182236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization. | 15290 | 15590 | 13413 | 55400 | 55700 | 47385 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense<sup>(1)</sup> | 819 | 869 | 185 | 1900 | 1950 | 732 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-cash occupancy-related costs<sup>(2)</sup> | 827 | 877 | 617 | 1450 | 1500 | 228 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease intangible asset expense<sup>(3)</sup> | 1123 | 1173 |  | 7630 | 7680 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pre-opening expenses<sup>(4)</sup> | 1992 | 2192 | 1418 | 5700 | 5900 | 1628 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Store closing expenses<sup>(5)</sup> | 806 | 956 | 1148 | 2600 | 2750 | 397 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Executive transition costs<sup>(6)</sup> | 306 | 406 | 420 | 1430 | 1530 | 420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shared service center transition costs<sup>(7)</sup> |  |  |  |  |  | 181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; COVID-related adjustments<sup>(8)</sup> | (0) | (0) | (8) | (53) | (53) | (21367) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transaction costs<sup>(9)</sup> | 294 | 394 | 8098 | 4600 | 4700 | 12604 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other adjustments<sup>(10)</sup> | 9152 | 9652 | 2093 | 13260 | 13510 | (1065) |
|  Adjusted EBITDA | $73543 | $78543 | $57093 | $296917 | $301667 | $223379 |

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(1) Equity-based compensation expense represents non-cash compensation expenses
related to stock options granted to certain of our employees and directors.

(2) Includes the difference between cash and straight-line rent for all periods. Adjusted EBITDA gives further effect to non-cash occupancy-related costs incurred by 2nd Ave. prior to the 2nd Ave. Acquisition.

(3) In connection with the March 2019 Transactions and the 2nd Ave. Acquisition, we recorded intangible assets and
liabilities for acquired lease contracts. Following the adoption of ASC 842, *Leases* ("ASC 842"), on January 2, 2022, the incremental value represented by these assets is classified as a component of right-of-use lease assets on our consolidated balance sheet, with the related amortization included within lease expense. Prior to the adoption of ASC 842, amortization
related to the acquired lease intangible assets was classified in depreciation and amortization on our consolidated statement of operations.

(4) Represents pre-opening expenses for our new stores, CPC, and ABP locations.

(5) Costs related to store closures such as fixed asset disposal, accelerated lease liability, and other closing expenses.

(6) Represents severance costs associated with executive leadership changes and the 2nd Ave. Acquisition.

(7) Represents severance costs associated with the opening of our new shared service center in Boise, Idaho during fiscal
year 2021.

(8) Represents benefits, net of costs, received in connection with the COVID-19 pandemic, including wage subsidies and severance costs. During fiscal year 2021, we received wage subsidies of

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$21.7 million and incurred $0.2 million in severance costs. Wage subsidies are reflected as a reduction to employee personnel costs in our Consolidated Statements of Operations and Comprehensive Income (Loss). Adjusted EBITDA for fiscal year 2021 is further adjusted to remove $8.1 million of income associated with the forgiveness of Paycheck Protection Program Loans reflected in the historical financial information of 2nd Ave.

(9) Reflects expenses related to the 2nd Ave. Acquisition and costs incurred in relation to this offering.

(10) Reflects the establishment of a donor advised fund and purchase accounting impacts related to the 2nd Ave. Acquisition
for the fourth quarter of Fiscal Year 2021. For the three months and fiscal year ended December 31, 2022, also includes a discretionary bonus paid in conjunction with our December 2022 dividend (as described below).

The following table summarizes our preliminary estimated key business metrics for the three months ended December 31, 2022 and fiscal year 2022 and our actual key business metrics for the three months ended January 1, 2022 and fiscal year 2021.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | | |
|  | **December 31,<br>2022** | **January 1,<br>2022** |<br>**Fiscal Year<br>2022** |<br>**Fiscal<br>Year 2021** |
| **(Dollar amounts in thousands)** | **(estimated)** | **(actual)** | **(estimated)** | **(actual)** |
|  Comparable store sales growth<sup>(\*)(1)</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; United States | 4.3% | 27.6% | 4.5% | 64.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Canada | 7.0% | 24.6% | 25.3% | 24.3% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total<sup>(2)</sup> | 6.1% | 25.5% | 13.5% | 44.5% |
|  Number of stores<sup>(3)</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; United States | 150 | 148 | 150 | 148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Canada | 152 | 148 | 152 | 148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total<sup>(2)</sup> | 314 | 306 | 314 | 306 |
|  Pounds processed (mm lbs) | 234 | 236 | 985 | 860 |

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(\*) Excludes stores acquired in the 2nd Ave. Acquisition.

(1) Comparable store sales growth is the percentage change in comparable store sales over the prior year. Comparable store
sales is calculated as net sales for the period by stores open during the entirety of both periods that are being compared. We considered any store temporarily closed due to the COVID-19 pandemic to be open
and comparable during the period. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics—Comparable store sales growth (United States, Canada, total)."

(2) Total number of stores and comparable store sales growth includes our Australia retail locations, in addition to the
United States and Canada.

(3) Number of Stores includes new stores not yet included in the comparable store sales growth and comparable store daily
sales computations measured as of the last day of the fiscal year.

***Acquisition***

On November 8, 2021, we acquired 2nd Ave. for purchase price consideration of $238.5 million in cash. We financed the 2nd Ave. Acquisition with cash on hand and $225.0 million of additional borrowings on our Term Loan Facility. The additional borrowings are on substantially the same terms as our existing loans under the Term Loan Facility. We have accounted for the 2nd Ave. Acquisition as a business combination under applicable accounting guidance. See Note 3 of our audited consolidated financial statements included elsewhere in this prospectus.

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***Corporate Conversion***

Prior to January 7, 2022, we operated as a Delaware limited liability company under the name S-Evergreen Holding LLC. On January 7, 2022, we converted into a Delaware corporation and changed our name to Savers Value Village, Inc. In the Corporate Conversion, all of our outstanding equity interests were converted into shares of common stock. The foregoing conversion and related transactions are referred to herein as the "Corporate Conversion."

The purpose of the Corporate Conversion was to reorganize our structure so that the entity that is

offering our common stock to the public in this offering is a corporation rather than a limited liability company and so that our existing investors and new investors purchasing in this offering will own our common stock rather than equity interests in a limited liability company.

***Increase of Revolving Credit Facility***

On November 23, 2022, we increased the maximum committed amount under the revolving credit facility (the "Revolving Credit Facility") under our Credit Agreement, dated as of April 26, 2021, by and among Evergreen AcqCo 1 LP and Value Village Canada Inc., as borrowers, the guarantors party thereto, KKR Loan Administration Services LLC, as administrative agent and collateral agent and the lenders party thereto, as amended on November 8, 2021 and November 23, 2022 (as amended, the "Secured Credit Agreement") from $60.0 million to $75.0 million.

***December 2022 Dividend***

In December 2022, we paid a dividend of $69.5 million to our equityholders, using borrowings from our Revolving Credit Facility and cash on the balance sheet. We subsequently repaid all amounts borrowed in connection with this dividend. No executive officers or directors received dividend payments. In connection with the dividend, we also paid one time bonuses of $6.5 million in the aggregate to certain of our employees who hold equity interests which were not entitled to participate in the dividend. We refer to the dividend and the related bonus payments together as the "December 2022 Dividend."

***Notes Offering***

On February 6, 2022, our wholly-owned subsidiaries completed the issuance of $550,000,000 aggregate principal amount of 9.750% Senior Secured Notes due 2028 (the "Notes") to persons reasonably believed to be "qualified institutional buyers" pursuant to Rule 144A under the Securities Act of 1933 and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. The Notes will mature on April 26, 2028 and bear interest at a fixed rate of 9.750% per year, payable semi-annually on each February 15 and August 15, commencing on August 15, 2023 through maturity. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by S-Evergreen Holding Corp. and each of its existing direct and indirect wholly-owned U.S. and Canadian subsidiaries (other than the issuers of the Notes), which are the same subsidiaries that guarantee the indebtedness under the Secured Credit Agreement.

We used the net proceeds of the Notes to (i) permanently prepay $233.4 million of outstanding borrowings under the term loan facility (the "Term Loan Facility") under the Secured Credit Agreement, (ii) pay a dividend of $262.2 million to our equityholders, (iii) pay one-time bonuses to certain of our employees who hold equity interests which were not entitled to participate in the dividend, (iv) pay certain related fees and expenses and (v) for general corporate purposes. We refer to the offering of the Notes and the related transactions (including the use of the proceeds of the Notes) collectively as the "Notes Offering."

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**Risk Factors Summary** 

Our business is subject to numerous risks and uncertainties, including, but not limited to, those highlighted in the section titled "Risk Factors" and summarized below. We have various categories of risks, including risks relating to our business and industry; risks relating to legal, regulatory, accounting and tax matters; risks relating to our indebtedness and liquidity; and risks relating to this public offering and ownership of our common stock, which are discussed more fully in the section titled "Risk Factors." As a result, this risk factor summary does not contain all of the information that may be important to you, and you should read this risk factor summary together with the more detailed discussion of risks and uncertainties set forth in the section titled "Risk Factors." Additional risks, beyond those summarized below or discussed elsewhere in this prospectus, may apply to our business, activities or operations as currently conducted or as we may conduct them in the future or in the markets in which we operate or may in the future operate. You should carefully consider these risks before making an investment. These risks include, but are not limited to, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to obtain a sufficient quantity of new and recurring quality secondhand items at attractive prices by
maintaining our strong relationships with existing NPPs, maintaining and growing OSDs and developing new relationships in the areas in which we operate, our business, results of operations, and financial condition could be harmed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are subject to risks associated with sourcing and processing of secondhand items, including processing costs and
capacity, risks due to damage, loss or contamination of items, increased costs to maintain and/or develop sources of supply, and risks associated with itemizing, grading, storage, transportation and other logistics;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our business depends on our ability to attract and retain suitable workers for our stores and processing facilities and to
manage labor costs, particularly given recent disruptions in the supply and cost of labor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our continued growth depends on attracting new, and retaining existing, customers, including by increasing the acceptance
of thrift among new and growing customer demographics;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Both supply of and demand for our products is influenced by general economic conditions, including trends in consumer
spending;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have experienced rapid growth, and those growth rates may not be indicative of our future growth. If we fail to manage
our growth effectively, we may be unable to execute our business plan and our business, results of operations and financial condition could be harmed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We face risks related to integrating the 2nd Ave. operations, financial and other systems, team members and facilities into
our business, as well as similar risks related to any future acquisitions or joint ventures we may pursue;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not be able to identify and obtain suitable locations for new stores as we grow our business. The success of each
store location is dependent on a number of factors, including site suitability, our ability to negotiate appropriate store leases, customer traffic and convenience and proximity to NPPs and their donors, customers, suitable workers, and our
processing facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Some of our stores may have challenges achieving period-to-period comparable store sales growth targets due to, various factors outside our control, including availability of suitable workers, site suitability, lease
terms and conditions, operational risks and regional growth and development patterns;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have significant foreign operations, particularly in Canada, so we are subject to risks specific to operating in these
jurisdictions and are also exposed to exchange rate risks, which we may not be able to fully hedge;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The global COVID-19 pandemic and the government's responses in the
jurisdictions in which we operate has had and may continue to have an unpredictable and adverse impact on our business, results of operations and financial condition, and similar events may have such effects in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not be able to expand our CPC operations in geographic regions that enable us to effectively scale our operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are unable to successfully leverage technology to automate and drive efficiencies in our operations, our business,
results of operations and financial condition could be harmed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are subject to various risks to our physical store and processing facility locations, which may adversely affect our
business, results of operations, and financial condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A failure to retain key store and processing center management personnel and labor-related matters, including labor
disputes, could materially and adversely affect our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Actions by wholesale customers could harm our brand and reputation, influence donor behavior and adversely affect our
relationships with our NPPs and our customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Compromises of our data security could cause us to incur unexpected expenses and may materially harm our reputation and
results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may be unable to protect our intellectual property rights and we may be accused of infringing intellectual property or
other proprietary rights of third parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Risks arising from the material weaknesses we have identified in our internal control over financial reporting and any
failure to remediate these material weaknesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may be unable to maintain an effective system of disclosure controls and procedures or internal control over financial
reporting and produce timely and accurate financial statements or comply with applicable regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We will incur increased expenses associated with being a public company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Changes in Canadian, Australian or U.S. national or local regulations, including those relating to the sale of secondhand
items and advertising practices, or our actual or alleged failure to comply with such regulations may have a material adverse effect on our reputation, business financial condition, and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• There has been no prior public market for our common stock, the stock price of our common stock may be volatile or may
decline regardless of our operating performance and you may not be able to resell your shares at or above the initial public offering price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The continuing control after this offering of our company, including the right to designate individuals to be included in
the slate of nominees for election to our board of directors, by the Ares Funds, whose interests may conflict with our interests and those of other stockholders. As such, the Ares Funds may be able to influence or control our affairs and policies
following the completion of this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Certain provisions in our certificate of incorporation and our bylaws that may delay or prevent a change of control.

If we are unable to adequately address these and other risks we face, our business, results of operations, financial condition and prospects may be harmed.

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**Implications of Being an Emerging Growth Company** 

When we publicly filed the registration statement of which this prospectus forms a part, we qualified as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). An emerging growth company may take advantage of relief from certain reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduced obligations with respect to financial data, including presenting only two years of audited financial statements and
only two years of selected financial data;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of
2002 (the "Sarbanes-Oxley Act");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduced disclosure about executive compensation arrangements in periodic reports, proxy statements and registration
statements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• exemptions from the requirements of holding non-binding advisory votes on executive
compensation or golden parachute arrangements.

We qualifiy as an emerging growth company, as our revenues for our fiscal year ended January 1, 2022, fell under the $1.235 billion eligibility threshold. As such, we are permitted to use (and are using) the exceptions and scaled disclosure requirements in our registration statement. In addition, for purposes of our registration statement, we have elected not to opt out of the JOBS Act Section 102(b)(1) extended transition period, which means that when a standard is issued or revised, and it has different application dates for public and private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with other public companies difficult because of the potential differences in accounting standards used.

**Ares** 

Ares Management Corporation (NYSE: ARES) ("Ares") is a leading global alternative investment manager offering clients complementary primary and secondary investment solutions across the credit, private equity, real estate and infrastructure asset classes. Ares seeks to provide flexible capital to support businesses and create value for its stakeholders and within its communities. By collaborating across its investment groups, Ares aims to generate consistent and attractive investment returns throughout market cycles. As of September 30, 2022, Ares' global platform had approximately $341 billion of assets under management, with approximately 2,500 employees operating across North America, Europe, Asia Pacific and the Middle East.

Prior to this offering, the Ares Funds indirectly owned all of our outstanding shares of common stock. After giving effect to this offering, the Ares Funds will hold approximately % of our outstanding common stock (% if the underwriters exercise their option to purchase additional shares in full). We use the term "Ares Funds" to describe certain funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares who own our securities.

The Ares Funds will have significant power to control our affairs and policies, including with respect to the election of directors (and through the election of directors, the appointment of management). For a description of certain potential conflicts between the Ares Funds and our other stockholders, see "Risk Factors—The continuing control after this offering of our company, including the right to designate individuals to be included in the slate of nominees for election to our board of

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directors, by the Ares Funds, whose interests may conflict with our interests and those of other stockholders. As such, the Ares Funds may be able to influence or control our affairs and policies following the completion of this offering." For a description of the Ares Funds' ownership interests in us and their rights with respect to such ownership interests, including the right to designate individuals to be included in the slate of nominees for election to our board of directors, see "Certain Relationships and Related Party Transactions," "Principal and Selling Stockholders" and "Description of Capital Stock."

**Corporate Information** 

S-Evergreen Holding LLC was formed March 22, 2019. S-Evergreen Holding LLC became a Delaware corporation on January 7, 2022 and changed its name to Savers Value Village, Inc. in the Corporate Conversion. Our principal executive offices are located at 11400 S.E. 6th Street., Suite 125, Bellevue, WA 98004, and our telephone number is 425-462-1515. Our website address is www.savers.com. Information contained on, or that can be accessed through, our website is not part of and is not incorporated by reference into this prospectus, and you should not consider information on our website to be part of this prospectus.

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**THE OFFERING** 

Common stock offered by us shares.

Common stock to be outstanding after this offering shares.

Option to purchase additional<br> shares of common stock The selling stockholders have granted the underwriters the right to purchase an additional shares of common stock within 30 days from the date of this prospectus.

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| | |
|:---|:---|
| Use of proceeds  | We estimate that we will receive net proceeds from this offering of approximately $ million based on an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting assumed underwriting discounts and commissions and estimated offering expenses payable by us. |

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The principal purposes of this offering are to increase our capitalization and financial flexibility and create a public market for our common stock. We intend to use net proceeds received by us from this offering to repay approximately $ million of indebtedness plus accrued and unpaid interest and premium under the Term Loan Facility and any remainder for general corporate purposes, including working capital, operating expenses and capital expenditures. We may also use a portion of any net proceeds we receive from this offering for acquisitions or other strategic investments, although we do not currently have any specific plans to do so. We will have broad discretion over the uses of any net proceeds in this offering to be used for general corporate purposes. We will not receive any proceeds from the sale of shares in this offering by the selling stockholders upon the sale of shares if the underwriters exercise their option to purchase additional shares. See "Use of Proceeds."

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| | |
|:---|:---|
| Voting rights  | One vote per share. |

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The Ares Funds, which immediately after this offering will control approximately % (% if the underwriters exercise their option to purchase additional shares in full) of the voting power of our outstanding common stock, will, acting alone, be able to exercise significant influence over all matters submitted to our stockholders for approval, including the election of our board of directors. See "Risk Factors—Risks relating to this offering and ownership of our common stock."

Dividend policy We currently do not anticipate paying any cash dividends after this offering and for the foreseeable future. Any future

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determination relating to dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including restrictions in our current and future debt instruments, our future earnings, capital requirements, financial condition, future prospects, and applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits. See "Dividend Policy." <br>

Risk factors See "Risk Factors" and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

Controlled company Following this offering, the Ares Funds will continue to control a majority of the voting power of our outstanding voting stock, and as a result we will be a controlled company within the meaning of the New York Stock Exchange corporate governance standards.

Proposed ticker symbol "SVV."

The number of shares of our common stock to be outstanding after this offering is based on shares of our common stock outstanding as of and excludes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock
reserved for future issuance under our equity incentive plans, consisting of shares subject to options outstanding under our 2019 Management Incentive
Plan and shares reserved under our Omnibus Incentive Plan which will become effective on the day prior to the first public trading date of our common
stock, as well as any future increases in the number of shares of our common stock reserved for issuance under the Omnibus Incentive Plan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock
that will become available for issuance under our Employee Stock Purchase Plan, which we expect to be adopted in connection with this offering, as well as any future increases in the number of shares of our common stock available for issuance under
our Employee Stock Purchase Plan.

In addition, unless otherwise expressly stated or the context otherwise requires, the information in this prospectus assumes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no exercise of the underwriters' option to purchase
additional shares of our common stock from the selling stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effectiveness of our certificate of incorporation and bylaws in connection with the completion of this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effectiveness of the Corporate Conversion (which occurred on January 7, 2022)

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**Summary Financial and Other Data** 

The summary consolidated statement of operations data for fiscal year 2021, fiscal year 2020, for the period from March 28, 2019 to December 28, 2019 (Successor), and for the period from December 30, 2018 to March 27, 2019 (Predecessor) are derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated statement of operations data for the nine months ended October 1, 2022 and October 2, 2021 and summary consolidated balance sheet data as of October 1, 2022, are derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in any future period. You should read the following summary financial and other data in conjunction with the sections titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Financial Information" and our consolidated financial statements and related notes included elsewhere in this prospectus. ****

***Consolidated statement of operations data***

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |
| *(in thousands, except <br>unit/share*<br> *and per unit/share data)* | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** | **Nine Months<br>Ended**<br>**October 1,<br>2022** | **Nine Months<br>Ended**<br>**October 2,<br>2021** |
|  Net sales | $1204124 | $834010 | $945527 | $259972 | $1070427 | $859291 |
|  Operating expenses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of merchandise sold exclusive of depreciation and amortization | 474462 | 353455 | 460169 | 133595 | 443372 | 317620 |
| &nbsp;&nbsp;&nbsp;&nbsp; Salaries, wages, and benefits | 239806 | 184392 | 195066 | 60193 | 199643 | 168314 |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 260235 | 229886 | 187727 | 71537 | 227236 | 186858 |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 47385 | 59432 | 32391 | 18837 | 40110 | 33972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 1021888 | 827165 | 875353 | 284162 | 910361 | 706764 |
|  Operating income (loss) | 182236 | 6845 | 70174 | (24190) | 160066 | 152527 |
|  Other (expense) income: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (53565) | (69678) | (58003) | (20784) | (45855) | (40591) |
| &nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (3265) | 3410 | (6353) | 6605 | (26430) | (399) |
| &nbsp;&nbsp;&nbsp;&nbsp;(Loss) gain on extinguishment of debt | (47541) |  |  | 283241 | (1023) | (47541) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (104371) | (66268) | (64356) | 269062 | (73308) | (88531) |
|  Income (loss) before income tax expense | 77865 | (59423) | 5818 | 244872 | 86758 | 63996 |
|  Income tax (benefit) expense | (5529) | 4060 | 4437 | 5256 | 28472 | 8340 |
|  Net income (loss) | $83394 | $(63483) | $1381 | $239616 | $58286 | $55656 |

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|:---|:---|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |
| *(in thousands, except <br>unit/share*<br> *and per unit/share data)* | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** | **Nine Months<br>Ended**<br>**October 1,<br>2022** | **Nine Months<br>Ended**<br>**October 2,<br>2021** |
|  Net income (loss) per unit/share, basic | $0.42 | $(0.34) | $0.01 |  | $0.29 | $0.28 |
|  Net income (loss) per unit/share, diluted | $0.41 | $(0.34) | $0.01 |  | $0.28 | $0.28 |
|  Weighted average number of units/shares outstanding used to compute net income (loss) per unit/share, basic | 198378867 | 188757245 | 178378867 |  | 198387534 | 198378867 |
|  Weighted average number of units/shares outstanding used to compute net income (loss) per unit/share, diluted | 203769786 | 188757245 | 178610774 |  | 204796324 | 201821886 |

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***Consolidated balance sheet data***

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| | | |
|:---|:---|:---|
| *(in thousands)* | **As of<br>October 1, 2022** | **Pro Forma <sup>(1)(2)</sup>** |
|  Cash and cash equivalents | $114946 | $|
|  Total assets | $1697797 |  |
|  Total liabilities | $1424469 |  |
|  Total stockholders' equity | $273328 |  |

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(1) The pro forma column reflects the effects of the December 2022 Dividend and the Notes Offering and gives further effect
to the sale and issuance by us of shares of our common stock in this offering, based upon the assumed initial public offering price of $ per share, which is the midpoint of the estimated offering price
range on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us upon completion of our initial public offering. See "Unaudited Pro Forma Condensed
Combined Financial Information."

(2) Each $1.00 increase or decrease in the assumed initial public offering price of
$ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease the amount of our pro forma cash and cash
equivalents, total assets and total stockholders' equity by $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after
deducting estimated underwriting discounts and commissions payable by us. An increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease, as applicable, the amount of our pro forma cash and cash
equivalents, total assets and total stockholders' equity by $ million assuming the assumed initial public offering price remains the same, and after deducting estimated underwriting discounts and
commissions payable by us.

*Key business metrics and non-GAAP financial measures* 

We use the following key business metrics and non-GAAP financial measures to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions. We believe that these key business metrics and non-GAAP financial measures provide useful information to

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investors and others in understanding and evaluating our results of operations in the same manner as our management team.

We present Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Free Cash Flow, which are non-GAAP financial measures. These measures are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, we believe the presentation of Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Free Cash Flow is helpful in highlighting trends in our operating results, because it excludes the impact of items that are outside the control of management or not reflective of our ongoing operations and performance.

*Key business metrics* 

The following table summarizes our key business metrics for the periods indicated:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Fiscal Year 2021** | **Fiscal Year 2020** | **Fiscal Year 2019** | **Nine Months<br>Ended**<br>**October 1, 2022** | **Nine Months<br>Ended**<br>**October 2, 2021** |
|  ***Comparable Store Sales Growth<sup>(1)</sup>*** |  |  |  |  |  |
|  United States | 64.8% | (27.8)% | 7.8% | 4.6% | 77.4% |
|  Canada | 24.3% | (29.3)% | 3.4% | 33.4% | 22.7% |
|  Total <sup>(3)</sup> | 44.5% | (28.6)% | 5.7% | 16.3% | 49.7% |
|  ***Comparable Store Daily Sales Growth<sup>(2)</sup>*** |  |  |  |  |  |
|  United States | 24.9% | (7.7)% | 7.8% | 4.6% | 25.1% |
|  Canada | 19.0% | (12.5)% | 3.4% | 4.3% | 18.5% |
|  Total <sup>(3)</sup> | 23.7% | (10.3)% | 5.7% | 2.9% | 24.2% |
|  ***Number of Stores<sup>(4)</sup>*** |  |  |  |  |  |
|  United States | 148 | 137 | 145 | 149 | 136 |
|  Canada | 148 | 147 | 147 | 150 | 148 |
|  Total <sup>(3)</sup> | 306 | 294 | 302 | 309 | 294 |
|  ***Other Metrics*** |  |  |  |  |  |
|  Pounds Processed (mm lbs) | 860 | 682 | 1029 | 751 | 624 |

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(1) Comparable store sales growth is the percentage change in comparable store sales over the prior fiscal year or the
comparable quarter in the prior fiscal year. Comparable store sales is calculated as net sales for the period by stores open during the entirety of both periods that are being compared. We considered any store temporarily closed due to the COVID-19 pandemic to be open and comparable during the period. Comparable store sales growth is measured in local currency for Canada, while total comparable store sales growth is measured on a constant currency
basis. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics—Comparable store sales growth (United States, Canada, total)."

(2) Comparable store daily sales growth for the period is the net sales by stores in the relevant geography that were or
would have been open for the entirety of both periods if not for temporary closures due to the COVID-19 pandemic, divided by the aggregate number of days those stores were open. Comparable store daily sales
growth is the percentage change in comparable store daily sales over the prior fiscal year or the comparable quarter in the prior fiscal year. Comparable store daily sales growth is measured in local currency for Canada, while total comparable store
daily sales growth is measured on a constant currency basis. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics—Comparable store daily sales growth."

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(3) Total comparable store sales growth, total comparable store daily sales, and total number of stores include our Australia
retail locations, in addition to the United States and Canada.

(4) Number of Stores, which is measured as of the last day of the fiscal year or quarter (as applicable), includes new stores
not yet included in the comparable store sales growth and comparable store daily sales growth, such as those acquired in the 2nd Ave. Acquisition.

*Non-GAAP measures* 

Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Free Cash Flow have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. There are limitations to using non-GAAP financial measures, including that amounts presented in accordance with our definitions of Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Free Cash Flow may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Free Cash Flow in the same manner. Because of these limitations, you should consider Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Free Cash Flow alongside other financial performance measures, including, as applicable, net income (loss) and net cash provided by (used in) operating activities, and our other GAAP results. We present Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Free Cash Flow because we consider these metrics to be important supplemental measures of our performance and we believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors' understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations.

The following table presents our Adjusted EBITDA and Free Cash Flow amounts:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Unaudited Pro Forma<br>Combined** | **Unaudited Pro Forma<br>Combined** | **Historical** | **Historical** | **Historical** | **Historical** | **Historical** | **Historical** |
|  | | | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |
| *(in thousands)* | **Fiscal<br>Year 2021** | **Nine<br>Months<br>Ended<br>October 1,<br>2022** | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | **Nine<br>Months<br>Ended**<br>**October 1,<br>2022** | **Nine<br>Months<br>Ended**<br>**October 2,<br>2021** |
|  Adjusted EBITDA | $244035 | $222560 | $223379 | $59496 | $118170 | $13989 | $222560 | $166286 |
|  Adjusted EBITDA Margin | 19.0% | 20.8% | 18.6% | 7.1% | 12.5% | 5.4% | 20.8% | 19.4% |
|  Free Cash Flow | $N/A | $N/A | $135218 | $10741 | $37859 | $(23263) | $37009 | $122559 |

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*Adjusted EBITDA, Adjusted EBITDA Margin, and Pro Forma Adjusted EBITDA* 

We define Adjusted EBITDA as net income (loss) before interest expense, income tax (benefit) expense, and depreciation and amortization, adjusted to exclude (loss) gain on extinguishment of debt, equity-based compensation expense, non-cash occupancy-related costs, pre-opening expenses, store closing expenses, executive transition costs, shared service center transition costs, certain COVID-19 related costs and benefits, transaction costs, management fees, and certain other adjustments. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales. We define Pro Forma Adjusted EBITDA as Adjusted EBITDA after giving effect to the Transactions, as illustrated within the section titled "Unaudited Pro Forma Condensed Combined Financial Information." Pro Forma Adjusted EBITDA does not necessarily reflect the results of operations of the acquired businesses as if they had

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been acquired at the beginning of each such period presented. Adjusted EBITDA and Adjusted EBITDA Margin are considered non-GAAP financial measures under the SEC's rules and regulations because they exclude certain charges included in net income (loss) calculated in accordance with GAAP.

Management believes that Adjusted EBITDA, Adjusted EBITDA Margin and Pro Forma Adjusted EBITDA are meaningful measures to share with investors because they best allow comparison of the performance of one period with that of another period. In addition, Adjusted EBITDA, Adjusted EBITDA Margin and Pro Forma Adjusted EBITDA afford investors a view of what management considers its operating performance to be and the ability to make a more informed assessment of such operating performance as compared with that of the prior period.

The following table provides a reconciliation of net income (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA, Adjusted EBITDA Margin and Pro Forma Adjusted EBITDA:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Unaudited Pro<br>Forma Combined** | **Unaudited Pro<br>Forma Combined** | **Historical** | **Historical** | **Historical** | **Historical** | **Historical** | **Historical** |
|  | | | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |
| *(in thousands)* | **Fiscal<br>Year 2021** | **Nine<br>Months<br>Ended<br>October 1,<br>2022** | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | **Nine<br>Months<br>Ended<br>October 1,<br>2022** | **Nine<br>Months<br>Ended<br>October 2,<br>2021** |
|  Net income (loss) | $46974 | $39842 | $83394 | $(63483) | $1381 | $239616 | $58286 | $55656 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | 94721 | 70124 | 53565 | 69678 | 58003 | 20784 | 45855 | 40591 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax (benefit) expense | (24187) | 22647 | (5529) | 4060 | 4437 | 5256 | 28472 | 8340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 50149 | 40110 | 47385 | 59432 | 32391 | 18837 | 40110 | 33972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on extinguishment of debt <sup>(1)</sup> | 47541 | 1023 | 47541 |  |  | (283241) | 1023 | 47541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense<sup>(2)</sup> | 732 | 1081 | 732 | 354 | 211 | 315 | 1081 | 547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-cash occupancy-related costs<sup>(3)</sup> | 497 | 623 | 228 | 11778 | 1756 | (91) | 623 | (389) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease intangible asset expense<sup>(4)</sup> |  | 6507 |  |  |  |  | 6507 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pre-opening expenses<sup>(5)</sup> | 2068 | 3708 | 1628 | 1458 | 1222 |  | 3708 | 210 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Store closing expenses<sup>(6)</sup> | 397 | 1794 | 397 | 10315 | 6400 | 5272 | 1794 | (751) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Executive transition costs<sup>(7)</sup> | 420 | 1124 | 420 | 655 |  |  | 1124 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shared service center transition costs<sup>(8)</sup> | 181 | —  | 181 | 358 |  |  |  | 181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; COVID-related adjustments<sup>(9)</sup> | (29488) | —  | (21367) | (31820) |  |  |  | (21359) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transaction costs<sup>(10)</sup> | 20514 | 4306 | 12604 |  | 3890 | 9443 | 4306 | 4506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management fees<sup>(11)</sup> | 492 |  |  |  |  |  |  |  |

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Unaudited Pro<br>Forma Combined** | **Unaudited Pro<br>Forma Combined** | **Historical** | **Historical** | **Historical** | **Historical** | **Historical** | **Historical** |
|  | | | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |
| *(in thousands)* | **Fiscal<br>Year 2021** | **Nine<br>Months<br>Ended<br>October 1,<br>2022** | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | **Nine<br>Months<br>Ended<br>October 1,<br>2022** | **Nine<br>Months<br>Ended<br>October 2,<br>2021** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend-related bonus payments<sup>(12)</sup> | 30070 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other adjustments<sup>(13)</sup> | 2954 | 29671 | 2200 | (3289) | 8479 | (2202) | 29671 | (2759) |
|  Adjusted EBITDA | $244035 | $222560 | $223379 | $59496 | $118170 | $13989 | $222560 | $166286 |
|  *Net income (loss) margin* | 3.7% | 3.7% | 6.9% | (7.6)% | 0.1% | 92.2% | 5.4% | 6.5% |
|  *Adjusted EBITDA Margin* | 19.0% | 20.8% | 18.6% | 7.1% | 12.5% | 5.4% | 20.8% | 19.4% |

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(1) Removes the effects of the loss on debt extinguishment in relation to the April 2021 Refinancing, the gain on debt
extinguishment associated with the March 2019 Transactions, and the loss on debt extinguishment in relation to the repayment of a mortgage loan on January 6, 2022.

(2) Equity-based compensation expense represents non-cash compensation expenses
related to stock options granted to certain of our employees and directors.

(3) Includes the difference between cash and straight-line rent for all periods. The increase in non-cash occupancy-related costs in fiscal year 2020 relates to operating leases renegotiated during the pandemic, which allowed us to defer payment toward future periods. Pro Forma Adjusted EBITDA gives further
effect to non-cash occupancy-related costs incurred by 2nd Ave. prior to the 2nd Ave. Acquisition.

(4) In connection with the March 2019 Transactions and the 2nd Ave. Acquisition, the Company recorded intangible assets
and liabilities for acquired lease contracts. Following the adoption of ASC 842, *Leases* ("ASC 842"), on January 2, 2022, the incremental value represented by these assets is classified as a component of right-of-use
lease assets on the Company's consolidated balance sheet, with the related amortization included within lease expense. Prior to the adoption of ASC 842, amortization related to the acquired lease intangible assets was classified in
depreciation and amortization on the Company's consolidated statement of operations.

(5) Pre-opening expenses include expenses incurred in the preparation and opening of
new store and processing locations, such as payroll, training, travel, occupancy, and supplies.

(6) Costs associated with the closing of certain retail locations, including lease termination costs, amounts paid to third
parties for rent reduction negotiations, fees paid to landlords for store closings, and, in some instances, income associated with early lease terminations.

(7) Represents severance costs associated with executive leadership changes and the 2nd Ave. Acquisition.

(8) Represents severance costs associated with the opening of our new shared service center in Boise, Idaho during fiscal
year 2021 and fiscal year 2020.

(9) Represents benefits, net of costs, received in connection with the COVID-19 pandemic during fiscal year 2020, including wage subsidies and severance costs. During fiscal year 2021, we received wage subsidies of $21.7 million and incurred $0.2 million in severance costs. During fiscal year 2020, we received
$32.6 million in wage subsidies and incurred $0.8 million in severance costs. Wage subsidies are reflected as a reduction to employee personnel costs in our Consolidated Statements

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of Operations and Comprehensive Income (Loss). Pro Forma Adjusted EBITDA for fiscal year 2021 is further adjusted to remove $8.1 million of income associated with the forgiveness of Paycheck Protection Program Loans reflected in the historical financial information of 2nd Ave.

(10) Adjustments to the nine months ended October 1, 2022 and October 2, 2021 represent transaction costs related to this
offering and the 2nd Ave. Acquisition, including third-party advisor and consulting fees, legal costs, and other transaction-related expenses. Adjustments to the period from March 28, 2019 to December 28, 2019 and the period from
December 30, 2018 to March 27, 2019 represent costs associated with the March 2019 Transactions, including employee bonuses, third-party advisor and consulting fees, and other transaction-related expenses, which are partially offset by
accrued interest forgiven by certain of our former lenders. The benefit from accrued interest forgiven by certain of our former lenders is reflected as a reduction in Adjusted EBITDA in the period from December 30, 2018 to March 27, 2019.
Pro Forma Adjusted EBITDA is further adjusted for transaction costs incurred by 2nd Ave. in connection with the 2nd Ave. Acquisition.

(11) Represents management fees paid by 2nd Ave. to its previous owner prior to the 2nd Ave. Acquisition, which will not occur
in the future.

(12) In connection with the December 2022 Dividend and the Notes Offering, the Company paid employee bonuses of
$6.5 million and $23.6 million, respectively, which are reflected as an expense in the unaudited pro forma condensed combined statement of operations for fiscal year 2021.

(13) Other adjustments include foreign exchange gains and losses in each of the historical periods. Fiscal year 2021 is
further adjusted for amortization related to the fair value step-up of inventory related to the 2nd Ave. Acquisition. During the nine months ended October 1, 2022, we incurred $26.0 million of foreign
exchange losses, which are classified within other adjustments.

*Free Cash Flow* 

We define Free Cash Flow as net cash provided by (used in) operating activities less purchases of property and equipment. Free Cash Flow is considered a non-GAAP financial measure under the SEC's rules and regulations because it excludes purchases of property and equipment calculated in accordance with GAAP. Management believes that Free Cash Flow, which measures the ability to generate additional cash from business operations, is an important financial measure for use in evaluating the company's financial performance and ability to reduce debt, fund acquisitions and fund growth initiatives.

The following table provides a reconciliation of net cash provided by (used in) operating activities, the most directly comparable GAAP financial measure, to Free Cash Flow:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |
| **(in thousands)** | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | **Nine months<br>ended<br>October 1,**<br>**2022** | **Nine months<br>ended<br>October 2,**<br>**2021** |
|  Net cash provided by (used in) operating activities | $175762 | $29913 | $61985 | $(18039) | $117633 | $145886 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of property and equipment <sup>(1)</sup> | (40544) | (19172) | (24126) | (5224) | (80624) | (23327) |
|  Free Cash Flow | $135218 | $10741 | $37859 | $(23263) | $37009 | $122559 |

---

(1) Purchases of property and equipment include capital expenditures on our retail stores, CPCs and facilities, including
leasehold improvements and information technology equipment.

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**RISK FACTORS** 

*A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, including the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes, before making a decision to invest in our common stock. Our business, results of operations, financial condition, and prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe to be material. If any of the risks actually occur, our business, results of operations, financial condition and prospects could be harmed. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.* 

**Risks Relating to Our Business and Industry** 

***If we fail to obtain a sufficient quantity of new and recurring quality secondhand items at attractive prices, our business, results of operations and financial condition could be harmed.***

The quality and quantity of the supply of our secondhand items are critically important drivers of our sales generated per pound of goods processed, which we internally refer to as "sales yield." If we are unable to achieve a favorable sales yield with a sufficient quantity of goods obtained at attractive prices, our profitability will suffer. Our business model is based on sourcing from and selling to the local community, so our business is dependent on our ability to obtain quality secondhand items at attractive prices from sources in each community we operate in.

To the extent we are required to pay higher prices to our NPPs for secondhand items, our profitability will be directly negatively affected. The pricing of secondhand items may be dependent on factors such as the volume of items donated to our NPPs (which may fluctuate due to factors outside of our control), our ability to negotiate, maintain and grow our relationships with our NPPs and competition for secondhand items from other potential purchasers of secondhand items. As a result, if we are required to pay higher prices for secondhand items, our profitability will be reduced.

Furthermore, the quality of items we receive (either directly from our NPPs or through OSDs) is critical to our sales yield and profitability. To the extent the items supplied to us are lower in quality or are worse in condition, fewer of those items may be graded in our processing centers as saleable at retail; the price points they will be able to obtain may be lower; and fewer of those items may be seen as desirable by our customers and actually be sold at retail. Lower item quality could result in markdowns and other promotions in our retail stores and a greater proportion of items sold at wholesale. The sales prices we receive for items sold to our wholesale customers for reuse and repurposing are lower than those we receive for items sold at retail. As a result, lower item quality could have a material and adverse effect on our ability to generate revenue from retail sales.

Finally, to the extent we do not obtain a sufficient quantity of quality secondhand items, we will not be able to provide our customers with a sufficient quantity of items they perceive as desirable. Because many of our customers desire a treasure hunt experience at our stores, a decline in the amount of desirable items could have a negative effect on their shopping experience and could have a negative impact on the number of store visits and purchase volumes of our existing customers as well as on our ability to attract new customers.

As a result, the failure to obtain a sufficient quantity of quality items at attractive prices could negatively impact our sales yield, revenues and profitability and could have a material, adverse effect on our business, financial condition and results of operations.

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***Our ability to obtain a sufficient quantity of quality secondhand items at attractive prices is dependent on maintaining our strong relationships with existing NPPs, maintaining and growing OSDs and developing new relationships in the areas in which we operate.***

Our ability to cost-effectively obtain quality secondhand items is dependent on maintaining strong relationships with our existing NPPs, maintaining and growing OSDs and developing relationships with new NPPs and their donors. Numerous factors, however, may impede our ability to maintain and develop relationships with NPPs and their donors with quality secondhand items. Additionally, we generally do not have long term supply agreements with our NPPs. To expand our base of secondhand items for sale and our base of NPPs, we must appeal to and engage NPPs new to selling secondhand items and individuals new to donating secondhand items to our NPPs through OSDs. We cannot be certain that these efforts will result in more supply of quality secondhand items or that these efforts will be cost-effective.

In addition, as we expand our operations, because our business model is focused locally, we will be required to expand or develop relationships with NPPs and donors who make OSDs in and around those locations. If we are unable to develop and maintain those new relationships, our ability to grow our business will be negatively impacted.

Our efforts to appeal to NPPs and donors may not result in more supply of quality secondhand items, and these efforts may not be cost-effective. Our ability to obtain new and recurring quality secondhand items from new and existing NPPs and their donors depends on a number of factors, such as our ability to enhance and improve our Community Donation Centers, NPPs' perceptions of whether payouts they are receiving are adequate, timely compensation for their items, and our reputation. Our ability to increase OSDs is dependent in large part on the convenience to donors of making a donation at one of our stores (which can be driven in large part by store location) and the quality of the donors' donation experience, including the quality and selection of the NPPs to which they can donate their items. If we are unable to meet the expectations of our NPPs and their donors and drive repeat supply, the quality and volume of the secondhand items we receive could be adversely affected.

In addition, due to economic uncertainties, governmental orders, the ongoing COVID-19 pandemic, other similar events or other challenges, our NPPs may be unable to obtain donated items for delivered supply or may be unable or unwilling to continue supplying secondhand items on terms or in quantities desirable to us. Furthermore, such uncertainties, restrictions or events could have a negative impact on donors' ability or willingness to make OSDs.

If we are unable to obtain a sufficient volume of quality secondhand items, our sales revenue from secondhand items would be materially and adversely affected, which would have a material, adverse effect on our business, growth prospects, results of operations and financial condition.

***We are subject to risks associated with sourcing and processing of secondhand items, including processing costs and capacity, risks due to damage, loss or contamination of items, increased costs to maintain and/or develop sources of supply, and risks associated with itemizing, grading, storage, transportation and other logistics.***

The secondhand items we offer at retail through our stores and at wholesale in domestic and global resale markets are initially sourced through our NPPs either directly or through OSDs at our stores. As a result, we are subject to fluctuations in the price we pay for secondhand items. In addition, the cost of merchandise sold may increase due to increases in labor costs, transportation costs and costs of storage, which may be driven by market forces outside our control, such as rising inflation. Furthermore, to the extent that the volume of secondhand items we obtain in a particular locality exceeds our capacity to process or store them, our ability to generate revenue in that locality will be limited by that capacity constraint. Our business, financial condition and results of operations could be negatively impacted by these cost and capacity issues.

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Furthermore, the secondhand items we receive may not be of sufficient quality or free from damage, and such secondhand items may be damaged during shipping or processing. While we conduct inspections of secondhand items in our inventory, we cannot control items while they are out of our possession or prevent all damage while in our processing facilities. For example, we may experience contamination from various sources, such as mold, bacteria, insects and other pests, in certain secondhand items provided to us. If we are unable to detect, quarantine and properly deal with such contaminants at the time such secondhand items are initially received in our stores or in our processing facilities, some or all of the other secondhand items in such facilities could be contaminated. We may incur additional expenses and our reputation could be harmed if the secondhand items we offer are damaged or contain contaminants.

We may also experience increased costs to attract, retain and grow relationships with our NPPs. If we are unsuccessful in establishing or maintaining our relationships with our NPPs, or if they partner with our competitors and devote greater resources to implement and support the platforms or retail items of our competitors, our ability to compete in the marketplace, or to grow our revenue, could be impaired, and our results of operations may suffer.

***Our business depends on our ability to attract and retain suitable workers for our stores and processing facilities and to manage labor costs, particularly given recent disruptions in the supply and cost of labor.***

Our future growth and performance, positive customer experience and legal and regulatory compliance depends on our ability to attract, develop, retain and motivate a large number of highly qualified store management personnel, processing employees and team members. Our team members in our processing facilities must efficiently and accurately sort and price many of our secondhand items for sale in our stores.

Our ability to meet our labor needs, while controlling labor costs in a labor market challenged by historically high rates of employee turnover, labor shortages and rising wage rates, is subject to many external factors, including competition for and availability of qualified personnel particularly during the ongoing COVID-19 pandemic, unemployment levels, governmental regulatory bodies such as the Equal Employment Opportunity Commission and the National Labor Relations Board, prevailing wage rates in the jurisdictions in which we operate (including the heightened possibility of increased applicable minimum wage rules and regulations), the impact of wage inflation, health and other insurance costs, changes in employment and labor laws or other workplace regulations (including those relating to employee benefit programs such as health insurance and paid leave programs), our ability to maintain good relations with our team members, employee activism, and our reputation and relevance within the labor market. Inflation has risen worldwide and the United States has recently experienced historically high levels of inflation. If the inflation rate continues to increase, it could also push up the costs of labor and our employee compensation expenses. Continued wage inflation could increase our operating costs, and there can be no assurance that our revenues will increase at the same rate to maintain the same level of profitability. In addition, to the extent unemployment assistance and other similar benefits are enhanced or extended by governmental agencies in the jurisdictions in which we operate (including in connection with the COVID-19 pandemic), such enhancements or extensions could have a negative effect on the supply of qualified workers.

Recently, we have incurred higher wage rates for our employees. We expect that our labor costs, including wages and employee benefits, will continue to increase. We have taken certain price increases to, among other things, address labor costs. Unless we are able to pass on these increased labor costs and other increased costs to our customers by increasing prices for our products, our profitability and results of operations may be materially and adversely affected.

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We compete with other retail businesses for many of our store management personnel and sales team members in hourly and part-time positions. These positions have had historically high turnover rates, which can lead to increased training and retention costs. In addition, we compete with retail business and warehouse operations for employees in our processing facilities, which are growing quickly and competing aggressively for additional labor. If we are unable to attract and retain quality employees and other management personnel, or fail to comply with the regulations and laws impacting personnel, our operations, processing efficiency, customer service levels, legal and regulatory compliance, and support functions could suffer, resulting in a material adverse effect on our business, financial condition and results of operations.

In addition, to the extent a significant portion of our employee base unionizes, or attempts to unionize, our labor and other related costs could increase. Our ability to pass along labor and other related costs to our customers is constrained by our everyday low-price model, and we may not be able to offset such increased costs elsewhere in our business.

***Our continued growth depends on attracting new, and retaining existing, customers, including by increasing the acceptance of thrift among new and growing customer demographics.***

To expand our customer base, we must appeal to and attract customers who do not typically purchase secondhand items, who have historically purchased only new retail items or who used other means to purchase secondhand items, such as other consignment and thrift stores or the websites of secondary marketplaces. We reach new customers through paid search, social media, influencers, advertising, other paid marketing, press coverage, retail locations, referral programs, organic word of mouth and other methods of discovery, such as converting our NPPs' donors to customers. We expect to continue investing in these and other marketing channels in the future and cannot be certain that these efforts will enable us to attract and retain more customers, result in increased purchase frequency or increased basket sizes from our customers or be cost-effective. In addition, successful growth requires us to find appropriate store locations tailored to consumer demographics in our targeted market areas. Our ability to attract and retain customers also depends on our ability to offer a broad selection of desirable and quality secondhand items in our stores, our ability to consistently provide high-quality customer experiences and our ability to promote and position our brands and stores. Our investments in marketing may not effectively reach potential customers and existing customers, potential customers or existing customers may decide not to buy through us or the spend of customers that purchase from us may not yield the intended return on investment, any of which could negatively affect our results of operations. Moreover, consumer preferences may change, and customers may not purchase through our stores as frequently or spend as much with us as historically has been the case. As a result, the revenue generated from customer transactions in the future may not be as high as the revenue generated from transactions historically. Consequently, failure to attract new customers and to retain existing customers could harm our business, results of operations and financial condition.

***Both supply of and demand for our products is influenced by general economic conditions, including trends in consumer spending.***

Our business and results of operations are subject to global economic conditions, conditions in the markets in which we operate and their impact on consumer discretionary spending, particularly in the retail market. Some of the factors that may negatively influence consumer spending on retail items include high levels of unemployment, high consumer debt levels, a prolonged economic downturn or acute recession, fluctuating interest rates and credit availability, fluctuating fuel and other energy costs, fluctuating commodity prices, other inflationary pressures and general uncertainty regarding the overall future political and economic environment. Economic conditions in particular regions may also be affected by natural disasters, such as earthquakes, hurricanes and wildfires; unforeseen public health

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crises, such as pandemics and epidemics, including the ongoing COVID-19 pandemic; political crises, such as terrorist attacks, war and other incidents of political or social instability or other catastrophic events, whether occurring in the United States, Canada or internationally, such as the ongoing conflict between Russia and Ukraine. The presence or absence of government stimulus funding programs has had and may continue to have an impact on consumer discretionary spending and, consequently, purchases at our stores.

Traditionally, consumer purchases of new retail items have declined and secondhand markets have grown during periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence. Nevertheless, we cannot guarantee that our customers will continue to visit our stores and buy our items if economic conditions worsen. On the other hand, economic upswings could increase the rate of new retail purchases in the primary market and slow the rate at which individuals choose to shop in the secondhand market, thereby decreasing our revenue.

Furthermore, fluctuations in economic and other conditions could also negatively impact the rate at which individuals choose to donate their secondhand items to our NPPs. To the extent that donors have lower actual or perceived wealth or economic security, donors may be less willing or able to donate items to our NPPs (either directly or through OSDs). The constriction of supply of secondhand items could increase the price we must pay for items and could also reduce the quality and quantity of items we are able to purchase for sale in our stores, which would adversely affect our revenues, profitability and sales yields.

As a result, general economic and other conditions could have a material and adverse effect on our business, results of operation and financial condition.

***We have experienced rapid growth, and those growth rates may not be indicative of our future growth. If we fail to manage our growth effectively, we may be unable to execute our business plan and our business, results of operations and financial condition could be harmed.***

We have experienced rapid growth in certain recent periods, and may continue to experience rapid growth in future periods, which has placed, and may continue to place, significant demands on our management and our operational and financial resources. We have also experienced significant growth in the number of customers using our stores in certain periods, despite a reduction in total days our stores were open during 2020 and growth rates that were impacted by the COVID-19 pandemic. Additionally, our organizational structure is becoming more complex as we scale our operational, financial and management controls as well as our reporting systems and procedures.

To manage growth in our operations and the growth in our number of customers, we will need to continue to grow and improve our operational, financial and management controls and our reporting systems and procedures. We will also need to actively and carefully manage the expansion of our store footprint through a targeted real estate strategy. We will need to maintain or increase the automation of our processing facilities (including our CPCs) and continue to improve how we apply data science to our operations. Our expansion has placed, and our expected future growth will continue to place, a significant strain on our management, marketing, operations, administrative, legal, financial, customer support, engineering and other resources. If we fail to manage our anticipated growth and change in a manner that preserves the key aspects of our corporate culture, our employee morale, productivity and retention could suffer, which could negatively affect our brands and reputation and harm our ability to attract new customers and to grow our business. In addition, future growth, such as the potential further expansion of our operations internationally or expansion into new categories of offerings, either organically or through acquisitions, would require significant capital expenditures, which could adversely affect our results of operations, and the allocation of valuable management resources to grow and change in these areas.

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In future periods, we may not be able to sustain or increase revenue growth rates consistent with recent history, or at all. We believe our success and revenue growth depends on a number of factors, including, but not limited to, our ability to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• generate a sufficient amount of new and recurring quality secondhand items at an attractive price by maintaining our strong
relationships with existing NPPs, maintaining and growing OSDs and developing new relationships in the areas in which we operate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• attract and retain suitable workers for our stores and processing facilities and manage labor costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• attract new, and retain existing, customers, including by increasing the acceptance of thrift among new and growing
customer demographics;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increase awareness of our brands;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• maintain a high level of customer service and satisfaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• anticipate and respond to changing market preferences;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• anticipate and respond to macroeconomic changes generally, including changes in the markets for both new and secondhand
retail items;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• identify and obtain suitable locations for new stores and facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adapt to changing conditions in our industry and related to the COVID-19 pandemic
and measures implemented to contain its spread;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• improve, expand and further automate our CPC operations, information systems and stores;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• effectively scale our operations while maintaining high-quality service and customer satisfaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• successfully compete against established companies and new market entrants, including national retailers and brands, other
consignment and thrift stores and online resale platforms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• avoid or manage interruptions in our business from information technology downtime, cybersecurity breaches and other
factors that could affect our physical and digital infrastructure; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• comply with regulations applicable to our business.

If we are unable to accomplish any of these tasks, our revenue growth may be harmed. We also expect our operating expenses to increase in future periods, and if our revenue growth does not increase to offset these anticipated increases in our operating expenses, our business, results of operations and financial condition will be harmed, and we may not be able to maintain profitability.

***We may not be able to identify and obtain suitable locations for new stores as we grow our business. The success of each store location is dependent on a number of factors, including site suitability, our ability to negotiate appropriate store leases, customer traffic and convenience and proximity to NPPs and their donors, customers, suitable workers and our processing facilities.***

Our business strategy requires us to find appropriate store and processing facility sites in our targeted market areas. We compete with other retailers and businesses for acceptable locations for our stores and other facilities. For the purpose of identifying suitable locations we rely, in part, on information regarding the demographics of the local areas, both with respect to potential customers and potential donors. While we believe demographics are helpful indicators of favorable locations, we recognize that this information cannot predict future consumer preferences and buying trends with

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complete accuracy. We also rely on other factors such as proximity to potential and existing NPPs and their donors, our CPCs and suitable workers. Time frames for negotiations and store development vary from location to location and can be subject to unforeseen delays or unexpected cancellations.

We lease all of our locations. While locations that source product through a CPC do not require on-site production facilities, currently, most of our locations have processing facilities on-site. To the extent a location requires an on-site processing facility, the location will have specific requirements as to size, layout and physical facilities that may not be available widely in the local area. To the extent suitable store and other locations are unavailable, whether due to large scale redevelopment of shopping centers or otherwise, we may experience difficulties entering into new leases on favorable terms. The failure to secure new locations for our stores and other facilities could have a material and adverse effect on our ability to grow and maintain our business.

Our store leases are generally for extended terms with a typical initial term of 10 years, and we had an average remaining term of obligation of 62 months as of January 1, 2022. The majority of our leases contain provisions for base rent and a small number of our leases contain provisions for base rent plus percentage rent based on sales in excess of an agreed upon minimum annual sales level. We may not be able to terminate a particular lease if or when we would like to do so, which could prevent us from closing or relocating certain underperforming locations. If we decide to close locations, we generally are required to continue paying rent and operating expenses for the balance of the lease term, and the performance of any of these obligations may be expensive. When we assign or sublease vacated locations, we may remain liable on the lease obligations for the rent differential or if the assignee or sub-lessee does not perform. Accordingly, we are subject to the risks associated with leasing locations, which can have a material and adverse effect on us.

If we are unable to renew, renegotiate or replace our leases or enter into leases for new locations on favorable terms, our growth and profitability could be harmed, which could have a material and adverse effect on our business, financial condition and results of operations.

We are also required to make significant lease payments for our existing leases, which may strain our cash flow. We depend on net cash provided by operating activities to pay our lease expenses and to fulfill our other cash needs. If our business does not generate sufficient cash provided by operating activities, and sufficient funds are not otherwise available to us from borrowings under our credit facilities or from other sources, we may not be able to service our lease expenses, grow our business, respond to competitive challenges or fund our other liquidity and capital needs, which would harm our business.

***Some of our stores may have challenges achieving period-to-period comparable store sales growth targets due to various factors outside our control, including availability of quality secondhand items, availability of suitable workers, site suitability, lease terms and conditions, operational risks and regional growth and development patterns.***

Because each store seeks to sell secondhand goods that are sourced locally to customers in its local area, each store's results may fluctuate from one period to the next. While we seek to grow comparable store sales, various factors (many of which are outside our control) may negatively impact each store's ability to meet our comparable store sales targets. These factors include (among others):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• COVID-related or other government-imposed operational restrictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the availability of quality secondhand items;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the availability of suitable workers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in or termination of store and facility leases;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the economy or demographics of the local area or region;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in weather or climate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of natural disasters, cyber-attacks, social unrest or terrorist incidents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in our relationships with local NPPs and the local community of donors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the timing and extent of promotional and advertising efforts; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• holidays or seasonal periods.

If our future year to year store sales growth fails to meet expectations, then our cash flow and profitability could decline substantially, which could have a material adverse effect on our business, financial condition and results of operations.

***We have significant foreign operations, particularly in Canada, so we are subject to risks specific to operating in these jurisdictions and are also exposed to exchange rate risks, which we may not be able to fully hedge.***

As of October 1, 2022, we operated 150 stores in Canada and 10 stores in Australia. Our operations in these non-U.S. jurisdictions require us to understand the retail climate and trends, customs and cultures, seasonal differences, business practices and competitive conditions in those jurisdictions. We are also required to familiarize ourselves with the laws, rules, regulations and government of each of those jurisdictions. Operations in each jurisdiction also require us to develop the appropriate in-country infrastructure, identify suitable partners for local operations and successfully integrate operations in that jurisdiction with our overall operations while effectively communicating and implementing company policies and practices. There are also financial, regulatory and other risks associated with international operations, including currency exchange fluctuations, potentially adverse tax and transfer pricing considerations, limitations on the repatriation and investment of funds outside of the country where earned, trade regulations, the risk of sudden policy or regulatory changes, the risk of political, economic and civil instability and labor unrest and uncertainties regarding interpretation, application and enforceability of laws and agreements. Any of these risks could adversely impact our operations, profitability or liquidity.

With respect to our Canadian operations, among other data privacy requirements, the Personal Information Protection and Electronic Documents Act ("PIPEDA") and various provincial laws require that companies give detailed privacy notices to consumers, obtain consent to collect, use and disclose personal information, with limited exceptions, allow individuals to access and correct their personal information and report certain data breaches. In addition, Canada's Anti-Spam Legislation ("CASL") or provincial privacy or data protection laws could result in significant fines and penalties or possible damage awards.

In addition our Canadian and Australian operations use a functional currency other than the U.S. dollar. In fiscal year 2021, 44.3% of our net sales were derived from markets outside the United States. We are exposed to currency translation risk because the results of our international businesses in some countries are generally reported in local currency, which we then translate to U.S. dollars we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results.

***The global COVID-19 pandemic and the government's responses in the jurisdictions in which we operate has had and may continue to have an unpredictable and adverse impact on our business, results of operations and financial condition, and similar events may have such effects in the future.***

Some of our operations and financial performance since early 2020 have been negatively impacted by the COVID-19 pandemic that has caused, and may continue to cause, a slowdown of

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economic activity, disruptions in global supply chains, and significant volatility in financial markets. As the COVID-19 pandemic continues to affect economic activity globally or in various regions, the extent to which this will adversely impact our future operations and financial performance is uncertain. We have experienced, and may continue to experience, operational challenges from personnel absences, temporary closures of our stores, offices and processing facilities, further or ongoing reduced capacity at those locations, decreased foot traffic at and/or closure of our stores and a decrease or volatile patterns in spending on retail in general. Furthermore, developing various responses to the challenges caused by COVID-19 and its effects has and may continue to divert the attention of our management team. For example, in March 2020, due to the progression of COVID-19 in areas where we operate and have corporate offices, we temporarily closed our corporate offices and all of our locations in the United States and Canada for a period of time to slow the spread of COVID-19, protect our team members and comply with certain local regulations. Later in 2020, all of our stores in Australia and stores elsewhere in our network were closed for similar reasons.

The continued impact of COVID-19 on the global slowdown in economic activity may heighten other risks disclosed in this prospectus. Public health concerns, such as COVID-19, could also result in social, economic and labor instability in the localities in which we or our customers and NPPs and their donors reside. Such instability and concerns could negatively impact the amount and quality of donations to our NPPs (whether directly provided to us by NPPs or through OSDs) and could also negatively impact our customers' willingness to shop at our stores, which would negatively impact our revenues and sales yields.

The effects of COVID-19 pandemic and related public health restrictions had a significant negative impact on our net sales and pounds processed during fiscal year 2021 and fiscal year 2020, respectively. Our retail stores were closed for a substantial portion of 2020 due to public health restrictions enacted during the pandemic, which resulted in lower store traffic and retail sales volume. In addition, due to the closure of our retail locations during the pandemic, we accepted fewer donations made to our NPPs at our Community Donation Centers.

The ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control. Any of these uncertainties and actions we take to mitigate the effects of COVID-19 and uncertainties related to COVID-19 could harm our business, results of operations and financial condition. We face similar risks with respect to any worsening of the COVID-19 pandemic, the spread of any variants of COVID-19, and any future outbreaks of disease. See the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations—COVID-19 Update" for additional information about the impact of COVID-19 on our business.

***We may not be able to expand our CPC operations in geographic regions that enable us to effectively scale our operations.***

To grow our business, we must continue to improve and expand our CPC operations, proprietary systems, equipment and related technology. We must also staff our CPCs with suitable workers in each of the localities we wish to service. Our CPC operations are complex and require the coordination of multiple functions that are highly dependent on numerous qualified employees and personnel working as a team. Each item that we process requires multiple touch points, including categorization, inspection, grading, pricing and delivery to our store locations. This process is complex and, from time to time, we may have more secondhand items arriving from our NPPs and their donors than we can timely process.

As we grow our CPC operations, we expect that the number of employees in our CPCs will increase significantly in the near term, particularly as and when concerns and restrictions due to

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COVID-19 abate. The market for these employees is increasingly competitive and is highly dependent on geographic location. We could be required to raise wages or introduce other compensation incentives to remain competitive, which could increase our costs and harm our results of operations. If we fail to effectively locate, hire and retain such personnel, our ability to continue to implement our CPC strategy could be negatively impacted, which could harm our growth prospects and our business, results of operations and financial condition.

Further, the success of our business depends on our ability to secure additional locations for our CPCs that are able to serve our stores. Space meeting our physical requirements in well-positioned geographic locations is becoming increasingly scarce, and where it is available, the lease terms offered by landlords are increasingly competitive, particularly in geographic locations with access to the large, qualified talent pools required for us to run our logistics infrastructure. Companies who have more financial resources and negotiating leverage than us may be more attractive tenants and, as a result, may outbid us for the facilities we seek. Due to the competitive nature of the real estate market in the locations where we currently operate, we may be unable to renew our existing leases or renew them on satisfactory terms. Failure to identify and secure suitable new CPCs or to maintain our current CPCs could harm our business, results of operations and financial condition.

***If we are unable to successfully leverage technology to automate and drive efficiencies in our operations, our business, results of operations and financial condition could be harmed.***

We are continuing to build automation, machine learning and other capabilities to drive efficiencies in our stores, our CPC operations, our ABP capabilities and other automated processing functions. As we continue to enhance automation and add capabilities, our operations may become increasingly complex. While we expect these technologies to improve productivity in many of our merchandising operations, including processing, itemizing and selling, any flaws, bugs or failures of such technologies could cause interruptions in and delays to our operations, which may harm our business. We are increasing our investment in technology, software and systems to support these efforts, but such investments may not increase productivity, maintain or improve the experience for customers or result in more efficient operations. While we have created our own proprietary technology to operate our business, we also rely on technology from third parties, particularly in our CPCs. If we are no longer able to rely on such third parties, we would be required to either seek licenses to technologies or services from other third parties and redesign aspects of business and operations to function with such technologies or services or develop such technologies ourselves, either of which would result in increased costs and could result in operational delays until equivalent technologies can be licensed or developed and integrated into our business and operations.

***We are subject to various risks to our physical store and processing facility locations, which may adversely affect our business, results of operations and financial condition.***

Our business model is predicated on sourcing from local NPPs and their donors and selling to local customers. As a result, our stores and processing facilities are critical to our operations, and disruptions to those facilities (as well as to our headquarters) could disrupt our business and overall operations.

Our various facilities including our CPCs, may be affected by natural disasters, disease outbreaks, severe weather events or man-made events such as terrorism, labor unrest, social unrest, riots, looting and arson. Our facilities may also be affected by construction defects, damage to the physical structure that requires repair or disruptions in utility service. Any of the above events could severely disrupt our operations, cause harm to our team members and result in damage to or loss of inventory (in a location or regionally).

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Additionally, given the nature of the unique selection of secondhand items we offer in our stores, our ability to restore such secondhand items in our stores would take time, and to the extent any events affecting our stores or other facilities also affect our NPPs or their donors, the supply of goods to our stores may also suffer. As a result, any of these events could result in a limitation and delay of available supply for customers, which would negatively impact our revenue and results of operations. For example, in March 2020 due to the progression of COVID-19 in areas where we operate and have corporate offices, we temporarily closed our corporate offices and all of our locations in the United States and Canada for a period of time to slow the spread of COVID-19, protect our team members and comply with certain local regulations. Later in 2020, all of our stores in Australia and stores elsewhere in our network were closed for similar reasons. In 2021, closures and reductions in operations due to COVID-19 continued in discrete geographical regions where we operate, including, for example, Ontario, Canada. Such reductions in operations and closures have slowed and may in the future slow or temporarily halt our operations and adversely affect our business, results of operations and financial condition.

We are also subject to shrinkage of inventory at our stores and facilities, and if we are unable to control such shrinkage, our sales yields will be negatively affected.

Further, while our property insurance covers certain of our inventory and losses, insurance coverage has become more expensive, which has resulted in increased premiums and deductibles. The insurance we do carry may not continue to be available on commercially reasonable terms and, in any event, may not be adequate to cover all possible losses that our business could suffer. In the event that we suffer a catastrophic loss of any or all of our facilities or the secondhand items in such facilities, our liabilities may exceed the maximum insurance coverage amount, which could adversely affect our business and results of operations.

***A failure to retain key store and processing center management personnel could materially and adversely affect our business.***

Our performance also depends on recruiting, hiring, developing, training, and retaining talented key management personnel for our stores and processing facilities. Similar to other retailers, we face challenges in securing and retaining sufficient talent in key management for many reasons, including competition for talent in the retail industry and in various geographic markets. In addition, because of the distinctive nature of our business model, which emphasizes promotion from within, we must provide significant internal training and development for key management personnel across the company and must effectively manage succession planning. If we do not effectively attract qualified individuals, train them in our business model and operating procedures, support their development, engage them in our business, and retain them in sufficient numbers and at appropriate levels of the organization, our growth could be limited, and the successful execution of our business model could be adversely affected.

***Labor-related matters, including labor disputes, may adversely affect our operations.***

None of our employees are currently represented by a union. If our employees decide to form or affiliate with a union, we cannot predict the effects such future organizational activities will have on our business and operations. If we were to become subject to work stoppages, we could experience disruption in our operations, including increases in our labor costs, which could harm our business, results of operations and financial condition.

In addition, we have in the past and could face in the future a variety of employee claims against us, including but not limited to general discrimination, privacy, wage and hour, labor and employment, Employee Retirement Income Security Act ("ERISA") and disability claims. Any claims could also result

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in litigation against us or regulatory proceedings being brought against us by various federal and state agencies that regulate our business, including the U.S. Equal Employment Opportunity Commission. Often these cases raise complex factual and legal issues and create risks and uncertainties.

***Acquisitions could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our results of operations and expansion prospects.***

We have in the past and may in the future make acquisitions of other companies or technologies. Competition within our industry for acquisitions of businesses (such as the 2nd Ave. Acquisition) may become intense, and we have limited experience in acquisitions. As such, even if we are able to identify a target for acquisition, we may not be able to complete the acquisition on commercially reasonable terms, or such target may be acquired by another company including, potentially, one of our competitors. Negotiations for such potential acquisitions may result in diversion of management time and significant out-of-pocket costs. If we do complete acquisitions, we may not ultimately strengthen our competitive position, realize the benefits from the acquired business or otherwise achieve our goals, and any acquisitions we complete could be viewed negatively by customers, team members, or investors or result in the incurrence of significant other liabilities. We may also not be able to successfully integrate the acquired operations, systems (including financial, inventory, customer and other systems), team members and facilities into our company, and the time and resources spent on such integration could be greater than expected. We may expend significant cash or incur substantial debt to finance such acquisitions, which indebtedness may restrict our business or require the use of available cash to make interest and principal payments. In addition, we may finance or otherwise complete acquisitions by issuing equity or convertible debt securities, which may result in further dilution of our existing stockholders. For example, we spent significant time and resources and incurred a significant amount of debt to finance the 2nd Ave. Acquisition, and expect to spend significant additional resources on integrating the 2nd Ave. operations, including 12 new stores, into our business. Doing so may take more time or use more resources than we expect, and we may not be successful at all in realizing our goals in the transaction. Additionally, the time and resources we spend toward integrating 2nd Ave. operations, systems (including financial, inventory, customer and other systems), team members and facilities may be a significant distraction to successfully growing the rest of our business. If we fail to evaluate and execute acquisitions successfully or fail to successfully address any of these risks, our results of operations and expansion prospects may be harmed.

***We face risks related to acquisitions or joint ventures we may pursue.***

We may in the future seek to acquire businesses, products or technologies that we believe could complement our business, extend our store footprint into new localities, enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated. Any acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In addition, we have limited experience in acquiring other businesses. If we acquire additional businesses, we may not be able to successfully integrate the acquired personnel, operations, systems and technologies, or effectively manage the combined business following the acquisition. Specifically, we may not successfully evaluate or utilize the acquired business, operations, systems, technology or personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges. Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be realized or we may be exposed to unknown risks or liabilities.

We may not be able to find and identify desirable acquisition targets or we may not be successful in entering into an agreement with any one target. Acquisitions could also result in dilutive issuances of

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equity securities or the incurrence of debt, which could harm our results of operations. In addition, if an acquired business fails to meet our expectations, our business, results of operations and financial condition may suffer.

***Actions by wholesale customers could harm our brands and reputation, influence donor behavior and adversely affect our relationships with our NPPs and our customers.***

We believe that our brands and reputation have significantly contributed to the success of our business. Our reputation, brands and ability to build trust with existing and new customers, donors and NPPs may be adversely affected by complaints and negative publicity about us and our merchandise, even if factually incorrect or based on isolated incidents. Our ability to attract and retain customers and maintain or enhance our relationships with NPPs and their donors is highly dependent upon external perceptions of our company, and damage to our brands and reputation may be caused by wholesale customers that improperly use or dispose of the items we sell to them. These and other events that may harm our brands and reputation could diminish the confidence of our customers in our products and shopping experience and could negatively impact the acceptance by our NPPs and their donors of our company and our business model. These risks could have an adverse effect on our business, financial condition and results of operations. Such events could also cause our stockholders to sell or otherwise dispose of a significant number of shares of our common stock, which may have a significant adverse effect on the trading price of our common stock.

***Disruptions in the wholesale markets due to market conditions, conditions in the countries where our wholesale goods are sold or other factors may adversely affect our business.***

Much of the merchandise we purchase from our NPPs is not sold in our stores, but instead is sold into the global wholesale secondhand goods market. We have in the past, and may in the future, experience fluctuations and disruptions in this market. These fluctuations and disruptions could be caused by an influx of inexpensive textiles or other replacement goods that could compete with the secondhand goods we offer. In addition, a change in the end markets in which these goods are sold could affect demand for secondhand goods in the wholesale market. These end markets may be affected negatively by natural disasters, civil unrest, economic conditions or other localized or regional events. Further, changes in laws, rules and regulations in the end markets could also negatively affect demand for or price of secondhand items. If we are unable to sell a sufficient amount of secondhand goods into the wholesale market, our business, our reputation and our revenues, profitability, results of operations and financial condition could be materially and adversely affected.

***Our business could be negatively impacted by a failure to live up to our commitments to, or our failure to appropriately address existing and emerging matters relating to, sustainability and good corporate citizenship and diversity.***

Our company is premised on a focus on sustainability and the reduction of waste in our local communities and in the textile and other industries through thrift, reuse and repurposing. We also seek to maintain good corporate citizenship and continuously strive for a more inclusive and diverse workplace. Our mission is to promote a more sustainable future by making secondhand second nature and positively impacting the communities we operate in. Our company is committed to a focus on sustainability and the reduction of waste in our local communities through thrift, reuse and repurposing. We also seek to maintain good corporate citizenship and continuously strive for a more inclusive and diverse workplace. Our commitment to such matters may require us to devote additional resources in our review of prospective investments and our operations and could increase the amount of expenses we are required to bear, which could lead to reduced profitability. In addition, if incidents occur in which we fail, or are perceived to have failed, to live up to our commitments to sustainability, good corporate citizenship or diversity, or if we fail to accurately report our progress toward such commitments,

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negative publicity with respect to any such incident could discourage our customers from shopping at our stores, causing our net sales to decrease, and could negatively impact our relationships with our NPPs and their donors, causing the quantity and quality of secondhand goods we receive to decrease (and thus negatively impacting our revenues and sales yields). We could also be criticized for the scope of our sustainability, good corporate citizenship or diversity commitments and engagement; or for a perceived lack of sustainability, good corporate citizenship or diversity commitments and engagement; or for any perceived lack of transparency about such matters, which in turn could have a negative impact on stakeholder perception and stakeholder engagement with our business. This may also impact our ability to attract and retain talent to compete in the marketplace. These risks could therefore have a material and adverse effect on our business, results of operations and financial condition.

***The market in which we participate is competitive and rapidly changing, and if we do not compete effectively with established companies as well as new market entrants or maintain and develop strategic relationships with NPPs, our business, results of operations and financial condition could be harmed.***

The markets for resale and secondhand items are highly competitive. We compete with vendors of new and secondhand items, including branded goods stores, local, national and global department stores, consignment and thrift stores (including non-profit operators), specialty retailers, direct-to-consumer, retailers, discount chains, independent retail stores, the offerings of other retail competitors, resale players focused on niche or single categories, as well as internet-based secondhand retailers and other technology-enabled marketplaces. We believe our ability to compete depends on many factors, many of which are beyond our control, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• maintaining favorable brand recognition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• identifying and delivering quality secondhand items;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• maintaining and increasing the amount, diversity and quality of secondhand items that we offer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to expand the means through which we acquire and offer secondhand items for resale;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• attracting and retaining suitable workers for our stores and processing facilities and managing labor costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• attracting donors and retaining relationships with NPPs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ease with which our customers and NPPs and their donors can supply, purchase and return secondhand items;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the price at which secondhand items are offered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the speed and cost at which we can process and make available secondhand items to our customers; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• attracting and retaining customers and increasing the volume of secondhand items they buy.

As our market evolves and we begin to compete with new market entrants, we expect competition to intensify in the future. Established companies may not only develop their own platforms and competing lines of business, but also acquire or establish cooperative relationships with our current competitors or provide meaningful incentives to third parties to favor their offerings over our stores. The performance of our competitors as well as changes in their pricing and promotional policies, marketing activities, new location openings, merchandising and operational strategies could negatively impact our sales and profitability.

Many of our existing competitors have, and some of our potential competitors or potential alliances among competitors could have, substantial competitive advantages such as greater brand name

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recognition and longer operating histories; larger fulfillment infrastructures; greater technical capabilities; internet-based marketplaces; broader supply; established relationships with a larger existing customer and/or NPP and donor base; better access to merchandise; superior or more desirable secondhand items for sale or resale; greater customer service resources; greater financial, marketing, institutional and other resources; greater resources to make acquisitions; lower labor and development costs; larger and more mature intellectual property portfolios; and better access to capital markets than we do. Such competitors with greater financial and operating resources may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements and derive greater revenue and profits from their existing customer bases, adopt more aggressive pricing policies to build larger customer or NPP bases, or respond more quickly than we can to new or emerging technologies and changes in consumer shopping behavior.

If we are unsuccessful in establishing or maintaining our relationships with our NPPs, or if they partner with our competitors and devote greater resources to implement and support the platforms or retail items of our competitors, our ability to compete in the marketplace, or to grow our revenue, could be impaired, and the results of our operations may suffer. Even if these partnerships and any future partnerships we undertake are successful, these relationships may not result in increased buying and selling through our stores or increased revenue.

Conditions in our market could also change rapidly and significantly as a result of technological advancements, partnering by our competitors or continuing market consolidation or strategic changes we or our competitors make in response to the COVID-19 pandemic, and it is uncertain how our market will evolve. These competitive pressures in our market or our failure to compete effectively may result in price reductions, fewer customers and NPPs, reduced revenue, reduced profitability, increased net losses, and loss of market share. Any failure to meet and address these factors could harm our business, results of operations and financial condition.

***National retailers and brands set their own retail prices and promotional discounts on new items, which could adversely affect our value proposition to customers and harm our business, results of operations and financial condition.***

National retailers and brands set pricing for their own new retail items, which can include promotional discounts. For example, there may be reductions in the price of new retail items in light of the economic downturn caused by the COVID-19 pandemic. Promotional pricing by these parties may adversely affect the relative value of secondhand items offered for resale with us. In order to attract customers to our stores, the prices for the secondhand items sold through our stores may need to be lowered in order to compete with pricing strategies employed by national retailers and brands for their own new retail items. These pricing changes and promotional discounts could, as a result, adversely affect our business, revenue, growth, results of operations and financial condition.

***Natural disasters, pandemics, geo-political events and other highly disruptive events could materially and adversely affect our business, financial condition and results of operations.***

The occurrence of one or more natural disasters, such as fires, hurricanes, tornados, tsunamis, floods and earthquakes, geo-political events or terrorist or military activities disrupting transportation, communication or utility systems (such as the ongoing military conflict between Russia and Ukraine) or other highly disruptive events, such as nuclear accidents, public health epidemics or pandemics (such as the ongoing COVID-19 outbreak), unusual weather conditions, widespread supply chain disruptions or cyberattacks, could adversely affect our business operations and financial performance. Such events could result in physical damage to or destruction or disruption of one or more of our properties (including our corporate offices, Centralized Processing Centers, other processing facilities and stores) or properties used by NPPs in connection with the supply of secondhand items to us, negative impacts

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on our team members in parts or all of our operations, supply chain disruptions, data, utility and communications disruptions, fewer customers visiting our stores, including due to quarantines or public health crises and the inability of our customers to reach or have transportation to our stores directly affected by such events. Such events could cause us to incur significant costs to relocate or re-establish these functions and negatively impact our operating results. These events could also negatively impact the willingness of donors to donate items to our NPPs (either directly to our NPPs or through OSDs), which would adversely affect the price, quantity and quality of secondhand items we are able to purchase. In addition, these events could cause a temporary reduction in consumer sales or the ability to sell our items or could indirectly result in increases in the costs of our insurance if they result in significant loss of property or other insurable damage. These factors could also cause reputational harm, decreased consumer confidence and spending and/or increased volatility in the United States, Canada and global financial markets and economies. Any of these developments could have a material and adverse effect on our business, financial condition and results of operations.

***Our advertising activity may fail to efficiently drive growth in customers, which could harm our business, results of operations and financial condition.***

Our future growth and potential profitability will depend in large part upon the effectiveness and efficiency of our advertising, promotion, public relations and marketing programs, and we are investing in these activities. Our advertising activities may not yield increased revenue and the efficacy of these activities will depend on a number of factors, including our ability to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• determine the effective creative message and media mix for advertising, marketing and promotional expenditures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• select the right markets, media and specific media vehicles in which to advertise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• identify the most effective and efficient level of spending in each market, media and specific media vehicle; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• effectively manage marketing costs, including creative and media expenses, to maintain acceptable customer acquisition
costs.

We closely monitor the effectiveness of our advertising campaigns and changes in the advertising market, and adjust or re-allocate our advertising spend across channels, customer segments and geographic markets in real-time to optimize the effectiveness of these activities. We expect to increase advertising spend in future periods to continue driving our growth. Increases in the pricing of one or more of our marketing and advertising channels could increase our marketing and advertising expenses or cause us to choose less expensive but possibly less effective marketing and advertising channels. If we implement new marketing and advertising strategies, we may incur significantly higher costs than our current channels, which, in turn, could adversely affect our results of operations.

Implementing new marketing and advertising strategies also could increase the risk of devoting significant capital and other resources to endeavors that do not prove to be cost effective. We also may incur marketing and advertising expenses significantly in advance of the time we anticipate recognizing revenue associated with such expenses and our marketing and advertising expenditures may not generate sufficient levels of brand awareness or result in increased revenue. Even if our marketing and advertising expenses result in increased sales (or donations made to our NPPs), the increase might not offset our related expenditures. If we are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more effective channels, our marketing and advertising expenses could increase substantially, our customer base could be adversely affected, our brands could suffer and our business, results of operations and financial condition could be harmed.

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***We may not succeed in promoting and maintaining our reputation, which could harm our business and future growth.***

We believe that maintaining our reputation is critical to driving customer and NPP and donor engagement. An important goal of our brand promotion strategy is establishing trust with our customers and NPPs and their donors.

For customers, maintaining our reputation requires that we foster trust through responsive and effective customer service and a broad supply of desirable brands and secondhand items. For NPPs and their donors, maintaining our brands and reputation requires that we foster convenience with service that is convenient, consistent and timely. We must also maintain trust through consistent receiving and payment processes for secondhand items supplied to us. Our payments must also be perceived by our NPPs to be adequate compensation for the items they collect.

If we fail to maintain our reputation with our customers, our revenues could be materially and adversely affected. If we fail to maintain our reputation with our NPPs and their donors, the quantity and quality of goods supplied to us could be materially and adversely affected. As a result, a failure to maintain our reputation could have a material, adverse effect on our business, growth, results of operations and financial condition.

***Certain estimates of market opportunity and our customer and NPP and donor metrics included in this prospectus may prove to be inaccurate, and any real or perceived inaccuracies may harm our reputation and negatively affect our business.***

This prospectus includes our estimates, based on research, surveys and internally generated data, of the addressable market for our company and metrics related to our customers and NPPs and their donors. Market opportunity estimates, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The estimates and forecasts in this prospectus relating to the size of our target market, market demand, capacity to address this demand, and pricing may prove to be inaccurate. The addressable market we estimate may not materialize for many years, if ever.

We may not be able to address fully the markets that we believe we can address, and we cannot be sure that these markets will grow at historical rates or the rates we expect for the future. Even if we are able to address the markets that we believe represent our market opportunity and even if these markets experience the growth we expect, we may not grow our business at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, the estimates and forecasts of market size and opportunity and of market growth included in this prospectus may not be indicative of our future growth.

Certain metrics presented in this prospectus, including the numbers of customers and NPPs and their donors, are based on market research, internally generated data, assumptions and estimates, and we use these numbers in managing our business. To the extent the metrics are inaccurate, our business decisions based on such metrics may prove to be incorrect. If investors or analysts do not perceive our metrics to be accurate representations of our business, or if we discover material inaccuracies in our metrics or the underlying information, our reputation, business, results of operations and financial condition would be harmed.

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**Risks Relating to Information Technology, Intellectual Property, Data Security and Privacy** 

***Compromises of our data security could cause us to incur unexpected expenses and may materially harm our reputation and results of operations.***

In the ordinary course of our business, we collect, process and store certain personal information and other data relating to individuals, such as our customers and employees. We also maintain other information, such as financial information, operating statistics and metrics, trade secrets and confidential business information and certain confidential information of third parties, that is sensitive and that we seek to protect.

We rely substantially on commercially available systems, software, tools and monitoring to provide security for our processing, transmission and storage of personal information and other confidential information. We have been in the past and could be in the future the subject of hacking, phishing attacks, data breaches, ransomware attacks or other attacks. For example, in July 2020, we suffered a ransomware attack that caused the loss of some of our data and caused some temporary operational disruptions. These incidents have allowed, and may in the future continue to allow, hackers or other unauthorized parties to gain access to personal information or other data, including payment card data or confidential business information, and we might not discover such issues for an extended period. The techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not identified until they are launched against a target. As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, our employees, NPPs or other third parties with whom we do business may attempt to circumvent security measures in order to misappropriate such personal information, confidential information or other data, or may inadvertently release or compromise such data. We are also affected by the security practices of our third-party service providers, which may be outside of our direct control. If these third parties fail to adhere to adequate security practices, or experience a breach of their networks, our users' data may be improperly accessed, used or disclosed, and our business operations may be disrupted. We expect to incur ongoing costs associated with the detection and prevention of security breaches and other security-related incidents. In addition, we provide the audit committee of our board of directors regular reports on such breaches or incidents, including the July 2020 incident, and on our efforts to implement more robust security measures. We may incur additional costs in the event of a security breach or other security-related incident. Any actual or perceived compromise of our systems or data security measures or those of third parties with whom we do business, or any failure to prevent or mitigate the loss of personal or other confidential information and delays in detecting or providing notice of any such compromise or loss could disrupt our operations, harm the perception of our security measures, damage our reputation, cause some participants to decrease or stop their visiting of our stores and subject us to litigation, government action, increased transaction fees, regulatory fines or penalties or other additional costs and liabilities that could adversely affect our business, results of operations and financial condition.

Our insurance coverage may not be adequate for data handling or data security liabilities, and that insurance may not continue to be available to us on economically reasonable terms, or at all. An insurer may also deny coverage as to a future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could harm our business, results of operations, financial condition and reputation.

In addition, the changes in our work environment as a result of the COVID-19 pandemic could impact the security of our systems, as well as our ability to protect against attacks and detect and respond to them quickly. Any rapid adoption by us of third-party services designed to enable the transition to a remote workforce also may introduce security risk that is not fully mitigated prior to the

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use of these services. We may also be subject to increased cyber-attacks, such as phishing attacks by threat actors using the attention placed on the COVID-19 pandemic as a method for targeting our personnel.

***Our use and other processing of personal information and other data is subject to laws and regulations relating to privacy, data protection and information security. Changes in such laws or regulations, or any actual or perceived failure by us to comply with such laws and regulations, our privacy policies and/or contractual obligations, could adversely affect our business, results of operations and financial condition.***

We collect, maintain and otherwise process significant amounts of personal information and other data relating to our customers, employees and other individuals. Numerous state, federal and international laws, rules and regulations govern the collection, use and protection of personal information and other types of data we collect, use, disclose and otherwise process. Such requirements are constantly evolving, and we expect that there will continue to be new proposed requirements relating to privacy, data protection and information security in the United States, Canada and other jurisdictions, or changes in the interpretation of existing privacy requirements. For example, the California Consumer Privacy Act ("CCPA") took effect on January 1, 2020 and broadly defines personal information, imposes stringent consumer data protection requirements, gives California residents expanded privacy rights, provides for civil penalties for violations and introduces a private right of action for data breaches. Additionally, on November 3, 2020, Proposition 24 was approved in California which creates a new privacy law, the California Privacy Rights Act ("CPRA"). The CPRA creates additional obligations relating to personal information that will take effect on January 1, 2023 (with certain provisions having retroactive effect to January 1, 2022). We will continue to monitor developments related to the CPRA and anticipate additional costs and expenses associated with CPRA compliance. Additionally, the CCPA has prompted other states to propose and enact similar laws and regulations relating to privacy. For example, in March 2021, Virginia enacted the Virginia Consumer Data Protection Act ("CDPA") which becomes effective on January 1, 2023, and on June 8, 2021, Colorado enacted the Colorado Privacy Act ("CPA") which takes effect on July 1, 2023. The CDPA and CPA share similarities with the CCPA, the CPRA, and legislation proposed in other states. Aspects of the CCPA, CPRA, CDPA, and CPA, and their interpretation, remain unclear, and we cannot yet fully predict the impact of these laws or regulations on our business or operations.

We have significant operations in Canada and Australia, and must comply with data privacy laws in both jurisdictions. In Canada, our collection, use, disclosure, and management of personal information must comply with both federal and provincial privacy laws, which impose separate requirements, but may overlap in some instances. The Personal Information Protection and Electronic Documents Act ("PIPEDA") applies in all Canadian provinces except, in certain contexts, Alberta, British Columbia and Québec, as well as to the transfer of personal information across provincial or international borders. PIPEDA imposes stringent personal information protection obligations, requires privacy breach reporting, and limits the purposes for which organizations may collect, use, and disclose personal information, which includes consumer data. The provinces of Alberta, British Columbia, and Québec have enacted separate data privacy laws that are substantially similar to PIPEDA, but, among other differences, all three additionally apply to our handling of our own employees' personal data within their respective provinces. We may incur additional costs and expenses related to compliance with these laws. We are also subject to Canada's anti-spam legislation ("CASL") which includes rules governing commercial electronic messages, which include marketing emails, text messages, and social media messages. Under these rules, we must follow certain standards when sending marketing messages, and, among other requirements, are prohibited from sending them without the recipient's consent (or there is a statutory exception to the requirement for consent), and can be held liable for violations. In Australia, the Privacy Act 1988 and the Australian Privacy Principles ("APPs") regulate the handling of personal information, which is defined in similar

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terms to the CCPA. The Privacy Act and the APPs set out data protection principles for how personal information should be collected, used, stored and disclosed, and when an entity must provide notice if personal information has been lost or accessed without authorization. The Privacy Act also gives the Australian Information Commissioner the power to conduct investigations, and contains civil penalties for breach. The Privacy Act is currently under review and may be amended to include more stringent requirements, including mandating the destruction or de-identification of personal information in certain circumstances. We may also be subject to the Spam Act 2003 and the Do Not Call Register Act 2006 which regulate the sending of commercial electronic messages and telemarketing activities. To the extent our operations further expand internationally, we may become subject to additional laws and regulations relating to privacy and data protection.

Future requirements, or changes in the interpretation of existing requirements relating to privacy, data protection and information security may, among other requirements, require us to implement privacy and security policies, provide certain types of notices, grant certain rights to individuals, inform individuals of security breaches and, in some cases, obtain individuals' consent to use personal data for certain purposes. For example, in Canada, major amendments to the privacy law in Quebec are coming into force between September 2022 and September 2024, and a bill for a replacement to PIPEDA has been tabled and is currently working its way through the Canadian federal legislative process. These requirements may be inconsistent from one jurisdiction to another, subject to differing interpretations and may be interpreted to conflict with our practices. We cannot yet fully determine the impact that such future requirements may have on our business or operations. Additionally, we are subject to the terms of our privacy policies and notices and may be bound by contractual requirements applicable to our collection, use, processing, security and disclosure of personal information, and may be bound by or alleged to be subject to, or voluntarily comply with, self-regulatory or other industry standards relating to these matters.

Any failure or perceived failure by us or any third parties with which we do business to comply with these privacy requirements, with our posted privacy policies or with other obligations to which we or such third parties are or may become subject relating to privacy, data protection or information security, may result in investigations or enforcement actions against us by governmental entities, private claims, public statements against us by consumer advocacy groups or others and fines, penalties or other liabilities. For example, California consumers whose information has been subject to a security incident may bring civil suits under the CCPA for statutory damages between $100 and $750 per consumer. In Canada, we may be subject to regulatory investigations, fines, or class action suits stemming from violations of PIPEDA, provincial data privacy laws or CASL. Any such action would be expensive to defend, likely would damage our reputation and market position, could result in substantial liability and could adversely affect our business and results of operations.

***We may be unable to protect our intellectual property rights.***

We rely on a combination of intellectual property rights, contractual protections and other practices to protect our brands, proprietary information, technologies and processes. We primarily rely on copyright and trade secret laws and exclusive licenses-in to protect our proprietary technologies and processes, including the automated operations systems and machine learning technology we use throughout our business. Others may independently develop the same or similar technologies and processes or may improperly acquire and use information about our technologies and processes, which may allow them to provide a service similar to ours, which could harm our competitive position. Our principal trademark assets include the registered and common law trademarks "Savers Value Village," "Savers," "Value Village," "Village des Valeurs," "Unique," "2nd Ave.," "GreenDrop," "Super Savers Club," "Community Donation Center" and "Thrift Proud" and our logos and taglines. Our trademarks are valuable assets that support our brands and customers' perception of our services and merchandise. We have registered trademarks in Australia, Canada and the United States. We also

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hold the rights to the "savers.com" Internet domain name and various related domain names, which are subject to Internet regulatory bodies and trademark and other related laws of each applicable jurisdiction. If we are unable to protect our trademarks or domain names, our brand recognition and reputation would suffer, we would incur significant expense establishing new brands and our results of operations would be adversely impacted. Further, to the extent we pursue patent protection for our innovations, patents we may apply for may not issue, and patents that do issue or that we acquire may not provide us with any competitive advantages or may be challenged by third parties. There can be no assurance that any patents we obtain will adequately protect our inventions or survive a legal challenge, as the legal standards relating to the validity, enforceability and scope of protection of patent and other intellectual property rights are uncertain. We may be required to spend significant resources to monitor and protect our intellectual property rights, and the efforts we take to protect our proprietary rights may not be sufficient.

We rely in part on trade secrets, proprietary know-how and other confidential information to maintain our competitive position. Although we enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships, partnerships and business alliances, no assurance can be given that these agreements will be effective in controlling access to and distribution of our proprietary information. Further, these agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our automation technologies or technologies related to our operations or services.

To protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights, and we may or may not be able to detect infringement by third parties. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Such litigation could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management's attention and resources, could delay the implementation of our platform, impair the functionality of our platform, delay introductions of new capabilities, result in our substituting inferior or more costly technologies into our business, or injure our reputation. In addition, we may be required to license additional technology from third parties to develop and market new capabilities, and we cannot assure you that we could license that technology on commercially reasonable terms or at all, and our inability to license this technology could harm our ability to compete.

***We may be accused of infringing intellectual property or other proprietary rights of third parties.***

We have been in the past and may be accused in the future of infringing intellectual property or other proprietary rights of third parties. We are also at risk of claims by others that we have infringed their copyrights, trademarks or patents, or improperly used or disclosed their trade secrets or otherwise infringed or violated their proprietary rights, such as the right of publicity. For example, although we require our employees to not use the proprietary information or know-how of others in their work for us, we may become subject to claims that these employees have divulged, or we have used, proprietary information of these employees' former employers. The costs of supporting any litigation or disputes related to these claims can be considerable, and we cannot assure you that we will achieve a favorable outcome of any such claim. If any such claim is valid, we may be compelled to cease our use of such intellectual property or other proprietary rights and pay damages, which could adversely affect our business. In addition, if such claims are valid, we may lose valuable intellectual property rights or

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personnel, which could harm our business. Even if such claims were not valid, defending them could be expensive and distracting, adversely affecting our results of operations.

***We rely on software, technology and services from other parties. Defects in or the loss of access to software or services from third parties could increase our costs and adversely affect the quality of our products.***

We rely on software, technologies and services sourced or licensed from third parties to operate critical functions of our business, including payment processing services, certain aspects of CPC automation and customer relationship management services. We also use Microsoft services for our business emails, file storage and communications. Our business would be disrupted if any of the third-party software or services we utilize, or functional equivalents thereof, were unavailable due to extended outages or interruptions or because they are no longer available on commercially reasonable terms or prices. In each case, we would be required to either seek licenses to software or services from other parties and redesign our business and operations to function with such software or services or develop these components ourselves, which would result in increased costs.

**Risks Relating to Legal, Regulatory, Accounting and Tax Matters** 

***Risks arising from the material weaknesses we have identified in our internal control over financial reporting and any failure to remediate these material weaknesses.***

As a public company, we will be required to maintain internal control over financial reporting in accordance with applicable rules and guidance and to report any material weaknesses in such internal control over financial reporting. Prior to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. In connection with this filing, we identified deficiencies in our internal control over financial reporting, which in the aggregate, constitute material weaknesses related to (i) the sufficiency of technical accounting and SEC reporting expertise within our accounting and financial reporting function, (ii) the establishment and documentation of clearly defined roles within our finance and accounting functions and (iii) our ability to evidence the design and implementation of effective information technology general controls ("ITGCs") for information systems and applications that are relevant to the preparation of our financial statements.

If our steps are insufficient to successfully remediate the material weaknesses and otherwise establish and maintain an effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence in us, and the value of our common stock could be materially and adversely affected. We may not be able to remediate the identified material weaknesses, and additional material weaknesses or significant deficiencies in our internal control over financial reporting may be identified in the future. Effective internal control over financial reporting is necessary for us to provide reliable and timely financial reports and, together with adequate disclosure controls and procedures, are designed to reasonably detect and prevent fraud. Our failure to implement and maintain effective internal control over financial reporting, to remedy identified material weaknesses or significant deficiencies or to implement required new or improved controls could result in errors in our financial statements that could result in a restatement of our financial statements or cause us to fail to timely meet our financial and other reporting obligations.

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***We may be unable to maintain an effective system of disclosure controls and procedures or internal control over financial reporting and produce timely and accurate financial statements or comply with applicable regulations.***

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") the Sarbanes-Oxley Act, and, if approved for listing, the rules and regulations and the listing standards of the New York Stock Exchange (the "NYSE").

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.

In addition to the material weaknesses in our internal control over financial reporting that we have identified, we may discover weaknesses in our disclosure controls and procedures and internal control over financial reporting in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could cause delays in our ability to comply with public company reporting requirements (including under the Exchange Act or stock exchange rules) and could also cause investors to lose confidence in our reported financial and other information, which could have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE. We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K.

Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an "emerging growth company" as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material adverse effect on our business and operating results and could cause a decline in the price of our common stock.

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***We will incur increased expenses associated with being a public company.***

As a public company, we will incur significant legal, accounting, investor relations and other expenses that we did not incur as a private company, and we may not be eligible to use the scaled disclosure standards applicable to "emerging growth companies" under the JOBS Act. For example, we will be subject to the reporting requirements of the Exchange Act, and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC and the NYSE, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. We expect that the requirements of operating as a public company will increase our legal and financial compliance and investor relations costs and will make some activities more time consuming and costly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an emerging growth company, as defined by the JOBS Act. We will also need to establish an investor relations function. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of those costs.

Public company reporting and disclosure obligations and a broader shareholder base as a result of our status as a public company may expose us to a greater risk of claims by shareholders, and we may experience threatened or actual litigation from time to time. If claims asserted in such litigation are successful, our business and operating results could be adversely affected, and, even if claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them and the diversion of management resources, could adversely affect our business and operating results.

***Changes in Canadian, Australian or U.S. national or local regulations, including those relating to the sale of secondhand items and advertising practices, or our actual or alleged failure to comply with such regulations may have a material adverse effect on our reputation, business, financial condition and results of operations.***

Our business and financial condition could be adversely affected by unfavorable changes in or interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations applicable to us and our business, including those relating to consumer protection, anti-corruption, antitrust and competition, economic and trade sanctions, tax, banking, environmental protection, waste management, sustainability, data security, network and information systems security, data protection and privacy. As a result, regulatory authorities could prevent or temporarily suspend us from conducting some or all of our activities or otherwise penalize us if our practices were found not to comply with applicable regulatory or licensing requirements or any binding interpretation of such requirements. Unfavorable changes or interpretations could decrease demand for our merchandise, limit marketing methods and capabilities, affect our growth, increase costs or subject us to additional liabilities. In addition, if we were to further expand internationally, we could be subject to additional regulation.

The resale of secondhand items is subject to regulation, including by regulatory bodies such as the U.S. Consumer Product Safety Commission, the U.S. Federal Trade Commission (the "FTC"), the U.S. Fish and Wildlife Service and other international, federal, state and local governments and regulatory authorities. These laws and regulations are complex, vary from jurisdiction to jurisdiction and change often. We monitor these laws and regulations and adjust our business practices as warranted to comply. We receive our supply of secondhand items from numerous NPPs and their donors located in approximately 27 U.S. states, and the items we receive from our NPPs and their donors may contain

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materials such as ivory, fur, snakeskin and other exotic animal product components, that are subject to regulation in the United States and overseas. In Canada, we follow the Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act, which, among other things, restricts the sale of ivory and other protected species. In Australia, we are prohibited from trading in certain animal products because Australia is a signatory to the Convention on International Trade in Endangered Species of Wild Fauna and Flora. Failure of our employees to identify prohibited items and remove them from the sale process could lead to violations of regulations or other claims against us, resulting in increased legal expenses and costs. Moreover, in connection with our marketing and advertisement practices, we have been in the past, are currently and may in the future be, the target of claims relating to false or deceptive advertising, including under the auspices of the FTC and the consumer protection statutes of some states. Failure by us to prevail on existing claims relating to false or deceptive advertising, effectively monitor the application of these laws and regulations to our business, and to comply with such laws and regulations, may negatively affect our brands, adversely impact our relationships with our NPPs and subject us to penalties and fines.

Numerous jurisdictions, including the States of California and New York, Canada, and Australia, have regulations regarding the handling of secondhand items and licensing requirements of secondhand dealers. In Canada, we follow the Canada Consumer Product Safety Act Health Canada's "Industry Guide to Second-Hand Products (Including Children's Products), which guides businesses selling second-hand products ensure all appropriate steps are taken to ensure consumer product safety, including with regard to product recalls. In Australia, product safety regulation is a shared responsibility between the Australian Competition and Consumer Commission and the product regulators in each of the Australian States and Territories. In Australia, all consumer products, regardless of whether they are secondhand or new, must be safe and meet the consumer guarantees under the Australian Consumer Law which include that products are of acceptable quality, match their description and are fit for purpose, and that any express warranties will be met. We must ensure that we meet mandatory reporting requirements if there is a risk that a product is not safe, and that we do not sell banned or recalled products. In addition, some products such as aquatic toys and certain goods designed for use by babies and children are regulated by mandatory product safety standards. There are serious penalties for selling non-compliant products. We must also be registered with the regulatory bodies in each of the Australian States and Territories to sell secondhand goods. Such government regulations could require us to change the way we conduct business in the applicable jurisdictions, such as prohibiting or otherwise restricting the sale or shipment of certain items in some locations. These regulations could result in increased costs or reduced revenue. We could also be subject to fines or other penalties that could harm our business.

Additionally, supplied secondhand items could be subject to recalls and other remedial actions and product safety, labeling and licensing concerns may require us to voluntarily remove certain secondhand items from our stores. Such recalls or voluntary removal of items can result in, among other things, lost sales, diverted resources, potential harm to our reputation and increased customer service costs and legal expenses, which could have an adverse effect on our results of operations. Some of the secondhand items sold at our stores may expose us to product liability claims and litigation or regulatory action relating to personal injury, environmental or property damage. We cannot be certain that our insurance coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms or at all.

***Our failure to address risks associated with payment methods, credit card fraud and other consumer fraud, or our failure to control any such fraud, could damage our reputation and brands and could harm our business, results of operations and financial condition.***

We have in the past incurred and may in the future incur losses from various types of fraudulent transactions, including the use of stolen credit card numbers, and claims that a customer did not

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authorize a purchase. In addition, as part of the payment processing process, our customers' credit and debit card information is transmitted to our third-party payment processors, and we may in the future become subject to lawsuits or other proceedings for purportedly fraudulent transactions arising out of the actual or alleged theft of our customers' credit or debit card information if the security of our third-party credit card payment processors are breached.

We and our third-party credit card payment processors are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we or our third-party credit card payment processors fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers. Further, we could violate or be alleged to have violated applicable laws, regulations, contractual obligations or other obligations, including those regulating to privacy, data protection and data security as outlined above, and including harm to our reputation and market position. Any of these could have an adverse impact on our business, results of operations, financial condition and prospects. Our failure to adequately prevent fraudulent transactions could damage our reputation and market position, result in claims, litigation or regulatory investigations and proceedings or lead to expenses that could harm our business, results of operations and financial condition.

***We and our directors and executive officers may be subject to litigation for a variety of claims, which could harm our reputation and adversely affect our business, results of operations and financial condition.***

In the ordinary course of business, we have in the past and may in the future be involved in and subject to litigation for a variety of claims or disputes and receive regulatory inquiries. These claims, lawsuits and proceedings could include labor and employment, wage and hour, commercial, consumer protection, regulatory, antitrust, alleged securities law violations or other investor claims, claims that our employees have wrongfully disclosed or we have wrongfully used proprietary information of our employees' former employers and other matters. The number and significance of these potential claims and disputes may increase as our business expands. Further, our general liability insurance may not cover all potential claims made against us or be sufficient to indemnify us for all liability that may be imposed. Any claim against us, regardless of its merit, could be costly, divert management's attention and operational resources, and harm our reputation.

Our directors and executive officers may also be subject to litigation. The limitation of liability and indemnification provisions that are included in our amended and restated certificate of incorporation, our amended and restated bylaws and indemnification agreements that we entered into with our directors and executive officers provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law and may discourage stockholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duties. Such provisions may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be harmed to the extent that we pay the costs of settlement and damage awards against our directors and executive officers as required by these indemnification provisions. We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law. These insurance policies may not cover all potential claims made against our directors and executive officers, may not be available to us in the future at a reasonable rate and may not be adequate to indemnify us for all liability that may be imposed. See the section titled "Certain Relationships and Related Party Transactions—Indemnification of officers and directors."

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As litigation is inherently unpredictable, we cannot assure you that any potential claims or disputes will not harm our business, results of operations and financial condition.

***Subjective estimates and judgments used by management in the preparation of our financial statements, including estimates and judgments that may be required by new or changed accounting standards, may impact our financial condition and results of operations.***

The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. Due to the inherent uncertainty in making estimates, results reported in future periods may be affected by changes in estimates reflected in our financial statements for earlier periods. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. From time to time, there may be changes in the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can materially impact how we record and report our financial condition and results of operations. In some instances, we could be required to apply a new or revised standard retrospectively. If the estimates and judgments we use in preparing our financial statements are subsequently found to be incorrect or if we are required to restate prior financial statements, our financial condition or results of operations could be significantly affected.

***Tax legislation could adversely affect our business, financial condition and results of operations.***

The Tax Cuts and Jobs Act, (the "Tax Act"), among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of "adjusted earnings" (roughly defined as earnings before interest, taxes, depreciation and amortization in the case of taxable years beginning before January 1, 2022 and earnings before interest and taxes thereafter), limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits. The most significant impacts of the Tax Act on our financial results to date have included lowering of the U.S. federal corporate income tax rate and remeasurement of our net deferred tax liabilities. We continue to examine the impact that the Tax Act may have on our business in the longer term. The U.S. government may enact significant new changes to the taxation of business entities, including, among others, an increase in the U.S. taxation of international business operations. Accordingly, the impact of the Tax Act and any future tax legislation on us is uncertain.

***Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited.***

As of January 1, 2022 and January 2, 2021, we had $0.0 million and $70.6 million, respectively, of U.S. federal net operating loss carryforwards. As of January 1, 2022 and January 2, 2021, we had $50.8 million and $99.0 million, respectively, of U.S. state net operating loss carryforwards. These net operating loss carryforwards expire between 2022 and 2040. As of January 1, 2022, we had a federal foreign tax credit of $2.5 million, which will expire in 2026, federal R&D credits of $1.0 million, which will expire between 2039 and 2041, and other federal credits of $5.3 million, which will expire between 2031 and 2041. Portions of these net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities.

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Under the Tax Act, as modified by the Coronavirus Aid, Relief, and Economic Security (the "CARES Act"), U.S. federal net operating losses incurred in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal net operating losses in taxable years beginning after December 31, 2020, is limited. It is uncertain how various states will respond to the Tax Act and the CARES Act. For state income tax purposes, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an "ownership change," which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its postchange income or taxes may be limited. We have experienced such ownership changes in the past, and may experience such ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating loss carryforwards is materially limited, it would harm our future results of operations by effectively increasing our future tax obligations.

***We are subject to various anti-corruption laws and regulations and laws and regulations relating to export controls and economic sanctions. Violations of these laws and regulations could have a material adverse effect on our business, financial condition and results of operations.***

We are subject to various anti-corruption laws, including the U.S. Foreign Corrupt Practices Act. These laws generally prohibit companies and their intermediaries from engaging in bribery or making other improper payments of cash (or anything else of value) to government officials and other persons in order to obtain or retain business. Our business operations also must be conducted in compliance with applicable export control and economic sanctions laws and regulations, including rules administered by the U.S. Department of the Treasury's Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council, and other relevant authorities.

We strive to conduct our business activities in compliance with relevant anti-corruption and trade control laws and regulations, and we are not aware of issues of historical noncompliance. However, full compliance cannot be guaranteed. Further expansion of our retail or wholesale footprint outside the United States would likely increase our future legal exposure. Violations of anti-corruption or trade control laws and regulations, or even allegations of such violations, could result in civil or criminal penalties, as well as disrupt our business, operations, financial condition and results of operations. Further, changes to the applicable laws and regulations, and/or significant business growth, may result in the need for increased compliance-related resources and costs.

**Risks Relating to Our Indebtedness and Liquidity** 

***Our indebtedness could materially adversely affect our financial condition.***

We have, and after this offering will continue to have, a significant amount of indebtedness. As of October 1, 2022, on a pro forma basis, our total indebtedness would have been $ million, including $ million aggregate principal amount outstanding under our Secured Credit Agreement and $ million aggregate principal amount of Notes. Under the Secured Credit Agreement, we

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have the Term Loan Facility and the Revolving Credit Facility. As of October 1, 2022, on a pro forma basis, we had $ million of letters of credit outstanding under the Revolving Credit Facility, leaving $ million available for borrowing out of a total committed amount of $75.0 million.

Our substantial indebtedness could have important consequences to the holders of our common stock, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• making it more difficult for us to satisfy our obligations with respect to our other debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or
other general corporate requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• requiring us to dedicate a substantial portion of our cash flows to debt service payments instead of other purposes,
thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increasing our vulnerability to general adverse economic and industry conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the Secured
Credit Agreement, are at variable rates of interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• placing us at a disadvantage compared to other, less leveraged competitors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increasing our cost of borrowing.

In addition, the Secured Credit Agreement and the indenture governing the Notes (the "Indenture") contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all our debt. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Secured Credit Facilities."

The Term Loan Facility and the Notes will mature on April 26, 2028. The Revolving Credit Facility will mature on April 26, 2026. We may need to refinance all or a portion of our indebtedness on or before the maturity thereof. We may not be able to obtain such financing on commercially reasonable terms or at all. Failure to refinance our indebtedness could have a material adverse effect on us.

***We may not be able to generate sufficient cash to service all of our indebtedness or repay such indebtedness when due and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.***

Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to financial, business, legislative, regulatory and other factors, some of which are beyond our control. We cannot be sure that our business will generate sufficient cash flows from operating activities, or that future borrowings will be available, to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and

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capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to implement any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The Secured Credit Agreement and the Indenture restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would have a material adverse effect on our financial condition and results of operations.

If we cannot make scheduled payments on our debt, we will be in default, and the lenders under the Secured Credit Agreement could terminate their commitments to loan money, the lenders and the holders of the Notes could foreclose against the assets securing their debt, and we could be forced into bankruptcy or liquidation. Any of these events could result in you losing all or a portion of your investment in the common stock.

***Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described herein.***

We and our subsidiaries may be able to incur significant additional indebtedness in the future. Although the Secured Credit Agreement and the Indenture contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. As of October 1, 2022, on a pro forma basis, we would have had $ million of borrowings outstanding under the Revolving Credit Facility, with $ million of outstanding letters of credit, leaving $ million available for borrowing out of a total committed amount (which was increased in November 2022) of $75.0 million. The Secured Credit Agreement provides for additional uncommitted incremental loans of up to the greater of $136 million and 100% of EBITDA for the most recent four fiscal quarters, plus certain other amounts, with additional incremental loans available if certain leverage ratios are maintained. Of the incremental loans, $15.0 million was permitted to be (and was utilized as) incremental commitments under the Revolving Credit Facility. All of those borrowings would be secured by first-priority liens on our property.

***The terms of the Secured Credit Agreement and the Indenture restrict our current and future operations, including our ability to respond to changes or to take certain actions.***

The Secured Credit Agreement and the Indenture contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Secured Credit Facilities." The Notes and the indebtedness under the Secured Credit Agreement will continue to be outstanding following completion of this offering. The restrictive covenants under the Secured Credit Agreement include restrictions on our ability to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur additional indebtedness and guarantee indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pay dividends or make other distributions or repurchase or redeem our capital stock;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prepay, redeem or repurchase junior debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issue certain preferred stock or similar equity securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make loans and investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sell assets or property, except in certain circumstances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• create or incur liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into transactions with affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• modify or waive certain material agreements in a manner that is adverse in any material respect to the lenders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into agreements restricting our subsidiaries' ability to pay dividends; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make fundamental changes in our business, corporate structure or capital structure, including, among other things, entering
into mergers, acquisitions, consolidations and other business combinations.

As a result of these restrictions, we may be:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limited in how we conduct our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unable to raise additional debt or equity financing to operate during general economic or business downturns; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unable to compete effectively or to take advantage of new business opportunities.

These restrictions may affect our ability to grow in accordance with our strategy.

A breach of the covenants or restrictions under the Secured Credit Agreement or the Indenture could result in a default or an event of default. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the Secured Credit Agreement would permit the lenders under the Revolving Credit Facility to terminate all commitments to extend further credit under such facility. Furthermore, if we were unable to repay the amounts due and payable under the Secured Credit Agreement and the Notes, the lenders under the Secured Credit Agreement and the holders of the Notes could proceed against the collateral granted to them to secure that indebtedness. In exacerbated or prolonged circumstances, one or more of these events could result in our bankruptcy or liquidation.

***We rely on available borrowings under the Revolving Credit Facility for liquidity, and the availability of credit under the Revolving Credit Facility may be subject to significant fluctuation.***

In addition to cash we generate from our business, our principal existing source of liquidity is borrowings available under the Revolving Credit Facility. As of October 1, 2022, on a pro forma basis, we had no borrowings under the Revolving Credit Facility, with $11.4 million of letters of credit outstanding, leaving $63.6 million available for borrowing. The inability to borrow under the Revolving Credit Facility may adversely affect our liquidity, financial position and results of operations.

***We are subject to risks associated with our indebtedness and debt service, including risks related to changes in interest rates.***

Borrowings under the Secured Credit Agreement are at variable rates of interest and expose us to interest rate risk. As interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed has remained the same, and our net

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income and cash flows, including cash available for servicing our indebtedness, is correspondingly decreasing. Based on amounts outstanding as of October 1, 2022, on a pro forma basis, each 100 basis point change in interest rates would result in a $ million change in annual interest expense on our indebtedness under the Secured Credit Agreement. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures about Market Risk—Interest Rate Risk." We enter into interest rate swaps, which act as economic hedges against changes in interest rates under the Secured Credit Agreement. In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments or other instruments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps or other instruments we enter into may not fully mitigate our interest rate risk.

***A lowering or withdrawal of the ratings assigned to our debt by rating agencies may increase our future borrowing costs and reduce our access to capital.***

Our debt currently has a non-investment grade rating, and any rating assigned could be lowered or withdrawn entirely by a rating agency if, in that rating agency's judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing.

**Risks Relating to This Offering and Ownership of Our Common Stock** 

***There has been no prior public market for our common stock, the stock price of our common stock may be volatile or may decline regardless of our operating performance and you may not be able to resell your shares at or above the initial public offering price.***

There has been no prior public market for our common stock prior to our initial public offering. The initial public offering price for our common stock will be determined through negotiations among the underwriters and us and may vary from the market price of our common stock following this offering. If you purchase shares of common stock in this offering, you may not be able to resell those shares at or above the initial public offering price. The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated fluctuations in our revenues or other operating results;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• variations between our actual operating results and the expectations of securities analysts, investors and the financial
community;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in
this information or our failure to meet expectations based on this information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities
analysts who follow us or our failure to meet these estimates or the expectations of investors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• additional shares of common stock being sold into the market by us or our existing stockholders, or the anticipation of
such sales, including if existing stockholders sell shares into the market when the applicable "lock-up" periods end;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic
partnerships, joint ventures, capital commitments, divestitures or other dispositions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• loss of relationships with significant suppliers or customers;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in operating performance and stock market valuations of companies in our industry, including our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• difficulties in integrating any new acquisitions we may make;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• loss of services from members of management or employees or difficulty in recruiting additional employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• worsening of economic conditions in the United States or Canada and reduction in demand for our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• price and volume fluctuations in the overall stock market, including as a result of general economic trends;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lawsuits threatened or filed against us, or events that negatively impact our reputation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial
or regulatory bodies.

In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect the stock prices of many companies. Often, their stock prices have fluctuated in ways unrelated or disproportionate to their operating performance. In the past, stockholders have filed securities class action litigation against companies following periods of market volatility. Such securities litigation, if instituted against us, could subject us to substantial costs, divert resources and the attention of management from our business and seriously harm our business.

***An active trading market for our common stock may never develop or be sustained.***

We intend to apply to list our common stock on the NYSE under the symbol "SVV." However, we cannot be certain that an active trading market for our common stock will develop on that exchange or elsewhere or, if developed, that any market will be sustained. Furthermore, even if we are approved to list our common stock on the NYSE, we cannot be certain that we will continue to satisfy the continued listing standards of the NYSE. If we fail to satisfy the continued listing standards, we could be de-listed, which would have a material adverse effect on the liquidity and price of our common stock.

***Future sales of our common stock and other actions by existing stockholders could cause our stock price to decline.***

If our existing stockholders, including employees, who have or obtain equity, sell or indicate an intention to sell, substantial amounts of our common stock in the public market after the lock-up and legal restrictions on resale discussed in this prospectus lapse, the trading price of our common stock could decline. Based on shares outstanding as of upon the completion of this offering, we will have outstanding a total of shares of common stock.

Subject to certain exceptions described under "Underwriting," we and all of our stockholders have entered into or will enter into agreements with the underwriters under which we and they have agreed or will agree, subject to certain exceptions, not to dispose of any shares of common stock, any options or warrants to purchase any shares of common stock or any securities convertible into or exchangeable for or that represent the right to receive shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus.

When the lock up period in these agreements expires, we and our stockholders will be able to sell shares in the public market. In addition, J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Jefferies LLC may release all or some portion of the shares subject to the lock up agreements prior to the expiration of the lock-up period. See "Shares Eligible for Future Sale." Sales of a substantial

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number of such shares, or the perception that such sales may occur, upon the expiration or early release of the securities subject to the lock up agreements could cause the price of our common stock to decline or make it more difficult for you to sell your common stock at a time and price that you deem appropriate.

In addition, the Ares Funds have demand and "piggy-back" registration rights with respect to our common stock that they will retain following this offering. See "Shares Eligible for Future Sale" for a discussion of the shares of our common stock that may be sold into the public market in the future, including our common stock held by the Ares Funds.

***We currently do not intend to pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock.***

After completion of this offering, we currently do not anticipate paying any cash dividends for the foreseeable future. In addition, the terms of our indebtedness limit our ability to pay dividends or make other distributions on, or to repurchase or redeem, shares of our capital stock. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." Consequently, your only opportunity to achieve a return on your investment in our company will be if the market price of our common stock appreciates and you sell your shares at a profit. There is no guarantee that the price of our common stock that will prevail in the market after this offering will ever exceed the price that you pay. For more information, see "Dividend Policy." We cannot be sure that we will pay dividends in the future or continue to pay dividends if we do commence paying dividends.

***If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business or our market, if they adversely change their recommendations regarding our common stock, or if our operating results do not meet their expectations or any financial guidance we may provide, the trading price or trading volume of our common stock could decline.***

The trading market for our common stock will be influenced in part by the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors. If one or more of the analysts initiate research with an unfavorable rating or downgrade our common stock, provide a more favorable recommendation regarding our competitors or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more analysts who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price or trading volume of our common stock to decline.

In addition, if we do not meet any financial guidance that we may provide to the public or if we do not meet expectations of securities analysts or investors, the trading price of our common stock could decline significantly. Our operating results may fluctuate significantly from period to period as a result of changes in a variety of factors affecting us or our industry, many of which are difficult to predict. As a result, we may experience challenges in forecasting our operating results for future periods.

***Future issuances of our common stock could result in significant dilution to our stockholders, dilute the voting power of our common stock and depress the market price of our common stock.***

Future issuances of our common stock could result in dilution to existing holders of our common stock. Such issuances, or the perception that such issuances may occur, could depress the market price of our common stock. We may issue additional equity securities from time to time, including

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equity securities that could have rights senior to those of our common stock. As a result, purchasers of shares of common stock in this offering bear the risk that future issuances of equity securities may reduce the value of their shares and dilute their ownership interests. Also, to the extent outstanding stock-based awards are issued or become vested, there will be further dilution to the holders of our common stock.

***If you purchase shares of our common stock in this offering, you will experience substantial and immediate dilution in net tangible book value per share.***

The assumed initial public offering price of $ per share, the midpoint of the estimated offering price range set forth on the cover page of this prospectus, is substantially higher than the net tangible book value per share of our outstanding common stock immediately after this offering. If you purchase shares of common stock in this offering, you will experience substantial and immediate dilution in the pro forma net tangible book value per share of $ per share as of based on the assumed initial public offering price of $ per share. That is because the price that you pay will be substantially greater than the pro forma net tangible book value per share of common stock that you acquire. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares of our capital stock. You will experience additional dilution to the extent that new securities are issued under our equity incentive plans or we issue additional shares of common stock or common stock in the future. See "Dilution."

**Risks Relating to Our Organizational Structure** 

***Our reliance on dividends, distributions and other payments from our subsidiaries to meet our obligations.***

We are a holding company that does not conduct any business operations of our own. As a result, we are dependent upon cash distributions and other transfers from our direct and indirect subsidiaries to meet our obligations. The agreements governing the indebtedness of our subsidiaries impose restrictions on our subsidiaries' ability to pay dividends or other distributions to us. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." Each of our subsidiaries is a distinct legal entity, and under certain circumstances legal and contractual restrictions may limit our ability to obtain cash from them and we may be limited in our ability to cause any future joint ventures to distribute their earnings to us. The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason could impair their ability to make distributions to us.

***The continuing control after this offering of our company, including the right to designate individuals to be included in the slate of nominees for election to our board of directors, by the Ares Funds, whose interests may conflict with our interests and those of other stockholders. As such, the Ares Funds may be able to influence or control our affairs and policies following the completion of this offering.***

Following this offering, the Ares Funds will beneficially own % of our common stock (or % if the underwriters exercise their option to purchase additional shares in full). Pursuant to the Stockholders Agreement that will be entered into between the Ares Funds and us in connection with this offering, the Ares Funds will have the right to designate a number of individuals to be included in the slate of nominees for election to our board of directors equal to the greater of up to seven directors and the number of directors comprising a majority of our board of directors for so long as the Ares Funds own 40% or more of the outstanding shares of our common stock. The Stockholders Agreement will provide that the Ares Funds will be able to nominate a specified number of directors to our board based on its beneficial ownership of our common stock.

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Because our board of directors will be divided into three staggered classes, the Ares Funds may be able to influence or control our affairs and policies even after they cease to own a majority of our outstanding common stock during the period in which the Ares Funds' nominees finish their terms as members of our board, but in any event no longer than would be permitted under applicable law and the NYSE listing requirements. Therefore, following the completion of this offering and for so long as the Ares Funds continue to own 40% or more of our common stock, individuals affiliated with the Ares Funds will have the power to elect a majority of our directors and will have effective control over the outcome of votes on all matters requiring approval by our board of directors or our stockholders regardless of whether other stockholders believe such matter is in our best interests.

In addition, following the completion of this offering, the Stockholders Agreement will provide that, for so long as the Ares Funds own at least 30% of the outstanding shares of our common stock, certain significant corporate actions will require the prior written consent of the Ares Funds, subject to certain exceptions. See "Certain Relationships and Related Party Transactions—Stockholders Agreement."

These actions include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• merging or consolidating with or into any other entity, or transferring all or substantially all of our assets, taken as a
whole, to another entity, or undertaking any transaction that would constitute a "Change of Control" as defined in our debt agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acquiring or disposing of assets, in a single transaction or a series of related transactions, or entering into joint
ventures, in each case with a value in excess of $ million;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incurring indebtedness in a single transaction or a series of related transactions in an aggregate principal amount in
excess of $ million;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issuing our or our subsidiaries' equity other than pursuant to an equity compensation plan approved by our
stockholders or a majority of the directors designated by the Ares Funds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• terminating the employment of our chief executive officer or hiring or designating a new chief executive officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• entering into any transactions, agreements, arrangements or payments with any other person who owns greater than or equal
to 10% of our common stock then outstanding that are material or involve aggregate payments or receipts in excess of $500,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• amending, modifying or waiving any provision of our organizational documents in a manner that adversely affects the Ares
Funds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• commencing any liquidation, dissolution or voluntary bankruptcy, administration, recapitalization or reorganization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increasing or decreasing the size of our board of directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• entering into of any agreement to do any of the foregoing.

The interests of Ares, its affiliates and managed accounts could conflict with or differ from our interests or the interests of our other stockholders. For example, the concentration of ownership held by the Ares Funds could delay, defer or prevent a change in control of our company or impede a merger, takeover or other business combination which may otherwise be favorable for us. Additionally, Ares, its affiliates and managed accounts are in the business of making investments in companies and may, from time to time, acquire and hold interests in or provide advice to businesses that compete directly or indirectly with us, or are suppliers or customers of ours. Any such investment may increase the potential for the conflicts of interest discussed in this risk factor. So long as funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares continue to directly or indirectly own a significant amount of our equity, even if such amount is less than 40%, Ares will

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continue to be able to substantially influence or effectively control our ability to enter into corporate transactions.

***Our status as a "Controlled Company" within the meaning of the NYSE rules, and our exemption from certain corporate governance requirements.***

Following this offering, funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares will continue to control a majority of the voting power of our outstanding voting stock, and as a result we will be a controlled company within the meaning of the NYSE corporate governance standards. Under the NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirements that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a majority of the board of directors consist of independent directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the nominating, corporate governance and sustainability committee be composed entirely of independent directors with a
written charter addressing the committee's purpose and responsibilities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the compensation committee be composed entirely of independent directors with a written charter addressing the
committee's purpose and responsibilities.

We intend to utilize these exemptions as long as we remain a controlled company. As a result, we will not have a majority of independent directors and our nominating, corporate governance and sustainability committee and compensation committee will not consist entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE.

Pursuant to Rule 10C-1 under the Exchange Act, the NYSE has adopted amendments to its listing standards that require, among other things, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compensation committees be composed of fully independent directors, as determined pursuant to new independence
requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compensation committees be explicitly charged with hiring and overseeing compensation consultants, legal counsel, and other
committee advisors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compensation committees be required to consider, when engaging compensation consultants, legal counsel, or other advisors,
certain independence factors, including factors that examine the relationship between the consultant or advisor's employer and us.

As a "controlled company," we will not be subject to these compensation committee independence requirements.

***Certain provisions in our certificate of incorporation and our bylaws that may delay or prevent a change of control.***

Our certificate of incorporation and bylaws, each of which will be in effect upon the completion of this offering, contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change of control of our company or changes in our management that our stockholders may deem advantageous. In particular, our certificate of incorporation and bylaws:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• establish a classified board of directors so that not all members are elected at one time, which could delay the ability of
stockholders to change the membership of a majority of our board of directors;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• permit our board of directors to establish the number of directors and fill any vacancies (including vacancies resulting
from an expansion in the size of our board of directors), except in the case of the vacancy of an Ares Funds-designated director (in which case the Ares Funds will be able to fill the vacancy);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• establish limitations on the removal of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• authorize the issuance of "blank check" preferred stock that our board of directors could use to implement a
stockholder rights plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide that our board of directors is expressly authorized to make, alter or repeal our bylaws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restrict the forum for certain litigation against us to Delaware;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide that stockholders may not act by written consent following the time when the Ares Funds cease to beneficially own
at least a majority of the shares of our outstanding common stock, which time we refer to as the Trigger Date, which would require stockholder action to be taken at an annual or special meeting of our stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prohibit stockholders from calling special meetings following the Trigger Date, which would delay the ability of our
stockholders to force consideration of a proposal or to take action, including with respect to the removal of directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• establish advance notice requirements for nominations for election to our board of directors or for proposing matters that
can be acted upon by stockholders at annual stockholder meetings, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain
control of us.

Section 203 of the Delaware General Corporation Law, or the DGCL, prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person, individually or together with any other interested stockholder, who owns or within the last three years has owned 15% of our voting stock, unless the business combination is approved in a prescribed manner. We have elected to opt out of Section 203 of the DGCL. However, our certificate of incorporation will contain a provision that is of similar effect, except that it will exempt from its scope the Ares Funds, any of their affiliates and certain of their respective direct or indirect transferees as described under "Description of Capital Stock—Anti-Takeover Provisions."

Any provision of our certificate of incorporation, our bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of common stock and could also affect the price that some investors are willing to pay for our common stock. See "Description of Capital Stock—Anti-Takeover Provisions."

***Our certificate of incorporation, which will be in effect upon the completion of this offering, will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for a wide range of disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.***

Our certificate of incorporation, which will be in effect upon the completion of this offering, will provide that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any derivative action or proceeding brought on our behalf;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any action asserting a breach of fiduciary duty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any action asserting a claim against us arising under the DGCL, our certificate of incorporation or our bylaws; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any action asserting a claim against us that is governed by the internal-affairs doctrine.

The exclusive-forum provisions will also provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive-forum provision. However, there is substantial uncertainty as to whether a court would enforce the exclusive-forum provisions relating to causes of action arising under the Securities Act. For example, the Court of Chancery of the State of Delaware recently determined that a provision stating that federal district courts are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable. This decision may be reviewed and ultimately overturned by the Delaware Supreme Court. If a court were to find any of the exclusive-forum provisions in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.

These exclusive-forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or employees, which may discourage lawsuits against us and our directors, officers and employees, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.

***Our certificate of incorporation will contain a provision renouncing our interest and expectancy in certain corporate opportunities.***

Under our certificate of incorporation, neither the Ares Funds nor any of their affiliates or their respective portfolio companies or affiliated funds, nor any of their respective officers, directors, employees, agents, stockholders, members or partners will have any duty to refrain from engaging, directly or indirectly, in the same business activities, similar business activities, or lines of business in which we operate. In addition, our certificate of incorporation provides that, to the fullest extent permitted by law, no officer or director of ours who is also an officer, director, employee, agent, stockholder, member, partner or affiliate of the Ares Funds or their affiliates will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to the Ares Funds or their affiliates, instead of to us, or does not communicate information regarding a corporate opportunity to us that the officer, director, employee, agent, stockholder, member, partner or affiliate has directed to the Ares Funds or their affiliates. For example, a director of our company who also serves as an officer, director, employee, agent, stockholder, member, partner or affiliate of the Ares Funds or their affiliates, or any of their respective portfolio companies or affiliated funds may pursue certain acquisitions or other opportunities that may be complementary to our business and, as a result, such acquisition or other opportunities may not be available to us. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if attractive corporate opportunities are allocated by an Ares Fund to itself or their affiliates or their respective portfolio companies or affiliated funds instead of to us. A description of our obligations related to corporate opportunities under our certificate of incorporation are more fully described in "Description of Capital Stock—Corporate Opportunity."

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**General Risks** 

***We depend on our executive officers and other key technical, operational and sales employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business.***

Our success depends largely upon the continued services of our executive officers and other key technical, operational and sales employees. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. Our employment agreements with our executive officers or other key personnel do not require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time. The loss of one or more of our executive officers, especially our Chief Executive Officer, or other executive officers or key technical, operational and sales employees could harm our business.

Volatility or lack of appreciation in the stock price of our common stock may also affect our ability to attract and retain our executive officers and key technical, operational and sales employees. Many of our senior personnel and other key technical, operational and sales employees have become, or will soon become, vested in a substantial amount of stock or stock options. Employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase price of the shares or the exercise price of the options, or conversely, if the exercise price of the options that they hold are significantly above the market price of our common stock. If we do not maintain and continue to develop our corporate culture as we grow and evolve, it could harm our ability to foster the innovation, craftsmanship, teamwork, curiosity and diversity that we believe we need to support our continued growth.

***Use of social media, emails and text messages may adversely impact our reputation or subject us to fines or other penalties.***

We use social media, emails, push notifications and text messages as part of our omni-channel approach to marketing. As laws and regulations evolve to govern the use of these channels, the failure by us, our employees or third parties acting at our direction to comply with applicable laws and regulations in the use of these channels could adversely affect our reputation or subject us to fines or other penalties. In addition, our employees or third parties acting at our direction may knowingly or inadvertently make use of social media in ways that could lead to the loss or infringement of intellectual property, as well as the public disclosure of proprietary, confidential or sensitive personal information of our business, employees, customers or others. Information concerning us, our customers and the brands available at our stores, whether accurate or not, may be posted on social media platforms at any time and may have an adverse impact on our brands, reputation or business. Any such harm may be immediate without affording us an opportunity for redress or correction and could have an adverse effect on our reputation, business, results of operations, financial condition and prospects.

***Our management team has limited experience managing a public company.***

Most members of our management team have limited experience managing a publicly-traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could harm our business, results of operations and financial condition.

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***The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain executive management and qualified board members.***

As a public company, we are subject to the reporting requirements of the Exchange Act, the listing standards of the NYSE and other applicable securities rules and regulations, and we may not be eligible to use the scaled disclosure standards applicable to "emerging growth companies" under the JOBS Act. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources. For example, the Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and results of operations. As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management's attention may be diverted from other business concerns, which could harm our business, results of operations and financial condition. Although we have already hired additional employees to assist us in complying with these requirements, we will need to hire more employees in the future or engage outside consultants, which will increase our operating expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. For example, in March 2022, the SEC issued a proposed rule requiring public companies to disclose information regarding their climate-related risks in their annual filings and registration statements. We intend to invest substantial resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from business operations to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

We also expect that being a public company and being subject to these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition are more visible, which may result in an increased risk of threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business, results of operations and financial condition could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business, results of operations and financial condition.

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**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS** 

This prospectus contains forward-looking statements. Many statements included in this prospectus that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These risks and other factors include, but are not limited to, those listed under "Risk Factors." In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "objective," "ongoing," "plan," "predict," "project," "potential," "should," "will," "would" or the negative of these terms or other comparable terminology. In particular, statements about the markets in which we operate, including growth of our various markets and growth in the use of engineered products, statements about potential new products and product innovation and our expectations, beliefs, plans, strategies, objectives, prospects, assumptions or future events or performance contained in this prospectus under the headings "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business" are forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our market opportunity and the potential growth of that market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our strategy, outcomes and growth prospects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• trends in our industry and markets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the competitive environment in which we operate.

Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• both supply of and demand for our products is influenced by general economic conditions and trends in consumer spending on
clothing and household items;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to source a sufficient quantity of quality secondhand items at attractive prices on a recurring basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to effectively manage our growth and execute our business plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks related to attracting new, and retaining existing customers, including by increasing acceptance of secondhand items
among new and growing customer demographics;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks associated with sourcing and processing secondhand items on a continued basis, including processing costs and
capacity; risk of damage, loss, or contamination of items, and increased costs to maintain or develop sources of supply;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks that certain stores may experience challenges achieving period-to-period comparable sales growth targets due to factors out of our control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to identify and secure suitable locations for new stores as we grow our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to expand our CPC operations in geographic regions that enable us to effectively scale our operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• various risks to our physical store and processing center locations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks associated with our significant foreign operations, including regulatory risks in foreign jurisdictions (particularly
in Canada, where we maintain extensive operations) and exchange rate risks, which we may not be able to fully hedge;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks related to our ability to attract and retain suitable workers for our stores and processing facilities and to manage
labor costs;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to retain key store and facility management personnel, who are crucial to our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks related to acquisitions or joint ventures we may pursue;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to protect our intellectual property rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks arising from the material weaknesses we have identified in our internal control over financial reporting and any
failure to remediate these material weaknesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks arising from compromises of our data security, which may materially harm our reputation and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to maintain an effective system of internal controls and produce timely and accurate financial statements or
comply with applicable regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to maintain normal operations and retain customers in the context of the global COVID-19 pandemic and related public health regulations in the jurisdictions in which we operate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the increased expenses associated with being a public company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other risks and uncertainties, including those described under "Risk Factors."

We have based the forward-looking statements contained in this prospectus primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions and other factors described under "Risk Factors" and elsewhere in this prospectus. These risks are not exhaustive. Other sections of this prospectus include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus. We cannot be sure that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in, or implied by, the forward-looking statements.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe that information forms a reasonable basis for such statements, that information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

The forward-looking statements made in this prospectus relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this prospectus or to conform such statements to actual results or revised expectations, except as required by law.

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**USE OF PROCEEDS** 

We estimate that we will receive net proceeds from this offering of approximately $ million based on an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting assumed underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to increase our capitalization and financial flexibility and create a public market for our common stock. We will not receive any proceeds from the sale of shares in this offering by the selling stockholders upon the sale of shares if the underwriters exercise their option to purchase additional shares.

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share of common stock, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately $ million, assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting assumed underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million shares in the number of shares of common stock offered by us would increase (decrease) the net proceeds to us from this offering by approximately $ million, assuming the assumed initial public offering price of $ per share remains the same, and after deducting assumed underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use net proceeds received by us from this offering to repay approximately $ million of indebtedness plus accrued and unpaid interest and premium under the Term Loan Facility. The Term Loan Facility matures in April 2028 and accrues interest at a variable rate equal to a reference rate plus a margin ranging from 4.50% to 5.75%. As of October 1, 2022, we had $816.8 million of borrowings outstanding under the Secured Credit Agreement, which consisted of amounts related to the April 2021 Refinancing and the 2nd Ave. Acquisition. We intend to use any remainder for general corporate purposes, including working capital, debt reduction, payment of operating expenses and capital expenditures. We may also use a portion of any net proceeds we receive from this offering for acquisitions or other strategic investments, although we do not currently have any specific plans to do so. We will have broad discretion over the uses of any net proceeds in this offering to be used for general corporate purposes.

We intend to invest the net proceeds to us from this offering that are not used as described above (or pending such use) in investment-grade, interest-bearing instruments. The precise allocation of funds among these uses will depend upon future developments in or affecting our business and the emergence of future opportunities.

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**DIVIDEND POLICY** 

On November 22, 2021, we paid a dividend of $75.0 million to our equityholders using cash on hand. On December 16, 2022, we paid a dividend of $69.5 million to our equityholders using borrowings from our Revolving Credit Facility and cash on hand. We subsequently repaid all amounts borrowed in connection with this dividend. On February 6, 2023, we paid a dividend of $262.2 million to our equityholders using the proceeds from the Notes Offering. No executive officers or directors received dividend payments. Certain of our employees who hold our equity interests who were not eligible to receive dividend payments received bonus payments in connection with the dividend payments in December 2022 and February 2023. Following completion of this offering, we do not anticipate paying any cash dividends for the foreseeable future. Instead, we anticipate that all of our earnings on our common stock in the foreseeable future will be used to repay debt, for working capital, to support our operations and to finance the growth and development of our business. Any future determination relating to dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including restrictions in our current and future debt instruments, our future earnings, capital requirements, financial condition, prospects, and applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits.

As a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries. Our ability to pay dividends will therefore be restricted as a result of restrictions on their ability to pay dividends to us, including under the agreements governing our existing and any future indebtedness. See "Risk Factors—Risks relating to this offering and ownership of our common stock," "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Secured Credit Facilities."

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**CAPITALIZATION** 

The following table sets forth our cash and cash equivalents and capitalization as of October 1, 2022:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on an actual basis; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on a pro forma basis, to give effect to the Notes Offering, the December 2022 Dividend, the issuance and sale of
 shares of our common stock in this offering at the assumed initial offering price of
$ per share, which is the midpoint of the estimated offering price range on the cover page of this prospectus, after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us.

You should read this table together with the sections titled "Selected Financial and Other Data," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Information" and our financial statements and related notes included elsewhere in this prospectus.

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| | | |
|:---|:---|:---|
|  | **As of October 1, 2022** | **As of October 1, 2022** |
| **(In thousands, except share and per share data)** | **Actual** | **Pro Forma<sup>(1)(2)</sup>** |
|  Cash and cash equivalents | $114946 | $|
|  Total debt | $792730 | $|
|  Stockholders' equity: |  |  |
|  Common stock, $ par value; no shares authorized issued or outstanding, actual; shares authorized, pro forma; shares issued and outstanding, pro forma |  |  |
|  Additional paid-in capital | 225465 |  |
|  Retained earnings | 4578 |  |
|  Accumulated other comprehensive income | 43285 |  |
|  Total stockholders' equity | 273328 |  |
|  Total capitalization | $1066058 | $|

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(1) The pro forma column reflects the effects of the December 2022 Dividend and the Notes Offering and gives further effect
to the sale and issuance by us of shares of our common stock in this offering, based upon the assumed initial public offering price of $ per share, which
is the midpoint of the estimated offering price range on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us upon completion of our initial public
offering. See "Unaudited Pro Forma Condensed Combined Financial Information."

(2) Each $1.00 increase or decrease in the assumed initial public offering price of
$ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease the
amount of our pro forma cash and cash equivalents, additional paid-in capital, total stockholders' equity, and capitalization by
$ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting
estimated underwriting discounts and commissions payable by us. An increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease, as applicable, the amount of our pro forma cash and cash
equivalents, additional paid-in capital, total stockholders' equity, and capitalization by $ million assuming
the assumed initial public offering price remains the same, and after deducting estimated underwriting discounts and commissions payable by us.

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Assuming no change in the number of shares offered by us as set forth on the cover page of this prospectus, a $1.00 increase (decrease) in the assumed initial public offering price of $ per share of common stock (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) each of cash and cash equivalents, additional paid-in capital, and total equity by $.

Similarly, each increase or decrease of 1.0 million shares in the number of shares of common stock offered by us, as set forth on the cover of this prospectus, would increase (decrease) each of cash and cash equivalents, additional paid-in capital, total equity, and total capitalization by $, million, after deducting assumed underwriting discounts and commissions and estimated offering expenses payable by us, based on the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, remained the same.

The table above does not include shares of common stock reserved for future issuance under our equity incentive plans, consisting of options outstanding under our 2019 Management Incentive Plan and shares reserved under our Omnibus Incentive Plan, which will become effective on the day prior to the first public trading date of our common stock, as well as any future increases in the number of shares of our common stock reserved for issuance under our Omnibus Incentive Plan, or under our Employee Stock Purchase Plan, which we expect to be adopted in connection with this offering, as well as any future increases in the number of shares of our common stock available for issuance under our Employee Stock Purchase Plan.

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**DILUTION** 

If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of common stock and the pro forma net tangible book deficit per share immediately after this offering.

Our net tangible book deficit as of October 1, 2022 was $ million, or $ per share of common stock. Net tangible book deficit per share is determined by dividing our net tangible book deficit, which is total tangible assets less total liabilities, by the aggregate number of shares of common stock outstanding after giving effect to the Corporate Conversion prior to the completion of this offering. Tangible assets represent total assets excluding goodwill and other intangible assets. Dilution in net tangible book deficit per share represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the pro forma net tangible book deficit per share of our common stock immediately afterwards.

After giving further effect to (i) the issuance and sale by us of shares of our common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us; and (ii) the intended use of the net proceeds to us from this offering to repay $ million of indebtedness (including accrued and unpaid interest), as set forth in "Use of Proceeds," our pro forma net tangible book deficit as of October 1, 2022 would have been approximately $ million, or $ per share. This represents an immediate increase in net tangible book deficit of $ per share to our existing shareholders and an immediate dilution of $ per share to new investors purchasing shares of common stock in this offering.

The following table illustrates this dilution on a per share basis:

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| | | |
|:---|:---|:---|
|  Assumed initial public offering price per share |  | $|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Historical net tangible book deficit per share | $|  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma net tangible book deficit per share before giving effect to this offering |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in net tangible book deficit per share attributable to this offering |  |  |
|  Pro forma net tangible book deficit per share after this offering |  | $|
|  Dilution per share to new investors |  | $|

---

The dilution information discussed above is illustrative only and may change based on the actual initial public offering price and other terms of this offering. A $1.00 increase (decrease) in the assumed initial public offering price of $ per share of common stock, the midpoint of the estimated offering price range on the cover page of this prospectus, would decrease (increase) our pro forma net tangible book deficit per share after this offering by $ per share and increase (decrease) the dilution to new investors by $ per share, in each case assuming the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 1.0 million shares in the number of shares of common stock offered by us would decrease (increase) our pro forma net tangible book deficit by approximately $ per share and decrease (increase) the dilution to new investors by approximately $ per share, in each case assuming the assumed initial public offering price of $ per share of common stock remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Dilution to new investors would be unaffected by the underwriters' exercise of their option to purchase additional shares because such shares will be purchased from the selling stockholders.

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The following table summarizes, as of October 1, 2022, on a pro forma basis as described above, the number of shares of our common stock, the total consideration and the average price per share (1) paid to us by existing stockholders and (2) to be paid by new investors acquiring our common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the estimated offering price range on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Shares Purchased** | **Shares Purchased** | **Total Consideration** | **Total Consideration** | **Average Price<br>Per Share** |
|  | **Number** | **Percent** | **Amount** | **Percent** | **Average Price<br>Per Share** |
|  Existing investors<sup>(1)</sup>% |  |  | $nan% |  | $— |
|  New investors |  |  |  |  |  |
|  Total | 100**%** |  | $100**%** |  | $|

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(1) Does not give effect to the sale of shares by the selling stockholders in this offering as a result of any exercise by
the underwriters of the option to purchase additional shares.

Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the estimated offering price range on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors and total consideration paid by all stockholders by approximately $, assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions.

The total number of shares reflected in the discussion and tables above is based on common shares outstanding as of the date of this prospectus on a pro forma basis reflecting the effects of this offering.

The discussion and tables exclude shares of common stock reserved for future issuance under our equity incentive plans, consisting of options outstanding under our 2019 Management Incentive Plan and shares reserved under our Omnibus Incentive Plan, which will become effective on the day prior to the first public trading date of our common stock, as well as any future increases in the number of shares of our common stock reserved for issuance under our Omnibus Incentive Plan, or under our Employee Stock Purchase Plan, which we expect to be adopted in connection with this offering, as well as any future increases in the number of shares of our common stock available for issuance under our Employee Stock Purchase Plan.

We expect to require additional capital to fund our current and future operating plans. To the extent additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders. See "Risk Factors—Risks relating to this offering and ownership of our common stock—Future issuances of our common stock could result in significant dilution to our stockholders, dilute the voting power of our common stock and depress the market price of our common stock."

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**UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION** 

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the accompanying notes. The adjustments presented in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an understanding of Savers Value Village, Inc., formerly known as S-Evergreen Holding LLC (the "Company"), upon consummation of the following transactions (collectively, the "Transactions"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• April 2021 Refinancing - In connection with the Ares Share Purchase Transaction in April 2021 (see "Presentation of
Financial Information"), the outstanding borrowings under the Company's existing credit facilities were refinanced (the "April 2021 Refinancing") with proceeds from the Term Loan Facility.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 2nd Ave. Acquisition - On November 8, 2021, the Company acquired Thrift Intermediate Holdings I, Inc. ("2nd
Ave.") for purchase price consideration of $238.5 million in cash (the "2nd Ave. Acquisition"). The Company financed the 2nd Ave. Acquisition with cash on hand and $225.0 million of additional borrowings under the Term Loan
Facility. The unaudited pro forma condensed combined statements of operations reflect the 2nd Ave. Acquisition as if it occurred on January 3, 2021, the first day of fiscal year 2021. The unaudited pro forma condensed combined balance sheet
does not give further effect to the 2nd Ave. Acquisition, because it is reflected in the historical consolidated balance sheet of the Company included elsewhere in this prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• December 2022 Dividend - On December 16, 2022, the Company paid a dividend of $69.5 million to its equityholders. The
Company incurred $44.0 million of borrowings on its Revolving Credit Facility and the remainder was paid using cash on the balance sheet. The Company has subsequently repaid all amounts borrowed in connection with the dividend. In connection with
the dividend, the Company paid bonuses to its employees of $6.5 million. The Company refers to the dividend and the related bonus payments together as the "December 2022 Dividend." The unaudited pro forma balance sheet reflects the
December 2022 Dividend as if it occurred on October 1, 2022, the date of the most recent historical balance sheet. The unaudited pro forma condensed combined statements of operations reflect the employee bonus expense in fiscal year 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Notes Offering - The Company completed, on February 6, 2023, an offering exempt from registration under the Securities Act
of $550.0 million aggregate principal amount of 9.75% Senior Secured Notes due 2028 (the "Notes"), co-issued by certain subsidiaries of the Company. The Notes have a maturity date of April 26, 2028 and were issued at an offering price of
97.986%. The net proceeds from the Notes were used to: (i) permanently prepay $233.4 million of outstanding borrowings under the Term Loan Facility, (ii) pay a dividend of $262.2 million to the Company's equityholders, (iii) pay one-time
bonuses to certain of the Company's employees who hold equity interests which were not entitled to participate in the dividend, (iv) pay certain related fees and expenses and (v) for general corporate purposes. The Company refers to the
offering of the Notes and the related transactions (including the use of the proceeds of the Notes) collectively as the "Notes Offering." The unaudited pro forma condensed combined balance sheet reflects the Notes Offering as if it
occurred on October 1, 2022. The unaudited pro forma condensed combined statements of operations reflect the Notes Offering as if it occurred on January 3, 2021, the first day of fiscal year 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Initial Public Offering - The unaudited pro forma condensed combined financial information reflects the Corporate
Conversion and the issuance and sale of our common stock in this offering after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and the intended use of the net proceeds, as described

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under "Use of Proceeds" (collectively, the "Initial Public Offering"). The unaudited pro forma condensed combined statements of operations reflect the Corporate Conversion and effects of this offering as if they occurred on January 3, 2021, the first day of fiscal year 2021. The unaudited pro forma condensed combined balance sheet reflects the Initial Public Offering as if it occurred on October 1, 2022, the date of the most recent historical balance sheet. <br>

The unaudited pro forma condensed combined statement of operations for the year ended January 1, 2022 combines the statement of operations of the Company for the year ended January 1, 2022 with the financial information of 2nd Ave. for the period from January 4, 2021 through November 7, 2021, the day immediately preceding the acquisition, giving effect to the Transactions as if they had occurred on January 3, 2021, the first day of fiscal year 2021.

The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. This unaudited pro forma condensed combined financial information has been prepared to give effect to the Transactions that have occurred or are probable for which disclosure of pro forma financial information would be material to investors.

Where applicable, the unaudited pro forma condensed combined financial information herein has been adjusted to depict the accounting for the Transactions (referred to as "Transaction Accounting Adjustments"), which reflect the application of the accounting required by the U.S. Generally Accepted Accounting Principles ("GAAP"), linking the effects of the Transactions to the historical consolidated statement of operations of the Company on a pro forma basis. The Transaction Accounting Adjustments are described in the notes to the unaudited pro forma condensed combined financial information. We elected not to present the reasonably estimable cost savings, synergies, and other transaction effects that may occur as a result of the Transactions.

As a public company, we will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. We expect to incur additional annual expenses as we become a public company, including expenses and charges related to additional directors' and officers' liability insurance, director fees, reporting requirements of the SEC, transfer agent fees, hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses. We have not included any pro forma adjustments relating to these costs.

The unaudited pro forma condensed combined financial information is presented for informational purposes only and does not purport to represent what our actual consolidated statement of operations would have been had the Transactions actually occurred on the dates indicated, nor are they necessarily indicative of future consolidated results of operations. The unaudited pro forma condensed combined financial information should be read in conjunction with the information contained in the sections titled "Summary Financial and Other Data", "Capitalization", "Dilution", "Selected Financial Data", "Management's Discussion and Analysis of Financial Condition and Results of Operations", and the consolidated financial statements and related notes of the Company and 2nd Ave. included elsewhere in this prospectus.

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**UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF OCTOBER 1, 2022** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Historical** | **Transaction Accounting Adjustments** | **Transaction Accounting Adjustments** | **Transaction Accounting Adjustments** | |
| *(In thousands, except share and per share<br>information)* | **Savers Value<br>Village, Inc.** | **December 2022<br>Dividend** | **Notes<br>Offering** | **Initial Public<br>Offering** | **Pro forma** |
|  **Current assets:** |  |  |  |  |  |
|  Cash and cash equivalents | $114946 | $(75955) A | $6268 B | $| $45259 |
|  Restricted cash | 968 |  |  |  | 968 |
|  Trade and other receivables, net of allowance for doubtful accounts of $197 | 15503 |  |  |  | 15503 |
|  Inventories | 29966 |  |  |  | 29966 |
|  Prepaid expenses and other current assets | 33259 |  |  |  | 33259 |
|  Derivative asset current | 8258 |  |  |  | 8258 |
|  **Total current assets** | 202900 | (75955) | 6268 |  | 133213 |
|  Property and equipment, net | 171521 |  |  |  | 171521 |
|  Right-of-use lease assets | 427351 |  |  |  | 427351 |
|  Goodwill | 682370 |  |  |  | 682370 |
|  Intangible assets, net | 172091 |  |  |  | 172091 |
|  Derivative asset—non-current | 37507 |  |  |  | 37507 |
|  Other assets | 4057 |  |  |  | 4057 |
|  **Total assets** | $1697797 | $(75955) | $6268 | $| $1628110 |
|  **Current liabilities:** |  |  |  |  |  |
|  Accounts payable and accrued liabilities | $81453 | $— | $(208) B | $| $81245 |
|  Accrued payroll and related taxes | 57015 |  |  |  | 57015 |
|  Lease liabilities—current | 71264 |  |  |  | 71264 |
|  Derivative liability current |  |  |  |  |  |
|  Current portion of long-term debt | 8250 |  |  |  | 8250 |
|  **Total current liabilities** | 217982 |  | (208) |  | 217774 |
|  Insurance reserves | 8656 |  |  |  | 8656 |
|  Deferred rent |  |  |  |  |  |
|  Deferred compensation | 2086 |  |  |  | 2086 |
|  Long-term debt, net | 784480 |  | 299054 B |  | 1083534 |
|  Lease liabilities—non-current | 344156 |  |  |  | 344156 |
|  Deferred tax liabilities | 63052 |  |  |  | 63052 |
|  Other liabilities | 4057 |  |  |  | 4057 |
|  **Total liabilities** | 1424469 |  | 298846 |  | 1723315 |
|  **Stockholders' equity (deficit):** |  |  |  |  |  |
|  Common stock, 0.000001 par value, 1,000,000,000 shares authorized as of October 1, 2022; 198,442,330 shares issued and outstanding as of October 1, 2022 |  |  |  |  |  |
|  Additional paid-in capital | 225465 |  |  |  | 225465 |
|  Retained earnings (accumulated deficit) | 4578 | (75955) A | (292578) B |  | (363955) |
|  Accumulated other comprehensive income | 43285 |  |  |  | 43285 |
|  **Total stockholders' equity (deficit)** | 273328 | (75955) | (292578) |  | (95205) |
|  **Total liabilities and stockholders' equity (deficit)** | $1697797 | $(75955) | $6268 | $| $1628110 |

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**UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JANUARY 1, 2022** 

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Historical** | **Historical** | **Transaction Accounting Adjustments** | **Transaction Accounting Adjustments** | | |
| *(in thousands, except per<br>share information)* | **Savers Value<br>Village, Inc.** | **Thrift<br>Intermediate<br>Holdings I<br>(through<br>November 7,<br>2021) Note 4** | **Business<br>Combination** | **Financing<br>Transactions** |  | **Pro forma** |
|  Net sales | $1204124 | $82036 | $— | $— | $— | $1286160 |
|  Operating expenses: |  |  |  |  |  |  |
|  Cost of merchandise sold exclusive of depreciation and amortization | 474462 | 22008 |  |  |  | 496470 |
|  Salaries, wages, and benefits | 239806 | 35814 |  | 30070 D |  | 305690 |
|  Selling, general, and administrative | 260235 | 4768 |  |  | E | 265003 |
|  Depreciation and amortization | 47385 | 8174 | (5410) A |  |  | 50149 |
|  Total operating expenses | 1021888 | 70764 | (5410) | 30070 |  | 1117312 |
|  Operating income | 182236 | 11272 | 5410 | (30070) |  | 168848 |
|  Other (expense) income: |  |  |  |  |  |  |
|  Interest expense | (53565) | (3475) |  | 3475 B | F | (94721) |
|  |  |  |  | (41156) C |  |  |
|  Other (expense), net | (3265) | (534) |  |  |  | (3799) |
|  Loss on extinguishment of debt | (47541) |  |  |  |  | (47541) |
|  Other (expense) income, net | (104371) | (4009) |  | (37681) |  | (146061) |
|  Income before income tax expense | 77865 | 7263 | 5410 | (67751) |  | 22787 |
|  Income tax expense | (5529) | (1202) | 1515 G | (18971) G | G | (24187) |
|  Net income | $83394 | $8465 | $3895 | $(48780) | $— | $46974 |
|  Net income per share, basic | $0.42 |  |  |  |  | $nan H |
|  Net income per share, diluted | $0.41 |  |  |  |  | $nan H |

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**UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED OCTOBER 1, 2022** 

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Historical** | **Transaction Accounting<br>Adjustments** | | |
| *(in thousands, except per share information)* | **Savers Value<br>Village, Inc.** | **Financing**<br>**Transactions** |  | **Pro forma** |
|  Net sales | $1070427 | $— | $— | $1070427 |
|  Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of merchandise sold exclusive of depreciation and amortization | 443372 |  |  | 443372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries, wages, and benefits | 199643 |  |  | 199643 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 227236 |  | E | 227236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 40110 |  |  | 40110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 910361 |  |  | 910361 |
|  Operating income | 160066 |  |  | 160066 |
|  Other (expense) income: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (45855) | (24269) C | F | (70124) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense), net | (26430) |  |  | (26430) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on extinguishment of debt | (1023) |  |  | (1023) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (73308) | (24269) |  | (97577) |
|  Income before income tax expense | 86758 | (24269) |  | 62489 |
|  Income tax expense | 28472 | (5825) G | G | 22647 |
|  Net income  | $58286 | $(18444) | $— | $39842 |
|  Net income per share, basic | $0.29 |  |  | $nan H |
|  Net income per share, diluted | $0.28 |  |  | $nan H |

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**1.** **Basis of Presentation** 

The adjustments presented in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an understanding of Savers Value Village, Inc., formerly known as S-Evergreen Holding LLC (the "Company"), upon consummation of the following transactions (collectively, the "Transactions"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• April 2021 Refinancing - In connection with the Ares Share Purchase Transaction in April 2021 (See "Presentation of
Financial Information"), the outstanding borrowings under the Company's existing credit facilities were refinanced (the "April 2021 Refinancing") with proceeds from the Term Loan Facility.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 2nd Ave. Acquisition - On November 8, 2021, the Company acquired Thrift Intermediate Holdings I, Inc. ("2nd
Ave.") for purchase price consideration of $238.5 million in cash (the "2nd Ave. Acquisition"). The Company financed the 2nd Ave. Acquisition with cash on hand and $225.0 million of additional borrowings under the Term Loan
Facility. The unaudited pro forma condensed combined statements of operations reflect the 2nd Ave. Acquisition as if it occurred on January 3, 2021, the first day of fiscal year 2021. The unaudited pro forma condensed combined balance sheet
does not give further effect to the 2nd Ave. Acquisition, because it is reflected in the historical consolidated balance sheet of the Company included elsewhere in this prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• December 2022 Dividend - On December 16, 2022, the Company paid a dividend of $69.5 million to its equityholders.
The Company incurred $44.0 million of borrowings on its Revolving Credit Facility and the remainder was paid using cash on the balance sheet. The Company has subsequently repaid all amounts borrowed in connection with the dividend. In
connection with the dividend, the Company paid bonuses to its employees of $6.5 million. The Company refers to the dividend and the related bonus payments together as the "December 2022 Dividend." The unaudited pro forma balance sheet
reflects the December 2022 Dividend as if it occurred on October 1, 2022, the date of the most recent historical balance sheet. The unaudited pro forma condensed combined statements of operations reflect the employee bonus expense in fiscal
year 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Notes Offering - The Company completed a private offering of senior secured notes (the "Notes") with an aggregate
principal of $550.0 million at an interest rate of 9.75% in a private offering on February 6, 2023. The Notes have a maturity date of April 26, 2028. The net proceeds from the Notes , were used to: (i) permanently prepay
$233.4 million of outstanding borrowings under the Term Loan Facility, (ii) pay a dividend to the Company's equityholders, (iii) pay one-time bonuses to certain of the Company's employees who hold equity interests which were
not entitled to participate in the dividend, (iv) pay certain related fees and expenses and (v) for general corporate purposes. The Company refers to the offering of the Notes and the related transactions (including the use of the proceeds of
the Notes) collectively as the "Notes Offering." The unaudited pro forma condensed combined balance sheet reflects the Notes Offering as if it occurred on October 1, 2022. The unaudited pro forma condensed combined statements of
operations reflect the Notes Offering as if it occured on January 3, 2021, the first day of fiscal year 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Initial Public Offering - The unaudited pro forma condensed combined financial information reflects the Corporate
Conversion and the issuance and sale of our common stock in this offering after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and the intended use of the net proceeds, as described under
"Use of Proceeds" (collectively, the "Initial Public Offering"). The unaudited pro forma condensed combined statements of operations reflect the Corporate Conversion and effects of this offering as if they occurred on
January 3, 2021, the first day of fiscal year 2021. The unaudited pro forma condensed combined balance sheet reflects the Initial Public Offering as if it occurred on October 1, 2022, the date of the most recent historical balance sheet.

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The 2nd Ave. Acquisition is accounted for using the acquisition method of accounting under the provisions of Accounting Standards Codification ("ASC") Topic 805, Business Combinations ("ASC 805") on the basis of the Company as the accounting acquirer. The acquisition method of accounting is based on ASC 805 and uses the fair value concepts defined in ASC Topic 820, Fair Value Measurements ("ASC 820"). In general, ASC 805 requires, among other things, that assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date. The consolidated financial statements issued by the Company after completion of the 2nd Ave. Acquisition for fiscal year 2021 reflect these values. Prior periods have not been retroactively restated to reflect the historical financial position or results of operations of 2nd Ave.

The Transaction Accounting Adjustments represent management's estimates based on information available as of the date of this Registration Statement on Form S-1 and are subject to change as additional information becomes available and additional analyses are performed. These adjustments are discussed in greater detail in Note 5 below. Management considers this basis of presentation to be reasonable under the circumstances. Additionally, certain amounts in the 2nd Ave. historical statements of operations have been conformed to the Company's presentation, as discussed in Note 4 below.

**2.** **Accounting Policies** 

As a private company, 2nd Ave. historically amortized its acquired goodwill. The unaudited pro forma condensed combined statement of operations includes an adjustment to remove the effects of 2nd Ave.'s goodwill amortization in its historical financial results. The Company did not identify any additional accounting policy differences that would have a material impact on the consolidated financial statements that have not been adjusted for in the unaudited pro forma financial information.

**3.** **Purchase Price Allocation** 

The Company completed the 2nd Ave. Acquisition for cash consideration of $238.5 million. The 2nd Ave. Acquisition has been accounted for as a business combination in accordance with ASC 805, using the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their estimated fair values as of the acquisition date. Goodwill is measured as the excess of consideration transferred over the fair value of net assets acquired.

Fair values of the assets acquired and liabilities assumed as of the acquisition date are as follows:

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| | |
|:---|:---|
| *(in thousands)* |  |
|  Current assets (excluding accounts receivable, inventory, and cash) | $2231 |
|  Accounts receivable | 1648 |
|  Inventory | 8876 |
|  Cash | 18213 |
|  Property and equipment | 12977 |
|  Intangible assets | 35000 |
|  Lease intangible assets | 4987 |
|  Other assets | 434 |
|  Goodwill | 217916 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $302282 |
|  Current liabilities | 9050 |
|  Lease intangible liabilities | 2113 |
|  Long-term debt | 2596 |
|  Deferred tax liabilities | 50003 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | $63762 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net assets acquired | $238520 |

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The Company recognized deferred tax liabilities of $50.0 million relating to the difference between the book basis and the outside tax basis in the acquired partnerships. The goodwill is not deductible for income tax purposes. The Company incurred $1.8 million of transaction costs in selling, general, and administrative expense related to the acquisition during fiscal year 2021, which are non-recurring. As the costs were incurred in fiscal year 2021, the earliest period presented, no adjustment is reflected for pro forma purposes.

In connection with the purchase price allocation, the Company estimated the fair values of 2nd Ave.'s tangible and intangible assets and liabilities, using the income approach, the market approach or a combination of both and the cost approach. The valuation process included a review of assumptions related to future cash flows, discount rates, business enterprise valuation, economic growth, market interest rates, and asset lives, utilizing currently available information.

Based on those estimates and the premise of value as of the acquisition date, the Company increased the carrying value of its property and equipment, inventory, intangible assets, and right-of-use assets. For further detail, see Note 3 of the Company's consolidated financial statements for fiscal year 2021 included elsewhere in this prospectus.

**4.** **Reclassification Adjustments** 

The unaudited condensed combined financial information reflects certain reclassification adjustments to conform the historical financial amounts of 2nd Ave. to the Company's presentation. The following adjustments have been made to the historical consolidated statement of operations of 2nd Ave. to conform the Company's presentation:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| (in thousands) | **Nine<br>months<br>ended<br>October 3,<br>2021<br>(A)** | **October 4,<br>2021<br>through<br>November 7,<br>2021<br>(B)** | **Fiscal<br>Year 2021<br>Results<br>through<br>November 7,<br>2021<br>(A+B = C)** | **Reclassification<br>Adjustments<br>(D)** | **TMs** | **Adjusted<br>Thrift<br>Intermediate<br>Holdings I<br>Amounts<br>(C+D)** |
|  Net Sales | $— | $— | $— | $82036 | A1 | $82036 |
|  Sales, retail | 62786 | 9998 | 72784 | (72784) | A1 |  |
|  Sales, wholesale | 8295 | 957 | 9252 | (9252) | A1 |  |
|  Lease revenue, real estate | 38 | (4) | 34 | (34) | A2 |  |
|  Other income (expense), net |  |  |  | (534) | A2 | (534) |
|  Paycheck Protection Program loan forgiveness | 8121 |  | 8121 | (8121) | A2 |  |
|  Rental income | 3 | (3) |  |  | A2 |  |
|  Discontinued operations | (384) | 384 |  |  | A2 |  |
|  Severance expense | (289) | (4) | (293) | 293 | A2 |  |
|  Board and other fees | (457) | (7820) | (8277) | 8277 | A2 |  |
|  Gain (loss) of sale of property and equipment | (11) | (108) | (119) | 119 | A2 |  |
|  Cost of sales | 19057 | 2951 | 22008 | (22008) | A3 |  |
|  Cost of merchandise sold exclusive of depreciation and amortization |  |  |  | 22008 | A3 | 22008 |
|  Salaries, wages, and benefits |  |  |  | 35814 | A4 | 35814 |
|  Selling, general and administrative expenses | 37164 | 5188 | 42352 | (35814) | A4 | 4768 |
|  |  |  |  | (1770) | A5 |  |
|  Depreciation and amortization |  |  |  | 8174 | A5 | 8174 |
|  Amortization expense on goodwill and intangible assets | 5715 | 689 | 6404 | (6404) | A5 |  |

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| | |
|:---|:---|
| **Adjustment** | **Nature of Reclassification** |
| A1 | Reflects reclassification of sales, retail and sales, wholesale to net sales. |
| A2 | Reflects reclassification of lease revenue, real estate, interest income, and gain (loss) on sale of property and equipment to other income (expense). 2nd Ave. recognized $8.1 million of non-recurring income within other income (expenses), net related to the forgiveness of loans received under the Paycheck Protection Program. |
| A3 | Reflects reclassification from costs of sales to cost of merchandise sold, exclusive of depreciation and amortization |
| A4 | Reflects reclassification from selling, general and administrative to salaries, wages and benefits |
| A5 | Reflects reclassification from selling, general and administrative and amortization expense on goodwill and intangible assets to depreciation and amortization |

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**5.** **Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Reflects the December 2022 Dividend, including a dividend payment of $69.5 million and a related $6.5 million bonus paid, resulting in a decrease to cash and cash equivalents and retained earnings. The Company borrowed $44.0 million on the Revolving Credit Facility in connection with the December 2022 Dividend, which has subsequently been repaid in full. The entire payment amount is reflected as a reduction to cash and cash equivalents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Reflects the Notes Offering, which the Company closed in February 2023. Proceeds from the Notes Offering were $538.9 million, reflecting a principal balance of $550.0 million and an original issue discount of $11.1 million. The Company expects to use the proceeds from the Notes Offering as follows:

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| | |
|:---|:---|
| *(in thousands)* |  |
|  Cash proceeds from Notes Offering | $538923 |
|  Use of cash proceeds |  |
|  Dividend payment to equityholders | (262213) |
|  Prepayment of Term Loan Facility | (233400) |
|  Payment of accrued interest on Term Loan Facility | (208) |
|  Bonus paid to employees | (23570) |
|  Transaction costs directly attributable to the offering | (13264) |
|  Increase in cash and cash equivalents | $6268 |

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Long-term debt increased by $299.1 million following the Notes Offering. The increase consists of the principal amount of the Notes issued, reduced by the original issuance discount, prepayment of the Term Loan Facility and the amount of capitalized debt issuance costs directly attributable to the Notes Offering. The change to long-term debt is also impacted by the write-off of debt issuance costs resulting from the partial prepayment of amounts outstanding under the Term Loan Facility (which are included in loss on debt extinguishment below).

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| | |
|:---|:---|
| *(in thousands)* |  |
|  Principal of Notes Offering | $550000 |
|  Original issuance discount | (11077) |
|  Prepayment of Term Loan Facility | (233400) |
|  Capitalized debt issuance costs from Notes Offering | (13264) |
|  Write-off of Term Loan debt issuance costs | 6795 |
|  Increase in long-term debt, net | $299054 |

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The Company paid all accrued interest outstanding related to the prepayment of the Term Loan Facility upon closing of the Notes Offering. The unaudited pro forma condensed combined balance sheet reflects a $0.2 million reduction of accrued interest, the amount outstanding as of October 1, 2022.

The Company's accumulated deficit increased by $292.6 million, reflecting the loss on debt extinguishment, payment of the cash bonus to employees and the dividend payment to equityholders.

**6.** **Unaudited Pro Forma Condensed Combined Statements of Operations Adjustments** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Reflects the reduction of amortization expense resulting from the removal of historical amortization expense related to goodwill and intangibles reflected in the historical financial results of 2nd Ave., which is partially offset by the amortization expense associated with the identified intangible assets related to 2nd Ave.'s supply agreements and lease agreements. The supply agreements have an average estimated useful life of fifteen years and are amortized on a straight-line basis, and favorable/unfavorable lease intangibles have an average estimated useful life of seven to ten years. The Company also recognized a tradename intangible asset which was assigned an indefinite life. In addition, this adjustment reflects an increase in depreciation expense related to the step up in fair value related to 2nd Ave.'s property, plant and equipment, which has an average estimated useful life of five years.

The adjustment to depreciation and amortization for fiscal year 2021 is computed as follows:

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| | |
|:---|:---|
| (in thousands) |  |
|  Reversal of historical amortization | $(6404) |
|  Pro forma amortization expense from acquired intangible assets | 704 |
|  Pro forma additional depreciation expense for acquired property, plant and equipment | 290 |
|  Adjustment to depreciation and amortization | $(5410) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Reflects the removal of the interest expense associated with 2nd Ave.'s historical debt reflected in its consolidated statement of operations for fiscal year 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Reflects incremental interest expense as if the April 2021 Refinancing, the incremental $225.0 million in borrowings under the Term Loan Facility Term Loan borrowed in connection with the 2nd Ave. Acquisition, and the Notes Offering (collectively, "the Refinancing Transactions") as if they had occurred on January 3, 2021. The unaudited pro forma condensed combined statement of operations assumes that the debt prepayment of $233.4 million toward the Term Loan Facility associated with the Notes Offering occurred on January 3, 2021.

The increase to interest expense is computed as follows:

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| | | |
|:---|:---|:---|
| (in thousands) | **Fiscal Year<br>2021** | **Nine months<br>ended October 1,<br>2022** |
|  Elimination of historical interest expense | $(53351) | $(46259) |
|  Interest expense on Term Loan Facility and Notes after the Refinancing Transactions | 94507 | 70528 |
|  Incremental interest expense | $41156 | $24269 |

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Following the Initial Public Offering, the Company's First Lien Term Loan Facility will bear interest at a variable rate equal to a specified reference rate plus 5.25%, with a reference rate floor of 0.75%. A 1/8% increase or decrease in interest rates would result in a change in interest expense of approximately $0.7 million and $0.5 million during fiscal year 2021 and the nine months ended October 1, 2022, respectively, in the unaudited pro forma condensed combined statement of operations.

The loss on extinguishment of debt associated with the April 2021 Refinancing of $47.5 million is reflected in the Company's historical statement of operations for fiscal year 2021 and was, therefore, not adjusted for pro forma purposes. In connection with the Notes Offering, the Company expects to incur a loss on extinguishment of debt of $6.0 million during the first quarter of fiscal year 2023, which is not reflected in the unaudited pro forma condensed combined statements of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Represents cash bonus payments paid to employees in connection with the December 2022 Dividend ($6.5 million) and the Notes Offering ($23.6 million), which are reflected as an expense in the unaudited pro forma condensed combined statement of operations for fiscal year 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. Represents $ million of expenses incurred or expected to be incurred during fiscal year 2022 by the Company in connection with the Initial Public Offering that are not capitalizable. The historical consolidated statements of operations for the Company also include $8.1 million and $2.0 million of offering expenses, which are classified as selling, general and administrative expense and incurred during the year ended January 1, 2022 and nine months ended October 1, 2022, respectively. Offering expenses are reflected entirely in fiscal year 2021, the first year presented in the unaudited condensed combined pro forma financial information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. Represents a reduction in interest expense resulting from the repayment of approximately $ million of indebtedness in connection with the Initial Public Offering. This adjustment assumes a reduction in principal of the Term Loan Facility of $ million, which has an effective interest rate of 6.9%. Following the offering, the Term Loan Facility bears an interest rate at a variable rate equal to a specified reference rate plus 5.25%, with a reference rate floor of 0.75%. Because our interest rate is tied to market rates, we are susceptible to fluctuations in interest rates. A hypothetical 1.00% change in interest rates would cause pro forma interest expense to increase or decrease by $ million during fiscal year 2021 and $ million during the nine months ended October 1, 2022, based on debt outstanding after the Initial Public Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. Reflects the estimated tax effect of the pro forma adjustments using the Company's estimated blended statutory tax rate of 28% for fiscal year 2021 and 24% for the nine months ended October 1, 2022. The transaction costs are assumed to be non-deductible expenses for income tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. Represents net income per share calculated using the weighted average shares outstanding and the issuance of additional shares of common stock in connection with the Initial Public Offering, assuming that the shares were outstanding since January 3, 2021, the first day of fiscal year 2021. As the Initial Public Offering is reflected as if it had occurred at the beginning of fiscal year 2021, the calculation of weighted average shares outstanding for net loss per share assumes that the shares issuable related to the Transactions have been outstanding for the entire period presented.

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For fiscal year 2021 and the nine months ended October 1, 2022, the pro forma diluted earnings per share amount includes the effect of options.

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| | | |
|:---|:---|:---|
|  | **Fiscal Year<br>2021** | **Nine months ended<br>October 1, 2022** |
|  Pro forma Basic (loss) earnings per share: |  |  |
|  Net (loss) income | $| $|
|  Weighted average common stock outstanding for basic (loss earnings per unit calculation |  |  |
|  Basic (loss) earnings per share: | $| $|
|  Diluted (loss) earnings per share: |  |  |
|  Net (loss) income | $| $|
|  Weighted average common stock outstanding for basic (loss earnings per unit calculation |  |  |
|  Assumed exercise / vesting of: |  |  |
|  Options |  |  |
|  Weighted average common stock outstanding for diluted (loss earnings per unit calculation |  |  |
|  Diluted (loss) earnings per share: | $| $|

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**Selected Financial Data** 

The selected consolidated statement of operations data for fiscal year 2021, fiscal year 2020, for the period from March 28, 2019 to December 28, 2019 (Successor), and for the period from December 30, 2018 to March 27, 2019 (Predecessor) and selected consolidated balance sheet data as of January 1, 2022 and January 2, 2021 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated statement of operations data for the nine months ended October 1, 2022 and October 2, 2021 and the selected consolidated balance sheet data as of October 1, 2022 are derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in any future period. You should read the following selected financial data in conjunction with the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Information" and our consolidated financial statements and related notes included elsewhere in this prospectus.

***Consolidated statement of operations data***

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| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |  |  |  |  |  |  |  |
| *(in thousands, except unit/share and<br>per unit/share data)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** | **Nine Months<br>Ended<br>October 1,**<br>**2022** | **Nine Months<br>Ended<br>October 2,**<br>**2021** |  |  |  |  |  |  |  |
| *(in thousands, except unit/share and<br>per unit/share data)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** | **Nine Months<br>Ended<br>October 1,**<br>**2022** | **Nine Months<br>Ended<br>October 2,**<br>**2021** | Net sales | $1204124.0 | $834010.0 | $945527.0 | $259972.0 | $1070427.0 | $859291.0 |
|  Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of merchandise sold exclusive of depreciation and amortization | 474462 | 353455 | 460169 | 133595 | 443372 | 317620 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Salaries, wages, and benefits | 239806 | 184392 | 195066 | 60193 | 199643 | 168314 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 260235 | 229886 | 187727 | 71537 | 227236 | 186858 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 47385 | 59432 | 32391 | 18837 | 40110 | 33972 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 1021888 | 827165 | 875353 | 284162 | 910361 | 706764 |  |  |  |  |  |  |  |
|  Operating income (loss) | 182236 | 6845 | 70174 | (24190) | 160066 | 152527 |  |  |  |  |  |  |  |
|  Other (expense) income: |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (53565) | (69678) | (58003) | (20784) | (45855) | (40591) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (3265) | 3410 | (6353) | 6605 | (26430) | (399) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;(Loss) gain on extinguishment of debt | (47541) |  |  | 283241 | (1023) | (47541) |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (104371) | (66268) | (64356) | 269062 | (73308) | (88531) |  |  |  |  |  |  |  |
|  Income (loss) before income tax expense | 77865 | (59423) | 5818 | 244872 | 86758 | 63996 |  |  |  |  |  |  |  |
|  Income tax (benefit) expense | (5529) | 4060 | 4437 | 5256 | 28472 | 8340 |  |  |  |  |  |  |  |
|  Net income (loss) | $83394 | $(63483) | $1381 | $239616 | $58286 | $55656 |  |  |  |  |  |  |  |
|  Net income (loss) per unit/share, basic | $0.42 | $(0.34) | $0.01 |  | $0.29 | $0.28 |  |  |  |  |  |  |  |
|  Net income (loss) per unit/share, diluted/shares | $0.41 | $(0.34) | $0.01 |  | $0.28 | $0.28 |  |  |  |  |  |  |  |
|  Weighted average number of shares outstanding used to compute net income (loss) per share, basic | 198378867 | 188757245 | 178378867 |  | 198387534 | 198378867 |  |  |  |  |  |  |  |
|  Weighted average number of shares outstanding used to compute net income (loss) per share, diluted | 203769786 | 188757245 | 178610774 |  | 204796324 | 201821886 |  |  |  |  |  |  |  |

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***Consolidated balance sheet data***

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| | | | |
|:---|:---|:---|:---|
|  | **As of** | **As of** | **As of** |
| *(in thousands)* | **October 1, 2022** | **January 1, 2022** | **January 2, 2021** |
|  Cash and cash equivalents | $114946 | $96812 | $137201 |
|  Total assets | $1697797 | $1222693 | $965615 |
|  Total liabilities | $1424469 | $1037261 | $791690 |
|  Total members'/stockholders' equity | $273328 | $185432 | $173925 |

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**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** 

*You should read the following discussion and analysis of the financial condition and results of operations of Savers Value Village, Inc., formerly known as S-Evergreen Holding LLC ("Successor"), and S-Evergreen Holding Corp. ("Predecessor") that is the accounting predecessor of Successor, in conjunction with the section entitled "Selected Financial and Other Data" and the consolidated financial statements and related notes included elsewhere in this prospectus. Unless the context otherwise requires, all references in this section to the "Savers Value Village," "the company," "we," "us" or "our" refer to the business of Predecessor and Successor in both periods. See "Presentation of Financial Information" for more information regarding the Successor and the Predecessor.* 

*This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations and reflect our plans, estimates and beliefs. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those we describe below, under "Risk Factors" and elsewhere in this prospectus. See "Special Note Regarding Forward-Looking Statements."* 

*Our fiscal year ends on the Saturday nearest December 31. Our fiscal year 2022 comprises the 52 weeks ended December 31, 2022. Our fiscal year 2021 comprises the 52 weeks ended January 1, 2022. Our fiscal year 2020 comprises the 53 weeks ended January 2, 2021. Our fiscal year 2019 is comprised of a Predecessor period and Successor period. The Predecessor period of fiscal year 2019 represents the period from December 30, 2018, to March 27, 2019, and comprises 12 weeks and four days. The Successor period of fiscal year 2019 represents the period from March 28, 2019, to December 28, 2019, and comprises 39 weeks and three days. Both the nine month interim reporting period ended on October 1, 2022, and the nine month interim reporting period ended October 2, 2021, consisted of 39 weeks.* 

**Overview** 

We are the largest for-profit thrift operator in the United States and Canada. With over 21,000 team members, we operate a total of 309 stores under the Savers, Value Village, Village des Valeurs, Unique, and 2nd Ave banners. We are committed to redefining secondhand shopping by providing one-of-a-kind, low-priced merchandise ranging from quality clothing to home goods in an exciting treasure-hunt shopping environment. We purchase secondhand textiles (i.e., clothing, bedding and bath items), shoes, accessories, housewares, books and other goods from our non-profit partners ("NPPs"), either directly from them or via on-site donations ("OSDs") at Community Donation Centers at our stores. We then process, select, price, merchandise and sell these items in our stores. Items that are not sold to our retail customers are marketed to wholesale customers, who reuse or repurpose the items they purchase from us. We believe our hyper-local and socially responsible procurement model, industry-leading and innovative operations, differentiated value proposition and deep relationships with our customers distinguish us from other secondhand and value-based retailers.

We offer a dynamic, ever-changing selection of items, with an average unit retail ("AUR") under $5. We have a highly engaged customer base, with over 4.5 million active loyalty program members in the United States and Canada who shopped with us, driving 70.3% of point-of-sale transaction value during the last 12 months ended October 1, 2022. Our business model is rooted in environmental, social and corporate governance ("ESG") principles, with a mission to positively impact our stakeholders—thrifters, NPPs and their donors, our team members and our stockholders. As a leader and pioneer of the for-profit thrift category, we seek to positively impact the environment by reducing waste and extending the life of reusable goods. The vast majority of the clothing and textiles we source

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are sold to our retail or wholesale customers. In fiscal year 2019, we processed over one billion pounds of secondhand goods. During fiscal year 2021 and the nine months ended October 1, 2022, we processed 860 million pounds and 751 million pounds of secondhand goods, respectively. During fiscal year 2021, we generated $1,204.1 million of net sales, $83.4 million of net income and $223.4 million of Adjusted EBITDA, resulting in a 6.9% net income margin and a 18.6% Adjusted EBITDA margin. During the nine months ended October 1, 2022, we generated $1,070.4 million of net sales, $58.3 million of net income and $222.6 million of Adjusted EBITDA, resulting in a net income margin of 5.4% and an Adjusted EBITDA Margin of 20.8%. Adjusted EBITDA and Adjusted EBITDA margin are considered non-GAAP financial measures under the SEC's rules because they exclude certain charges included in net (loss) income calculated in accordance with GAAP. For additional information on our use of non-GAAP financial measures and a reconciliation to the nearest GAAP measure, see "Prospectus Summary—Summary Financial and Other Data—Key business metrics and non-GAAP financial measures."

**Powerful, Vertically Integrated Business Model** 

We have innovated and invested to develop significant operational expertise and integrate the three highly-complex parts of thrift operations—supply and processing, retail, and sales to wholesale markets. Our business model enables us to provide value to our NPPs and our customers, while driving attractive profitability and cash flow.

We are a for-profit company that champions reuse. While purchases made by our customers in our stores do not benefit any NPP, we pay our NPPs a contracted rate for all OSDs and delivered product. Our subsidiaries are registered professional fundraisers where such registration is required.

We source our merchandise locally by purchasing secondhand items donated to our NPPs primarily through two distinct and strategic procurement models:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• OSDs, which are donations of items by individuals to our local NPPs made at the Community Donation Centers located at our
stores; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delivered supply, which includes items donated to and collected by our NPPs through a variety of methods, such as
neighborhood collections and donation drives, and delivered to our stores or centralized processing centers ("CPCs").

In either case, we purchase our merchandise from our NPPs which provides them with revenue to support their community-focused missions. Our supplier base for a majority of our stores is predominantly local, with over 90% of our supply locally sourced; each store supports a NPP in the local community, delivers a broad selection for our customers, and at the same time reduces transportation costs and emissions typically associated with the production and distribution of new merchandise.

Our stores offer a compelling selection of quality items across clothing, home goods, books and other items at convenient locations. Our continued investment in our stores has both elevated and modernized the thrift shopping experience, transforming our stores into a thrift destination for all generations with increasing traffic from younger generations. To maximize traffic and frequency, we leverage data to drive our decisions on merchandising. For each store, we closely track what is being sold to inform how we optimize our merchandising mix, including by leveraging various data analytics. We also are implementing self-checkout kiosks to significantly enhance store efficiency, while improving the shopping experience further through shorter lines.

Historically, we have displayed approximately 50% of all textile items we receive on our retail sales floors, approximately 50% of which are sold to thrifters. In support of our efforts to extend the life of

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reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textile items unsold at retail to our wholesale customers, which are predominately comprised of textile graders and small business owners, who supply local communities across the globe with gently-used, affordable items like clothing, housewares, toys, and shoes. Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste.

We primarily generate revenue from our U.S. Retail and Canada Retail segments, which accounted for, in the aggregate, 92.5% of our net sales in the nine months ended October 1, 2022. We also generate revenue from our Australian retail business and sales to wholesale markets.

**Recent Developments** 

**Ares Share Purchase Transaction** 

On April 26, 2021, certain of the Ares Funds, pursuant to a Purchase and Sale Agreement with Crescent, purchased for cash all of the outstanding equity securities of S-Evergreen Holding LLC held by Crescent. As a result, the Ares Funds became the holders of all of our outstanding equity, prior to this offering. We did not elect to apply push down accounting for the Ares Share Purchase Transaction, as the transaction was entirely among the holders of the securities.

In connection with the Ares Share Purchase Transaction, the outstanding borrowings under our existing credit facilities were refinanced with the proceeds of the Senior Secured Credit Facilities (defined below—see "Liquidity and Capital Resources"), resulting in a $47.5 million loss on extinguishment of debt.

**2nd Ave. Acquisition** 

On November 8, 2021, we completed the 2nd Ave. Acquisition for purchase price consideration of $238.5 million in cash. The 2nd Ave. Acquisition added 12 stores in the Northeastern and Mid-Atlantic regions of the United States, representing a complementary store footprint for our existing store network and offering new store expansion opportunities. The 2nd Ave. Acquisition also included GreenDrop, which allows donors to drop off their items at attended donation stations that are movable and can be placed in attractive, high traffic areas that are convenient to donors. We are currently expanding GreenDrop to locations in certain other markets.

We financed the 2nd Ave. Acquisition through cash on hand and $225.0 million of additional borrowings under our Term Loan Facility. The additional borrowings are on substantially the same terms as our existing loans under the Term Loan Facility. We have accounted for the 2nd Ave. Acquisition as a business combination under applicable accounting guidance. See "Unaudited Pro Forma Condensed Combined Financial Information" for more information regarding the 2nd Ave. Acquisition.

**November 2021 Dividend** 

On November 22, 2021, we paid a dividend of $75.0 million to our equityholders using cash on the balance sheet. No executive officers or directors received dividend payments.

**Increase of Revolving Credit Facility** 

On November 23, 2022, we increased the maximum committed amount under the Revolving Credit Facility from $60.0 million to $75.0 million.

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**December 2022 Dividend** 

In December 2022, we paid a dividend of $69.5 million to our equityholders, using borrowings from our Revolving Credit Facility and cash on the balance sheet. We subsequently repaid all amounts borrowed in connection with this dividend. No executive officers or directors received dividend payments. In connection with the December 2022 Dividend, we paid one time bonuses of $6.5 million in the aggregate to certain of our employees who hold equity interests which were not entitled to participate in the dividend.

**Notes Offering** 

On February 6, 2022, our wholly-owned subsidiaries completed the issuance our $550,000,000 aggregate principal amount of the Notes to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. The Notes will mature on April 26, 2028 and bear interest at a fixed rate of 9.750% per year, payable semi-annually on each February 15 and August 15, commencing on August 15, 2023 through maturity. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by S-Evergreen Holding Corp. and each of its existing and future direct and indirect wholly-owned U.S. and Canadian subsidiaries (other than the issuers of the Notes), which are the same subsidiaries that guarantee the indebtedness under the Secured Credit Agreement.

We used the net proceeds of the Notes to (i) permanently prepay $233.4 million of outstanding borrowings under our Term Loan Facility, (ii) pay a dividend of $262.2 million to our equityholders, (iii) pay one-time bonuses to certain of our employees who hold equity interests which were not entitled to participate in the dividend, (iv) pay certain related fees and expenses and (v) for general corporate purposes.

***Corporate Conversion***

Prior to January 7, 2022, we operated as a Delaware limited liability company under the name S-Evergreen Holding LLC. On January 7, 2022, we converted into a Delaware corporation and changed our name to Savers Value Village, Inc. (the "Corporate Conversion"). In connection with the Corporate Conversion, all of our outstanding equity interests were converted on a one for one basis into shares of common stock.

The purpose of the Corporate Conversion was to reorganize our structure so that the entity offering our common stock to the public in a future offering is a corporation rather than a limited liability company and so that our existing investors and new investors purchasing will own our common stock rather than equity interests in a limited liability company.

***COVID-19 Update***

The effect and extent of the impact of the COVID-19 pandemic on our business continues to be uncertain and difficult to predict. While we have seen recovery in our business from the initial economic effects of the pandemic, the impact of the COVID-19 pandemic may continue to affect our financial results in the future. The extent to which the COVID-19 pandemic continues to impact our results and financial position will depend on future developments, which are uncertain and difficult to predict.

**Key Factors Affecting our Performance** 

***Comparable store sales growth***

***Processed supply volume and product quality***. Our long-term growth will depend on our ability to continue to drive comparable store sales growth, which is generally driven by a combination of

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increase in processed volume, quality of supply, category and price mix and higher customer demand. Supply volume and quality both play a critical role in driving traffic, customer frequency and lifetime value.

Our ability to continue to source quality supply determines the value and quantity of sellable products within the millions of pounds of supply we purchase. It also shapes the experience of our customers as they look for a wide selection of quality products at an exceptional value. Since OSDs allow us to increase supply volume and enhance product quality, we have strategically expanded this source of supply. Between fiscal year 2018 and fiscal year 2021, we increased our percentage of supply from OSDs from 48.6% of total supply to 70.4% by making the donation experience as easy, convenient and pleasant as possible. We have grown the average comparable store's OSD volume from 1.6 million pounds in fiscal year 2018 to 2.1 million pounds in fiscal year 2021.

During the nine months ended October 1, 2022, our percentage of supply from OSDs decreased to 63.2% from 70.4% during fiscal year 2021 and 75% during fiscal year 2020. During fiscal year 2020 and fiscal year 2021, social distancing measures limited our Canadian stores' ability to receive delivered supply directly from our NPPs, and as a result, our percentage of supply received from OSDs increased during the year. These restrictions were not in effect during the nine months ended October 1, 2022, and consequently, our percentage of supply from OSDs decreased. While the percentage of supply from OSD decreased during the nine months ended October 1, 2022, the total volume of supply received from OSDs increased from 453 million pounds in the nine months ended October 2, 2021 to 475 million pounds in the nine months ended October 1, 2022. We do not expect a material decrease in the percentage of supply from OSDs going forward, as all of our stores were fully reopened during the nine months ended October 1, 2022.

![LOGO](g264743g06a55.jpg)

Total supply breakdown by source (% of total supply) Delivered supply On-site donations 51% 47% 25% 30% 49% 53% 75% 70% FY2018 FY2019 FY2020 FY2021

Our ability to maximize sales generated per pound of processed volume, which we internally refer to as "sales yield," is critical to driving both long-term sales and profitability of the business. Sales yield can be used as a proxy for the quality of goods we source, because when the quality of supply is high, we are able to sell more items and/or items at higher prices from the volume we process than we would otherwise. In recent years, we have made targeted use of data analytics to help elevate the quality of supply by explicitly measuring the sales yield of specific sources of supply and concentrating purchases on sources with quality, lowest cost goods. On a currency neutral basis, our sales yield has also improved from $1.03 in fiscal year 2018 to $1.30 during fiscal year 2021. On a currency neutral basis, sales yield for the nine months ended October 1, 2022, was $1.36.

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![LOGO](g264743g22i12.jpg)

Comparable storeOSD volume (lbs MM)(OSD / comp store) 1.6 1.8 1.7 2.1 FY 2018 FY 2019 FY 2020 FY 2021 Sales yield ($)(Used sales / pounds processed) $1.03 $1.08 $1.16 $1.30 FY2018 FY 2019 FY2020 FY2021 Sales yield is presented on a currency neutral basis using $0.75 CAD and $0.73 AUD for all years shown.

***Existing customer engagement and new customer acquisition.*** Our long-term growth will also depend on our continued ability to retain existing customers and acquire new customers. We must continue to provide deep value and a compelling shopping experience that our customers love. Additionally, we must continue to engage our most active customers by growing our loyalty program. Our industry-leading investment in technology will continue to elevate our customer experience and differentiate it from other thrift retailers. We believe we will benefit from the secular tailwinds driven by a broader adoption of secondhand shopping resulting in an industry that is expected to grow at a 18% CAGR from 2022 to 2026 in the United States. We utilize customer feedback and closely analyze sales data to introduce, test and improve our offerings. In addition, we see a significant opportunity to continue to expand and grow awareness of our multiple brands in the communities we serve.

Our marketing strategy is generally different from that of many traditional retailers because we do not rely on major sale events and focus on driving consistent traffic to our stores by providing everyday value and ever-changing selection. We regularly utilize public relations and experiential marketing, leveraging social media and targeted digital advertising to expand the reach of our brands and to drive traffic to our stores. We are also pursuing a robust capital expenditure program to improve the in-store customer experience and invest in technology to improve our execution.

***New store openings in the United States and Canada***

We expect that new stores will be a key driver of long-term growth. Our results of operations have been and will continue to be affected by the timing and number of new store openings. We are continually assessing the number of locations available that could accommodate our preferred size of stores in our target markets. We target opening approximately 20 net new stores in 2023 and more than 20 new stores annually from 2024 through 2026. We opened five new stores in Canada and one in the United States during the nine months ended October 1, 2022, in addition to one new store in Australia. We target opening five additional new stores by the end of fiscal year 2022.

We have the opportunity to open new locations across the United States, Canada, and Australia. Our compelling value proposition creates a significant opportunity to grow our store base in a profitable and disciplined manner. We plan to solidify our leadership by expanding our store footprint. We have identified close to 2,200 potential new locations across the United States and Canada in both existing and new markets, based on a third-party analysis prepared for us.

We believe our real estate strategy has positioned us well for further expansion. Our CPC initiative is expected to be rolled out and implemented to support approximately 35% of our new and existing

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store locations in the United States and Canada by 2026, which we expect to unlock significant new store potential. A store served by a CPC can have a much more flexible physical layout and size.

The performance of new stores may vary depending on various factors such as the store opening date, the time of year of a particular opening, the amount of store opening costs, the amount of store occupancy costs and the location of the new store, including whether it is located in a new or existing market. For example, we typically incur higher than normal team member costs at the time of a new store opening associated with set-up and other opening costs. We target most of our new stores to achieve a payback period of two and half years or less.

***Cost of supply and processing***

Our ability to reduce the cost of merchandise sold per pound processed directly increases our overall gross product margin. We define gross product margin as net sales less cost of merchandise sold, exclusive of depreciation and amortization, divided by net sales. If we are unable to cost-effectively purchase and process supply items, it could negatively affect our profitability. In recent years, we increased the OSD volume as a percentage of our total supply to drive down the cost of merchandise sold per pound processed and improve sales yield, which improved our gross product margin significantly. Between fiscal year 2018 and fiscal year 2021, cost of merchandise sold per pound processed declined from $0.58 to $0.55 contributing to our gross product margin expansion from 48.3% to 60.6%.

The effects of the COVID-19 pandemic contributed to a portion of our gross product margin expansion during 2020, as we increased our percentage of supply from OSDs and received $32.6 million in wage subsidies, of which $18.6 million are classified within cost of merchandise sold. These wage subsidies are recorded as a reduction to compensation expense, which increased gross product margin by approximately 2.2% during fiscal year 2020. Our gross product margin would be adversely affected by declines in wage subsidies, as we experienced in fiscal year 2021 and through the first nine months of fiscal year 2022, or a material decline in OSD volume as a percentage of total supply, which increased during the pandemic. During fiscal year 2021, our cost of merchandise sold per pound processed increased to $0.55 from $0.52 in fiscal year 2020. The increase in merchandise cost per pound was offset by a 44.4% increase in net sales, resulting in a gross product margin of 60.6%. During fiscal year 2021, we received $21.7 million of wage subsidies, of which $13.4 million was classified as a reduction to cost of merchandise sold and increased our gross product margin by 1.1%.

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![LOGO](g264743g15a18.jpg)

OSD growth drives margin expansion Cost of merchandise per pounds processed Gross product margin (%) $0.58 $0.58 $0.52 $0.55 48.3% 50.7% 57.6% 60.6% FY2018 FY2019 FY2020 FY2021

Over the last several years we have found that items sourced through OSDs have a cost per pound that is on average one-third that of delivered supply from our NPPs. As such, our store footprint plays a critical role in accepting OSDs from donors who wish to donate to our NPPs. On a comparable store basis, the average store's OSDs have grown at an 8.0% CAGR from fiscal year 2018 to fiscal year 2021 and OSDs as a percentage of total supply has expanded from 48.6% to 70.4% during the same period. Expansion of OSDs has been a significant driver of our gross product margin improvement in recent years. In addition to the increase in sellable items through better management of our supply mix, our gross product margin has been positively impacted during recent years by an increase in price realization driven by better discount management and strategic price increases across selective categories as well as improved grading accuracy by store graders.

During the nine months ended October 1, 2022, our cost of merchandise sold per pound increased to $0.59 from $0.55 during fiscal year 2021, while our gross product margin decreased to 58.6% from 60.6% during that same period. The decrease in gross product margin resulted primarily from rising personnel costs combined with a decrease in percentage of total supply from OSDs. Greater personnel costs resulted from an increase in wages offered to our employees and the easing of the COVID-19 pandemic in Canada, which allowed our stores to fully reopen. As our stores in Canada were fully reopened, we did not receive any wage subsidies during the nine months ended October 1, 2022. Wage subsidies received by us during the nine months ended October 2, 2021, resulted in a reduction to cost of merchandise sold of $13.4 million.

Although we processed 475 million pounds from OSDs during the nine months ended October 1, 2022, compared to 453 million pounds in the nine months ended October 2, 2021, our percentage of supply from OSDs decreased to 63.2%. The decline in the percentage of supply from OSDs resulted primarily from the lifting of COVID-19 related restrictions in Canada. During fiscal year 2020 and fiscal year 2021, social distancing measures limited our Canadian stores' ability to receive delivered supply directly from our NPPs. These restrictions were not in effect during the nine months ended October 1, 2022, and consequently, our percentage of delivered supply from NPPs increased for this period. The increase of delivered supply from NPPs naturally resulted in a decline in the percentage of supply received from OSDs, therefore resulting in greater supply costs per pound during the nine months ended October 1, 2022. We do not expect a material decrease in the percentage of supply from OSD

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going forward, as our stores were fully reopened during the first nine months of fiscal year 2022 in the United States and Canada.

***Investment in operations***

We expect to continue to focus on long-term margin growth through investments in our infrastructure and logistics, including significant investments in store efficiency, processing centers, and pricing. We are accelerating our roll-out of self-checkout kiosks, which decrease lines and reduce reliance on availability of labor and exposure to wage rate risk. We have begun to operationalize CPCs in order to unlock new store potential, reduce labor costs and maximize processing capacity.

We have also implemented ABP systems utilizing scanning technology to identify the value of each item, thereby increasing processing volume, as well as automatic pricing, which provides consistent merchandising and market-based pricing across stores.

***Seasonality***

Seasonality in our business does not follow that of traditional retailers, which usually experience a typical concentration of revenue during the holidays. Supply from donations made to our NPPs is usually slightly more concentrated during the second and third quarters of the year, as it coincides with warmer periods, and customer demand for secondhand goods is usually slightly higher during the third and fourth quarters of the year, in part as a result of increased demand during the fall season.

**Key Business Metrics** 

We use the following metrics to evaluate our performance, identify trends, formulate financial projections and make strategic decisions. We believe that these metrics provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team.

The following table summarizes our key business metrics for the periods indicated:

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|:---|:---|:---|:---|:---|:---|
|  | | | | **Nine Months Ended** | **Nine Months Ended** |
|  |<br>**Fiscal Year<br>2021** |<br>**Fiscal Year<br>2020** |<br>**Fiscal Year<br>2019** | **October 1,<br>2022** | **October 2,<br>2021** |
|  ***Comparable Store Sales Growth <sup>(1)</sup>***  |  |  |  |  |  |
|  United States | 64.8% | (27.8)% | 7.8% | 4.6% | 77.4% |
|  Canada | 24.3% | (29.3)% | 3.4% | 33.4% | 22.7% |
|  Total <sup>(3)</sup>  | 44.5% | (28.6)% | 5.7% | 16.3% | 49.7% |
|  ***Comparable Store Daily Sales Growth <sup>(2)</sup>*** |  |  |  |  |  |
|  United States | 24.9% | (7.7)% | 7.8% | 4.6% | 25.1% |
|  Canada | 19.0% | (12.5)% | 3.4% | 4.3% | 18.5% |
|  Total <sup>(3)</sup>  | 23.7% | (10.3)% | 5.7% | 2.9% | 24.2% |
|  ***Number of Stores <sup>(4)</sup>***  |  |  |  |  |  |
|  United States | 148 | 137 | 145 | 149 | 136 |
|  Canada | 148 | 147 | 147 | 150 | 148 |
|  Total <sup>(3)</sup>  | 306 | 294 | 302 | 309 | 294 |
|  ***Other Metrics*** |  |  |  |  |  |
|  Pounds Processed (mm lbs) | 860 | 682 | 1029 | 751 | 624 |

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(1) Comparable store sales growth is the percentage change in comparable store sales over the prior fiscal year or the
comparable period in the prior fiscal year. Comparable store sales is calculated as

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net sales for the period by stores open during the entirety of both periods that are being compared. We considered any store temporarily closed due to the COVID-19 pandemic to be open and comparable during the period. Comparable store sales growth is measured in local currency for Canada, while total comparable store sales growth is measured on a constant currency basis.

(2) Comparable store daily sales growth for the period represents net sales by stores in the relevant geography that were or
would have been open for the entirety of both periods if not for temporary closures due to the COVID-19 pandemic, divided by the aggregate number of days those stores were open. Comparable store daily sales growth is the percentage change
in comparable store daily sales over the prior fiscal year or the comparable quarter in the prior fiscal year. Comparable daily sales growth is measured in local currency for Canada, while total comparable store daily sales growth is measured on a
constant currency basis.

(3) Total comparable store sales growth, total comparable store daily sales growth, and total number of stores include our
Australia retail locations, in addition to the United States and Canada.

(4) Number of Stores, which is measured as of the last day of the fiscal year or quarter (as applicable), includes new stores
not yet included in the comparable store sales growth and comparable store daily sales growth, such as those acquired in the 2nd Ave. Acquisition.

***Comparable store sales growth (United States, Canada, total)***

Comparable store sales growth is the percentage change in comparable store sales over the prior fiscal year or the comparable period in the prior fiscal year. Comparable store sales is calculated as net sales for the period by stores open during the entirety of both periods that are being compared. We considered any store temporarily closed due to the COVID-19 pandemic to be open and comparable during the period. This metric provides us with visibility into top-line performance on a like-for-like basis excluding new stores opened in the current or previous reporting period and excluding all closed stores as of the end of the current reporting period. We believe investors can use this metric to assess our ability to increase comparable store sales over time.

During the nine months ended October 1, 2022, our comparable store sales growth was 16.3%, compared to 49.7% for the nine months ended October 2, 2021. Our comparable store sales growth was greatest in Canada as pandemic related restrictions continued to ease, and our stores were able to remain open. During the nine months ended October 2, 2021, our percentage open store days in Canada was 77.0%, compared to 100% in the nine months ended October 1, 2022. In the United States, our comparable store sales growth normalized to 4.6% during the nine months ended October 1, 2022. Our stores reopened earlier in the United States than Canada, as COVID-19 related restrictions generally eased sooner in the United States, and thus, our comparable store sales growth normalized sooner in the United States. Our percentage open store days in the United States was 100% during the nine months ended October 1, 2022, and October 2, 2021.

The comparable store sales growth rate of 77.4% in the United States for the nine months ended October 2, 2021, reflects the reopening of our stores following the easing of pandemic related restrictions. Our percentage open store days during the nine months ended October 3, 2020, in the United States was only 70.5% compared to 100% during the nine months ended October 2, 2021. Our comparable store sales growth rate was lower in Canada during the nine months ended October 2, 2021, due to the delayed reopening of our stores relative to the United States.

During fiscal year 2021, our comparable store sales growth was 44.5%, compared to (28.6)% during fiscal year 2020. The increase in comparable store sales growth resulted primarily from a higher percentage of open store days during 2021 resulting from reduced COVID-19 related restrictions in much of the United States, Canada, and Australia.

During fiscal year 2020, our comparable store sales growth was (28.6)%, compared to 5.7% during fiscal year 2019. The decrease resulted primarily from temporary COVID-19 related store

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closures in the United States and Canada in March, April, and May 2020 as well as store closures in Australia during August and September 2020.

***Comparable store daily sales growth***

Comparable store daily sales growth is the percentage change in comparable store daily sales over the prior fiscal year or the comparable period in the prior fiscal year. Comparable store daily sales for the period represents net sales by stores in the relevant geography that were or would have been open for the entirety of both periods if not for temporary closures due to the COVID-19 pandemic, divided by the aggregate number of days those stores were open. We use comparable store daily sales to evaluate comparable store sales during periods during which a substantial number of our stores were closed, such as fiscal year 2020, when many of our stores were closed for varying periods due to COVID-related restrictions. We do not expect to continue reporting comparable store daily sales growth in the future, once our stores are fully re-opened in both comparative periods.

In the United States, our comparable store daily sales growth rate during the nine months ended October 1, 2022, was consistent with our comparable store sales growth, because our percentage open store days was 100% during both comparative periods. Our comparable store daily sales growth in Canada was 4.3% during the nine months ended October 1, 2022, reflecting a modest average daily sales growth as customers had more potential shopping days in the nine months ended October 1, 2022, compared to the prior year. Total consolidated comparable store daily sales growth, which includes our Australian stores, was 2.9% during the nine months ended October 1, 2022, as the year over year growth in open store days was more heavily weighted towards Canada.

Our comparable store daily sales growth rate was 25.1% and 18.5% in the United States and Canada, respectively, during the nine months ended October 2, 2021. This resulted from an increase in customer demand as COVID-19 restrictions eased.

During fiscal year 2021, our comparable store daily sales growth was 23.7%, compared to (10.3)% during fiscal year 2020. The increase in comparable store daily sales growth resulted from strong customer demand and relaxed COVID-19 restrictions throughout much of the portfolio during fiscal year 2021. In fiscal year 2021, our stores were open for 90.2% of possible store days, compared to 77.3% in fiscal year 2020.

In fiscal year 2020, our comparable store daily sales growth was (10.3)%, compared to 5.7% during fiscal year 2019. The decrease was primarily due to adverse economic conditions and customer uncertainty related to the COVID-19 pandemic.

***Number of stores (United States, Canada, total)***

We define number of stores as the number of retail stores in our portfolio, including new retail stores opened at the end of the period. This metric provides us visibility into our scale of operations. We believe investors can use this metric to assess our ability to open new stores in high-growth markets while reducing our number of stores in low-growth markets.

Our number of open stores increased to 309 stores as of October 1, 2022, compared to 294 stores as of October 2, 2021. The increase in stores resulted primarily from the addition of 12 new stores in connection with the 2nd Ave. Acquisition in the fourth quarter of fiscal year 2021.

Our number of open stores increased during fiscal year 2021 as we added 12 new stores in connection with the 2nd Ave. Acquisition. During fiscal year 2020, we elected not to renew 10 leases for our stores, which resulted in a net decrease in the number of stores from fiscal year 2019.

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***Pounds processed***

We define pounds processed as the total number of pounds of goods processed during the period, excluding furniture and other large items. We process inventory by receiving goods directly from our NPPs or through OSDs, sorting them, and placing them on the sales floor. This metric is our indicator of the volume of secondhand goods processed during the period and is typically a key driver of top-line sales growth. We believe investors can use this metric to assist in their evaluation of our sales growth and sales yield.

During the nine months ended October 1, 2022, our pounds processed increased to 751 million pounds, compared to 624 million pounds during the nine months ended October 2, 2021. The increase in pounds processed resulted primarily from an increase in goods received directly from our NPPs. We were able to accept more goods directly from our NPPs, primarily in Canada, as most pandemic related restrictions were no longer in effect. During the nine months ended October 1, 2022, we accepted 276 million pounds directly from our NPPs, compared to 170 million pounds during the nine months ended October 2, 2021. Total pounds processed by our Canadian operations increased by 58 million pounds during the nine months ended October 1, 2022, of which 38 million pounds is attributed to an increase in inventory received directly from our NPPs. During the nine months ended October 1, 2022, we processed 475 million pounds from OSDs compared to 453 million pounds in the nine months ended October 2, 2021.

During fiscal year 2021, our pounds processed increased to 860 million pounds, compared to 682 million pounds during fiscal year 2020. The increase in pounds processed resulted from increased sourcing of merchandise through both our OSDs and delivered supply channels. As public health restrictions eased during fiscal year 2021 and our percentage of open store days increased, we were able to purchase and process greater amounts of supply from our NPPs. During fiscal year 2021 we processed 605 million pounds from OSDs compared to 512 million pounds during fiscal year 2020.

For fiscal year 2020, our pounds processed decreased to 682 million pounds, representing a decrease of 33.7% compared to fiscal year 2019.

**Components of Results of Operations** 

***Net sales***

We earn revenues by selling primarily secondhand items in our retail stores along with small amounts of new merchandise in complementary and seasonal categories. We recognize revenues at the point of sale, net of sales promotions and sales taxes collected. We allow customers to exchange certain goods within fourteen days of purchase, with no right of return for customers.

We also earn revenue through our sales to wholesale customers for reuse and repurposing. Wholesale sales are recognized at the point of shipment with no right of return.

***Cost of merchandise sold, exclusive of depreciation and amortization***

Cost of merchandise sold primarily consists of the cost of merchandise sold in our retail stores, including costs related to payments to our NPPs, sorting and processing and inventory storage. Cost of merchandise sold also includes costs for personnel who are responsible for receiving and processing inventory, including salaries, wages and employee benefit costs.

***Salaries, wages and benefits***

Salaries, wages and benefits primarily consist of personnel-related expenses not classified within cost of merchandise sold. These costs include salaries, wages and other employee benefit costs,

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including stock-based compensation expense, for personnel not directly involved in the receiving and processing of inventory.

***Selling, general and administrative***

Selling, general and administrative expense primarily consists of costs related to occupancy, repair and maintenance, professional services, and other general and administrative activities. Although selling, general and administrative expense will increase as we grow and become a publicly traded company, we expect these expenses to decrease as a percentage of net sales as we grow due to economies of scale.

***Depreciation and amortization***

Depreciation and amortization consists of depreciation associated with our property and equipment and amortization of our definite-lived intangible assets.

***Interest expense***

Interest expense primarily consists of interest associated with our outstanding debt, including amortization of debt issuance costs and realized and unrealized gains and losses on our interest rate swap.

***Other (expense) income, net***

Other (expense) income historically consists primarily of realized and unrealized gains and losses associated with U.S. dollar denominated debt held by our Canadian subsidiaries and forward contracts and cross currency swaps used to manage foreign exchange risk. Other (expense) income also includes amounts of charitable donations that we make to our NPPs and other charities.

***(Loss) gain on extinguishment of debt***

Loss on extinguishment of debt consists of the settlement of certain debt amounts in connection with the March 2019 Transactions, April 2021 Refinancing and repayment of the mortgage loan.

***Income tax (benefit) expense***

Income tax (benefit) expense consists of income taxes related to foreign and domestic federal and state jurisdictions in which we conduct business, adjusted for allowable credits, deductions and valuation allowance against deferred tax assets.

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**Results of Operations** 

The following table sets forth our results of operations for each of the periods presented (in thousands):

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|:---|:---|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |
|  | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | <br> **Nine Months Ended** | <br> **Nine Months Ended** |
|  | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | **October 1,<br>2022** | **October 2,<br>2021** |
|  Net sales | $1204124 | $834010 | $945527 | $259972 | $1070427 | $859291 |
|  Operating expenses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of merchandise sold exclusive of depreciation and amortization | 474462 | 353455 | 460169 | 133595 | 443372 | 317620 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries, wages, and benefits | 239806 | 184392 | 195066 | 60193 | 199643 | 168314 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 260235 | 229886 | 187727 | 71537 | 227236 | 186858 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 47385 | 59432 | 32391 | 18837 | 40110 | 33972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 1021888 | 827165 | 875353 | 284162 | 910361 | 706764 |
|  Operating income | 182236 | 6845 | 70174 | (24190) | 160066 | 152527 |
|  Other (expense) income: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (53565) | (69678) | (58003) | (20784) | (45855) | (40591) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (3265) | 3410 | (6353) | 6605 | (26430) | (399) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Loss) gain on extinguishment of debt | (47541) |  |  | 283241 | (1023) | (47541) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (104371) | (66268) | (64356) | 269062 | (73308) | (88531) |
|  Income (loss) before income tax expense | 77865 | (59423) | 5818 | 244872 | 86758 | 63996 |
|  Income tax benefit (expense) | (5529) | 4060 | 4437 | 5256 | 28472 | 8340 |
|  Net income (loss) | $83394 | $(63483) | $1381 | $239616 | $58286 | $55656 |

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The following table sets forth the components of our results of operations for each of the periods presented as a percentage of net sales:

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|:---|:---|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |
|  | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | <br> **Nine Months Ended** | <br> **Nine Months Ended** |
|  | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | **October 1,<br>2022** | **October 2,<br>2021** |
|  Net sales | 100.0% | 100.0% | 100.0% | 100.0% | 100% | 100% |
|  Operating expenses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of merchandise sold exclusive of depreciation and amortization | 39.4 | 42.4 | 48.7 | 51.4 | 41.4 | 37.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries, wages, and benefits | 19.9 | 22.1 | 20.6 | 23.2 | 18.7 | 19.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 21.6 | 27.6 | 19.9 | 27.5 | 21.2 | 21.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 3.9 | 7.1 | 3.4 | 7.2 | 3.7 | 4.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 84.8 | 99.2 | 92.6 | 109.3 | 85.0 | 82.3 |
|  Operating income | 15.2 | 0.8 | 7.4 | (9.3) | 15.0 | 17.7 |
|  Other (expense) income: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (4.4) | (8.4) | (6.1) | (8.0) | (4.3) | (4.7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (0.4) | 0.4 | (0.7) | 2.5 | (2.5) | (0.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Loss) gain on extinguishment of debt | (3.9) |  |  | 109.0 | (0.1) | (5.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (8.7) | (8.0) | (6.8) | 103.5 | (6.9) | (10.3) |
|  Income (loss) before income tax expense | 6.5 | (7.2) | 0.6 | 94.2 | 8.1 | 7.4 |
|  Income tax benefit (expense) | (0.4) | 0.4 | 0.5 | 2.0 | 2.7 | 0.9 |
|  Net income (loss) | 6.9% | (7.6)% | 0.1% | 92.2% | 5.4% | 6.5% |

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***Comparison of nine months ended October 1, 2022 (Successor) and nine months ended October 2, 2021 (Successor)***

The following table presents net sales (in thousands):

*Net sales* 

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|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** | | |
|  | **October 1,<br>2022** | **October 2,<br>2021** |<br>**$Change** |<br>**%<br>Change** |
|  Retail sales | $1015682 | $822587 | $193095 | 23.5% |
|  Wholesale sales | 54745 | 36704 | 18041 | 49.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total net sales | $1070427 | $859291 | $211136 | 24.6% |

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Our net sales increased by $211.1 million, or 24.6%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021. The increase in net sales resulted primarily from a reduction in COVID-19 related store closures in Canada, the acquisition of 2nd Ave., which occurred in November 2021, and an increase in sales yield.

As public health restrictions continued to ease in fiscal year 2022, our percentage open store days increased to 100% in Canada during the nine months ended October 1, 2022, compared to 77.0% during the nine months ended October 2, 2021. The increase in percentage open store days contributed to a $108.9 million increase in net sales in Canada for the nine months ended October 1, 2022, of which $100.7 million is classified as retail sales.

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New stores acquired in the 2nd Ave. Acquisition, which occurred in November 2021, accounted for an increase of $69.3 million in retail sales during the nine months ended October 1, 2022.

During the nine months ended October 1, 2022, our sales yield, which comprises used net sales from our retail business, increased to $1.36 net sales per pound processed during the nine months ended October 1, 2022, compared to $1.31 net sales per pound processed during the nine months ended October 2, 2021.

We supported the increase in sales volume by accepting significantly more inventory through both our OSD and delivered supply channels during the nine months ended October 1, 2022. Total pounds processed by us increased by 20.4% to 751 million pounds during the nine months ended October 1, 2022, compared to 624 million pounds during the nine months ended October 2, 2021.

Wholesale sales increased by $18.0 million, or 49.2%, during the nine months ended October 1, 2022. The increase in wholesale sales resulted primarily from an increase in processing volume, more favorable pricing on our wholesale product and additional sales resulting from the 2nd Ave. Acquisition.

*Cost of merchandise sold, exclusive of depreciation and amortization* 

The following table presents cost of merchandise sold (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** | | |
|  | **October 1,<br>2022** | **October 2,<br>2021** |<br>**$Change** |<br>**%<br>Change** |
|  Cost of merchandise sold exclusive of depreciation and amortization | $443372 | $317620 | $125752 | 39.6% |

---

Cost of merchandise sold increased by $125.8 million, or 39.6%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021.

As a percentage of net sales, cost of merchandise sold also increased to 41.4% during the nine months ended October 1, 2022, compared to 37.0% during the nine months ended October 2, 2021. Similarly, the cost of merchandise sold per pound processed increased to $0.59 per pound during the nine months ended October 1, 2022, from $0.51 per pound during the nine months ended October 2, 2021.

The increase in cost of merchandise sold per pound processed resulted primarily from an increase in personnel costs, an increase in the percentage of inventory delivered by NPPs, and a shift in supply mix from hard goods toward soft goods.

Personnel costs classified within cost of merchandise sold increased to $257.5 million during the nine months ended October 1, 2022, compared to $189.6 million during the nine months ended October 2, 2021. The increase resulted primarily from an increase in open store days, in addition to higher wages offered to our store employees and the discontinuation of wage subsidies in Canada in fiscal year 2022. The increase in open store days resulted from fewer temporary store closures in Canada related to the COVID-19 pandemic and the addition of 12 new retail stores from the 2nd Ave. Acquisition. During the nine months ended October 2, 2021, we received a total of $21.7 million in wage subsidies in Canada, of which $13.4 million was classified as a reduction to cost of merchandise sold. We did not receive any wage subsidies during the nine months ended October 1, 2022, and we do not currently expect to receive any in future periods.

While our OSDs processed increased to 475 million pounds in the nine months ended October 1, 2022, compared to 453 million pounds in the nine months ended October 2, 2021, the percentage of

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##### [**Table of Contents**](#toc)
inventory received from OSDs decreased to 63.2% from 72.7% during that same period, as we accepted more inventory from our NPPs. Inventory received from our NPPs, which consists primarily of soft goods, such as clothing and other textiles, generally has a higher cost per pound than inventory received from OSDs. During fiscal year 2021, social distancing measures enacted during the pandemic limited our Canadian stores' ability to receive delivered supply from our NPPs. As these restrictions were lifted during fiscal year 2022, we received a greater proportion of our supply from NPPs.

Materials costs, which increased to support our increase in sales volume, also contributed to the increase in cost of merchandise sold. Our total pounds processed increased by 20.4%, reaching 751 million pounds during the nine months ended October 1, 2022, compared to 624 million pounds during the nine months ended October 2, 2021.

*Salaries, wages, and benefits* 

The following table presents salaries, wages, and benefits expense (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** | | |
|  | **October 1,**<br>**2022** | **October 2,**<br>**2021** |<br>**$Change** |<br>**%**<br>**Change** |
|  Salaries, wages, and benefits: |  |  |  |  |
|  Retail  | $148066 | $120401 | $27665 | 23.0% |
|  Corporate | 51577 | 47913 | 3664 | 7.6 |
|  Total salaries, wages, and benefits | $199643 | $168314 | $31329 | 18.6% |

---

Salaries, wages, and benefits expense increased by $31.3 million, or 18.6%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021.

The increase in personnel costs was greatest for our retail operations. Salaries, wages, and benefits for our retail and wholesale employees increased by $27.7 million, or 23.0%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021. The acquisition of 2nd Ave. contributed to an additional $14.2 million of personnel costs for our retail businesses. Furthermore, during the nine months ended October 2, 2021, we received $8.3 million of wage subsidies for our retail employees, which were classified as a reduction to salaries, wages, and benefits. These subsidies did not reoccur during fiscal year 2022. We also experienced fewer temporary store closures in Canada as public health restrictions in connection with the COVID-19 pandemic eased, resulting in greater personnel costs at our stores.

We do not currently expect to receive wage subsidies in future periods, and to the extent wage subsidies are not provided in future periods, our salaries, wages and benefits expense will be higher than in periods in which we did receive those subsidies.

Salaries, wages, and benefits for our corporate employees increased by $3.7 million, or 7.6%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021. The increase in corporate personnel costs resulted from an increase in headcount as we onboarded personnel from 2nd Ave. and expanded our finance, accounting, and legal functions as we prepare to operate as a public company and scale the business to support more retail locations.

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*Selling, general, and administrative* 

The following table presents selling, general, and administrative expenses (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** | | |
|  | **October 1,**<br>**2022** | **October 2,**<br>**2021** |<br>**$Change** |<br>**%**<br>**Change** |
|  Rent and utilities | $132812 | $119319 | $13493 | 11.3% |
|  Repairs and maintenance | 24144 | 20005 | 4139 | 20.7 |
|  Supplies | 14721 | 8768 | 5953 | 67.9 |
|  Professional service fees | 13854 | 7025 | 6829 | 97.2 |
|  Marketing | 8151 | 6954 | 1197 | 17.2 |
|  Other expenses | 33554 | 24787 | 8767 | 35.4 |
|  Total selling, general, and administrative | $227236 | $186858 | $40378 | 21.6% |

---

Selling, general, and administrative expense increased by $40.4 million, or 21.6%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021. The increase in selling, general, and administrative expenses resulted primarily from increases in rent and utilities, professional service fees, supplies, and repairs and maintenance.

Rent and utilities increased by $13.5 million, or 11.3%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021, which resulted primarily from $5.0 million of additional expense related to the 2nd Ave. Acquisition, the reclassification of $6.5 million in right-of-use asset expense previously classified as depreciation and amortization under ASC 840, and a $1.9 million increase in utility expenses. We also incurred additional rent and utilities expense in relation to our new retail stores and CPC facilities.

Professional service fees, which include legal, accounting, and other third-party advisor fees, increased by $6.8 million, or 97.2%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021, primarily due to expenses incurred in connection with our contemplated initial public offering.

Other expenses increased by $8.8 million, or 35.4%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021. The increase resulted primarily from an increase of $3.7 million related to disposals of property and equipment.

Supplies and repairs and maintenance expenses increased as fewer of our stores were temporarily closed due to the COVID-19 pandemic.

*Depreciation and amortization* 

The following table presents depreciation and amortization expense (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** | | |
|  | **October 1,<br>2022** | **October 2,**<br>**2021** |<br>**$Change** |<br>**%**<br>**Change** |
|  Depreciation and amortization | $40110 | $33972 | $6138 | 18.1% |

---

Depreciation and amortization increased by $6.1 million, or 18.1%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021. The increase in depreciation and amortization resulted primarily from capital expenditures related to store improvements and the opening of our CPCs.

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##### [**Table of Contents**](#toc)
*Interest expense* 

The following table presents interest expense (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** | | |
|  | **October 1,**<br>**2022** | **October 2,**<br>**2021** |<br>**$**<br>**Change** |<br>**%**<br>**Change** |
|  Interest expense | $(43259) | $(37985) | $(5274) | 13.9% |
|  Amortization of debt issuance cost | (2974) | (2619) | (355) | 13.6% |
|  Gain on interest rate swap | 378 | 13 | 365 | n/m |
|  Total interest expense | $(45855) | $(40591) | $(5264) | 13.0% |
|  <br> n/m - not meaningful |  |  |  |  |

---

Total interest expense increased by $5.3 million, or 13.0%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021. The increase in interest expense resulted from an increase in interest rates as well as an increase in principal under the Term Loan Facility following the Ares Share Purchase Transaction and the 2nd Ave. Acquisition. Our effective interest rate paid under the Senior Secured Credit Facilities (defined below) increased to 6.85% during the nine months ended October 1, 2022, from 6.50% during the nine months ended October 2, 2021.

*Other expense, net* 

The following table presents other expense, net (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** | | |
|  | **October 1,**<br>**2022** | **October 2,**<br>**2021** |<br>**$Change** |<br>**%**<br>**Change** |
|  Loss on foreign currency remeasurement | $(41020) | $(10709) | $(30311) | 283.0% |
|  Gain on derivative instruments | 14381 | 12611 | 1770 | 14.0 |
|  Other expense, net | 209 | (2301) | 2510 | (109.1) |
|  Total other expense, net | $(26430) | $(399) | $(26031) | n/m |
|  <br> n/m - not meaningful |  |  |  |  |

---

Other expense, net of $26.4 million during the nine months ended October 1, 2022, was comprised primarily of $41.0 million of foreign currency remeasurement losses, which were partially offset by $14.4 million in gains associated with our foreign currency derivatives. Other expense, net of $0.4 million during the nine months ended October 2, 2021, was comprised primarily of $12.6 million in gains associated with our foreign currency derivatives and $10.7 million of foreign currency losses.

*Loss on extinguishment of debt* 

We repaid a mortgage loan payable, which had a remaining principal of $2.7 million during the nine months ended October 1, 2022, resulting in a loss on extinguishment of debt of $1.0 million.

In connection with the Ares Share Purchase Transaction on April 26, 2021, the outstanding borrowings under our existing credit facilities were refinanced with the proceeds of the Senior Secured Credit Facilities, resulting in a $47.5 million loss on extinguishment of debt during the nine months ended October 2, 2021.

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*Segment results* 

The following table presents net sales and profit by segment (in thousands) for the periods presented:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** | | |
|  | **October 1,**<br>**2022** | **October 2,**<br>**2021** |<br>**$Change** |<br>**%**<br>**Change** |
|  **Net sales:** |  |  |  |  |
|  US Retail | $555350 | $466783 | $88567 | 19.0% |
|  Canada Retail | 434433 | 333739 | 100694 | 30.2 |
|  Other | 80644 | 58769 | 21875 | 37.2 |
|  Total net sales | $1070427 | $859291 | $211136 | 24.6% |
|  **Segment Profit:** |  |  |  |  |
|  US Retail | $137003 | $135564 | $1439 | 1.1% |
|  Canada Retail | $128246 | $108288 | $19958 | 18.4% |
|  Other | $26520 | $13003 | $13517 | 104.0% |

---

*U.S. Retail* 

U.S. Retail net sales increased by $88.6 million, or 19.0%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021. The increase resulted primarily from the addition of 12 stores acquired in the 2nd Ave. Acquisition, in addition to a 4.6% increase in comparable store sales growth, and a 5.1% increase in comparable store sales yield. The 2nd Ave. Acquisition resulted in an additional $69.3 million of net sales during the nine months ended October 1, 2022. During the nine months ended October 1, 2022, used sales per pound processed increased to $1.43 from $1.36 during the nine months ended October 2, 2021.

While U.S. Retail segment profit remained consistent, segment profit as a percentage of net sales decreased to 24.7% during the nine months ended October 1, 2022, from 29.0% during the nine months ended October 2, 2021. The decrease resulted primarily from increases in personnel costs. As a percentage of net sales, labor and merchandise costs increased to 64.7% during the nine months ended October 1, 2022, compared to 62.3% during the nine months ended October 2, 2021.

*Canada Retail* 

Canada Retail net sales increased by $100.7 million, or 30.2%, during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021. The increase in Canada Retail net sales resulted primarily from the easing of COVID-19 restrictions as fewer of our stores were temporarily closed during the nine months ended October 1, 2022. Our percentage open store days for Canada Retail during the nine months ended October 1, 2022, was 100.0%, compared to 77.0% for the nine months ended October 2, 2021.

Canada Retail segment profit increased by $20.0 million, or 18.4%, during the nine months ended October 1, 2022, compared to nine months ended October 2, 2021. As a percentage of net sales, segment profit decreased to 29.5% during the nine months ended October 1, 2022, from 32.4% during the nine months ended October 2, 2021. The decrease was primarily driven by an increase in personnel costs driven by a decrease in wage subsidies. During the nine months ended October 1, 2022, our Canadian Retail segment did not receive any wage subsidies, compared to $21.3 million during the nine months ended October 2, 2021. Our Canada Retail segment's profit as a percentage of net sales was further reduced by an increase in the percentage of supply received from NPPs, which generally have a higher cost per pound than inventory received from OSDs. We were able to accept more goods directly from our NPPs, primarily in Canada, as most pandemic related restrictions were no longer in effect.

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##### [**Table of Contents**](#toc)
*Other* 

Other includes our Australian retail stores and our wholesale operations. Net sales for our other businesses increased by $21.9 million, or 37.2%, during the nine months ended October 1, 2022. The increase in inventory volume processed by our wholesale operations in the United States, Canada, and Australia, resulted in the overall increase in net sales for Other. Segment profit for our other businesses increased by $13.5 million, primarily as a result of an increase in wholesale volume and the easing of COVID-19 related restrictions as fewer of our stores were temporarily closed in Australia.

***Comparison of fiscal year 2021 and fiscal year 2020.***

*Net sales* 

The following table presents net sales (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | | |
|  | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** |<br>**$Change** |<br>**%<br>Change** |
|  Retail sales | $1154891 | $800278 | $354613 | 44.3% |
|  Wholesale sales | 49233 | 33732 | 15501 | 46.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total net sales | $1204124 | $834010 | $370114 | 44.4% |

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Our net sales were $1,204.1 million during fiscal year 2021, compared to $834.0 million during fiscal year 2020. The increase in net sales resulted primarily from a reduction in public health restrictions related to COVID-19 during fiscal year 2021, which resulted in fewer temporary store closures and an increase in the number of customers in our stores. During fiscal year 2021, our percentage of open store days was 90.2%, compared to 77.3% during fiscal year 2020.

As our percentage of open store days increased during fiscal year 2021, we accepted significantly more inventory through both our OSDs and delivered supply channels allowing us to increase both our retail sales and wholesale sales. Total pounds processed by us increased to 860 million pounds during fiscal year 2021 from 682 million pounds during fiscal year 2020.

The 2nd Ave. Acquisition also resulted in an additional $15.5 million of net sales during fiscal year 2021. Additionally, favorable movements in foreign exchange rates for our Canadian operations resulted in a $33.7 million increase in net sales during fiscal year 2021.

Our increase in sales volume during fiscal year 2021 was complemented by an increase in sales yield. Net sales per pound processed, which includes net sales for used goods from our retail business only, increased to $1.30 on a currency neutral basis during fiscal year 2021, compared to $1.16 during fiscal year 2020. Our net sales per pound increased as a result of improved quality of supply purchased from our non-profit partners and less discounting in our retail stores. During fiscal year 2021, the average selling price of goods sold through our retail business increased by approximately 5.8%.

Wholesale sales increased by $15.5 million, or 46.0% during fiscal year 2021. The increase in wholesale sales during fiscal year 2021 resulted from a 20.5% increase in pounds sold, combined with a more favorable product mix processed by our wholesale business.

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*Cost of merchandise sold, exclusive of depreciation and amortization* 

The following table presents cost of merchandise sold (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | | |
|  | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** |<br>**$Change** |<br>**%<br>Change** |
|  Cost of merchandise sold exclusive of depreciation and amortization | $474462 | $353455 | $121007 | 34.2% |

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Cost of merchandise sold increased by $121.0 million, or 34.2%, during fiscal year 2021, compared to fiscal year 2020. The increase in cost of merchandise sold resulted primarily from an increase in pounds processed during the year. Our total pounds processed increased by 26.1%, reaching 860 million pounds during fiscal year 2021, compared to 682 million pounds during fiscal year 2020.

As a percentage of net sales, cost of merchandise sold decreased to 39.4% during fiscal year 2021 from 42.4% during fiscal year 2020. The decrease in cost of merchandise sold as a percentage of net sales resulted primarily from an increase in sales yield and increased leveraging of fixed costs as sales volume increased, which were partially offset by an increase in costs per pound processed.

During fiscal year 2021, the cost of merchandise sold per pound processed increased to $0.55 per pound from $0.52 per pound in fiscal year 2020. The increase in cost of merchandise sold per pound processed resulted primarily from a decrease in wage subsidies received in connection with COVID-19 and higher wages offered to our employees. Excluding the effects of wage subsidies, labor costs as a percentage of net sales decreased to approximately 24.6% in fiscal year 2021 from approximately 27.1% in fiscal year 2020. The decrease in labor costs as a percentage of net sales primarily resulted from higher sales yields and improved labor efficiencies.

During fiscal year 2021 and fiscal year 2020, we received a total of $21.7 million and $32.6 million in wage subsidies, respectively, resulting in reductions to cost of merchandise sold of $13.4 million and $18.6 million, respectively. These wage subsidies reimbursed us for certain employee wage costs incurred in Canada and Australia. We were eligible for the wage subsidy program in Canada and Australia and complied with the requirements of the programs because we had a reduced amount of sales during the initial phases of the pandemic in fiscal year 2020 and the first half of fiscal year 2021 and continued to pay a significant portion of our team members' wages that were not covered by the subsidies. We do not currently expect wage subsidies to continue in future periods, because our Canadian and Australian net sales have recovered to a large extent as our stores resumed a more normal store opening schedule. Assuming no significant increases in public health restrictions associated with the pandemic, which may result in increased store closures and decreased customer traffic, we do not expect the absence of wage subsidies to have a significant impact on our future operations or expansion plans.

*Salaries, wages, and benefits* 

The following table presents salaries, wages, and benefits expense (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | | |
|  | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** |<br>**$Change** |<br>**%<br>Change** |
|  Salaries, wages, and benefits: |  |  |  |  |
|  Retail  | $167740 | $129636 | $38104 | 29.4% |
|  Corporate | 72066 | 54756 | 17310 | 31.6 |
|  Total salaries, wages, and benefits | $239806 | $184392 | $55414 | 30.1% |

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Salaries, wages, and benefits expense increased by $55.4 million, or 30.1%, fiscal year 2021, compared fiscal year 2020.

The increase in labor costs was greatest for our retail operations, where expenses increased by $38.1 million, or 29.4%. The increase in labor costs primarily resulted from an overall increase in operations and open store days as public health restrictions related to COVID-19 eased during fiscal year 2021, in addition to an increase in employee incentive compensation. Incentive compensation for our retail employees, which is based on individual retail location performance relative to budgeted expectations, increased to $16.8 million in fiscal year 2021 from $0.1 million in fiscal year 2020 due to our strong performance and the reintroduction of incentive bonuses for retail employees we scaled back our COVID-19 mitigation measures.

Salaries, wages, and benefits for our corporate employees increased by $17.3 million, or 31.6%, during fiscal year 2021 when compared to fiscal year 2020. The increase primarily resulted from the reversal of pandemic-related cost mitigation measures enacted by us during 2020, which included employee furloughs, temporary salary reductions, and suspension of our 401(k) plan match program. We also increased incentive compensation for corporate employees in 2021. Incentive compensation for corporate employees, which is based on our overall performance relative to budged expectations, increased by $7.3 million to $17.4 million in fiscal year 2021. We also increased our corporate employee headcount in our finance, accounting and other corporate functions during fiscal year 2021 as we prepare to be a public company.

As relief during the pandemic, we received a total of $21.7 million and $32.6 million in wage subsidies during fiscal year 2021 and fiscal year 2020, respectively. These wage subsidies resulted in reductions to salaries, wages, and benefits of $8.3 million and $14.0 million during fiscal year 2021 and fiscal year 2020, respectively. We do not currently expect wage subsidies to continue in future periods, and to the extent wage subsidies are not provided in future periods, our salaries, wages and benefits expense will increase.

*Selling, general, and administrative* 

The following table presents selling, general and administrative expense (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | | |
|  | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** |<br>**$Change** |<br>**%<br>Change** |
|  Rent and utilities | $113973 | $111149 | $2824 | 2.5% |
|  Repairs and maintenance | 39216 | 32991 | 6225 | 18.9 |
|  Marketing | 10726 | 5768 | 4958 | 86.0 |
|  Real estate taxes | 23950 | 22083 | 1867 | 8.5 |
|  Professional service fees | 16606 | 7403 | 9203 | 124.3 |
|  Supplies | 13397 | 11394 | 2003 | 17.6 |
|  Other expenses | 42367 | 39098 | 3269 | 8.4 |
|  Total selling, general, and administrative | $260235 | $229886 | $30349 | 13.2% |

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Selling, general, and administrative expense increased by $30.3 million, or 13.2%, during fiscal year 2021 compared to fiscal year 2020. The increase in selling, general, and administrative expenses resulted primarily from increases in professional service fees, repairs and maintenance, and rent and utilities expenses.

Professional service fees, which include legal, accounting, and other third-party advisor fees, increased by $9.2 million during fiscal year 2021, primarily due to expenses incurred in connection with our contemplated initial public offering and the 2nd Ave. Acquisition.

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Repairs and maintenance during the fiscal year 2021 increased by $6.2 million, or 18.9%, due to increased cleaning and janitorial costs as our stores remained open for a greater percentage of the year.

Marketing expenses increased by $5.0 million, or 86.0%, as our stores gradually eased pandemic-related cost mitigation measures during fiscal year 2021.

Other expenses increased by $3.3 million, or 8.4%, primarily as a result of an increase in credit card processing fees.

Rent and utilities increased by $2.8 million during fiscal year 2021 as rent abatements offered by landlords at our retail store locations during fiscal year 2020 did not reoccur.

*Depreciation and amortization* 

The following table presents depreciation and amortization expense (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | | |
|  | **Fiscal<br>Year<br>2021** | **Fiscal<br>Year<br>2020** |<br>**$Change** |<br>**%<br>Change** |
|  Depreciation and amortization | $47385 | $59432 | $(12047) | (20.3)% |

---

Depreciation and amortization decreased by $12.0 million, or 20.3%, during fiscal year 2021 compared to fiscal year 2020. The decrease in expense resulted from greater amounts of accelerated depreciation and amortization recorded in fiscal year 2020 related to expired licensing agreements and fixed assets no longer in service. Accelerated depreciation and amortization expenses amounted to $11.3 million in fiscal year 2020, compared to $1.3 million in fiscal year 2021.

*Interest expense* 

The following table presents interest expense (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | | |
|  | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** |<br>**$Change** |<br>**%<br>Change** |
|  Interest expense | $(48907) | $(60497) | $11590 | (19.2)% |
|  Amortization debt issuance cost | (4444) | (5723) | 1279 | (22.3) |
|  Loss on interest rate swap | (214) | (3458) | 3244 | (93.8) |
|  Total interest expense | $(53565) | $(69678) | $16113 | (23.1)% |

---

Interest expense decreased by $16.1 million, or 23.1%, during fiscal year 2021 compared to fiscal year 2020. The reduction in interest expense resulted from lower interest rates and principal balances under our Senior Secured Credit Facilities. The lower interest rates were negotiated as part of the Ares Share Purchase Transaction and the April 2021 Refinancing. We also incurred $3.5 million in losses under our interest rate swap during fiscal year 2020, which did not occur to the same extent during fiscal year 2021.

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*Other income (expense), net* 

The following table presents other income (expense), net (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | | |
|  | **Fiscal<br>Year<br>2021** | **Fiscal<br>Year<br>2020** |<br>**$Change** |<br>**%<br>Change** |
|  Other income (expense), net | $(3265) | $3410 | $(6675) | (195.7)% |

---

Other income (expense), net was an expense of $3.3 million during the fiscal year 2021, compared to $3.4 million of income during fiscal year 2020. The change was primarily due to a $2.8 million increase in charitable donations that we make to our NPPs and other charities, $2.6 million of costs related to the Ares Share Purchase Transaction and April 2021 Refinancing, and a $1.3 million decrease in foreign currency gains during 2021.

*Loss on extinguishment of debt* 

In connection with the Ares Share Purchase Transaction, we refinanced our outstanding borrowings under our Prior Credit Facilities, which resulted in a loss on extinguishment of debt of $47.5 million during fiscal year 2021.

*Segment results* 

The following table presents net sales and profit by segment (in thousands) for the periods presented:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fiscal Year<br>2021** | **Fiscal<br>Year 2020** | **$ Change** | **%<br>Change** |
|  **Net sales:** |  |  |  |  |
|  U.S. Retail | $644182 | $412272 | $231910 | 56.3% |
|  Canada Retail | 481559 | 364159 | 117400 | 32.2 |
|  Other | 78383 | 57579 | 20804 | 36.1 |
|  Total net sales | $1204124 | $834010 | $370114 | 44.4% |
|  **Segment Profit:** |  |  |  |  |
|  U.S. Retail | $166988 | $44571 | $122417 | 274.7% |
|  Canada Retail | 148137 | 100695 | 47442 | 47.1 |
|  Other | 16235 | 18247 | (2012) | (11.0) |

---

*U.S. Retail* 

U.S. Retail net sales increased by $231.9 million, or 56.3%, during the fiscal year 2021, compared to fiscal year 2020. The increase resulted primarily from the easing of COVID-19 related restrictions during fiscal year 2021 through most of the United States, which allowed our stores to remain open. During the fiscal year 2021, our percentage of open store days in the United States was 99.9%, compared to 76.8% during fiscal year 2020. In addition to an increase in our percentage of open store days in the United States, our stores also had a higher capacity during fiscal year 2021, due to reduced social distancing measures.

U.S. Retail segment profit increased by $122.4 million, or 274.7%, during the fiscal year 2021, compared to fiscal year 2020. As a percentage of net sales, segment profit for our U.S. Retail segment increased to 25.9% during fiscal year 2021 from 10.8% during fiscal year 2020. The increase resulted primarily from an increase in net sales and sales yield, which increased to $1.34 per pound during fiscal

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year 2021 from $1.16 per pound during fiscal year 2020, in addition to more favorable merchandise costs. As a percentage of net sales, labor and merchandise costs declined to 65.3% during the fiscal year 2021 compared to 80.3% during fiscal year 2020. The decrease resulted primarily from higher sales yields combined with lower COVID-related charges as the bulk of COVID-related spend was incurred in fiscal year 2020, such as the installation of protective glass at each check out register, as well as lower labor costs as we continued to rollout self-checkout kiosks in our stores. Additionally, the acquisition of 2nd Ave. provided an incremental $1.2 million in profit during fiscal year 2021.

*Canada Retail* 

Canada Retail net sales increased by $117.4 million, or 32.2%, during the fiscal year 2021, compared to fiscal year 2020. Although less pronounced than the U.S. Retail segment, the increase in Canada Retail net sales resulted from the easing of COVID-19 restrictions and increased consumer willingness to engage in retail. During fiscal year 2021, our percentage of open store days in Canada was 81.3%, compared to 78.1% during fiscal year 2020. In addition to an increase in our percentage of open store days in Canada, our stores also had a higher capacity during fiscal year 2021, due to reduced social distancing measures.

Canada Retail segment profit increased by $47.4 million, or 47.1%, during fiscal year 2021, compared to fiscal year 2020. As a percentage of net sales, segment profit increased to 30.8% during the fiscal year 2021 from 27.7% during fiscal year 2020. The increase in segment profit was primarily driven by increased sales volume and leveraging of our fixed costs as our operations in Canada continued to return to pre-pandemic levels.

*Other* 

Other includes our Australian retail stores and our wholesale operations. Net sales for our other businesses increased by $20.8 million, or 36.1%, during fiscal year 2021, compared to fiscal year 2020. The increase in net sales resulted from increases in inventory volume processed by our wholesale operations in the United States, Canada, and Australia, in addition to increased retail net sales in Australia of $5.3 million, resulted in the overall increase in net sales for Other. The decrease in profit was driven by a reduction in wage subsidies of $9.9 million received by our Australian businesses during fiscal year 2021.

***Comparison of fiscal year 2020 (Successor), period from March 28, 2019 (Successor) to December 28, 2019 and period from December 30, 2018 to March 27, 2019 (Predecessor)***

*Net sales* 

The following table presents net sales (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** |
|  Retail sales | $800278 | $902056 | $247531 |
|  Wholesale sales | 33732 | 43471 | 12441 |
|  Total net sales | $834010 | $945527 | $259972 |

---

Our net sales were $834.0 million during fiscal year 2020, compared to $945.5 million during the period from March 28, 2019 to December 28, 2019 and $260.0 million during the period from December 30, 2018 to March 27, 2019. The decrease in net sales resulted primarily from the effects of the COVID-19 pandemic and related public health restrictions enacted during the year.

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Our retail stores were closed for a substantial portion of 2020 due to public health restrictions enacted during the pandemic, which resulted in lower store traffic and retail sales volume. During fiscal year 2020, our percentage open store days was 77.3%, compared to 100% during the Successor and Predecessor periods of fiscal year 2019.

We define percentage open store days as the total number of days during which each of our stores generated revenue during a fiscal period, divided by the total number of days in the fiscal period, excluding planned holiday closures. During 2020, our percentage open store days declined substantially due to public health restrictions to reduce the spread of COVID-19.

Due to the closure of our retail locations during the pandemic, we accepted fewer donations made to our NPPs at our Community Donation Centers. Total pounds processed by us decreased to 682 million pounds during fiscal year 2020, compared to 791 million pounds during the period from March 28, 2019 to December 28, 2019 and 238 million pounds during the period from December 30, 2018 to March 27, 2019. The decrease in wholesale sales resulted primarily from the reduction in pounds processed.

Our decrease in sales volume during fiscal year 2020 was partially offset by favorable pricing. Net sales per pound processed increased to $1.16 in fiscal year 2020, compared to $1.09 during the period from March 28, 2019 to December 28, 2019 and $1.02 during the period from December 30, 2018 to March 27, 2019.

*Cost of merchandise sold, exclusive of depreciation and amortization* 

The following table presents cost of merchandise sold (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** |
|  Total cost of merchandise sold exclusive of depreciation and amortization | $353455 | $460169 | $133595 |

---

Cost of merchandise sold was $353.5 million during fiscal year 2020, $460.2 million during the period from March 28, 2019 to December 28, 2019, and $133.6 million during the period from December 30, 2018 to March 27, 2019. The overall decrease in cost of merchandise sold resulted primarily from decreased donation volume and sales volume. Our total pounds processed decreased to 682 million pounds during fiscal year 2020, compared to 791 million pounds during the period from March 28, 2019 to December 28, 2019 and 238 million pounds during the period from December 30, 2018 to March 27, 2019.

As a percent of net sales, cost of merchandise sold decreased to 42.4% during fiscal year 2020, compared to 48.7% during the period from March 28, 2019 to December 28, 2019 and 51.4% during the period from December 30, 2018 to March 27, 2019. The decrease in cost of merchandise sold as a percentage of net sales resulted from favorable pricing and an increase in the percentage of OSDs received by us relative to all goods received. OSDs typically have a lower cost than delivered supply received from our NPPs. During fiscal year 2020, OSDs accounted for 75.1% of all volume received, compared to 53.9% during the period from March 28, 2019 to December 28, 2019 and 50.4% during the period from December 30, 2018 to March 27, 2019.

As relief during the pandemic, we received wage subsidies during fiscal year 2020, which resulted in a reduction in cost of merchandise sold of $18.6 million.

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*Salaries, wages, and benefits* 

The following table presents salaries, wages, and benefits expense (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** |
|  Salaries, wages, and benefits: |  |  |  |
|  Retail  | $129636 | $144255 | $41174 |
|  Corporate | 54756 | 50811 | 19019 |
|  Total salaries, wages, and benefits | $184392 | $195066 | $60193 |

---

Salaries, wages, and benefits expense was $184.4 million during fiscal year 2020, $195.1 million during the period from March 28, 2019 to December 28, 2019, and $60.2 million during the period from December 30, 2018 to March 27, 2019. The reduction in labor costs resulted primarily from temporary closures of our retail locations and cost reduction initiatives enacted by us during the pandemic.

The reduction in costs was greatest for our retail stores, which were temporarily closed for a substantial portion of fiscal year 2020 due to the pandemic. Salaries, wages, and benefits for our retail stores were $129.6 million during fiscal year 2020, $144.3 million during the period from March 28, 2019 to December 28, 2019 and $41.2 million during the period from December 30, 2018 to March 27, 2019. The decrease primarily resulted from store closures related to COVID-19, wage subsidies received by us, as well as cost cutting measures such as suspending the company's 401(k) plan match. As relief during the pandemic, we received $14.0 million in wage subsidies, in addition to the subsidies received and classified as cost of merchandise sold, which are classified as a reduction in salaries, wages and benefits for our retail operations during fiscal year 2020.

Salaries, wages, and benefits for our corporate employees was $54.8 million during fiscal year 2020, $50.8 million during the period from March 28, 2019 to December 28, 2019 and $19.0 million during the period from December 30, 2018 to March 27, 2019. The decrease is primarily due to cost cutting measures such as furloughing employees, implementing temporary tiered salary reductions for employees, and suspending the company's 401(k) plan match.

*Selling, general, and administrative* 

The following table presents selling, general and administrative expense (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** |
|  Rent and utilities | $111149 | $86640 | $27497 |
|  Repairs and maintenance | 32991 | 25018 | 8213 |
|  Marketing | 5768 | 18222 | 2760 |
|  Real estate taxes | 22083 | 16171 | 5442 |
|  Professional service fees | 7403 | 7290 | 16198 |
|  Supplies | 11394 | 8487 | 2635 |
|  Other expenses | 39098 | 25899 | 8792 |
|  Total selling, general, and administrative | $229886 | $187727 | $71537 |

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Selling, general, and administrative expense was $229.9 million during fiscal year 2020, $187.7 million during the period from March 28, 2019 to December 28, 2019, and $71.5 million for the period from December 30, 2018 to March 27, 2019. The decrease in selling, general, and administrative expenses resulted primarily from a reduction in professional service fees, marketing expenses, and rent and utilities.

Professional service fees decreased during fiscal year 2020, as transaction costs associated with the March 2019 Transactions did not reoccur.

We reduced our marketing spend considerably during fiscal year 2020 as our stores were temporarily closed for a substantial portion of the year during the pandemic.

During fiscal year 2020, our rent expense decreased as we did not renew expiring lease contracts for eight of our retail locations in the United States and two in Canada in addition to rent abatements received of $3.1 million.

Other expenses, which include bank services charges, travel and entertainment expenses, security expenses, IT expenses and other miscellaneous expenses, decreased as a result of spending reductions enacted by us during the pandemic.

*Depreciation and amortization* 

The following table presents depreciation and amortization expense (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** |
|  Depreciation and amortization | $59432 | $32391 | $18837 |

---

Depreciation and amortization expense was $59.4 million during fiscal year 2020, $32.4 million during the period from March 28, 2019 to December 28, 2019, and $18.8 million during the period from December 30, 2018 to March 27, 2019. The increase in depreciation and amortization expense resulted primarily from the increased values of our property and equipment and definite-lived intangible assets following the application of purchase accounting in connection with the March 2019 Transactions.

*Interest expense* 

The following table presents interest expense (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** |
|  Interest expense | $(60497) | $(46409) | $(19111) |
|  Amortization of debt issuance costs and term debt discount | (5723) | (2696) | (1673) |
|  Loss on interest rate swap | (3458) | (8898) |  |
|  Total interest expense | $(69678) | $(58003) | $(20784) |

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Interest expense was $69.7 million for fiscal period 2020, $58.0 million for the period from March 28, 2019 to December 28, 2019, and $20.8 million for the period from December 30, 2018 to March 27, 2019. The reduction in interest expense resulted primarily from the debt restructuring, which resulted in a $368.4 million decrease in outstanding borrowings.

*Other income (expense), net* 

The following table presents other income (expense), net (in thousands):

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| | | | |
|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** |
|  Other income (expenses), net | $3410 | $(6353) | $6605 |

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During fiscal year 2020 and the period from March 28, 2019 to December 28, 2019, other income (expense), net included $2.7 million in unrealized gains and $5.8 million in unrealized losses, respectively, related to our foreign currency forward contracts. During the period from December 30, 2018 to March 27, 2019, other income (expense), net included $7.4 million of income related to accrued interest forgiven by certain of our former lenders in connection with the March 2019 Transactions.

*Gain on extinguishment of debt* 

As part of the March 2019 Transactions, certain of our former lenders settled a portion of our outstanding debt for equity, which resulted in a gain on extinguishment of debt of $283.2 million during the period from December 30, 2018 to March 27, 2019.

*Segment results* 

The following table presents net sales and profit by segment (in thousands) for the periods presented:

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| | | | |
|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** |
|  | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** |
|  **Net sales:** |  |  |  |
|  U.S. Retail | $412272 | $469977 | $134720 |
|  Canada Retail | 364159 | 405501 | 105003 |
|  Other | 57579 | 70049 | 20249 |
|  Total net sales | $834010 | $945527 | $259972 |
|  **Segment Profit:** |  |  |  |
|  U.S. Retail | $44571 | $64430 | $13264 |
|  Canada Retail | 100695 | 97521 | 22384 |
|  Other | 18247 | 16607 | 4814 |

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*U.S. Retail* 

U.S. Retail net sales was $412.3 million for fiscal year 2020, $470.0 million for the period from March 28, 2019 to December 28, 2019, and $134.7 million for the period from December 30, 2018 to

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March 27, 2019. The decrease in fiscal year 2020 resulted primarily from the effects of the COVID-19 pandemic and stay-at-home orders in place during 2020, which resulted in the temporary closures of our retail locations. During fiscal year 2020, our percentage open store days in the United States was 76.8%, compared to 100% during the period from March 28, 2019 to December 28, 2019 and 100% during the period from December 30, 2018 to March 27, 2019. Overall, our number of retail stores in the United States decreased during fiscal year 2020, decreasing from 145 stores as of December 28, 2019 to 137 stores as of January 2, 2021.

The net decrease of eight retail stores in the United States during fiscal year 2020 resulted largely from the expiration of store leases, which we elected not to renew. We did not open any new stores in the United States during fiscal year 2020.

U.S. Retail segment profit was $44.6 million during fiscal year 2020, $64.4 million for the period from March 28, 2019 to December 28, 2019, and $13.3 million for the period from December 30, 2018 to March 27, 2019. The decrease in fiscal year 2020 was primarily driven by a reduction in sales from stores temporarily closed in connection with the pandemic. The decline in U.S. Retail profit was partially offset by a reduction in store payroll while the stores were closed.

As a percentage of net sales, segment profit for our U.S. Retail segment was 10.8% in fiscal year 2020, compared to 13.7% during the period from March 28, 2019 to December 28, 2019, and 9.8% during the period from December 30, 2018 to March 27, 2019. The decline in fiscal year 2020 resulted primarily from lower net sales.

*Canada Retail* 

Canada Retail net sales was $364.2 million for fiscal year 2020, $405.5 million for the period from March 28, 2019 to December 28, 2019, and $105.0 million for the period from December 30, 2018 to March 27, 2019. The decrease in fiscal year 2020 resulted primarily from the effects of the COVID-19 pandemic, which resulted in the temporary closures of our retail locations. During fiscal year 2020, our percentage open store days in Canada was 78.1%, compared to 100% during the period from March 28, 2019 to December 28, 2019 and 100% during the period from December 30, 2018 to March 27, 2019. Overall, our number of retail stores in Canada remained consistent during fiscal year 2020.

Canada Retail segment profit was $100.7 million during fiscal year 2020, compared to $97.5 million for the period from March 28, 2019 to December 28, 2019 and $22.4 million for the period from December 30, 2018 to March 27, 2019. The decrease in fiscal year 2020 was primarily driven by a reduction in sales resulting from the temporary store closures during the pandemic. The decline in Canada Retail profit was partially offset by a reduction in store payroll while the stores were closed, in addition to $22.7 million of wage subsidies.

Our Canada Retail segment has historically been more profitable than our U.S. Retail segment, due to lower merchandise and labor costs. This trend resulted in greater segment profit for our Canada Retail segment when compared to our U.S. Retail segment, despite lower net sales during fiscal year 2020, the period from March 28, 2019 to December 28, 2019, and the period from December 30, 2018 to March 27, 2019.

During fiscal year 2020, labor and merchandise costs accounted for 55.0% of net sales in our Canada Retail segment compared to 65.9% in our U.S. Retail segment when excluding wage subsidies. Our Canada Retail segment also received wage subsidies of $22.7 million in fiscal year 2020, compared to zero for our U.S. Retail segment.

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During the period from March 28, 2019 to December 28, 2019 (Successor) and the period from December 30, 2018 to March 27, 2019 (Predecessor), labor and merchandise costs accounted for 57.9% and 60.7% for our Canada Retail segment, respectively, compared to 67.3% and 71.0% for our U.S. Retail segment.

*Other* 

Other includes our Australian retail stores and our wholesale operations. Net sales for our other businesses were $57.6 million during fiscal year 2020, $70.0 million for the period from March 28, 2019 to December 28, 2019, and $20.2 million for the period from December 30, 2018 to March 27, 2019. The decrease in fiscal year 2020 resulted primarily from the effects of the COVID-19 pandemic and stay-at-home orders in place during 2020, which resulted in the temporary closure of our retail locations in Australia. In addition, the overall reduction in total pounds processed resulted in lower sales by our wholesale processing facilities in the United States, Canada, and Australia. Profit for other decreased in line with the overall reductions in sales volume. The decline in profit was partially offset by a reduction in store payroll while the stores in Australia were closed, in addition to $9.9 million of wage subsidies received from the Australian government.

**Cash Flows** 

***Comparison of nine months ended October 1, 2022 (Successor) and nine months ended October 2, 2021 (Successor)***

The following table summarizes our cash flows for the periods indicated (in thousands):

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| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
|  | **October 1,<br>2022** | **October 2,<br>2021** |
|  Net cash provided by operating activities | $117633 | $145886 |
|  Net cash used in investing activities | (81398) | (23327) |
|  Net cash used in financing activities | (11462) | (90222) |
|  Effect of exchange rate changes on cash | (6774) | (8851) |
|  Net increase in cash and cash equivalents | $17999 | $23486 |

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***Cash Provided by Operating Activities***

Net cash provided by operating activities was $117.6 million for the nine months ended October 1, 2022, primarily resulting from net income of $58.3 million, after consideration of non-cash charges of $180.2 million and a decrease in cash provided by changes in operating assets and liabilities of $120.8 million. The decrease in net cash provided by operating activities during the first nine months of fiscal year 2022 was driven by employee incentive compensation earned in 2021 but paid during the first quarter of 2022. The increased incentive compensation was due to the improvement in the Company's operating performance during fiscal year 2021 compared to 2020, which was severely impacted by the COVID 19 pandemic. Through the first nine months of fiscal year 2022, we paid $37.9 million of employee incentive compensation, compared to $16.5 million during the first nine months of fiscal year 2021.

Non-cash charges during the nine months ended October 1, 2022 primarily consisted of $86.1 million of operating lease expense, $40.1 million of depreciation and amortization, and $34.9 million of other non-cash charges. Other non-cash charges included $41.7 million of foreign currency losses and $3.9 million in losses on the retirement of property and equipment, which were partially offset by an

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unrealized gain of $15.2 million on our derivatives. During the nine months ended October 1, 2022, the U.S. dollar appreciated in value relative to the Canadian dollar. As a result, we incurred foreign currency losses related to the U.S. dollar denominated Term Loan Facility borrowed by our Canadian subsidiaries, which use the Canadian dollar as their functional currency. Our unrealized gain on derivatives resulted primarily from our Canadian dollar and U.S. dollar cross currency swaps.

Net cash used in changes in operating assets and liabilities during the nine months ended October 1, 2022, consisted primarily of a $82.9 million decrease in operating lease liabilities, a $17.0 million decrease in accrued payroll and related taxes, a $10.0 million increase in prepaid expenses and other current assets, and a $9.2 million increase in trade and other receivables.

The $17.0 million decrease in accrued payroll and related taxes resulted primarily from the payment of incentive compensation to our employees. As of January 1, 2022, we accrued $35.3 million related to employee incentive compensation, which was subsequently paid during the nine months ended October 1, 2022. As of October 1, 2022, we had accrued $17.7 million for employee incentive compensation, the majority of which we plan to pay in the first quarter of fiscal year 2023. The decrease in operating lease liabilities during the nine months ended October 1, 2022, resulted from payments toward our lease liabilities. The increase in prepaid expenses and other current assets resulted primarily from an increase in prepaid taxes and capitalized expenditures related to this offering. The increase in trade and other receivables resulted primarily from an increase in sales volume and more favorable pricing in our wholesale operations.

Net cash provided by operating activities was $145.9 million for the nine months ended October 2, 2021, primarily resulting from net income of $55.7 million, after consideration of non-cash charges of $88.5 million and a net change of $1.7 million in our operating assets and liabilities.

Net cash provided by non-cash charges during the nine months ended October 2, 2021, consisted primarily of a $47.5 million loss on extinguishment of debt in relation to the Ares Share Purchase Transaction and $34.0 million in depreciation and amortization.

Net cash provided by changes in operating assets and liabilities during the nine months ended October 2, 2021 consisted primarily of a $9.2 million increase in prepaid expenses and other current assets, which was partially offset by a $6.8 million increase in accrued payroll and related taxes and a $5.0 million increase in accounts payable and accrued liabilities. The increase in prepaid expenses and other current assets resulted primarily from an increase in prepaid occupancy costs during the nine months ended October 2, 2021. The increase in accrued payroll and related taxes resulted primarily from the accrual of incentive compensation for our employees, which was paid out during the first quarter of fiscal year 2022. The increase in accounts payable and accrued liabilities resulted from the deferral of interest payments during the initial stages of the COVID-19 pandemic and increase in federal tax payable.

***Cash Used in Investing Activities***

Net cash used in investing activities was $81.4 million for the nine months ended October 1, 2022, and $23.3 million for the nine months ended October 2, 2021. The increase in our capital spending during the nine months ended October 1, 2022, compared to the nine months ended October 2, 2021, resulted from greater investments in our CPC, ABP and customer self-checkout initiatives, which are reflected as purchases of property and equipment.

***Cash Used in Financing Activities***

Net cash used in financing activities was $11.5 million for nine months ended October 1, 2022, and $90.2 million for the nine months ended October 2, 2021. Financing activities during the

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nine months ended October 1, 2022, consisted primarily of $8.9 million in payments towards the principal of our long-term debt.

Significant financing activities during the nine months ended October 2, 2021, consisted of $600 million of proceeds from issuance of our Term Loan Facility, which was used to pay off pre-existing term loans in the amount of $643.6 million. In relation to the repayment of our pre-existing term loans, we paid $22.8 million in pre-payment premium and $23.8 million in debt issuance costs.

***Comparison of fiscal year 2021 (Successor), fiscal year 2020 (Successor) and the period from March 28, 2019 to December 28, 2019 (Successor) and period from December 30, 2018 to March 27, 2019 (Predecessor)***

The following table summarizes our cash flows for the periods indicated (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **Period from**<br>**March 28,**<br>**2019 to**<br>**December 28,**<br>**2019** | **Period from**<br>**December 30,**<br>**2018 to**<br>**March 27,**<br>**2019** |
|  Net cash provided by (used in) operating activities | $175762 | $29913 | $61985 | $(18039) |
|  Net cash used in investing activities | (263172) | (19172) | (752918) | (5224) |
|  Net cash provided by financing activities | 52999 | 36807 | 729233 | 51494 |
|  Effect of exchange rate changes on cash | (5533) | 4044 | (688) | 846 |
|  Net increase (decrease) in cash and cash equivalents | $(39944) | $51592 | $37612 | $29077 |

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***Comparison of fiscal year 2021 and fiscal year 2020***

***Cash Provided by (Used in) Operating Activities***

Net cash provided by operating activities was $175.8 million for the fiscal year 2021, primarily resulting from net income of $83.4 million, after consideration of non-cash charges of $83.0 million and a net favorable movement of $9.4 million in our operating assets and liabilities. Net cash provided by changes in operating assets and liabilities during the fiscal year 2021 consisted primarily of $18.0 million increase in accrued payroll and related taxes and a $6.1 million decrease in inventory, which were partially offset by a $18.0 million increase in prepaid expenses and other current assets. The increase in accrued payroll and related taxes resulted from $35.3 million in unpaid bonuses in connection with our management incentive programs. We pay the majority of our management incentive bonuses in the first quarter following fiscal year-end. The decrease in inventory resulted from increased sales as our operations approach pre-pandemic levels. The $18.0 million increase in prepaid expenses and other current assets resulted from an increase in occupancy related prepayments as of fiscal year 2021.

Net cash provided by operating activities was $29.9 million for fiscal year 2020, primarily resulting from a net loss of $63.5 million, after consideration of non-cash charges of $72.9 million and a net favorable movement of $20.5 million in our operating assets and liabilities. Net cash provided by changes in operating assets and liabilities during fiscal year 2020 consisted primarily of a $21.8 million increase in deferred rent and other and a $4.8 million increase in accounts payable and accrued liabilities, which were offset by a $9.1 million decrease in accrued payroll and related taxes. The increase in deferred rent and other resulted primarily from favorable renegotiations of our operating leases during the COVID-19 pandemic, which resulted in $4.4 million in rent deferrals and $3.1 million in rent abatement, in addition to a decrease in prepaid income taxes of $8.9 million primarily related to the Canadian Revenue Authority settlement. The increase in accounts payable and accrued liabilities

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resulted from the timing of our payment activity associated with our taxes, accrued interest, and trade payables. During fiscal year 2020, our accruals for income and real estate taxes increased by $15.2 million, which was partially offset by a $5.6 million decrease in accrued interest on our debt and an overall decrease in accounts payable resulting from the timing of inventory purchases and supplier payments. The decrease in accrued payroll and related taxes resulted from the payment of $25.0 million in accrued bonuses from the prior year combined with a lower accrual for bonus payments under our management incentive program at the end of fiscal year 2020.

***Cash Used in Investing Activities***

Net cash used in investing activities was $263.2 million for the fiscal year 2021, and $19.2 million for fiscal year 2020. During fiscal year 2021, the increase in investing activities primarily related to the cash payment of $220.3 million for the acquisition of 2nd Ave., as well as an increase in investment in our CPC, ABP and customer self-checkout initiatives. During fiscal year 2020, investing activities consisted exclusively of capital expenditures on property and equipment.

***Cash Provided by Financing Activities***

Net cash provided by financing activities was $53.0 million for fiscal year 2021, compared to net cash provided by financing activities of $36.8 million for fiscal year 2020. During fiscal year 2021, we repaid $645.7 million of outstanding principal on our debt as well as a $22.8 million prepayment penalty related to the April 2021 Refinancing. We also paid our equityholders $75.0 million in connection with the November 2021 Dividend. These cash payments were offset by $796.5 million of net debt proceeds received from the Term Loan Facility and the Incremental Term Facility. Significant financing activities during fiscal year 2020 consisted primarily of $45.0 million in proceeds received from a new equity issuance during the pandemic. During the pandemic, we also borrowed and subsequently repaid $42.1 million on our revolving credit facility.

***Comparison of fiscal year 2020 (Successor) to period from March 28, 2019 to December 28, 2019 (Successor) and period from December 30, 2018 to March 27, 2019 (Predecessor)***

***Cash Provided by (Used in) Operating Activities***

Net cash provided by operating activities was $29.9 million for fiscal year 2020, primarily resulting from a net loss of $63.5 million, after consideration of non-cash charges of $72.9 million and a net favorable movement of $20.5 million in our operating assets and liabilities. Net cash provided by changes in operating assets and liabilities during fiscal year 2020 consisted primarily of a $21.8 million increase in deferred rent and other and a $4.8 million increase in accounts payable and accrued liabilities, which were offset by a $9.1 million decrease in accrued payroll and related taxes. The increase in deferred rent and other resulted primarily from favorable renegotiations of our operating leases during the COVID-19 pandemic, which resulted in $4.4 million in rent deferrals and $3.1 million in rent abatement, in addition to a decrease in prepaid income taxes of $8.9 million related to primarily to the Canadian Revenue Authority settlement. The increase in accounts payable and accrued liabilities resulted from the timing of our payment activity associated with our taxes, accrued interest, and trade payables. During fiscal year 2020, our accruals for income and real estate taxes increased by $15.2 million, which was partially offset by a $5.6 million decrease in accrued interest on our debt and an overall decrease in accounts payable resulting from the timing of inventory purchases and supplier payments. The decrease in accrued payroll and related taxes resulted from the payment of $25.0 million in accrued bonuses from the prior year combined with a lower accrual for bonus payments under our management incentive program at the end of fiscal year 2020.

Net cash provided by operating activities was $62.0 million in the period from March 28, 2019 to December 28, 2019, primarily resulting from a net income of $1.4 million, after consideration of non-cash charges of $41.4 million and a net favorable change of $19.2 million in operating assets and

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liabilities. Net cash provided by changes in operating assets and liabilities during the period from March 28, 2019 to December 28, 2019 consisted primarily of a $20.2 million increase in accrued payroll and related taxes, a $10.9 million decrease in prepaid expenses and other current assets, and a $5.7 million decrease in inventories, which were partially offset by a $14.8 million decrease in accounts payable and accrued liabilities. The increase in accrued payroll and related taxes resulted primarily from $25.0 million in unpaid bonus payments incurred under our management incentive plans, which were accrued during the period. The decrease in prepaid expenses and other current assets resulted from a reduction in estimated tax payments to tax authorities in Canada during the period. The decrease in inventories and accounts payable and accrued liabilities resulted from lower inventory purchasing activity during the fourth quarter of fiscal year 2019. We also had greater unpaid accrued liabilities associated with interest, professional service fees incurred in connection with the March 2019 Transactions, and unpaid state income taxes in the United States.

Net cash used in operating activities was $18.0 million during the period from December 30, 2018 to March 27, 2019, primarily resulting from a net income of $239.6 million, after consideration of non-cash charges of $247.2 million and a net unfavorable change of $10.5 million in operating assets and liabilities. Net cash provided by changes in operating assets and liabilities during the period from December 30, 2018 to March 27, 2019 consisted primarily of a $14.0 million decrease in accrued payroll and related taxes and a $7.1 million decrease in deferred rent and other, which were partially offset by a $7.9 million decrease in trade and other receivables. The decrease in accrued payroll and related taxes resulted from the payment of accrued bonuses of $22.9 million in connection with our management incentive program. The decrease in deferred rent and other, which includes certain accrued liabilities, resulted primarily from payments for certain accrued general and administrative expenses in the period. The decrease in trade and other receivables primarily resulted from an increase in cash collected from a refund of certain expenses that were overpaid by us in the prior period.

***Cash Used in Investing Activities***

Net cash used in investing activities was $19.2 million for fiscal year 2020, which exclusively related to capital expenditures on property and equipment, $752.9 million for the period from March 28, 2019 to December 28, 2019, which included a payment of $728.8 million for the March 2019 Transactions as discussed in Note 3 to our audited consolidated financial statements with the remainder attributable to capital expenditures, and $5.2 million for the period from December 30, 2018 to March 27, 2019, exclusively related to capital expenditures on property and equipment. Our capital spending decreased during 2020 due to cost reductions implemented following the onset of the COVID-19 pandemic in 2020.

***Cash Provided by Financing Activities***

Net cash provided by financing activities was $36.8 million for fiscal year 2020, $729.2 million for the period from March 28, 2019 to December 28, 2019, and $51.5 million for the period from December 30, 2018 to March 27, 2019. Significant financing activities consisted of $45.0 million of additional paid-in capital for fiscal year 2020 resulting from the issuance of additional shares, $573.8 million of long-term debt issuance and a capital contribution in connection with the acquisition of $165.0 million for the period from March 28, 2019 to December 28, 2019, and $51.5 million from advances on the revolving line of credit, net of repayments, for the period from December 30, 2018 to March 27, 2019.

***Non-GAAP measures*** 

The following information provides definitions and reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. We present Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow, which are non-GAAP financial measures. These measures are frequently used by analysts, investors and other

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interested parties to evaluate companies in our industry. Further, we believe the presentation of Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow is helpful in highlighting trends in our operating results, because it excludes the impact of items that are outside the control of management or not reflective of our ongoing operations and performance. The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this registration statement that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or an alternative to, and should be considered in conjunction with, the GAAP financial measures presented elsewhere in this registration statement. The non-GAAP financial measures in this registration statement may differ from similarly-titled measures used by other companies. For more information about these non-GAAP financial measures, see "Summary Financial and Other Data—Non-GAAP measures."

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** | **Successor** | **Successor** |
|  | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | <br> **Nine Months Ended** | <br> **Nine Months Ended** |
| *(in thousands)* | **Fiscal<br>Year 2021** | **Fiscal<br>Year 2020** | **Period from<br>March 28,<br>2019 to<br>December 28,<br>2019** | **Period from<br>December 30,<br>2018 to<br>March 27,<br>2019** | **October 1,**<br>**2022** | **October 2,**<br>**2021** |
|  Adjusted EBITDA | $223379 | $59496 | $118170 | $13989 | $222560 | $166286 |
|  Adjusted EBITDA Margin | 18.6% | 7.1% | 12.5% | 5.4% | 20.8% | 19.4% |
|  Free Cash Flow | $135218 | $10741 | $37859 | $(23263) | $37009 | $122559 |

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***Adjusted EBITDA and Adjusted EBITDA Margin***

Adjusted EBITDA and Adjusted EBITDA margin are considered non-GAAP financial measures under the SEC's rules and regulations because they exclude certain charges included in net (loss) income calculated in accordance with GAAP. Management believes that Adjusted EBITDA and Adjusted EBITDA Margin are meaningful measures to share with investors because they best allow comparison of the performance of one period with that of another period. In addition, Adjusted EBITDA and Adjusted EBITDA Margin afford investors a view of what management considers its operating performance to be and the ability to make a more informed assessment of such operating performance as compared with that of the prior period.

For a definition of Adjusted EBITDA and Adjusted EBITDA Margin and a reconciliation of Adjusted EBITDA and Adjusted EBITDA to net income (loss) and net income (loss) margin, see "Prospectus Summary—Summary Financial and Other Data—Adjusted EBITDA and Adjusted EBITDA Margin."

***Free Cash Flow*** 

Free Cash Flow is a non-GAAP financial measure that is calculated as net cash generated by operations less cash paid for fixed assets. Management believes that Free Cash Flow, which measures the ability to generate additional cash from business operations, is an important financial measure for use in evaluating the company's financial performance and ability to reduce debt, fund acquisitions and fund growth initiatives. Free Cash Flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. There are limitations to using non-GAAP financial measures, including that other companies, including companies in our industry, may calculate Free Cash Flow differently. Because of these limitations, you should consider Free Cash Flow alongside other financial performance measures, including net cash provided by (used in) operating activities, purchases of property and equipment and our other GAAP results.

For a definition of Free Cash Flow and a reconciliation of Free Cash Flow to net cash provided by operating activities, see "Prospectus Summary - Summary Financial and Other Data—Free Cash Flow."

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**Quarterly Results of Operations** 

The information below for each quarter has been prepared on a basis consistent with our audited consolidated financial statements included in this prospectus and reflect all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of the financial information contained in those statements. Our historical results are not necessarily indicative of the results that may be expected for the full year or any other period in the future. The following quarterly financial information should be read in conjunction with our audited consolidated financial statements and related notes and our interim financial statements and related notes included in this prospectus.

The following table sets forth certain unaudited financial data for each fiscal quarter for the periods indicated in dollars (in thousands):

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2022** | **Fiscal Year 2022** | **Fiscal Year 2022** |
|  | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** |
|  Net sales | $236115 | $80938 | $247275 | $269682 | $252827 | $278275 | $328189 | $344833 | $327467 | $364668 | $378292 |
|  Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of merchandise sold exclusive of depreciation and amortization | 127565 | 22209 | 83428 | 120254 | 96357 | 97737 | 123526 | 156842 | 143955 | 146794 | 152623 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries, wages, and benefits | 53182 | 24848 | 46213 | 60150 | 52409 | 51941 | 63964 | 71492 | 65433 | 66103 | 68107 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 61500 | 49458 | 57889 | 61040 | 55125 | 63899 | 67834 | 73377 | 72473 | 76298 | 78465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 11575 | 20169 | 11690 | 15998 | 12261 | 10768 | 10943 | 13413 | 12649 | 14043 | 13418 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 253822 | 116684 | 199220 | 257442 | 216152 | 224345 | 266267 | 315124 | 294510 | 303238 | 312613 |
|  Operating income (loss) | (17707) | (35746) | 48055 | 12240 | 36675 | 53930 | 61922 | 29709 | 32957 | 61430 | 65679 |
|  Other expense: |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (17142) | (17346) | (16966) | (18224) | (16735) | (12918) | (10938) | (12974) | (14594) | (14807) | (16454) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other expense, net | (2284) | 3728 | 693 | 1275 | 1922 | 1426 | (3747) | (2866) | (2094) | (6119) | (18217) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on extinguishment of debt |  |  |  |  |  | (47541) |  |  | (1023) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other expense, net | (19426) | (13618) | (16273) | (16949) | (14813) | (59033) | (14685) | (15840) | (17711) | (20926) | (34671) |
|  Income (loss) before income tax expense | (37133) | (49364) | 31782 | (4709) | 21862 | (5103) | 47237 | 13869 | 15246 | 40504 | 31008 |
|  Income tax (benefit) expense | (9093) | (12088) | 7783 | 17458 | 2849 | (665) | 6156 | (13869) | 3315 | 9646 | 15511 |
|  Net income (loss) | $(28040) | $(37276) | $23999 | $(22167) | $19013 | $(4438) | $41081 | $27738 | $11931 | $30858 | $15497 |

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The following table sets forth certain unaudited financial data for each fiscal quarter for the periods indicated as a percentage of net sales:

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|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2022** | **Fiscal Year 2022** | **Fiscal Year 2022** |
|  | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** |
|  Net sales | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
|  Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of merchandise sold exclusive of depreciation and amortization | 54 | 27.4 | 33.7 | 44.6 | 38.1 | 35.1 | 37.6 | 45.5 | 44 | 40.3 | 40.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries, wages, and benefits | 22.5 | 30.7 | 18.7 | 22.3 | 20.7 | 18.7 | 19.5 | 20.7 | 20 | 18.1 | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 26 | 61.1 | 23.4 | 22.6 | 21.8 | 23 | 20.7 | 21.3 | 22.1 | 20.9 | 20.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 4.9 | 24.9 | 4.7 | 5.9 | 4.8 | 3.9 | 3.3 | 3.9 | 3.9 | 3.9 | 3.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 107.4 | 144.1 | 80.5 | 95.4 | 85.4 | 80.7 | 81.1 | 91.4 | 90 | 83.2 | 82.5 |
|  Operating income (loss) | (7.4) | (44.1) | 19.5 | 4.6 | 14.6 | 19.3 | 18.9 | 8.6 | 10 | 16.8 | 17.5 |
|  Other (expense) income: |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (7.3) | (21.4) | (6.9) | (6.8) | (6.6) | (4.6) | (3.3) | (3.8) | (4.5) | (4.1) | (4.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (1.0) | 4.6 | 0.3 | 0.5 | 0.7 | 0.5 | (1.1) | (0.8) | (0.6) | (1.7) | (4.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on extinguishment of debt |  |  |  |  |  | (17.1) |  |  | (0.3) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (expense) income, net | (8.3) | (16.8) | (6.6) | (6.3) | (5.9) | (21.2) | (4.4) | (4.6) | (5.4) | (5.8) | (9.2) |
|  Income (loss) before income tax expense | (15.7) | (60.9) | 12.9 | (1.7) | 8.7 | (1.9) | 14.5 | 4 | 4.6 | 11 | 8.3 |
|  Income tax (benefit) expense | (3.8) | (14.8) | 3.2 | 6.5 | 1.2 | (0.3) | 2 | (4.0) | 1 | 2.5 | 4.2 |
|  Net income (loss) | (11.9)% | (46.1)% | 9.7% | (8.2)% | 7.5% | (1.6)% | 12.5% | 8.0% | 3.6% | 8.5% | 4.1% |

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**Key Financial and Operating Metrics** 

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2022** | **Fiscal Year 2022** | **Fiscal Year 2022** |
| *(Dollars in thousands)* | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** |
|  ***Comparable Store Sales Growth<sup>(1)</sup>*** |  |  |  |  |  |  |  |  |  |  |  |
|  United States | (8.4)% | (76.7)% | (16.8)% | (10.3)% | 24.2% | 410.2% | 39.2% | 27.6% | 8.4% | 1.7% | 4.1% |
|  Canada | (15.1) | (66.2) | (13.6) | (21.8) | (9.8) | 101.4 | 19.5 | 24.6 | 41.1 | 61.7 | 9.4 |
|  Total<sup>(4)</sup> | (11.2) | (70.6) | (16.5) | (16.0) | 8.8 | 221.7 | 28.9 | 25.5 | 20.1 | 22.4 | 6.2 |
|  ***Comparable Store Daily Sales<sup>(2)</sup>*** |  |  |  |  |  |  |  |  |  |  |  |
|  United States | 1.7% | (11.9)% | (12.4)% | (12.1)% | 12.1% | 35.0% | 32.4% | 27.3% | 8.4% | 1.7% | 4.1% |
|  Canada | (5.6) | (8.6) | (13.5) | (18.5) | 15.6 | 16.3 | 18.4 | 20.4 | (0.7) | 3.2 | 9.4 |
|  Total<sup>(4)</sup> | (1.6) | (13.4) | (13.2) | (14.6) | 15.3 | 32.8 | 26.0 | 23.5 | 2.2 | 0.1 | 8.0 |
|  ***Number of Stores<sup>(3)</sup>*** |  |  |  |  |  |  |  |  |  |  |  |
|  United States | 145 | 139 | 138 | 137 | 137 | 137 | 136 | 148 | 148 | 149 | 149 |
|  Canada | 148 | 148 | 148 | 147 | 148 | 148 | 148 | 148 | 149 | 150 | 150 |
|  Total<sup>(4)</sup> | 303 | 297 | 296 | 294 | 295 | 295 | 294 | 306 | 307 | 309 | 309 |
|  ***Other Metrics*** |  |  |  |  |  |  |  |  |  |  |  |
|  Pounds Processed (mm lbs) | 216 | 54 | 191 | 220 | 190 | 201 | 232 | 236 | 240 | 256 | 255 |
|  Net (loss) income | $(28040) | $(37276) | $23999 | $(22167) | $19013 | $(4438) | $41081 | $27738 | $11931 | $30858 | $15497 |
|  Net (loss) income margin | (11.9)% | (46.1)% | 9.7% | (8.2)% | 7.5% | (1.6)% | 12.5% | 8.0% | 3.6% | 8.5% | 4.1% |
|  Adjusted EBITDA<sup>(5)</sup> | $(4332) | $(3578) | $44372 | $23031 | $42182 | $46555 | $77549 | $57093 | $51693 | $85258 | $85609 |
|  Adjusted EBITDA Margin<sup>(5)</sup> | (1.8)% | (4.4)% | 17.9% | 8.5% | 16.7% | 16.7% | 23.6% | 16.5% | 15.8% | 23.4% | 22.6% |
|  Net cash provided by (used in) operating activities | $(53376) | $(4483) | $62307 | $25465 | $23493 | $50265 | $72128 | $29876 | $1573 | $48945 | $67115 |
|  Free Cash Flow<sup>(6)</sup> | $(60799) | $(6873) | $57905 | $20507 | $18519 | $43647 | $60393 | $12659 | $(24249) | $16973 | $44285 |

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(1) Comparable store sales growth is the percentage change in comparable store sales over the prior fiscal year or the
comparable quarter in the prior fiscal year. Comparable store sales is calculated as net sales for the period by stores open and comparable during the entirety of both periods that are being

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compared. We consider any store temporarily closed due to the COVID-19 pandemic to be open and comparable during the period for the purposes of calculating comparable store sales growth. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics—Comparable store sales growth (United States, Canada, total)."

(2) Comparable store daily sales growth is the percentage change in comparable store daily sales over the prior fiscal year
or the comparable quarter in the prior fiscal year. Comparable store daily sales for the period is the net sales by stores in the relevant geography that were or would have been open for the entirety of both periods if not for temporary closures due
to the COVID-19 pandemic, divided by the aggregate number of days those stores were open. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Business
Metrics—Comparable store daily sales growth."

(3) Number of Stores includes new stores not yet included in the comparable store sales growth and comparable store daily
sales growth computations measured as of the last day of the fiscal year or quarter, as applicable.

(4) Includes our stores in the United States and Canada as well as those in Australia.

(5) Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. For more information about
these non-GAAP financial measures, see "Summary Financial and Other Data—Non-GAAP measures." The following tables provides a reconciliation of Adjusted EBITDA and its most directly comparable GAAP financial measure, net
income (loss). Net income (loss) margin is the most directly comparable GAAP financial measure for Adjusted EBITDA Margin.

(6) Free Cash Flow is a non-GAAP financial measure. We define Free Cash Flow as net cash provided by (used in)
operating activities less purchases of property and equipment. For more information about this non-GAAP financial measure, see "Summary Financial and Other Data—Non-GAAP measures." The reconciliation of Free Cash Flow and
its most directly comparable GAAP financial measure is provided below.

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The following table presents a reconciliation of Adjusted EBITDA from net income (loss) for each fiscal quarter for the periods indicated (in thousands):

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|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2022** | **Fiscal Year 2022** | **Fiscal Year 2022** |
|  | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** |
|  Net income (loss) | $(28040) | $(37276) | $23999 | $(22167) | $19013 | $(4438) | $41081 | $27738 | $11931 | $30858 | $15497 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | 17142 | 17346 | 16966 | 18224 | 16735 | 12918 | 10938 | 12974 | 14594 | 14807 | 16454 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax (benefit) expense | (9093) | (12088) | 7783 | 17458 | 2849 | (665) | 6156 | (13869) | 3315 | 9646 | 15511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 11575 | 20169 | 11690 | 15998 | 12261 | 10768 | 10943 | 13413 | 12649 | 14043 | 13418 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on extinguishment of debt <sup>(1)</sup>  |  |  |  |  |  | 47541 |  |  | 1023 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense<sup>(2)</sup>  | 89 | 89 | 89 | 87 | 178 | 184 | 185 | 185 | 162 | 120 | 799 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-cash occupancy-related costs<sup>(3)</sup>  | 504 | 15064 | (4692) | 902 | (923) | (502) | 1035 | 618 | 693 | 818 | (888) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease intangible asset expense<sup>(4)</sup> |  |  |  |  |  |  |  |  | 2218 | 2865 | 1424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pre-opening expenses<sup>(5)</sup> | 152 |  | 137 | 1168 | 210 |  |  | 1418 | 1739 | 881 | 1088 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Store closing expenses<sup>(6)</sup> | 712 | 4073 | 2964 | 2566 | (763) | (110) | 122 | 1148 | (176) | 837 | 1133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Executive transition costs<sup>(7)</sup> | 607 | 48 |  |  |  |  |  | 420 | 893 | 231 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shared service center transition costs<sup>(8)</sup>  |  |  |  | 358 | 181 |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; COVID-related adjustments<sup>(9)</sup>  |  | (7256) | (14293) | (10272) | (6730) | (14628) | (1) | (8) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transaction costs<sup>(10)</sup>  |  |  |  |  | 199 | 1238 | 3069 | 8098 | 794 | 386 | 3126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other adjustments<sup>(11)</sup>  | 2020 | (3747) | (271) | (1291) | (1028) | (5751) | 4021 | 4958 | 1858 | 9766 | 18047 |
|  Adjusted EBITDA | $(4332) | $(3578) | $44372 | $23031 | $42182 | $46555 | $77549 | $57093 | $51693 | $85258 | $85609 |

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(1) Removes the effects of the loss on debt extinguishment in relation to the April 2021 Refinancing and the repayment of a
mortgage loan on January 6, 2022.

(2) Equity-based compensation expense represents non-cash compensation expenses related to stock options granted to
certain of our employees and directors.

(3) Includes the difference between cash and straight-line rent for all periods. The increase in non-cash occupancy-related
costs in fiscal year 2020 relates to operating, renegotiated during the pandemic, which allowed us to defer payment toward future periods. Some of these payments were deferred into the third quarter of fiscal year 2020, while other renegotiated
lease agreements allowed us to defer payment over the remaining lease terms.

(4) In connection with the March 2019 Transactions and the 2nd Ave. Acquisition, the Company recorded intangible assets and
liabilities for acquired lease contracts. Following the adoption of ASC 842, Leases ("ASC 842"), on January 2, 2022, the incremental value represented by these assets is classified as a component of right-of-use lease assets
on the Company's consolidated balance sheet, with the related amortization included within lease expense. Prior to the adoption of ASC 842, amortization related to the acquired lease intangible assets was classified in depreciation and
amortization on the Company's consolidated statement of operations.

(5) Pre-opening expenses include expenses incurred in the preparation and opening of new store and processing locations,
such as payroll, training, travel, occupancy, and supplies.

(6) Costs associated with the closing of certain retail locations, including lease termination costs, amounts paid to third
parties for rent reduction negotiations, fees paid to landlords for store closings, and, in some instances, income associated with early lease terminations.

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(7) Represents severance costs associated with executive leadership changes and the 2nd Ave. Acquisition.

(8) Represents severance costs associated with the opening of our new shared service center in Boise, Idaho during fiscal
year 2021 and fiscal year 2020.

(9) Represents benefits, net of costs, received in connection with the COVID-19 pandemic during fiscal year 2020,
including wage subsidies and severance costs. During fiscal year 2021, we received wage subsidies of $21.7 million and incurred $0.2 million in severance costs. During fiscal year 2020, we received $32.6 million in wage subsidies and
incurred $0.8 million in severance costs. Wage subsidies are reflected as a reduction to employee personnel costs in our Consolidated Statements of Operations and Comprehensive Income (Loss).

(10) Adjustments represent transaction and acquisition costs, including those related to this offering and the 2nd Ave.
Acquisition, and consist of third-party advisor and consulting fees, legal costs, and other transaction-related expenses.

(11) Other adjustments include foreign exchange gains and losses in each period presented. The fourth quarter of fiscal year
2021 is further adjusted for amortization related to the fair value step-up of inventory related to the 2nd Ave. Acquisition. During the nine months ended October 1, 2022, we incurred $26.0 million
of foreign exchange losses, which are classified within other adjustments.

The following table provides a reconciliation of net cash provided by (used in) operating activities, the most directly comparable GAAP financial measure, to Free Cash Flow (in thousands):

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2020** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2021** | **Fiscal Year 2022** | **Fiscal Year 2022** | **Fiscal Year 2022** |
|  | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** | **Q4** | **Q1** | **Q2** | **Q3** |
|  Net cash provided by (used in) operating activities | $(53376) | $(4483) | $62308 | $25463 | $23493 | $50265 | $72128 | $29876 | 1573 | $48945 | $67115 |
|  Purchase of property and equipment<sup>(1)</sup> | (7423) | (2390) | (4403) | (4956) | (4974) | (6618) | (11735) | (17217) | (25822) | (31972) | (22830) |
|  Free Cash Flow | $(60799) | $(6873) | $57905 | $20507 | $18519 | $43647 | $60393 | $12659 | (24249) | $16973 | $44285 |

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(1) Purchases of property and equipment include capital expenditures on our retail stores, CPCs and facilities, including
leasehold improvements and information technology equipment.

*Quarterly Trends* 

Our quarterly net sales decreased during the first and second quarters of fiscal 2020 as the effects of the COVID-19 pandemic first took hold and public health restrictions forced a substantial portion of our retail store locations to close temporarily. These public health measures slowly eased in the second half of fiscal year 2020 and through fiscal year 2021. By the fourth quarter of fiscal year 2021, our net sales returned to pre-pandemic levels. COVID-19 will continue to have an impact on our net sales as the pandemic continues to evolve and the relaxation of public health restrictions may reverse in some cases. Due to steps taken by us, we believe we are well positioned to react to changes in the pandemic and public health restrictions.

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**Liquidity and Capital Resources** 

We have historically financed our operations primarily with cash generated by our operating activities and proceeds from debt issuances. Our primary short-term requirements for liquidity and capital are to fund general working capital, capital expenditures and debt service requirements. Our primary long-term liquidity needs are related to the repayment of our loans, in addition to our lease commitments at our retail stores and processing facilities.

Our primary sources of liquidity are cash generated from operations and proceeds from borrowings, including our Revolving Credit Facility (as defined below). We believe our existing cash and cash equivalents are sufficient to fund our liquidity needs for the next 12 months. As of October 1, 2022, we had $114.9 million of cash and cash equivalents, of which 22.4%, 72.6% and 5.0% were held in U.S., Canada, and Australia, respectively, and denominated in local currency. As of the same date we had $816.8 million of borrowings outstanding under our Senior Secured Credit Facilities, excluding unamortized discount and issuance costs. As of October 1, 2022, the Company had not drawn on the Revolving Credit Facility, which had availability of $48.6 million after giving effect to $11.4 million letters of credit outstanding as of October 1, 2022.

***Prior Credit Facilities***

As of January 2, 2021, we had $603.8 million (excluding original issuance discounts and debt issuance costs) in outstanding borrowings under our credit facilities existing at the time (the "Prior Credit Facilities"), which we entered into as part of the March 2019 Transactions. As of January 2, 2021, the Prior Credit Facilities included (i) a first lien term loan facility (the "Prior First Lien Term Loan Facility"), (ii) a super-priority first lien revolving loan facility (the "Prior Revolving Loan Facility") and (iii) a second lien term loan facility (the "Prior Second Lien Term Loan Facility"). To provide enhanced liquidity during the pandemic, we amended the Prior Credit Facilities in June 2020 to allow for smaller cash interest payments and larger deferrals of interest and to modify the financial covenants. The Prior Credit Facilities were subsequently refinanced with the proceeds of the Senior Secured Credit Facilities in connection with the Ares Share Purchase Transaction in April 2021. See "—Recent Developments—Ares Share Purchase Transaction" for additional details on the Ares Share Purchase Transaction.

As of January 2, 2021, the Prior First Lien Term Loan Facility had an aggregate outstanding principal amount of $566.1 million. The Prior First Lien Term Loan Facility was to mature in March 2024, subject to quarterly amortization payments of $1.4 million each. The Prior First Lien Term Loan Facility carried a variable interest rate equal to a reference rate plus a margin ranging from 5.25% to 7.00% based on the type and currency of loan and our first lien net leverage ratio. Pursuant to an amendment, for the 12-month period between March 31, 2020, and March 31, 2021, an option to pay increased interest in-kind was added, and the applicable interest rate was based on the type and currency of loan and whether we elected to pay increased interest in-kind, resulting in an interest rate per year equal to a reference rate plus a margin ranging from 7.75% to 9.25%.

As of January 2, 2021, the Prior Revolving Loan Facility provided a commitment of $60.0 million, subject to a borrowing base based on 70% of our EBITDA, with an option to draw in U.S. dollars or Canadian dollars. The Prior Revolving Loan Facility was to mature in December 2023 and carried a variable interest rate equal to a reference rate plus a margin of 1.75% to 2.75% per year based on the type of loan, resulting in an all-in interest rate per year ranging from 4.25% to 5.50% during fiscal year 2020. During the first and second quarter of fiscal year 2020, we borrowed $42.1 million under the Prior Revolving Loan Facility, which we subsequently repaid in the third quarter of fiscal year 2020. As of January 2, 2021, and December 28, 2019, we had no amounts outstanding under the Prior Revolving Loan Facility and letters of credit totaling $13.2 million and $13.7 million, respectively.

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As of January 2, 2021, the Prior Second Lien Term Loan Facility had an aggregate outstanding principal amount of $64.5 million and was to mature in March 2024. The Prior Second Lien Term Loan Facility carried an interest rate of 14.00% to 14.75% per year based on our first lien net leverage ratio and whether we elected to pay interest in-kind.

***Senior Secured Credit Facilities***

In connection with the Ares Share Purchase Transaction, the Prior Credit Facilities were refinanced with the proceeds of a new term loan on April 26, 2021. The related credit agreement named Evergreen AcqCo 1 LP and Value Village Canada Inc., as borrowers, the guarantors party thereto, and KKR Loan Administration Services LLC as administrative agent and collateral agent and the lenders party thereto (the "Secured Credit Agreement").

The new senior secured credit facilities under the Secured Credit Agreement consist of a term loan facility (the "Term Loan Facility") and a revolving credit facility (the "Revolving Credit Facility" and, together with the Term Loan Facility, the "Senior Secured Credit Facilities"). Our principal subsidiaries in the United States and Canada are borrowers under the Senior Secured Credit Facilities, and most of our U.S. and Canadian subsidiaries are guarantors. The Senior Secured Credit Facilities are secured by a first-priority lien on substantially all assets of the borrowers and guarantors, subject to certain exceptions. The Revolving Credit Facility is senior to the Term Loan Facility in right of payment. The Term Loan Facility matures in April 2028. As of October 1, 2022, the Term Loan Facility had an aggregate outstanding principal amount of $816.8 million and is subject to quarterly principal payments of $2.1 million. The outstanding amount includes $225.0 million of incremental term loans (the "Incremental Term Facility") under the Term Loan Facility in order to finance, together with cash on hand, the 2nd Ave. Acquisition. The Incremental Term Facility has substantially the same terms as the original term loans under the Term Loan Facility. The Term Loan Facility bears interest at a variable rate equal to a reference rate plus a margin ranging from 4.50% to 5.75% based on the type of loan and our first lien net leverage ratio.

The Revolving Credit Facility matures in April 2026. The maximum available amount under the Revolving Credit Facility is $75.0 million (including an incremental commitment of $15.0 million obtained in November 2022), with $60.0 million available for letters of credit and a swingline sublimit of $10.0 million. As of October 1, 2022, we had no borrowings outstanding under the Revolving Credit Facility. Revolving loan draws are permitted in both U.S. and Canadian dollars and interest is variable at a rate equal to the reference rate plus a margin of 2.25% or 3.25% based on loan type. Beginning in 2023, we are required to prepay the Term Loan Facility with a percentage of our annual excess cash flow, if our first lien net leverage ratio exceeds 3.50 to 1.00. We are also required to prepay the Term Loan Facility with a percentage of the net cash proceeds of certain asset sales, subject to customary reinvestment provisions, when the first lien leverage ratio exceeds 3.50 to 1.00. We may prepay amounts outstanding under the Term Loan Facility without a prepayment premium.

The applicable margins under the Senior Secured Credit Facilities will be reduced by 0.25% per annum upon the completion of an initial public offering.

The Senior Secured Credit Facilities also have a customary uncommitted incremental facility equal to (a) the greater of $136 million and 1.0 times our EBITDA plus unused amounts under our "general" debt basket, plus (b) an additional amount such that (x) our pro forma net first lien leverage ratio is less than or equal to 4.50 (or less than our net first lien leverage ratio immediately prior to the incurrence of such additional debt) (in the case of first-lien debt), (y) our pro forma net secured net leverage ratio is less than or equal to 4.75 (or less than our net secured leverage ratio immediately prior to the incurrence of such additional debt) (in the case of junior lien debt) or (z) either our pro forma net leverage ratio is less than or equal to 5.00 (or less than our net leverage ratio immediately prior to the

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incurrence of such additional debt) or our pro forma interest coverage ratio is greater than or equal to 2.00 (or greater than our interest coverage ratio immediately prior to the incurrence of such additional debt) (in the case of unsecured debt). Up to $15.0 million of this incremental capacity was permitted to be (and was utilized as) incremental commitments under the Revolving Credit Facility, and the Revolving Credit Facility was increased by such amount in November 2022 pursuant to clause (b)(x) above. In addition, $225.0 of incremental term loans were borrowed under the Secured Credit Agreement in November 2021 pursuant to clause (b)(x) above.

The Senior Secured Credit Facilities have customary affirmative and negative covenants, including restrictions on our ability to incur additional indebtedness, incur liens, make investments, make restricted payments, make optional prepayments on junior financings, engage in transactions with affiliates and make asset sales, in each case, subject to customary exceptions and baskets.

The Revolving Credit Facility is subject to a financial maintenance covenant that requires us to maintain a maximum net first lien leverage ratio, tested quarterly, beginning with our fourth fiscal quarter in the 2021 fiscal year. The financial maintenance covenant is only applicable if the aggregate amount of revolving loans, swingline loans and letters of credit outstanding under the Revolving Credit Facility (excluding up to $20 million of undrawn letters of credit and certain other amounts) exceeds 35% of the committed amount. The Revolving Credit Facility provides for customary equity cure rights.

***The Notes***

On February 6, 2022, our wholly-owned subsidiaries completed the issuance $550,000,000 aggregate principal amount of 9.750% Senior Secured Notes due 2028 (the "Notes") to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. The Notes will mature on April 26, 2028 and bear interest at a fixed rate of 9.750% per year, payable semi-annually on each February 15 and August 15, commencing on August 15, 2023 through maturity. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by S-Evergreen Holding Corp. and each of its existing and future direct and indirect wholly-owned U.S. and Canadian subsidiaries (other than the issuers of the Notes), which are the same subsidiaries that guarantee the indebtedness under the Secured Credit Agreement.

The Indenture governing the Notes contains customary affirmative and negative covenants, which are similar in scope to those in the Senior Secured Credit Agreement, although there are no financial maintenance covenants in the indenture governing the Notes.

We used the net proceeds of the Notes to (i) permanently prepay $233.4 million of outstanding borrowings under our Term Loan Facility, (ii) pay a dividend of $262.2 million to our equityholders, (iii) pay one-time bonuses to certain of our employees who hold equity interests which were not entitled to participate in the dividend, (iv) pay certain related fees and expenses and (v) for general corporate purposes.

**Off-Balance Sheet Arrangements** 

As of October 1, 2022, we did not have any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.

**Critical Accounting Policies and Estimates** 

Our consolidated financial statements are prepared in accordance with GAAP. Preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that

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affect the reported amounts of assets, liabilities, revenue, costs, and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Actual results may differ from these estimates under different assumptions or conditions. We believe that the assumptions and estimates associated with revenue recognition; impairment of our goodwill and indefinite-lived intangible assets; and income taxes have the greatest potential impact on our consolidated financial statements. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated balance sheets, results of operations, and cash flows.

***Revenue recognition***

We earn revenues by selling secondhand and limited new seasonal merchandise in retail markets. We recognize retail revenue at the point of sale, net of promotional price reductions, with no right of return. Sales of residual product to wholesale customers for reuse and repurposing are recognized at the point of shipment with no right of return. Sales taxes collected from customers are not considered revenue (net basis) and are included in accounts payable and accrued liabilities until remitted to the taxing authorities.

We do not recognize revenue on the issuance of gift cards. We recognize revenue when a gift card is redeemed for merchandise.

***Impairment of goodwill and indefinite-lived intangible assets***

We assess goodwill and our indefinite-lived intangible assets (our trademarks) for impairment annually, or more frequently if events or changes in circumstances indicate that an asset may be impaired. We assess definite-lived intangible assets and other long-lived assets (collectively, "long-lived assets") for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.

We account for acquired businesses using the acquisition method of accounting which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values with the differences between consideration and net assets acquired being recorded as goodwill.

Goodwill is reviewed for impairment annually in our fourth quarter or whenever circumstances indicate goodwill might be impaired. We first perform a qualitative assessment, evaluating relevant events or circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If not, no further impairment testing is performed. If the assessment indicates that it is more likely than not, we compare the carrying value of the reporting unit to the estimated fair value of the reporting unit, both as of the testing date. If the carrying value of the reporting unit exceeds the estimated fair value, we will recognize an impairment charge equal to the amount by which the carrying amount exceeds the reporting unit's fair value up to but not to exceed the total amount of goodwill allocated to the reporting unit.

In fiscal year 2021, we performed a qualitative impairment assessment (also known as the "Step 0" test). Under the Step 0 test, we assessed qualitative factors to determine whether it is more likely than not that the fair value of the U.S. and Canadian reporting units was less than their respective carrying values. Qualitative factors included, but were not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting units and other entity and reporting unit specific events. Based on the results of the qualitative impairment assessment, we determined that it was not "more likely than not" that the fair value of the U.S. and Canadian reporting units was less than their respective carrying amounts. As such, the quantitative assessment was not required or performed.

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Similar to goodwill, our indefinite-lived trade names and trademarks are not amortized, but reviewed for impairment annually, or earlier whenever events or changes in business circumstances indicate that their carrying values may not be recoverable. We assessed our indefinite-lived trade names and trademarks for impairment in the fourth quarter of fiscal year 2021 by utilizing a qualitative analysis. This annual impairment test resulted in no impairment charge.

Each reporting period, we perform an evaluation of the remaining useful life of our indefinite-lived trade names and trademarks to determine whether events and circumstances continue to support an indefinite life. We consider the life of our indefinite-lived trade names and trademarks to be appropriate.

***Income taxes***

Management makes estimates, assumptions, and judgments to determine our provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets. We utilize the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as operating loss, capital loss, and tax credit carryforwards. Valuation allowances are established against deferred tax assets if it is more likely than not that they will not be realized. Income tax expense represents the current expense incurred for the period plus or minus the change during the period in net deferred tax assets and liabilities.

**Material Weaknesses** 

As a public company, we will be required to maintain internal control over financial reporting in accordance with applicable rules and guidance and to report any material weaknesses in such internal control over financial reporting. Prior to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. In connection with this filing, we identified deficiencies in our internal control over financial reporting, which in the aggregate, constitute material weaknesses related to (i) the sufficiency of technical accounting and SEC reporting expertise within our accounting and financial reporting function, (ii) the establishment and documentation of clearly defined roles within our finance and accounting functions and (iii) our ability to evidence the design and implementation of effective information technology general controls ("ITGCs") for information systems and applications that are relevant to the preparation of our financial statements.

To address these material weaknesses, we have initiated a plan to hire additional qualified personnel and establish more robust processes to support our internal control over financial reporting, including the documentation of clearly defined roles and responsibilities, and the design and implementation of effective ITGCs. To date, we have hired a director of internal audit and a director of SEC reporting. In addition, we have engaged external advisors who are providing financial accounting assistance and are assisting in evaluating the design, implementation and operating effectiveness of our internal control over financial reporting.

If our steps are insufficient to successfully remediate the material weaknesses and otherwise establish and maintain an effective system of internal control over financial reporting, the reliability of

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our financial reporting, investor confidence in us, and the value of our common stock could be materially and adversely affected. We may not be able to remediate the identified material weaknesses, and additional material weaknesses or significant deficiencies in our internal control over financial reporting may be identified in the future. Effective internal control over financial reporting is necessary for us to provide reliable and timely financial reports and, together with adequate disclosure controls and procedures, are designed to reasonably detect and prevent fraud. Our failure to implement and maintain effective internal control over financial reporting, to remedy identified material weaknesses or significant deficiencies or to implement required new or improved controls could result in errors in our financial statements that could result in a restatement of our financial statements or cause us to fail to timely meet our financial and other reporting obligations.

**Recent Accounting Pronouncements** 

See Note 2 to our audited consolidated financial statements and our unaudited interim condensed consolidated financial statements for a description of recently adopted accounting pronouncements and issued accounting pronouncements not yet adopted.

**JOBS Act Accounting Election** 

Section 107 of the JOBS Act allows emerging growth companies to take advantage of the extended transition period for complying with new or revised accounting standards. Under Section 107, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Any decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. We have elected to use the extended transition period under the JOBS Act.

**Quantitative and Qualitative Disclosures about Market Risk** 

In the normal course of business, we are exposed to various market risks. We continually monitor these risks and regularly develop appropriate strategies to manage them. Accordingly, we manage our exposure to these risks through the use of derivative contracts with the objective of reducing potential income statement, cash flow, and market exposures from changes in interest rates and foreign exchange rates. Our primary market risks are interest rate risk associated with our long-term debt and foreign currency exchange risk associated with our operations in Canada and Australia. These instruments are used solely to mitigate market exposure and are not used for trading or speculative purposes. Refer to Note 9 of our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus for additional information. There were no material changes during the nine months ended October 1, 2022, to the information reported in our Prospectus filed on May 5, 2022, relating to our evaluation of interest rate, foreign currency exchange and commodity price risk.

***Interest rate risk***

Our market risk is affected by changes in interest rates on our borrowings, which increased during the nine months ended October 1, 2022. The Company's Senior Secured Facilities consist of the Term Loan Facility and the Revolving Credit Facility. As of January 1, 2022, total borrowings on the Term Loan Facility and the Revolving Credit Facility were $822.9 million and $0, respectively. As of October 1, 2022, total borrowings on the Term Loan Facility and the Revolving Credit Facility were $816.8 million and $0, respectively.

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The Term Loan Facility bears an interest rate at a variable rate equal to LIBOR plus 5.50%, with a LIBOR floor of 0.75%. Because our interest rate is tied to market rates, we are susceptible to fluctuations in interest rates if we do not hedge the interest rate exposure arising from our floating-rate borrowings.

Due to rising interest rates during the nine months ended October 1, 2022, the floating interest rate on the Term Loan Facility exceeded the LIBOR floor rate beginning on March 31, 2022, resulting in an increase to interest expense and cash paid toward interest of $3.7 million during the nine months ended October 1, 2022. While we are unable to forecast future movements to LIBOR, any future increases to LIBOR would inherently result in an increase to interest expense and cash paid toward interest.

We performed a sensitivity analysis to determine the effect of interest rate fluctuations on our interest expense. A hypothetical 1.00% increase in LIBOR would result in an increase to interest expense and cash paid toward interest of $8.2 million over 12 months, based on amounts outstanding and interest rates in effect as of October 1, 2022. (As of January 1, 2022, a 1.00% increase in LIBOR would have resulted in an increase to interest expense and cash paid toward interest of $4.4 million, based on amounts outstanding and interest rates in effect as of that date.)

To reduce our exposure to fluctuations in interest rates, we enter into interest rate swaps. These interest rate swaps act as economic hedges to reduce our exposure to interest rate movements and effectively convert a portion of our floating-rate debt to a fixed-rate basis. We elected to apply hedge accounting in fiscal year 2021 and fiscal year 2022 for our interest rate swaps. Based on the notional amount of interest rate swaps in effect and the amounts borrowed as of October 1, 2022, our exposure to future changes in LIBOR to be reduced by 34%.

We continue to monitor interest rate movements and their effect on the Company. At this time, we expect to fund potential increases in interest payments resulting from interest rate movements using cash on hand.

***Foreign currency exchange risk***

In addition to our U.S. businesses, we operate in Canada and Australia. Operations conducted entirely in each jurisdiction use that jurisdiction's currency as their functional currency, and changes in foreign exchange rates affect the translation of the results of these businesses into U.S. dollars for financial reporting purposes. For fiscal year 2021, approximately 44% of our net sales were denominated in a currency other than our functional U.S. dollar currency. For fiscal year 2021, a hypothetical 10% change in the relative value of the U.S. dollar to the Canadian dollar would impact our net sales by $53.4 million. A hypothetical 10% change in the relative fair value of the U.S. dollar to the Australian dollar would not have a material impact on our operations. We will be susceptible to fluctuations in our local currency compared to foreign currency if we do not hedge the exchange rate exposure. As such, we routinely enter into currency forwards and swap contracts to reduce our exposure to fluctuations in earnings and cash flows associated with changes in foreign exchange rates.

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**BUSINESS** 

**<u>Company Overview</u>** 

***Our mission***

To champion reuse and inspire a future where secondhand is second nature.

From the thrill of the hunt to the joy of decluttering, we help communities harness the power of pre-loved stuff to keep reusable items around for years to come.

***Who we are***

We are the largest for-profit thrift operator in the United States and Canada based on number of stores. With over 21,000 team members, we operate a total of 309 stores under the Savers, Value Village, Village des Valeurs, Unique and 2nd Ave. banners. We are committed to redefining secondhand shopping by providing one-of-a-kind, low-priced merchandise ranging from quality clothing to home goods in an exciting treasure-hunt shopping environment. We purchase secondhand textiles (i.e., clothing, bedding and bath items), shoes, accessories, housewares, books and other goods from our NPPs, either directly from them or via OSDs at Community Donation Centers at our stores. We then process, select, price, merchandise and sell these items in our stores. Items that are not sold to our retail customers are marketed to wholesale customers, who reuse or repurpose the items they purchase from us. We believe our hyper-local and socially responsible procurement model, industry-leading and innovative operations, differentiated value proposition and deep relationships with our customers distinguish us from other secondhand and value-based retailers.

We offer a dynamic, ever-changing selection of items, with an AUR under $5. We have a highly engaged customer base, with over 4.5 million active loyalty program members in the United States and Canada who shopped with us, driving 70.3% of point-of-sale transaction value during the last 12 months ended October 1, 2022. Our business model is rooted in ESG principles, with a mission to positively impact our stakeholders—thrifters, NPPs and their donors, our team members and our stockholders. As a leader and pioneer of the for-profit thrift category, we seek to positively impact the environment by reducing waste and extending the life of reusable goods. The vast majority of the clothing and textiles we source are sold to our retail or wholesale customers. In fiscal year 2019, we processed over one billion pounds of secondhand goods. During fiscal year 2021 and the nine months ended October 1, 2022, we processed 860 million pounds and 751 million pounds of secondhand goods, respectively. During fiscal year 2021, we generated $1,204.1 million of net sales, $83.4 million of net income and $223.4 million of Adjusted EBITDA, resulting in a 6.9% net income margin and a 18.6% Adjusted EBITDA margin. During the nine months ended October 1, 2022, we generated $1,070.4 million of net sales, $58.3 million of net income and $222.6 million of Adjusted EBITDA, resulting in a 5.4% net income margin and a 20.8% Adjusted EBITDA margin. Adjusted EBITDA and Adjusted EBITDA margin are considered non-GAAP financial measures under the SEC's rules because they exclude certain charges included in net (loss) income calculated in accordance with GAAP. For additional information on our use of non-GAAP financial measures and a reconciliation to the nearest GAAP measure, see "Prospectus Summary — Summary Financial and Other Data — Key business metrics and non-GAAP financial measures."

The U.S. secondhand market, which is a subset of the broader retail market, reached approximately $35 billion in 2021 and is expected to grow 127% by 2026, reaching $82 billion. Thrift accounted for approximately 60% of the total secondhand market in 2021, and we believe we benefit from the powerful secular trends driving growth in the sector. We also believe consumers are increasingly concerned about the environmental impact of the clothes they wear. As of June 2022, more than one in three U.S. shoppers and nearly half of Canadian shoppers surveyed reported caring more

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about the environmental impact of their apparel choices today than they did three years ago. There is a growing awareness that the textile and clothing industry is one of the most environmentally damaging sectors of the economy.

Meanwhile, discarded clothing remains the largest source of textile waste in the world, with the average U.S. citizen throwing away 81 pounds of clothing each year, 95% of which could have been re-worn or repurposed; yet 85% of this material ends up in landfills. To put this another way, the Ellen MacArthur Foundation reports that one garbage truck of textiles is landfilled or incinerated every second. Thrift as a business model provides one of the most effective solutions in mitigating the environmental cost of clothing and extending its life.

***Track record of consistent growth and recent performance***

We have a proven track record of consistently delivering comparable store sales growth across the United States and Canada. Prior to the start of the COVID-19 pandemic in March 2020, we achieved over ten years of positive comparable store sales growth across the United States and Canada and our business has recovered strongly from COVID-19-related disruptions in 2021.

![LOGO](g264743g11i13.jpg)

10+ years of consistent comparable store salesgrowth in the U.S. and Canada (pre-COVID) FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 U.S. Canada 3.7% 2.6% 2.4% 5.1% 3.4% 4.7% 3.6% 4.5% 5.3% 4.6% 4.5% 4.8% 3.7% 7.1% 3.9% 4.3% 4.8% 7.2% 1.1% 7.9% 0.9% 1.4% 4.4% 3.2% 7.8% 3.4% -27.8% -29.3% 64.8% 24.3%

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**<u>Powerful, Vertically Integrated Business Model</u>**

We have innovated and invested to develop significant operational expertise and integrate the three highly-complex parts of thrift operations—supply and processing, retail, and sales to wholesale markets. Our business model enables us to provide value to our NPPs and our customers, while driving attractive profitability and cash flow.

![LOGO](g264743g00t67.jpg)

Three vertically integrated businesses Supply & processing Retail Wholesale

***Supply and processing***

We source our merchandise locally by purchasing secondhand items donated to our NPPs primarily through two distinct and strategic procurement models:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on-site donations, or "OSDs," which are donations of items by individuals
to our local NPPs made at the Community Donation Centers located at our stores; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delivered supply, which includes items donated to and collected by NPPs through a variety of methods, such as neighborhood
collections and donation drives, and delivered to our stores or Centralized Processing Centers, or "CPCs."

Our business model is predicated on sourcing and selling quality secondhand items to our customers in local communities. We are able to meet our customer demand given our deep relationships with an extensive network of locally-based NPPs that is unmatched in the thrift industry. Our local sourcing strategy also reduces transportation costs and emissions typically associated with the production and distribution of new merchandise.

The quantity and quality of our supply of secondhand items has continued to evolve and improve, particularly as OSDs have grown as a percentage of the pounds of goods we process. While it is strategically important for us to maintain a diverse supply mix, items sourced through OSDs have a cost per pound that is on average one-third that of delivered supply from our NPPs. Because OSD volume is primarily driven by convenience, the more we are able to expand our footprint and geographic reach, the more we will be able to attract and procure additional OSD supply, which benefits our supply cost and yields. OSDs have grown at a 5.8% CAGR from fiscal year 2018 through fiscal year 2021, and its contribution to total pounds processed has expanded from 48.6% to 70.4% during the same period. Although we processed 475 million pounds from OSDs during the nine months ended October 1, 2022 compared to 453 million pounds in the nine months ended October 2, 2021,

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our percentage of supply from OSDs decreased to 63.2% as our Canadian stores fully reopened, and we began accepting more supply from our NPPs. We do not expect a material decrease in the percentage of supply from OSD going forward, as our stores were fully reopened during the nine months ended October 1, 2022 in the United States and Canada.

Our acquisition of 2nd Ave. in November 2021 included GreenDrop, which allows donors to drop off their items at attended donation stations that are movable and can be placed in attractive, high traffic areas that are convenient to donors. We are currently considering expanding the use of GreenDrop for our other locations. In addition, data analytics have played a critical role in elevating the quality of our delivered supply by enabling us to concentrate on supply sources with quality goods, which has been a significant driver of our gross product margin.

Nearly all of our retail stores have space dedicated to handle the processing of secondhand goods that provide the inventory to be sold on our retail sales floors. In fiscal year 2019, we processed over one billion pounds of secondhand goods. During fiscal year 2021 and the nine months ended October 1, 2022, we processed 860 million pounds and 751 million pounds of secondhand goods, respectively.

We are currently implementing our CPC strategy, having opened our first CPC in the third quarter of fiscal year 2021 and an additional CPC in the second quarter of fiscal year 2022. The CPC system is an offsite, semi-automated processing facility that mechanizes the flow of clothing, accessories and shoes through an integrated series of conveyor belts, robotics, sensors, and other technology. The CPC unlocks new store expansion by allowing for a more flexible store layout and loading configuration thereby improving access to more densely populated urban areas.

![LOGO](g264743g05l66.jpg)

***Retail***

Our continued investment in our stores has both elevated and modernized the thrift shopping experience, transforming our stores into a destination for all generations with increasing traffic from younger generations.

Our store experience directly reflects our mission to make secondhand second nature. We deliver a well merchandised environment that maximizes customer engagement and supports a core tenet for any thrifter—the treasure hunt. Our stores offer a wide selection of quality items across clothing, home goods, books and other items at convenient locations. More than 33,000 items are merchandised per store every week, as of October 1, 2022. Our merchandise is also regularly rotated and refreshed, with inventory turns of roughly 15 times a year, providing our customers with an extensive, ever-changing selection at tremendous value.

We are enhancing our visual presentation with the roll out of our updated "Thrift Proud" sign package that has a great new look, while communicating who we are and what we do. In addition, we

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have enhanced the customer experience with the introduction of self-checkout kiosks that significantly shorten and, at most times of the day, eliminate payment lines.

![LOGO](g264743g04u18.jpg)

We have a continuous feedback loop on the customer experience. Our REactions surveys take the pulse of our customers on a weekly basis regarding the shopping experience and environment. This information is proactively shared with our leadership team and cascaded to store managers, who are measured on their ability to improve operations.

***Wholesale reuse and repurpose***

Historically, we have displayed approximately 50% of all textile items we receive on our retail sales floors, approximately 50% of which are sold to thrifters. In support of our efforts to extend the life of reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textile items unsold at retail to our wholesale customers, predominately comprised of textile graders and small business owners, who supply local communities across the globe with gently-used, affordable items like clothing, housewares, toys, and shoes. Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste.

![LOGO](g264743g35c82.jpg)

Our powerful, vertically integrated model Reusable goods Supply 1.Onsite donations: 70% 1 2.Delivered supply: 30% 1 Processing Items sorted for retail or wholesale. Goods unable to be reused or repurposed. Retail Thousands of Items are priced and merchandised. Customers Unsold reusable goods.Wholesale The majority of unsold textiles, shoes and books go in to the global reuse economy. Customers Extend the life of items throught: Items reused as secondhand. Textiles repurposed into other items. Textiles turned into post-consumer fibers. FY2021

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***ESG impact***

***Environmental:*** Our business model is designed to maximize the life of reusable goods, and we found a reuse for over 3.2 billion pounds of secondhand items from 2017 to 2021.

![LOGO](g264743g04a01.jpg)

Our impact 3.2bn+ lbs. of reusable goods diverted from North American landfills 2017-2021 $615mm+paid to our non-profit partners for secondhand clothing and household goods 2017-2021 From 2017 to 2021, on average, our thrifters purchased: 73 million tops and pants 5 million dresses 6 million coats 10 million pairs of shoes 11 million accessories 12million pieces of kitchenware 22 million books

The environmental impacts of textile manufacturing are well documented. The textile industry largely relies on non-renewable resources such as oil for synthetic fibers, fertilizer to grow cotton, and chemicals associated with the production, dyeing, and finishing of fibers and textiles. Between 2002 and 2017, the EMF found that clothing production approximately doubled, while utilization decreased by 36%. In addition, textile production is both energy-intensive and water-intensive. EMF estimates that the production of textiles resulted in 1.2 billion tons of carbon dioxide equivalent in 2015, which outpaced the year's carbon dioxide emissions from all international flights and marine shipping, with additional impacts on local environments. With respect to water usage, which includes cotton farming, EMF also found that the textile industry used approximately 93 billion cubic meters of water each year, while contributing to water scarcity in many parts of the world. Since less than 1% of the material used to produce new clothing can be recycled into new clothing, the reuse of clothing, rather than the purchase of new clothing, is key to mitigating the environmental impacts of the textile industry. In order to achieve the 2030 Paris climate objectives, 20% of garments worldwide must be traded through circular business models.

In 2021, we purchased enough Renewable Energy Certificates to match our electricity usage with renewable energy at our three corporate offices and our largest U.S. and Canadian Wholesale Distribution and Reuse Centers. Additionally, we are committed to further reducing our emissions and energy consumption whenever feasible. We also recently completed a LED lighting retrofit for more than 90% of our U.S. and Canadian stores and warehouses.

***Social:*** Our business model is predicated on sourcing our supply from local non-profit organizations in the communities where we do business. Our relationships with our top 10 NPPs average more than 25 years. Over the last five years, we have paid our NPPs more than $615 million for secondhand goods, providing them with unrestricted revenue to support their community-focused missions. From 2017 to 2021, over 90% of our supply was locally sourced, delivering a broad and diverse selection to our customers and fostering a sense of community.

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Our leading "people" metric across our organization is team member engagement, which is scored across various areas, including overall job satisfaction, whether the team member would recommend us as a place to work, personal commitment, being energized at work and intent to remain employed. Our team member engagement is considered best-in-class, as measured by an external consultant, comparing our results to other companies in the retail sector. Team member engagement is crucial to customer satisfaction and the satisfaction of our NPPs and their donors.

We also invest in the training, development and advancement of our team members. Through the first seven months of fiscal year 2022, more than 87% of open salaried management positions in the United States and Canada were filled by internal promotions. As of January 2022, more than 61% of the management roles in our stores and corporate operations were held by team members identifying as female.

***Governance*:** We are committed to ethical practices in every aspect of our business and have adopted a Savers Code of Conduct that outlines our expectations for internal interactions and helps us maintain compliance with local laws and regulations. Our five core values guide our strategic direction and how our team members interact with one another, our communities and our customers: (1) make service count; (2) celebrate uniqueness; (3) do the right thing; (4) find a better way; and (5) make an impact.

**<u>Our Market Opportunity</u>** 

We operate within the large, fragmented and fast-growing secondhand market, which is a subset of the broader retail market. In addition to being recession-resilient, growth in the secondhand market is accelerating due to a number of powerful secular trends. These trends have been confirmed by a consumer survey we commissioned, which was conducted by Transom during 2022.

***The emergence of conscious consumerism***

Consumers are increasingly taking into consideration the ESG impacts of their shopping decisions and the brands with which they choose to interact. As of June 2022, 92% of consumers surveyed reported that they expect to spend as much or more on secondhand apparel compared to their current spending, and 95% of consumers surveyed indicated that they expect to spend as much or more on key non-apparel categories including books, home décor, and furniture.

***Growing importance of value retail and treasure hunt experience***

The relevance of value shopping and treasure hunting has grown stronger in recent years. Our thrift model provides a highly compelling, differentiated customer proposition and experience that gives us a competitive advantage over traditional retail and other existing secondhand options. Today's consumers, and thrifters specifically, are seeking experiential shopping opportunities and compelling value propositions, combined with the multifaceted possibilities of brands and styles. They are drawn to the excitement of finding great value through a treasure hunt experience. That experience, combined with our low AUR, makes us more attractive to customers than traditional retail. As of June 2022, approximately 60% of Gen Z and millennial shoppers surveyed indicated that thrift shopping is becoming more cool, popular, and/or acceptable, and 66% indicated that they would gladly receive an item purchased at a thrift store as a gift.

Furthermore, our in-store experience and broad, ever-changing inventory cannot be replicated online. The in-store thrift shopping experience is overwhelmingly preferred by consumers over online resale. As of June 2022, approximately 70% of secondhand shoppers surveyed reported preferring to shop in-store for reasons associated with convenience, the in-store experience (e.g., the thrill of the treasure hunt) and cost savings. We believe that we operate leading brands within the thrift industry offering consumers this unique experience.

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***Fast-growing secondhand market across both demand and supply***

***Secondhand demand-side total addressable market:*** The secondhand market is rapidly growing and continues to gain share in the total retail market from a wide range of traditional retailers, including department stores, fast fashion brands and off-price retailers. The secondhand market consists of both resale (e.g., consignment) and thrift goods, with thrift accounting for approximately 60% of the total market during 2021. In the United States alone, the secondhand market reached approximately $35 billion in 2021 and is expected to grow to more than $82 billion by 2026, representing a CAGR over this period of 18%. Additionally over this period, the U.S. secondhand share of consumer spending as a percentage of the total U.S. apparel market is expected to increase from an estimated 14% in 2022 to 22% in 2026.

![LOGO](g264743g07b24.jpg)

U.S. secondhand apparel market growth expected to accelerate +21% CAGR TO $77bn by 2025 Size of the total U.S. apparel market Secondhand % of total U.S. apparel $253 $258 $263 $270 $270 $276 $286 $290 $226 $262 $283 $294 $302 $310 4% 5% 5% 6% 7% 7% 8% 10% 12% 14% 15% 18% 21% 25% ($bn) +12% '12A'20A secondhand CAGR +21% '21E-'25E SECONDHAND CAGR $11 $12 $14 $15 $18 $20 $24 $28 $27 $36 $43 $53 $64 $77 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: GlobalDate 2021 market sizing and growth estimates,Euromonitor.

Our total market opportunity continues to grow due to a general rise in demand for secondhand goods in part as consumers continue to expand the occasions for shopping for secondhand goods. As of June 2022, more than 80% of consumers surveyed reporting having engaged with a thrift store in the last twelve months as shoppers, donors, or both. As of December 2021, Salvation Army and Goodwill, the two leading non-profit thrift operators in the United States, operated approximately 7,300 locations and 3,200 retail locations, respectively, further indicating that there is a robust market for secondhand goods.

***Secondhand supply-side total addressable market:*** There is an abundant and growing source of supply that facilitates the availability of secondhand and thrift goods. As this market continues to develop and expand with the opening of new points of collection, there is significant opportunity to unlock and drive further OSDs to our NPPs at our stores. OSDs are typically driven by a combination of location, convenience, ease of drop and a fast and friendly experience at our Community Donation Centers at our stores.

In fiscal year 2019 alone, we processed over one billion pounds of secondhand goods. During fiscal year 2021 and fiscal year 2020, periods that were affected by the COVID-19 pandemic, we processed 860 million and 682 million pounds of secondhand goods, respectively. As donations continue to grow and awareness of secondhand shopping increases, we believe more consumers are

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likely to become thrift shoppers. As of June 2022, 80% of consumers surveyed reported that they donated secondhand apparel within the last twelve months, and 95% of consumers surveyed cited that, three years from now, they plan to donate as much or more across all of our major product categories. Furthermore, consumers strongly prefer donating apparel over reselling it, with consumers donating approximately two-thirds of their unwanted apparel and reselling less than 10% of it as of June 2022.

**<u>Competitive Strengths</u>**

We have been able to delight millions of customers each year and grow our business consistently through the following competitive strengths:

***A leader in the industry with a powerful business model***

We are the largest for-profit thrift operator in the United States and Canada. With 309 retail stores under our Savers, Value Village, Village des Valeurs, Unique and 2nd Ave. banners, we are nine times larger than the next largest for-profit thrift operator. In Canada, our principal brand, Value Village, is the largest in thrift volume and had over 93% aided brand awareness as of January 2021. We believe our significant scale advantage allows us to deliver extreme value and a superior shopping experience to customers, while generating strong cash flow that can be reinvested in our business.

We have innovated and integrated three highly-complex parts of thrift operations—supply and processing, retail and sales to wholesale markets—through significant operational expertise and investments. This has created a compelling business model which is differentiated against online competition and traditional retail, based on our treasure-hunt experience and low AUR. Our AUR, which is under $5, is approximately 70% lower than that of our retail competitors. Further, our business has demonstrated resilience through economic cycles. Such advantages of our business model provide compelling value to customers, drive attractive profitability for the business, and underpin positive comparable store sales growth from 2009 to 2019. As interest in the secondhand market continues to grow, we will have the opportunity to elevate and define the thrift experience for decades to come.

![LOGO](g264743g35h35.jpg)

Clear differentiation from traditional retail Traditional retailers Savers(R) Sustainability is often an add-on Sustainability is intrinsic Limited breadth of product offerings Wide variety of product offerings Macro-level sourcing risks Long-term strategic sourcing relationships High seasonality Low seasonality Standardized product offering Treasure hunt E-commerce threat high E-commerce threat low Substantial advertising expenditures Low advertising expenditures Significant investment in inventory Low inventory investment / favorable working capital dynamic Cyclical Cycle-resistant Significant exposure to supply chain disruptions Minimal exposure due to hyper-local supply model

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***Unmatched value proposition driving exceptional customer engagement***

We offer quality items at one of the deepest values across all of our product categories and an exciting, engaging treasure hunt experience in a contemporary in-store atmosphere, which underpins strong customer loyalty. Our most engaged customers are members of our Super Savers Club<sup>®</sup> loyalty program. As of October 1, 2022, we had 4.5 million active members enrolled in our U.S. and Canadian loyalty programs who have made a purchase within the last 12 months, compared to 3.8 million active members as of October 1, 2021. Our members earn points or store credit, which further enhances the value shopping experience. Members in both the United States and Canada receive exclusive coupons and offers via email, as well as a special birthday coupon.

During the last 12 months ended October 1, 2022, U.S. loyalty members spent approximately 31% more per shopping trip than non-members. During the same period, U.S. loyalty members shopped at our stores an average of 6.8 times annually. During the last 12 months ended October 1, 2022, the top three loyalty segments, which represent approximately 50% of active members in the United States, shopped with us more than 12 times per year. In addition, as of January 1, 2022, 35% of our loyalty members had annual household incomes of over $75,000, and 85% identified as female.

We have a particularly active presence on social media platforms, including Facebook, Instagram and Pinterest, to connect with our customers, and we also partner with a number of social media "influencers" who generate further awareness of our brands through sponsored content. At the core of our "Thrift Proud" movement, our customers and followers on social media serve as influential peer-to-peer brand ambassadors and are tagging our brand and banners in thousands of photos and videos weekly. We enjoy highly engaged communities on social media who are inspired by thrift hauls, shopping cart photos, do-it-yourself and upcycling, creating "new from used." As of August 2022, Savers, Value Village, Village des Valeurs and Thrift Proud branded hashtags had more than 188 million organic views on TikTok alone.

***Supply model with proven capacity to drive growth***

Quality and volume of supply play a critical role in driving traffic and customer frequency and engagement. We have developed a proven strategy to continuously improve our supply model. In order to maximize supply quality, we periodically assess sales yield, which we define as revenues generated per pound processed, from each supply source to make informed decisions on supplier selection. This approach ultimately improves both our revenue and profitability. We have been strategically focused on increasing our OSDs, particularly in increasing convenience and proximity to potential donors. OSDs not only drive profitability but also enhance the consistency and reliability of supply to each of our stores. We expect our focus on increasing OSDs will contribute to further improvement and growth in our supply.

***Culture of innovation and operational excellence***

Our culture of innovation underpins our key decisions and the way we run our business. We continue to be an industry leader with innovation to improve the customer experience, while enhancing operational efficiency. We have continuously improved our thrift operations across sourcing, processing, and retailing. We have recently launched major initiatives that will further reinforce our competitive advantage and have a measurable impact on our financial profile:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Centralized Processing Centers (CPCs)*** *:* The CPC system is an offsite, semi-automated processing
facility that mechanizes the flow of clothing, accessories, and shoes through an integrated series of conveyor belts, robotics, sensors, and other technology. It significantly improves upon our traditional process by driving labor efficiencies and
enabling grader

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specialization and pricing precision. CPCs also allow for a more flexible store layout and loading configuration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Automated Book Processing (ABP)*** *:* The ABP system is an integrated set of technologies that efficiently
identify, price, and sort books based on their critical attributes (e.g., genre, author, market price). The system design consists of high-speed conveyors, optic recognition, robot tagging and an automated book distribution system working in concert
to increase throughput over traditional, manual processes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Self-checkout*** *:* We are rolling out self-checkout kiosks in many of our stores in order to enhance the
customer experience, with shorter lines and more access points. We estimate that self-checkout kiosks also can save up to 80 labor hours per week per store, which reduces our labor costs.

***Attractive financial profile with proven track record of consistent growth***

We achieved positive comparable store sales growth from 2009 through 2019, even throughout recessionary periods. We have also delivered steady and consistent gross product margin expansion over the last five years, from 46.4% for fiscal year 2015 to 60.6% for fiscal year 2021. We define gross product margin as net sales minus cost of merchandise sold, exclusive of depreciation and amortization, divided by net sales. We have utilized multiple levers that are unique to our business model to drive margin improvements, especially the growth of OSDs as part of our supply mix and sales yield improvement. As a result of our attractive financial profile, we have significant flexibility with respect to capital allocation, giving us the ability to drive long-term shareholder and stakeholder value through various operating and financial strategies.

***Highly experienced and strategic leadership***

Our strategic vision and culture are directed by a leadership team that combines deep industry expertise and advanced operational capabilities to continuously innovate our business. Given the unique needs of the business, our leadership team has diverse backgrounds across not only retail but also technology, manufacturing, and supply chain. We are committed to ethical practices in every aspect of our business and are guided by people who fundamentally do the right thing.

**<u>How We Plan to Grow</u>** 

***Strategically grow our store base***

Our goal is to expand our position as the leading for-profit thrift operator by expanding our store footprint. We have identified approximately 2,200 potential new locations across the United States and Canada, based on a third-party analysis prepared for us by Transom. To date, we have opened seven new stores during fiscal year 2022, and we plan to open five additional stores by the end of the year. We target opening approximately 20 net new stores in 2023 and more than 20 new stores annually from 2024 through 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***In-fill opportunities:*** We will continue to identify attractive
locations in our existing markets by leveraging our brand awareness and operational capabilities, and where we have the advantage of both attractive supply and demand. These in-fill opportunities will include
both traditional and alternative format stores.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Adjacent store opportunities:*** We also will pursue opportunities to expand our regional footprint in adjacent
areas where we can leverage our operational capabilities and regional market knowledge.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Greenfield store opportunities:*** **  We are currently underpenetrated in multiple important regional
markets, including the South and West regions of the United States and in Central Canada.

![LOGO](g264743g32t53.jpg)

Expansive new store opportunity Locational strategy based on demographic data and third-party analysis.Current stores1 297In-fill Stores ~1,400Adjacent Stores ~500Greenfield Stores ~300Systematic, data-driven new store opening frameworkDeep understanding of supply and demand dynamicsAll stores leases singed for 2022 openingsTeam with a track record of new store openingsTotal new store potential: ~2,2002As of 01/01/2022.1 Current stores consists of open stores as of October 1, 2022 including those acquired in the 2nd Ave. Acquisition. 2 Based on a third-party analysis prepared for us. This is a goal / target and is forward-looking, subject to significant, business, economic, regulatory and competitive uncertainties and contingencies, many of which arebeyond the control of the Company and its management and is based upon assumptions with respect to future decisions, which are subject to change. See the section titled "Risk Factors" in the Registration Statement. Actual results will vary, and those variations may be material. Nothing in this presentation should be regarded as a representation by any person that these goals and targets will be achieved, and the Company undertakes no duty to update its goals.

Our CPC strategy is designed to support approximately 35% of our new and existing stores in the United States and Canada by 2026. As a result, we believe we can unlock significant new store potential given that a CPC-served store can have a more flexible store layout and size. In more densely populated areas specifically, CPCs enable in-fill opportunities in alternative store formats without the need for a full-scale processing facility in the back-of-store.

Driven by our disciplined real estate selection approach, we expect to deliver attractive return on investment and store-level profitability. We target most of our new stores to achieve a payback period of two and half years or less. Of the 13 new stores opened since 2019, five have already returned their initial investment despite the impacts of the pandemic. Our alternative store format is designed to capitalize on high real estate availability in in-fill markets through smaller formats.

***Drive consistent comparable store sales growth***

Our goal is to drive consistent growth in comparable store sales growth by maintaining a superior value proposition to our customers and continuing to offer a compelling selection of quality secondhand items. Benefitting from secular tailwinds, we expect to further drive comparable sales growth with the following strategies:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Quality product offerings*** *:* We will continue to procure ample supply of quality items to delight our
customers. Our compelling selection of offerings enables us to drive both frequency with existing customers and the acquisition of new customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Improving shopping experience*** *:* We will continue to invest in the in-store shopping experience to facilitate the treasure hunt dynamics for our customers. We have invested in renovations to modernize our stores; new technologies to optimize store operations; and alternative
store formats supported by CPCs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Expanding engagement with our loyalty program members*** *:* Our loyalty program members have increased
shopping frequencies, stronger retention, more transactions, and larger basket sizes. Our marketing efforts are designed to continue to increase our loyalty program member base.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Conducting brand marketing*** *:* We will continue to increase our brand marketing spend to improve our
brand awareness, bolstered by the broader adoption of thrift shopping overall to drive new customer acquisition.

***Continue to implement strategic initiatives to drive efficiency and expand margin***

Compared to our traditional retail competitors, we have multiple levers within our control that have been critical in driving our profitability and Free Cash Flow. For instance, our data analysis has improved our sales yield, defined as sales per pound processed, which has been a primary driver of comparable store profitability. Our deliberate strategy of increasing the penetration of OSDs as a percentage of total supply has had a significant impact on our gross product margin. In addition, our recent initiatives, including CPCs, ABPs and self-checkout, are expected to generate combined incremental savings of at least $200,000 per store per year, based on anticipated savings per store of approximately $125,000 for CPCs, $25,000 for ABPs, and $50,000 for self-checkout. These savings are based on management estimates of the average savings for each of our stores from these initiatives. Our CPC initiative, which we expect to be the greatest contributor towards these future savings, assumes significant cost reductions in labor and freight costs associated with the sorting, processing, and distribution of inventory. We also anticipate further labor cost reductions from our ABP and self-checkout initiatives. Our culture of innovation and data orientation has been critical to driving operational efficiencies, and we will continue to lead in terms of innovating the thrift business model.

***Selectively pursue other growth opportunities***

In addition to our organic growth initiatives, we will also take an opportunistic yet disciplined approach toward potential inorganic growth opportunities. Given the fragmented nature of the thrift category, we believe there are significant opportunities for growth. This can be conducted through the acquisition of well-operated regional players where we believe we can build upon our infrastructure and scale to accelerate the growth of a potential target and generate synergies. Our acquisition criteria include a significant regional presence; access to a robust flow of quality supply; strong brand awareness; and a complementary cultural fit for our company. For example, in November 2021, we completed the acquisition of 2nd Ave., which added 12 stores in the Northeastern and Mid-Atlantic regions of the United States, representing a complementary store footprint for our existing store network and offering new store expansion opportunities. The 2nd Ave. Acquisition also included the GreenDrop system used to provide supply to 2nd Ave. stores, which allows donors to drop off their items at attended donation stations that are movable and can be placed in attractive, high traffic areas that are convenient to donors. We are currently expanding GreenDrop to locations in certain other markets.

**Supply** 

***Supply Sources Overview.*** Our supplier base for a majority of our stores is predominantly local, with over 90% of our supply locally-sourced. As a result, each store draws its supply predominantly from local NPPs and their donors, delivering a broad and diverse selection for our customers and fostering a sense of community. Our local sourcing strategy reduces transportation costs and emissions typically associated with the production and distribution of new merchandise.

We are a for-profit company that champions reuse. While purchases made by our customers in our stores do not benefit any NPP, we pay our NPPs a contracted rate for all OSDs and delivered product. Our subsidiaries are registered professional fundraisers where such registration is required.

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We source our merchandise primarily through two distinct and strategic methods: (i) on-site donations and (ii) delivered supply, all of which we purchase directly from our NPPs. We pay a market-competitive contractual rate to purchase items received as OSDs or as part of delivered supply. OSDs are the largest part of our supply mix, accounting for 70.4% of our total pounds processed for fiscal year 2021.

***On-Site Donations:*** OSDs are donations of items made by individuals to our NPPs at our stores' Community Donation Centers. We operate as a registered professional fundraiser, where required, on behalf of local NPPs in accepting donations from their respective donors. Each store is specifically designated as an OSD location for a particular NPP, such that all donations received at the Community Donation Center are credited to that NPP.

***Delivered supply:*** Delivered supply is comprised of two types of supply: First, items collected by our NPPs through a variety of methods, such as neighborhood collections and donation drives, and second, items delivered to our stores and CPCs. On behalf of our NPPs, we may solicit, collect, and deliver items to our stores.

***GreenDrop collections:*** Donations of items are made by individuals to our NPPs at convenient and well-signed brick and mortar and trailer locations in neighborhoods surrounding a store location. On behalf of our NPPs, we solicit, collect, and deliver items to our stores and CPCs.

***Donation drives:*** Donation drives operate within our FUNDrive<sup>®</sup> program and include smaller, local non-profits such as schools, sports teams, community groups, and other charitable organizations. These drives are one-time and event-based, with contractual agreements based on each distinct donation drive itself.

***Third-party credential:*** Third-party credential goods are purchased in small amounts on an as-needed basis from regional for-profit collectors, generally consisting of bin operators and other for-profit resellers.

We leverage an analytical platform to measure the sales yield and product margin of an individual stream of supply in our stores. In general, this tool is either used to periodically confirm the performance of an existing stream of supply or to evaluate the performance of a new source of supply.

***Non-Profit Partners ("NPPs").*** We have deep relationships with an extensive roster of NPPs that is unmatched in the thrift industry. Our relationships with our top 10 NPPs average 25 to 30 years. Over the last five years we have paid our NPPs more than $615 million for goods donated to them. We support both large and small partners alike and offer a reliable, unrestricted source of revenue. Delivered product enables our NPPs to not only generate additional revenue, but also promote awareness of their missions even further throughout the community via collection truck signage, collection bin messaging, and home pickup flyers.

***On-Site Donations ("OSDs").*** The quantity and quality of our supply of secondhand items has continued to evolve and improve, particularly as OSDs have grown as a percentage of pounds of goods we process. While it is strategically important for us to maintain a diverse supply mix, items sourced through OSDs have a cost per pound that is on average one-third that of delivered supply from our NPPs. Our store footprint has played a critical role in strengthening our OSD intake by accepting OSDs on behalf of our NPPs. Additionally, because OSD volume is primarily driven by convenience, the more we are able to expand our footprint and geographic reach, the more we will be able to attract and procure additional OSD supply, which benefits our growth and margin profiles.

Our OSDs have grown at a 5.8% CAGR from fiscal year 2018 through fiscal year 2021, and its contribution to total pounds processed has expanded from 48.6% to 70.4% during the same period. In

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addition, data analytics have played a critical role in elevating the quality of our delivered supply by enabling us to concentrate on supply sources with quality goods, which has been a significant driver of our gross product margin.

![LOGO](g264743g17p21.jpg)

**Processing** 

***Overview.*** Nearly all of our retail stores have a dedicated space that handles the processing of soft and hard goods that provide the inventory to be sold on our retail sales floors. In fiscal year 2019, we processed over one billion pounds of secondhand goods. We are currently implementing our CPC strategy, which allows us to process goods at a larger-scale facility and distribute the goods to multiple stores in a local market. We opened our first CPC in the third quarter of 2021 and an additional CPC in the second quarter of fiscal year 2022.

Historically, we have displayed approximately 50% of all textile items we receive on our retail sales floors, approximately 50% of which are sold to thrifters. In support of our efforts to extend the life of reusable goods and recover a portion of the cost of acquiring our supply of secondhand items, we sell the majority of textile items unsold at retail to our wholesale customers, predominately comprised of textile graders and small business owners, who supply local communities across the globe with gently-used, affordable items like clothing, housewares, toys, and shoes. Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste.

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![LOGO](g264743g35c82.jpg)

Our powerful, vertically integrated model Reusable goods Supply 1. Onsite donations: 70% 1 2. Delivered supply: 30% 1 Processing Items sorted for retail or wholesale. Goods unable to be reused or repurposed. Retail Thousands of items are priced and merchandised. Customers Unsold reusable goods. Wholesale The majority of unsold textiles, shoes and books go into the global reuse economy. Customers Extend the life of items through: Items reused as secondhand. Textiles repurposed into other items. Textiles turned into post-consumer fibers. FY2021

Our process has five sequential and interdependent steps: (1) Receiving; (2) Sorting; (3) Grading and Pricing; (4) Merchandising; and (5) Wholesale. Given the high volumes processed in our stores, effective process management is critical to ensuring each step is done properly and in coordination with the other steps. The typical processing room has approximately 30 team members, each of whom is trained in a specific area with many who are cross trained to support adjacent roles as needed.

![LOGO](g264743g00g71.jpg)

Processing flow Unsorted goods received at the store. 1 Goods weighed and recorded for payment to the store's non-profit partner. 2 Items sorted by department or for wholesale reuse. 3 Sellable items evaluated to determine category/size and graded based on quality and condition. 3 Items priced and tagged. 4 Items merchandized by department and category on the sales floor. 5 Items sold to wholesale reuse customers. 5 Items sold to thrifters.

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***Receiving***

Upon receipt, most of our supply is separated into either soft goods, hard goods, or books and then weighed in aggregate. The weight is then recorded into our inventory management system which initiates the payment process to our NPPs, as defined by their contracted rate. The one exception is the receipt of furniture and other large items which are received and purchased by the piece. The aggregated goods are then staged in designated areas of the processing room.

***Sorting***

The sorting process consists of emptying the contents of each donated bag or box, separating them by department, and then transferring them to that specific area for further inspection. Each item is inspected and determined to be either salable, unsalable, or backstock storage. The salability of an item is based primarily on its quality and condition. Every effort is made by our stores to maximize the extraction of salable items, including the use of well-established analytics which are routinely used by store management. Items deemed unsalable are removed from the processing stream and incorporated into the wholesale process. Salable items that are seasonal are backstocked and stored for future sale during the appropriate season (e.g., winter coats received in the summer). On average, each of our stores evaluate approximately 15,000 items every day.

***Grading and pricing***

The price for a garment is determined through a grading process that ends with a centrally controlled pricing algorithm. Grading involves a team member assessing a garment for quality and condition relative to other garments within the same category. This enables a more scalable, consistent, and comparative approach in determining the value of items for which there are many of the same kind. The grader enters in their assessment and the system generates a price based on an underlying pricing algorithm based on quality and condition for garments in that category. The algorithms are centrally controlled and we conduct routine analyses to monitor price and sales performance.

***Merchandising***

Priced goods are merchandised in our stores to maximize both customer selection and sales yield using a data-driven approach. Our stores do this by balancing and optimizing three primary levers: (i) allocation of retail floor space, (ii) processing output targets by category, and (iii) sales floor rotation. Our point-of-sale system is integrated with our grading and pricing system which provides visibility into the exact performance for over 200 categories across 10 departments. Our stores routinely modulate each of the three levers in accordance with real-time data analytics available to them.

Additionally, our stores utilize colored price tags which reflect the processing date and enable us to manage the sales floor rotation and retail lifecycle of each item. The system makes it easy for team members to determine the age of each item and distinguish between which should be removed to be sold through wholesale and which should remain on the floor.

***Wholesale***

The vast majority of clothing, accessories, shoes, and books that either are unfit for retail sale in our stores, or, have gone unsold on our sales floor after a period of time are sold into the wholesale market. In general, clothing is baled into cubes that are required for transport to the wholesale customer. Shoes are paired and bundled in drawstring bags, and books are aggregated into cardboard gaylords. We have a variety of standards and controls across each of these product categories to ensure consistency and efficiency at our store locations.

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Most stores aggregate these categories onto trailers which are then sent to one of several company-operated Wholesale Reuse and Distribution Centers. These centers perform additional sorting on certain categories, containerization, and ultimately sell to our wholesale customers.

***Centralized Processing Centers and Automated Book Processing***

Our first CPC and ABP systems were launched in the third quarter of 2021.

The CPC system is an offsite, semi-automated processing facility that mechanizes the flow of clothing, accessories, and shoes through an integrated series of conveyor belts, robotics, sensors, and other technology. It significantly improves upon our traditional process by (i) improving labor efficiencies, and (ii) enabling grader specialization and pricing precision. Importantly, the CPC unlocks new store expansion by allowing for a more flexible store layout, loading configuration, and overall building requirements when selecting new store locations.

![LOGO](g264743g05l66.jpg)

The ABP system is an integrated set of technologies that efficiently identify, price, and sort books based on their critical attributes (e.g., genre, author, market price). The system design consists of high-speed conveyors, optic recognition, robot tagging, and an automated book distribution system working in concert to increase throughput eightfold over our traditional, manual process. The system also utilizes a central database of over 56.9 million ISBN records and a pricing algorithm to determine the optimal price point for each salable book.

The CPC and ABP technologies widen our competitive and operational advantage, and we plan to aggressively expand both across many of the markets in which we operate in the next several years. We have contractual arrangements with Valvan Baling Systems NV, the provider of CPC technology, and ABP technology that include exclusive rights to the use of the CPC technology and ABP technology for a period of time that may be extended as we purchase additional technology from the provider in connection with our buildout of additional CPCs and ABP facilities.

Our initial contract was for a CPC system in Edmonton, Alberta, Canada. Signed in July 2020, the agreement required the design, manufacture and installation of the system over a period of eleven months, with percentage payments due at each of several milestones, with the final payment due upon acceptance of the system. The system components are designed and manufactured in Belgium, with Valvan responsible for shipping the components to the facility in Edmonton where the CPC is operating. The agreement granted an initial two-year period of exclusivity for use of the technology and design in the United States and Canada and an initial period of three years after the acceptance date of the Edmonton CPC (which was October 2021). Exclusivity is extended by three years from the date of each subsequent order for an additional CPC or other products or services exceeding €2 million

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made within one year after the date of a prior order. Orders for CPC products in Australia extend the exclusivity period in the United States and Canada, but not vice-versa. As of August 2022, we had made orders to purchase equipment for a total of seven CPCs, extending our exclusivity for the use of the CPC technology and design in the United States and Canada through May 2025. Our exclusivity in Australia lasts through October 2024. If we complete the purchases we currently plan to make, our exclusive rights would extend until at least May 2028 in the United States and Canada.

The contract for the first ABP system was signed in September 2020 and requires the design, manufacture and installation of an ABP system in Edmonton over a period of seven months. Like the CPC systems, the ABP system components are designed and manufactured in Belgium with percentage payments due at each of several milestones. The initial ABP system contract granted a one year period of exclusivity for use of the technology and design for the ABP system, extending by one year for each system purchased, up to a maximum of five years after the commissioning date of the last-commissioned system. Our first ABP system installation was completed in May 2020, resulting in an initial term through May 2021. We have subsequently ordered a total of thirteen ABP systems, extending our exclusive rights in the United States, Canada and Australia until September 2028. If we complete the purchases we currently plan to make, our exclusive rights would extend until November 2031.

Our ability to extend these exclusive rights with respect to the CPC and ABP technologies is dependent on our continuing to secure our relationship with the provider as we expand our CPCs and ABP facilities. There is no guarantee that we will complete the purchases we currently plan to make, and if we do not do so, we may not extend our exclusive rights as described above.

**Retail** 

***Retail Footprint and Banners***. As of October 1, 2022, we had 149 stores in the United States, 150 stores in Canada and 10 stores in Australia. We operate under five distinct store banners—Savers, Value Village, Village des Valeurs Unique and 2nd Ave.

In Canada, we operate 133 Value Village stores located in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan (nine provinces). Additionally, we have 17 stores in Quebec that operate under the Village des Valeurs brand. In Canada, we are the top-of-mind thrift retailer with 93% aided brand awareness.

In the United States, Value Village is our original store brand established by our founders in 1954. We have 23 U.S. Value Village stores located in Washington, Oregon, Alaska and Maryland. However, the predominant brand in the United States is Savers and we operate 105 Savers stores across 24 states, including Arkansas, Arizona, California, Connecticut, Hawaii, Idaho, Illinois, Kansas, Massachusetts, Maryland, Minnesota, Missouri, North Dakota, South Dakota, New Hampshire, New Mexico, Nevada, New York, Ohio, Rhode Island, Texas, Utah, Virginia and Wisconsin.

In 2011 and 2013, we acquired the Unique brand name and currently operate nine stores across Minnesota, Illinois, Maryland and Virginia. We have retained the Unique store name given its strong brand equity amongst our customer base. In November 2021, in the 2nd Ave. Acquisition, we acquired an additional twelve stores operating under the 2nd Ave. banner in Virginia, Maryland, Pennsylvania and New Jersey. We then opened an additional store under the 2nd Ave. brand in 2022.

In Australia, we operate ten stores under the Savers brand with seven located in Victoria and three located in South Australia. All store banners are managed and operated centrally with a common marketing and operations strategy.

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![LOGO](g264743g17d66.jpg)

Current store footprint21 20 5 6 69 17 12 4 14 1 9 7 4 14 4 4 3 12 1 2 1 3 3 4 8 4 3 8 6 11 8 4 3 1 3 7 2Our footprint:Total: U.S. 149 CA 150 AU 10

***Merchandising Overview.*** Our merchandising strategy is focused on a broad, compelling product offering. On average, we turn our inventory every three weeks to ensure we are offering a fresh assortment to new and returning customers. Items are organized within five "soft" goods and four "hard" goods departments spanning 277 distinct categories. Our product selection is consistently identified as the top driver of customer satisfaction in feedback surveys.

We monitor customer purchasing trends on a weekly and seasonal basis at each individual location to maximize sales and profitability. Space on the sales floor for each store is allocated by category, utilizing a data-driven process to predict category demand trends.

![LOGO](g264743g55h55.jpg)

Diverse offering highlights treasure hunt Enhances treasure hunt experience Provides convenient, one-stop-shop Differentiates from competitors Drives customer satisfaction Provides consistency across seasons Other7% Outerwear6% Kids10% Shoes13% Mens22% Womens42% ~65%Soft Goods(1) Furniture8% Jewelry8% Electronics9% Other9% Toys / Sports11% Kitchenware14% Books/Media17% Home Decor23% ~35% (1)Hard Goods 1 Based on store merchandise net sales.

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We believe that the breadth and depth of the assortment across our categories distinguishes us from our competitors.

***Soft goods department and sample categories***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Womens – e.g., long / short sleeve knits, sleeveless tops, jeans, pants, dresses, skirts

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Mens – e.g., t-shirts, long / short sleeve shirts / knits, jeans, pants,
shorts, activewear

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Kids – e.g., infants, long / short sleeve tops, dresses, shorts, skirts, activewear

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Bed & Bath – e.g., bed linens, purses, scarves, kids accessories, bags / backpacks, belts / suspenders,
curtains / drapes

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Shoes – e.g., women's shoes / active /boots / sandals; men's active / shoes, boys active, infant / toddler

***Hard goods department and sample categories***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Jewelry – e.g., costume jewelry, showcase jewelry

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Housewares – e.g., toys, home décor, toy bag, vases / floral, glassware, servicewear, plastics, office

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Furniture and Other – e.g., sporting goods, electronics, lamps, tvs / stereos / computers, tools

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Books – e.g., books, cds / cassettes / lps, dvds, video cassettes, video games / software

***Shopping experience.*** Our store experience is a direct reflection of our mission to make secondhand second nature. We deliver a well merchandised environment that maximizes customer engagement and supports a core tenet for any thrifter—the treasure hunt. More than 33,000 items are merchandised per store every week, as of October 1, 2022. Our merchandise is also regularly rotated and refreshed, with inventory turns of roughly 15 times a year, providing our customers with an extensive, ever-changing selection at tremendous value.

The average store in the United States and Canada has approximately 20,400 square feet of retail space. The retail space continues to evolve as we execute two major initiatives to contemporize our experience. We are enhancing our visual presentation with the roll out of our updated "Thrift Proud" sign package that has a great new look, while communicating who we are and what we do. In addition, we have enhanced the customer experience with the introduction of self-checkout kiosks that significantly shorten and, at most times of the day, eliminate payment lines.

Lastly, we have a continuous feedback loop on the customer experience. Our REactions surveys take the pulse of our customers on a weekly basis regarding the shopping experience and environment. This information is proactively shared with our leadership team and cascaded to store managers, who are measured on their ability to improve operations.

![LOGO](g264743g04u18.jpg)

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***Loyalty Program.*** Our most engaged customers are members of the Super Savers Club<sup>®</sup> loyalty program. As of October 1, 2022, we have 4.5 million active members enrolled in our U.S. and Canadian loyalty programs who have made a purchase within the last 12 months. This compares to 3.1 million and 4.0 million active loyalty members for fiscal year 2020 and fiscal year 2019, respectively. Our members earn points or store credit, which further enhances the value shopping experience. Members in both the United States and Canada receive exclusive coupons and offers via email, as well as a special birthday coupon.

The majority of our customers join our loyalty programs during the checkout process in our store. We also offer in-store self-service sign-ups at our self-checkout kiosks, which makes the process more efficient by eliminating the need for sign-up assistance from a team member. Customers also have the option to sign up online or via text message (in the United States only). While the number of loyalty program members overall did not decline from fiscal year 2019 to fiscal year 2020, our active members declined 23% for the fiscal year 2020 versus the fiscal year 2019, due primarily to our loyalty program members shopping less because of pandemic-related store closures. Over the last 12 months ended October 1, 2022, we have grown our active member base 20% over the previous 12 months ended October 1, 2021, with an accelerated growth over the last few months of over 60,000 active members per month, which reflects the continued momentum in our loyalty program.

During the last 12 months ended October 1, 2022, U.S. loyalty members spent approximately 31% more per shopping trip than non-members. During the same period, U.S. loyalty members shopped at our stores an average of 6.8 times annually. Driving 70.3% of point-of-sale transaction value. As of the last 12 months ended October 1, 2022, the top three loyalty segments, which represent approximately 50% of active members in the United States, shopped with us more than 12 times per year. In addition, as of January 1, 2022, 35% of our loyalty members had annual household incomes of over $75,000, and 85% identified as female.

We have e-mail addresses for 75% of our U.S. and Canadian active loyalty members as of October 1, 2022, which we have leveraged as a cost-effective communication channel. In August 2021, we expanded our loyalty member communications in the United States to include text messaging, and we rolled out text messaging to our loyalty members in Canada in August 2022.

***Marketing and Brand Awareness.*** We have highly recognizable brands in Canada, with 93% aided brand awareness. In the United States, we have an opportunity to continue building brand awareness across our three brands.

We drive traffic, acquire new customers and donors to our NPPs at our Community Donation Centers and promote brand awareness through an efficient, cost-effective mix of customer engagement (word-of-mouth), paid and organic marketing. Our marketing channels and approach include social media, influencer engagement, digital media, email, text messaging, online, and in store promotional materials, which support existing and new market entries. Our website is also an extension of our brand and retail stores, and serves as a marketing and informational tool.

We believe we have an expansive opportunity to further leverage our growing social media presence to drive brand awareness and generate excitement to increase store visits. At the core of our "Thrift Proud" movement, our customers and followers on social media serve as influential peer-to-peer brand ambassadors and are tagging our brand and banners in thousands of photos and videos weekly. We enjoy highly engaged communities on social media who are inspired by thrift hauls, shopping cart photos, do-it-yourself and upcycling, creating "new from used." As of August 2022, Savers, Value

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Village, Village des Valeurs and Thrift Proud branded hashtags have more than 188 million organic views on TikTok alone.

![LOGO](g264743g22i22.jpg)

To further strengthen brand awareness, particularly in the United States, we are partnering with authentic, relatable influencers with highly engaged audiences. Our roster of influencers have enabled us to create a steady stream of on-brand, owned content that we can use and repurpose through other marketing methods, such as paid digital amplification efforts to reach our audiences at scale. Our user and influencer-generated content strategy builds authenticity by celebrating the real, genuine shoppers who have shaped our brand image through social media, online, email, paid digital, and in-store signage, among other avenues.

***New Store Openings.*** We foresee a total addressable market potential of approximately 2,200 stores. We have accelerated new store openings in the United States and Canada in 2022—we opened 8 net new stores or 12 new stores—and intend to continue doing so in 2023. We believe we can unlock significant new store potential, given that a CPC-served store can have a more flexible store layout and size.

We use a sophisticated sales and donations projection model that incorporates key factors, including per capita income, population, internal and external competition and population psychographics to determine a market's propensity to shop at our stores or donate to our NPPs. We also utilize store footprint analysis and market optimization tools inform our retail site selection process.

Additionally, we employ several real estate strategies to ensure that our sites are both convenient for donors and accessible by shoppers. Through careful analysis, we have determined the optimal strategy is to lease stores within quality donation markets to secure higher donation volumes of better quality that expand gross product margins. In such cases, shoppers are willing to travel further for higher quality retail offerings and more curated assortments.

**Wholesale, Reuse and Repurpose** 

Textiles, shoes and books that are unsold at retail stores are sold to wholesale customers, who reuse and repurpose the items we sell to them across six continents and 29 countries. Textiles not suitable for reuse as secondhand clothing can be repurposed into other textile items (e.g., wiping rags) and post-consumer fibers (e.g., insulation, carpet padding), further reducing waste.

We have long-standing relationships with our wholesale customers and work directly with textile processors that have multiple reuse and repurposing streams. Other categories, such as hard goods, move directly to small businesses and shop owners in markets across the globe for resale in various retail forms.

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**Logistics and Distribution** 

The vast majority of our supply is processed as it is generated. We store very little of our collected inventory, and any excess supply that is stored is only done so for short durations on rented trailers onsite at store locations or in a variety of local trailer yards. Our supply is nearly all locally sourced and locally consumed within a few weeks after it is initially collected.

We also operate a number of warehouse locations in various markets which serve as supply and demand buffers when needed and help to modulate supply flow to the stores. Only a very small portion of supply is transferred across markets or regions.

**Our Culture and Team** 

We are guided by our mission and values, and we aspire to always act with purpose to promote inclusion, diversity and respect throughout our team and culture. We are committed to ethical practices in every aspect of our business and have adopted a Savers Code of Conduct that outlines our expectations for internal interactions and helps us maintain compliance with local laws and regulations. Five core values guide how our team members interact with one another, our communities and our customers: (1) make service count; (2) celebrate uniqueness; (3) do the right thing; (4) find a better way; and (5) make an impact. These core values also guide our strategic direction.

We have over 21,000 team members across 309 stores in the United States, Canada, and Australia. Our team members are primarily full-time employees (64% of our workforce) as of August 2022. As of August 2022, approximately 26% of our workforce in the United States and Canada is aged 20 to 30, with 26% aged 51 or older. As of August 2022, the average tenure of our store team members was 3.5 years, and our field multi-unit leaders, directors and executive population averaged 13 to 14 years of tenure. Through the first seven months of fiscal year 2022, more than 87% of open salaried management positions in the United States and Canada were filled by internal promotions. As of January 2022, more than 61% of the management roles in our stores and corporate operations were held by team members identifying as female.

We proudly provide a competitive total compensation package to our team members. In addition to competitive base pay and bonus programs, we also provide healthcare (both medical and dental), flexible spending accounts, life and disability insurance, retirement savings, and mental health and wellness support programs. We also offer work-life balance programs including parental leave, and vacation, sick, and holiday pay.

Additionally, we host our own in-house "university" where we offer a wide array of both mandatory and elective online technical and management training programs. We also provide blended learning opportunities for compliance purposes, and offer growth and development opportunities for our team members.

Our leading "people" metric across the organization is team member engagement. We have been working alongside an external partner for the last five years to operate programs to measure and analyze shopper, donor, and team member satisfaction and engagement. These programs embrace the service profit chain concept: starting with a highly engaged team member who provides better service to our customers is critical to customer satisfaction and the overall profitability of our stores. We have had tremendous positive momentum over the past five years in team member engagement, with a focus on respect and inclusion. Our overall team member engagement scores and performance are at the top of our benchmark comparison amongst other retail companies as measured by our external partner. Team member engagement scores are based on various metrics, including overall job satisfaction, whether the team member would recommend us as a place to work, personal commitment, being energized at work and intent to remain employed.

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**Competition** 

***Retail Competition.*** We compete for customer spend with value retailers, including off-price and other thrift operators. The thrift non-profit sector is largely decentralized, resulting in inconsistent shopping experiences from market to market. The thrift for-profit sector is characterized by smaller regional chains of 10-30 retail locations each. These organizations can maintain more consistent retail experiences from store to store, but typically lack the ability and capital to expand beyond their regional footprints.

***Supply Competition.*** The thrift retail industry is made possible by the availability of quality secondhand items. As the secondhand movement continues to thrive and grow, we face increasing competition for secondhand goods from other thrift stores, consignment retailers, on-line thrift retailers and on-line marketplaces.

**Our Sponsor** 

***Ares Management Corporation.*** Ares Management Corporation (NYSE: ARES) is a leading global alternative investment manager offering clients complementary primary and secondary investment solutions across the credit, private equity, real estate and infrastructure asset classes. Ares seeks to provide flexible capital to support businesses and create value for its stakeholders and within its communities. By collaborating across its investment groups, Ares aims to generate consistent and attractive investment returns throughout market cycles. As of September 30, 2022, Ares' global platform had approximately $35.3 billion of assets under management, with approximately 2,500 employees operating across North America, Europe, Asia Pacific and the Middle East.

**Trademarks and Other Intellectual Property** 

We own federally registered trademarks related to our brands, including SAVERS, UNIQUE, UNIQUE THRIFT STORE, 2ND AVE., 2ND AVE VALUE STORES in the United States, VALUE VILLAGE and VILLAGE DES VALEURS in Canada, and SAVERS in Australia. In addition, we own federal trademarks for certain business programs, like FUNDRIVE and ALTEREGO in the United States and Canada and SUPER SAVERS CLUB and GREENDROP in the United States. We also pursue and maintain federal registrations for certain slogans that we use, including THRIFT PROUD in the United States (pending in Canada) and RETHINK REUSE and I GIVE A SH!RT in the United States.

Our trademark registrations have various expiration dates. However, assuming that the trademark registrations are properly renewed, they have a perpetual duration.

We also own several domain names, including www.savers.com, www.valuevillage.com, www.valuevillage.ca, www.villagedesvaleurs.ca, and www.savers.com.au, and registered and unregistered copyrights in our website content.

Additionally, we own the unregistered copyright in our Donation Manager route and schedule management software that we license for use by and on behalf of our non-profit partners.

We pursue infringement of our trademarks and copyrights when appropriate. We rely on trademark and copyright laws, trade-secret protection and confidentiality, license and other agreements with our NPPs, our vendors, employees and others to protect our intellectual property.

We hold exclusive rights to the CPC technology in the United States and Canada until May 2025, and under our current purchase plans, our exclusive rights will extend until at least May 2028. Our exclusive right to the CPC technology in Australia extends to October 2024 and, under the terms of our

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agreement, if we entered into a purchase agreement for a CPC in Australia before that date, will extend until at least 2027. Finally, our exclusive right to the ABP technology in the United States, Canada and Australia currently extends to September 2028, and under our current purchase plan will extend until November 2031.

**Properties** 

We do not own any real property. As of October 1, 2022, we operated 309 retail stores in the United States, Canada and Australia.

We actively continue to identify sites to open new store locations. As a result, our number of store properties may grow or fluctuate. We maintain a focused and disciplined approach to entering into lease arrangements. All leases are approved by our real estate committee, which is comprised of senior management and executive officers. All of our stores are leased from third parties, and the leases typically have ten-year terms with two or more options to renew for successive five-year periods. All of our leases have pre-defined rent escalation provisions over the initial term, and most of our leases include predefined rents for the extension options. We have created strategic relationships with a broad brokerage network throughout the United States and Canada as we exclusively lease our locations from third parties.

Our corporate headquarters are based in two locations—one consisting of 14,031 square feet, and the other consisting of 12,312 square feet—under leases expiring in September 2028 and November 2025, respectively. We lease a major distribution center consisting of 93,146 square feet which has term through February 2027, and another consisting of 94,914 square feet which has term through March 2030 with two additional options to extend the term by 5 years each. We also have signed leases for seven CPC facilities: (1) a 46,348 square foot space with term through May 2036 and two 5-year options to renew thereafter; (2) a 57,843 square foot space with term through July 2036 and two 5-year options to renew thereafter; (3) a 56,244 square foot space with term through October 2031 and one option to renew for an additional 5 years; (4) a 59,676 square foot space with term into 2038 and two 5-year options to renew thereafter; (5) a 50,897 square foot space with term well into 2032 and one 5-year option to renew thereafter; (6) a 48,082 square foot space with a term into 2038 and two 5-year options to renew thereafter; and (7) a 52,685 square foot space with term into 2033 and two 5-year options to renew thereafter.

**Insurance** 

We maintain third-party insurance for a number of risk management activities including workers' compensation, general liability, property, automobile, cargo and warehouse, cybersecurity, directors and officers and fiduciary insurance. We evaluate our insurance programs on an ongoing basis to ensure we maintain adequate levels of coverage.

**Government Regulation** 

We are subject to labor and employment laws, COVID-19-related mandates, laws related to the collection of sales taxes and other tax matters, laws governing advertising and marketing including via text messaging and email and operation of customer loyalty programs, privacy laws, local fire codes, safety regulations, consumer product safety regulations, and other laws including consumer protection regulations that regulate retailers and/or govern the promotion and sale of merchandise and the operation of stores and warehouse facilities, certain secondhand dealer ordinances, regulations related to clothing donation bins, environmental and waste regulations and laws, laws related to commercial

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and professional fundraiser registration and disclosure, regulations regarding telephone and mail solicitations, laws governing international trade and customs, laws governing weights and measures and laws related to transportation and trucking.

We sell certain portions of the secondhand goods that do not sell at our retail locations overseas and source a minimal amount of new goods from overseas markets. The U.S. Foreign Corrupt Practices Act ("FCPA") and other similar anti-bribery and anti-kickback laws and regulations generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The U.S. Department of the Treasury Office of Foreign Assets Control ("OFAC") is responsible for economic sanctions on countries, designated individuals, and entities (businesses, charities, institutions) named on its list of Specially Designated Nationals and Blocked Persons. This list includes roughly 10,000 companies, organizations, and individuals around the world with whom the vast majority of dealings with U.S. persons (including companies and companies outside the United States owned by U.S. persons) are prohibited. Our policies and our vendor compliance agreements mandate compliance with applicable law, including these laws and regulations.

We monitor changes in the laws and regulations affecting the company and believe that we are in material compliance with applicable laws.

**Legal Matters** 

We are subject to various proceedings, lawsuits, disputes, and claims arising in the ordinary course of our business. Many of these actions raise complex factual and legal issues and are subject to uncertainties.

Actions filed against us from time to time include commercial, intellectual property, regulatory, consumer protection, and employment actions, including class action lawsuits. Actions are in various procedural stages, and some are covered in part by insurance. We cannot predict with assurance the outcome of actions brought against us. Accordingly, adverse developments, settlements, or resolutions may occur and negatively impact income in the quarter of such development, settlement, or resolution.

If a potential loss arising from these lawsuits, claims and pending actions is probable and reasonably estimable, we record the estimated liability based on circumstances and assumptions existing at the time. Although the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition or results of operations.

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**MANAGEMENT** 

**Directors and Executive Officers** 

The following table sets forth certain information with respect to our directors and executive officers as of the date of this prospectus:

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| ***Non-Employee Directors:*** |  |  |
| Scott Graves | 51 | Chairman of our Board of Directors, Compensation Committee Chair |
| Aaron Rosen | 41 | Director |
| Robyn Collver | 58 | Director |
| William T. Allen | 66 | Director |
| Duane C. Woods | 71 | Director |
| Aina E. Konold | 54 | Director |
| Kristy Pipes | 63 | Director |
| ***Executive Officers:*** |  |  |
| Mark Walsh | 61 | Chief Executive Officer and Director |
| Jay Stasz | 55 | Chief Financial Officer and Treasurer |
| Jubran Tanious | 46 | President and Chief Operating Officer |
| Richard Medway | 55 | General Counsel, Chief Compliance Officer and Secretary |
| Mindy Geisser | 54 | Chief People Services Officer |
| Charles Hunsinger | 55 | Chief Information Officer |
| Scott Estes | 46 | Senior Vice President of Finance |

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***Non-employee directors***

***Scott Graves****,* a director since April 2021*,* is the Chairman of our board of directors*,* a position he has held since April 2021. Mr. Graves is a Partner in and Co-Head of the Ares Private Equity Group and is Head of Special Opportunities. He serves on the Ares Executive Management Committee*,* the Ares Business Advisory Group*,* and the Ares Private Equity Group's Corporate Opportunities and Special Opportunities Investment Committees. Prior to joining Ares in this role in January 2017*,* Mr. Graves spent over 15 years in various capacities as a senior executive and investment professional for Oaktree Capital Management*,* L.P. From 2013 through December 2016*,* Mr. Graves served as Oaktree's Head of Credit Strategies and Portfolio Manager of Multi-Strategy Credit. He was responsible for a substantial portion of Oaktree's credit platform*,* managed investment portfolios spanning the breadth of Oaktree's credit strategies and was active in Oaktree corporate management*,* serving on the Capital and Risk Management Board*,* the Senior Leadership Counsel*,* the Product Governance Board and the Project Steering Committee. From 2001 through 2013*,* Mr. Graves was an investment professional in Oaktree's Distressed Opportunities*,* Value Opportunities and Strategic Credit strategies*,* where he served as a Co-Portfolio Manager. From 2010 to 2015*,* Mr. Graves also managed Oaktree's corporate and strategic development group*,* leading the firm's product step-outs into emerging market credit*,* strategic credit*,* value equities*,* infrastructure*,* the enhanced income strategies*,* structured credit and senior secured lending. Prior to joining Oaktree*,* Mr. Graves served as a Principal in William E. Simon & Sons' private equity group and as an Analyst at Merrill Lynch & Company in the mergers and acquisitions group. Additionally*,* Mr. Graves worked at Price Waterhouse LLP in the audit business services division. Mr. Graves has served as a director of Infrastructure and Energy Alternatives*,* Inc. and McLaren Group Limited since August 2021*,* Vmo Aircraft Leasing GP*,* LLC since January 2021 and Cincinnati Bell*,* Inc. since September 2021. Mr. Graves received a B.A. from the University of California*,* Los Angeles*,* in History*,* and an M.B.A. from the Wharton School at

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the University of Pennsylvania*,* where he currently serves on the Wharton School Graduate Executive Board. He is a Certified Public Accountant (inactive).

***Aaron Rosen****,* a director since April 2019*,* is a Partner and Co-Portfolio Manager of Special Opportunities in the Ares Private Equity Group, where he focuses on investing in the public and private markets. Mr. Rosen serves as a member of the Ares Private Equity Group's Special Opportunities Investment Committee. Prior to joining Ares in December 2017, Mr. Rosen had been a Partner and Director of Research at Archview Investment Group LP where he was employed since February 2009. Prior to Archview, Mr. Rosen was a Vice President at Citigroup Inc., where he was a founding member of its Global Special Situations Group focused on U.S. opportunistic credit and equity investment strategies. Mr. Rosen was previously a member of Citigroup's Asset-Based Finance group, where he focused on structuring senior secured debt financing for non-investment grade corporate borrowers. Mr. Rosen also currently serves on the Boards of Directors of the parent entities of Integrated Power Services and Hornbeck Offshore Services. Previously, Mr. Rosen has also served as a director of the Jewish Community Relations Council of New York from 2012 to June 2018. Mr. Rosen holds a B.S., summa cum laude, from New York University's Stern School of Business in Finance and Information Systems, where he received the Valedictorian Award.

***Robyn Collver****,* a director since May 2019, is a Corporate Director. She is the Board Chair of MMBC Recycling Inc. (Recycle BC) and of Multi-Material Stewardship Western Inc., where she also sits on the Governance Committee after Chairing the Governance Committees of both organizations. Ms. Collver served as Senior Vice President, ESG and Environmental Strategy Adviser at Canadian Tire Corporation, Limited (CTC), a family of businesses that includes a Retail segment, a Financial Services division and CT REIT until September 2022; prior thereto she was SVP, Regulatory and Chief Sustainability Officer at CTC until January 2022 and before that, SVP, Risk and Regulatory Affairs, having been appointed to that position in March 2015 after serving as Secretary and General Counsel since January 2009. She joined CTC in 2002; prior thereto she was a partner in the corporate and securities group at Cassels, Brock & Blackwell LLP, a Toronto, Canada law firm. Ms. Collver was Chair of the Board of Stewardship Ontario from 2019 to 2021, Chair of its Governance Committee from 2018 to 2019 and a director of the organization from 2016 to 2021. She was a director of the Alzheimer Society of Toronto from 2015 to 2020 and Chair of its Governance Committee from 2016 to 2020. She was a director of Automotive Materials Stewardship from 2016 to 2017. Ms. Collver holds a Bachelor of Business Administration from Acadia University and a Bachelor of Laws from the University of Toronto.

***William T. Allen****,* a director since May 2019*,* has an extensive 30-year background managing businesses and providing leadership to manufacturing operations requiring operational turnarounds*,* notably as CEO. Amongst industries Mr. Allen has worked in have included nuclear power*,* oil/petrochemical*,* automotive*,* industrial equipment*,* steel fabrication and plastic injection molding. Mr. Allen served as a director of Schultze Special Purpose Acquisition Corp. from December 2018 until its business combination with Clever Leaves Holdings Inc. in December 2020. Mr. Allen was*,* until December 2017*,* CEO of Werner Co.*,* Inc.*,* a leading manufacturer of industrial climbing products*,* from August 2007*,* and President and Chairman of the Board from March 2009*,* until its sale to Triton Funds in July 2017. Mr. Allen currently serves as a member of the board of directors of AQuity Solutions (formerly Mmodal Inc.)*,* a leading provider of clinical documentation technology solutions to the healthcare market*,* and Schultze Special Purpose Acquisition Corp. II. From December 2017 until July 2018*,* Mr. Allen also served as a board member of Rockport*,* a leading provider of men's and women's footwear*,* which filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware and is in the process of being sold through Section 363 of the Bankruptcy Code. He has also held board positions at USI*,* Arclin*,* Inc.*,* Constar*,* Ames Taping Tools*,* Oriental Trading Company*,* Hines Nurseries*,* Inc.*,* Running Aces Harness Park*,* Wright Line LLC (former CEO)*,* APW Company (former CEO)*,* Chart Industries*,* Inc. (former CEO) and Millennium Rail*,* many of which were on behalf of leading alternative investment firms including Ares Management*,*

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Black Diamond Capital Management*,* Oaktree Capital and Crescent Capital Group. In 2012*,* Mr. Allen received the Pittsburgh Business Times' Diamond Award as CEO of the Year in the 'Large for Profit' category.

***Duane C. Woods****,* a director since May 2019*,* is the Chairman of our board of directors*,* a position he has held with us or a predecessor entity since January 2017. Mr. Woods also served as Chief Executive Officer of us or a predecessor from 2017 to October 2019*,* when he led the company through a strategic business transformation and complex refinance. He previously served as Vice Chairman of the Board and CEO of Foundation Bank*,* a privately held state chartered bank in Bellevue*,* Washington*,* from October 2015 to September 2016. Since 2015, Mr. Woods has served as a director of RoadRunner Recycling*,* Inc.*,* an innovative provider of commercial recycling and waste services*,* and previously served as a director of Pacific Continental Corporation*,* a publicly traded bank headquartered in Eugene*,* Oregon*,* from November 2016 to November 2017. Mr. Woods has more than 30 years of experience in various executive management and leadership roles and over 18 years of experience as a successful lawyer and general counsel. Mr. Woods has proven experience in leading large and small dynamic organizations to achieve consistent profitable growth*,* operational excellence*,* productivity*,* customer service*,* capital management and innovation.

***Aina E. Konold****,* a director since June 2021*,* is the Chief Financial Officer of Nautilus*,* Inc.*,* a developer and manufacturer of fitness equipment brands including Bowflex<sup>®</sup>, Schwinn<sup>®</sup>, JRNY<sup>®</sup> and Nautilus<sup>®</sup>*,* where she leads the Finance*,* Strategy*,* Business Development*,* and IT functions. Ms. Konold has over 25 years of global retail*,* strategy*,* financial management*,* and operational experience*,* with a strong track record of driving growth and optimizing and scaling operating models. Prior to joining Nautilus*,* Inc. in December 2019*,* Ms. Konold held several executive level positions during her 20-year career with The Gap*,* Inc.*,* across financial planning and analysis*,* controllership*,* shared services*,* real estate strategy*,* and investor relations. From March 2011 until May 2018, she was the founding CFO for Gap Inc. in China, where she led the business through its hyper growth phase and established a scalable business model in a constantly evolving marketplace, particularly in the areas of digital and e-commerce. Ms. Konold holds a B.A. from Stanford University and began her career at PricewaterhouseCoopers.

***Kristy Pipes****,* a director since July 2021*,* until April 2019 served as Managing Director and Chief Financial Officer of Deloitte Consulting*,* a management consultancy firm with operations in the United States*,* India*,* Germany*,* and Mexico*,* where she managed the finance function. Ms. Pipes held various leadership positions*,* including serving on the firm's Management Committee and Consulting Operations Committee. Prior to joining Deloitte in 1999*,* Ms. Pipes was Vice President and Manager*,* Finance Division*,* at Transamerica Life Companies and Senior Vice President and Chief of Staff for the President and Chief Executive Officer (among other senior management positions) at First Interstate Bank of California. Ms. Pipes has also served as a director of AECOM since September 2022, ExlService Holdings*,* Inc. since January 2021*,* and on the board of trustees of Public Storage since October 2020.

***Executive officers***

***Mark Walsh*** is currently serving as our Chief Executive Officer*,* a role he has held since October 2019. He also serves as a director on the board of directors, a position he has held since December 2020. After beginning his career at Deloitte Consulting and Pepsico, Mr. Walsh amassed nearly two decades of successful leadership for a wide range of top brands in apparel retailing including J. Crew*,* Juicy Couture*,* Prana*,* Ellen Tracy and Laundry. Prior to joining us*,* Mr. Walsh served as CEO of Bob's Stores and Eastern Mountain Sports from 2008 to 2013*,* prior to returning to the role again from 2015 to May 2017*,* when the company was renamed Vestis Retail Group. During this period*,* Mr. Walsh optimized brand and organizational value and retained approximately 400 jobs throughout all stores*,* as

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well as managed a Section 363 sale to Versa Capital and subsequent sale to UK-based Sports Direct through a debtor in possession process. Due to these actions*,* both the Bob's Stores and Eastern Mountain Sports brands are currently operating today under the Sports Direct corporate umbrella. Mr. Walsh also served as operating Chairman of Polartec from 2012 to 2014. From May 2017 to October 2019*,* Mr. Walsh pursued personal interests and was an independent consultant focused on special situations and interim turnaround CEO services. Mr. Walsh holds a B.A. from Brown University and an M.B.A. from The Wharton School at the University of Pennsylvania. Mr. Walsh currently serves as a director of Savers Australia Pty Ltd.

***Jay Stasz*** is currently serving as our Chief Financial Officer and Treasurer, a role he has held since July 2022. Mr. Stasz has almost 25 years of finance leadership experience. Prior to assuming the CFO role, Mr. Stasz was Chief Financial Officer of Ollie's Bargain Outlet (Ollie's) since January 2018. He also served as Senior Vice President of Finance and Chief Accounting Officer at Ollie's since November 2015. Before his role at Ollie's, Mr. Stasz spent 17 years at Gart Sports, which merged with Sports Authority in 2003, where he held a variety of leadership positions including Senior Vice President of Finance & Accounting. He began his career as an accountant in the audit department at Deloitte. Mr. Stasz holds a Bachelor of Science in Accounting from the University of Southern California.

***Jubran Tanious*** is currently serving as our President and Chief Operating Officer and joined us in 2011. In his role he oversees all of Store*,* Supply*,* and Real Estate Operations. Mr. Tanious has nearly two decades of leadership and general management experience across a variety of operating companies. Prior to assuming the role of COO in November 2019*,* he served as our Vice President of Supply from January 2017 to October 2019 and was instrumental in transforming the Company's supply strategy and organization. Prior to that he served as Director of Supply and Regional Director of stores. Prior to Savers*,* Mr. Tanious served as Director of Business Risk Management for UnitedHealth Group and as Product Marketer for the 3M Company. Early in his career he worked in an Operations Management and Engineering role for the Valspar Corporation. Mr. Tanious holds a Bachelor of Science in Chemical Engineering from the Pennsylvania State University and a Masters of Business Administration from Harvard Business School. Mr. Tanious currently serves as a director of Savers Australia Pty Ltd.

***Richard Medway*** is currently serving as our General Counsel and Chief Compliance Officer and joined us in 2015. In November 2019, he was appointed corporate Secretary. Mr. Medway ensures our compliance with laws and regulations in each of the communities in which we operate*,* and assists in risk management and government relations as we grow our business and build our partnerships. Additionally*,* he oversees an in-house legal and risk team which oversees workplace safety*,* insurance and loss prevention issues. Previously*,* Mr. Medway served as Vice President*,* Deputy General Counsel for Nintendo of America and was a partner at Powell Goldstein LLP. Mr. Medway received his Bachelor of Arts from the University of Wisconsin, Madison and holds a Juris Doctor from the Catholic University of America.

***Mindy Geisser*** has served as our Chief People Services Officer since October 2015. Ms. Geisser oversees our benefits, compensation, HR systems, recruitment, training, team member relations, and employee engagement and retention efforts. She also champions our ongoing priority around diversity and inclusion and ensuring a respectful workplace. Ms. Geisser has over three decades of HR generalist and leadership experience for companies including Colliers International, where she was the Chief Human Resources Officer, as well as Slalom Consulting, Amazon.com Inc, and Philips Medical Systems, among others. She received her Bachelor of Arts degree from the University of Wisconsin, Madison, and her Master of Arts in Industrial Relations from the University of Minnesota.

***Charles Hunsinger*** has served as our Chief Information Officer since October 2022. Mr. Hunsinger is a senior technology executive with over 30 years of IT experience in consulting and

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corporate environments. He has deep industry expertise in retail, e-commerce, direct marketing/catalog, B2B, and wholesale business models. Mr. Hunsinger has held several CIO roles for leading retail and direct marketing organizations. Prior to joining Savers, he was the CIO for the previous six years for Oriental Trading Company, a company held by Berkshire Hathaway. Prior to that, he held CIO roles for Harry and David, Musicians Friend/Guitar Center, and Corporate Express/Staples, and also served as the VP of Customer Technologies for L.L.Bean. Charles started his career in the consulting industry with Accenture, one of the preeminent global business process and technology consulting firms. He holds a BS in Electrical Engineering from the University of Oklahoma.

***Scott Estes*** has served as our Senior Vice President of Finance since July 2022 and joined us in 2015. Prior to this role, Mr. Estes served as our Chief Financial Officer and Treasurer since February 2021. Mr. Estes held the roles of Senior Vice President of Finance from October 2020 to February 2021, Vice President of Finance from November 2018 to October 2020, Director of Finance, FP&A and Treasury from July 2016 to November 2018 and Director of Finance, Australia and Canada, Retail from July 2015 to July 2016. Mr. Estes has over 20 years of finance experience, including leadership positions at Microsoft Corporation and PACCAR Inc., making him uniquely qualified to guide our day-to-day financial operations while establishing strategic long-range plans. Mr. Estes has been instrumental in managing our capital structure and developing a robust customer analytics function. Mr. Estes received his B.A. and M.B.A. from the University of Washington.

**Composition and Risk Management Practices** 

***Board Composition***

After the completion of this offering, the authorized number of directors comprising our board of directors will be not less than three but not more than thirteen, with the actual number to be fixed from time to time by resolution of our board of directors, subject to the terms of our certificate of incorporation and bylaws that will be in effect upon the completion of this offering and the Stockholders Agreement. Our certificate of incorporation, which will be in effect upon the completion of this offering, provides for a board of directors comprised of three classes of directors, with each class serving a three-year term beginning and ending in different years than those of the other two classes. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Our board of directors will be divided among the three classes as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our class I directors will be Aaron Rosen and Scott Graves, and their term will expire at the annual meeting of
stockholders to be held in 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our class II directors will be William Allen, Robyn Collver and Mark Walsh, and their term will expire at the annual
meeting of stockholders to be held in 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our class III directors will be Duane Woods, Aina Konold and Kristy Pipes, and their term will expire at the annual meeting
of stockholders to be held in 2025.

Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board of directors could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of us.

Pursuant to the Stockholders Agreement, the Ares Funds will be entitled to designate individuals to be included in the slate of nominees for election to our board of directors as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• for so long as the Ares Funds own 40% or more of the outstanding shares of our common stock, the greater of up to seven
directors and the number of directors comprising a majority of our board; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• except as provided below, for so long as the Ares Funds own less than 40% of the outstanding shares of our common stock and
5% or more of the outstanding shares of our common stock, that number of directors (rounded up to the nearest whole number that is the same percentage of the total number of directors comprising our board as the collective percentage of common stock
owned by the Ares Funds.

***Controlled company exemption***

Upon the completion of this offering, we will be deemed to be a "controlled company" under the NYSE rules, and we will qualify for the "controlled company" exemption to the board of directors and committee composition requirements under the NYSE rules. Pursuant to this exception, we will be exempt from the requirements that (1) our board of directors be comprised of a majority of independent directors, (2) we have a nominating, corporate governance and sustainability committee composed entirely of independent directors and (3) our compensation committee be comprised solely of independent directors. The "controlled company" exemption does not modify the independence requirements for the audit committee, and we intend to comply with the requirements of the Sarbanes-Oxley Act and the NYSE rules, which require that our audit committee be composed of at least three directors, one of whom must be independent upon the listing of our common stock on the NYSE, a majority of whom must be independent within 90 days of the date of this prospectus and each of whom must be independent within one year from the date of this prospectus. We intend to utilize these exemptions as long as we remain a controlled company. As a result, we will not have a majority of independent directors and our nominating, corporate governance and sustainability committee and compensation committee will not consist entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE.

If at any time we cease to be a "controlled company" under the NYSE rules, the board of directors will take all action necessary to comply with such rules within the applicable transition periods, including appointing a majority of independent directors to the board and establishing certain committees composed entirely of independent directors.

***Board leadership***

Our board of directors has no policy with respect to the separation of the offices of Chief Executive Officer and Chairman of the Board. It is our board of directors' view that rather than having a rigid policy, our board of directors should determine, as and when appropriate upon consideration of all relevant factors and circumstances, whether the two offices should be separate.

Currently, our leadership structure separates the offices of Chief Executive Officer and Chairman of the Board, with Mr. Walsh serving as our Chief Executive Officer and Mr. Graves serving as non-executive Chairman of the Board. We believe this is appropriate as it provides Mr. Walsh with the ability to focus on our day-to-day operations while Mr. Graves focuses on the oversight of our board of directors.

***Board's role in risk management***

Management is responsible for the day-to-day management of the risks facing our company, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. Our board of directors regularly reviews information regarding our credit, liquidity and operations, as well as the risks associated therewith. Effective upon the consummation of this offering, our compensation committee will be responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. Effective upon consummation of this

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offering, our audit committee will oversee management of financial and cybersecurity risks. While each committee will be responsible for evaluating certain risks and overseeing the management of such risks, our full board of directors plans to keep itself regularly informed regarding such risks through committee reports and otherwise. We believe that the leadership structure of our board of directors provides appropriate risk oversight of our activities given the controlling interests held by the Ares Funds.

***Director independence***

Pursuant to the corporate governance standards of the NYSE, a director employed by us cannot be deemed an "independent director," and each other director will qualify as "independent" only if our board of directors affirmatively determines that he has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us. The fact that a director may own our capital stock is not, by itself, considered a material relationship. Based on information provided by each director concerning his or her background, employment and affiliations, our board of directors has affirmatively determined that each of Aaron Rosen, Scott Graves, Robyn Collver, William Allen, Duane C. Woods, Aina Konold and Kristy Pipes are independent in accordance with the NYSE rules.

**Board Committees** 

Upon the completion of this offering, our board of directors will have three standing committees: an audit committee, a compensation committee and a nominating, corporate governance and sustainability committee, each of which has the composition and responsibilities described below. From time to time, our board of directors may establish other committees to facilitate the management of our business.

***Audit Committee***

Upon the completion of this offering, the audit committee will consist of three directors: Aina Konold, Aaron Rosen and Duane C. Woods, with Aina Konold serving as chair of the committee. Our board of directors has determined that Duane C. Woods and Aina Konold each satisfy the independence requirements for audit committee members under the listing standards of the NYSE and Rule 10A-3 of the Exchange Act. Ms. Konold has been determined to be an audit committee "financial expert" as defined under SEC rules. All members of the audit committee are able to read and understand fundamental financial statements, are familiar with finance and accounting practices and principles and are financially literate.

The purpose of the audit committee is to assist our board of directors in overseeing (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, including global data privacy and security laws applicable to the data we receive, (3) our independent auditors' qualifications and independence, (4) the performance of the independent auditors and our internal audit function and (5) our capabilities, policies and controls, and methods for identifying, assessing and mitigating information and cybersecurity risks. The audit committee also prepares the audit committee report as required by the SEC for inclusion in our annual proxy statement.

Our board of directors has adopted a written charter for the audit committee which will take effect upon the completion of this offering and which satisfies the applicable rules of the SEC and the listing standards of the NYSE This charter will be posted on our website upon the completion of this offering.

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***Compensation Committee***

Upon the completion of this offering, the compensation committee will consist of three directors: William Allen, Scott Graves and Aaron Rosen. We intend to avail ourselves of the "controlled company" exemption under the NYSE rules which exempts us from the requirement that we have a compensation committee composed entirely of independent directors.

The purpose of the compensation committee is to assist our board of directors in discharging its responsibilities relating to (1) setting our compensation program and compensation of our executive officers and directors, (2) monitoring our incentive and equity-based compensation plans and (3) preparing the compensation committee report required to be included in our proxy statement under the rules and regulations of the SEC.

Our board of directors has adopted a written charter for the compensation committee which will take effect upon the completion of this offering and which satisfies the applicable rules of the SEC and the listing standards of the NYSE. This charter will be posted on our website upon the completion of this offering.

***Nominating, Corporate Governance and Sustainability Committee***

The nominating, corporate governance and sustainability committee consists of three directors: Robyn Collver, Kristy Pipes and Duane C. Woods. We intend to avail ourselves of the "controlled company" exemption under the NYSE rules which exempts us from the requirement that we have a nominating, corporate governance and sustainability committee composed entirely of independent directors.

The purpose of the nominating, corporate governance and sustainability committee is to assist our board of directors in discharging its responsibilities relating to (1) identifying individuals qualified to become new board of directors members, consistent with criteria approved by the board of directors, subject to our certificate of incorporation, bylaws and the Stockholders Agreement, (2) reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or recommending that the board of directors select, the director nominees for the next annual meeting of stockholders, (3) identifying board of directors members qualified to fill vacancies on the board of directors or any board of directors committee and recommending that the board of directors appoint the identified member or members to the board of directors or the applicable committee, subject to our certificate of incorporation, bylaws and the Stockholders Agreement, (4) reviewing and recommending to the board of directors corporate governance principles applicable to us, (5) overseeing the evaluation of the board of directors and management, (6) oversee our strategy on corporate social responsibility and sustainability and (7) handling such other matters that are specifically delegated to the committee by the board of directors from time to time.

Our board of directors has adopted a written charter for the nominating, corporate governance and sustainability committee which will take effect upon the completion of this offering and which satisfies the applicable rules of the SEC and the listing standards of the NYSE. This charter will be posted on our website upon the completion of this offering.

**Compensation Committee Interlocks and Insider Participation** 

None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. None of the members of the compensation committee is, nor has ever been, an officer or employee of our company.

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**Code of Ethics** 

Prior to the consummation of this offering, we intend to adopt a code of business conduct and ethics that applies to all our employees, officers, and directors, including those officers responsible for financial reporting. Upon the closing of this offering our code of business conduct and ethics will be available our website. We intend to disclose any amendments to the code, or any waivers of its requirements, on our website or in public filings.

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**EXECUTIVE COMPENSATION** 

**Summary Compensation Table** 

The following table provides compensation information for our principal executive officer and our two other most highly compensated executive officers for the fiscal year ended December 31, 2022, which we refer to as "fiscal 2022". We refer to these executive officers as the named executive officers.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal<br>Position** | **Year(1)** | **Salary<br>($)** | **Bonus<br>($)(2)** | **Option<br>Awards<br>($)(3)** | **Non-Equity<br>Incentive Plan<br>Compensation<br>($)(4)** |  | **Non-Qualified<br>Deferred<br>Compensation<br>Earnings<br>($)(5)** | **All Other<br>Compensation<br>($)(6)** | **Total ($)** |
|  **Mark Walsh** <br>*Chief Executive Officer* | 2022 | 921807 | 2170000 |  |  | (4) | – | 100 | 3091907 |
|  **Mark Walsh** <br>*Chief Executive Officer* | 2021 | 897403 |  |  | 1800000 |  | – | 5223 | 2702626 |
|  **Jay Stasz** <br>*Chief Financial* <br>*Officer and Treasurer* | 2022 | 203077 |  | 3018856 |  | (4) | – | 100 | 3222033 |
|  **Charles Hunsinger**<br>*Chief Information Officer* | 2022 | 53846 | 50000 | 1605396 |  | (4) | – | 100 | 1709342 |

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(1) Both Mr. Stasz and Mr. Hunsinger commenced employment with us during fiscal 2022.

(2) The amounts in this column for 2022 reflect, for Mr. Walsh, a discretionary bonus paid in connection with the
December 2022 Dividend in recognition of business performance and, for Mr. Hunsinger, a sign-on bonus.

(3) The amounts in this column reflect the aggregate grant date fair value of stock options granted during the fiscal year,
computed in accordance with Accounting Standards Codification 718 issued by the Financial Accounting Standards Board, or FASB ASC 718. For a description of the assumptions used to determine the grant date fair value of our stock options, see Note 13
to our consolidated financial statements included elsewhere in this prospectus.

(4) The amounts in this column reflect bonus payments under our annual bonus for performance in the applicable year. The
annual bonus amounts for fiscal 2022 performance have not yet been determined, but are expected to be determined following review of the audited financial statements. Our annual bonus plan is described below.

(5) No above-market or preferential interest rate options are available under our deferred compensation plan, which is
described below.

(6) The amounts shown in this column for fiscal 2022 include a charitable contribution benefit of $100 for each named
executive officer.

***Narrative disclosure to summary compensation table***

***Employment arrangements.*** As further described under "Additional Narrative Disclosure" below, we have entered into an employment agreement with each of our named executive officers.

***Cash bonus*.** A portion of each named executive officer's total target compensation opportunity is in the form of an annual incentive bonus under our Store Support Center ("SSC") Bonus Plan. Each executive has a target bonus (as a percentage of base salary at year-end) under the SSC Bonus Plan. The target amounts are 100% of base salary for Mr. Walsh and 75% of base salary for each other named executive officer with a maximum payout of 200% of target. The bonus amounts for fiscal 2022 performance have not yet been determined, but are expected to be determined following review of the audited financial statements.

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***Health and welfare benefits*.** The named executive officers are eligible to participate in our health and welfare benefit plans, including medical benefits and life insurance, on the same basis as other salaried employees.

***401(k) retirement plan*.** We maintain a tax-qualified defined contribution plan, or a 401(k) plan, in which all employees may make contributions from eligible compensation, subject to Internal Revenue Code limits. We make matching contributions, subject to Internal Revenue Code limits. The named executive officers are eligible to participate in the 401(k) plan on the same terms as other participating U.S. employees.

***Deferred compensation plan*.** We provide a non-qualified deferred compensation plan to the named executive officers and other employees. Participants may elect to defer all or a portion of their eligible salary and bonus until a specified date. Executive officers who defer salary or bonus under this plan are credited with market-based returns depending upon the investment choices made by the executive. The investment options under the plan, which are similar to those provided under our qualified 401(k) plan, include a number of mutual funds with varying risk and return profiles.

**Outstanding Equity Awards at Fiscal Year-end** 

The following table shows all outstanding equity awards held by each of the named executive officers at the end of fiscal 2022, which consisted entirely of stock options.

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|:---|:---|:---|:---|:---|:---|:---|
|  | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** |
| **Name** | **Grant Date** | **Number of<br>Securities<br>Underlying<br>Unexercised<br>Options (#)<br>Exercisable** | **Number of<br>Securities<br>Underlying<br>Unexercised<br>Options (#)<br>Unexercisable<br>(1)** | **Equity<br>Incentive<br>Plan<br>Awards:<br>Number of<br>Securities<br>Underlying<br>Unexercised<br>Unearned<br>Options<br>(#)(2)** | **Option<br>Exercise<br>Price ($)** | **Option<br>Expiration<br>Date** |
|  Mark Walsh | 10/7/2019 | 764481 | 509654 | 1911202 | 1.00 | 10/7/2029 |
|  | 12/9/2020 | 482346 | 723519 | 1808798 | 2.25 | 12/9/2030 |
|  Jay Stasz | 8/18/2022 |  | 600000 |  | 10.50 | 8/18/2032 |
|  | 12/16/2022 |  | 42857 |  | 11.00 | 12/16/2032 |
|  Charles Hunsinger | 12/16/2022 |  | 326300 |  | 11.00 | 12/16/2032 |

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(1) The amounts in this column represent unvested time-vesting stock options. These stock options vest in equal installments
on each of the first, second, third, fourth and fifth anniversaries of the grant date (or, for Mr. Stasz's August 2022 grant, anniversaries of July 19, 2022; or for Mr. Hunsinger's grant, anniversaries of November 18,
2022), subject to continued employment through the applicable vesting date.

(2) The amounts in this column represent unvested and unearned performance-vesting stock options. These stock options are
eligible to become vested upon the achievement of the performance conditions described under "*Additional Narrative Disclosure*" below.

**Additional Narrative Disclosure** 

***Employment agreements***

We have entered into an employment agreement with each of our named executive officers pursuant to which each executive agrees to work for us. Mr. Walsh's employment agreement dated

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December 16, 2021, which superseded his prior agreement, provides for an initial term through December 31, 2024, with automatic 12-month renewals thereafter, unless the term ends earlier due to termination of executive's employment by either party at any time. Mr. Walsh's agreement provides for an initial base salary of $900,000 (which may be increased from time to time), a target annual bonus of 100% of base salary and other benefits provided to similarly situated employees. Employment agreements with each of our other named executive officers provide for a term until the executive's employment is terminated by either party at any time and for continued payments during employment of base salary, annual cash bonus eligibility (with a target bonus of 75% of salary) and other benefits provided to similarly situated employees. Mr. Stasz's employment agreement provides for a one-time sign-on bonus on March 1, 2023 if he remains employed at such time, subject to repayment if he departs prior to March 1, 2024, other than upon involuntary termination without cause or as a result of death or disability. Mr. Hunsinger's employment agreement provides for a sign-on bonus, 50% of which is paid shortly after commencement of employment as reported in the Summary Compensation Table above and the remaining 50% of which is paid after six months of employment, in each case subject to repayment if he voluntarily resigns prior to the first anniversary of his start date.

Pursuant to each named executive officer's employment agreement, upon the executive's involuntary termination without cause or resignation for good reason (as defined below), and subject to signing a release and complying with the restrictive covenants, the executive will be entitled to receive the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 12 months of continued base salary (plus, for Mr. Walsh, his annual target bonus),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a pro-rated portion of the annual bonus based on actual level of achievement,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 12 months of payment of healthcare premiums under COBRA, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• for Mr. Walsh, performance-based options that were granted prior to January 1, 2022 will remain available for
performance-based vesting until the earlier of December 31, 2024 and two years following termination of employment, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• outplacement services in an amount up to $10,000 (or $15,000 for Mr. Walsh).

For purposes of each employment agreement, "good reason" generally includes one of the following occurring without the executive's consent: (i) material diminution of authority, duties or responsibilities; (ii) a change of principal employment location by more than 50 miles (or 35 miles for Mr. Walsh); (iii) material diminution in base salary (or target bonus for Mr. Walsh); or (iv) material breach by the company of the employment agreement. In addition, each of the employment agreements (other than Walsh's) provides for a Section 280G "better-of provision" such that payments or benefits that each individual receives in connection with a change in control will be reduced to the extent necessary to avoid the imposition of any excise tax under Sections 280G and 4999 of the Code if a reduction would result in greater after-tax payment amount for the individual. There are no tax gross-up provisions related to Section 280G or 4999 of the Code in the employment agreements or other agreements.

*Restrictive Covenants*. Each named executive officer's employment agreement subjects the executive to a non-competition covenant for up to 18 months (or 12 months for Mr. Walsh) following termination of employment. Each named executive officer is also subject to confidentiality and proprietary information covenants, non-disparagement covenants and post-termination non-solicit covenants.

***Equity compensation***

We have granted equity compensation to the named executive officers prior to this offering in the form of stock options under our 2019 Management Incentive Plan, as amended. In general, options

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granted to our named executive officers prior to fiscal 2022 consisted of 40% time-vesting options and 60% performance-vesting options as described below. The options granted to our named executive officers during fiscal 2022 consisted solely of time-vesting options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The time-vesting portion of the stock options generally vest in equal annual installments over five years, subject to
continued employment through each vesting date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The performance-vesting portion of the stock options become vested to the extent our private equity investors receive a
specified multiple of invested capital (or "MOIC") before the tenth anniversary of the option grant date, subject to the executive's continued employment through the applicable measurement date. In addition, additional performance
measures are applicable, including as a result of or following this offering, as described below. Shares underlying performance-vesting options that become vested may be subject to transfer restrictions for up to one year following this offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *MOIC vesting*. MOIC is a ratio comparing cash proceeds (including cumulative cash dividends and sale proceeds through
the measurement date) to aggregate investment. Absent other events (such as this offering), the percentage of the performance-vesting portion that would become vested based on MOIC is as follows: one-third if
MOIC equals or exceeds 2.00; an additional one-third if MOIC equals or exceeds 3.00; and the final one-third if MOIC equals or exceeds 3.75. The option agreements also
include provisions applicable prior to this offering for partial vesting upon sales by our private equity investors that exceed specified hurdles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *IPO vesting*. Up to 20% of the performance-vesting portion of the stock options may be eligible to become vested upon
closing of this offering to the extent the 2.00 MOIC level has not previously been reached.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *VWAP vesting*. Following this offering, the performance-vesting options will be eligible to vest based on our stock
price performance, as measured using a 90-day volume weighted average price (or "VWAP") on an annual basis over a four-year period.

The stock option agreements for stock options granted prior to this offering provide that, if a holder's employment is terminated without cause, or due to death or disability, then a pro-rated portion of the time-vesting stock option will become vested. In the event of a change in control (which, for the avoidance of doubt, would not include our initial public offering), the time-vesting stock options will become fully vested, and the performance-vesting options will become vested to the extent the MOIC returns described above are met in connection with the change in control.

***Proposed New Equity Grants***

In connection with this offering, we expect to grant stock options and restricted stock units under the Omnibus Incentive Plan (a description of which is provided below) to certain directors, employees and other service providers, including our named executive officers, in amounts to be determined.

***Omnibus Incentive Compensation Plan***

Our board of directors expects to adopt, and we expect our stockholders to approve, our Omnibus Incentive Compensation Plan (the "Omnibus Incentive Plan") to become effective in connection with the consummation of this offering. Following the adoption of the Omnibus Incentive Plan, we do not expect to issue additional awards under the 2019 Management Incentive Plan, as amended (the "Prior Plan"). This summary is qualified in its entirety by reference to the Omnibus Incentive Plan that is ultimately adopted by our board of directors.

*Administration.* We expect that the board of directors will authorize the compensation committee of our board of directors to administer the Omnibus Incentive Plan. The compensation committee, or its

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delegate, will have the authority to determine the type, size terms and conditions of any awards and the terms of the underlying agreements evidencing any awards granted under the Omnibus Incentive Plan and to adopt, alter and repeal rules, guidelines and practices relating to the Omnibus Incentive Plan. The compensation committee will have full discretion to administer and interpret the Omnibus Incentive Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times at which the awards may vest and be exercised.

*Eligibility.* Any of our or our affiliates' current or prospective employees, directors, officers, consultants or advisors who are selected by the compensation committee will be eligible for awards under the Omnibus Incentive Plan. The compensation committee will have the sole and complete authority to determine who will be granted an award under the Omnibus Incentive Plan.

*Number of Shares Authorized*. Pursuant to the Omnibus Incentive Plan, the aggregate number of shares of common stock that may be issued or transferred under the Omnibus Incentive Plan shall be equal to the sum of the following: (i) shares of common stock, plus (ii) shares of common stock underlying any award under the Prior Plan that expires, terminates, or is canceled for any reason without having been exercised in full. There will be a maximum grant date fair value of cash and equity awards that may be awarded to a non-employee director under the Omnibus Incentive Plan during any one calendar year, taken together with any cash fees earned by such non-employee director for services rendered as a member of the Board during the calendar year, provided that a majority of the independent non-employee directors may provide for an exception to this limitation in the case of a non-executive chair of the Board. If any award granted under the Omnibus Incentive Plan expires, terminates, or is canceled or forfeited without being settled, vested or exercised, shares of our common stock subject to such award will again be made available for future grants. If shares of common stock otherwise issuable under the Omnibus Incentive Plan are surrendered in payment of the exercise price of an option, then the number of shares of common stock available for issuance under the Omnibus Incentive Plan shall be reduced only by the net number of shares actually issued by us upon such exercise and not by the gross number of shares as to which such option is exercised. Upon the exercise of any SAR under the Omnibus Incentive Plan, the number of shares of common stock available for issuance under the Omnibus Incentive Plan shall be reduced by only by the net number of shares actually issued by the Company upon such exercise. If shares of common stock otherwise issuable under the Omnibus Incentive Plan are withheld by us in satisfaction of the withholding taxes incurred in connection with the issuance, vesting or exercise of any grant or the issuance of common stock thereunder, then the number of shares of common stock available for issuance under the Omnibus Incentive Plan shall be reduced by the net number of shares issued, vested or exercised under such grant, calculated in each instance after payment of such share withholding. To the extent any grants are paid in cash, and not in shares of common stock, any shares previously subject to such grants shall again be available for issuance or transfer under the Omnibus Incentive Plan.

*Change in Capitalization.* If there is a change in our capitalization in the event of a stock or extraordinary cash dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of our common stock or other relevant change in capitalization or applicable law or circumstances, such that the compensation committee determines that an adjustment to the terms of the Omnibus Incentive Plan (or awards thereunder) is necessary or appropriate, then the compensation committee shall make adjustments in a manner that it deems equitable. Such adjustments may be to the number of shares reserved for issuance under the Omnibus Incentive Plan, the number of shares covered by awards then outstanding under the Omnibus Incentive Plan, the limitations on awards under the Omnibus Incentive Plan, the exercise price of outstanding options, or any applicable performance measures (including, without limitation, performance conditions and performance periods), or such other equitable substitution or adjustments as the compensation committee may determine appropriate.

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*Awards Available for Grant.* The compensation committee may grant awards of non-qualified stock options, incentive stock options, stock appreciation rights ("SARs"), stock awards (including restricted stock), stock units (including restricted stock units), other stock-based awards, other cash-based awards, dividend equivalents or any combination of the foregoing. Awards may be granted under the Omnibus Incentive Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by us or with which we combine, which are referred to herein as "Substitute Awards." All awards granted under the Omnibus Incentive Plan will vest and become exercisable in such manner and on such date or dates or upon such event or events as determined by the compensation committee.

*Stock Options.* The compensation committee will be authorized to grant options to purchase shares of our common stock that are either "incentive stock options," meaning they are intended to satisfy the requirements of Section 422 of the Code for incentive stock options, or "non-qualified," meaning they are not intended to satisfy the requirements of Section 422 of the Code. All options granted under the Omnibus Incentive Plan shall be non-qualified unless the applicable award agreement expressly states that the option is intended to be an incentive stock option. Options granted under the Omnibus Incentive Plan will be subject to the terms and conditions established by the compensation committee. Under the terms of the Omnibus Incentive Plan, the exercise price of the options will not be less than the fair market value (or 110% of the fair market value in the case of an incentive stock option granted to a 10% stockholder) of our common stock at the time of grant (except with respect to Substitute Awards). Options granted under the Omnibus Incentive Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the compensation committee and specified in the applicable award agreement. The maximum term of an option granted under the Omnibus Incentive Plan will be ten years from the date of grant (or five years in the case of an incentive stock option granted to a 10% stockholder), provided that if the term of a non-qualified option would expire at a time when trading in the shares of our common stock is prohibited by our insider trading policy, the option's term shall be extended automatically until the 30th day following the expiration of such prohibition (as long as such extension shall not violate Section 409A of the Code) unless otherwise determined by the compensation committee. Payment in respect of the exercise of an option may be made (i) in cash, (ii) unless otherwise determined by the compensation committee, by delivery of shares of our common stock valued at the fair market value at the time the option is exercised, (iii) if there is a public market for the shares of our common stock at such time, by means of a broker-assisted cashless exercise mechanism, (iv) if permitted by the compensation committee, by means of a "net exercise" procedure effected by withholding the minimum number of shares otherwise deliverable in respect of an option that are needed to pay the exercise price or (v) by such other method as the compensation committee may permit in its sole discretion.

*Stock Awards.* The compensation committee will be authorized to grant stock awards under the Omnibus Incentive Plan, which will be subject to the terms and conditions established by the compensation committee. Stock awards are common stock that is generally non-transferable and is subject to such restrictions determined by the compensation committee for a specified period. The compensation committee may, but shall not be required to, establish conditions under which restrictions on stock awards shall lapse over a period of time or according to such other criteria as the compensation committee deems appropriate, including, without limitation, restrictions based upon the achievement of specific performance goals. Unless the compensation committee determines otherwise, during any restriction period, the participant shall have the right to vote shares of stock awards and to receive any dividends or other distributions paid on such shares. Dividends with respect to stock awards that vest based on performance shall vest if and to the extent that the underlying stock award vests, as determined by the compensation committee.

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*Stock Unit Awards.* The compensation committee will be authorized to grant stock unit awards, which will be subject to the terms and conditions established by the compensation committee. Each stock unit shall represent the right of the participant to receive a share of common stock or an amount of cash based on the value of a share of common stock, if and when specified conditions are met. The compensation committee may grant stock units that vest and are payable if specified performance goals or other conditions are met, or under other circumstances. Stock units may be paid at the end of a specified performance period or other period, or payment may be deferred to a date authorized by the compensation committee. The compensation committee may accelerate vesting or payment, as to any or all stock units at any time for any reason, provided such acceleration complies with section 409A of the Code. To the extent provided in an award agreement, the holder of outstanding restricted stock units shall be entitled to be credited with dividend equivalent payments upon the payment by us of dividends on shares of our common stock, either in cash or, at the sole discretion of the compensation committee, in shares of our common stock having a fair market value equal to the amount of such dividends (or a combination of cash and shares), which accumulated dividend equivalents shall be payable at the same time that the underlying restricted stock units are settled.

*Stock Appreciation Rights.* The compensation committee will be authorized to award SARs under the Omnibus Incentive Plan. SARs will be subject to the terms and conditions established by the compensation committee. A SAR is a contractual right that allows a participant to receive, in the form of either cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An option granted under the Omnibus Incentive Plan may include SARs, and SARs may also be awarded to a participant independent of the grant of an option. SARs granted in connection with an option shall be subject to terms similar to the option corresponding to such SARs, including with respect to vesting and expiration. Except as otherwise provided by the compensation committee (in the case of Substitute Awards or SARs granted in tandem with previously granted options), the strike price per share of our common stock underlying each SAR shall not be less than 100% of the fair market value of such share, determined as of the date of grant and the maximum term of a SAR granted under the Omnibus Incentive Plan will be ten years from the date of grant.

*Other Stock-Based Awards.* The compensation committee may grant other stock-based awards, which are awards (other than those described above) that are based on or measured by common stock, on such terms and conditions as the compensation committee shall determine. Other stock-based awards may be awarded subject to the achievement of performance goals or other criteria or other conditions and may be payable in cash, common stock or any combination of the foregoing, as the compensation committee shall determine and as set forth in the applicable award agreement.

*Cash Awards.* The compensation committee may grant cash awards to participants. The compensation committee shall determine the terms and conditions applicable to cash awards, including the criteria for the vesting and payment of cash awards. Cash awards shall be based on such measures as the compensation committee deems appropriate and need not relate to the value of shares of common stock.

*Effect of a Change in Control.* Unless otherwise provided in an award agreement, or any applicable employment, consulting, change of control, severance or other agreement between us and a participant, in the event of a change in control (as defined in the Omnibus Incentive Plan), if the acquirer or successor company in a change in control has agreed to provide for the substitution, assumption, exchange or other continuation of awards granted pursuant to the Omnibus Incentive Plan, then, unless a participant's award agreement provides otherwise, if a participant's employment or service is terminated by us other than for cause (and other than due to death or disability) within the 24-month period following a change of control, all outstanding options and SARs, stock awards, stock unit awards, other stock based awards or cash awards held by such participant will become immediately vested and exercisable as of such participant's date of termination with respect to all of

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the shares subject to such award; provided that with respect to any award whose vesting or exercisability is otherwise subject to the achievement of performance conditions in whole or in part, vesting shall be determined under the applicable award agreement. In the event of a change of control, if any outstanding awards are not assumed by, or replaced with grants that have comparable terms by, the surviving corporation (or a parent or subsidiary of the surviving corporation), the compensation committee may (but is not obligated to) make adjustments to the terms and conditions of outstanding awards, including, without limitation, taking any of the following actions (or combination thereof) with respect to any or all outstanding awards, without the consent of any participant: (i) the compensation committee may determine that outstanding stock options and SARs shall automatically accelerate and become fully exercisable and the restrictions and conditions on outstanding stock awards, stock units, other stock-based awards, cash awards, and dividend equivalents shall immediately lapse; (ii) the compensation committee may determine that participants shall receive a payment in settlement of outstanding stock units, other stock-based awards, cash awards, or dividend equivalents, in such amount and form as may be determined by the compensation committee; (iii) the compensation committee may require that participants surrender their outstanding stock options and SARs in exchange for a payment by the Company, in cash or stock as determined by the compensation committee, in an amount equal to the amount, if any, by which the then fair market value of the shares of common stock subject to the participant's unexercised stock options and SARs exceeds the stock option exercise price or SAR base amount, and (iv) after giving participants an opportunity to exercise all of their outstanding stock options and SARs, the compensation committee may terminate any or all unexercised stock options and SARs at such time as the compensation committee deems appropriate. Such surrender, termination or payment shall take place as of the date of the change of control or such other date as the compensation committee may specify. Without limiting the foregoing, if the per share fair market value of the common stock does not exceed the per share stock option exercise price or SAR base amount, as applicable, the Company shall not be required to make any payment to the participant upon surrender of the stock option or SAR.

*Nontransferability.* Each award may be exercised during the participant's lifetime by the participant or, if permissible under applicable law, by the participant's guardian or legal representative. No award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a participant other than by will or by the laws of descent and distribution or, with respect to certain awards, pursuant to a domestic relations order. Notwithstanding the foregoing, the compensation committee may provide that a participant may transfer non-qualified stock options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with the applicable securities laws, according to such terms as the compensation committee may determine, provided that the participant receives no consideration for the transfer of an option and the transferred option shall continue to be subject to the same terms and conditions as were applicable to the option immediately before the transfer.

*Amendment.* The Omnibus Incentive Plan will have a term of ten years, unless the Omnibus Incentive Plan is terminated earlier by the board of directors or is extended by the board of directors with the approval of the stockholders. The board of directors may amend, suspend or terminate the Omnibus Incentive Plan at any time, subject to stockholder approval if necessary to comply with any tax, exchange rules, or other applicable regulatory requirement. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, stock, other securities or property), stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of stock or other securities, or similar transactions), the Company may not, without obtaining stockholder approval, (i) amend the terms of outstanding stock options or SARs to reduce the exercise price of such outstanding stock options or base amount of such SARs, (ii) cancel outstanding stock options or SARs in exchange for stock options or SARs with an exercise price or base amount, as applicable, that is less than the exercise price or base

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amount of the original stock options or SARs or (iii) cancel outstanding stock options or SARs with an exercise price or base amount, as applicable, above the current stock price in exchange for cash or other securities.

*Clawback/Forfeiture.* Awards may be subject to clawback or forfeiture to the extent required by a clawback or recoupment policy adopted by us or by the provisions of the Omnibus Incentive Plan or an award agreement.

***Employee Stock Purchase Plan***

Prior to the completion of this offering, our board of directors expects to adopt, and we expect our stockholders to approve, our Employee Stock Purchase Plan (the "ESPP") to become effective in connection with this offering, which will be intended to be an employee stock purchase plan under Section 423 of the Code. The ESPP is designed to allow our eligible employees to purchase shares of our common stock, at periodic intervals, with their accumulated payroll deductions. The maximum number of our shares of our common stock which will be authorized for sale under the ESPP is equal to shares of common stock. Our board of directors or its delegate may implement purchase and offering periods from time to time under the ESPP and may change the duration and timing of offering and purchase periods in its discretion. However, in no event may an offering period be longer than 27 months in length. The option purchase price will be no less than the lower of 85% of the closing trading price per share of our common stock on the first day of an offering period in which a participant is enrolled or 85% of the closing trading price per share on the purchase date. Our board of directors may amend, suspend or terminate the ESPP at any time. However, the board of directors may not amend the ESPP without obtaining stockholder approval within twelve months before or after such amendment to the extent required by applicable laws.

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**DIRECTOR COMPENSATION** 

**Director Compensation Table** 

During fiscal 2022, the following members of our board of directors received compensation from the company for their service:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name<sup>(1)</sup>** | **Fees Earned<br>or Paid in<br>Cash ($)<sup>(2)</sup>** | **Option<br>Awards ($)<sup>(4)</sup>** | **All Other<br>Compensation ($)<sup>(3)</sup>** | **Total ($)** |
|  William Allen | 75000 |  | 49300 | 124300 |
|  Robyn Collver | 75000 |  | 49300 | 124300 |
|  Aina E. Konold | 75000 | 261394 |  | 336394 |
|  Kristy Pipes | 100000 | 261394 |  | 361394 |
|  Duane Woods | 75000 |  | 49300 | 124300 |

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1) Mr. Walsh did not receive any additional compensation for his service on the board of directors apart from his compensation as CEO as set forth above in the Summary Compensation Table and so is not included in this table. Our directors who are associated with Ares did not receive compensation from us for their service on the board of directors and so are not included in this table. 

(2) The amounts in this column represent a $75,000 annual cash retainer, plus, for Ms. Pipes, an additional $25,000 for
service as chair of the audit committee. Although Ms. Collver's cash compensation was paid in Canadian dollars, the payment due was determined based on the amount of U.S. dollars set forth in this table, and then paid in Canadian dollars using
the exchange rate in effect at the time of payment.

(3) The amounts set forth in this column reflect a discretionary bonus paid in connection with the December 2022 Dividend in
recognition of business performance.

(4) The amounts in this column reflect the aggregate grant date fair value of these options granted during the fiscal year,
computed in accordance with FASB ASC 718. During fiscal 2022, each of Ms. Konold and Ms. Pipes received options to purchase 65,000 shares on February 18, 2022, vesting in four equal annual installments with the first vesting date on July 22, 2022
through July 22, 2025 (with a grant date fair value of $238,550), and options to purchase 4,643 shares on December 16, 2022, vesting in equal annual installments on the first five anniversaries of the grant date (with a grant date fair value of
$22,844), subject to continued service. For a description of the assumptions used to determine the grant date fair value of our stock options, see Note 13 to our consolidated financial statements included elsewhere in this prospectus. As of the last
day of fiscal 2022, the following directors held the following number of outstanding stock options: Mr. Allen, 140,875 options; Ms. Collver, 140,875 options; Ms. Konold 69,643 options; Ms. Pipes, 69,643 options; Mr. Woods, 140,875 options.

**Post-Offering Director Compensation Program** 

We are evaluating the specific terms of our director compensation program following this offering, but we anticipate that our non-employee directors will be eligible to receive cash and equity and will be reimbursed for out-of-pocket expenses in connection with their services. In connection with this offering, it is anticipated that each director will receive a grant of restricted stock units under the Omnibus Incentive Plan.

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**CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS** 

***Stockholders agreement***

In connection with this offering, we intend to enter into a Stockholders Agreement with the Ares Funds. Pursuant to the Stockholders Agreement, the Ares Funds will be entitled to designate individuals to be included in the slate of nominees for election to our board of directors as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• for so long as the Ares Funds own 40% or more of the outstanding shares of our common stock, the greater of up
to seven directors and the number of directors comprising a majority of our board; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• except as provided below, for so long as the Ares Funds own less than 40% of the outstanding shares of our common stock and
5% or more of the outstanding shares of our common stock, that number of directors (rounded up to the nearest whole number) that is the same percentage of the total number of directors comprising our board as the collective percentage of common
stock owned by the Ares Funds.

Notwithstanding the foregoing, if the Ares Funds at any time cease to own more than 5% of the outstanding shares of our common stock, the Ares Funds will not have the right to designate any directors. The Stockholders Agreement will also provide for the nomination to our board of directors, subject to his or her election by our stockholders at the annual meeting, of our chief executive officer. Each of the Ares Funds will agree, for so long as the Ares Funds hold more than 5% of the outstanding shares of our common stock, to vote all of the shares of common stock held by it in favor of the foregoing nominees.

The Stockholders Agreement will also provide that, for so long as the Ares Funds own at least 30% of the outstanding shares of our common stock, the following actions will require the prior written consent of the Ares Funds, subject to certain exceptions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• merging or consolidating with or into any other entity, or transferring all or substantially all of our assets, taken as a
whole, to another entity, or undertaking any transaction that would constitute a "Change of Control" as defined in our debt agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acquiring or disposing of assets, in a single transaction or a series of related transactions, or entering into joint
ventures, in each case with a value in excess of $ million;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incurring indebtedness in a single transaction or a series of related transactions in an aggregate principal amount in
excess of $ million;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issuing our or our subsidiaries' equity other than pursuant to an equity compensation plan approved by our
stockholders or a majority of the directors designated by the Ares Funds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• terminating the employment of our chief executive officer or hiring or designating a new chief executive officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• entering into any transactions, agreements, arrangements or payments with any other person who owns greater than or equal
to 10% of our common stock then outstanding that are material or involve aggregate payments or receipts in excess of $500,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• amending, modifying or waiving any provision of our organizational documents in a manner that adversely affects the Ares
Funds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• commencing any liquidation, dissolution or voluntary bankruptcy, administration, recapitalization or reorganization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increasing or decreasing the size of our board of directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• entering into of any agreement to do any of the foregoing.

The Stockholders Agreement will also grant the Ares Funds certain information rights.

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***Registration rights agreement***

In connection with this offering, we intend to enter into a registration rights agreement, or the Registration Rights Agreement, with the Ares Funds. Subject to certain conditions, the Registration Rights Agreement will provide the Ares Funds with unlimited "demand" registrations and unlimited "demand" registrations at any time we are eligible to register shares on Form S-3. Under the Registration Rights Agreement, the Ares Funds will be provided with shelf registration rights, subject to certain conditions and exceptions. We will also be required to cooperate in a customary manner in connection with dispositions of common stock under the registration statements filed under the Registration Rights Agreement. The Registration Rights Agreement will also provide the Ares Funds with customary "piggyback" registration rights. The Registration Rights Agreement will also provide that we will pay certain expenses of these holders relating to such registrations and indemnify them against certain liabilities which may arise under the Securities Act.

This summary does not purport to be complete and is subject to and qualified in its entirety by the Registration Rights Agreement, a copy of which will be filed as an exhibit to the registration statement of which this prospectus is a part.

***Corporate Conversion***

Prior to January 7, 2022, we operated as a Delaware limited liability company under the name S-Evergreen Holding LLC. On January 7, 2022, we converted into a Delaware corporation and changed our name to Savers Value Village, Inc. In the Corporate Conversion, all of our outstanding equity interests were converted into shares of common stock.

The purpose of the Corporate Conversion was to reorganize our structure so that the entity that is offering our common stock to the public in this offering is a corporation rather than a limited liability company and so that our existing investors and new investors purchasing in this offering will own our common stock rather than equity interests in a limited liability company.

***Indemnification of officers and directors***

Following completion of this offering, our certificate of incorporation and bylaws will provide that we will indemnify each of our directors and officers to the fullest extent permitted by Delaware law. In addition, we have entered, or will enter, into indemnification agreements with each of our directors and executive officers. See "Description of Capital Stock—Limitations of Liability, Indemnification and Advancement" below for more details.

***Purchases of products in the ordinary course of business***

Certain of our related persons may, either directly or through their respective affiliates, enter into commercial transactions with us from time to time in the ordinary course of business, primarily for the purchase of merchandise. We believe that none of the transactions with such persons is significant enough to be considered material to such persons or to us.

***Related persons transaction policy***

We have adopted formal written procedures for the review, approval or ratification of transactions with related persons, or the Related Persons Transaction Policy. The Related Persons Transaction Policy provides that the audit committee of our board of directors is charged with reviewing for approval or ratification all transactions with "related persons" (as defined in paragraph (a) of Item 404 of

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Regulation S-K) that are brought to the audit committee's attention. This policy was adopted on , 2022 and will take effect upon the effectiveness of our certificate of incorporation in connection with this offering, and as a result, certain of the transactions entered into prior to that date were not reviewed under the policy.

We also maintain certain compensation agreements and other arrangements with certain of our executive officers, which are described under "Executive Compensation" elsewhere in this prospectus.

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**PRINCIPAL AND SELLING STOCKHOLDERS** 

The following table sets forth the beneficial ownership of our common stock (i) as of and (ii) immediately following this offering, as adjusted to reflect the sale of shares of common stock by us, in each case, by the following individuals or groups:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each of our directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each of our named executive officers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all of our directors and executive officers as a group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each selling stockholder; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock.

The percentage ownership information shown in the table prior to this offering is based upon shares of common stock outstanding as of , after giving effect to the Corporate Conversion. The percentage ownership information shown in the table after this offering is based upon shares of common stock outstanding as of , after giving effect to the sale of shares of common stock by us in this offering and assuming no exercise of the underwriters' option to purchase additional shares.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities, or have the right to acquire such powers within 60 days. Under these rules, more than one person may be deemed beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options or warrants that are either immediately exercisable or exercisable on or before , 2023, which is 60 days after , 2023. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

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Except as otherwise noted below, the address for persons listed in the table is c/o Savers Value Village, Inc., 11400 S.E. 6th Street, Suite 125, Bellevue, WA 98004.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Shares Beneficially Owned<br>Prior to this Offering** | **Shares Beneficially Owned<br>Prior to this Offering** | **Shares Beneficially Owned<br>Prior to this Offering** | **Shares Beneficially Owned<br>Following this Offering** | **Shares Beneficially Owned<br>Following this Offering** | **Shares Beneficially Owned<br>Following this Offering** |
| **Name of Beneficial Owner** | **Shares** | **%** | **% of Total<br>Voting<br>Power** | **Shares** | **%** | **% of Total<br>Voting<br>Power** |
|  **Directors<sup>(1)</sup>:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Scott Graves |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Aaron Rosen |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Robyn Collver |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; William Allen |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Duane Woods |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Aina Konold |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Kristy Pipes |  |  |  |  |  |  |
|  **Named Executive Officers:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mark Walsh |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jay Stasz |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charles Hunsinger |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Directors and executive officers as a group |  |  |  |  |  |  |
|  **5% or Greater Stockholders:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares Management Corporation<sup>(1)</sup><br> \* Represents beneficial ownership of less than 1%. |  |  |  |  |  |  |

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(1) Includes shares held by Ares Corporate Opportunities Fund V, L.P. ("ACOF V"), ASSF IV AIV B Holdings III, L.P.
("ASSF IV AIV Holdings"), ASSF IV AIV B, L.P. ("ASSF IV AIV") and ASOF Holdings I, L.P. ("ASOF Holdings I" and, collectively with ACOF V, ASSF IV AIV Holdings and ASSF IV AIV, the "Ares Holders"). The manager
of ACOF V is ACOF Investment Management LLC and the sole member of ACOF Investment Management LLC is Ares Management LLC. The general partner of ASSF IV AIV Holdings is ASSF IV AIV B Holdings III GP LLC ("ASSF IV AIV Holdings GP") and the
sole member of ASSF IV AIV Holdings GP is ASSF IV AIV. The manager of ASSF IV AIV is ASSF Operating Manager IV, L.P. and the general partner of ASSF Operating Manager IV, L.P. is Ares Management LLC. The manager of ASOF Holdings I is ASOF Investment
Management LLC and the sole member of ASOF Investment Management LLC is Ares Management LLC. The sole member of Ares Management LLC is Ares Management Holdings L.P. and the general partner of Ares Management Holdings L.P. is Ares Holdco LLC. The
sole member of Ares Holdco LLC is Ares Management Corporation. Ares Management Corporation is indirectly controlled by Ares Partners Holdco LLC. We refer to all of the foregoing entities collectively as the Ares Entities. Ares Partners Holdco LLC is
managed by a board of managers, which is composed of Michael Arougheti, Ryan Berry, R. Kipp deVeer, David Kaplan, Antony Ressler and Bennett Rosenthal. Mr. Ressler generally has veto authority over decisions by the board of managers of Ares Partners
Holdco LLC. Each of the members of the board of managers expressly disclaims beneficial ownership of our shares of common stock owned by the Ares Holders. Each of the Ares Entities (other than the Ares Holders, with respect to the securities owned
by them, respectively) and the equityholders, partners, members and managers of the Ares Entities and the executive committee of Ares Partners Holdco LLC expressly disclaims beneficial ownership of these shares. Also includes
 shares held by an account managed by ASSF Operating Manager IV, L.P. with respect to which the Ares Entities may be deemed to have shared voting or
dispositive power with the owner of such account. The address of each Ares Entity is 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067.

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**DESCRIPTION OF CAPITAL STOCK** 

The following descriptions are summaries of our capital stock, certain provisions of our certificate of incorporation and bylaws, as each will be in effect upon the completion of this offering, and certain provisions of Delaware law. The description below reflects the completion of the Corporate Conversion. Please note that these summaries are not intended to be exhaustive. For further information, you should also refer to the full versions of our certificate of incorporation and the bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.

**General** 

Upon the completion of this offering, our authorized capital stock will consist of shares of common stock, par value $0.001 per share and shares of preferred stock, par value $0.001 per share.

As of , 2022, after giving effect to the Corporate Conversion, there were shares of our common stock outstanding, held of record by stockholders. No shares of our preferred stock are designated, issued or outstanding.

**Common Stock** 

***Voting rights***

Each share of our common stock entitles its holder to one vote per share on all matters to be voted upon by the stockholders. There is no cumulative voting, which means that a holder or group of holders of more than 40% of the shares of our common stock can elect all of our directors. For a description of the Stockholders Agreement, see "Certain Relationships and Related Party Transactions—Stockholders Agreement."

***Dividend rights***

The holders of our common stock are entitled to receive dividends when and as declared by our board of directors from legally available sources, subject to the prior rights of the holders of our preferred stock, if any. See "Dividend Policy."

***Preemptive or similar rights***

Our common stock is not entitled to preemptive rights. The rights of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that our board of directors may designate and issue in the future.

***Liquidation rights***

Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time after payment of liquidation preferences, if any, on any outstanding shares of preferred stock and payment of claims of creditors.

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**Preferred Stock** 

Our board of directors is authorized to issue up to shares of our preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, to fix the designation, powers, preferences and rights of the shares of each series and any qualifications, limitations or restrictions thereof, in each case without further action by our stockholders. Subject to the terms of any series of preferred stock so designated, our board of directors is also authorized to increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding. Our board of directors may authorize the issuance of preferred stock with voting or conversion or other rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control and could adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. We have no current plan to issue any shares of preferred stock in the foreseeable future.

**Anti-Takeover Provisions** 

Below are brief summaries of various anti-takeover provisions contained primarily in our organizational documents. We believe the benefits of these provisions, including increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company, outweigh the disadvantages of discouraging takeover proposals, because negotiation of takeover proposals could result in an improvement of their terms.

***Anti-takeover statute***

Our certificate of incorporation provides that we are not governed by Section 203 of the DGCL which, in the absence of such provisions, would have imposed additional requirements regarding mergers and other business combinations.

However, our certificate of incorporation, which will become effective on the consummation of this offering, will include a provision that restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder. These restrictions will not apply to any business combination involving Ares or any affiliate of Ares, including the Ares Funds, or their respective direct and indirect transferees, on the one hand, and us, on the other.

Additionally, we would be able to enter into a business combination with an interested stockholder if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• before that person became an interested stockholder, our board of directors approved the transaction in which the
interested stockholder became an interested stockholder or approved the business combination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• upon consummation of the transaction that resulted in the interested stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested
stockholder) stock held by directors who are also officers of our company and by employee stock plans that do not provide employees with the right to determine confidentially whether shares held under the plan will be tendered in a tender or
exchange offer; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• following the transaction in which that person became an interested stockholder, the business combination is approved by
our board of directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least 66 2/3% of our outstanding voting stock not owned by the interested stockholder.

In general, a "business combination" is defined to include mergers, asset sales and other transactions resulting in financial benefit to a stockholder and an "interested stockholder" is any person who, together with affiliates and associates, is the owner of 15% or more of our outstanding voting stock or is our affiliate or associate and was the owner of 15% or more of our outstanding voting stock at any time within the three-year period immediately before the date of determination. Under our certificate of incorporation, an "interested stockholder" generally does not include Ares or any affiliate of Ares, including the Ares Funds, or their respective direct and indirect transferees.

This provision of our certificate of incorporation could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

***Anti-takeover effects of certain provisions of our certificate of incorporation and bylaws to be in effect upon the completion of this offering***

*Undesignated preferred stock* 

As discussed above, subject to the terms of the Stockholders Agreement, our board of directors will have the ability to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management.

*Action by written consent; special meetings of stockholders* 

Our certificate of incorporation will provide that, from and after the Trigger Date, our stockholders may not act by written consent, which may lengthen the amount of time required to take stockholder actions. As a result, following the Trigger Date, a holder controlling a majority of our common stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our bylaws. In addition, our certificate of incorporation will provide that, from and after the Trigger Date, special meetings of the stockholders may be called only by the chairperson of our board of directors, our Chief Executive Officer or our board of directors. Following the Trigger Date, stockholders may not call a special meeting of stockholders, which may delay the ability of our stockholders to force consideration of a proposal or for holders controlling a majority of our common stock to take any action, including the removal of directors.

*Advance notice procedures* 

Our bylaws will establish advance notice procedures with respect to stockholder proposals and stockholder nomination of candidates for election as directors. These provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of us.

*Board classification* 

Our certificate of incorporation, which will be in effect upon the completion of this offering, provides for a board of directors comprised of three classes of directors, with each class serving a three-year

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term beginning and ending in different years than those of the other two classes. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. The classification of our board of directors and the limitations on the ability of our stockholders to remove directors without cause following the Trigger Date could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of us.

*Removal of directors; vacancies* 

From and after the Trigger Date, directors may only be removed for cause by the affirmative vote of at least two-thirds of the voting power of our outstanding common stock. Prior to the Trigger Date, directors may be removed with or without cause by the affirmative vote of at least a majority of the voting power of our outstanding common stock. Except in the case of a vacancy arising with respect to a director designated by the Ares Funds where they continue to have a right of designation pursuant to the Stockholders Agreement, our board of directors has the sole power to fill any vacancy on our board of directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise.

*No cumulative voting* 

Because our stockholders will not have cumulative voting rights, stockholders holding a majority of the voting power of the common stock outstanding will be able to elect all of our directors. The absence of cumulative voting makes it more difficult for a minority stockholder to nominate and elect a director to our board of directors in order to influence our board of directors' decision regarding a takeover or otherwise.

**Amendment of Charter and Bylaw Provisions** 

Subject to the terms of the Stockholders Agreement, following the Trigger Date, the amendment of certain of the provisions of our certificate of incorporation described in this prospectus will require approval by holders of at least two-thirds of the voting power of our outstanding common stock. Subject to the terms of the Stockholders Agreement, our certificate of incorporation will provide that our board of directors may from time to time adopt, amend, alter or repeal our bylaws without stockholder approval. Subject to the terms of the Stockholders Agreement, the stockholders may adopt, amend, alter or repeal our bylaws by the affirmative vote of a majority of the voting power of our outstanding common stock (other than certain specified bylaws which, following the Trigger Date, will require the affirmative vote of two-thirds of our outstanding common stock).

In addition, following the completion of this offering, the Stockholders Agreement will provide that, for so long as the Ares Funds own at least 30% of the outstanding shares of our common stock, certain significant corporate actions will require the prior written consent of the Ares Funds, subject to certain exceptions. If the Ares Funds own less than 5% of the outstanding shares of our common stock, such action will not be subject to the approval of the Ares Funds and the shares of common stock owned by the Ares Funds will be excluded in calculating the 30% threshold. See "Certain Relationships and Related Party Transactions—Stockholders Agreement."

The combination of these provisions will make it more difficult for another party to obtain control of us by replacing our board of directors. Because our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for another party to effect a change in management.

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These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage coercive takeover practices and inadequate takeover bids.

These provisions are also designed to reduce our vulnerability to hostile takeovers and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and may have the effect of delaying changes in our control or management.

**Corporate Opportunity** 

Our amended and restated certificate of incorporation will provide that, to the fullest extent permitted by law, the doctrine of "corporate opportunity" will not apply against the Ares Funds, any of our non-employee directors or any of their respective affiliates in a manner that would prohibit them from investing in competing businesses. See "Risk Factors—The continuing control after this offering of our company, including the right to designate individuals to be included in the slate of nominees for election to our board of directors, by the Ares Funds, whose interests may conflict with our interests and those of other stockholders. As such, the Ares Funds may be able to influence or control our affairs and policies following the completion of this offering."

**Choice of Forum** 

Our amended and restated certificate of incorporation to be in effect upon the closing of this offering will provide that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of us, (ii) action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or stockholders to us or our stockholders, creditors, or other constituents, (iii) action asserting a claim arising out of or relating to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or our amended and restated by-laws (as either may be amended and/or restated from time to time), or (iv) action asserting a claim against us or any of our directors or officers that is governed by the internal affairs doctrine; provided, that, if the Court of Chancery of the State of Delaware does not have jurisdiction, such action may be brought in another state court sitting in the State of Delaware, or if no state court of the State of Delaware has jurisdiction, the federal district court for the District of Delaware, unless we consent in writing to the selection of an alternative forum. Additionally, our amended and restated certificate of incorporation will state that the foregoing provision will not apply to claims arising under the Securities Act, the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction. Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, the Exchange Act or such other federal securities law. The exclusive forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers or stockholders, which may discourage lawsuits with respect to such claims. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder as a result of our exclusive forum provisions. See "Risk Factors—Risks relating to this offering and ownership of our common stock—Our certificate of incorporation, which will be in effect upon the completion of this offering, will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for a wide range of disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees."

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**Limitations of Liability, Indemnification and Advancement** 

Upon the completion of this offering, our certificate of incorporation and bylaws will provide that we will indemnify and advance expenses to our directors and officers, and may indemnify and advance expenses to our employees and other agents, to the fullest extent permitted by Delaware law, which prohibits our certificate of incorporation from limiting the liability of our directors for the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any breach of the director's duty of loyalty to us or to our stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unlawful payment of dividends or unlawful stock repurchases or redemptions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any transaction from which the director derived an improper personal benefit.

If Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. Our certificate of incorporation will not eliminate a director's duty of care and, in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, remain available under Delaware law. This provision also does not affect a director's responsibilities under any other laws, such as the federal securities laws or other state or federal laws. Under our certificate of incorporation and bylaws, we will also be empowered to purchase insurance on behalf of any person whom we are required or permitted to indemnify.

In addition to the indemnification and advancement of expenses required in our certificate of incorporation and bylaws, we intend to enter into indemnification agreements with each of our current directors and executive officers. These agreements will provide for the indemnification of, and the advancement of expenses to, such persons for all reasonable expenses and liabilities, including attorneys' fees, judgments, fines and settlement amounts, incurred in connection with any action or proceeding brought against them by reason of the fact that they are or were serving in such capacity. We believe that these charter and bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors' and officers' liability insurance.

The limitation of liability, indemnification and advancement provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder's investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification or advancement by any director or officer.

**Transfer Agent and Registrar** 

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC. The transfer agent's address is 48 Wall Street, 22nd Floor, New York, New York 10005, Attention: Legal Department.

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**Listing** 

We intend to apply to have our common stock approved for listing on the NYSE under the symbol "SVV."

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**SHARES ELIGIBLE FOR FUTURE SALE** 

Prior to this offering, no public market existed for our capital stock. Future sales of substantial amounts of common stock in the public market, the availability of shares for future sale or the perception that such sales may occur, could adversely affect the market price of our common stock and/or impair our ability to raise equity capital.

Upon the completion of this offering, shares of our common stock will be outstanding, or shares of common stock if the underwriters exercise their option to purchase additional shares from us in full.

All of the shares of common stock sold in this offering will be freely tradable without restrictions or further registration under the Securities Act, except for any shares sold to our "affiliates," as defined in Rule 144 under the Securities Act, or Rule 144. The outstanding shares of our common stock held by existing stockholders are "restricted securities," as defined in Rule 144. Restricted securities may be sold in the public market only if the offer and sale is registered under the Securities Act or if the offer and sale of those securities qualifies for exemption from registration, including exemptions provided by Rule 144 or Rule 701 under the Securities Act, or Rule 701.

As a result of lock-up agreements described below and the provisions of Rules 144 and 701, shares of our common stock will be available for sale in the public market as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock
will be eligible for immediate sale upon the completion of this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approximately shares of
common stock, will be eligible for sale upon expiration of lock-up agreements described below, beginning 181 days after the date of this prospectus, subject in certain circumstances to the volume, manner of
sale and other limitations under Rules 144 and 701.

We may issue shares of our capital stock from time to time for a variety of corporate purposes, including in capital-raising activities through future public offerings or private placements, in connection with the exercise of stock options and warrants, vesting of RSUs and other issuances relating to our employee benefit plans and as consideration for future acquisitions, investments or other purposes. The number of shares of our capital stock that we may issue may be significant, depending on the events surrounding such issuances. In some cases, the shares we issue may be freely tradable without restriction or further registration under the Securities Act; in other cases, we may grant registration rights covering the shares issued in connection with these issuances, in which case the holders of the shares will have the right, under certain circumstances, to cause us to register any resale of such shares to the public.

***Rule 144***

In general, persons who have beneficially owned restricted shares of our common stock for at least six months, and any affiliate of ours who owns either restricted or unrestricted shares of our common stock, are entitled to sell their securities without registration with the SEC under an exemption from registration provided by Rule 144.

*Non-affiliates* 

Any person who is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale may sell an unlimited number of restricted securities under Rule 144 if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the restricted securities have been held for at least six months, including the holding period of any prior owner other
than one of our affiliates;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we have been subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we are current in our Exchange Act reporting at the time of sale.

Any person who is not deemed to have been an affiliate of ours at the time of, or at any time during the three months preceding, a sale and has held the restricted securities for at least one year, including the holding period of any prior owner other than one of our affiliates, will be entitled to sell an unlimited number of restricted securities without regard to the length of time we have been subject to Exchange Act periodic reporting or whether we are current in our Exchange Act reporting.

*Affiliates* 

Persons seeking to sell restricted securities who are our affiliates at the time of, or any time during the three months preceding, a sale would be subject to the restrictions described above. Sales of restricted or unrestricted shares of our common stock by affiliates are also subject to additional restrictions, by which such person would be required to comply with the manner of sale and notice provisions of Rule 144 and would be entitled to sell within any three-month period only that number of securities that does not exceed the greater of either of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 1% of the number of shares of our common stock then outstanding, which will equal approximately shares immediately
following the completion of this offering (or shares if the underwriters exercise their option to purchase additional shares in full); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to the sale.

***Rule 701***

In general, under Rule 701, a person who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been one of our affiliates during the immediately preceding 90 days may sell these shares in reliance upon Rule 144, but without being required to comply with the holding period, notice, manner of sale, public information requirements or volume limitation provisions of Rule 144. Rule 701 also permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701, subject to the expiration of the lock-up agreements described below.

***Lock-up Agreements***

In connection with this offering, we and our officers, directors and holders of substantially all of our common stock and securities convertible into or exercisable for our common stock, including the Ares Funds and the selling stockholders, have agreed, or will agree, with the underwriters that, until 180 days after the date of this prospectus, we and they will not, without the prior written consent of J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Jefferies LLC on behalf of the underwriters, offer, sell or transfer any of our shares of common stock or securities convertible into or exchangeable for our common stock.

The agreements do not contain any pre-established conditions to the waiver by J.P. Morgan Securities LLC, Goldman Sachs & Co. and Jefferies LLC on behalf of the underwriters of any terms of the lock-up agreements. Any determination to release shares subject to the lock-up agreements would be based on a number of factors at the time of determination, including but not necessarily limited to the market price of the common stock, the liquidity of the trading market for the common stock, general market conditions, the number of shares proposed to be sold and the timing, purpose and terms of the proposed sale.

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In addition to the restrictions contained in the lock-up agreements described above, we have entered into agreements with certain of our security holders, including our stockholders agreement and agreements governing our equity awards, that contain market stand-off provisions imposing restrictions on the ability of such security holders to offer, sell or transfer our equity securities for a period of 180 days following the date of this prospectus.

***Registration Rights***

Following the completion of this offering, under the Registration Rights Agreement, subject to certain conditions, the Ares Funds will have unlimited "demand" registrations and unlimited demand registrations at any time we are eligible to register shares on Form S-3. Under the Registration Rights Agreement, the Ares Funds will be provided with shelf registration rights, subject to certain conditions and exceptions, as soon as we become eligible to register shares on Form S-3. We will also be required to cooperate in a customary manner in connection with dispositions of common stock under the registration statements filed under the Registration Rights Agreement. The Ares Funds will also have customary "piggy-back" registration rights. The Registration Rights Agreement will also provide that we will pay certain expenses of these holders relating to such registrations and indemnify them against certain liabilities which may arise under the Securities Act. Following completion of this offering, the shares covered by such registration rights would represent approximately % of our outstanding common stock (or approximately % of our outstanding common stock if the underwriters exercise their option to purchase additional shares in full). These shares also may be sold under Rule 144, depending on their holding period and subject to restrictions in the case of shares held by persons deemed to be our affiliates. For a description of the rights that the Ares Funds and certain members of management will have to require us to register shares of common stock they own, see "Certain Relationships and Related Party Transactions—Registration Rights Agreement."

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**MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS** 

The following is a discussion of material U.S. federal income tax considerations applicable to Non-U.S. Holders (as defined herein) with respect to the ownership and disposition of our common stock issued pursuant to this offering. The following discussion is based upon current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), U.S. judicial decisions, administrative pronouncements and existing and proposed Treasury regulations, all as in effect as of the date hereof. All of the preceding authorities are subject to change at any time, possibly with retroactive effect, so as to result in U.S. federal income tax consequences different from those discussed below. We have not requested, and will not request, a ruling from the IRS with respect to any of the U.S. federal income tax consequences described below, and as a result there can be no assurance that the IRS will not disagree with or challenge any of the conclusions we have reached and describe herein.

This discussion only addresses beneficial owners of our common stock that hold such common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be important to a Non-U.S. Holder in light of such Non-U.S. Holder's particular circumstances or that may be applicable to Non-U.S. Holders subject to special treatment under U.S. federal income tax law, including, for example, financial institutions; dealers in securities; traders in securities that elect mark-to-market treatment; insurance companies; tax-exempt entities; Non-U.S. Holders who acquire our common stock pursuant to the exercise of employee stock options or otherwise as compensation for their services; Non-U.S. Holders liable for the alternative minimum tax; controlled foreign corporations; passive foreign investment companies; former citizens or former long-term residents of the United States; Non-U.S. Holders that hold our common stock as part of a hedge, straddle, constructive sale or conversion transaction; Non-U.S. Holders that are required to report income no later than when such income is reported in an "applicable financial statement"; and Non-U.S. Holders that are foreign governments and other entities that are eligible for the benefits of Section 892 of the Code. In addition, this discussion does not address U.S. federal tax laws other than those pertaining to U.S. federal income tax (such as U.S. federal estate or gift tax or the Medicare contribution tax on certain net investment income), nor does it address any aspects of U.S. state, local or non-U.S. taxes. Non-U.S. Holders are urged to consult with their tax advisors regarding the possible application of these taxes.

For purposes of this discussion, the term "Non-U.S. Holder" means a beneficial owner of our common stock that is an individual, corporation, estate or trust, other than:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an individual who is a citizen or resident of the United States, as determined for U.S. federal income tax purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in the
United States or under the laws of the United States, any state thereof or the District of Columbia;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source;
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a trust if: (i) a court within the United States is able to exercise primary supervision over the administration of
the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a domestic trust.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of our common stock, the tax treatment of a person treated as a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Persons that, for

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U.S. federal income tax purposes, are treated as partners in a partnership holding shares of our common stock are urged to consult their tax advisors.

Prospective purchasers are urged to consult their tax advisors as to the particular consequences to them under U.S. federal, state and local and applicable foreign tax laws of the acquisition, ownership and disposition of our common stock.

**Distributions** 

Distributions of cash or property that we pay in respect of our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Subject to the discussions below under "—U.S. Trade or Business Income," "—Information Reporting and Backup Withholding" and "—FATCA," you generally will be subject to U.S. federal withholding tax at a 30% rate, or at a reduced rate prescribed by an applicable income tax treaty (if you qualify for the benefits of such tax treaty), on any dividends received in respect of our common stock. If the amount of the distribution exceeds our current and accumulated earnings and profits, such excess first will be treated as a return of capital to the extent of your tax basis in our common stock and thereafter will be treated as capital gain. However, except to the extent that we elect (or the paying agent or other intermediary through which you hold your common stock elects) otherwise, we (or the intermediary) must generally withhold on the entire distribution, in which case you would be entitled to a refund from the IRS for the withholding tax on the portion of the distribution that exceeded our current and accumulated earnings and profits.

In order to obtain a reduced rate of U.S. federal withholding tax under an applicable income tax treaty, you will be required to provide a properly executed IRS Form W-8BEN or Form W-8BEN-E (or, in each case, a successor form) certifying your entitlement to benefits under the treaty. If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty but do not provide the documentation described in the preceding sentence, you may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for a refund with the IRS. You are urged to consult your tax advisor regarding your possible entitlement to benefits under an applicable income tax treaty.

**Sale, Exchange or Other Taxable Disposition of Common Stock** 

Subject to the discussions below under "—U.S. Trade or Business Income," "—Information Reporting and Backup Withholding" and "—FATCA," you generally will not be subject to U.S. federal income or withholding tax in respect of any gain on a sale, exchange or other taxable disposition of our common stock unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the gain is U.S. trade or business income, in which case, such gain will be taxed as described in "—U.S. Trade or
Business Income" below;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• you are an individual who is present in the United States for 183 or more days in the taxable year of the disposition and
certain other conditions are met, in which case you will be subject to U.S. federal income tax at a rate of 30% (or a reduced rate under an applicable income tax treaty) on the amount by which certain capital gains allocable to U.S. sources exceed
certain capital losses allocable to U.S. sources; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we are or have been a "United States real property holding corporation" (a "USRPHC") under
Section 897 of the Code at any time during the shorter of the five-year period ending on the

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date of the disposition and your holding period for the common stock, in which case, subject to the exception set forth in the second sentence of the next paragraph, such gain will be subject to U.S. federal income tax in the same manner as U.S. trade or business income discussed below.

In general, a corporation is a USRPHC if the fair market value of its "United States real property interests" (as defined in the Code) equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. In the event that we are determined to be a USRPHC, your gain on a sale, exchange or other taxable disposition of our common stock will not be subject to tax as U.S. trade or business income if your holdings (direct and indirect) at all times during the applicable period described in the third bullet point above constituted 5% or less of our common stock, provided that our common stock was regularly traded on an established securities market during such period. We believe that we are not currently, and we do not anticipate becoming in the future, a USRPHC for U.S. federal income tax purposes.

**U.S. Trade or Business Income** 

For purposes of this discussion, your dividend income with respect to our common stock and gain on the sale, exchange or other taxable disposition of our common stock will be considered to be "U.S. trade or business income" if (A)(i) such income or gain is effectively connected with your conduct of a trade or business within the United States and (ii) if you are eligible for the benefits of an income tax treaty with the United States and such treaty so requires, such income or gain is attributable to a permanent establishment (or, if you are an individual, a fixed base) that you maintain in the United States or (B) with respect to gain, we are or have been a USRPHC at any time during the shorter of the five-year period ending on the date of the disposition of our common stock and your holding period for our common stock (subject to the 5% ownership exception set forth above in the second paragraph of "—Sale, Exchange or Other Taxable Disposition of Common Stock"). Generally, U.S. trade or business income is not subject to U.S. federal withholding tax (provided that you comply with applicable certification and disclosure requirements, including providing a properly executed IRS Form W-8ECI (or successor form)); instead, such income is subject to U.S. federal income tax on a net basis at regular U.S. federal income tax rates (generally in the same manner as a U.S. person). If you are a corporation, any U.S. trade or business income that you receive may also be subject to a "branch profits tax" at a 30% rate, or at a lower rate prescribed by an applicable income tax treaty.

**Information Reporting and Backup Withholding** 

We must annually report to the IRS and to each Non-U.S. Holder any dividend income that is subject to U.S. federal withholding tax or that is exempt from such withholding pursuant to an income tax treaty. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which a Non-U.S. Holder resides. Under certain circumstances, the Code imposes a backup withholding obligation on certain reportable payments. Dividends paid to you will generally be exempt from backup withholding if you provide a properly executed IRS Form W-8BEN, Form W-8BEN-E or W-8ECI (or, in each case, a successor form) or otherwise establish an exemption and the applicable withholding agent does not have actual knowledge or reason to know that you are a U.S. person or that the conditions of such other exemption are not, in fact, satisfied.

The payment of the proceeds from the disposition of our common stock to or through the U.S. office of any broker (U.S. or non-U.S.) will be subject to information reporting and possible backup withholding unless you certify as to your non-U.S. status under penalties of perjury or otherwise

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establish an exemption and the broker does not have actual knowledge or reason to know that you are a U.S. person or that the conditions of any other exemption are not, in fact, satisfied. The payment of proceeds from the disposition of our common stock to or through a non-U.S. office of a non-U.S. broker will not be subject to information reporting or backup withholding unless the non-U.S. broker has certain types of relationships with the United States (a "U.S. related financial intermediary"). In the case of the payment of proceeds from the disposition of our common stock to or through a non-U.S. office of a broker that is either a U.S. person or a U.S. related financial intermediary, the Treasury regulations require information reporting (but not backup withholding) on the payment unless the broker has documentary evidence in its files that the owner is not a U.S. person and the broker has no knowledge to the contrary. You are urged to consult your tax advisor regarding the application of information reporting and backup withholding in light of your particular circumstances.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to you will be refunded or credited against your U.S. federal income tax liability, if any, provided that the required information is timely furnished to the IRS.

**FATCA** 

Pursuant to Section 1471 through 1474 of the Code, commonly referred to as the Foreign Account Tax Compliance Act ("FATCA"), foreign financial institutions (which include most foreign hedge funds, private equity funds, mutual funds, securitization vehicles and any other investment vehicles) and certain other foreign entities that do not otherwise qualify for an exemption must comply with information reporting rules with respect to their U.S. account holders and investors or be subject to a withholding tax on U.S. source payments made to them (whether received as a beneficial owner or as an intermediary for another party).

More specifically, a foreign financial institution or other foreign entity that does not comply with the FATCA reporting requirements or otherwise qualify for an exemption will generally be subject to a 30% withholding tax with respect to any "withholdable payments." For this purpose, withholdable payments generally include U.S.-source payments otherwise subject to nonresident withholding tax (e.g., U.S.-source dividends) and, subject to the following two sentences, also include the entire gross proceeds from the sale of any equity instruments of U.S. issuers (such as our common stock). The U.S. Department of the Treasury has released proposed regulations which, if finalized in their present form, would eliminate the U.S. federal withholding tax applicable to the gross proceeds from a sale or disposition of equity instruments. In its preamble to the proposed regulations, the U.S. Department of the Treasury stated that taxpayers may generally rely on the proposed regulations until final regulations are issued. The FATCA withholding tax will apply even if the payment would otherwise not be subject to U.S. nonresident withholding tax. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.

To avoid withholding imposed under FATCA, you may be required to provide us (or our withholding agents) with applicable tax forms or other information. You are urged to consult with your tax advisor regarding the effect, if any, of the FATCA provisions to you based on your particular circumstances.

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**UNDERWRITING** 

We and the selling stockholders are offering the shares of common stock described in this prospectus through a number of underwriters. J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, Jefferies LLC and UBS Securities LLC are acting as joint book-running managers of the offering and as representatives of the underwriters (the "Representatives"). We and the selling stockholders have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, we and the selling stockholders have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of shares of common stock listed next to its name in the following table:

---

| | |
|:---|:---|
| **Name** | **Number of shares<br>of common stock** |
|  J.P. Morgan Securities LLC |  |
|  Goldman Sachs & Co. LLC |  |
|  Jefferies LLC |  |
|  UBS Securities LLC |  |
|  Robert W. Baird & Co. Incorporated |  |
|  CIBC World Markets Corp. |  |
|  Guggenheim Securities, LLC |  |
|  Piper Sandler & Co. |  |
|  Total |  |

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The underwriters are committed to purchase all the common stock offered by us and the selling stockholders if they purchase any shares of common stock. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or the offering may be terminated.

The underwriters propose to offer the common stock directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share. The offering of the shares by the underwriters is subject to receipt and acceptance subject to the underwriters' right to reject any order in whole or in part. After the initial offering of the shares of common stock to the public, if all of the shares of common stock are not sold at the initial public offering price, the underwriters may change the offering price and the other selling terms. Sales of any shares of common stock made outside of the United States may be made by affiliates of the underwriters.

The underwriters have an option to buy up to additional shares of common stock from us and the selling stockholders to cover sales of common stock by the underwriters which exceed the number of shares of common stock specified in the table above. The underwriters have 30 days from the date of this prospectus to exercise this option to purchase additional shares of common stock. If any shares of common stock are purchased with this option to purchase additional common stock, the underwriters will purchase common stock in approximately the same proportion as shown in the table above. If any additional shares of common stock are purchased, the underwriters will offer the additional shares of common stock on the same terms as those on which the shares of common stock are being offered.

The underwriting fee is equal to the public offering price per share less the amount paid by the underwriters to us and the selling stockholders per share. The underwriting fee is $ per share. The following table shows the per share and total underwriting discounts and commissions to be paid

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to the underwriters assuming both no exercise and full exercise of the underwriters' option to purchase additional shares of common stock.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Savers Value Village, Inc.** | **Savers Value Village, Inc.** | **Selling Stockholders** | **Selling Stockholders** |
|  | **No Exercise** | **Full Exercise** | **No Exercise** | **Full Exercise** |
|  Per Share | $| $| $| $|
|  Total | $| $| $| $|

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We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $. We have also agreed to reimburse the underwriters for certain of their expenses in an amount up to $30,000.

A prospectus in electronic format may be made available on the web sites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares of common stock to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations.

We have agreed that we will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, or submit to, or file with, the Securities and Exchange Commission a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exercisable or exchangeable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, loan, disposition or filing, or (ii) enter into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any shares of common stock or any such other securities (regardless of whether any of these transactions are to be settled by the delivery of common stock or such other securities, in cash or otherwise), in each case without the prior written consent of J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Jefferies LLC for a period of 180 days after the date of this prospectus, other than the shares of our common stock to be sold in this offering.

The restrictions on our actions, as described above, do not apply to certain transactions, including (i) the issuance of shares of common stock or securities convertible into or exercisable for shares of our common stock pursuant to the conversion or exchange of convertible or exchangeable securities or the exercise of warrants or options (including net exercise) or the settlement of RSUs (including net settlement), in each case outstanding on the date of the underwriting agreement and described in this prospectus; (ii) grants of stock options, stock awards, restricted stock, RSUs, or other equity awards and the issuance of shares of our common stock or securities convertible into or exercisable or exchangeable for shares of our common stock (whether upon the exercise of stock options or otherwise) to our employees, officers, directors, advisors, or consultants pursuant to the terms of an equity compensation plan in effect as of the closing of this offering and described in this prospectus, provided that such recipients enter into a lock-up agreement with the underwriters; (iii) the issuance of up to % of the outstanding shares of our common stock, or securities convertible into, exercisable for, or which are otherwise exchangeable for, our common stock, immediately following the closing of this offering, in acquisitions or other similar strategic transactions, provided that such recipients enter into a lock-up agreement with the underwriters; or (iv) our filing of any registration statement on Form S-8 relating to securities granted or to be granted pursuant to any plan in effect on the date of the underwriting agreement and described in this prospectus or any assumed benefit plan pursuant to an acquisition or similar strategic transaction.

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The selling stockholders, our directors and executive officers, and substantially all of our stockholders (such persons, the "lock-up parties") have entered into lock-up agreements with the underwriters prior to the commencement of this offering pursuant to which each lock-up party, with limited exceptions, for a period of 180 days after the date of this prospectus (such period, the "restricted period"), may not (and may not cause any of their direct or indirect affiliates to), without the prior written consent of J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Jefferies LLC, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock (including, without limitation, common stock or such other securities which may be deemed to be beneficially owned by such lock-up parties in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a stock option or warrant (collectively with the common stock, the "lock-up securities")), (2) enter into any hedging, swap or other agreement or transaction that transfers, in whole or in part, any of the economic consequences of ownership of the lock-up securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of lock-up securities, in cash or otherwise, (3) make any demand for, or exercise any right with respect to, the registration of any lock-up securities, or (4) publicly disclose the intention to do any of the foregoing. Such persons or entities have further acknowledged that these undertakings preclude them from engaging in any hedging or other transactions or arrangements (including, without limitation, any short sale or the purchase or sale of, or entry into, any put or call option, or combination thereof, forward, swap or any other derivative transaction or instrument, however described or defined) designed or intended, or which could reasonably be expected to lead to or result in, a sale or disposition or transfer (by any person or entity, whether or not a signatory to such agreement) of any economic consequences of ownership, in whole or in part, directly or indirectly, of any lock-up securities, whether any such transaction or arrangement (or instrument provided for thereunder) would be settled by delivery of lock-up securities, in cash or otherwise. The restrictions described in the immediately preceding paragraph and contained in the lock-up agreements between the underwriters and the lock-up parties do not apply, subject in certain cases to various conditions, to certain transactions, including (a) transfers of lock-up securities: (i) as bona fide gifts, or for bona fide estate planning purposes, (ii) by will or intestacy, (iii) to any trust for the direct or indirect benefit of the lock-up party or any immediate family member, (iv) to a partnership, limited liability company or other entity of which the lock-up party and its immediate family members are the legal and beneficial owner of all of the outstanding equity securities or similar interests, (v) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (i) through (iv), (vi) in the case of a corporation, partnership, limited liability company, trust or other business entity, (A) to another corporation, partnership, limited liability company, trust or other business entity that is an affiliate of the lock-up party, or to any investment fund or other entity controlling, controlled by, managing or managed by or under common control with the lock-up party or its affiliates or (B) as part of a distribution to members or stockholders of the lock-up party; (vii) by operation of law, (viii) to us from an employee upon death, disability or termination of employment of such employee, (ix) as part of a sale of lock-up securities acquired in open market transactions after the completion of this offering, (x) to us in connection with the vesting, settlement or exercise of restricted stock units, options, warrants or other rights to purchase shares of our common stock (including "net" or "cashless" exercise), including for the payment of exercise price and tax and remittance payments, or (xi) pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction approved by our board of directors and made to all stockholders involving a change in control, provided that if such transaction is not completed, all such lock-up securities would remain subject to the restrictions in the immediately preceding paragraph; (b) exercise of the options, settlement of RSUs or other equity awards, or the exercise of warrants granted pursuant to plans described in this prospectus, provided that any lock-up securities received upon such exercise, vesting or settlement would be subject to restrictions similar to those in the immediately preceding paragraph; (c) the conversion of outstanding preferred stock,

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warrants to acquire preferred stock, or convertible securities into shares of our common stock or warrants to acquire shares of our common stock, provided that any common stock or warrant received upon such conversion would be subject to restrictions similar to those in the immediately preceding paragraph; and (d) the establishment by lock-up parties of trading plans under Rule 10b5-1 under the Exchange Act, provided that such plan does not provide for the transfer of lock-up securities during the restricted period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, in their sole discretion, may release the securities subject to any of the lock-up agreements with the underwriters described above, in whole or in part at any time.

We, and the selling stockholders have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended.

We will apply to have our common stock approved for listing/quotation on the NYSE under the symbol "SVV."

The underwriters have advised us that, pursuant to Regulation M of the Securities Act of 1933, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the common stock, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase common stock in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares of common stock as part of this offering to repay the underwriting discount received by them.

These activities may have the effect of raising or maintaining the market price of the common stock or preventing or retarding a decline in the market price of the common stock, and, as a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the NYSE, in the over-the-counter market or otherwise.

Prior to this offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the representatives of the

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underwriters. In determining the initial public offering price, we and the representatives of the underwriters expect to consider a number of factors including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the information set forth in this prospectus and otherwise available to the representatives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our prospects and the history and prospects for the industry in which we compete;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an assessment of our management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our prospects for future earnings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the general condition of the securities markets at the time of this offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the recent market prices of, and demand for, publicly traded securities of generally comparable companies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other factors deemed relevant by the underwriters and us.

Neither we nor the underwriters nor the selling stockholders can assure investors that an active trading market will develop for our common shares of common stock, or that the shares of common stock will trade in the public market at or above the initial public offering price.

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. An affiliate of Jefferies LLC acts as a joint lead arranger and a joint physical bookrunner under the Term Loan Facility and Credit Facility and acts as a lender under the Term Loan Facility. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.

**Notice to Prospective Investors in the European Economic Area** 

In relation to each Member State of the European Economic Area (each a "Relevant State"), no shares have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that offers of shares may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to any legal entity which is a qualified investor as defined under Article 2 of the Prospectus Regulation;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the Prospectus
Regulation), subject to obtaining the prior consent of the underwriters; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of shares shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation. and each person who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with each of the underwriters and the Company that it is a "qualified investor" within the meaning of Article 2(e) of the Prospectus Regulation. In the case of any shares being offered to a financial intermediary as that term is used in the Prospectus Regulation, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares to the public other than their offer or resale in a Relevant State to qualified investors as so defined or in circumstances in which the prior consent of the underwriters have been obtained to each such proposed offer or resale.

For the purposes of this provision, the expression an "offer to the public" in relation to shares in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to purchase or subscribe for any shares, and the expression "Prospectus Regulation" means Regulation (EU) 2017/1129.

**Notice to Prospective Investors in the United Kingdom** 

No shares have been offered or will be offered pursuant to the offering to the public in the United Kingdom prior to the publication of a prospectus in relation to the shares which has been approved by the Financial Conduct Authority, except that the Shares may be offered to the public in the United Kingdom at any time:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to any legal entity which is a qualified investor as defined under Article 2 of the UK Prospectus Regulation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the UK Prospectus
Regulation), subject to obtaining the prior consent of underwriters for any such offer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in any other circumstances falling within Section 86 of the Financial Services and Markets Act 2000 ("FSMA").

provided that no such offer of the Shares shall require the company or any underwriter to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation. For the purposes of this provision, the expression an "offer to the public" in relation to the Shares in the United Kingdom means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase or subscribe for any Shares and the expression "UK Prospectus Regulation" means Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are "qualified investors" (as

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defined in the Prospectus Regulation) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons") or otherwise in circumstances which have not resulted and will not result in an offer to the public of the shares in the United Kingdom within the meaning of the FSMA.

Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this document or use it as basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons.

**Notice to Prospective Investors in Canada** 

The shares of common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares of common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

**Notice to Prospective Investors in Switzerland** 

The shares of common stock may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document does not constitute a prospectus within the meaning of, and has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares of common stock or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, the company, the shares of common stock have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares of common stock will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares of common stock has not been and will not be authorized under the

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Swiss Federal Act on Collective Investment Schemes ("CISA"). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares of common stock.

**Notice to Prospective Investors in the United Arab Emirates** 

The shares of common stock have not been, and are not being, publicly offered, sold, promoted or advertised in the United Arab Emirates (including the Dubai International Financial Centre) other than in compliance with the laws of the United Arab Emirates (and the Dubai International Financial Centre) governing the issue, offering and sale of securities. Further, this prospectus does not constitute a public offer of securities in the United Arab Emirates (including the Dubai International Financial Centre) and is not intended to be a public offer. This prospectus has not been approved by or filed with the Central Bank of the United Arab Emirates, the Securities and Commodities Authority or the Dubai Financial Services Authority.

**Notice to Prospective Investors in Australia** 

This prospectus:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• does not constitute a disclosure document or a prospectus under Chapter 6D.2 of the Corporations Act 2001 (Cth) (the
"Corporations Act");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• has not been, and will not be, lodged with the Australian Securities and Investments Commission ("ASIC"), as a
disclosure document for the purposes of the Corporations Act and does not purport to include the information required of a disclosure document for the purposes of the Corporations Act; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• may only be provided in Australia to select investors who are able to demonstrate that they fall within one or more of the
categories of investors, available under section 708 of the Corporations Act ("Exempt Investors").

The shares of common stock may not be directly or indirectly offered for subscription or purchased or sold, and no invitations to subscribe for or buy the shares of common stock may be issued, and no draft or definitive offering memorandum, advertisement or other offering material relating to any shares of common stock may be distributed in Australia, except where disclosure to investors is not required under Chapter 6D of the Corporations Act or is otherwise in compliance with all applicable Australian laws and regulations. By submitting an application for the shares of common stock, you represent and warrant to us that you are an Exempt Investor.

As any offer of shares of common stock under this document will be made without disclosure in Australia under Chapter 6D.2 of the Corporations Act, the offer of those securities for resale in Australia within 12 months may, under section 707 of the Corporations Act, require disclosure to investors under Chapter 6D.2 if none of the exemptions in section 708 applies to that resale. By applying for the shares of common stock you undertake to us that you will not, for a period of 12 months from the date of issue of the shares of common stock, offer, transfer, assign or otherwise alienate those shares of common stock to investors in Australia except in circumstances where disclosure to investors is not required under Chapter 6D.2 of the Corporations Act or where a compliant disclosure document is prepared and lodged with ASIC.

**Notice to Prospective Investors in Japan** 

The shares of common stock have not been and will not be registered pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Act. Accordingly, none of the common stock

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nor any interest therein may be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any "resident" of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to or for the benefit of a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and ministerial guidelines of Japan in effect at the relevant time.

**Notice to Prospective Investors in Hong Kong** 

The shares of common stock have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the "SFO") of Hong Kong and any rules made thereunder; or (b) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong) (the "CO") or which do not constitute an offer to the public within the meaning of the CO. No advertisement, invitation or document relating to the common stock has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the SFO and any rules made thereunder.

**Notice to Prospective Investors in Singapore** 

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of common stock may not be circulated or distributed, nor may the common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the "SFA")) pursuant to Section 274 of the SFA; (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares of common stock are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which
is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of
the trust is an individual who is an accredited investor,

securities or securities-based derivatives contract (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be

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transferred within six months after that corporation or that trust has acquired the common stock pursuant to an offer made under Section 275 of the SFA except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising
from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• where no consideration is or will be given for the transfer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• where the transfer is by operation of law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as specified in Section 276(7) of the SFA; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities based
Derivatives Contracts) Regulations 2018.

Singapore SFA Product Classification—Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the SFA, the company has determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the shares of common stock are "prescribed capital markets products" (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

**Notice to Prospective Investors in Israel** 

This document does not constitute a prospectus under the Israeli Securities Law, 5728-1968, or the Securities Law, and has not been filed with or approved by the Israel Securities Authority. In Israel, this prospectus is being distributed only to, and is directed only at, and any offer of the shares is directed only at, (i) a limited number of persons in accordance with the Israeli Securities Law and (ii) investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment in trust funds, provident funds, insurance companies, banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange, underwriters, venture capital funds, entities with equity in excess of NIS 50 million and "qualified individuals," each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors (in each case, purchasing for their own account or, where permitted under the Addendum, for the accounts of their clients who are investors listed in the Addendum). Qualified investors are required to submit written confirmation that they fall within the scope of the Addendum, are aware of the meaning of same and agree to it.

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**VALIDITY OF COMMON STOCK** 

The validity of the shares of common stock being offered by this prospectus will be passed upon for us by Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, New York. Certain legal matters in connection with this offering will be passed upon for the underwriters by Latham & Watkins LLP, New York, New York.

**EXPERTS** 

The consolidated financial statements of Savers Value Village, Inc., formerly known as S-Evergreen Holding LLC, as of January 1, 2022 and January 2, 2021 and for the fiscal years ended January 1, 2022 and January 2, 2021 (Successor) and the period from March 28, 2019 to December 28, 2019 (Successor) and the consolidated financial statements of S-Evergreen Holding Corp. for the period from December 30, 2018 to March 27, 2019 (Predecessor) have been included herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of Thrift Intermediate Holdings I, Inc. and Subsidiaries as of January 3, 2021 and for the year then ended have been included herein and in the registration statement in reliance upon the report of CohnReznick LLP, independent accountant, appearing elsewhere herein, upon the authority of such firm as experts in accounting and auditing.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION** 

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement, including the exhibits filed as a part thereof. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The SEC maintains an internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

Upon the completion of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available on the website of the SEC referred to above.

We also maintain a website at www.savers.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Information contained on, or that can be accessed through, our website is not incorporated by reference in this prospectus, and you should not consider information on our website to be part of this prospectus.

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**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS** 

**SAVERS VALUE VILLAGE, INC. (formerly known as S-EVERGREEN HOLDING LLC)** 

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| | |
|:---|:---|
|  *Consolidated Financial Statements* |  |
|  [Reports of Independent Registered Public Accounting Firm](#fin264743_2) | F-2 |
|  [Consolidated Balance Sheets as of January 1, 2022 and January 2, 2021](#fin264743_3) | F-4 |
|  [Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended January 1, 2022, January 2, 2021, for the period from March 28, 2019 to December 28, 2019 for the Successor, and for the period from December 30, 2018 to March 27, 2019 for the Predecessor](#fin264743_4) | F-5 |
|  [Consolidated Statements of Members' Equity for the fiscal years ended January 1, 2022, January 2, 2021, for the period from March 28, 2019 to December 28, 2019 for the Successor, and for the period from December 30, 2018 to March 27, 2019 for the Predecessor](#fin264743_5) | F-6 |
|  [Consolidated Statements of Cash Flows for the fiscal years ended January 1, 2022, January 2, 2021, for the period from March 28, 2019 to December 28, 2019 for the Successor, and for the period from December 30, 2018 to March 27, 2019 for the Predecessor](#fin264743_6) | F-7 |
|  [Notes to Consolidated Financial Statements](#fin264743_7) | F-8 |

---

---

| | |
|:---|:---|
|  *Interim Condensed Consolidated Financial Statements (unaudited)* |  |
|  [Condensed Consolidated Balance Sheets as of October 1, 2022 and January 1, 2022 (unaudited)](#fin264743_8) | F-39 |
|  [Condensed Consolidated Statements of Operations and Comprehensive Income for the nine months ended October 1, 2022 and October 2, 2021 (unaudited)](#fin264743_9) | F-40 |
|  [Condensed Consolidated Statements of Stockholders' Equity for the nine months ended October 1, 2022 and October 2, 2021 (unaudited)](#fin264743_10) | F-41 |
|  [Condensed Consolidated Statements of Cash Flows for the nine months ended October 1, 2022 and October 2, 2021 (unaudited)](#fin264743_11) | F-42 |
|  [Condensed Notes to Condensed Quarterly Consolidated Financial Statements (unaudited)](#fin264743_12) | F-43 |

---

**THRIFT INTERMEDIATE HOLDINGS I, INC. AND SUBSIDIARIES** 

---

| | |
|:---|:---|
|  *Consolidated Financial Statements* |  |
|  [Independent Auditor's Report](#fin264743_13) | F-56 |
|  [Consolidated Balance Sheet as of January 3, 2021](#fin264743_14) | F-57 |
|  [Consolidated Statement of Operations for the year ended January 3, 2021](#fin264743_15) | F-58 |
|  [Consolidated Statement of Changes in Equity for the year ended January 3, 2021](#fin264743_16) | F-59 |
|  [Consolidated Statement of Cash Flows for the year ended January 3, 2021](#fin264743_17) | F-60 |
|  [Notes to Consolidated Financial Statements](#fin264743_18) | F-61 |
|  *Interim Consolidated Financial Statements (unaudited)* |  |
|  [Consolidated Balance Sheet as of October 3, 2021 (unaudited)](#fin264743_19) | F-72 |
|  [Consolidated Statement of Operations for the period ending October 3, 2021 (unaudited)](#fin264743_20) | F-73 |
|  [Consolidated Statement of Changes in Equity for the period ended October 3, 2021 (unaudited)](#fin264743_21) | F-74 |
|  [Consolidated Statement of Cash Flows for the period ended October 3, 2021 (unaudited)](#fin264743_22) | F-75 |
|  [Notes to Consolidated Financial Statements (unaudited)](#fin264743_23) | F-76 |

---

------

##### [**Table of Contents**](#toc)
**Report of Independent Registered Public Accounting Firm** 

To the Stockholders and Board of Directors

Savers Value Village, Inc.:

***Opinion on the Consolidated Financial Statements***

We have audited the accompanying consolidated balance sheets of Savers Value Village, Inc. (formerly known as S-Evergreen Holding LLC) and subsidiaries (the Company) as of January 1, 2022 and January 2, 2021, the related consolidated statements of operations and comprehensive income (loss), members' equity, and cash flows for the fiscal years ended January 1, 2022 and January 2, 2021 (Successor) and the period from March 28, 2019 to December 28, 2019 (Successor), and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 1, 2022 and January 2, 2021, and the results of its operations and its cash flows for the fiscal years ended January 1, 2022 and January 2, 2021 (Successor) and the period from March 28, 2019 to December 28, 2019 (Successor), in conformity with U.S. generally accepted accounting principles.

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company's auditor since 2003.

Boise, Idaho

May 4, 2022

------

##### [**Table of Contents**](#toc)
**Report of Independent Registered Public Accounting Firm** 

To the Stockholders and Board of Directors

Savers Value Village, Inc.:

***Opinion on the Consolidated Financial Statements***

We have audited the accompanying consolidated statements of operations and comprehensive income, members' equity, and cash flows of S-Evergreen Holding Corp. and subsidiaries (the Company) for the period from December 30, 2018 to March 27, 2019 (Predecessor), and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company's operations and its cash flows for the period from December 30, 2018 to March 27, 2019 (Predecessor), in conformity with U.S. generally accepted accounting principles.

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company's auditor since 2003

Boise, Idaho

May 4, 2022

------

##### [**Table of Contents**](#toc)
**SAVERS VALUE VILLAGE, INC. (formerly known as S-EVERGREEN HOLDING LLC)** 

Consolidated Balance Sheets

(Dollars in thousands, except unit amounts)

---

| | | |
|:---|:---|:---|
|  | **January 1,<br>2022** | **January 2,<br>2021** |
|  Current assets: |  |  |
|  Cash and cash equivalents | $96812 | $137201 |
|  Restricted cash | 1103 | 658 |
|  Trade and other receivables, net of allowance for doubtful accounts of $244 and $1,332 | 6612 | 8898 |
|  Inventories | 24352 | 21595 |
|  Prepaid expenses and other current assets | 28847 | 10255 |
|  Total current assets | 157726 | 178607 |
|  Property and equipment, net | 133859 | 119962 |
|  Goodwill | 703778 | 485789 |
|  Intangible assets, net | 208812 | 179439 |
|  Derivative asset—non-current | 14980 |  |
|  Other assets | 3538 | 1818 |
|  Total assets | $1222693 | $965615 |
|  Current liabilities: |  |  |
|  Accounts payable and accrued liabilities | $72963 | $66728 |
|  Accrued payroll and related taxes | 76016 | 53688 |
|  Derivative liability—current | 3761 | 3452 |
|  Current portion of long-term debt | 8424 | 2754 |
|  Current portion of long-term debt due to related parties |  | 2755 |
|  Total current liabilities | $161164 | $129377 |
|  Insurance reserves | 7303 | 6465 |
|  Deferred rent | 11393 | 13980 |
|  Deferred compensation | 2530 | 2488 |
|  Lease intangible liability, net | 4819 | 4005 |
|  Long-term debt, net | 790693 | 268263 |
|  Long-term debt, net due to related parties |  | 330056 |
|  Derivative liability—non-current | 1463 | 6078 |
|  Deferred tax liabilities | 49516 | 21416 |
|  Other liabilities | 8380 | 9562 |
|  Total liabilities | $1037261 | $791690 |
|  Commitments and contingencies (see Note 14) |  |  |
|  Members' equity: |  |  |
|  Common A Units, 198,378,867 units authorized, issued, and outstanding as of January 1, 2022 and January 2, 2021 | $223379 | $223379 |
|  Common B Units, 25,482,695 units authorized as of January 1, 2022 and January 2, 2021; 0 units issued and outstanding as of January 1, 2022 and January 2, 2021 | 1297 | 565 |
|  Accumulated deficit | (53708) | (62102) |
|  Accumulated other comprehensive income | 14464 | 12083 |
|  Total members' equity | 185432 | 173925 |
|  Total liabilities and members' equity | $1222693 | $965615 |

---

*The accompanying notes are an integral part of these consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**SAVERS VALUE VILLAGE, INC. (formerly known as S-EVERGREEN HOLDING LLC)** 

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Dollars in thousands, except per unit amounts)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal year<br>ended January 1,<br>2022** | **Fiscal year<br>ended January 2,<br>2021** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  Net sales | $1204124 | $834010 | $945527 | $259972 |
|  Operating expenses: |  |  |  |  |
|  Cost of merchandise sold exclusive of depreciation and amortization | 474462 | 353455 | 460169 | 133595 |
|  Salaries, wages, and benefits | 239806 | 184392 | 195066 | 60193 |
|  Selling, general, and administrative | 260235 | 229886 | 187727 | 71537 |
|  Depreciation and amortization | 47385 | 59432 | 32391 | 18837 |
|  Total operating expenses | 1021888 | 827165 | 875353 | 284162 |
|  Operating income (loss) | 182236 | 6845 | 70174 | (24190) |
|  Other (expense) income: |  |  |  |  |
|  Interest expense | (53565) | (69678) | (58003) | (20784) |
|  Other (expense) income, net | (3265) | 3410 | (6353) | 6605 |
| (Loss) gain on extinguishment of debt | (47541) |  |  | 283241 |
|  Other (expense) income, net | (104371) | (66268) | (64356) | 269062 |
|  Income (loss) before income tax expense | 77865 | (59423) | 5818 | 244872 |
|  Income tax (benefit) expense | (5529) | 4060 | 4437 | 5256 |
|  Net income (loss) | $83394 | $(63483) | $1381 | $239616 |
|  Other comprehensive income (loss), net of tax: |  |  |  |  |
|  Foreign currency translation adjustments | 4923 | 2577 | 9506 | 10376 |
|  Cash flow hedges | (2542) |  |  |  |
|  Other comprehensive income | 2381 | 2577 | 9506 | 10376 |
|  Comprehensive income (loss) | $85775 | $(60906) | $10887 | $249992 |
|  Net income (loss) per unit, basic | $0.42 | $(0.34) | $0.01 |  |
|  Net income (loss) per unit, diluted | $0.41 | $(0.34) | $0.01 |  |
|  Weighted average number of units outstanding used to compute net income (loss) per unit, basic | 198378867 | 188757245 | 178378867 |  |
|  Weighted average number of units outstanding used to compute net income (loss) per unit, diluted | 203769786 | 188757245 | 178610774 |  |

---

*The accompanying notes are an integral part of these consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**SAVERS VALUE VILLAGE, INC. (formerly known as S-EVERGREEN HOLDING LLC)** 

Consolidated Statements of Members' Equity

(Dollars in thousands, except unit amounts)

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common stock** | **Common stock** | **Common A units** | **Common A units** | **Common B<br>units** | **Common B<br>units** | **(Accumulated<br>deficit)<br>retained<br>earnings** | **Accumulated<br>other<br>comprehensive<br>(loss) income** | **Total** |
| **Predecessor** | **Shares** | **Amount** | **Units** | **Amount** | **Units** | **Amount** | **(Accumulated<br>deficit)<br>retained<br>earnings** | **Accumulated<br>other<br>comprehensive<br>(loss) income** | **Total** |
|  Balance at December 29, 2018 | 213008666 | $793296 |  | $— |  | $— | $(804804) | $(255437) | $(266945) |
|  Net Income |  |  |  |  |  |  | 239616 |  | 239616 |
|  Common B Units |  | 315 |  |  |  |  |  |  | 315 |
|  Equity interest for mezzanine debt conversion |  | 13379 |  |  |  |  |  |  | 13379 |
|  Other comprehensive income (loss), net of income taxes |  |  |  |  |  |  |  | 10376 | 10376 |
|  Balance at March 27, 2019 | 213008666 | $806990 |  | $— |  | $— | $(565188) | $(245061) | $(3259) |
| **Successor** |  |  |  |  |  |  |  |  |  |
|  Elimination of predecessor equity | (213008666) | $(806990) |  | $— |  | $— | $565188 | $245061 | $3259 |
|  Issuance of common A units—acquisition |  |  | 178378867 | 178379 |  |  |  |  | 178379 |
|  Net Income |  |  |  |  |  |  | 1381 |  | 1381 |
|  Common B units equity compensation |  |  |  |  |  | 211 |  |  | 211 |
|  Other comprehensive income (loss), net of income taxes |  |  |  |  |  |  |  | 9506 | 9506 |
|  Balance at December 28, 2019 |  | $— | 178378867 | $178379 |  | $211 | $1381 | $9506 | $189477 |
|  Net loss |  | $— |  | $— |  | $— | $(63483) | $— | $(63483) |
|  Common B units equity compensation |  |  |  |  |  | 354 |  |  | 354 |
|  Share issuance |  |  | 20000000 | 45000 |  |  |  |  | 45000 |
|  Other comprehensive income (loss), net of income taxes |  |  |  |  |  |  |  | 2577 | 2577 |
|  Balance at January 2, 2021 |  | $— | 198378867 | $223379 |  | $565 | $(62102) | $12083 | $173925 |
|  Net income |  | $— |  | $— |  | $— | $83394 | $— | $83394 |
|  Common B units equity compensation |  |  |  |  |  | 732 |  |  | 732 |
|  November 2021 Dividend |  |  |  |  |  |  | (75000) |  | (75000) |
|  Other comprehensive income (loss), net of income taxes |  |  |  |  |  |  |  | 2381 | 2381 |
|  Balance at January 1, 2022 |  | $— | 198378867 | $223379 |  | $1297 | $(53708) | $14464 | $185432 |

---

*The accompanying notes are an integral part of these consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**SAVERS VALUE VILLAGE, INC. (formerly known as S-EVERGREEN HOLDING LLC)** 

Consolidated Statements of Cash Flows

(Dollars in thousands)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
|  | **Fiscal<br>year<br>ended<br>January 1,<br>2022** | **Fiscal year<br>ended<br>January 2,<br>2021** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  Cash flows from operating activities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net (loss) income | $83394 | $(63483) | $1381 | $239616 |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation expense | 732 | 354 | 211 | 315 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt issuance costs and term debt discount | 4444 | 5723 | 2696 | 1673 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 47385 | 59432 | 32391 | 18837 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax (benefit) expense | (21870) | (12911) | (16312) | 14881 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on extinguishment of debt | 47541 |  |  | (283241) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noncash interest expense | 3417 | 20779 | 6608 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other noncash items, net | 1351 | (483) | 15847 | 351 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in trade and other receivables | 3878 | 4182 | (3151) | 7936 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in inventories | 6091 | 2606 | 5699 | (2605) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease (increase) in prepaid expenses and other current assets | (17998) | (3764) | 10864 | 268 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in accounts payable and accrued liabilities | 2732 | 4784 | (14771) | 4958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease) increase in accrued payroll and related taxes | 17984 | (9123) | 20245 | (13971) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in deferred rent and other | (3319) | 21817 | 277 | (7057) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) operating activities | $175762 | $29913 | $61985 | $(18039) |
|  Cash flows from investing activities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Acquisition of 2nd Ave, net of cash acquired | (220307) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; March 2019 Transactions acquisition |  |  | (728792) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchases of property and equipment | (40544) | (19172) | (24126) | (5224) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net settlement of derivative instruments | (2321) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | $(263172) | $(19172) | $(752918) | $(5224) |
|  Cash flows from financing activities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from issuance of long-term debt | 825000 |  | 260363 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from issuance of long-term debt from related parties |  |  | 313400 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Principal payments on long-term debt | (422755) | (3356) | (1351) | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp; Principal payments on long-term debt to related parties | (222910) | (3356) | (1351) | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp; Advances on revolving line of credit |  | 42095 | 30000 | 99500 |
| &nbsp;&nbsp;&nbsp;&nbsp; Repayments of revolving line of credit |  | (42095) | (30000) | (48000) |
| &nbsp;&nbsp;&nbsp;&nbsp; Prepayment premium on extinguishment of debt | (14687) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Prepayment premium on extinguishment of debt to related parties | (8122) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Capital contribution in connection with the March 2019 Transactions |  |  | 165000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from share issuance |  | 45000 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Payment of debt issuance costs and debt discount | (28527) | (1481) | (6828) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; November 2021 Dividend payment | (75000) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | $52999 | $36807 | $729233 | $51494 |
|  Effect of exchange rate changes on cash | (5533) | 4044 | (688) | 846 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in cash and cash equivalents | (39944) | 51592 | 37612 | 29077 |
|  Cash, cash equivalents and restricted cash at beginning of period | 137859 | 86267 | 48655 | 19578 |
|  Cash, cash equivalents and restricted cash at end of period | $97915 | $137859 | $86267 | $48655 |
|  Supplemental disclosures of cash flow information: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest paid on debt | 45250 | 49201 | 40865 | 18243 |
| &nbsp;&nbsp;&nbsp;&nbsp; Income taxes paid, net | 29654 | 4637 | 8978 | 1102 |
|  Supplemental disclosure of noncash investing activities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Noncash capital expenditures | 2891 | 235 | (1313) | (598) |
| &nbsp;&nbsp;&nbsp;&nbsp; Exchange of pre-existing equity from mezzanine debt conversion |  |  | 13379 |  |

---

*The accompanying notes are an integral part of these consolidated financial statements.* 

------

##### [**Table of Contents**](#toc)
**SAVERS VALUE VILLAGE, INC. (formerly known as S-EVERGREEN HOLDING LLC)** 

**Notes to Consolidated Financial Statements** 

**Note 1. Description of Business and Basis of Presentation** 

***Description of business***

Savers Value Village, Inc. (formerly known as S-Evergreen Holding LLC) (the "Company," "we," "our" or the "Successor" within these financial statements) was established on March 22, 2019 as part of the restructuring in 2019 (see Note 3) and is headquartered in Bellevue, Washington. The Company, together with its wholly owned subsidiaries, sells second-hand merchandise in retail stores located in the United States ("U.S."), Canada, and Australia. The term "Company" shall also refer to S-Evergreen Holding Corp ("Predecessor") for the period from December 20, 2018 to March 27, 2019 during which S-Evergreen Holding Corp was the predecessor entity to the Successor. If Predecessor or Successor is not specified, the terms "we," "our" or the "Company" apply to all periods. As discussed in Note 3, on March 28, 2019, the Company entered into a restructuring and refinancing transaction (the "March 2019 Transactions") which was accounted for as a business combination in accordance with the Accounting Standards Codification ("ASC") 805, Business Combinations. Additionally, also as discussed in Note 3, on November 8, 2021, the Company acquired Thrift Intermediate Holdings I, Inc. ("2nd Ave."), which was also accounted for as a business combination in accordance with ASC 805.

***Basis of presentation***

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. These consolidated financial statements present the results of operations, financial position, and cash flows of the Company in accordance with U.S. generally accepted accounting principles ("GAAP").

As a result of the March 2019 Transactions and the application of purchase price accounting in accordance with ASC 805, the consolidated financial statements and notes for the period before March 28, 2019 are presented on a different basis than the period after March 28, 2019, and therefore, are not comparable. Accordingly, the consolidated financial statements are presented for the Predecessor and Successor, which relate to the accounting periods preceding and succeeding completion of the March 2019 Transactions, respectively. The Successor had no activity from its inception on March 22, 2019 through March 28, 2019 and accordingly is presented from the completion of the March 2019 Transactions going forward. The Predecessor and Successor periods have been separated by a black line on the consolidated financial statements to highlight the fact that the financial information for such periods has been prepared under two different historical cost accounting bases.

The Company reports on a fiscal year basis, which ends on the Saturday nearest December 31. Fiscal year 2021 was the 52 weeks ended January 1, 2022 ("fiscal year 2021"), fiscal year 2020 was the 53 weeks ended January 2, 2021 ("fiscal year 2020") and the Successor period from March 28, 2019 to December 28, 2019 includes 39 weeks and 3 days whereas the Predecessor period from December 30, 2018 to March 27, 2019 includes 12 weeks and 4 days. All amounts in the Notes to the Consolidated Financial Statements, with the exception of per unit amounts, are presented in U.S. dollars rounded to the nearest thousand unless otherwise indicated.

Certain prior period information has been reclassified to conform to the current period presentation. The reclassification had no effect on the Company's consolidated financial position or the consolidated results of operations as previously reported.

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##### [**Table of Contents**](#toc)
***Impact of the COVID-19 pandemic***

In March 2020, the World Health Organization declared COVID-19 a global pandemic and governmental authorities around the world implemented measures to reduce the spread of COVID-19. These measures created disruptions within our business and our results for fiscal year 2020 were adversely impacted. From time to time throughout the year, we temporarily closed our stores in accordance with local restrictions and where we believed we could provide for the safety and well- being of our team members and customers.

Measures were taken to mitigate the operating and financial impact of the pandemic including, but not limited to: (i) furloughing team members, (ii) implementing temporary tiered salary reductions for employees, (iii) suspending the 401k plan match, (iv) extending payment terms with partners and suppliers, (v) deferring or abating payments of rent based on negotiations with each landlord and (vi) executing substantial reductions in expenses, store occupancy costs, capital expenditures, and other costs.

Additionally, the Company received wage subsidies from the Canadian and Australian governments, which are reflected as a reduction to cost of merchandise sold and salaries, wages, and benefits on the Consolidated Statements of Operations and Comprehensive Income (Loss). These subsidies are not loans to the Company. These wage subsidies helped the Company to avoid reductions in workforce in Canada and Australia during the pandemic. For fiscal year 2020, we received a total of $32.6 million in wage subsidies, of which our Canadian and Australian operations received $22.7 million and $9.9 million, respectively. The $32.6 million in wage subsidies are presented as a reduction of $18.6 million and $14.0 million of costs of merchandise sold and salaries, wages, and benefits, respectively. There were no unfulfilled conditions or contingencies relating to these subsidies at January 2, 2021. For fiscal year 2021, the Company received a total of $21.7 million in wage subsidies, of which its Canadian operations received the entire balance. The $21.7 million in wage subsidies are presented as a reduction of $13.4 million and $8.3 million of costs of merchandise sold and salaries, wages, and benefits, respectively. There were no unfulfilled conditions or contingencies relating to these subsidies at January 1, 2022.

In June 2020, the Company issued 20.0 million units, resulting in proceeds of $45.0 million from an existing shareholder. Also, in June 2020, the Company amended its First Lien and Second Lien Credit Agreements to allow for deferral of certain cash interest payments and to amend certain covenants.

During fiscal year 2020, the Company also negotiated rent deferrals and rent abatements for a significant number of its stores. In April 2020, the FASB issued guidance allowing entities to make a policy election whether to account for lease concessions related to the COVID-19 pandemic as if the enforceable rights and obligations of the concessions existed in the contracts at lease inception. The election applies to any lessor-provided lease concession related to the impact of the COVID-19 pandemic, provided the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee. The Company did not make this policy election and accounted for lease concessions and abatements as lease modifications. In fiscal year 2020, the Company received total rent deferrals of $11.9 million, of which the Company repaid $7.5 million within fiscal year 2020 and $4.3 million within fiscal year 2021. The remaining $0.1 million is to be paid off incrementally over the period from 2023 to 2027. In addition, the Company received rent abatements of $3.1 million and $0.3 million in fiscal year 2020 and fiscal year 2021, respectively.

***Ares Share Purchase Transaction***

On April 26, 2021, certain funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares Management Corporation (the "Ares Funds"), pursuant to a Purchase and

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Sale Agreement with the then majority equityholder of the Company, purchased for cash all of the outstanding equity securities of the Company of that equityholder (the "Ares Share Purchase Transaction"). As a result, the Ares Funds became the holders of all of the Company's outstanding equity. The Company did not elect to apply push down accounting for the Ares Share Purchase Transaction, as the transaction was entirely among the holders of the securities. As explained further in Note 7, the Company also refinanced its debt as part of the Ares Share Purchase Transaction.

**Note 2. Summary of Significant Accounting Policies** 

***Use of estimates***

The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. These estimates are based on information that is currently available and on various other assumptions that are believed to be reasonable under the circumstances. Certain items subject to such estimates and assumptions include, but are not limited to, the useful lives of both property and equipment and intangible assets, equity-based compensation, insurance reserves, allowances on trade and other receivables, valuation of intangibles and goodwill, and income taxes. Actual results could vary from those estimates under different assumptions or conditions.

***Foreign currency***

The functional currency of the Company's foreign entities is the local currency of the country in which the entity operates. Assets and liabilities of foreign operations are translated into the reporting currency of Savers Value Village, Inc., the U.S. dollar, using rates of exchange in effect at the end of the reporting period. Income and expense accounts are translated into U.S. dollars using average rates of exchange during the reporting period. The net gain or loss resulting from translation is shown as a foreign currency translation adjustment and is included in other comprehensive income in the Consolidated Statements of Operations and Comprehensive Income (Loss) and in accumulated other comprehensive income in total members' equity on the Consolidated Balance Sheets. Gains and losses from foreign currency transactions are included in other (expense) income, net in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company also had intercompany loans denominated in foreign currencies and issued to its foreign subsidiaries. The gain or loss on settlement of such intercompany loans survives consolidation and is recognized in other comprehensive income in the Consolidated Statements of Operations and Comprehensive Income (Loss) and in accumulated other comprehensive income in total members' equity on the Consolidated Balance Sheets.

***Revenue recognition***

*Retail sales.* The Company recognizes revenue pursuant to ASC 606, *Revenue from Contracts with Customers*. Revenue is recorded for store sales upon the purchase of merchandise by customers. Sales taxes collected from customers are not considered revenue and are included in accrued liabilities until remitted to the taxing authorities.

Revenue is recorded net of promotional price reductions. The Company does not record a sales return reserve as no right of return exists for customers. Only exchanges are accepted within fourteen days of purchase.

*Gift Cards.* Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise.

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*Customer Loyalty Program*. In 2017, the Company launched its loyalty program called the Super Savers Club<sup>™</sup> (the "Program"). The Program features unique benefits for loyalty members. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited.

*Wholesale sales.* Sales of wholesale products are recognized at the point of delivery with no right of return and exclude shipping and handling costs, which are paid by the customer. The Company does not have a significant financing component as customers pay within one year of title transfer.

Sales broken out by retail and wholesale are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
| *(in thousands)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  Retail sales | $1154891 | $800278 | $902056 | $247531 |
|  Wholesale sales | 49233 | 33732 | 43471 | 12441 |
|  Total net sales | $1204124 | $834010 | $945527 | $259972 |

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***Cash and cash equivalents and restricted cash***

Cash and cash equivalents consist of cash, demand deposits with banks, proceeds due from credit and debit card transactions, and highly liquid investments with maturity dates of three months or less from the date of purchase. The carrying amounts reported for cash and cash equivalents are considered to approximate fair values based upon their short maturities.

The Company's cash and cash equivalents are maintained in accounts primarily with two major financial institutions in the U.S. and Canada. Substantially all the cash on deposit exceed the federally insured limits for such deposits.

In addition, the Company maintains restricted cash in connection with lines of credit required by landlords. These balances have been excluded from the Company's cash and cash equivalents balance and are classified as restricted cash in the Company's Consolidated Balance Sheets.

***Trade accounts receivable***

Trade accounts receivable are recorded at the invoiced amount, net of any allowances. Allowance for doubtful accounts typically relates to wholesale sales only.

***Inventories***

Inventories consist almost entirely of used clothing and other household goods purchased from nonprofit partners on a volume basis or donated to nonprofit partners by individuals at the Company's donation centers and then purchased by the Company from the nonprofit partners. Inventory is valued at the lower of average purchase cost or net realizable value. As of January 1, 2022 and January 2, 2021, there was no allowance for obsolete or excess inventory.

The Canadian Diabetes Association provided approximately 27% and 31% of the Company's product supply for fiscal year 2021 and fiscal year 2020, respectively.

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***Property and equipment***

Property and equipment are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from 2 to 15 years for certain furniture, fixtures, and equipment. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the remaining lease term.

***Intangible assets***

Intangible assets represent the Company's trade names, charity agreements, and favorable lease rights. The Company's trade names, which have indefinite lives, are not amortized, but rather, reviewed for impairment at least annually in the fourth quarter. All other long-lived intangibles are amortized using the straight-line method over their estimated period of benefit ranging from 2 to 24 years (see Note 6).

***Long-lived asset impairment recoverability***

The carrying value of long-lived assets, primarily property, equipment, leasehold improvements, and certain intangible assets, is evaluated whenever events or changes in circumstances indicate that a potential impairment has occurred. A potential impairment has occurred if projected undiscounted cash flows are less than the carrying value of the asset group. The estimated cash flows include management's assumptions of cash inflows and outflows directly resulting from the use of that asset group in operations and dispositions. If the carrying value of the asset group exceeds the undiscounted expected future cash flows from the asset group, impairment is indicated. The impairment loss recognized is the excess of the carrying value of the asset group over its fair market value (defined as the discounted expected future cash flows).

The Company reviews asset groups to assess whether a triggering event has occurred. For asset groups where a triggering event has been identified, the carrying amounts of the asset groups are compared to the related expected undiscounted future cash flows to be generated by those asset groups over the estimated remaining useful life of the primary asset. Cash flows are projected for each asset group based upon historical results and expectations. In cases where expected future cash flows are less than the carrying amount of the asset groups, those asset groups are considered impaired and the asset group is written down to fair value. For fiscal year 2021, fiscal year 2020, and the period March 28, 2019 to December 28, 2019 (Successor), and the period December 30, 2018 to March 27, 2019 (Predecessor), the Company did not identify any triggering events related to the potential impairment of its long-lived asset groups.

***Goodwill***

Goodwill is reviewed for impairment annually in the Company's fourth quarter or whenever circumstances indicate goodwill might be impaired. The Company first performs a qualitative assessment, evaluating relevant events or circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If not, no further impairment testing is performed. If the assessment indicates that it is more likely than not, the Company compares the carrying value of the reporting unit to the estimated fair value of the reporting unit, both as of the testing date. If the carrying value of the reporting unit exceeds the estimated fair value, the Company will recognize an impairment charge equal to the amount by which the carrying amount exceeds the reporting unit's fair value up to but not to exceed the total amount of goodwill allocated to the reporting unit.

The Company's reporting units are consistent with its operating segments, with goodwill balances allocated entirely to the U.S. Retail and Canada Retail reporting units.

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***Insurance reserves***

The Company is self-insured for general liability, medical, and workers' compensation and regularly reviews the related insurance reserves to adjust the balances as determined necessary. Self-insurance claims filed and claims incurred-but-not-reported are accrued based on management's estimates of cost by considering historical claims experience, demographic factors, severity factors, and other actuarial assumptions. Additionally, the Company reviews specific large insurance claims to determine whether there is need for additional accrual on a case-by-case basis. Changes in these assumptions could materially impact the required reserve balances, and it is possible that the Company's actual loss experience could differ materially from recorded insurance reserves.

Current portions of insurance reserves of $1.9 million and $1.5 million are included in accounts payable and accrued liabilities and $5.9 million and $6.1 million are included in accrued payroll and related taxes as of January 1, 2022 and January 2, 2021, respectively. Noncurrent insurance reserves were $7.3 million and $6.5 million as of January 1, 2022 and January 2, 2021, respectively.

***Advertising costs***

Advertising production costs are expensed the first time the advertisement is run and media placement costs are expensed in the month the advertising first appears. Total advertising costs for fiscal year 2021, fiscal year 2020, the period March 28, 2019 to December 28, 2019 (Successor), and December 30, 2018 to March 27, 2019 (Predecessor) were $10.7 million, $5.8 million, $18.2 million and $2.8 million, respectively.

***Income taxes***

The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized based on the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred income tax assets to the amount more likely than not expected to be realized. Income tax expense represents the current expense incurred for the period plus or minus the change during the period in net deferred tax assets and liabilities.

Section 382 of the Internal Revenue Code, and similar state regulations, contain provisions that may limit the net operating loss ("NOL") carryforwards available to be used to offset income in any given year upon the occurrence of certain events, including changes in ownership of more than 50% (see Note 3). The Company reduced its tax attributes (as defined in Note 3) (NOLs and tax credits) and certain tax basis of assets in connection with the March 2019 Transactions and the Ares Share Purchase Transaction. In addition, pursuant to Section 382, a limitation on utilization of such tax attributes resulted from the March 2019 Transactions and the Ares Share Purchase Transaction

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount of the benefit that is greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in income tax expense in the Consolidated Statements of Operations and Comprehensive Income (Loss).

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***Equity based compensation***

The Company recognizes compensation expense related to the cost of services received in exchange for equity-based awards over the awards' vesting period based on their fair value at the appropriate measurement date, under ASC 718, Compensation – Stock Compensation (see Note 13).

***Derivative instruments***

In the normal course of business, the Company uses derivative financial instruments, which may include interest rate swaps, cross currency swaps and foreign exchange forwards and swaps to hedge against adverse fluctuations in interest rates or foreign exchange rates thereby reducing our exposure to variability in cash flows on our floating-rate debt or from foreign operations.

Derivative instruments are measured at fair value and classified as assets or liabilities, current or non-current, depending on settlement dates of the individual contracts. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.

Derivative instruments that are not designated as hedges are intended to economically hedge a portion of our interest rate and foreign exchange risks. Gains and losses from changes in fair value on these derivatives are recorded immediately in other (expense) income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

For derivative instruments designated as cash flow hedges, gains and losses from changes in fair value are initially reported as a component of accumulated other comprehensive income on the Consolidated Balance Sheets and subsequently recognized in earnings in the same period during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During fiscal year 2022, the Company estimates that an additional $0.9 million will be reclassified as an increase to interest expense.

The Company does not use derivative instruments for trading or speculative purposes and does not use any leveraged derivative financial instruments.

***Segment reporting***

Operating segments are defined as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision Maker ("CODM") in making decisions regarding resource allocation and performance assessment. The Company's CODM is its Chief Executive Officer. The Company has determined it has two reportable segments: U.S. Retail and Canada Retail.

***Business combinations***

The Company accounts for business combinations using the acquisition method of accounting, as required by ASC 805, Business Combinations. Under the acquisition method, the consolidated financial statements reflect the operations of an acquired business starting from the closing date of the acquisition. All assets acquired and liabilities assumed are recorded at fair value as of the acquisition date. The Company allocates the purchase price of an acquired business to the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, with any excess purchase price recorded as goodwill. During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill.

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***Income (Loss) per unit***

Basic income (loss) per unit is computed by dividing the net income (loss) by the weighted-average number of units outstanding during the period. Diluted income (loss) per unit is computed by giving effect to all potentially dilutive common equivalent units outstanding for the period. In periods of a net loss, common equivalent units are excluded from the calculation of diluted loss per units, because their inclusion would have an antidilutive effect. Accordingly, for periods in which we report a net loss, diluted loss per unit is equal to basic loss per unit, as the dilutive common equivalent units are not assumed to have been issued if their effect is antidilutive.

***Debt***

Long-term debt is carried at the outstanding principal balance, less debt issuance costs and any unamortized discount or premium. Deferred borrowing costs, premiums and discounts are amortized to interest expense over the terms of the respective borrowings using the effective interest method.

***Leases and deferred rent***

The Company categorizes leases at their inception as either operating or capital leases. To date, the Company has only entered into operating leases.

The Company leases office facilities and retail stores. The majority of leases contain renewal options and require the Company to pay specific taxes, insurance, utilities, and maintenance costs on a pro rata basis or based upon the actual expenses incurred. The Company records retail and office rent expense as a component of selling, general, and administration expenses.

The recognition of rent expense for an operating lease commences on the date on which control and possession of the property is obtained. Rent expense is calculated by recognizing total minimum rental payments, net of any rental abatement, tenant improvement allowances, and other rental concessions, on a straight-line basis over the lease term. The difference between straight-line rent expense and rent paid is recorded as deferred rent, which is classified within accounts payable and accrued liabilities for the current portion and non-current deferred rent on the Consolidated Balance Sheets.

***Emerging growth company***

An emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, is eligible to use certain exemptions and scaled disclosures in its registration statement and public reports.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company ceased to be an emerging growth company as of the end of its fiscal year ended January 1, 2022 because its revenues for that fiscal year exceeded the applicable eligibility threshold. Nevertheless, because the Company publicly filed its registration statement at a time when it qualified as an emerging growth company, the Company is permitted to use (and is using) the exceptions and scaled disclosure requirements in its registration statement. In addition, for purposes of its registration

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statement, Company has elected not to opt out of the JOBS Act Section 102(b)(1) extended transition period which means that when a standard is issued or revised, and it has different application dates for public or private companies, the Company will adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's financial statements with other public companies difficult or impossible because of the potential differences in accounting standards used.

The Company will no longer be eligible to use any of the emerging growth company exemptions or scaled disclosure requirements after its registration statement is declared effective.

***Changes in accounting principles***

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"), which is intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its consolidated financial statements. In addition to that main objective, the amendments in the update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. Additional updates to further clarify the guidance in ASU 2017-12 were issued by the FASB in October 2018 within ASU 2018-16. For public entities, the amendment was effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For nonpublic entities, ASU 2017-12 is effective for fiscal years beginning after December 15, 2020 and interim periods beginning after December 15, 2021. The Company adopted this ASU on January 3, 2021 and evaluated the relevant guidance to determine the impact on the consolidated financial statements. The Company concluded that the impact of adoption of this guidance was not material.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40), which align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 was subsequently modified by ASU 2019-10. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. The Company adopted this ASU on January 3, 2021 and evaluated the relevant guidance to determine the impact on the consolidated financial statements. The Company concluded that the impact of adoption of this guidance was not material.

***Recently issued accounting pronouncements not yet adopted***

In February 2016, the FASB issued ASU 2016-02, Leases, requiring the recognition of lease assets and lease liabilities on the balance sheet for leases that have terms of more than twelve months, and the disclosure of key information about the leasing arrangements. The new guidance is applied utilizing a modified retrospective approach and is effective for annual periods beginning after December 15, 2021. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), which provides entities with an additional (and optional) transition method to adopt the new lease requirements by allowing entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted this guidance at the beginning of fiscal year 2022 using the optional transition method. At transition, the Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification, and initial direct costs. The Company elected the short-term lease recognition exemption for all leases that qualify. The Company has developed a project plan for implementation, assessed its portfolio of leases, and compiled a central repository of all leases. Although the Company is still finalizing its evaluation of the impact of adoption on the Company's

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consolidated financial statements, the Company expects to recognize $459.7 million to $462.7 million in right-of-use lease assets and $436.5 million to $439.5 million in lease liabilities on the Company's Consolidated Balance Sheets as a result of adoption.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, to provide relief that, if elected, will require less accounting analysis and less accounting recognition for modifications related to reference rate reform. The amendments in this Update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is in the process of evaluating the impact of the reference rate reform on its credit agreements and cash flow derivative instruments.

**Note 3. Business Combinations** 

***2nd Ave. Acquisition***

On November 8, 2021, the Company acquired 100% of the equity of Thrift Intermediate Holdings I, Inc. ("2nd Ave." or the "Acquiree") for cash consideration of $238.5 million (the "2nd Ave. Acquisition"). The Acquiree, through its subsidiaries, sells high-quality second-hand clothing, accessories and household items through 12 retail thrift stores under the 2nd Ave. brand. The Company financed the 2nd Ave. Acquisition with cash on hand and $225.0 million of additional borrowings under the New Term Loan Facility.

The 2nd Ave. Acquisition was accounted for as a business combination in accordance with ASC 805 and the purchase price has been allocated to the assets acquired and the liabilities assumed based on their preliminary fair value at the acquisition date. The excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. Goodwill is primarily attributable to the assembled workforce, expected synergies, and other factors. Goodwill was allocated to the U.S. Retail operating segment and reporting unit. The valuation process included a review of financial and other data, the projected and operating performance of the business, analysis of the economic and financial market conditions, and the ability of 2nd Ave. to generate future cash flows through established revenue channels.

The Company recognized deferred tax liabilities of $50.0 million relating to the difference between the book basis and the outside tax basis in the acquired partnerships. The goodwill is not deductible for income tax purposes. The Company recorded $1.8 million of transaction costs in selling, general, and administrative expense related to the acquisition. Following the acquisition, the Company recognized an incremental $15.5 million of net sales and $1.2 million of net income attributable to the 2nd Ave. business during fiscal year 2021.

In connection with the purchase price allocation, the Company made estimates of the fair values of 2nd Ave.'s tangible and intangible assets and liabilities, using the income approach, the market approach or a combination of both and the cost approach. The valuation process included a review of assumptions related to future cash flows, discount rates, business enterprise valuation, economic growth, market interest rates, and asset lives, utilizing currently available information.

Based on those estimates and the premise of value as of the acquisition date, the Company increased the carrying value of its property and equipment, inventory, intangible assets, and right-of-use assets.

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Fair values of the assets acquired and liabilities assumed as of the acquisition date are as follows:

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| | |
|:---|:---|
| *(in thousands***)** | **November 8, 2021** |
|  Current assets (excluding accounts receivable, inventory, and cash) | $2231 |
|  Accounts receivable | 1648 |
|  Inventory | 8876 |
|  Cash | 18213 |
|  Property and equipment | 12977 |
|  Intangible assets | 35000 |
|  Lease intangible assets | 4987 |
|  Other assets | 434 |
|  Goodwill | 217916 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $302282 |
|  Current liabilities | 9050 |
|  Lease intangible liabilities | 2113 |
|  Long-term debt | 2596 |
|  Deferred tax liabilities | 50003 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | $63762 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net assets acquired | $238520 |

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The preliminary fair value of identifiable intangible assets and liabilities acquired and associated useful lives were as follows:

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| | | |
|:---|:---|:---|
| *(in thousands)* | **Fair Value** | **Weighted average<br>useful life** |
|  Trade names and trademarks | $25500 | Indefinite |
|  Charity licensing agreements | 9500 | 15.0 years |
|  Lease intangible assets | 4987 | 15.0 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total intangible assets | $39987 |  |
|  Lease intangible liabilities | 2113 | 10.0 years |

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The fair value of identified intangible assets were estimated based on the income approach. These fair value measures were based on significant inputs not observable in the market and thus represent Level 3 measurements as defined in ASC 820, "Fair Value Measurement." The valuations of the trade names and trademarks were based on the relief-from-royalty method (income approach). The charity licensing agreements were valued using the with and without method (income approach). The total amount of goodwill recognized was $217.9 million.

The Company's estimates and assumptions related to the purchase price allocation are preliminary and subject to change during the measurement period (up to one year from the acquisition date) as it finalizes the valuations of assets acquired, the related deferred taxes and goodwill recorded in connection with the 2nd Ave. Acquisition.

***March 2019 Transaction***

On March 28, 2019 (the "Valuation Date"), the Company executed a restructuring of its equity (the "Restructuring Transaction"), refinancing of its debt (the "Refinancing Transaction"), and also entered into the Amended and Restated Limited Liability Company Agreement ("2019 LLC Agreement") and collectively with the Restructuring and Refinancing Transactions referred to as the "March 2019

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Transactions". The Company entered into the March 2019 Transactions with its existing equityholders, certain of its debt holders, and certain funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares Management Corporation.

As part of the March 2019 Transactions, the following transactions occurred:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The parties listed in the table below purchased 165,000 shares of new common stock of the Predecessor, representing 92.5%
of the outstanding equity of the surviving corporation, Savers Value Village, Inc. (formerly known as S-Evergreen Holding LLC) at the completion of the March 2019 Transactions.

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| | |
|:---|:---|
| **Determination of consideration *(in thousands)*** | **Amount** |
|  Crescent | $108814 |
|  Ares | 45000 |
|  Goldpoint | 11186 |
|  Total cash consideration | $165000 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• All senior notes held by parties acquiring new common stock as described above, were settled for the issuance of an
additional 7.5% of new equity worth $13.4 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• All previously existing equity securities (including all shares of common stock, options, and restricted stock units)
issued by the Predecessor were canceled and extinguished.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company obtained a $540.0 million first lien term loan, a $60.0 million revolving line of credit, and a
$50.0 million second lien term loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The obligations under the existing credit agreements were paid in full in cash. The payment of such debt was included in
the consideration transferred.

The March 2019 Transactions were accounted for as a business combination in accordance with ASC 805, and the purchase price has been allocated to the assets acquired and the liabilities assumed based on their fair value at the acquisition date on March 28, 2019. The excess purchase price over the fair value of the net assets acquired is recorded as goodwill. The Company elected to apply push down accounting in accordance with ASC 805. The valuation process included a review of financial and other data, the projected and operating performance of the business, analysis of the economic and financial market conditions, and the ability to generate future cash flows through established revenue channels. The Company recorded $12.0 million of transaction costs during the period from December 30, 2018 to March 27, 2019 associated with the March 2019 Transactions. The charges were included in selling, general, and administrative expenses.

The intangible assets and liabilities acquired and their respective weighted average lives are as follows:

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| | | |
|:---|:---|:---|
| *(in thousands)* | **Amount** | **Weighted average<br>life** |
|  Trade names and trademarks | $92500 | Indefinite |
|  Charity licensing agreements | 74500 | 15.0 years |
|  Lease intangible assets | 37948 | 8.0 years |
|  Total intangible assets | $204948 |  |
|  Lease intangible liabilities | 6538 | 5.2 years |

---

***Pro forma financial information (unaudited)***

The following table presents the unaudited pro forma results for fiscal year 2021 and fiscal year 2020 as though the 2nd Ave. Acquisition had occurred as of the beginning of fiscal year 2020. The

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unaudited pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the 2nd Ave. Acquisition taken place at such time. The unaudited pro forma results presented below reflect pro forma adjustments related to the 2nd Ave. Acquisition, including differences in interest expense resulting from debt issued and debt repaid in connection with the 2nd Ave. Acquisition of $11.8 million and the effects of the step-up in inventory on the cost of merchandise sold of $1.8 million.

---

| | | |
|:---|:---|:---|
|  | **Pro forma** | **Pro forma** |
| *(in thousands)* | **Fiscal Year 2021** | **Fiscal Year 2020** |
|  Net sales | $1286160 | $897885 |
|  Net income (loss) | 96681 | (84372) |

---

The following table presents the unaudited pro forma results for the fiscal year ended December 28, 2019. The unaudited pro forma financial information presents the results of operations of the Company as though the March 2019 Transactions had occurred as of the beginning of fiscal year ended December 29, 2018. The unaudited pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition taken place at such time. The unaudited pro forma results presented below reflect pro forma adjustments related to the March 2019 Transactions, including increased amortization and depreciation resulting from the application of purchase accounting, differences in interest expense resulting from debt issued in connection with the March 2019 Transactions, and the effects of the step-up in inventory on cost of merchandise sold.

---

| | |
|:---|:---|
|  | **Pro forma** |
| *(in thousands)* | **Fiscal Year Ended<br>December 28, 2019** |
|  Net sales | $1205499 |
|  Net loss | (40136) |

---

**Note 4. Property and Equipment** 

Property and equipment, net of related depreciation, consist of the following at January 1, 2022 and January 2, 2021:

---

| | | |
|:---|:---|:---|
| *(in thousands)* | **January 1,<br>2022** | **January 2,<br>2021** |
|  Furniture, fixtures, and equipment | $154532 | $105594 |
|  Leasehold improvements | 82586 | 80168 |
|  Total property and equipment | $237118 | $185762 |
|  Less accumulated depreciation | (103259) | (65800) |
|  Total property and equipment, net | $133859 | $119962 |

---

Depreciation expense for fiscal year 2021, fiscal year 2020, the period March 28, 2019 to December 28, 2019 (Successor), and the period December 30, 2018 to March 27, 2019 (Predecessor) was $38.1 million, $39.9 million, $25.9 million, and $17.0 million, respectively.

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**Note 5. Goodwill** 

Changes in the carrying value of goodwill by reportable segments were as follows:

---

| | | | |
|:---|:---|:---|:---|
| *(in thousands)* | **U.S.**<br>**Retail** | **Canada<br>Retail** | **Consolidated<br>Total** |
|  Balance at December 28, 2019 | $203368 | $274406 | $477774 |
|  Foreign currency translation effect |  | 8015 | 8015 |
|  Balance at January 2, 2021 | $203368 | $282421 | $485789 |
|  2nd Ave. Acquisition | 217916 |  | 217916 |
|  Foreign currency translation effect |  | 73 | 73 |
|  Balance at January 1, 2022 | $421284 | $282494 | $703778 |

---

During the fourth quarter of fiscal year 2021, the Company performed a qualitative impairment assessment (also known as the "Step 0" test). Under the Step 0 test, the Company assessed qualitative factors to determine whether it is more likely than not that the fair value of the U.S. and Canadian reporting units was less than their respective carrying values. Qualitative factors included, but were not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting unit and other entity and reporting unit specific events. Based on the results of the qualitative impairment assessment, we determined that it was not "more likely than not" that the fair value of the U.S. and Canadian reporting units was less than their respective carrying amounts. As such, the quantitative assessment was not required or performed.

As a result of its quantitative assessment during the fourth quarter of fiscal year 2020, the Company determined it was more likely than not that the fair values of the U.S. and Canadian reporting units were greater than their carrying amounts. No goodwill impairment charges were recorded during any of the periods presented.

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**Note 6. Intangible Assets and Liabilities** 

The components of intangible assets and liabilities were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **January 1, 2022** | **January 1, 2022** | **January 1, 2022** |
| *(in thousands)* | **Gross carrying<br>amount** | **Accumulated<br>amortization** | **Net carrying<br>amount** |
|  Assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade names and trademarks | $118000 | $— | $118000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charity licensing agreements | 84880 | (24280) | 60600 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease intangible asset | 43745 | (13533) | 30212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $246625 | $(37813) | $208812 |
|  Liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease intangible liability | $(8491) | $3672 | $(4819) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $(8491) | $3672 | $(4819) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **January 2, 2021** | **January 2, 2021** | **January 2, 2021** |
| *(in thousands)* | **Gross carrying<br>amount** | **Accumulated<br>amortization** | **Net carrying<br>amount** |
|  Assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade names and trademarks | $92500 | $— | $92500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charity licensing agreements | 75498 | (18674) | 56824 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease intangible asset | 36135 | (6020) | 30115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $204133 | $(24694) | $179439 |
|  Liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease intangible liability | $(5449) | $1444 | $(4005) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $(5449) | $1444 | $(4005) |

---

The amortization expense associated with long-lived intangible assets net of liabilities was $9.2 million, $19.5 million, $6.5 million and $1.9 million, respectively, for fiscal year 2021, fiscal year 2020, the period March 28, 2019 to December 28, 2019 (Successor), and the period December 30, 2018 to March 27, 2019 (Predecessor).

At January 1, 2022, estimated future intangible amortization expense is expected to be as follows:

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| | |
|:---|:---|
| *(in thousands)* | *(in thousands)* |
| 2022 | $8080 |
| 2023 | 7837 |
| 2024 | 7613 |
| 2025 | 7234 |
| 2026 | 6581 |
|  Thereafter | 48648 |
|  | $85993 |

---

During fiscal year 2021, fiscal year 2020, and the period March 28, 2019 to December 28, 2019 (Successor), the Company performed its annual indefinite lived intangible asset impairment test during the fourth quarter utilizing a qualitative analysis and concluded it was more likely than not the fair value of the intangible assets was greater than its carrying value and no impairment charge was required.

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**Note 7. Indebtedness** 

Long-term debt consists of the following at January 1, 2022 and January 2, 2021:

---

| | | |
|:---|:---|:---|
| *(in thousands)* | **January 1,<br>2022** | **January 2,<br>2021** |
|  New Term Loan Facility & Incremental Term Facility<sup>(1)</sup> | $822937 | $— |
|  Mortgage loan payable<sup>(2)</sup> | 2741 |  |
|  U.S. first lien term loan<sup>(3)</sup> |  | 277423 |
|  Canada first lien term loan<sup>(4)</sup> |  | 288647 |
|  U.S. second lien term loan<sup>(5)</sup> |  | 64532 |
|  Total face value of debt | $825678 | $630602 |
|  Less current portion of long-term debt | 8424 | 5509 |
|  Less unamortized discount and issuance costs | 26561 | 26774 |
|  Total long-term debt, net of current portion | 790693 | 598319 |

---

------

(1) The Company had no related party borrowings under the New Term Loan Facility as of January 1, 2022.

(2) The Company had no related party borrowings under the mortgage loan payable as of January 1, 2022.

(3) Borrowings from related parties for the U.S. first lien term loan were $138.7 million as of January 2, 2021.

(4) Borrowings from related parties for the Canadian first lien term loan were $144.3 million as of January 2,
2021. (5) Borrowings from related parties for the U.S. second lien term loan were $64.5 million as of January 2, 2021.

***Debt Outstanding at January 1, 2022***

As part of the Ares Share Purchase Transaction in April 2021, the Company entered into new senior secured credit facilities, which consist of a $600.0 million first lien term loan ("New Term Loan Facility") and a $60.0 million revolving credit facility ("New Revolving Credit Facility" and, together with the New Term Loan Facility, the "Senior Secured Credit Facilities"). Proceeds from the New Term Loan Facility were used to pay off pre-existing term loans, resulting in a loss on debt extinguishment of $47.5 million. The Company's principal subsidiaries in the U.S. and Canada are borrowers under the Senior Secured Credit Facilities, and most of the Company's U.S. and Canadian subsidiaries are guarantors. The Senior Secured Credit Facilities are secured by a first-priority lien on substantially all assets of the borrowers and guarantors, subject to certain exceptions. The New Revolving Credit Facility is senior to the New Term Loan Facility in right of payment.

On November 8, 2021 the Company incurred $225.0 million of incremental term loans (the "Incremental Term Loan Facility") pursuant to an amendment to the credit agreement governing the Senior Secured Credit Facilities. The Incremental Term Loan Facility has substantially the same terms as the New Term Loan Facility. Proceeds from the Incremental Term Loan Facility were used primarily to finance the 2nd Ave. Acquisition.

*New Term Loan Facility & Incremental Term Loan Facility* 

The New Term Loan Facility and the Incremental Term Loan Facility both mature in April 2028. Total principal payments of $2.1 million are due quarterly. As of January 1, 2022, the aggregate principal balance outstanding was $822.9 million.

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The New Term Loan Facility and the Incremental Term Loan Facility bear interest at a variable rate equal to a reference rate plus a margin ranging from 4.50% to 5.75% based on loan type and our first lien net leverage ratio. The weighted average effective interest rate of borrowings under the New Term Facility and the Incremental Term Loan Facility was 6.37% for fiscal year 2021.

Beginning in 2023, the Company is required to prepay the New Term Loan Facility and the Incremental Term Loans Facility with a specified percentage of the Company's annual excess cash flow, if the first lien net leverage ratio exceeds 3.50 to 1.00. The Company is also required to prepay the New Term Loan Facility and the Incremental Term Loan Facility with a specified percentage of the net cash proceeds of certain asset sales, subject to customary reinvestment provisions, when the first lien leverage ratio exceeds 3.50 to 1.00. The Company is able to prepay amounts outstanding under the New Term Loan Facility and Incremental Term Facility without a prepayment premium.

*New Revolving Credit Facility* 

The New Revolving Credit Facility matures in April 2026. The maximum available amount under the New Revolving Credit Facility is $60.0 million, with $60.0 million available for letters of credit and a swingline sublimit of $10.0 million. As of January 1, 2022, the Company had not drawn on the New Revolving Credit Facility and had availability of $47.2 million. As of January 1, 2022, $12.8 million in face amount of letters of credit were outstanding under the New Revolving Credit Facility.

Borrowings under the New Revolving Credit Facility are permitted in both U.S. dollars and Canadian dollars, and interest is variable at a rate equal to the reference rate plus a margin of 2.25% or 3.25% based on loan type.

The applicable interest rates under the Senior Secured Credit Facilities will be reduced by 0.25% per annum upon the completion of an initial public offering by the Company.

The Senior Secured Credit Facilities also have a customary uncommitted incremental facility of (i) the greater of $136.0 million and EBITDA for the prior four fiscal quarters plus (ii) additional amounts based on the Company's net leverage ratio or interest coverage ratio plus (iii) certain specified additional amounts.

*Debt Acquired in 2nd Ave. Acquisition* 

As part of the 2nd Ave. Acquisition, the Company assumed a $2.7 million mortgage loan with monthly principal payments of $14.5 thousand, plus interest. The mortgage loan was scheduled to mature on September 1, 2037 and was secured by certain parcels of real property owned and leased by our subsidiary Village Economy Stores, Inc. The entire balance of this debt was repaid on January 6, 2022 (see Note 16).

***Debt Outstanding at January 2, 2021 but Repaid during Fiscal Year 2021***

On March 28, 2019, the Company completed a recapitalization and refinancing transaction. The transaction provided funding in the form of a $540.0 million first lien term loan, a $50.0 million second lien term loan, and a $60.0 million revolving line of credit. The $540.0 million first lien term loan and the $50.0 million second lien term loan were scheduled to mature in March 2024. On April 26, 2021, all term loans were repaid.

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*2019 First Lien Term Loan and Second Lien Term Loan* 

The first lien term loan was denominated equally in U.S. dollars and in Canadian dollars and was repaid in quarterly installments of $1.4 million. The weighted average effective interest rate of the U.S. first lien term loan was 8.75%, 8.82%, and 9.72% for fiscal year 2021, fiscal year 2020, and the period from March 28, 2019, to December 28, 2019, respectively. The weighted average effective interest rate of the Canadian first lien term loan was 9.00%, 9.07%, and 9.74% for fiscal year 2021, fiscal year 2020, and the period from March 28, 2019, to December 28, 2019, respectively.

The weighted average effective interest rate on the second lien term loan was 14.56%, 14.72%, and 14.68% for fiscal year 2021, fiscal year 2020, and the period from March 28, 2019, to December 28, 2019, respectively.

*2019 Revolving Line of Credit* 

The $60.0 million revolving line of credit was scheduled to mature in December 2023. This line of credit was replaced with the New Revolving Credit Facility. At January 2, 2021, the Company had $0 drawn on the line of credit, there were $13.2 million face amount of letters of credit outstanding and $46.8 million was available to borrow.

*Senior Subordinated Notes* 

On March 28, 2019, the Senior Subordinated Notes previously outstanding were all canceled in full in exchange for new common units representing 7.5% of outstanding units. The fair value of the units issued was $13.4 million. As a result, the Company recognized a gain on extinguishment of the Senior Subordinated Notes of $283.2 million in the Predecessor period.

***Aggregate principal payments***

Aggregate principal payments on debt at January 1, 2022 are as follows:

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| | |
|:---|:---|
| *(in thousands)* |  |
| 2022 | $8424 |
| 2023 | 8424 |
| 2024 | 6362 |
| 2025 | 10487 |
| 2026 | 8424 |
|  Thereafter | 783557 |
|  | $825678 |

---

***Related party debt***

All related party debt was paid off on April 26, 2021, and there was no debt due to related parties at January 1, 2022. Prior to April 26, 2021, the Company had debt arrangements with the Ares Funds, which are the majority shareholder of the Company.

**Note 8. Fair Value Measurements** 

The Company utilizes fair value measurements for its financial assets and financial liabilities and fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the

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financial statements on a recurring basis. Fair value is based upon a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company
has the ability to access at the measurement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The following table presents financial assets and financial liabilities that are measured at fair value on a recurring basis at January 1, 2022:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair Value measurements at reporting date using** | **Fair Value measurements at reporting date using** | **Fair Value measurements at reporting date using** | |
| *(in thousands)* | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Assets: |  |  |  |  |
|  Interest rate swap | $— | $188 | $— | $188 |
|  Cross currency swap |  | 14792 |  | 14792 |
|  Total | $— | $14980 | $— | $14980 |
|  Liabilities: |  |  |  |  |
|  Interest rate swap | $— | $4031 | $— | $4031 |
|  Cross currency swap |  | 1193 |  | 1193 |
|  Total | $— | $5224 | $— | $5224 |

---

The following table presents financial assets and financial liabilities that are measured at fair value on a recurring basis at January 2, 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair Value measurements at reporting date using** | **Fair Value measurements at reporting date using** | **Fair Value measurements at reporting date using** | |
| *(in thousands)* | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Assets: |  |  |  |  |
|  Money market | $1 | $— | $— | $1 |
|  Liabilities: |  |  |  |  |
|  Interest rate swap | $— | $8923 | $— | $8923 |
|  Forward contracts |  | 607 |  | 607 |
|  Total | $— | $9530 | $— | $9530 |

---

The interest rate swap and cross currency swap are valued using broker quotations, which include observable market information. Where independent pricing services provide fair values, the Company obtains an understanding of the methods used in pricing. As such, these instruments are classified within Level 2.

There were no transfers of financial assets or liabilities into or out of Level 1, Level 2, or Level 3 for fiscal year 2021 or fiscal year 2020.

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The Company recognizes or discloses the fair value of certain nonfinancial assets, primarily long-lived assets, goodwill, intangible assets, and certain other assets in connection with impairment evaluations. For fiscal year 2021, fiscal year 2020, the period March 28, 2019 to December 28, 2019 (Successor), and the period December 30, 2018 to March 27, 2019 (Predecessor), the Company did not record any material impairment charges to long-lived assets, goodwill, or intangible assets. Additionally, it measures exit costs associated with store closure at fair value. All of the Company's nonrecurring valuations use significant unobservable inputs and, therefore, fall under Level 3 of the fair value hierarchy.

The fair values of the Company's debt instruments approximate their carrying values as the current rates approximate rates on similar debt and were based on rate notices provided by the Administrative Agent for the amended Credit Agreement (Level 2 inputs) at January 1, 2022 and January 2, 2021 (see Note 7).

**Note 9. Derivative Financial Instruments** 

As a result of its operating and financing activities, the Company is exposed to market risks from changes in interest and foreign currency exchange rates. These market risks may adversely affect the Company's operating results and financial position. The Company seeks to minimize risk from changes in interest and foreign currency exchange rates through the use of derivative financial instruments when and to the extent deemed appropriate.

***Foreign currency contracts***

We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. We use derivative financial instruments to manage our exposure to foreign currency exchange rate risk, specifically forward sales of the CAD and USD-CAD cross currency swaps, locking in the exchange rate for a portion of the estimated cash flows of the Canadian operations. These contracts are entered into with large, reputable financial institutions that are monitored for counterparty risk. The Company enters into forward contracts primarily in Canadian dollars, and at January 1, 2022 and January 2, 2021, these forward contracts had U.S. dollar equivalent gross notional amounts of $40.6 million and $34.6 million, respectively. Additionally, at January 1, 2022 and January 2, 2021, the Company had entered into cross-currency swaps with notional amounts of $275.0 million and $0 million, respectively.

***Interest rate swap contracts***

Our market risk is affected by changes in interest rates. We maintain floating-rate debt that bears interest based on market rates plus an applicable spread. Because the interest rate on our floating-rate debt is tied to market rates, we manage our exposure to interest rate movements by effectively converting a portion of our floating-rate debt to fixed-rate debt. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Following the Ares Share Purchase Transaction, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

The company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness.

At January 1, 2022 and January 2, 2021, the Company had entered into interest rate swaps with notional amounts of $275.0 million and $265.3 million, respectively.

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The fair values of cross currency swap contracts, forward contracts, and interest rate swap contracts are as follows:

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| | | | |
|:---|:---|:---|:---|
| *(in thousands)* | **Balance Sheet Location** | **January 1,<br>2022** | **January 2,<br>2021** |
|  Derivatives not designated as hedging instruments: |  |  |  |
|  Interest rate swap | Derivative liability—current | $— | $(2845) |
|  Cross currency swap | Derivative liability—current | (1193) |  |
|  Forward contracts | Derivative liability—current |  | (607) |
|  Interest rate swap | Derivative liability—non-current |  | (6078) |
|  Total derivatives in a liability position |  | $(1193) | $(9530) |
|  Interest rate swap | Derivative asset—non-current | $— | $— |
|  Cross currency swap | Derivative asset—non-current | 14792 |  |
|  Total derivatives in an asset position |  | $14792 | $— |
|  Derivatives designated as hedging instruments: |  |  |  |
|  Interest rate swap | Derivative liability—current | $(2568) | $— |
|  Interest rate swap | Derivative liability—non-current | (1463) |  |
|  Total derivatives in a liability position |  | $(4031) | $— |
|  Interest rate swap | Derivative asset—non-current | $188 | $— |
|  Total derivatives in an asset position |  | $188 | $— |

---

The impact of derivative financial instruments on the Consolidated Statements of Operations and Comprehensive Income (Loss) during fiscal year 2021, fiscal year 2020, the period from March 28, 2019 to December 28, 2019 (Successor), and the period from December 30, 2018 to March 27, 2019 (Predecessor) is as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
| *(in thousands)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  Gain (loss) on forward contract recognized in other (expense) income, net | $575 | $2924 | $(6476) | $(653) |
|  Gain on cross currency swap recognized in other (expense) income, net | $12594 | $— | $— | $— |
|  Loss on interest rate swap recognized in interest expense | $(214) | $(3458) | $(8898) | $— |

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The table below presents the effect of cash flow hedge accounting on accumulated other comprehensive income for fiscal year 2021:

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| | | | |
|:---|:---|:---|:---|
|  | **Amount of Gain (Loss)<br>Recognized in OCI** | **Location of Gain<br>(Loss) Reclassified<br>from AOCI into<br>Income** |  |
| *(in thousands)* | **Fiscal Year 2021** | **Location of Gain<br>(Loss) Reclassified<br>from AOCI into<br>Income** |  |
|  Interest rate swap | $1994 | Interest expense | $(548) |

---

Prior to fiscal year 2021 the Company did not designate any derivatives as hedges.

**Note 10. Segment Information** 

The Company consists of two reportable segments, U.S. Retail and Canada Retail. In addition to its two reportable segments, the Company has retail stores in Australia and its wholesale operations, which are classified within Other. 2nd Ave. is included within the U.S. Retail operating segment (see Note 3).

The Company evaluates the performance of its segments based on Segment Profit, which it defines as operating income, exclusive of corporate overhead and allocations, asset impairments, and certain separately disclosed unusual or infrequent items. Segment Profit, as defined herein, may not be comparable to similarly titled measures used by other entities. These measures should not be considered as alternatives to our GAAP measures of Operating income, Net income, or cash flows from operating activities as an indicator of the Company's performance or as a measure of liquidity.

During each of the periods presented, our segment results were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
| *(in thousands)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  Net sales: |  |  |  |  |
|  U.S. Retail | $644182 | $412272 | $469977 | $134720 |
|  Canada Retail | 481559 | 364159 | 405501 | 105003 |
|  Other | 78383 | 57579 | 70049 | 20249 |
|  Total net sales | 1204124 | 834010 | 945527 | 259972 |
|  Segment profit: |  |  |  |  |
|  U.S. Retail | 166988 | 44571 | 64430 | 13264 |
|  Canada Retail | 148137 | 100695 | 97521 | 22384 |
|  Other | 16235 | 18247 | 16607 | 4814 |
|  Total segment profit | 331360 | 163513 | 178558 | 40462 |
|  General corporate expenses | 149124 | 156668 | 108384 | 64652 |
|  Operating income (loss) | 182236 | 6845 | 70174 | (24190) |
|  Interest expense | (53565) | (69678) | (58003) | (20784) |
|  Other (expense) income, net | (3265) | 3410 | (6353) | 6605 |
| (Loss) gain on extinguishment of debt | (47541) |  |  | 283241 |
|  Income (loss) before taxes | 77865 | (59423) | 5818 | 244872 |
|  Income tax (benefit) expense | (5529) | 4060 | 4437 | 5256 |
|  Net (loss) income | $83394 | $(63483) | $1381 | $239616 |

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During each of the years presented, the Company's reportable segments incurred depreciation and amortization expense as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
| *(in thousands)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  Depreciation expense: |  |  |  |  |
|  U.S. Retail | $27066 | $28435 | $18594 | $12689 |
|  Canada Retail | 10306 | 10606 | 6735 | 3888 |
|  Other | 775 | 845 | 602 | 388 |
|  Total depreciation expense | $38147 | $39886 | $25931 | $16965 |
|  Amortization expense: |  |  |  |  |
|  U.S. Retail | $4201 | $11416 | $2714 | $943 |
|  Canada Retail | 4643 | 7761 | 3473 | 889 |
|  Other | 394 | 369 | 273 | 40 |
|  Total amortization expense | $9238 | $19546 | $6460 | $1872 |

---

The Company's long-lived tangible assets are primarily located in the U.S. and Canada, with a portion located in Australia. The locations of our long-lived tangible assets consisted of the following as of January 1, 2022 and January 2, 2021:

---

| | | |
|:---|:---|:---|
| *(in thousands)* | **January 1, 2022** | **January 2, 2021** |
|  U.S. | $107321 | $77764 |
|  Canada | 42522 | 41745 |
|  Other | 2534 | 2271 |
|  Total long-lived assets | $152377 | $121780 |

---

Net assets by geographic location as of January 1, 2022 and January 2, 2021 were as follows:

---

| | | |
|:---|:---|:---|
| *(in thousands)* | **January 1, 2022** | **January 2, 2021** |
|  U.S. | $359488 | $30385 |
|  Canada | (182277) | 127819 |
|  Other | 8221 | 15721 |
|  Total net assets | $185432 | $173925 |

---

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**Note 11. Income (Loss) Per Unit** 

For fiscal year 2021, fiscal year 2020, and the period from March 28, 2019 to December 28, 2019, basic and diluted income (loss) per unit were as follows:

---

| | | | |
|:---|:---|:---|:---|
| *(in thousands, except unit and per unit data)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28, 2019 to<br>December 28, 2019** |
|  *Basic income (loss) per unit:* |  |  |  |
|  Net income (loss) | $83394 | $(63483) | $1381 |
|  Weighted average common units outstanding for basic income (loss) per unit calculation | 198378867 | 188757245 | 178378867 |
|  Basic income (loss) per unit: | $0.42 | $(0.34) | $0.01 |
|  *Diluted income (loss) per unit:* |  |  |  |
|  Net income (loss) | $83394 | $(63483) | $1381 |
|  Weighted average common units outstanding for basic income (loss) per unit calculation | 198378867 | 188757245 | 178378867 |
|  Assumed exercise / vesting of: Options | 5390919 |  | 231907 |
|  Weighted average common units outstanding for diluted income (loss) per unit calculation<sup>(1)</sup> | 203769786 | 188757245 | 178610774 |
|  Diluted income (loss) per unit: | $0.41 | $(0.34) | $0.01 |

---

------

(1) For fiscal year 2020, the calculation of diluted net loss per unit excludes the effect 3,848,794 options if exercised
during the period under the treasury stock method as the inclusion of such options would be antidilutive to the period.

**Note 12. Equity** 

The 2019 LLC Agreement governs the outstanding equity of the Company at January 1, 2022, January 2, 2021, and at December 28, 2019. The Company's capital structure includes no provision for the issuance of preferred stock. The 2019 LLC Agreement, among other provisions, contains the following items:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Restrictions on the transfer of equity, rights of first refusal, and rights of first offer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A call right, as defined by the 2019 LLC Agreement, by the Company related to equity held by any employee stockholder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Certain take along rights and come along rights related to the sale or transfer of Common Units as defined in the 2019 LLC
Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Participation rights related to the issuance of any new securities as defined in the 2019 LLC Agreement;

***Common units***

The Company's common units consist of 198,378,867 units of Class A common units issued and outstanding as of January 1, 2022 and January 2, 2021. The Company does not have any Class B common units issued and outstanding as of January 1, 2022 or January 2, 2021. As of January 1, 2022 and January 2, 2021 there were 25,482,695 units of Class B common units authorized. Class A and

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Class B common units have the same rights except that Class A common units are entitled to one vote per unit while Class B common units have no voting rights. All holders of all series of common units have the same economic rights and participate in regular dividends based upon pro rata unit ownership. Time and performance-based options issued in connection with the 2019 Incentive Plan are redeemable for units of Class B common units (see Note 13).

***November 2021 Dividend***

On November 22, 2021, we paid a dividend of $75.0 million to our equityholders, the Ares Funds, using cash on hand. No executive officers or directors received dividend payments. The dividend payment is reflected as an increase to accumulated deficit in the Consolidated Balance Sheets.

**Note 13. Compensation Plans** 

***Equity based compensation***

The Company established the 2012 Incentive Plan (the 2012 Plan) on July 9, 2012. The 2012 Plan allowed for the issuance of time and performance-based options, equity and cash performance awards, and restricted equity awards, to directors, officers, key employees, and other key individuals for up to 26,932,280 units. An additional authorization of 21,545,824 units to the 2012 Plan was approved by the Board of Directors (Board) in 2013. The 2012 Plan was authorized for a total of 48,478,104 units as of January 2, 2016.

As of March 28, 2019, the 2012 Plan was canceled (see Note 3). The Company established the 2019 Incentive Plan (the 2019 Plan) which allows for the issuance of time and performance-based options to directors, officers, key employees, and other key individuals for up to 25,482,695 units of Class B common units.

Option awards are generally granted with an exercise price equal to the market price established by the Board at the date of grant. As of January 1, 2022, the Company had 19,581,512 option awards outstanding, of which 7,842,859 vest over a five-year period based on employee service and 11,738,653 vest upon completion of performance conditions. Performance measurements are based on the achievement of specified multiples of the Company's invested capital as defined. Option awards generally have 10-year contractual terms. When options are granted with other vesting terms, the vesting information is reflected in the valuation.

The Company recognized employee equity compensation expense related to its time-based options, net of tax effect, of $0.7 million, $0.4 million, $0.2 million, and $0.3 million, respectively, for fiscal year 2021, fiscal year 2020, the period from March 28, 2019 to December 28, 2019 (Successor) and December 30, 2018 to March 27, 2019 (Predecessor), respectively, in salaries, wages, and benefits expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). The total intrinsic value of options exercised during fiscal year 2021, fiscal year 2020, the period March 28, 2019 to December 28, 2019 (Successor), and the period December 30, 2018 to March 27, 2019 (Predecessor) was $0. As of January 1, 2022 there was $4.0 million of total unrecognized compensation cost related to nonvested unit-based compensation arrangements granted under the 2019 Plan. That cost is expected to be recognized on a straight-line basis over the weighted average vesting period of 5 years.

The total fair value of units vested for fiscal year 2021 and fiscal year 2020 was $15.1 million and $2.4 million respectively. No units were vested for the periods of March 28, 2019 to December 28, 2019 (Successor) and December 30, 2018 to March 27, 2019 (Predecessor).

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Employee options granted for fiscal year 2021, fiscal year 2020, the period March 28, 2019 to December 28, 2019 (Successor) and the period December 30, 2018 to March 27, 2019 (Predecessor) include 840,000, 3,153,323, 7,982,019, and 0 performance-based options. Performance-based options vest in 20% increments as performance measurements are achieved through the term of the options, which is five years from the grant date. Compensation expense for performance-based options is recognized when it is probable that performance measurements will be achieved. For the fiscal year 2021, fiscal year 2020, the period March 28, 2019 to December 28, 2019 (Successor), and the period December 30, 2018 to March 27, 2019 (Predecessor), no compensation expense was recognized as the achievement of performance measurements was determined not to be probable.

The fair value of each option award is estimated on the date of the grant using the Black-Scholes-Merton option pricing model. The following assumptions apply for fiscal year 2021, fiscal year 2020, and the fiscal year ended December 28, 2019 (Successor):

---

| | | | |
|:---|:---|:---|:---|
|  | **Fiscal Year 2021** | **Fiscal Year 2020** | **March 28, 2019 to<br>December 28, 2019** |
|  Expected volatility | 31.34% to 36.21% | 27.02% to 29.37% | 26.27% to 28.02% |
|  Risk-free interest rate | 0.53% to 0.55% | 0.47% to 1.72% | 1.401% to 1.908% |
|  Expected term (in years) | 6.50 | 6.50 | 6.50 |
|  Weighted average fair value of options | 0.87 | 0.52 | 0.31 |

---

Expected volatility is based on historic volatilities from publicly traded options of similar retail entities. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of each grant over the expected term of the options. The Company accounts for forfeitures as they are incurred. The expected term of options granted represents the period of time that options are expected to be outstanding.

A summary of the Company's employee option plan activity is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *(in thousands, except per unit data)* | **Number of<br>options** | **Weighted<br>average<br>exercise price** | **Weighted<br>average<br>remaining<br>contractual<br>term** | **Aggregate<br>intrinsic<br>value** |
|  Granted | 16549372 | $1.00 |  |  |
|  Exercised |  |  |  |  |
|  Forfeited or expired | (2038615) | 1.00 |  |  |
|  Outstanding at December 28, 2019 | 14510757 | 1.00 | 9.70 | $— |
|  Granted | 5255538 | 2.25 |  |  |
|  Exercised |  |  |  |  |
|  Forfeited or expired | (1174193) | 1.00 |  |  |
|  Outstanding at January 2, 2021 | 18592102 | 1.35 | 8.84 | 24252 |
|  Granted | 1400000 | 3.86 |  |  |
|  Exercised |  |  |  |  |
|  Forfeited or expired | (410590) | 1.01 |  |  |
|  Outstanding at January 1, 2022 | 19581512 | 1.53 | 8.03 | 89905 |
|  Exercisable at January 1, 2022 | 2554220 | $1.22 | 8.08 | $12521 |

---

***Restricted units***

On July 9, 2012, 12,668,285 vested restricted units of the 2012 Plan were issued. The restricted units were canceled and extinguished on March 28, 2019 (see Note 3).

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**Note 14. Commitments and Contingencies** 

***Leases***

The Company rents office facilities and retail store space from various unaffiliated lessors with expiration dates through 2032. The majority of the retail leases contain renewal options and require the Company to pay specific taxes, insurance, utilities, and maintenance costs either on a pro rata basis or based upon the actual expenses incurred.

Certain leases contain clauses that allow for the adjustment of minimum lease commitments based on increases in certain defined indices and also contain clauses for additional rent based on a percentage of gross sales as stipulated in the lease agreements. Many leases also provide for escalating minimum rental payments. Lease expense attributable to minimum rental payments is being recognized on the straight-line basis. Deferred rent represents the difference between straight-line rent expense recognized, and actual payments made on such leases.

Aggregate future minimum rental payments under these agreements at January 1, 2022 are as follows for each of the following fiscal years:

---

| | |
|:---|:---|
| *(in thousands)* | **Unaffiliated lessors** |
| 2022 | $141045 |
| 2023 | 132169 |
| 2024 | 114530 |
| 2025 | 96218 |
| 2026 | 77545 |
|  Thereafter | 174955 |
|  | $736462 |

---

Rent expense totaled $95.3 million, $94.6 million, $70.5 million, and $22.0 million for fiscal year 2021, fiscal year 2020, the periods March 28, 2019 to December 28, 2019 (Successor), and December 30, 2018 to March 27, 2019 (Predecessor), respectively. At January 1, 2022, the total amount of minimum rental payments to be received in the future under noncancelable sublease agreements was $4.9 million.

***Litigation and regulatory matters***

The Company is involved from time to time in claims, proceedings and litigation arising in the ordinary course of business. We have made accruals with respect to these matters, where appropriate, which are reflected in the consolidated financial statements. For some matters, the amount of liability is not probable or the amount cannot be reasonably estimated and therefore accruals have not been made. The Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it's in the best interest of the Company. From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company's financial position.

The Company periodically has inquiries from various government agencies regarding aspects of its operations. In 2014, the Company received such an inquiry from the Attorney General of the State of Washington. In December 2017, the Washington Attorney General ("AG") filed a lawsuit against the Company in State Court relating to, among other things, alleged deceptive advertisements and marketing practices. The parties completed the first phase of the lawsuit in October 2019. The second phase of the lawsuit was scheduled for June 2020, but in May 2020, the Washington Court of Appeals

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granted the Company's request for a discretionary review of the ruling in the first phase. On August 16, 2021, the Washington Court of Appeals ruled in the Company's favor and dismissed all of the remaining claims. At this point, the Company has prevailed on all claims asserted in the lawsuit. On November 17, 2021, the Washington Court of Appeals denied a Motion for Reconsideration filed by the Washington AG. Thereafter, on December 17, 2021, the Washington AG filed a Petition for Review in the Washington Supreme Court.

**Note 15. Income Taxes** 

Income (loss) before income tax (benefit) expense consists of the following for each period presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
| *(in thousands)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28, 2019<br>to December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  U.S. operations | $86828 | $(57496) | $(15488) | $250084 |
|  Foreign operations | (8963) | (1927) | 21306 | (5212) |
|  Total income (loss) before tax (benefit) expense | $77865 | $(59423) | $5818 | $244872 |

---

Components of income tax (benefit) expense are summarized as follows for each period presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
| *(in thousands)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  Current: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S.—federal | $(21) | $— | $— | $1545 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S.—state | 4661 | 28 |  | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign | 11701 | 16943 | 20749 | (11233) |
|  Deferred: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S.—federal | (7257) | (12602) | (4406) | 1240 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S.—state | (7223) | (2276) | 808 | 2272 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign | (7390) | 1967 | (12714) | 11369 |
|  Total income tax expense (benefit) | $(5529) | $4060 | $4437 | $5256 |

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The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows for the consolidated taxable entities at January 1, 2022, January 2, 2021, and December 28, 2019:

---

| | | |
|:---|:---|:---|
| *(in thousands)* | **January 1, 2022** | **January 2, 2021** |
|  Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net operating loss carryforwards | $3962 | $23734 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign tax credits | 2503 | 20579 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred rent | 2981 | 3659 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Insurance reserves | 2561 | 2969 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employment tax credits | 5315 | 4832 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred interest | 16764 | 28091 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred payroll | 7998 | 5083 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sec. 267 Deferred Basis | 8568 | 8635 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 15082 | 8042 |
|  Deferred tax asset, exclusive of valuation allowance | $65734 | $105624 |
|  Less valuation allowance | (4855) | (64382) |
|  Deferred tax asset, net | $60879 | $41242 |
|  Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment depreciation and amortization | 6206 | 7027 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Leasehold interests | 5857 | 6835 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charity licensing agreements | 13350 | 14831 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade names and trademarks | 23363 | 22703 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Partnership tax deferral | 4827 | 8341 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Partnership basis | 49499 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 7293 | 2921 |
|  Deferred tax liability | $110395 | $62658 |
|  Deferred tax liability, net | $49516 | $21416 |

---

As of January 1, 2022 and January 2, 2021, the Company had $0.0 million and $70.6 million, respectively, of U.S. federal net operating loss carryforwards. As of January 1, 2022 and January 2, 2021, the Company had $50.8 million and $99.0 million, respectively, of U.S. state net operating loss carryforwards. These net operating loss carryforwards expire between 2022 and 2040. As of January 1, 2022, the Company had a federal foreign tax credit of $2.5 million, which will expire in 2026, federal R&D credits of $1.0 million, which will expire between 2039 and 2041, and other federal credits of $5.3 million, which will expire between 2031 and 2041.

Section 382 of the Internal Revenue Code, and similar state regulations, contain provisions that may limit the NOL carryforwards available to be used to offset income in any given year upon the occurrence of certain events, including changes in the ownership within the meaning of Section 382. The Company reduced its tax attributes (NOLs and tax credits) and generated a limitation on utilization of such attributes resulting from the March 2019 Transactions and the Ares Share Purchase Transaction.

The Company maintains a valuation allowance of $2.1 million and $2.7 million related to its Canadian and Australian operations, respectively. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more-likely-than-not expected to be

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realized. Management evaluates and weighs all available positive and negative evidence such as historic results, projected future taxable income, future reversals of existing deferred tax liabilities, as well as prudent and feasible tax-planning strategies. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are utilizable, we believe it is more likely than not that the Company will realize the net benefits of its deferred tax assets, other than the deferred tax assets related to the unrealized foreign exchange loss in Canada and deferred tax assets in Australia for which a valuation allowance has been maintained due to uncertainties relating to their realization. On the basis of this evaluation, the Company maintains a valuation allowance for the deferred tax assets related to the unrealized foreign exchange loss in Canada and the Australian deferred tax assets has been provided due to uncertainties relating to their realization.

On March 27, 2020, Congress enacted the Coronavirus Aid Relief and Economic Security Act ("CARES Act"), in response to the COVID-19 pandemic. The CARES Act contain numerous income tax provisions, including refundable payroll tax credits, deferment of employer side social security payments, 100% utilization of net operating losses (NOLs) for taxable income in 2018, 2019 and 2020, 5 years NOL carryback from 2018, 2019 or 2020, interest limitation increase to 50% adjusted taxable income from 30% for tax years beginning January 1, 2019 and 2020, and immediate deduction of qualified improvement costs instead of depreciating them over 39 years. The Company has benefited from the increase of the 50% adjusted taxable income limitation on net interest expense deduction, immediate deductions of qualified improvement costs, and the deferment of employer side social security payments.

The differences between income taxes expected by applying the U.S. federal statutory tax rate and the amount of income taxes provided for are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
| *(in thousands)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  U.S. federal statutory income tax rate | 21.0% | 21.0% | 21.0% | 21.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax (benefit) expense at statutory rate | $16352 | $(12479) | $1223 | $51423 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in income taxes resulting from: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State taxes net of federal benefit | 8828 | (5006) | 666 | (5747) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax impact of restructuring | 24779 | (11293) | 121655 | (81681) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GILTI | 2438 | 3193 | 4331 | 1604 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in valuation allowance | (59527) | 8969 | (126915) | 38551 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CRA Settlement | 973 | 18611 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 4868 | 2065 | 3477 | 1106 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax Credits | (4240) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax (benefit) expense | $(5529) | $4060 | $4437 | $5256 |

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The following table summarizes the activity related to the Company's unrecognized tax benefits:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Successor** | **Successor** | **Successor** | **Predecessor** |
| *(in thousands)* | **Fiscal Year<br>2021** | **Fiscal Year<br>2020** | **March 28,<br>2019 to<br>December 28,<br>2019** | **December 30,<br>2018 to<br>March 27,<br>2019** |
|  Beginning gross unrecognized tax benefits balance | $1545 | $1545 | $1545 | $— |
|  Increase related to prior year tax position | 367 |  |  | 1545 |
|  Ending gross unrecognized tax benefits balance | $1912 | $1545 | $1545 | $1545 |

---

In the normal course of business, the Company is subject to examination by taxing authorities in the countries in which it operates. The Company is currently under audit by several taxing jurisdictions, federal and state. Although the outcome of tax audits is always uncertain, the Company has assessed the probable outcomes and potential exposure and believes that it has provided adequate amounts of tax, interest and penalties for any adjustments that may arise from these open tax years. The Company's continuing practice is to recognize interest and penalties related to income tax matters in income tax expense.

On December 9, 2020, the Company signed a settlement agreement with Canada Revenue Agency to resolve certain income and nonresident withholding tax disputes with respect to tax years 2012 – 2019. As a result of the settlement, the Company has recorded tax and interest expense of approximately CAD $28.1 million. Of the CAD $28.1 million, approximately CAD $26.2 million has been paid as of January 1, 2022.

As of January 1, 2022, the Company had not recognized a deferred tax liability on approximately $1.0 billion of the excess of the amount for financial reporting over the tax basis in the stock of certain foreign subsidiaries that is essentially permanent in duration. This amount becomes taxable upon a repatriation of assets from the subsidiaries or a disposal of the subsidiaries. It is not practicable to determine the amount of the related unrecognized deferred income tax liability.

**Note 16. Subsequent Events** 

On January 6, 2022, the Company repaid the mortgage loan payable acquired in the 2nd Ave. Acquisition resulting in a loss on extinguishment of $1.0 million.

On January 7, 2022, S-Evergreen Holding LLC was converted into a Delaware corporation, and the name of the Company was changed to "Savers Value Village, Inc." (the "Corporate Conversion"). In the Corporate Conversion, holders of S-Evergreen Holding LLC units received one share of common stock of Savers Value Village, Inc. for each unit of S-Evergreen Holding LLC, and corresponding adjustments were made to the Company's outstanding equity awards. All references to the Company's name have been changed to Savers Value Village, Inc. (formerly known as S-Evergreen Holding LLC).

The Company has evaluated subsequent events from the balance sheet date through May 4, 2022, the date the financial statements were available to be issued, and determined there are no other items to disclose.

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**SAVERS VALUE VILLAGE, INC.** 

(formerly known as S-Evergreen Holding LLC)

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share amounts, unaudited)

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **October 1,<br>2022** | **January 1,<br>2022** |
|  **Current assets:** |  |  |
|  Cash and cash equivalents | $114946 | $96812 |
|  Restricted cash | 968 | 1103 |
|  Trade and other receivables, net of allowance for doubtful accounts of $197 and $244 | 15503 | 6612 |
|  Inventories | 29966 | 24352 |
|  Prepaid expenses and other current assets | 33259 | 28847 |
|  Derivative asset – current | 8258 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total current assets** | 202900 | 157726 |
|  Property and equipment, net | 171521 | 133859 |
|  Right-of-use lease assets | 427351 |  |
|  Goodwill | 682370 | 703778 |
|  Intangible assets, net | 172091 | 208812 |
|  Derivative asset - non-current | 37507 | 14980 |
|  Other assets | 4057 | 3538 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total assets** | $1697797 | $1222693 |
|  **Current liabilities:** |  |  |
|  Accounts payable and accrued liabilities | $81453 | $72963 |
|  Accrued payroll and related taxes | 57015 | 76016 |
|  Lease liabilities - current | 71264 |  |
|  Derivative liability – current |  | 3761 |
|  Current portion of long-term debt | 8250 | 8424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total current liabilities** | 217982 | 161164 |
|  Insurance reserves | 8656 | 7303 |
|  Deferred rent |  | 11393 |
|  Deferred compensation | 2086 | 2530 |
|  Lease intangible liability, net |  | 4819 |
|  Long-term debt, net | 784480 | 790693 |
|  Lease liabilities - non-current | 344156 |  |
|  Deferred tax liabilities | 63052 | 49516 |
|  Other liabilities | 4057 | 9843 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total liabilities** | 1424469 | 1037261 |
|  **Stockholders' equity:** |  |  |
|  Common A Units, 0 and 198,378,867 units authorized, issued, and outstanding as of October 1, 2022, and January 1, 2022 |  | 223379 |
|  Common B Units, 0 and 25,482,695 units authorized as of October 1, 2022, and January 1, 2022; 0 shares issued and outstanding as of October 1, 2022, and January 1, 2022 |  | 1297 |
|  Common stock, 0.000001 par value, 1,000,000,000 shares authorized as of October 1, 2022; 198,442,330 shares issued and outstanding as of October 1, 2022 |  |  |
|  Additional paid-in capital | 225465 |  |
|  Retained earnings (accumulated deficit) | 4578 | (53708) |
|  Accumulated other comprehensive income | 43285 | 14464 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total stockholders' equity** | 273328 | 185432 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total liabilities and stockholders' equity** | $1697797 | $1222693 |

---

*The accompanying notes are an integral part of these condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**SAVERS VALUE VILLAGE, INC.** 

(formerly known as S-Evergreen Holding LLC)

Condensed Consolidated Statements of Operations and Comprehensive Income

(Dollars in thousands, except share and per share amounts, unaudited)

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
|  | **October 1, 2022** | **October 2, 2021** |
|  Net sales | $1070427 | $859291 |
|  Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cost of merchandise sold exclusive of depreciation and amortization | 443372 | 317620 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries, wages, and benefits | 199643 | 168314 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 227236 | 186858 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 40110 | 33972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 910361 | 706764 |
|  Operating income | 160066 | 152527 |
|  Other expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (45855) | (40591) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Loss) gain on foreign currency, net | (26639) | 1902 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other income (expense), net | 209 | (2301) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on extinguishment of debt | (1023) | (47541) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other expense, net | (73308) | (88531) |
|  Income before income tax expense | 86758 | 63996 |
|  Income tax expense | 28472 | 8340 |
|  Net income | $58286 | $55656 |
|  Other comprehensive income: |  |  |
|  Foreign currency translation adjustments | 9368 | 607 |
|  Cash flow hedges | 19453 | 107 |
|  Other comprehensive income, net of taxes | 28821 | 714 |
|  Comprehensive income | $87107 | $56370 |
|  Net income per share, basic | $0.29 | $0.28 |
|  Net income per share, diluted | $0.28 | $0.28 |
|  Weighted average number of shares outstanding used to compute net income per share, basic | 198387534 | 198378867 |
|  Weighted average number of shares outstanding used to compute net income per share, diluted | 204796324 | 201821886 |

---

*The accompanying notes are an integral part of these condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**SAVERS VALUE VILLAGE, INC.** 

(formerly known as S-Evergreen Holding LLC)

Condensed Consolidated Statements of Stockholders' Equity

(Dollars in thousands, except share amounts, unaudited)

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common A units** | **Common A units** | **Common B units** | **Common B units** | **Common stock** | **Common stock** | **Additional<br>Paid in<br>Capital** | **Retained<br>earnings<br>(accumulated<br>deficit)** | **Accumulated<br>other<br>comprehensive<br>income** | |
| *(unaudited)* | **Units** | **Amount** | **Units** | **Amount** | **Shares** | **Amount** | **Additional<br>Paid in<br>Capital** | **Retained<br>earnings<br>(accumulated<br>deficit)** | **Accumulated<br>other<br>comprehensive<br>income** | **Total** |
|  Balance as of January 1, 2022 | 198378867 | $223379 |  | $1297 |  | $— | $— | $(53708) | $14464 | $185432 |
|  Corporate Conversion of common units to common stock | (198378867) | (223379) |  | (1297) | 198378867 |  | 224676 |  |  |  |
|  Net Income |  |  |  |  |  |  |  | 58286 |  | 58286 |
|  Common stock equity compensation |  |  |  |  |  |  | 1081 |  |  | 1081 |
|  Common stock issued, net |  |  |  |  | 63463 |  | (292) |  |  | (292) |
|  Other comprehensive income, net of taxes |  |  |  |  |  |  |  |  | 28821 | 28821 |
|  Balance as of October 1, 2022 |  | $— |  | $— | 198442330 | $— | $225465 | $4578 | $43285 | $273328 |
|  Balance as of January 2, 2021 | 198378867 | $223379 |  | $565 |  | $— | $— | $(62102) | $12083 | $173925 |
|  Net income |  |  |  |  |  |  |  | 55656 |  | 55656 |
|  Common B units equity compensation |  |  |  | 547 |  |  |  |  |  | 547 |
|  Other comprehensive income, net of taxes |  |  |  |  |  |  |  |  | 714 | 714 |
|  Balance as of October 2, 2021 | 198378867 | $223379 |  | $1112 |  | $— | $— | $(6446) | $12797 | $230842 |

---

*The accompanying notes are an integral part of these condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**SAVERS VALUE VILLAGE, INC.** 

(formerly known as S-Evergreen Holding LLC)

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands, unaudited)

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
|  | **October 1,<br>2022** | **October 2,<br>2021** |
|  Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $58286 | $55656 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation expense | 1081 | 547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt issuance costs and term debt discount | 2974 | 2619 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 40110 | 33972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease expense | 86109 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax benefit (expense) | 14001 | (3321) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on extinguishment of debt | 1023 | 47541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noncash interest expense |  | 3415 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other items, net | 34890 | 3750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and other receivables | (9222) | 3290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories | (6002) | (180) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | (10020) | (9168) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accrued liabilities | 4780 | 4990 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued payroll and related taxes | (17026) | 6809 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | (82876) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | (475) | (4034) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | 117633 | 145886 |
|  Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of property and equipment | (80624) | (23327) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net settlement of derivative instruments | (774) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (81398) | (23327) |
|  Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from issuance of long-term debt |  | 600000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal payments on long-term debt | (8929) | (420690) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal payments on long-term debt to related parties |  | (222910) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advances on revolving line of credit | 53000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of revolving line of credit | (53000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepayment premium on extinguishment of debt | (1023) | (14687) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepayment premium on extinguishment of debt to related parties |  | (8122) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net settlement of derivative instruments | (1057) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares withheld to cover taxes | (292) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment of debt issuance costs and debt discount | (161) | (23813) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in financing activities | (11462) | (90222) |
|  Effect of exchange rate changes on cash | (6774) | (8851) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net change in cash and cash equivalents | 17999 | 23486 |
|  Cash, cash equivalents and restricted cash at beginning of period | 97915 | 137859 |
|  Cash, cash equivalents and restricted cash at end of period | $115914 | $161345 |
|  Supplemental disclosures of cash flow information: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest paid on debt | $42715 | $32467 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes paid | $24839 | $5391 |
|  Supplemental disclosure of noncash investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noncash capital expenditures | $4722 | $8168 |

---

*The accompanying notes are an integral part of these condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**Savers Value Village, Inc. (formerly known as S-Evergreen Holding LLC)** 

**Notes to Condensed Consolidated Financial Statements (unaudited)** 

**Note 1. Description of Business and Basis of Presentation** 

***Description of business***

Savers Value Village, Inc. (formerly known as S-Evergreen Holding LLC) (the "Company", "we", or "our") was established on March 22, 2019, and is headquartered in Bellevue, Washington. The Company, together with its wholly owned subsidiaries, sells second-hand merchandise primarily in retail stores located in the United States ("U.S."), Canada, and Australia.

***Corporate Conversion***

On January 7, 2022, S-Evergreen Holding LLC was converted into a Delaware corporation, and the name of the Company was changed to Savers Value Village, Inc. (the "Corporate Conversion"). In the Corporate Conversion, holders of S-Evergreen Holding LLC units received one share of common stock of Savers Value Village, Inc. for each unit of S-Evergreen Holding LLC, and corresponding adjustments were made to the Company's outstanding equity awards.

***Change in Presentation***

During the Corporate Conversion, a single class of common stock was created with 1,000,000,000 shares of stock authorized, but the Company presented the common stock as two classes with the authorized shares reflecting the pre-conversion authorized units. The presentation has been updated to combine the two classes of stock into a single class and reflect the amount of stock authorized.

***Basis of presentation***

The accompanying interim condensed consolidated financial statements have not been audited but, in the opinion of the Company, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of its financial position as of October 1, 2022, and its results of operations and cash flows for the nine months ended October 1, 2022, and October 2, 2021. These interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the fiscal year ended January 1, 2022, and the notes thereto. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Except as described in Note 2, there have been no material changes to the Company's significant accounting policies as described in the Company's consolidated financial statements as of and for the fiscal year ended January 1, 2022.

The Company reports on a fiscal year basis, which ends on the Saturday nearest December 31. Both the nine-month interim reporting period ended on October 1, 2022, and the comparative period ended October 2, 2021, consisted of 39 weeks. All dollar amounts in the Notes to these interim unaudited condensed consolidated financial statements, with the exception of share and per share amounts, are rounded to the nearest thousand unless otherwise indicated.

***Impact of the COVID-19 pandemic***

In connection with the global COVID-19 pandemic, the Company received wage subsidies from the Canadian and Australian governments, which are reflected as a reduction to cost of merchandise sold and salaries, wages, and benefits on the Condensed Consolidated Statements of Operations and Comprehensive Income. These subsidies were not loans to the Company. These wage subsidies helped the Company to avoid reductions in workforce in Canada and Australia during the pandemic.

During the nine months ended October 2, 2021, the Company's Canadian operations received $21.7 million in wage subsidies, which are presented as reductions to cost of merchandise sold and

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##### [**Table of Contents**](#toc)
salaries, wages, and benefits of $13.4 million and $8.3 million, respectively. The Company did not receive any wage subsidies during the nine months ended October 1, 2022. There were no unfulfilled conditions or contingencies relating to these subsidies as of October 1, 2022.

**Note 2. Summary of Significant Accounting Policies** 

***Use of estimates***

Preparation of these interim unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. These estimates are based on information that is currently available and on various other assumptions that are believed to be reasonable under the circumstances. Certain items subject to such estimates and assumptions include, but are not limited to, the useful lives of property and equipment, equity-based compensation, insurance reserves, allowances on trade and other receivables, valuation of intangibles and goodwill, and income taxes. Actual results could vary from those estimates under different assumptions or conditions.

***Revenue recognition***

*Retail sales*. The Company recognizes revenue pursuant to ASC 606, *Revenue from Contracts with Customers*. Revenue is recorded for store sales upon the purchase of merchandise by customers. Sales taxes collected from customers are not considered revenue and are included in accrued liabilities until remitted to the taxing authorities.

Revenue is recorded net of promotional price reductions. The Company does not record a sales return reserve as no right of return exists for customers. Only exchanges are accepted within fourteen days of purchase.

*Gift Cards.* Revenue is not recorded on the issuance of gift cards. A current liability is recorded upon issuance, and revenue is recognized when the gift card is redeemed for merchandise.

*Customer Loyalty Program*. In 2017, the Company launched its loyalty program called the Super Savers Club<sup>™</sup> (the "Program"). The Program features unique benefits for loyalty members. Under the Program, members accumulate points based on purchase activity and earn rewards by reaching certain point thresholds. Members earn rewards in the form of discount savings certificates. Rewards earned are valid through the stated expiration date, which is 60 days from the issuance date of the reward. Rewards not redeemed during the 60-day redemption period are forfeited.

*Wholesale sales.* Sales of residual products are recognized at the point of delivery with no right of return and exclude shipping and handling costs, which are paid by the customer. The Company does not have a significant financing component as customers pay within one year of title transfer.

Net sales during the nine months ended October 1, 2022, and October 2, 2021, consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
| *(in thousands)* | **October 1, 2022** | **October 2, 2021** |
|  Retail sales | $1015682 | $822587 |
|  Wholesale sales | 54745 | 36704 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total net sales | $1070427 | $859291 |

---

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##### [**Table of Contents**](#toc)
***Emerging growth company***

Following amendments to the Securities Act Rule 405 and the Exchange Act Rule 12b-2 in September 2022, the Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised, and it has different application dates for public and private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's financial statements with other public companies difficult because of the potential differences in accounting standards used.

***Recently adopted accounting standards***

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases, requiring the recognition of lease assets and lease liabilities on the balance sheet and the disclosure of key information about the leasing arrangements. The new guidance is applied utilizing a modified retrospective approach and is effective for annual periods beginning after December 15, 2021. In July 2018, the FASB issued ASU 2018-11, Leases ("Topic 842"), which provides entities with an additional (and optional) transition method to adopt the new lease requirements by allowing entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted this guidance at the beginning of fiscal year 2022. In addition, the Company elected the transition package of practical expedients permitted within the standard, which allowed it to carry forward the historical lease classification. Upon the adoption of the new lease standard on January 2, 2022, the Company recognized right-of-use assets of $462.2 million and lease liabilities of $443.0 million (including a current liability of $69.0 million) in the Condensed Consolidated Balance Sheets and reclassified certain balances related to existing leases. The right-of-use assets balance as of January 2, 2022, is adjusted for $25.4 million of net favorable intangible lease assets and unfavorable lease liabilities, $11.4 million of deferred rent liabilities, $8.9 million of prepaid rent assets and $3.7 million of lease termination liabilities recognized under the previous lease standard. There was no impact to Retained earnings (accumulated deficit) on the Condensed Consolidated Balance Sheets at adoption. See Note 8 for more information.

***Recently issued accounting pronouncements not yet adopted***

In June 2016, the FASB issued ASU 2016-13, *Financial Instruments* - *Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments* and subsequently issued amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, ASU 2020-02, ASU

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2020-03 and ASU 2022-02 which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. For private companies, this standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company has not early adopted this standard and does not expect adoption of the new standard to have a material effect on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, *Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting*, to provide relief that, if elected, will require less accounting analysis and less accounting recognition for modifications related to reference rate reform. The amendments in this Update are effective for all entities as of March 12, 2020, through December 31, 2022. The Company is in the process of evaluating the impact of reference rate reform on its credit agreements and derivative instruments that are designated as cash flow hedges.

**Note 3. Property and Equipment** 

Property and equipment, net of depreciation, consisted of the following as of October 1, 2022, and January 1, 2022:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
| *(in thousands)* | **October 1,<br>2022** | **January 1,<br>2022** |
|  Furniture, fixtures, and equipment | $201989 | $154532 |
|  Leasehold improvements | 84297 | 82586 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total property and equipment | 286286 | 237118 |
|  Less accumulated depreciation | 114765 | 103259 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total property and equipment, net | $171521 | $133859 |

---

During the nine months ended October 1, 2022, the Company recorded $80.6 million of additions to furniture, fixtures, and equipment. These additions primarily consisted of new equipment in our retail stores, including customer check-out kiosks, and our centralized inventory processing centers ("CPCs").

During the nine months ended October 1, 2022, and October 2, 2021, the Company recognized depreciation expense of $36.1 million and $28.0 million, respectively.

**Note 4. Intangible Assets and Liabilities** 

The components of intangible assets were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of October 1, 2022** | **As of October 1, 2022** | **As of October 1, 2022** |
| *(in thousands)* | **Gross carrying<br>amount** | **Accumulated<br>amortization** | **Net carrying<br>amount** |
|  Assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade names and trademarks | $118000 | $— | $118000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charity licensing agreements | 81369 | (27278) | 54091 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $199369 | $(27278) | $172091 |

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The components of intangible assets and liabilities were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of January 1, 2022** | **As of January 1, 2022** | **As of January 1, 2022** |
| *(in thousands)* | **Gross carrying<br>amount** | **Accumulated<br>amortization** | **Net carrying<br>amount** |
|  Assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade names and trademarks | $118000 | $— | $118000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charity licensing agreements | 84880 | (24280) | 60600 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease intangible assets | 43745 | (13533) | 30212 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $246625 | $(37813) | $208812 |
|  Liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease intangible liabilities | $8491 | $(3672) | $4819 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $8491 | $(3672) | $4819 |

---

The amortization expense associated with long-lived intangible assets and liabilities was $4.0 million during the nine months ended October 1, 2022, and $6.0 million during the nine months ended October 2, 2021. Following the adoption of Topic 842 on January 2, 2022, amounts previously recognized as lease intangible assets and lease intangible liabilities are now reflected within right-of-use lease assets. See Note 8 for more information.

During the nine months ended October 1, 2022, the Company did not identify any impairment triggering events related to either its indefinite-lived trade names and trademarks or long-lived assets, including its charity licensing agreements and property and equipment.

**Note 5. Indebtedness** 

Long-term debt consisted of the following as of October 1, 2022, and January 1, 2022:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
| *(in thousands)* | **October 1,<br>2022** | **January 1,<br>2022** |
|  New Term Loan Facility & Incremental Term Facility | $816750 | $822937 |
|  Mortgage loan payable |  | 2741 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total face value of debt | 816750 | 825678 |
|  Less current portion of long-term debt | 8250 | 8424 |
|  Less unamortized discount and issuance costs | 24020 | 26561 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total long-term debt, net of current portion | $784480 | $790693 |

---

As of October 1, 2022, the Company had no outstanding amounts due on the New Revolving Credit Facility, which had availability of $48.6 million after giving effect to $11.4 million letters of credit outstanding. During the nine months ended October 1, 2022, the Company borrowed $53 million on the New Revolving Credit Facility related to the funding of general working capital needs. The Company repaid all borrowings on the New Revolving Credit Facility prior to October 1, 2022.

On January 6, 2022, the Company repaid the mortgage loan payable, which had a remaining principal balance of $2.7 million. In connection with the repayment, the Company recognized a loss on extinguishment of debt of $1.0 million.

The Company is in compliance with its debt covenants as of October 1, 2022.

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**Note 6. Fair Value Measurements** 

The Company utilizes fair value measurements for its financial assets and financial liabilities and fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is based upon a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company
has the ability to access at the measurement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement.

The following table presents financial assets that are measured at fair value on a recurring basis as of October 1, 2022:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair Value Hierarchy** | **Fair Value Hierarchy** | **Fair Value Hierarchy** | |
| *(in thousands)* | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Money market funds | $10001 | $— | $— | $10001 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest rate swap |  | 16983 |  | 16983 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cross currency swap |  | 27820 |  | 27820 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forward Contract |  | 962 |  | 962 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $10001 | $45765 | $— | $55766 |

---

The following table presents financial assets and financial liabilities that are measured at fair value on a recurring basis as of January 1, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair Value Hierarchy** | **Fair Value Hierarchy** | **Fair Value Hierarchy** | |
| *(in thousands)* | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest rate swap | $— | $188 | $— | $188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cross currency swap |  | 14792 |  | 14792 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $— | $14980 | $— | $14980 |
|  Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest rate swap | $— | $4031 | $— | $4031 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cross currency swap |  | 1193 |  | 1193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $— | $5224 | $— | $5224 |

---

Money market funds consist of short-term deposit with an original maturity of three months or less. The interest rate swaps, cross currency swaps and forward contracts are fair valued using independent pricing services and the Company obtains an understanding of the methods used in pricing. As such, these derivative instruments are classified within Level 2.

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There were no transfers of financial assets or liabilities between Level 1, Level 2, or Level 3 during the nine months ended October 1, 2022.

The Company recognizes or discloses the fair value of certain nonfinancial assets, primarily long-lived tangible assets, goodwill, intangible assets, and certain other assets in connection with impairment evaluations. All of the Company's nonrecurring valuations use significant unobservable inputs and, therefore, fall under Level 3 of the fair value hierarchy.

The fair values of the Company's debt instruments approximate their carrying values as the current rates approximate rates on similar debt and were based on rate notices provided by the Administrative Agent for the amended Credit Agreement (Level 2 inputs) as of October 1, 2022, and January 1, 2022 (see Note 5).

**Note 7. Segment Information** 

The Company consists of two reportable segments, U.S. Retail and Canada Retail. In addition to its two reportable segments, the Company has retail stores in Australia and its wholesale operations, which are classified within Other.

The Company evaluates the performance of its segments based on Segment Profit, which it defines as operating income, exclusive of corporate overhead and allocations, asset impairments, and certain separately disclosed unusual or infrequent items. Segment Profit, as defined herein, may not be comparable to similarly titled measures used by other entities. These measures should not be considered as alternatives to its GAAP measures of operating income, net income, or cash flows from operating activities as an indicator of the Company's performance or as a measure of liquidity. During each of the periods presented, the Company's segment results were as follows:

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
| *(in thousands)* | **October 1,<br>2022** | **October 2,<br>2021** |
|  Net sales: |  |  |
|  U.S. Retail | $555350 | $466783 |
|  Canada Retail | 434433 | 333739 |
|  Other | 80644 | 58769 |
|  Total net sales | 1070427 | 859291 |
|  Segment profit: |  |  |
|  U.S. Retail | 137003 | 135564 |
|  Canada Retail | 128246 | 108288 |
|  Other | 26520 | 13003 |
|  Total segment profit | 291769 | 256855 |
|  General corporate expenses | 131703 | 104328 |
|  Operating income | 160066 | 152527 |
|  Interest expense | (45855) | (40591) |
| (Loss) gain on foreign currency, net | (26639) | 1902 |
|  Other income (expense), net | 209 | (2301) |
|  Loss on extinguishment of debt | (1023) | (47541) |
|  Income before income tax expense | 86758 | 63996 |
|  Income tax expense | 28472 | 8340 |
|  Net income | $58286 | $55656 |

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**Note 8. Leases** 

The Company leases various real estate, including retail stores, warehouses, office space, and land. The Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the lease commencement date. To determine the present value of lease payments, the Company estimates an incremental borrowing rate which represents the rate used for a secured borrowing of a similar term as the lease. Our operating leases typically require payment of real estate taxes, common area maintenance and insurance. These components comprise the majority of our variable lease costs and are excluded from the present value of our lease obligations.

The Company's leases have remaining lease terms of 1 to 17 years. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. The option periods are generally not included in the lease term used to measure our lease liabilities and right-of-use assets upon commencement as exercise of the options is not reasonably certain. We remeasure the lease liability and right-of-use asset when we are reasonably certain to exercise a renewal option. Leases with an initial term of 12 months or less are not recorded on the balance sheet and payments are expensed as incurred. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

The components of total lease costs, net, consisted of the following:

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| | |
|:---|:---|
|  | **Nine Months Ended** |
| *(in thousands)* | **October 1, 2022** |
|  Operating lease costs | $86109 |
|  Short-term and variable lease costs | 36724 |
|  Sublease income | (1743) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total lease costs, net | $121090 |

---

Rent expense, prior to the adoption of ASC 842, was $74.8 million for the nine months ended October 2, 2021.

The maturities of our lease obligations for operating leases as of October 1, 2022, for the next five fiscal years and thereafter are as follows:

---

| | |
|:---|:---|
|  | **As of** |
| *(in thousands)* | **October 1, 2022** |
|  Remainder of 2022 (3 months) | $18041 |
| 2023 | 105367 |
| 2024 | 93199 |
| 2025 | 85499 |
| 2026 | 64636 |
|  Thereafter | 164104 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total undiscounted payments | 530846 |
|  Less: Interest | 115426 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Present value of lease obligations | $415420 |
|  Weighted average remaining lease term (years) | 6.37 |
|  Weighted average discount rate | 7.20 |

---

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As discussed in Note 2, the Company adopted ASC 842 in the first quarter of 2022, and as required, the following disclosure is provided for periods prior to adoption:

---

| | |
|:---|:---|
| *(in thousands)* | **Unaffiliated lessors** |
| 2022 | $100733 |
| 2023 | 106714 |
| 2024 | 93670 |
| 2025 | 78754 |
| 2026 | 64192 |
|  Thereafter | 159799 |
|  | $603862 |

---

The table included in the fiscal year 2021 audited consolidated financial statements within Note 14 included variable lease payments and other executory costs that should not have been included based on GAAP and has been updated in the table above.

Supplemental cash flow information related to leases is as follows:

---

| | |
|:---|:---|
|  | **Nine Months Ended** |
| *(in thousands)* | **October 1, 2022** |
|  Cash paid for amounts included in the measurement of lease obligations |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating cash flows for operating leases | $82876 |
|  Noncash investing activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Assets obtained in exchange for new operating lease obligations | $20258 |

---

**Note 9. Derivative Financial Instruments** 

As a result of its operating and financing activities, the Company is exposed to market risks from changes in interest and foreign currency exchange rates. These market risks may adversely affect the Company's operating results and financial position. The Company seeks to minimize risk from changes in interest and foreign currency exchange rates through the use of derivative financial instruments when and to the extent deemed appropriate.

***Foreign currency contracts***

The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations. The Company uses derivative financial instruments to manage its exposure to foreign currency exchange rate risk, specifically forward sales of the Canadian Dollar ("CAD") and U.S. Dollar ("USD") – CAD cross currency swaps. Forward sales contracts lock in the exchange rate for a portion of the estimated cash flows of the Company's Canadian operations and USD – CAD cross currency swaps manage the risk that arises from having USD-denominated assets and liabilities in an entity with a functional currency that is not the USD. These contracts are entered into with large, reputable financial institutions that are monitored for counterparty risk. As of October 1, 2022, and January 1, 2022, the Company's forward contracts had USD equivalent gross notional amounts of $42.6 million and $40.6 million, respectively. Additionally, as of October 1, 2022, and January 1, 2022, cross currency swaps with notional amounts of $275.0 million were outstanding.

***Interest rate swap contracts***

The Company's market risk is affected by changes in interest rates. The Company maintains floating-rate debt that bears interest based on market rates plus an applicable spread. Because the

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interest rate on its floating-rate debt is tied to market rates, the Company manages its exposure to interest rate movements by effectively converting a portion of its floating-rate debt to fixed-rate debt. Interest rate swaps involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount. These contracts are entered into with large, reputable financial institutions that are monitored for counterparty risk.

The Company has agreements with each of its derivative counterparties that contain a provision, whereby the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness.

As of October 1, 2022, and January 1, 2022, interest rate swaps with notional amounts of $275.0 million were outstanding.

The fair values of cross currency swap contracts, forward contracts, and interest rate swap contracts are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of** | **As of** |
| *(in thousands)* | **Balance Sheet<br>Location** | **October 1,<br>2022** | **January 1,<br>2022** |
|  Derivatives not designated as hedging instruments: | Derivatives not designated as hedging instruments: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forward contract | Derivative asset – current | $962 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cross currency swap | Derivative asset – current | 347 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cross currency swap | Derivative asset – non-current | 27473 | 14792 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives in an asset position | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives in an asset position | $28782 | $14792 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cross currency swap | Derivative liability – current | $— | $1193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives in a liability position | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives in a liability position | $— | $1193 |
|  Derivatives designated as hedging instruments: | Derivatives designated as hedging instruments: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest rate swap | Derivative asset – current | $6949 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest rate swap | Derivative asset – non-current | 10034 | 188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives in an asset position | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives in an asset position | $16983 | $188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest rate swap | Derivative liability – current | $— | $2568 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest rate swap | Derivative liability – non-current |  | 1463 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives in a liability position | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total derivatives in a liability position | $— | $4031 |
|  Total deferred gain on derivatives in accumulated other comprehensive income | Total deferred gain on derivatives in accumulated other comprehensive income | $21994 | $2542 |

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The impact of derivative financial instruments on the Consolidated Statements of Operations and Comprehensive Income during the nine months ended October 1, 2022, and nine months ended October 2, 2021, is as follows:

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| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
| *(in thousands)* | **October 1,<br>2022** | **October 2,<br>2021** |
|  Gain (loss) on forward contract recognized in (loss) gain on foreign currency, net | $1041 | $(432) |
|  Gain on cross currency swap recognized in (loss) gain on foreign currency, net | $13340 | $13043 |
|  Gain on interest rate swap recognized in interest expense | $378 | $13 |

---

The table below presents the effect of cash flow hedge accounting on accumulated other comprehensive income for the nine months ended October 1, 2022, and the nine months ended October 2, 2021.

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| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
| *(in thousands)* | **October 1,<br>2022** | **October 2,<br>2021** |
|  Amount of gain (loss) recognized in other comprehensive income | $19867 | $(203) |
|  Amount of gain (loss) reclassified from accumulated other comprehensive income into income | $414 | $(310) |

---

Amounts reclassified from accumulated other comprehensive income into income are recognized in interest expense. Within the next 12 months, the Company estimates that an additional $8.9 million of gains recognized within accumulated other comprehensive income will be reclassified as a decrease in interest expense.

**Note 10. Income Taxes** 

The income tax provision or benefit for interim periods is generally determined using an estimate of the Company's annual effective tax rate adjusted for any discrete items, if any, in the relevant period. Each quarter the estimate of the annual effective tax rate is updated, and if the Company's estimated tax rate changes, a cumulative adjustment is made.

The effective tax rate for the nine months ended October 1, 2022, was 32.8% of pre-tax income. The effective tax rate for the nine months ended October 2, 2021, was 13.0% of pre-tax income. The effective tax rates differed from the federal statutory rate primarily due to changes in the valuation allowances, tax credits, withholding taxes, state income taxes and foreign rate differential.

**Note 11. Accrued Payroll and Related Taxes** 

As of January 1, 2022, the Company had accrued $35.3 million in incentive compensation and related taxes for its employees, which was earned in fiscal year 2021 and subsequently paid in the first quarter of fiscal year 2022. As of October 1, 2022, the Company accrued $17.7 million in incentive compensation and related taxes, which it expects to pay out within the next six months.

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**Note 12. Earnings Per Share** 

For nine months ended October 1, 2022, and October 2, 2021, basic and diluted earnings per share were as follows:

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| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
| *(in thousands, except per share data)* | **October 1, 2022** | **October 2, 2021** |
|  *Basic earnings per share:* |  |  |
|  Net income | $58286 | $55656 |
|  Weighted average common share outstanding for basic earnings per unit calculation | 198387534 | 198378867 |
|  Basic earnings per share: | $0.29 | $0.28 |
|  *Diluted earnings per share:* |  |  |
|  Net income | $58286 | $55656 |
|  Weighted average common shares outstanding for basic earnings per share calculation | 198387534 | 198378867 |
|  Assumed exercise / vesting of: |  |  |
|  Options | 6408790 | 3443019 |
|  Weighted average common shares outstanding for diluted earnings per share calculation | 204796324 | 201821886 |
|  Diluted earnings per share: | $0.28 | $0.28 |

---

(1) For the nine months ended October 1, 2022, and the nine months ended October 2, 2021, there were no options
that would have had an antidilutive impact for the periods presented.

**Note 13. Commitments and Contingencies** 

***Litigation and regulatory matters***

The Company is involved from time to time in claims, proceedings and litigation arising in the ordinary course of business. The Company has made accruals with respect to these matters, where appropriate, which are reflected in the condensed consolidated financial statements. For some matters, the amount of liability is not probable or the amount cannot be reasonably estimated and therefore accruals have not been made. The Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if in the best interest of the Company**.** From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company's financial position.

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The Company periodically has inquiries from various government agencies regarding aspects of its operations. In 2014, the Company received such an inquiry from the Attorney General of the State of Washington. In December 2017, the Washington Attorney General ("AG") filed a lawsuit against the Company in State Court relating to, among other things, alleged deceptive advertisements and marketing practices. The parties completed the first phase of the lawsuit in October 2019. The second phase of the lawsuit was scheduled for June 2020, but in May 2020, the Washington Court of Appeals granted the Company's request for a discretionary review of the ruling in the first phase. On August 16, 2021, the Washington Court of Appeals ruled in the Company's favor and dismissed all of the remaining claims. At this point, the Company has prevailed on all claims asserted in the lawsuit. On November 17, 2021, the Washington Court of Appeals denied a Motion for Reconsideration filed by the Washington AG. Thereafter, on December 17, 2021, the Washington AG filed a Petition for Review in the Washington Supreme Court. On March 30, 2022, the Washington Supreme Court granted the Washington AG's petition to review the case. Oral argument took place at the Washington Supreme Court on October 25, 2022.

**Note 14. Subsequent Events** 

The Company has evaluated subsequent events from the balance sheet date through November 10th, 2022, the date the financial statements were available to be issued, and identified no additional events or transactions to disclose.

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| | |
|:---|:---|
| ![LOGO](g264743g78g28.jpg) | . ![LOGO](g264743g78m69.jpg) |

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<u>Independent Auditor's Report</u> 

To the Management of

Thrift Intermediate Holdings I, Inc. and Subsidiaries

We have audited the accompanying consolidated financial statements of Thrift Intermediate Holdings I, Inc. and Subsidiaries, which comprise the consolidated balance sheet as of January 3, 2021, and the related consolidated statements of operations, changes in equity and cash flows for the year then ended, and the related notes to the consolidated financial statements.

***Management's Responsibility for the Financial Statements***

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal controls relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

***Auditor's Responsibility***

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

***Opinion***

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Thrift Intermediate Holdings I, Inc. and Subsidiaries as of January 3, 2021, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ CohnReznick LLP

Parsippany, New Jersey

November 22, 2021

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**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Consolidated Balance Sheet** 

**January 3, 2021** 

---

| | |
|:---|:---|
| <u>Assets</u> |  |
|  Current assets |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | $14263749 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 711000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory | 5554056 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Store supplies | 451320 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 969676 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets | 21949801 |
|  Property and equipment, net of accumulated depreciation and amortization of $2,276,703 | 9459405 |
|  Goodwill, net of amortization of $7,542,543 | 51439009 |
|  Other intangible assets, net of amortization of $2,150,641 | 30625161 |
|  Deposits | 809225 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $114282601 |
| <u>Liabilities and Equity</u> |  |
|  Current liabilities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Line of credit | $5000000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of long-term debt | 584444 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of obligations under capital lease | 127992 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses | 2170160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current liabilities | 2508406 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales tax payable | 297456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued salaries and wages | 2154277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued severance pay, short-term | 410000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities | 13252735 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term debt, net of current portion and debt issuance costs | 42155082 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term portion of obligations under capital lease | 240781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Paycheck Protection Program loans payable | 8120700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued severance pay, long-term | 65000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | 2830 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred rent, long-term | 598270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 64435398 |
|  Commitments |  |
|  Equity |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, par value $0.01, 1,000 shares authorized, issued and outstanding as of January 3, 2021 | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | 59714696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit | (9867503) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total equity | 49847203 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $114282601 |

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**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Consolidated Statement of Operations** 

**Year Ended January 3, 2021** 

---

| | |
|:---|:---|
|  Sales, retail | $55922479 |
|  Sales, wholesale | 7953340 |
|  Lease revenue, real estate | 37750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total sales and revenues | 63913569 |
|  Cost of sales | 24323471 |
|  Gross profit | 39590098 |
|  Selling, general and administrative expenses | 38871487 |
|  Amortization expense on goodwill and intangible assets | 7528066 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 46399553 |
|  Loss from operations | (6809455) |
|  Other income (expenses) |  |
|  Interest expense | (2990569) |
|  Interest income | 2225 |
|  Loss of sale of property and equipment | (8353) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income (expenses) | (2996697) |
|  Net loss before income taxes | (9806152) |
|  Benefit from income taxes | (22854) |
|  Net loss | $(9783298) |

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**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Consolidated Statement of Changes in Equity Year Ended January 3, 2021** 

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Common<br>stock | Additional<br>paid-in capital | Accumulated<br>deficit | Total |
|  Balance, December 31, 2019 | $10 | $59714696 | $(84205) | $59630501 |
|  Net loss |  |  | (9783298) | (9783298) |
|  Balance, January 3, 2021 | $10 | $59714696 | $(9867503) | $49847203 |

---

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Consolidated Statement of Cash Flows** 

**Year Ended January 3, 2021** 

---

| | |
|:---|:---|
|  Cash flows from operating activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consolidated net loss | $(9783298) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile consolidated net loss to net cash provided by operating activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 1773183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangible assets | 1675871 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of goodwill | 5852195 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt issuance costs | 162649 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on sale of property and equipment | 8353 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes | 1022733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | (508410) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory | 295988 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Store supplies | (104420) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 331424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | (183485) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses | (504718) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued salaries and wages | 14766 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued severance pay | 290000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current liabilities | 378606 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales tax payable | 23041 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred rent | 420062 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | 1164540 |
|  Cash flows from investing activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of fixed assets | (1873783) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | (183070) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (2056853) |
|  Cash flows from financing activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of long-term debt | (584444) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments on capital lease obligations | (173864) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from line of credit | 5000000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from Paycheck Protection Program loans | 8120700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | 12362392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase in cash | 11470079 |
|  Cash, beginning | 2793670 |
|  Cash, end | $14263749 |
|  Supplemental disclosure of cash flow information |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash interest paid | $2989317 |
|  Supplemental disclosure of non-cash investing and financing activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment acquired under capital lease obligations | $60205 |

---

See Notes to Consolidated Financial Statements.

------

##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

**Note 1 - Nature of operations** 

Thrift Intermediate Holdings I, Inc. (the "Company"), through its subsidiaries, sells high-quality second-hand clothing, accessories and household items through 11 branded retail thrift stores under the 2nd Ave. brand. The Company's retail thrift stores are located in Pennsylvania, New Jersey, Maryland and Virginia. In 2021, the Company opened an additional retail location in Fairless Hills, Pennsylvania. Under the GreenDrop brand, the Company also operates a network of donation sites and a fleet of trucks which are used to collect home pick-up donations from individuals on behalf of several nationally based charities. In addition, the Company operates a wholesale business that sells clothing, shoes and other goods to distributors who sell these goods to international markets.

**Note 2 - Summary of significant accounting policies Principles of consolidation** 

The consolidated financial statements include the accounts and activities of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

**Basis of accounting** 

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP").

**Debt issuance costs** 

Costs incurred in obtaining financing, net of accumulated amortization, are reported as a direct deduction from the face amount of the long-term debt to which such costs relate. Amortization of loan acquisition fees is reported as a component of interest expense and is computed using the straight-line method, which approximates the effective interest method, over the term of the loan.

**Revenue recognition** 

Revenue is recognized when control of the promised good is transferred to the Company's customers, in an amount that depicts the consideration the Company expects to be entitled to in exchange for those goods. Revenue is not recognized unless collectability under the contract is considered probable, the contract has commercial substance and the contract has been approved. Additionally, the contract must contain payment terms, as well as the rights and commitments of both parties. The Company recognizes revenue from retail sales at the point of the sale to its customers. The Company recognizes revenue from wholesale sales when the goods purchased are shipped to the customer.

**Sales taxes collected from customers** 

The Company collects applicable sales taxes from customers and remits the entire amount to various states. The Company's accounting policy is to record the tax collected and remitted to the states net of revenue.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

**Accounts receivable** 

Accounts receivable primarily arise from wholesale sales to brokers. Management determines the allowance for uncollectible accounts based on prior Company experience and management's analysis of specific uncollectible accounts. Accounts receivable is stated net of an allowance, when applicable, for estimated uncollectible accounts. There was no allowance for doubtful accounts as of January 3, 2021.

---

| | | |
|:---|:---|:---|
|  | January 3,<br>2021 | December 31,<br>2019 |
|  Accounts receivable | $711000 | $202590 |

---

**Inventory** 

Inventories are based on direct costs and fees paid for acquisition along with processing costs for those items on the retail floor of the stores. Inventories are stated at the lower of cost or net realizable value with cost determined by the first-in, first-out method.

**Property and equipment** 

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed on the straight-line basis over the estimated useful lives of individual assets or classes of assets, ranging between three and fifteen years. Leasehold improvements are amortized over the shorter of the term of the lease or estimated useful life of the asset.

**Impairment of long-lived assets** 

The carrying value of long-lived assets is assessed for impairment by management when changes in circumstances indicate the assets may be impaired. If it is determined that impairment has occurred, the loss would be recognized during that period. The Company does not believe that any material impairment currently exists related to its long-lived assets.

**Use of estimates** 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

**Risk concentrations** 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company places its cash amounts with high-credit quality financial institutions. At times, such investments may exceed federally insured limits. At January 3, 2021, the Company has cash in excess of federally insured limits in the amount of approximately $13,742,020.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

**Major vendor** 

The Company has a number of contracts and long-standing relationships with charitable organizations which allows it to obtain a majority of its inventory. For the year ended January 3, 2021, 83% of its inventory was obtained from the same two charitable organizations.

**Deferred rent** 

The Company entered into operating lease agreements which contain provisions for future rent increases. The total amount of rental payments to be made over the lease term is being charged to rent expense on the straight-line method over the term of the lease. The difference between the rent expense recorded and the amount paid is recorded as deferred rent in the accompanying consolidated balance sheet.

**Advertising** 

Advertising costs are expensed as incurred and amounted to $156,952 for the year ended January 3, 2021.

**Income taxes** 

The Company accounts for income taxes pursuant to the asset and liability method, which requires deferred income tax assets and liabilities to be computed annually for temporary differences between the consolidated financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision or credit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

The Company has no unrecognized tax benefits at January 3, 2021.

The Company recognizes interest and penalties associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the consolidated balance sheet.

**Gift cards** 

Proceeds from the sale of gift cards are recorded as a liability and are recognized as net sales when the cards are redeemed. There is no expiry date on the gift cards. Management applies a breakage percentage dependent on the likelihood of use or the customer exercising the remaining balance, taking into account the period that has lapsed since the initial issuance of the gift card. Accordingly, gift cards five years and older are 100% written-off, four to five years old are 90% written-off, three to four years old are 80% written-off, two to three years old are 50% written-off and for less than 2 years are not written-off.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

**Note 3 - Property and equipment** 

Property and equipment consist of the following:

---

| | |
|:---|:---|
|  Vehicles | $153057.0 |
|  Office equipment | 757666.0 |
|  Store equipment | 3723482.0 |
|  Building and improvements | 26329.0 |
|  Leasehold improvements | 6881392.0 |
|  Land and land improvements | 75000.0 |
|  Purchased computer software | 119182.0 |
|  | 11736108.0 |
|  Less accumulated depreciation and amortization | 2276703.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $9459405.0 |

---

Depreciation and amortization of property and equipment amounted to $1,773,183 for the year ended January 3, 2021.

**Note 4 - Goodwill** 

The Company records the excess of the purchase price of acquired businesses over the fair value of the acquired identifiable tangible and intangible net assets as goodwill. The Company determined that the estimated useful life of the goodwill recognized in its acquisitions is 10 years. As such, the Company amortizes its goodwill over 10 years. Amortization expense of $5,852,195 was incurred for the year ended January 3, 2021. Amortization expense for the five years subsequent to January 3, 2021 amounts to $5,897,865 per year.

Goodwill consists of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Amortization<br>period | Cost | Accumulated<br>amortization | Net |
|  Goodwill | 10 years | $58978649 | $7539640 | $51439009 |

---

The Company tests for impairment when there is an event or circumstance that indicates that goodwill has been impaired. The Company first considers qualitative factors to determine whether the existence of events or circumstances leads to a conclusion that it is more likely than not that the fair value of the entity/reporting unit is less than its carrying amount. For the year ended January 3, 2021, no such triggering event has occurred. Management considered the qualitative factors and concluded that fair value of the entity is not less than its carrying amount.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

**Note 5 - Intangible assets** 

Intangible assets consist of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Amortization<br>period | Cost | Accumulated<br>amortization | Net |
|  Capitalized software | 5 to 12 years | $374382 | $67141 | $307241 |
|  Trade names | 20 years | 32401420 | 2083500 | 30317920 |
|  |  | $32775802 | $2150641 | $30625161 |

---

Amortization expense amounted to $1,675,871 for the year ended January 3, 2021. Future amortization expense annually is as follows:

---

| | |
|:---|:---|
| 2021 | $1694546.0 |
| 2022 | 1694546.0 |
| 2023 | 1688029.0 |
| 2024 | 1669845.0 |
| 2025 | 1645750.0 |
|  Total | $8392716.0 |

---

**Note 6 - Revolving line of credit** 

At January 3, 2021, the Company has a $5,000,000 revolving line of credit with a bank that expires September 18, 2025. Interest is charged at a rate per annum equal to LIBOR or the Wall Street Journal Prime Rate plus applicable margins of 5.5% and 4.5%, respectively. At January 3, 2021, $5,000,000 was outstanding under the line of credit agreement, respectively. The line of credit is secured by substantially all of the assets of the Company. This line is subject to various debt covenants.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

**Note 7 - Long-term debt** 

Long-term debt consists of the following at January 3, 2021:

---

| | |
|:---|:---|
|  Mortgage loan payable to a lender in fixed monthly principal payments of $14,537 plus interest. The mortgage matures on September 1, 2037 and is secured by substantially all of the assets of the Company. The loan bears interest at an initial rate of 7.75% and will increase annually by 2%. | $2915732 |
|  Senior Secured Term Note payable to a lender in quarterly installments of $102,500 with total unpaid principal due at maturity, including interest at a rate of LIBOR + 6.50%. The note matures on September 18, 2025 and is secured by substantially all of the assets of the Company. This note is subject to various debt covenants. | 40590000 |
|  Total | 43505732 |
|  Less current portion | 584444 |
|  Less unamortized debt issuance costs | 766206 |
|  Long-term debt | $42155082 |

---

On the Senior Secured Term Note payable and the revolving line of credit, as per the first amendment to the credit agreement dated November 2, 2020, the lender granted a financial covenant holiday, whereby the Company is not required to comply with the covenants for the quarters ending September 30, 2020, December 31, 2020 and March 31, 2021.

Principal payment requirements for the above obligations in each of the years subsequent to January 3, 2021 are as follows:

---

| | |
|:---|:---|
| 2022 | $584444.0 |
| 2023 | 584444.0 |
| 2024 | 584444.0 |
| 2025 | 584444.0 |
| 2026 | 41167956.0 |
|  Total | $43505732.0 |

---

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

**Note 8 - Capital lease obligations** 

Capital lease obligations consist of the following at January 3, 2021:

---

| | |
|:---|:---|
|  Equipment (A) | $7498 |
|  Equipment (B) | 2563 |
|  Equipment (C) | 4686 |
|  Equipment (D) | 2487 |
|  Vehicle (E) | 22851 |
|  Vehicle (F) | 30081 |
|  Computers (G) | 11140 |
|  Computers (H) | 28328 |
|  Computers (I) | 30959 |
|  Vehicle (J) | 22631 |
|  Vehicle (K) | 24535 |
|  Vehicle (L) | 30319 |
|  Vehicle (M) | 28638 |
|  Vehicle (N) | 99194 |
|  Vehicle (O) | 22863 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 368773 |
|  Less current portion | (127992) |
|  Long-term portion | $240781 |

---

(A) In January 2017, the Company entered into a lease agreement for equipment. The terms of the agreement require monthly
payments at an interest rate of 3.5% through December 2021.

(B) In May 2016, the Company entered into a lease agreement for equipment. The terms of the agreement require monthly
payments at an interest rate of 5.9% through April 2021.

(C) In August 2016, the Company entered into a lease agreement for equipment. The terms of the agreement require monthly
payments at an interest rate of 6.8% through April 2021.

(D) In May 2016, the Company entered into a lease agreement for equipment. The terms of the agreement require monthly
payments at an interest rate of 4.2% through April 2021.

(E) In December 2017, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 7.6% through November 2022.

(F) In May 2019, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 8% through August 2024.

(G) In October 2018, the Company entered into a lease agreement for computers. The terms of the agreement require monthly
payments at an interest rate of 5.6% through October 2021.

(H) In June 2019, the Company entered into a lease agreement for computers. The terms of the agreement require monthly
payments at an interest rate of 5% through June 2022.

(I) In September 2019, the Company entered into a lease agreement for computers. The terms of the agreement require monthly
payments at an interest rate of 10.1% through September 2022.

(J) In November 2018, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 5.6% through November 2023.

(K) In November 2018, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 5.6% through December 2023.

(L) In October 2019, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 5.2% through October 2024.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

(M) In October 2019, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 6.9% through October 2025.

(N) In February 2020, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 8.8% through January 2025.

(O) In June 2020, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 5% through June 2025.

Minimum future lease payments under capital leases are as follows at January 3, 2021:

---

| | |
|:---|:---|
| 2022 | $154948.0 |
| 2023 | 107522.0 |
| 2024 | 71963.0 |
| 2025 | 47843.0 |
| 2026 | 21040.0 |
|  Net minimum lease payments | 403316.0 |
|  Less amount representing imputed interest | 34543.0 |
|  Present value of future lease payments | $368773.0 |

---

The net book value of equipment and vehicles held under capital leases at January 3 is as follows:

---

| | |
|:---|:---|
|  Vehicles and equipment | $838982.0 |
|  Less accumulated depreciation | 438984.0 |
|  | $399998.0 |

---

**Note 9 - Income taxes** 

The income taxes consists of the following for the period from January 1, 2020 through January 3, 2021:

---

| | |
|:---|:---|
|  Current |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal | $(531687) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State | (513900) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | (1045587) |
|  Deferred |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal | (2697361) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State | (1056051) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation allowance | 4776145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 1022733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $(22854) |

---

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

Deferred tax assets consists of the following as of January 3, 2021:

---

| | |
|:---|:---|
|  Deferred tax assets |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred rent | $162926.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of goodwill and intangible assets | 1882090.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net operating loss carryforwards | 1821377.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense Limitation | 809884.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation - state | 192900.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory capitalization | 32709.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of asset | 2275.0 |
|  | 4904161.0 |

---

---

| | |
|:---|:---|
|  Deferred tax liabilities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | (128017) |
|  | (128017) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 4776144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation allowance on net deferred tax assets | (4776144) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net deferred tax assets | $— |

---

As of January 3, 2021, the Company has net operating loss carryforwards of approximately $6,305,000 available to reduce future federal and state taxable income, which expire in 2040.

**Note 10 - Self-insured group health plan** 

The Company has a self-funded health plan. At January 3, 2021, the Company recorded a reserve for claims to be settled in the subsequent year in the amount of approximately $140,000, included in accounts payable and accrued expenses. The Company also obtained stop loss coverage for any claims made in excess of $50,000 per insured.

**Note 11 - Commitments Operating leases** 

The Company occupies warehouse, retail and office facilities under various operating leases expiring through 2039. As of January 3, 2021, the Company leases 11 retail stores, two warehouses, one call center and three office facilities. The Company additionally lease trucks for the purpose of providing donation and transportation services to support the stores. Rent expense for the year ended January 3, 2021 was $4,044,076.

In November 2020, the Company signed a ten-year operating lease for a retail store that opened in 2021.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

Aggregate minimum future payments under the leases in each of the five years subsequent to January 3, 2021 and thereafter are as follows:

---

| | |
|:---|:---|
| 2021 | $5069006.0 |
| 2022 | 5404317.0 |
| 2023 | 5274199.0 |
| 2024 | 4709239.0 |
| 2025 | 4180164.0 |
|  Thereafter | 16254696.0 |
|  Total | $40891621.0 |

---

The Company additionally leases trucks and donation drop sites for the purpose of providing donation and transportation services to support the stores.

**Note 12 - Management fees** 

The Company paid management fees to a related party under the terms of an agreement. The agreement is equal to the greater of 4% of the Company's adjusted EBITDA, as defined in the master services agreement with our parent, for the year or $500,000 annually not to exceed $900,000 paid-out semiannually. The agreement will expire in 10 years from the effective date of September 18, 2019. Management fees incurred and paid for year-ended January 3, 2021 was $545,194, which are included in selling, general and administrative expenses.

**Note 13 - Retirement plan** 

The Company has an employee defined contribution plan, covering all eligible employees of the Company. Employees are eligible to participate in the Plan when they have reached age 21 and have either worked 1,000 hours within the first 12 months of employment or at the end of the plan year following completion of 12 months of employment with the Company. Each year, participants may contribute up to 90% of their annual compensation, as defined in the plan document, on a pre-tax or post-tax (Roth) basis, up to the maximum limits of the Internal Revenue Code. There are no employer contributions in 2020.

**Note 14 - Coronavirus impact** 

In December 2019 and early 2020, the coronavirus that causes COVID-19 was reported to have surfaced in China. The spread of this virus globally, including in early 2020, has caused business disruption domestically in the United States, the area in which the Company primarily operates. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration of this uncertainty. Therefore, while the Company expects this matter to negatively impact the Company's financial condition, results of operations, or cash flows, the extent of the financial impact and duration cannot be reasonably estimated at this time.

------

##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**Year Ended January 3, 2021** 

**Note 15 - Paycheck Protection Program Loans** 

On April 2020, the Company entered into unsecured promissory notes with a commercial bank for an aggregate principal amount of $8,120,700 pursuant to the Paycheck Protection Program (the "PPP Loan"), which was established under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and is administered by the U.S. Small Business Administration (the "SBA"). The outstanding borrowings under the PPP Loan require recipients to meet certain criteria set by the SBA in order to be eligible for full or partial forgiveness of such loans. The Company has submitted its application for PPP Loan forgiveness as of January 3, 2021 and believes it will qualify for full or partial forgiveness. However, there is no assurance the Company's PPP Loans or any portion thereof will be forgiven. Subsequent to year-end the Company received forgiveness on one of its PPP Loans in the amount of $1,190,000 and is awaiting forgiveness on the remainder of its PPP Loans.

The PPP Loan promissory notes contain customary events of defaults relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in the repayment of all amounts outstanding and/or filing suit and obtaining judgement against the Company.

**Note 16 - Subsequent Event** 

The Company has evaluated subsequent events through November 22, 2021, which is the date the consolidated financial statements were available to be issued. On November 8, 2021, Thrift Intermediate Holdings I, Inc. and all of its subsidiaries was sold to TVI, Inc., a subsidiary of Savers, Inc. The Company identified no additional events requiring disclosure in these consolidated financial statements.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Consolidated Balance Sheet (unaudited)** 

**October 3, 2021** 

---

| | |
|:---|:---|
| Assets |  |
|  Current assets |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | $16019110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 861090 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory | 7634670 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Store supplies | 697530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 2396479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets | 27608879 |
|  Property and equipment, net of accumulated depreciation and amortization of $3,789,683 | 9693266 |
|  Goodwill, net of amortization of $11,965,890 | 47012759 |
|  Other intangible assets, net of amortization of $3,453,124 | 29624227 |
|  Deferred tax assets | 1944986 |
|  Deposits | 1276188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $117160305 |
| Liabilities and Equity |  |
|  Current liabilities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of long-term debt | $584444 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of obligations under capital lease | 107725 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses | 2252287 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payable | 700076 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current liabilities | 2466541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales tax payable | 798147 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued salaries and wages | 2844262 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued severance pay, short-term | 262917 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities | 10016399 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term debt, net of current portion and debt issuance costs | 41838235 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term portion of obligations under capital lease | 159600 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued severance pay, long-term | 65000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred rent, long-term | 815706 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 52894940 |
|  Commitments |  |
|  Equity |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, par value $0.01, 1,000 shares authorized, issued and outstanding as of January 3, 2021 | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | 59814696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit | 4450659 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total equity | 64265365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $117160305 |

---

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Consolidated Statement of Operations** 

**For the period ending October 3, 2021 (unaudited)** 

---

| | |
|:---|:---|
|  Sales, retail | $62786112 |
|  Sales, wholesale | 8294663 |
|  Lease revenue, real estate | 37750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total sales and revenues | 71118525 |
|  Cost of sales | 19056915 |
|  Gross profit | 52061610 |
|  Selling, general and administrative expenses | 37164242 |
|  Amortization expense on goodwill and intangible assets | 5715117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | 42879359 |
|  Income from operations | 9182251 |
|  Other income (expenses) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Paycheck Protection Program loan forgiveness | 8120700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Rental income | 3002 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (3043080) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Discontinued operations | (384155) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Severance expense | (288726) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Board and other fees | (457232) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain (loss) of sale of property and equipment | (11286) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income (expenses) | 3939274 |
|  Net income before income taxes | 13121525 |
|  Benefit from income taxes | (1196637) |
|  Net income | $14318162 |

---

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Consolidated Statement of Changes in Equity** 

**Period Ended October 3, 2021 (unaudited)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Common<br>stock | Additional<br>paid-in capital | Accumulated<br>deficit | Total |
|  Balance, January 3, 2021 | $10 | $59714696 | $(9867503) | $49847203 |
|  Contributions |  | 100000 |  | 100000 |
|  Net Income |  |  | 14318162 | 14318162 |
|  Balance, October 3, 2021 | $10 | $59814696 | $4450659 | $64265365 |

---

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Consolidated Statements of Cash Flows** 

**For the period ending October 3, 2021 (unaudited)** 

---

| | |
|:---|:---|
|  Cash flows from operating activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consolidated net income | $14318162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile consolidated net loss to net cash provided by operating activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 1504294 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangible assets | 1288867 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of goodwill | 4426250 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt issuance costs | 121486 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on sale of property and equipment | 11286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes | (1944986) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Paycheck Protection Program loan forgiveness | (8120700) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | (150090) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory | (2080614) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Store supplies | (246210) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | (1426803) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | (466963) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses | 130400 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued salaries and wages | 689985 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued severance pay | (147083) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current liabilities | (41865) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales tax payable | 500691 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payable | 651803 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | (2830) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred rent | 217436 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | 9232516 |
|  Cash flows from investing activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of fixed assets | (1749441) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | (287933) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (2037374) |
|  Cash flows from financing activities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of long-term debt | (438333) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from shareholder contributions | 100000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments on capital lease obligations | (101448) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of line of credit | (5000000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in financing activities | (5439781) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase in cash | 1755361 |
|  Cash, beginning | 14263749 |
|  Cash, end | $16019110 |
|  Supplemental disclosure of cash flow information Cash interest paid | $2879742 |

---

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

**Note 1 - Nature of operations** 

Thrift Intermediate Holdings I, Inc. (the "Company"), through its subsidiaries, sells high-quality second-hand clothing, accessories and household items through 12 branded retail thrift stores under the 2nd Ave. brand. The Company's retail thrift stores are located in Pennsylvania, New Jersey, Maryland and Virginia. Under the GreenDrop brand, the Company also operates a network of donation sites and a fleet of trucks which are used to collect home pick-up donations from individuals on behalf of several nationally based charities. In addition, the Company operates a wholesale business that sells clothing, shoes and other goods to distributors who sell these goods to international markets.

**Note 2 - Summary of significant accounting policies** 

**Principles of consolidation** 

The consolidated financial statements include the accounts and activities of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

**Basis of accounting** 

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP").

**Debt issuance costs** 

Costs incurred in obtaining financing, net of accumulated amortization, are reported as a direct deduction from the face amount of the long-term debt to which such costs relate. Amortization of loan acquisition fees is reported as a component of interest expense and is computed using the straight-line method, which approximates the effective interest method, over the term of the loan.

**Revenue recognition** 

Revenue is recognized when control of the promised good is transferred to the Company's customers, in an amount that depicts the consideration the Company expects to be entitled to in exchange for those goods. Revenue is not recognized unless collectability under the contract is considered probable, the contract has commercial substance and the contract has been approved. Additionally, the contract must contain payment terms, as well as the rights and commitments of both parties. The Company recognizes revenue from retail sales at the point of the sale to its customers. The Company recognizes revenue from wholesale sales when the goods purchased are shipped to the customer.

**Sales taxes collected from customers** 

The Company collects applicable sales taxes from customers and remits the entire amount to various states. The Company's accounting policy is to record the tax collected and remitted to the states net of revenue.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

**Accounts receivable** 

Accounts receivable primarily arise from wholesale sales to brokers. Management determines the allowance for uncollectible accounts based on prior Company experience and management's analysis of specific uncollectible accounts. Accounts receivable is stated net of an allowance, when applicable, for estimated uncollectible accounts. There was no allowance for doubtful accounts as of October 3, 2021.

---

| | | |
|:---|:---|:---|
|  | October 3,<br>2021 | January 1,<br>2021 |
|  Accounts receivable | $861090 | $711000 |

---

**Inventory** 

Inventories are based on direct costs and fees paid for acquisition along with processing costs for those items on the retail floor of the stores. Inventories are stated at the lower of cost or net realizable value with cost determined by the first-in, first-out method.

**Property and equipment** 

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed on the straight-line basis over the estimated useful lives of individual assets or classes of assets, ranging between three and fifteen years. Leasehold improvements are amortized over the shorter of the term of the lease or estimated useful life of the asset.

**Impairment of long-lived assets** 

The carrying value of long-lived assets is assessed for impairment by management when changes in circumstances indicate the assets may be impaired. If it is determined that impairment has occurred, the loss would be recognized during that period. The Company does not believe that any material impairment currently exists related to its long-lived assets.

**Use of estimates** 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

**Risk concentrations** 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company places its cash amounts with high-credit quality financial institutions. At times, such investments may exceed federally insured limits. At October 3, 2021, the Company has cash in excess of federally insured limits in the amount of approximately $15,145,000.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

**Major vendor** 

The Company has a number of contracts and long-standing relationships with charitable organizations which allows it to obtain a majority of its inventory. For the period ended October 3, 2021, 82% of its inventory was obtained from the same two charitable organizations.

**Deferred rent** 

The Company entered into operating lease agreements which contain provisions for future rent increases. The total amount of rental payments to be made over the lease term is being charged to rent expense on the straight-line method over the term of the lease. The difference between the rent expense recorded and the amount paid is recorded as deferred rent in the accompanying consolidated balance sheet.

**Advertising** 

Advertising costs are expensed as incurred and amounted to $502,749 for the period ended October 3, 2021.

**Income taxes** 

The Company accounts for income taxes pursuant to the asset and liability method, which requires deferred income tax assets and liabilities to be computed annually for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision or credit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

The Company has no unrecognized tax benefits at October 3, 2021.

The Company recognizes interest and penalties associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the consolidated balance sheet.

**Gift cards** 

Proceeds from the sale of gift cards are recorded as a liability and are recognized as net sales when the cards are redeemed. There is no expiry date on the gift cards. Management applies a breakage percentage dependent on the likelihood of use or the customer exercising the remaining balance, taking into account the period that has lapsed since the initial issuance of the gift card. Accordingly, gift cards five years and older are 100% written-off, four to five years old are 90% written-off, three to four years old are 80% written-off, two to three years old are 50% written-off and for less than 2 years are not written-off.

**Subsequent events** 

The Company has evaluated subsequent events through November 22, 2021, which is the date the consolidated financial statements were available to be issued. On November 8, 2021, Thrift Intermediate Holdings I, Inc. and all of its subsidiaries was sold to TVI, Inc., a subsidiary of Savers, Inc. The Company identified no additional events requiring disclosure in these consolidated financial statements.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

**Note 3 - Property and equipment** 

Property and equipment consists of the following:

---

| | |
|:---|:---|
|  Vehicles | $186798.0 |
|  Office equipment | 1084377.0 |
|  Store equipment | 4462361.0 |
|  Building and improvements | 26329.0 |
|  Leasehold improvements | 7520004.0 |
|  Land and land improvements | 75000.0 |
|  Purchased computer software | 128080.0 |
|  | 13482949.0 |
|  Less accumulated depreciation and amortization | 3789683.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $9693266.0 |

---

Depreciation and amortization of property and equipment amounted to $1,504,294 for the period ended October 3, 2021.

**Note 4 - Goodwill** 

The Company records the excess of the purchase price of acquired businesses over the fair value of the acquired identifiable tangible and intangible net assets as goodwill. The Company determined that the estimated useful life of the goodwill recognized in its acquisitions is 10 years. As such, the Company amortizes its goodwill over 10 years. Amortization expense of $4,426,250 was incurred for the period ended October 3, 2021. Amortization expense for the periods subsequent to October 3, 2021 amounts to $5,897,865 per year.

Goodwill consists of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | October 3, 2021 | October 3, 2021 | October 3, 2021 | October 3, 2021 |
|  | Amortization<br>period | Cost | Accumulated<br>amortization | Net |
|  Goodwill | 10 years | $58978649 | $11965890 | $47012759 |

---

The Company tests for impairment when there is an event or circumstance that indicates that goodwill has been impaired. The Company first considers qualitative factors to determine whether the existence of events or circumstances leads to a conclusion that it is more likely than not that the fair value of the entity/reporting unit is less than its carrying amount. For the period ended October 3, 2021, no such triggering event has occurred. Management considered the qualitative factors and concluded that fair value of the entity is not less than its carrying amount.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

**Note 5 - Intangible assets** 

Intangible assets consist of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Amortization<br>period | Cost | Accumulated<br>amortization | Net |
|  Capitalized software | 5 to 12 years | $675931 | $154624 | $521307 |
|  Trade names | 20 years | 32401420 | 3298500 | 29102920 |
|  |  | $33077351 | $3453124 | $29624227 |

---

Amortization expense amounted to $1,288,867 for the period ended October 3, 2021. Future amortization expense annually is as follows:

---

| | |
|:---|:---|
| 2022 | $1747875.0 |
| 2023 | 1741887.0 |
| 2024 | 1723913.0 |
| 2025 | 1697928.0 |
| 2026 | 1647394.0 |
|  Total | $8558997.0 |

---

**Note 6 - Revolving line of credit** 

At October 3, 2021, the Company has a $5,000,000 revolving line of credit with a bank that expires September 18, 2025. Interest is charged at a rate per annum equal to LIBOR or the Wall Street Journal Prime Rate plus applicable margins of 5.5% and 4.5%, respectively. At October 3, 2021, $0 was outstanding under the line of credit agreement. The line of credit is secured by substantially all of the assets of the Company. This line is subject to various debt covenants.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

**Note 7 - Long-term debt** 

Long-term debt consists of the following at October 3, 2021:

---

| | |
|:---|:---|
|  Mortgage loan payable to a lender in fixed monthly principal payments of $14,537 plus interest. The mortgage matures on September 1, 2037 and is secured by substantially all of the assets of the Company. The loan bears interest at an initial rate of 7.75% and will increase annually by 2%. | $2784899 |
|  Senior Secured Term Note payable to a lender in quarterly installments of $102,500 with total unpaid principal due at maturity, including interest at a rate of LIBOR + 6.50%. The note matures on September 18, 2025 and is secured by substantially all of the assets of the Company. This note is subject to various debt covenants. | 40282500 |
|  Total | 43067399 |
|  Less current portion | 584444 |
|  Less unamortized debt issuance costs | 644720 |
|  Long-term debt | $41838235 |

---

On the Senior Secured Term Note payable and the revolving line of credit, as per the first amendment to the credit agreement dated November 2, 2020, the lender granted a financial covenant holiday, whereby the Company is not required to comply with the covenants for the quarters ending September 30, 2020, December 31, 2020 and March 31, 2021. The Company is in compliance with the covenants as of October 3, 2021.

Principal payment requirements for the above obligations in each of the periods subsequent to October 3, 2021 are as follows:

---

| | |
|:---|:---|
| 2022 | $584444.0 |
| 2023 | 584444.0 |
| 2024 | 584444.0 |
| 2025 | 584444.0 |
| 2026 | 40729623.0 |
|  Total | $43067399.0 |

---

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

**Note 8 - Capital lease obligations** 

Capital lease obligations consist of the following at October 3, 2021:

---

| | |
|:---|:---|
| **Capital lease obligations** | |
|  Equipment (A) | $1909 |
|  Vehicle (B) | 15961 |
|  Vehicle (C) | 24759 |
|  Computers (D) | 1137 |
|  Computers (E) | 14429 |
|  Computers (F) | 18356 |
|  Vehicle (G) | 17158 |
|  Vehicle (H) | 18897 |
|  Vehicle (I) | 24856 |
|  Vehicle (J) | 24301 |
|  Vehicle (K) | 86753 |
|  Vehicle (L) | 18809 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | 267325 |
|  Less current portion | (107725) |
|  Long-term portion | $159600 |

---

(A) In January 2017, the Company entered into a lease agreement for equipment. The terms of the agreement require monthly
payments at an interest rate of 3.5% through December 2021.

(B) In December 2017, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 7.6% through November 2022.

(C) In May 2019, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 8% through August 2024.

(D) In October 2018, the Company entered into a lease agreement for computers. The terms of the agreement require monthly
payments at an interest rate of 5.6% through October 2021.

(E) In June 2019, the Company entered into a lease agreement for computers. The terms of the agreement require monthly
payments at an interest rate of 5% through June 2022.

(F) In September 2019, the Company entered into a lease agreement for computers. The terms of the agreement require monthly
payments at an interest rate of 10.1% through September 2022.

(G) In November 2018, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 5.6% through November 2023.

(H) In November 2018, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 5.6% through December 2023.

(I) In October 2019, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 5.2% through October 2024.

(J) In October 2019, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 6.9% through October 2025.

(K) In February 2020, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 8.8% through January 2025.

(L) In June 2020, the Company entered into a lease agreement for a vehicle. The terms of the agreement require monthly
payments at an interest rate of 5% through June 2025.

------

##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

Minimum future lease payments under capital leases are as follows at October 3, 2021:

---

| | |
|:---|:---|
| 2022 | $121530.0 |
| 2023 | 78428.0 |
| 2024 | 60462.0 |
| 2025 | 33264.0 |
| 2026 | 2024.0 |
|  Net minimum lease payments | 295708.0 |
|  Less amount representing imputed interest | 28383.0 |
|  Present value of future lease payments | $267325.0 |

---

The net book value of equipment and vehicles held under capital leases at October 3 is as follows:

---

| | |
|:---|:---|
|  Vehicles and equipment | $838982.0 |
|  Less accumulated depreciation | 558823.0 |
|  | $280159.0 |

---

**Note 9 - Income taxes** 

---

| | |
|:---|:---|
|  Current |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal | $439189 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State | 309160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 748349 |
|  Deferred |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal | 2158261 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State | 672898 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation allowance | (4776145) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | (1944986) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Benefit from income taxes | $(1196637) |
|  Deferred tax assets consists of the following as of October 3, 2021: | Deferred tax assets consists of the following as of October 3, 2021: |
|  Deferred tax assets |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred rent | $250202 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of goodwill and intangible assets | 1694636 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation - state | 277380 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory capitalization | 66218 |
|  | 2288436 |
|  Deferred tax liabilities |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | (343450) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net deferred tax assets | $1944986 |

---

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

**Note 10 - Self-insured group health plan** 

The Company has a self-funded health plan. At October 3, 2021, the Company recorded a reserve for claims in the amount of approximately $125,000, included in accounts payable and accrued expenses. The Company participates in a stop loss captive pool and has purchased specific and aggregate stop loss insurance. These provide both individual, per employee stop loss, and a ceiling on the dollar amount of eligible expenses the Company would pay in total during a contract period.

**Note 11- Commitments** 

**Operating leases** 

The Company occupies warehouse, retail and office facilities under various operating leases expiring through 2039. As of October 3, 2021, the Company leases 12 retail stores, two warehouses, one call center and three office facilities. The Company additionally lease trucks for the purpose of providing donation and transportation services to support the stores. Rent expense for the period ended October 3, 2021 was $3,948,540.

Aggregate minimum future payments under the leases in each of the periods subsequent to October 3, 2021 and thereafter are as follows:

---

| | |
|:---|:---|
| 2022 | $5404317.0 |
| 2023 | 5274199.0 |
| 2024 | 4709239.0 |
| 2025 | 4180164.0 |
| 2026 | 3508150.0 |
|  Thereafter | 12746547.0 |
|  Total | $35822616.0 |

---

The Company additionally leases trucks and donation drop sites for the purpose of providing donation and transportation services to support the stores.

**Note 12 - Management fees** 

The Company paid management fees to a related party under the terms of an agreement. The agreement is equal to the greater of 4% of the Company's adjusted EBITDA, as defined in the management services agreement with our parent, for the year or $500,000 annually not to exceed $900,000 paid-out semiannually. The agreement will expire in 10 years from the effective date of September 18, 2019. Management fees incurred and paid for the period ended October 3, 2021 was $437,322, which are included in selling, general and administrative expenses.

**Note 13 - Retirement plan** 

The Company has an employee defined contribution plan, covering all eligible employees of the Company. Employees are eligible to participate in the Plan when they have reached age 21 and have either worked 1,000 hours within the first 12 months of employment or at the end of the plan year following completion of 12 months of employment with the Company. Each year, participants may contribute up to 90% of their annual compensation, as defined in the plan document, on a pre-tax or post-tax (Roth) basis, up to the maximum limits of the Internal Revenue Code. There are no employer contributions in 2021.

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##### [**Table of Contents**](#toc)
**Thrift Intermediate Holdings I, Inc. and Subsidiaries** 

**Notes to Consolidated Financial Statements** 

**For the Period Ended October 3, 2021 (unaudited)** 

**Note 14 - Paycheck Protection Program Loans** 

On April 2020, the Company entered into unsecured promissory notes with a commercial bank for an aggregate principal amount of $8,120,700 pursuant to the Paycheck Protection Program (the "PPP Loan"), which was established under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and is administered by the U.S. Small Business Administration (the "SBA").

For the period ending October 3, 2021, the Company received full forgiveness on its PPP Loans in the amount of $8,120,700, which is recorded as non-operating income on the financial statements.

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##### [**Table of Contents**](#toc)
**Shares**![LOGO](g264743g20c64.jpg)

**Common Stock** 

**Prospectus** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**, 2023** 

---

| | | | |
|:---|:---|:---|:---|
| **J.P. Morgan** | **Goldman Sachs & Co. LLC** | **Jefferies** | **UBS Investment Bank** |

---

---

| | | | |
|:---|:---|:---|:---|
| **Baird** | **CIBC Capital Markets** | **Guggenheim Securities** | **Piper Sandler** |

---

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##### [**Table of Contents**](#toc)
**PART II** 

**INFORMATION NOT REQUIRED IN PROSPECTUS** 

***Item 13. Other expenses of issuance and distribution.***

The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of the common stock being registered. All amounts shown are estimates except for the SEC registration fee, the FINRA filing fee and the exchange listing fee.

---

| | |
|:---|:---|
|  | **Amount to**<br>**be Paid** |
|  SEC registration fee | $9270 |
|  FINRA filing fee | \* |
|  Initial exchange listing fee | \* |
|  Printing and engraving expenses | \* |
|  Legal fees and expenses | \* |
|  Accounting fees and expenses | \* |
|  Transfer agent and registrar fees | \* |
|  Miscellaneous fees and expenses | \* |
|  Total | $nan \* |

---

------

\* To be provided by amendment.

***Item 14. Indemnification of directors and officers.***

Upon the completion of the offering contemplated by this registration statement, we will be incorporated under the laws of the State of Delaware. Section 102 of the DGCL, permits a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his or her duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit.

Section 145 of the DGCL provides that a corporation has the power to indemnify a director, officer, employee or agent of the corporation and certain other persons serving at the request of the corporation in related capacities against expenses (including attorneys' fees), judgments, fines and amounts paid in settlements actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he or she is or is threatened to be made a party by reason of such position, if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

As permitted by the DGCL, our certificate of incorporation and bylaws will provide that we will indemnify and advance expenses to our directors and officers, and may indemnify and advance expenses to our employees and other agents, to the fullest extent permitted by Delaware law. If Delaware law is amended to authorize corporate action further eliminating or limiting the personal

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##### [**Table of Contents**](#toc)
liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended.

We intend to enter into agreements with our directors and executive officers that will require us to indemnify them against expenses, judgments, fines, settlements and other amounts that any such person becomes legally obligated to pay in connection with any proceeding to which such person may be made a party by reason of the fact that such person is or was serving in such capacity, provided such person acted in good faith and in a manner such person reasonably believed to be in, or not opposed to, our best interests. These indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder. At present, no litigation or proceeding is pending that involves any of our directors or officers regarding which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

Upon the completion of this offering, we will maintain a directors' and officers' liability insurance policy. The policy will insure directors and officers against unindemnified losses arising from certain wrongful acts in their capacities as directors and officers and reimburse us for those losses for which we lawfully indemnify the directors and officers. The policy will likely contain various exclusions.

In addition, the underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification by the underwriters of us and our officers and directors for certain liabilities arising under the Securities Act or otherwise.

***Item 15. Recent sales of unregistered securities.***

None.

***Item 16. Exhibits and financial statement schedules.***

***(A) Exhibits***

The exhibits to this registration statement are listed in the Exhibit Index attached hereto and incorporated by reference herein.

***(B) Financial statement schedules***

Financial statement schedules are omitted because the required information is not applicable, not required or included in the financial statements or the notes thereto included in the prospectus that forms a part of this registration statement.

***Item 17. Undertakings.***

Insofar as indemnification by the registrant for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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##### [**Table of Contents**](#toc)
The undersigned registrant hereby undertakes that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

**Exhibit Index** 

---

| | |
|:---|:---|
| **Exhibit<br>Number** | **Description of Document** |
| 1.1\* | Form of Underwriting Agreement. |
| 3.1\* | Form of Certificate of Incorporation of Savers Value Village, Inc. (to be effective upon completion of this offering. |
| 3.2\* | Form of Bylaws of Savers Value Village, Inc. (to be effective upon completion of this offering. |
| 4.1\* | Form of Stockholders Agreement, by and among the Registrant and the other parties named therein. |
| 4.2\* | Form of Registration Rights Agreement, by and among the Registrant and the other parties named therein. |
| 4.3 | [Indenture, dated as of February 6, 2023, by and among Evergreen AcqCo 1 LP, TVI, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee.](d264743dex43.htm) |
| 5.1\* | Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP. |
| 10.1\* | Form of Indemnification Agreement. |
| 10.2\* | Credit Agreement, dated as of April 26, 2021, by and among Evergreen Acqco 1 LP, as US Borrower, Value Village Canada Inc., as Canadian Borrower, S-Evergreen Holding Corp., as Holdings, Evergreen Acqco GP LLC, as Holdings GP, KKR Loan Administration Services LLC, as Administrative Agent and as Collateral Agent, KKR Capital Markets LLC, as Lender and as Joint Lead Arranger, Jefferies Finance LLC, as Lender and as Joint Lead Arranger, PNC Bank, National Association, as Lender and as Joint Lead Arranger, and Credit Suisse Loan Funding LLC, as Lender and as Joint Lead Arranger. |
| 10.3\*\* | [First Amendment to Credit Agreement, dated as of November 8, 2021, by and among Evergreen Acqco 1 LP, as US Borrower, Value Village Canada Inc., as Canadian Borrower, S-Evergreen Holding Corp., as Holdings, Evergreen Acqco GP LLC, as Holdings GP, KKR Loan Administration Services LLC, as Administrative Agent and as Collateral Agent, KKR Corporate Lending LLC, as a 2021 Incremental Term Lender, Jefferies Finance LLC, as a 2021 Incremental Term Lender and Credit Suisse AG, Cayman Islands Branch, as a 2021 Incremental Term Lender.](http://www.sec.gov/Archives/edgar/data/1883313/000119312521365068/d264743dex103.htm) |
| 10.4\* | Second Amendment to Credit Agreement, dated as of November 23, 2022, among Evergreen Acqco 1 LP, as US Borrower, Value Village Canada INC., as Canadian Borrower, S-Evergreen Holding Corp., as Holdings, Evergreen Acqco GP LLC, as Holdings GP, the other Guarantors party thereto, KKR Loan Administration Services LLC, as Administrative Agent and Collateral Agent, and PNC Bank, National Association, as 2022 Incremental Revolving Lender. |

---

------

##### [**Table of Contents**](#toc)

---

| | |
|:---|:---|
| **Exhibit<br>Number** | **Description of Document** |
| 10.5\*\* | [Agreement for the Design, Manufacturing and Commissioning of a Centralized Processing Center CPC, dated as of July 24, 2020, by and between the Registrant and the other party named therein.](http://www.sec.gov/Archives/edgar/data/1883313/000119312521365068/d264743dex104.htm) |
| 10.6\*\* | [Agreement for the Design, Manufacturing and Commissioning of a Books and Media Processing System, dated as of September 22, 2020, by and between the Registrant and the other party named therein.](http://www.sec.gov/Archives/edgar/data/1883313/000119312521365068/d264743dex105.htm) |
| 10.7<sup>#</sup>\* | 2021 Omnibus Incentive Compensation Plan. |
| 10.8<sup>#</sup>\* | Form of Option Agreement under the 2021 Omnibus Incentive Compensation<br> Plan. |
| 10.9<sup>#</sup>\* | Form of Restricted Stock Unit Agreement under the 2021 Omnibus Incentive<br> Compensation Plan. |
| 10.10<sup>#</sup>\* | 2019 Management Incentive Plan. |
| 10.11<sup>#</sup>\* | Form of Option Agreement under the 2019 Management Incentive Plan. |
| 10.12<sup>#</sup>\* | 2022 Employee Stock Purchase Plan. |
| 10.13<sup>#</sup>\* | Employment Agreement by and between the Registrant and Mark Walsh. |
| 10.14<sup>#</sup>\* | Form of Executive Employment Agreement. |
| 10.15<sup>#</sup>\* | Non-Qualified Deferred Compensation Plan. |
| 10.16<sup>#</sup>\* | Annual Bonus Plan. |
| 21.1\* | Subsidiaries of the Registrant. |
| 23.1 | [Consents of KPMG LLP, independent registered public accounting firm.](d264743dex231.htm) |
| 23.2 | [Consent of CohnReznick LLP, independent accountant.](d264743dex232.htm) |
| 23.3\* | Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP (included in Exhibit 5.1). |
| 23.4\*\* | [Consent of Transom Consulting Group LLC.](http://www.sec.gov/Archives/edgar/data/1883313/000119312521365068/d264743dex234.htm) |
| 24.1\*\* | [Power of Attorney (included on signature page).](http://www.sec.gov/Archives/edgar/data/1883313/000119312521365068/d264743ds1.htm#sig) |
| 107 | [Filing Fee Table.](d264743dexfilingfees.htm) |

---

------

\* To be filed in a subsequent amendment to this registration statement.

\*\* Previously Filed

# Indicates management contract or compensatory plan.

------

##### [**Table of Contents**](#toc)
**SIGNATURES** 

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Bellevue, Washington, on February 7, 2023.

---

| | |
|:---|:---|
| **Savers Value Village, Inc.** | **Savers Value Village, Inc.** |
| By: | /s/ Mark Walsh |
|  | Mark Walsh |
|  | *Chief Executive Officer* |

---

**SIGNATURES** 

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities held on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ Mark Walsh | Chief Executive Officer *(Principal Executive Officer)* | February 7, 2023 |
| Mark Walsh | Chief Executive Officer *(Principal Executive Officer)* | February 7, 2023 |
| /s/ Jay Stasz | Chief Financial Officer *(Principal Financial Officer and Principal Accounting Officer)* | February 7, 2023 |
| Jay Stasz | Chief Financial Officer *(Principal Financial Officer and Principal Accounting Officer)* | February 7, 2023 |
| \* | Chairman of the Board of Directors | February 7, 2023 |
| Scott Graves | Chairman of the Board of Directors | February 7, 2023 |
| \* | Director | February 7, 2023 |
| Aaron Rosen | Director | February 7, 2023 |
| \* | Director | February 7, 2023 |
| Robyn Collver | Director | February 7, 2023 |
| \* | Director | February 7, 2023 |
| William Allen | Director | February 7, 2023 |
| \* | Director | February 7, 2023 |
| Duane Woods | Director | February 7, 2023 |
| \* | Director | February 7, 2023 |
| Aina Konold | Director | February 7, 2023 |
| \* | Director | February 7, 2023 |
| Kristy Pipes | Director | February 7, 2023 |

---

---

| | |
|:---|:---|
| \*By: | /s/ Richard Medway |
|  | Richard Medway |
|  | Attorney-in-Fact |

---

## Exhibit 4.3

**EXECUTION VERSION** 

------

EVERGREEN ACQCO 1 LP,

as the Issuer,

TVI, INC.,

as the Co-Issuer,

THE GUARANTORS PARTY HERETO FROM TIME TO TIME,

and

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee and Notes Collateral Agent

9.750% Senior Secured Notes due 2028

------

INDENTURE

Dated as of February 6, 2023

------

**TABLE OF CONTENTS** 

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
|  ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE | ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.1 | Definitions | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.2 | Other Definitions | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.3 | UCC, PPSA and STA | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1.4 | Rules of Construction | 75 |
|  ARTICLE II THE NOTES | ARTICLE II THE NOTES | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.1 | Form, Dating and Terms | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.2 | Execution and Authentication | 85 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.3 | Registrar and Paying Agent | 86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.4 | Paying Agent to Hold Money in Trust | 87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.5 | Holder Lists | 87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.6 | Transfer and Exchange | 87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.7 | [Reserved] | 91 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.8 | [Reserved] | 91 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.9 | Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S | 91 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.10 | Form of Certificate for Transfer to Institutional Accredited Investor | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.11 | Mutilated, Destroyed, Lost or Stolen Notes | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.12 | Outstanding Notes | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.13 | Temporary Notes | 96 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.14 | Cancellation | 96 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.15 | Payment of Interest; Defaulted Interest | 97 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.16 | CUSIP and ISIN Numbers | 98 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.17 | Form of Certificate to be Delivered Upon Termination of Restricted Period | 98 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 2.18 | Subordination to Super-Priority Indebtedness | 99 |
|  ARTICLE III COVENANTS | ARTICLE III COVENANTS | 100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.1 | Payment of Notes | 100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.2 | Limitation on Indebtedness | 100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.3 | Limitation on Restricted Payments | 107 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.4 | Limitation on Restrictions on Distributions from Restricted Subsidiaries | 117 |

---

i

------

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.5 | Limitation on Sales of Assets and Subsidiary Stock | 119 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.6 | Limitation on Liens | 125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.7 | Limitation on Guarantees | 125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.8 | Limitation on Affiliate Transactions | 126 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.9 | Change of Control | 131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.10 | Reports | 134 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.11 | [Reserved] | 137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.12 | Maintenance of Office or Agency | 137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.13 | [Reserved] | 137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.14 | After-Acquired Collateral | 138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.15 | Compliance Certificate | 138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.16 | [Reserved] | 138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.17 | [Reserved] | 138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.18 | Statement by Officers as to Default | 138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.19 | Designation of Restricted and Unrestricted Subsidiaries | 138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 3.20 | Suspension of Certain Covenants on Achievement of Investment Grade Status | 139 |
|  ARTICLE IV SUCCESSOR COMPANY; SUCCESSOR PERSON | ARTICLE IV SUCCESSOR COMPANY; SUCCESSOR PERSON | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 4.1 | Merger and Consolidation | 140 |
|  ARTICLE V REDEMPTION OF SECURITIES | ARTICLE V REDEMPTION OF SECURITIES | 143 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.1 | Notices to Trustee | 143 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.2 | Selection of Notes to Be Redeemed or Purchased | 144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.3 | Notice of Redemption | 144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.4 | [Reserved] | 145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.5 | Deposit of Redemption or Purchase Price | 145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.6 | Notes Redeemed or Purchased in Part | 146 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.7 | Optional Redemption | 146 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 5.8 | Mandatory Redemption | 148 |
|  ARTICLE VI DEFAULTS AND REMEDIES | ARTICLE VI DEFAULTS AND REMEDIES | 148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.1 | Events of Default | 148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.2 | Acceleration | 152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.3 | Other Remedies | 153 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.4 | Waiver of Past Defaults | 153 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.5 | Control by Majority | 154 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.6 | Limitation on Suits | 154 |

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ii

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.7 | Rights of Holders to Receive Payment | 155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.8 | Collection Suit by Trustee | 155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.9 | Trustee May File Proofs of Claim | 155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.10 | Priorities | 156 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 6.11 | Undertaking for Costs | 156 |
|  ARTICLE VII TRUSTEE | ARTICLE VII TRUSTEE | 156 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.1 | Duties of Trustee | 156 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.2 | Rights of Trustee | 157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.3 | Individual Rights of Trustee | 159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.4 | Trustee's Disclaimer | 160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.5 | Notice of Defaults | 160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.6 | [Reserved] | 160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.7 | Compensation and Indemnity | 160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.8 | Replacement of Trustee | 161 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.9 | Successor Trustee by Merger | 162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.10 | Eligibility; Disqualification | 162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.11 | [Reserved] | 162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.12 | Trustee's Application for Instruction from the Issuers | 162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.13 | Collateral Documents; Intercreditor Agreement | 163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.14 | Limitation on Duty of Trustee in Respect of Collateral; Indemnification | 163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 7.15 | Québec Security | 163 |
|  ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE | ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE | 164 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.1 | Option to Effect Legal Defeasance or Covenant Defeasance; Defeasance | 164 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.2 | Legal Defeasance and Discharge | 164 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.3 | Covenant Defeasance | 165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.4 | Conditions to Legal or Covenant Defeasance | 165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.5 | Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions | 167 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.6 | Repayment to the Issuers | 167 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 8.7 | Reinstatement | 167 |
|  ARTICLE IX AMENDMENTS | ARTICLE IX AMENDMENTS | 168 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.1 | Without Consent of Holders | 168 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.2 | With Consent of Holders | 170 |

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.3 | [Reserved] | 172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.4 | Revocation and Effect of Consents and Waivers | 172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.5 | Notation on or Exchange of Notes | 172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 9.6 | Trustee to Sign Amendments | 172 |
|  ARTICLE X GUARANTEE | ARTICLE X GUARANTEE | 173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 10.1 | Guarantee | 173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 10.2 | Limitation on Liability; Termination, Release and Discharge | 175 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 10.3 | Right of Contribution | 176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 10.4 | No Subrogation | 176 |
|  ARTICLE XI SATISFACTION AND DISCHARGE | ARTICLE XI SATISFACTION AND DISCHARGE | 176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.1 | Satisfaction and Discharge | 176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11.2 | Application of Trust Money | 178 |
|  ARTICLE XII COLLATERAL | ARTICLE XII COLLATERAL | 178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.1 | Collateral Documents | 178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.2 | Release of Collateral | 179 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.3 | Suits to Protect the Collateral | 180 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.4 | Authorization of Receipt of Funds by the Trustee Under the Collateral Documents | 181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.5 | Purchaser Protected | 181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.6 | Powers Exercisable by Receiver or Trustee | 181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 12.7 | Notes Collateral Agent | 181 |
|  ARTICLE XIII MISCELLANEOUS | ARTICLE XIII MISCELLANEOUS | 189 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.1 | Notices | 189 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.2 | Certificate and Opinion as to Conditions Precedent | 190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.3 | Statements Required in Certificate or Opinion | 191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.4 | When Notes Disregarded | 191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.5 | Rules by Trustee, Paying Agent and Registrar | 191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.6 | Legal Holidays | 191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.7 | Governing Law | 192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.8 | Jurisdiction | 192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.9 | Waivers of Jury Trial | 192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.10 | USA PATRIOT Act | 192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.11 | No Recourse Against Others | 192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.12 | Successors | 193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.13 | Multiple Originals | 193 |

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.14 | **Table of Contents**; Headings | 193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.15 | Force Majeure | 193 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.16 | Severability | 194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.17 | Trust Indenture Act | 194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.18 | Waiver of Immunities | 194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.19 | Judgment Currency | 194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.20 | Intercreditor Agreement | 194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13.21 | Criminal Code (Canada) | 195 |

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EXHIBIT A Form of Global Restricted Note <br> EXHIBIT B Form of Supplemental Indenture to Add Guarantors

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INDENTURE dated as of February 6, 2023, by and among EVERGREEN ACQCO 1 LP, a Delaware limited partnership (the "<u>Issuer</u>"), TVI, INC., a Washington State corporation (the "<u>Co-Issuer</u>" and, together with Issuer, the "<u>Issuers</u>"), the GUARANTORS party hereto from time to time and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association, as trustee (the "<u>Trustee</u>") and as notes collateral agent (the "<u>Notes Collateral Agent</u>").

<u>W</u> <u>I</u> <u>T</u> <u>N</u> <u>E</u> <u>S</u> <u>S</u> <u>E</u> <u>T</u> <u>H</u>

WHEREAS, the Issuers have duly authorized the execution and delivery of this Indenture to provide for the issuance of (i) their 9.750% Senior Secured Notes due 2028 issued on the date hereof (the "<u>Initial Notes</u>") and (ii) any additional Notes ("<u>Additional Notes</u>" and, together with the Initial Notes, the "<u>Notes</u>") that may be issued after the Issue Date.

WHEREAS, all things necessary (i) to make the Notes, when executed and duly issued by the Issuers and authenticated and delivered hereunder, the valid obligations of the Issuers, and (ii) to make this Indenture a valid agreement of the Issuers have been done;

WHEREAS, on the Issue Date, the Transactions (as defined herein) were consummated substantially concurrently with the closing of the offering of the Initial Notes;

WHEREAS, the Notes will be guaranteed and secured by the Collateral on a senior secured basis by S-EVERGREEN HOLDING CORP., a Delaware corporation ("<u>Holdings</u>"), Evergreen AcqCo GP LLC, a Delaware limited liability company ("<u>Holdings GP</u>"), and certain of the Issuer's existing and future Restricted Subsidiaries (other than the Co-Issuer) that guarantee the Issuers' obligations under the Credit Agreement; and

NOW, THEREFORE, in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:

**ARTICLE I** 

**<u>DEFINITIONS AND INCORPORATION BY REFERENCE</u>**

Section 1.1 <u>Definitions</u>.

"<u>Acquired Indebtedness</u>" means with respect to any Person (x) Indebtedness of any other Person or any of its Subsidiaries existing at the time such other Person becomes a Restricted Subsidiary or merges or amalgamates with or into or consolidates or otherwise combines with the Issuer or any Restricted Subsidiary and (y) Indebtedness secured by a Lien encumbering any asset acquired by such Person. Acquired Indebtedness shall be deemed to have been incurred, with respect to clause (x) of the preceding sentence, on the date such Person becomes a Restricted Subsidiary or on the date of the relevant merger, amalgamation, consolidation, acquisition or other combination.

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"<u>Additional Assets</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any property or assets (other than Capital Stock) used or to be used by the Issuer, a Restricted Subsidiary or
otherwise useful in a Similar Business (it being understood that capital expenditures on property or assets already used in a Similar Business or to replace any property or assets that are the subject of such Asset Disposition shall be deemed an
investment in Additional Assets);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Capital Stock of a Person that is engaged in a Similar Business and becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by the Issuer or a Restricted Subsidiary; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary.

"<u>Additional Notes</u>" has the meaning assigned to it in the recitals of this Indenture.

"<u>Affiliate</u>" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"<u>AHYDO Payment</u>" means any payment required to be made under the terms of Indebtedness in order to avoid the application of Section 163(e)(5) of the Code to such Indebtedness.

"<u>Alternative Currency</u>" means any currency (other than Dollars) that is a lawful currency (other than Dollars) that is readily available and freely transferable and convertible into Dollars (as determined in good faith by the Issuer).

"<u>Applicable Collateral Agent</u>" has the meaning assigned to it in the Intercreditor Agreement, as in effect on the date hereof.

"<u>Applicable Percentage</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) 100% if the Consolidated Secured Leverage Ratio is greater than or equal to 4.00 to 1.00;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) 50% if the Consolidated Secured Leverage Ratio is less than 4.00 to 1.00 and greater than or equal to 3.50 to
1.00; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) 0% if the Consolidated Secured Leverage Ratio is less than 3.50 to 1.00.

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"<u>Applicable Premium</u>" means the greater of (A) 1.0% of the principal amount of such Note and (B) on any redemption date, the excess (to the extent positive) of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the present value at such redemption date of (i) the redemption price of such Note at the First Call Date
(such redemption price (expressed in percentage of principal amount) being set forth in the table under <u>Section</u> <u>5.7(e)</u> (excluding accrued but unpaid interest, if any)), plus (ii) all required interest payments due on
such Note to and including such date set forth in clause (i) (excluding accrued but unpaid interest, if any), computed upon the redemption date using a discount rate equal to the Applicable Treasury Rate at such redemption date plus 50 basis points;
over

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the outstanding principal amount of such Note;

in each case, as calculated by the Issuers or on behalf of the Issuers by such Person as the Issuers shall designate. The Trustee shall have no duty to calculate or verify the calculations of the Applicable Premium.

"<u>Applicable Treasury Rate</u>" means the weekly average for each Business Day during the most recent week that has ended at least two Business Days prior to the redemption date of the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the Federal Reserve Statistical Release H.15 (or, if such statistical release is not so published or available, any publicly available source of similar market data selected by the Issuer in good faith)) most nearly equal to the period from the redemption date to the First Call Date; *provided, however*, that if the period from the redemption date to the First Call Date is not equal to the constant maturity of a United States Treasury security for which a yield is given, the Applicable Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the yields of United States Treasury securities for which such yields are given, except that if the period from the redemption date to such applicable date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

"<u>Asset Disposition</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the voluntary sale, conveyance, transfer or other disposition, whether in a single transaction or a series of
related transactions, of property or assets (including by way of a Sale and Leaseback Transaction) of the Issuer or any of its Restricted Subsidiaries (in each case other than Capital Stock of the Issuer) (each referred to in this definition as a
" *disposition* "); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the issuance or sale of Capital Stock of any Restricted Subsidiary (other than Preferred Stock or Disqualified
Stock of Restricted Subsidiaries issued in compliance with <u>Section</u> <u>3.2</u> or directors' qualifying shares and shares issued to foreign nationals as required under applicable law), whether in a single transaction or a
series of related transactions;

in each case, other than:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a disposition by the Issuer or a Restricted Subsidiary to the Issuer or a Restricted Subsidiary, including
pursuant to any Intercompany License Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a disposition of cash, Cash Equivalents or Investment Grade Securities, including any marketable securities
portfolio owned by the Issuer and its Subsidiaries on the Issue Date;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) a disposition of inventory, goods or other assets (including Settlement Assets) in the ordinary course of
business or consistent with past practice or held for sale or no longer used in the ordinary course of business, including any disposition of disposed, abandoned or discontinued operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) a disposition of obsolete, worn-out, uneconomic, damaged, non-core or surplus property, equipment or other assets or property, equipment or other assets that are no longer economically practical or commercially desirable to maintain or used or useful in the business of the
Issuer and its Restricted Subsidiaries whether now or hereafter owned or leased or acquired in connection with an acquisition or used or useful in the conduct of the business of the Issuer and its Restricted Subsidiaries (including by ceasing to
enforce, allowing the lapse, abandonment or invalidation of or discontinuing the use or maintenance of or putting into the public domain any intellectual property that is, in the reasonable judgment of the Issuer or the Restricted Subsidiaries, no
longer used or useful, or economically practicable to maintain, or in respect of which the Issuer or any Restricted Subsidiary determines in its reasonable judgment that such action or inaction is desirable);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) transactions permitted under <u>Section</u> <u>4.1</u> or a transaction that constitutes a Change
of Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) an issuance of Capital Stock by a Restricted Subsidiary to the Issuer or to another Restricted Subsidiary or as
part of or pursuant to an equity incentive or compensation plan approved by the Board of Directors of the Issuer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) any dispositions of Capital Stock, properties or assets in a single transaction or series of related
transactions with a Fair Market Value (as determined in good faith by the Issuer) of less than the greater of $16 million and 12% of LTM EBITDA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) any Restricted Payment that is permitted to be made, and is made, under <u>Section</u> <u>3.3</u> and the making of any Permitted Payment or Permitted Investment, or solely for purposes of <u>Section</u> <u>3.5(a)(3)</u>, asset sales, the proceeds of which are used to make such Restricted Payments or Permitted Investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) dispositions in connection with Permitted Liens, Permitted Intercompany Activities, Permitted Tax Restructuring
and related transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary
course of business or consistent with past practice or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) conveyances, sales, transfers, licenses, sublicenses, cross-licenses or other dispositions of intellectual
property, software or other general intangibles and licenses, sublicenses, cross-licenses, leases or subleases of other property, in each case, in the ordinary course of business or consistent with past practice or pursuant to a research or
development agreement in which the counterparty to such agreement receives a license in the intellectual property or software that result from such agreement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) the lease, assignment, license, sublease or sublicense of any real or personal property in the ordinary course
of business or consistent with industry practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) foreclosure, condemnation, expropriation, forced disposition or any similar action with respect to any property
or other assets or the granting of Liens not prohibited by this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) the sale, discount or other disposition (with or without recourse, and on customary or commercially reasonable
terms and for credit management purposes) of inventory, accounts receivable or notes receivable in the ordinary course of business or consistent with past practice, or the conversion or exchange of accounts receivable for notes receivable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) any issuance or sale of Capital Stock in, or Indebtedness or other securities of, an Unrestricted Subsidiary or
any other disposition of Capital Stock, Indebtedness or other securities of an Unrestricted Subsidiary or an Immaterial Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) any disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement or other obligation with
or to a Person (other than the Issuer or a Restricted Subsidiary) from whom such Restricted Subsidiary was acquired, or from whom such Restricted Subsidiary acquired its business and assets (having been newly formed in connection with such
acquisition), made as part of such acquisition and in each case comprising all or a portion of the consideration in respect of such sale or acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) (i) dispositions of property to the extent that such property is exchanged for credit against the purchase
price of similar replacement property that is promptly purchased, (ii) dispositions of property to the extent that the proceeds of such disposition are promptly applied to the purchase price of such replacement property (which replacement
property is actually promptly purchased) and (iii) to the extent allowable under Section 1031 of the Code or comparable law or regulation, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) any disposition of Securitization Assets or Receivables Assets, or participations therein, in connection with
any Qualified Securitization Financing or Receivables Facility, or the disposition of an account receivable in connection with the collection or compromise thereof in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) any financing transaction with respect to property constructed, acquired, leased, renewed, relocated, expanded,
replaced, repaired, maintained, upgraded or improved (including any reconstruction, refurbishment, renovation and/or development of real property) by the Issuer or any Restricted Subsidiary after the Issue Date, including Sale and Leaseback
Transactions and asset securitizations, not prohibited by this Indenture;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20) sales, transfers or other dispositions of Investments in joint ventures or similar entities to the extent
required by, or made pursuant to customary buy/sell arrangements between, the parties set forth in joint venture arrangements and similar binding arrangements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21) any surrender or waiver of contractual rights or the settlement, release, surrender or waiver of contractual,
tort, litigation or other claims of any kind;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22) the unwinding of any Cash Management Obligations or Hedging Obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(23) transfers of property or assets subject to Casualty Events upon receipt of the Net Proceeds of such Casualty
Event; *provided* that any Cash Equivalents received by the Issuer or any of its Restricted Subsidiaries in respect of such Casualty Event shall be deemed to be Net Available Cash of an Asset Disposition, and such Net Available Cash shall be
applied in accordance with <u>Section</u> <u>3.5</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(24) any disposition to a Captive Insurance Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25) any sale of property or assets, if the acquisition of such property or assets was financed with Excluded
Contributions and the proceeds of such sale are used to make a Restricted Payment pursuant to <u>Section</u> <u>3.3(b)(10)(b)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(26) the disposition of any assets (including Capital Stock) (i) acquired in a transaction after the Issue
Date, which assets are not useful in the core or principal business of the Issuer and its Restricted Subsidiaries, or (ii) made in connection with the approval of any applicable antitrust authority or otherwise necessary or advisable in the
reasonable determination of the Issuer to consummate any acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(27) any sale, transfer or other disposition to affect the formation of any Subsidiary of the Issuer that is a
Delaware Divided LLC; *provided* that upon formation of such Delaware Divided LLC, such Delaware Divided LLC shall be a Restricted Subsidiary; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(28) any disposition of non-revenue producing assets to a Person who is
providing services related to such assets, the provision of which have been or are to be outsourced by the Issuer or any Restricted Subsidiary to such Person.

In the event that a transaction (or any portion thereof) meets the criteria of a permitted Asset Disposition and would also be a Permitted Investment or an Investment permitted under <u>Section</u> <u>3.3</u>, the Issuers, in their sole discretion, will be entitled to divide and classify such transaction (or a portion thereof) as an Asset Disposition and/or one or more of the types of Permitted Investments or Investments permitted under <u>Section</u> <u>3.3</u>.

"<u>Associate</u>" means (i) any Person engaged in a Similar Business of which the Issuer or its Restricted Subsidiaries are the legal and beneficial owners of between 20% and 50% of all outstanding Voting Stock and (ii) any joint venture entered into by the Issuer or any Restricted Subsidiary.

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"<u>Bankruptcy Law</u>" means Title 11 of the United States Code, the Canadian Insolvency Laws or similar federal, state or foreign law for the relief of debtors, or any arrangement, reorganization, insolvency, moratorium, assignment for the benefit of creditors, any other marshaling of assets and/or liabilities of the Issuers and/or their affiliates, or any similar law relating to or affecting creditors' rights generally.

"<u>Board of Directors</u>" means (i) with respect any corporation, the board of directors or managers, as applicable, of such corporation, or any duly authorized committee thereof; (ii) with respect to any partnership, the board of directors or other governing body of the general partner, as applicable, of the partnership or any duly authorized committee thereof; (iii) with respect to a limited liability company, the managing member or members or any duly authorized controlling committee thereof; and (iv) with respect to any other Person, the board or any duly authorized committee of such Person serving a similar function. Whenever any provision requires any action or determination to be made by, or any approval of, a Board of Directors, such action, determination or approval shall be deemed to have been taken or made if approved by a majority of the directors on any such Board of Directors (whether or not such action or approval is taken as part of a formal board meeting or as a formal board approval). Unless the context requires otherwise, Board of Directors means the Board of Directors of Holdings.

"<u>Business Day</u>" means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York, United States or in the jurisdiction of the place of payment are authorized or required by law to close. When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment or performance shall extend to the immediately succeeding Business Day and such extension of time shall not be reflected in computing interest or fees, as the case may be.

"<u>Business Successor</u>" means (i) any former Subsidiary of the Issuer and (ii) any Person that, after the Issue Date, has acquired, merged or consolidated with a Subsidiary of the Issuer (that results in such Subsidiary ceasing to be a Subsidiary of the Issuer), or acquired (in one transaction or a series of transactions) all or substantially all of the property and assets or business of a Subsidiary or assets constituting a business unit, line of business or division of a Subsidiary of the Issuer.

"<u>Canadian Insolvency Laws</u>" means the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada), the Winding-Up and Restructuring Act (Canada) and the reorganization provisions of applicable Canadian corporate statutes, each as now and hereafter in effect, any successors to such statutes and any other applicable insolvency, restructuring, liquidation, winding-up, arrangement or other similar laws of Canada or any province or territory thereof.

"<u>Canadian Security Agreement</u>" means the Canadian Security Agreement, dated as of February 6, 2023, as amended, restated, amended and restated, supplemented or otherwise modified from time to time, among the Guarantors party thereto from time to time and the Notes Collateral Agent.

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"<u>Capital Markets Debt Securities</u>" means debt securities originally issued to holders thereof (i) in a transaction registered under the Securities Act in which an investment bank acts as underwriter with respect thereto or (ii) in a transaction exempt from registration under the Securities Act pursuant to Rule 144A thereunder in which an investment bank acts as initial purchaser with respect thereto.

"<u>Capital Stock</u>" of any Person means any and all shares of, rights to purchase or acquire, warrants, options or depositary receipts for, or other equivalents of, or partnership or other interests in (however designated), equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into, or exchangeable for, such equity.

"<u>Capitalized Lease Obligations</u>" means an obligation that is required to be classified and accounted for as a capitalized or financed lease (and, for the avoidance of doubt, not a straight-line or operating lease) for financial reporting purposes in accordance with GAAP. The amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty; *provided* that all obligations of the Issuer and its Restricted Subsidiaries that are or would be characterized as an operating lease as determined in accordance with GAAP prior to the adoption of Accounting Standards Codification Topic 842, "Leases," shall be accounted for as an operating lease (and not as a Capitalized Lease Obligation) for purposes of this Indenture regardless of any change in GAAP following the Issue Date (that would otherwise require such obligation to be recharacterized as a Capitalized Lease Obligation).

"<u>Capitalized Software Expenditures</u>" means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by a Person and its Restricted Subsidiaries during such period in respect of licensed or purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of a Person and its Restricted Subsidiaries.

"<u>Captive Insurance Subsidiary</u>" means (i) any Subsidiary of the Issuer operating for the purpose of (a) insuring the businesses, operations or properties owned or operated by the Parent Entity, the Issuer or any of its Subsidiaries, including their future, present or former employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members), and related benefits and/or (b) conducting any activities or business incidental thereto (it being understood and agreed that activities which are relevant or appropriate to qualify as an insurance company for U.S. federal or state Tax purposes shall be considered "activities or business incidental thereto") or (ii) any Subsidiary of any such insurance subsidiary operating for the same purpose described in clause (i) above.

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"<u>Cash Equivalents</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) (a) Dollars, Canadian dollars, Australian dollars, pounds sterling, yen, euro, any national currency of any
member state of the European Union or any Alternative Currency; or (b) any other foreign currency held by the Issuer and its Restricted Subsidiaries from time to time in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) securities issued or directly and fully guaranteed or insured by the United States, Canadian, United Kingdom,
Australian or Japanese governments, a member state of the European Union or, in each case, any agency or instrumentality thereof (*provided* that the full faith and credit obligation of such country or such member state is pledged in support
thereof), with maturities of 36 months or less from the date of acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits, demand deposits or
bankers' acceptances having maturities of not more than two years from the date of acquisition thereof issued by any bank, trust company or other financial institution (a) whose commercial paper is rated at least "P-2" or the equivalent thereof by S&P or at least "A-2" or the equivalent thereof by Moody's (or, if at the time, neither S&P or Moody's
is rating such obligations, then a comparable rating from another Nationally Recognized Statistical Rating Organization selected by the Issuer) or (b) having combined capital and surplus in excess of $100 million;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) repurchase obligations for underlying securities of the types described in clauses (2), (3), (7) and
(8) entered into with any Person meeting the qualifications specified in clause (3) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) securities with maturities of two years or less from the date of acquisition backed by standby letters of
credit issued by any Person meeting the qualifications in clause (3) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) commercial paper and variable or fixed rate notes issued by any Person meeting the qualifications specified in
clause (3) above (or by the parent company thereof) maturing within two years after the date of creation thereof, or if no rating is available in respect of the commercial paper or variable or fixed rate notes, the issuer of which has an
equivalent rating in respect of its long-term debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) marketable short-term money market and similar securities having a rating of at least "P-2" or "A-2" from either S&P or Moody's, respectively (or, if at the time, neither S&P nor Moody's is rating such obligations, then a
comparable rating from another Nationally Recognized Statistical Rating Organization selected by the Issuer);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) readily marketable direct obligations issued by any state, province, commonwealth or territory of the United
States of America, Canada or Australia or any political subdivision, taxing authority or any agency or instrumentality thereof, rated BBB- (or the equivalent) or better by S&P or Baa3 (or the equivalent)
or better by Moody's (or, if at the time, neither S&P nor Moody's is rating such obligations, then a comparable rating from another Nationally Recognized Statistical Rating Organization selected by the Issuer) with maturities of not
more than two years from the date of acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) readily marketable direct obligations issued by any foreign government or any political subdivision, taxing
authority or agency or instrumentality thereof, with a rating of "BBB-" or higher from S&P or "Baa3" or higher by Moody's or the equivalent of such rating by such rating
organization (or, if at the time, neither S&P nor Moody's is rating such obligations, then a comparable rating from another Nationally Recognized Statistical Rating Organization selected by the Issuer) with maturities of not more than two
years from the date of acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Investments with average maturities of 24 months or less from the date of acquisition in money market funds
with a rating of "A" or higher from S&P or "A-2" or higher by Moody's or the equivalent of such rating by such rating organization (or, if at the time, neither S&P nor
Moody's is rating such obligations, then a comparable rating from another Nationally Recognized Statistical Rating Organization selected by the Issuer);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) with respect to any Foreign Subsidiary: (i) obligations of the national government of the country in which
such Foreign Subsidiary maintains its chief executive office and principal place of business provided such country is a member of the Organization for Economic Cooperation and Development, in each case maturing within one year after the date of
investment therein, (ii) certificates of deposit of, bankers' acceptance of, or time deposits with, any commercial bank which is organized and existing under the laws of the country in which such Foreign Subsidiary maintains its chief
executive office and principal place of business provided such country is a member of the Organization for Economic Cooperation and Development, and whose short-term commercial paper rating from S&P is at least "P-2" or the equivalent thereof or from Moody's is at least "A-2" or the equivalent thereof (any such bank being an "*Approved Foreign Bank* "), and in each case with maturities of not more than 270 days from the date of acquisition and (iii) the equivalent of demand deposit accounts which are maintained with an Approved Foreign Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) Indebtedness or Preferred Stock issued by Persons with a rating of "BBB-" or higher from S&P or "Baa3" or higher by Moody's or the equivalent of such rating by such rating organization (or, if at the time, neither S&P nor Moody's is
rating such obligations, then a comparable rating from another Nationally Recognized Statistical Rating Organization selected by the Issuer) with maturities of not more than two years from the date of acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) bills of exchange issued in the United States of America, Canada, the United Kingdom, Australia, Japan, a
member state of the European Union eligible for rediscount at the relevant central bank and accepted by a bank (or any dematerialized equivalent);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) investments in industrial development revenue bonds that (i) "re-set" interest rates not less frequently than quarterly, (ii) are entitled to the benefit of a remarketing arrangement with an established broker dealer and (iii) are supported by a
direct pay letter of credit covering principal and accrued interest that is issued by any bank meeting the qualifications specified in clause (3) above; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) any investment company, money market, enhanced high yield, pooled or other investment fund investing 90% or
more of its assets in instruments of the types specified in the clauses above.

In the case of Investments by any Foreign Subsidiary that is a Restricted Subsidiary or Investments made in a country outside the United States of America or Canada, Cash Equivalents shall also include (a) investments of the type and maturity described in clauses (1) through (15) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (b) other short-term investments utilized by Foreign Subsidiaries that are Restricted Subsidiaries in accordance with normal investment practices for cash management in investments analogous to the foregoing investments in clauses (1) through (15) above and in this paragraph.

In addition, in the case of Investments by any Captive Insurance Subsidiary, Cash Equivalents shall also include (a) such Investments with average maturities of 12 months or less from the date of acquisition in issuers rated BBB-(or the equivalent thereof) or better by S&P or Baa3 (or the equivalent thereof) or better by Moody's, in each case at the time of such Investment and (b) any Investment with a maturity of more than 12 months that would otherwise constitute Cash Equivalents of the kind described in any of clauses of this definition above or clause (a) in this paragraph, if the maturity of such Investment was 12 months or less; *provided* that the effective maturity of such Investment does not exceed 15 years.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clause (1) above, *provided* that such amounts are converted into any currency listed in clause (1) as promptly as practicable and in any event within 10 Business Days following the receipt of such amounts.

For the avoidance of doubt, any items identified as Cash Equivalents under this definition will be deemed to be Cash Equivalents for all purposes under this Indenture regardless of the treatment of such items under GAAP.

"<u>Cash Management Obligations</u>" means (1) obligations in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements, electronic fund transfer, treasury services and cash management services, including controlled disbursement services, working capital lines, lines of credit, overdraft facilities, foreign exchange facilities, deposit and other accounts and merchant services, or other cash management arrangements or any automated clearing house arrangements, (2) other obligations in respect of netting or setting off arrangements, credit, debit or purchase card programs, stored value card and similar arrangements and (3) obligations in respect of any other services related, ancillary or complementary to the foregoing (including any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services, corporate credit and purchasing cards and related programs or any automated clearing house transfers of funds).

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"<u>Casualty Event</u>" means any event that gives rise to the receipt by the Issuer or any Restricted Subsidiary of any insurance proceeds or condemnation awards in respect of any equipment, assets or real property (including any improvements thereon) to replace or repair such equipment, assets or real property.

"<u>Change of Control</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Issuer becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the
Exchange Act, proxy, vote, written notice or otherwise) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Issue Date), other than one or more Permitted Holders or a Parent Entity, that
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 of the Exchange Act as in effect on the Issue Date) of more than 50% of the total
voting power of the Voting Stock of the Issuer; *provided* that (x) so long as the Issuer is a Subsidiary of any Parent Entity, no person shall be deemed to be or become a beneficial owner of more than 50% of the total voting power of the
Voting Stock of the Issuer unless such person shall be or become a beneficial owner of more than 50% of the total voting power of the Voting Stock of such Parent Entity (other than a Parent Entity that is a Subsidiary of another Parent Entity) and
(y) any Voting Stock of which any Permitted Holder is the beneficial owner shall not in any case be included in any Voting Stock of which any such person is the beneficial owner; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the sale or transfer, in one or a series of related transactions, of all or substantially all of the assets of
the Issuer and its Restricted Subsidiaries, taken as a whole, to a Person (other than the Issuer or any of its Restricted Subsidiaries or one or more Permitted Holders) and any "person" (as defined in clause (1) above), other than one
or more Permitted Holders or any Parent Entity, is or becomes the "beneficial owner" (as so defined) of more than 50% of the total voting power of the Voting Stock of the transferee Person in such sale or transfer of assets, as the case
may be; *provided* that (x) so long as the Issuer is a Subsidiary of any Parent Entity, no person shall be deemed to be or become a beneficial owner of more than 50% of the total voting power of the Voting Stock of the Issuer unless such
person shall be or become a beneficial owner of more than 50% of the total voting power of the Voting Stock of such Parent Entity (other than a Parent Entity that is a Subsidiary of another Parent Entity) and (y) any Voting Stock of which any
Permitted Holder is the beneficial owner shall not in any case be included in any Voting Stock of which any such person is the beneficial owner.

Notwithstanding the preceding or any provision of Section 13d-3 of the Exchange Act, (i) a Person or group shall not be deemed to beneficially own Voting Stock subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Voting Stock in connection with the transactions

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contemplated by such agreement, (ii) if any group includes one or more Permitted Holders, the issued and outstanding Voting Stock of the Issuer owned, directly or indirectly, by any Permitted Holders that are part of such group shall not be treated as being beneficially owned by such group or any other member of such group for purposes of determining whether a Change of Control has occurred, (iii) a Person or group will not be deemed to beneficially own the Voting Stock of another Person as a result of its ownership of Voting Stock or other securities of such other Person's parent entity (or related contractual rights) unless it owns 50% or more of the total voting power of the Voting Stock entitled to vote for the election of directors of such parent entity having a majority of the aggregate votes on the board of directors (or similar body) of such parent entity and (iv) the right to acquire Voting Stock (so long as such Person does not have the right to direct the voting of the Voting Stock subject to such right) or any veto power in connection with the acquisition or disposition of Voting Stock will not cause a party to be a beneficial owner.

"<u>Civil Code of Québec</u>" means the Civil Code of Québec (*Code civil du Québec*).

"<u>Code</u>" means the United States Internal Revenue Code of 1986, as amended.

"<u>Co-Issuer</u>" has the meaning ascribed to it in the recitals of this Indenture.

"<u>Collateral</u>" means all property that is subject or purported to be subject to any Lien in favor of the Notes Collateral Agent for the benefit of the Notes Secured Parties pursuant to any Collateral Document, but in any event excluding all Excluded Assets.

"<u>Collateral Documents</u>" means the security agreements (including the Security Documents), pledge agreements, collateral assignments, mortgages, deeds of trust, and related agreements (including financing statements under the UCC of the relevant states and financing statements under the PPSA), the Intercreditor Agreement and any Customary Junior Lien Intercreditor Agreement, each as amended, supplemented, restated, renewed, replaced or otherwise modified from time to time, to secure any obligations under the Notes Documents or under which rights or remedies with respect to any such Lien are governed.

"<u>Collateral Excess Proceeds</u>" means, with respect to an Asset Disposition of Collateral, the product of (A) the excess of (x) the amount of remaining Applicable Proceeds at the expiration of the Proceeds Application Period over (y) the Applicable Proceeds Threshold Amount times (B) the Applicable Percentage in effect at such time.

"<u>Company</u>" means Savers Value Village, Inc., a Delaware corporation.

"<u>Consolidated Depreciation and Amortization Expense</u>" means, with respect to any Person for any period, the total amount of depreciation and amortization expense and capitalized fees, including amortization or write-off of (i) intangible assets and non-cash organization costs, including amortization and similar charges related to goodwill, customer relationships, trade names, databases, technology, software, internal labor costs and other intangible assets, (ii) deferred financing and debt issuance fees, costs and expenses, (iii) capitalized expenditures (including Capitalized Software Expenditures), customer acquisition costs and incentive payments, media development costs, conversion costs and contract acquisition costs, the amortization of original issue discount resulting from the issuance of Indebtedness at less than par and amortization of favorable or unfavorable lease assets or liabilities, and (iv) capitalized fees related to any Qualified Securitization Financing or Receivables Facility, of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP and any write down of assets or asset value carried on the balance sheet.

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"<u>Consolidated EBITDA</u>" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) increased (without duplication) by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Fixed Charges of such Person for such period (including (w) non-cash rent expense, (x) net payments and losses or any obligations on any Hedging Obligations or other derivative instruments, (y) bank, letter of credit and other financing fees and
(z) costs of surety bonds in connection with financing activities, plus amounts excluded from the definition of "Consolidated Interest Expense" and any non-cash interest expense), to the extent
deducted (and not added back) in computing Consolidated Net Income; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) (x) provision for Taxes based on gross receipts, income, profits, revenue or capital, including federal,
foreign, state, provincial, territorial, local, unitary, excise, property, franchise, value added and similar Taxes (such as Delaware franchise Tax, Pennsylvania capital Tax, Texas margin Tax and provincial capital Taxes paid in Canada) and
withholding Taxes (including any future Taxes or other levies which replace or are intended to be in lieu of such Taxes and any penalties, additions to Tax, and interest related to such Taxes or arising from Tax examinations) and similar Taxes of
such Person paid or accrued during such period (including in respect of repatriated funds), (y) any distributions made to a Parent Entity or other direct or indirect holder of Capital Stock in the Issuer in respect of any such Taxes attributable to
such Parent Entity or holder or pursuant to a Tax sharing arrangement or as a result of a Tax distribution or repatriated funds and (z) the net Tax expense associated with any adjustments made pursuant to the definition of "Consolidated
Net Income" in each case, to the extent deducted (and not added back) in computing Consolidated Net Income; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Consolidated Depreciation and Amortization Expense of such Person for such period to the extent deducted (and
not added back) in computing Consolidated Net Income; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any fees, costs, expenses or charges (other than Consolidated Depreciation and Amortization Expense) related to
any actual, proposed or contemplated Equity Offering (including any expense relating to enhanced accounting functions or other transaction costs associated with becoming a public company, including Public Company Costs), Permitted Investment,

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Restricted Payment, acquisition, disposition, recapitalization or the incurrence of Indebtedness permitted to be incurred by this Indenture (including a refinancing thereof) or other transaction outside the ordinary course of business (whether or not successful or completed and including any such transaction consummated prior to the Credit Agreement Reference Date), including (i) such fees, expenses or charges (including rating agency fees, consulting fees and other related expenses and/or letter of credit or similar fees) related to the offering or incurrence of, or ongoing administration of the Notes, the Credit Agreement, any other Credit Facilities, any Securitization Fees and the Transactions, including Transaction Expenses, and (ii) any amendment, waiver or other modification of the Notes, the Credit Agreement, Receivables Facilities, Securitization Facilities, any other Credit Facilities, any Securitization Fees, any other Indebtedness or any Equity Offering, in each case, whether or not consummated, to the extent deducted (and not added back) in computing Consolidated Net Income; *plus*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) (i) the amount of any restructuring charge, accrual, reserve (and adjustments to existing reserves) or expense,
integration cost, inventory optimization programs or other business optimization, realignment or restructuring expense or cost (including charges directly related to the implementation of cost-savings initiatives and Tax restructurings) that is
deducted (and not added back) in such period in computing Consolidated Net Income, including any costs incurred in connection with acquisitions or divestitures after the Credit Agreement Reference Date, any severance, retention, signing bonuses,
relocation, recruiting and other employee related costs, costs in respect of strategic initiatives and curtailments or modifications to pension and post-retirement employment benefit plans (including any settlement of pension liabilities), costs
related to entry into new markets (including unused warehouse space costs) and new product introductions and exit of markets and products (including labor costs, scrap costs and lower absorption of costs, including due to decreased productivity and
greater inefficiencies), systems development and establishment costs, operational and reporting systems, technology initiatives, contract termination costs, future lease commitments and costs related to the opening and closure and/ or consolidation
of facilities (including severance, rent termination, moving and legal costs), relocation (relocation of the corporate headquarters), changes to the distribution footprint, and to exiting lines of business and consulting fees incurred with any of
the foregoing and (ii) fees, costs and expenses associated with litigation and settlement thereof; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) any other non-cash charges, write-downs, expenses, losses or items
reducing Consolidated Net Income for such period including, without limitation, (i) non-cash losses on the sale of assets and any write-offs or write-downs, deferred revenue or impairment charges,
(ii) impairment charges, amortization (or write offs) of financing costs (including debt

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discount, debt issuance costs and commissions and other fees associated with Indebtedness, including the Notes and the Credit Agreement) of such Person and its Subsidiaries and/or (iii) the impact of acquisition method accounting adjustment and any non-cash write-up, write-down or write-off with respect to re-valuing assets and liabilities in connection with the Transactions or any Investment, deferred revenue or any effects of adjustments resulting from the application of purchase accounting, purchase price accounting (including any step-up in inventory and loss of profit on the acquired inventory) (*provided* that if any such non-cash charge, write-down, expense, loss or item represents an accrual or reserve for potential cash items in any future period, (A) the Issuer may elect not to add back such non-cash charge, expense or loss in the current period and (B) to the extent the Issuer elects to add back such non-cash charge, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA when paid), or other items classified by the Issuer as special items less other non-cash items of income increasing Consolidated Net Income (excluding any amortization of a prepaid cash item that was paid in a prior period or such non-cash item of income to the extent it represents a receipt of cash in any future period); *plus*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the amount of readily identifiable and factually supportable pro forma "run rate" cost savings
(including cost savings with respect to salary, benefit and other direct savings resulting from workforce reductions and facility, benefit and insurance savings and any savings expected to result from the reduction of Public Company Costs),
operating expense reductions, other operating improvements (including the entry into material contracts or arrangements), revenue enhancements, and initiatives and synergies (including, to the extent applicable, from (i) the Transactions,
(ii) the effect of new supplier or customer contracts or projects and/or (iii) increased pricing or volume in existing contracts) (it is understood and agreed that "run rate" means the full recurring benefit for a period that is
associated with any action taken, committed to be taken or expected to be taken, net of the amount of actual benefits realized during such period form such actions) projected by the Issuer in good faith to result from actions taken or expected to be
taken within 24 months of the date thereof (including from any actions taken in whole or in part prior to such date), which will be added to Consolidated EBITDA as so projected until fully realized and calculated on a pro forma basis as though such
cost savings (including cost savings with respect to salary, benefit and other direct savings resulting from workforce reductions and facility, benefit and insurance savings and any savings expected to result from the reduction of Public Company
Costs), operating expense reductions, other operating improvements and initiatives and synergies had been realized on the first day of such period, net of the amount of actual benefits realized prior to or during such period from such actions (it
being understood that the foregoing amounts or adjustments need not be made in compliance with Regulation S-X or other securities laws or regulations); *plus* 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) any costs or expenses incurred by the Issuer or a Restricted Subsidiary or a Parent Entity pursuant to any
management equity plan, stock option plan, phantom equity plan, profits interests or any other management, employee benefit or other compensatory plan or agreement (and any successor plans or arrangements thereto), employment, termination or
severance agreement, or any stock subscription or equityholder agreement, and any costs or expenses in connection with the roll-over, acceleration or payout of Capital Stock held by management, to the extent that such costs or expenses are non-cash or otherwise funded with cash proceeds contributed to the capital of the Issuer or net cash proceeds of an issuance of Capital Stock (other than Disqualified Stock) of the Issuer; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing
Consolidated EBITDA or Consolidated Net Income in any period to the extent non-cash gains relating to such income were deducted in the calculation of Consolidated EBITDA pursuant to clause (2) below for
any previous period and not added back; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) any net loss included in the Consolidated Net Income attributable to non-controlling or minority interests pursuant to the application of Accounting Standards Codification Topic 810-10-45 (or any
successor provision); *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) the amount of any non-controlling or minority interest expense
consisting of Subsidiary income attributable to non-controlling or minority equity interests of third parties in any non-wholly owned Subsidiary; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) (i) unrealized or realized foreign exchange losses resulting from the impact of foreign currency changes and
(ii) gains and losses due to fluctuations in currency values and related Tax effects determined in accordance with GAAP; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) with respect to any joint venture, an amount equal to the proportion of those items described in clauses
(b) and (c) above relating to such joint venture corresponding to the Issuer's and its Restricted Subsidiaries' proportionate share of such joint venture's Consolidated Net Income (determined as if such joint venture were a
Restricted Subsidiary) to the extent deducted (and not added back) in computing Consolidated Net Income; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) the amount of any costs, charges or expenses relating to payments made to stock appreciation or similar rights,
stock option, restricted stock, phantom equity, profits interests or other interests or rights holders of the Issuer or any of its Subsidiaries or any Parent Entity in connection with, or as a result of, any distribution being made to equityholders
of such Person or any of its Subsidiaries or any Parent Entities, which payments are being made to compensate such holders as though they were equityholders at the time of, and entitled to share in, such distribution; *plus* 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) (i) adjustments of the nature or type used in connection with the calculation of "Covenant Adjusted
EBITDA" as set forth in "Summary—Summary Financial and Other Data—Consolidated balance sheet data—Adjusted EBITDA, Acquisition Adjusted EBITDA, Covenant Adjusted EBITDA and Adjusted Free Cash Flow" contained in the
Offering Memorandum and other adjustments of a similar nature to the foregoing and (ii) any due diligence quality of earnings report from time to time prepared with respect to the target of an acquisition or Investment by a nationally
recognized accounting firm; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) losses, charges and expenses (including operating expenses associated with remodeling or refurbishing stores)
related to (i) the pre-opening and opening of new, remodeled or refurbished stores, and start-up period prior to opening, that are operated, or to be operated, by
the Company or any Subsidiary (including any relocation of the corporate headquarters) and (ii) a new, remodeled or refurbished store until the date that is 24 months after the date of commencement of construction or the date of acquisition
thereof; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) without duplication of amounts already included in the calculation of Consolidated EBITDA, for the first 24
months following a new, refurbished or remodeled store opening, an annualized amount for the most recent four consecutive fiscal quarters ending immediately prior to such date of determination based on the greater of (x) actual Consolidated
EBITDA attributable to such store for each month such store is in operation and (y) the 24-month average Consolidated EBITDA for all similar stores that have been in operation for a period of at least 24
months (as reasonably determined by the Company); *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) rent expense as determined in accordance with GAAP not actually paid in cash during such period (net of rent
expense paid in cash during such period over and above rent expense as determined in accordance with GAAP); *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) losses, charges and expenses related to internal software development (including for cloud based software) that
are expensed or depreciated in accordance with GAAP; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) any non-cash increase in expense resulting from the revaluation of
inventory (including any impact of changes to inventory valuation policy methods including changes in capitalization of variances) or other inventory adjustments; *plus* 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) (1) the net increase (which, for the avoidance of doubt, shall not be negative), if any, of the difference
between: (i) the deferred revenue of such Person and its Restricted Subsidiaries, as of the last day of such period (the "*Determination Date*") and (ii) the deferred revenue of such Person and its Restricted Subsidiaries as of
the date that is 12 months prior to the Determination Date, and (2) without duplication of any adjustment pursuant to clause (1), the net adjustment for the annualized full-year gross profit contribution from new supplier or customer contracts
signed during the 12 months prior to the Determination Date; *plus* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) lost earnings due to, directly or indirectly, the impact of COVID-19 not to exceed 25% of Consolidated EBITDA after giving effect to the addback permitted by this clause; *provided* that (i) such lost earnings are reasonably identifiable and factually supportable, (ii) no lost earnings shall be added
pursuant to this clause to the extent duplicative of any expenses or charges relating to such lost earnings that are included in any other clause of this definition of "Consolidated EBITDA";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) decreased (without duplication) by non-cash gains increasing
Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or reserve for a potential cash item that reduced Consolidated
EBITDA in any prior period (other than non-cash gains relating to the application of Accounting Standards Codification Topic 842—Leases (or any successor provision or other financial accounting standard
having a similar result or effect)).

"<u>Consolidated Interest Expense</u>" means, with respect to any Person for any period, without duplication, the sum of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) cash interest expense (including that attributable to Capitalized Lease Obligations), net of cash interest income, of the Issuer and the Restricted Subsidiaries with respect to all outstanding Indebtedness of the Issuer and the Restricted Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs under hedging agreements, *plus*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) non-cash interest expense resulting solely from the amortization of original issue discount from the issuance of Indebtedness of the Issuer and the Restricted Subsidiaries (excluding Indebtedness borrowed under the Credit Agreement in connection with and to finance the "Transactions" (as defined in the Credit Agreement)) at less than par, *plus*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) pay-in-kind interest expense of the Issuer and the Restricted Subsidiaries payable pursuant to the terms of the agreements governing such debt for borrowed money;

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but excluding, for the avoidance of doubt, (i) amortization of deferred financing costs, debt issuance costs, commissions, fees and expenses and any other amounts of non-cash interest other than referred to in clause (b) above (including as a result of the effects of acquisition method accounting or pushdown accounting), (ii) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under hedging agreements or other derivative instruments pursuant to FASB Accounting Standards Codification No. 815-Derivatives and Hedging, (iii) any one-time cash costs associated with breakage in respect of Hedge Agreements, (iv) commissions, discounts, yield, make whole premium and other fees and charges (including any interest expense) incurred in connection with any permitted receivables financing, (v) any "additional interest" owing pursuant to a registration rights agreement with respect to any securities, (vi) any payments with respect to make-whole premiums or other breakage costs of any Indebtedness, (vii) penalties and interest relating to Taxes, (viii) accretion or accrual of discounted liabilities not constituting Indebtedness, (ix) interest expense attributable to a direct or indirect Parent Entity resulting from push-down accounting, (x) any expense resulting from the discounting of Indebtedness in connection with the application of recapitalization or purchase accounting, (xi) any interest expense attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto and with respect to any Permitted Acquisition or similar Investment permitted hereunder, all as calculated on a consolidated basis in accordance with GAAP and (xii) annual agency fees paid to any trustees, administrative agents and collateral agents with respect to any secured or unsecured loans, debt facilities, debentures, bonds, commercial paper facilities or other forms of Indebtedness (including any security or collateral trust arrangements related thereto). For the avoidance of doubt, interest expense shall be determined after giving effect to any net payments made or received by the Issuers and the Restricted Subsidiaries in respect of Hedge Agreements relating to interest rate protection.

"<u>Consolidated Net Income</u>" means, with respect to any Person for any period, the net income (loss) of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP and before any reduction in respect of Preferred Stock dividends; *provided*, *however*, that there will not be included in such Consolidated Net Income (without duplication):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any net income (loss) of any Person if such Person is not a Restricted Subsidiary (including any net income
(loss) from investments recorded in such Person under the equity method of accounting), except that the Issuer's equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate
amount of cash or Cash Equivalents actually distributed (or to the extent converted into cash or Cash Equivalents) or that (as determined by the Issuer in its reasonable discretion) could have been distributed by such Person during such period to
the Issuer or a Restricted Subsidiary as a dividend or other distribution or return on investment;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) solely for the purpose of determining the Available Amount, any net income (loss) of any Restricted Subsidiary
(other than the Guarantors) if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Issuers or a Guarantor by
operation of the terms of such Restricted Subsidiary's articles, charter or any agreement, instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such Restricted Subsidiary or its stockholders (other than
(a) restrictions that have been waived or otherwise released (or such Person reasonably believes such restriction could be waived or released and is using commercially reasonable efforts to pursue such waiver or release), (b) restrictions
pursuant to the Credit Agreement, the Notes, this Indenture or other similar Indebtedness and (c) restrictions specified in <u>Section</u> <u>3.4(b)(14)</u>, except that the Issuer's equity in the net income of any such
Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents actually distributed (or to the extent converted, or having the ability to be converted, into cash or Cash
Equivalents) or that could have been distributed by such Restricted Subsidiary during such period to the Issuer or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend to another Restricted
Subsidiary, to the limitation contained in this clause);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any gain (or loss) (a) in respect of facilities or assets no longer used or useful in the conduct of the
business of the Issuer or its Restricted Subsidiaries, abandoned, transferred, closed, disposed or discontinued operations, (b) on disposal, abandonment or discontinuance of disposed, abandoned, transferred, closed or discontinued operations,
and (c) attributable to asset dispositions, abandonments, sales or other dispositions of any asset (including pursuant to any Sale and Leaseback Transaction) or the designation of an Unrestricted Subsidiary other than in the ordinary course of
business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) (a) any extraordinary, exceptional, unusual or nonrecurring loss, charge or expense, Transaction Expenses,
Public Company Costs, restructuring and duplicative running costs, refinancing, restructuring charges or reserves (whether or not classified as restructuring expense on the consolidated financial statements), relocation costs (including relocation
of the corporate headquarters), changes to the distribution footprint, start-up or initial costs for any project or new production line, division or new line of business, integration and facilities' or
bases' opening costs, facility consolidation and closing costs, severance costs and expenses, one-time charges (including compensation charges), payments made pursuant to the terms of change in control
agreements that the Issuers or a Subsidiary or a Parent Entity had entered into with employees of the Issuers, a Subsidiary or a Parent Entity, losses or costs related to project terminations, store, facility or property disruptions or shutdowns
(including due to work stoppages, natural disasters and epidemics), signing, retention and completion bonuses (including management bonus pools), recruiting costs, costs incurred in connection with any strategic or cost savings initiatives,
transition costs, contract terminations, litigation and arbitration fees, costs and charges, expenses in connection with one-time rate changes, costs incurred with acquisitions, investments and dispositions
(including travel and out-of-pocket costs, human resources costs (including relocation bonuses), litigation and arbitration costs,

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charges, fees and expenses (including settlements), management transition costs, advertising costs, losses associated with temporary decreases in work volume and expenses related to maintain underutilized personnel) and non-recurring product and intellectual property development, other business optimization expenses or reserves (including costs and expenses relating to business optimization programs and new systems design and costs or reserves associated with improvements to IT and accounting functions), retention charges (including charges or expenses in respect of incentive plans), system establishment costs and implementation costs and operating expenses attributable to the implementation of strategic or cost-savings initiatives, and curtailments or modifications to pension and post-retirement employee benefit plans (including any settlement of pension liabilities and charges resulting from changes in estimates, valuations and judgments), loss of margin and associated operating costs related to non-recurring inventory liquidation, and professional, legal, accounting, consulting and other service fees incurred with any of the foregoing and (b) any charge, expense, cost, accrual or reserve of any kind associated with litigation and settlements thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) (a) at the election of the Issuer with respect to any quarterly period, the cumulative effect (including
charges, accruals, expenses and reserves) of a change in law, regulation or accounting principles and changes as a result of the adoption or modification of accounting policies, (b) subject to the last paragraph of the definition of
"GAAP," the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies during such period (including any impact resulting from an election by the Issuer to apply
IFRS or other Accounting Changes), (c) any costs, charges, losses, fees or expenses in connection with the implementation or tracking of such changes or modifications specified in the foregoing clauses (a) and (b), in each case as reasonably
determined by the Issuer; and (d) any fees, costs and expenses incurred in connection with the implementation of Accounting Standards Codification Topic 606—Revenue from Contracts with Customers and Accounting Standards Codification Topic
842—Leases (or any other financial accounting standard having a similar result or effect), and any non-cash losses or charges resulting from the application of Accounting Standards Codification Topic
606—Revenue from Contracts with Customers and Accounting Standards Codification Topic 842—Leases (or any other financial accounting standard having a similar result or effect);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) (a) any equity-based or non-cash compensation or similar charge, cost
or expense or reduction of revenue, including any such charge, cost, expense or reduction arising from any grant of stock, stock appreciation or similar rights, stock options, restricted stock, phantom equity, profits interests or other interests,
or other rights or equity- or equity-based incentive programs ("equity incentives"), any income (loss) associated with the equity incentives or other long-term incentive compensation plans (including under deferred compensation
arrangements of the Issuer or any Parent Entity or Subsidiary and any positive investment income with respect to funded deferred compensation account balances), roll-over, acceleration or payout of Capital Stock by employees, directors, officers,
managers,

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contractors, consultants, advisors or business partners (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer or any Parent Entity or Subsidiary, and any cash awards granted to employees of the Issuer and its Subsidiaries in replacement for forfeited awards, (b) any non-cash losses attributable to deferred compensation plans or trusts or realized in such period in connection with adjustments to any employee benefit plan due to changes in estimates, actuarial assumptions, valuations, studies or judgments, (c) non-cash compensation expense resulting from the application of Accounting Standards Codification Topic 718, Compensation—Stock Compensation or Accounting Standards Codification Topics 505-50 Equity-Based Payments to Non-Employees (or any successor provision), and (d) any net pension or post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, amortization of such amounts arising in prior periods, amortization of the unrecognized obligation (and loss or cost) existing at the date of initial application of Statement of Financial Accounting Standards No. 87, 106 and 112 (or any successor provision), and any other item of a similar nature;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) any income (loss) from the extinguishment, conversion, modification or cancellation of Indebtedness, Hedging
Obligations or other derivative instruments (including deferred financing costs written off, premiums paid or other expenses incurred);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) any unrealized gains or losses in respect of any Hedge Agreements, Hedging Obligations or any ineffectiveness
recognized in earnings related to hedge transactions or the fair value of changes therein recognized in earnings for derivatives that do not qualify as hedge transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) any fees, losses, costs, expenses or charges incurred during such period (including audit fees and any
transaction, retention bonus or similar payment), or any amortization thereof for such period, in connection with (a) any acquisition, recapitalization, Investment, Asset Disposition, disposition, issuance or repayment of Indebtedness
(including such fees, expense or charges related to the offering, issuance and rating of the Notes, other securities and any Credit Facilities), issuance of Capital Stock, refinancing transaction or amendment or modification of any debt instrument
(including any amendment or other modification of the Notes, other securities and any Credit Facilities), in each case, including the Transactions, any such transaction consummated prior to, on or after the Credit Agreement Reference Date and any
such transaction undertaken but not completed, and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful (including,
for the avoidance of doubt, the effects of expensing transaction-related expenses in accordance with Accounting Standards Codification Topic 805—Business Combinations (or any successor provision) and any adjustments resulting from the
application of Accounting Standards Codification Topic 460—Guarantees (or any successor provision) or any related pronouncements) and (b) complying with the requirements under, or making elections permitted by, the documentation governing
any Indebtedness;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) any unrealized or realized gain or loss resulting in such period from currency translation increases or
decreases or transaction gains or losses, including those related to currency remeasurements of Indebtedness (including any net loss or gain resulting from Hedging Obligations for currency risk), intercompany loans, accounts receivables, accounts
payable, intercompany balances, other balance sheet items, Hedging Obligations or other obligations of the Issuer or any Restricted Subsidiary owing to the Issuer or any Restricted Subsidiary and any other realized or unrealized foreign exchange
gains or losses relating to the translation of assets and liabilities denominated in foreign currencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) any unrealized or realized income (loss) or non-cash expense
attributable to movement in mark-to-market valuation of foreign currencies, Indebtedness or derivative instruments pursuant to GAAP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) effects of adjustments (including the effects of such adjustments pushed down to such Person and its Restricted
Subsidiaries) in such Person's consolidated financial statements pursuant to GAAP (including those required or permitted by Accounting Standards Codification Topic 805–Business Combinations and Accounting Standards Codification
350–Intangibles-Goodwill and Other (or any successor provisions)) and related pronouncements, including in the inventory (including any impact of changes to inventory valuation policy methods, including changes in capitalization of variances),
property and equipment, software, loans, leases, goodwill, intangible assets, in-process research and development, deferred revenue (including deferred costs related thereto and deferred rent) and debt line
items thereof, resulting from the application of acquisition method accounting, recapitalization accounting or purchase accounting, as the case may be, in relation to the Transactions or any consummated acquisition (by merger, consolidation,
amalgamation or otherwise), joint venture investment or other Investment or the amortization or write-off or write-down of any amounts thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) (i) any impairment charge, write-off or write-down, including
impairment charges, write-offs or write-downs related to intangible assets, long-lived assets, goodwill, investments in debt or equity securities (including any losses with respect to the foregoing in bankruptcy, insolvency or similar proceedings)
and investments recorded using the equity method or as a result of a change in law or regulation and the amortization of intangibles arising pursuant to GAAP and (ii) gains, losses or charges arising from Accounting Standards Codification Topic
820—Fair Value Measurements and Disclosures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) (a) accruals and reserves (including contingent liabilities) that are established or adjusted in connection
with the Transactions or the closing of any acquisition or disposition that are so required to be established or adjusted as a result of such acquisition or disposition in accordance with GAAP, or changes as a result of adoption or modification of
accounting policies and (b) earn-out, non-compete and contingent consideration obligations (including to the extent accounted for as bonuses, compensation or
otherwise (and including deferred performance incentives in connection with any acquisition (by merger, consolidation, amalgamation or otherwise), joint venture investment or other Investment whether or not a service component is required from the
transferor or its related party)) and adjustments thereof and purchase price adjustments;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) any income (loss) related to any unrealized gains and losses resulting from Hedge Agreements, Hedging
Obligations or embedded derivatives that require similar accounting treatment (including embedded derivatives in supplier or customer contracts), and the application of Accounting Standards Codification Topic 815— Derivatives and Hedging (or
any successor provision) and its related pronouncements or mark to market movement of non-U.S. currencies, Indebtedness, derivatives instruments or other financial instruments pursuant to GAAP, including
Accounting Standards Codification Topic 825—Financial Instruments (or any successor provision) or an alternative basis of accounting applied in lieu of GAAP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) any non-cash expenses, accruals or reserves related to adjustments to
historical Tax exposures and any deferred Tax expense associated with Tax deductions or net operating losses arising as a result of the Transactions, or the release of any valuation allowances related to such item;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) the amount of (x) Board of Director (or equivalent thereof) fees, management, monitoring, consulting,
refinancing, transaction, advisory and other fees (including exit and termination fees) and indemnities, costs and expenses paid or accrued in such period to (or on behalf of) an Investor or otherwise to any member of the Board of Directors (or the
equivalent thereof) of the Issuer, any of its Subsidiaries, any Parent Entity, any Permitted Holder or any Affiliate of a Permitted Holder, and (y) payments made to option holders of the Issuers or any Parent Entity in connection with, or as a
result of, any distribution being made to equityholders of such Person or its Parent Entity, which payments are being made to compensate such option holders as though they were equityholders at the time of, and entitled to share in, such
distribution, including any cash consideration for any repurchase of equity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) the amount of loss or discount on sale of Securitization Assets, Receivables Assets and related assets in
connection with a Qualified Securitization Financing or Receivables Facility; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) (i) payments to third parties in respect of research and development, including amounts paid upon signing,
success, completion and other milestones and other progress payments, to the extent expensed, and (ii) at the election of the Issuer with respect to any quarterly period, effects of adjustments to accruals and reserves during a period relating
to any change in the methodology of calculating reserves for returns, rebates and other chargebacks (including government program rebates).

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In addition, to the extent not already excluded (or included, as applicable) in the Consolidated Net Income of such Person and its Restricted Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall be increased by the amount of: (i) any expenses, charges or losses that are reimbursed by indemnification or other reimbursement provisions in connection with any investment or any sale, conveyance, transfer or other disposition of assets permitted hereunder, or, so long as the Issuer has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed within 365 days of the date of such evidence (net of any amount so added back in a prior period to the extent not so reimbursed within the applicable 365-day period) and (ii) to the extent covered by insurance (including business interruption insurance) and actually reimbursed, or, so long as the Issuer has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is in fact reimbursed within 365 days of the date of such evidence (net of any amount so added back in a prior period to the extent not so reimbursed within the applicable 365-day period), expenses, charges or losses with respect to liability or Casualty Events or business interruption. Consolidated Net Income shall be reduced by the amount of distributions for Permitted Tax Amounts actually made to any Parent Entity of such Person in respect of such period in accordance with <u>Section</u> <u>3.3(b)(9)(i)</u> as though such amounts had been paid as Taxes directly by such Person for such periods.

"<u>Consolidated Secured Leverage Ratio</u>" means, as of any date of determination, the ratio of (x) the sum of (I) all outstanding Consolidated Secured Net Debt as of such date, plus (II) the Reserved Indebtedness Amount, but only to the extent such Indebtedness would be Consolidated Secured Debt if actually borrowed and outstanding as of such date to (y) LTM EBITDA.

"<u>Consolidated Secured Net Debt</u>" means, as of any date of determination, any Consolidated Total Indebtedness (other than Indebtedness owed to the Issuer or any of its Restricted Subsidiaries) that (i) is not subordinated in right of payment to the Notes or the Note Guarantees and (ii) is secured by a Lien on the Collateral on a basis that is not junior to the Liens on the Collateral securing the Notes and the Note Guarantees, but excluding, all revolving loans funded for working capital purposes.

"<u>Consolidated Total Indebtedness</u>" means, as of any date of determination, an amount equal to (a) the aggregate principal amount of outstanding Indebtedness for borrowed money (excluding Indebtedness with respect to Cash Management Obligations, Hedging Obligations and intercompany Indebtedness), *plus* (b) the aggregate principal amount of Capitalized Lease Obligations, Purchase Money Obligations and unreimbursed drawings under letters of credit of the Issuer and its Restricted Subsidiaries outstanding on such date (*provided* that any unreimbursed amount under commercial letters of credit shall not be counted as Consolidated Total Indebtedness until five Business Days after such amount is drawn), *minus* (c) the aggregate amount of cash and Cash Equivalents included on the consolidated balance sheet of the Issuer and its Restricted Subsidiaries as of the end of the most recent fiscal period for which consolidated financial statements are available (which may, at the Issuer's election, be internal financial statements) (*provided* that the cash proceeds of any proposed incurrence of Indebtedness shall not be included in this clause (c) for purposes of calculating the Consolidated Total Leverage Ratio or the Consolidated Secured Leverage Ratio, as applicable), with such pro forma adjustments as are consistent with the pro forma adjustments set forth in the definition of "Fixed Charge Coverage Ratio." For the avoidance of doubt, Consolidated Total Indebtedness shall exclude Indebtedness in respect of any Receivables Facility or Securitization Facility.

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"<u>Consolidated Total Leverage Ratio</u>" means, as of any date of determination, the ratio of (x) the sum of (a) Consolidated Total Indebtedness as of such date and (b) without duplication, the Reserved Indebtedness Amount as of such date to (y) LTM EBITDA. Notwithstanding the foregoing, all revolving loans funded for working capital purposes shall be excluded from the foregoing calculation.

"<u>Contingent Obligations</u>" means, with respect to any Person, any obligation of such Person guaranteeing in any manner, whether directly or indirectly, any Non-Financing Lease Obligation, dividend or other obligation that does not constitute Indebtedness ("*primary obligations*") of any other Person (the "*primary obligor*"), including any obligation of such Person, whether or not contingent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) to advance or supply funds:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) for the purchase or payment of any such primary obligation; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to maintain the working capital or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency of the primary obligor; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

"<u>Controlled Investment Affiliate</u>" means, as to any Person, any other Person, which directly or indirectly is in control of, is controlled by, or is under common control with such Person and is organized by such Person (or any Person controlling such Person) primarily for making direct or indirect equity or debt investments in the Issuer, its Subsidiaries, any Parent Entity and/or other companies.

"<u>Credit Agreement</u>" means the Credit Agreement among the Issuer and Value Village Canada Inc., as borrowers, certain guarantors party thereto, KKR Loan Administration Services LLC, as administrative agent, the other agents party thereto and the lenders party thereto, dated as of April 26, 2021, as amended on November 8, 2021 and November 23, 2022, together with the related documents thereto (including a last-out term loan facility and any guarantees, collateral documents, instruments and agreements executed in connection therewith) (collectively, the "<u>Issue Date Credit Agreement</u>"), as amended, extended, renewed, restated, refunded, replaced, refinanced, supplemented, modified or otherwise changed (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any one or more agreements (and related documents) governing Indebtedness, including indentures, incurred to refinance, substitute, supplement, replace or add to (including increasing the amount available for borrowing or adding or removing any Person as

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a borrower, issuer or guarantor thereunder, in whole or in part), the borrowings and commitments then outstanding or permitted to be outstanding under such Credit Agreement or one or more successors to the Credit Agreement or one or more new credit agreements. Notwithstanding the foregoing, an instrument other than the Issue Date Credit Agreement shall only be a "Credit Agreement" if specified as such by the Issuer in an Officer's Certificate.

"<u>Credit Agreement Administrative Agent</u>" means KKR Loan Administration Services, LLC, in its capacity as administrative agent for the Credit Agreement Secured Parties (together with its successors and assigns, and together with any Replacement Representative).

"<u>Credit Agreement Collateral Agent</u>" means KKR Loan Administration Services, LLC, in its capacity as collateral agent for the Credit Agreement Secured Parties (together with its successors and assigns, and together with any Replacement Collateral Agent).

"<u>Credit Agreement Obligations</u>" has the meaning assigned to it in the Intercreditor Agreement, as in effect on the date hereof.

"<u>Credit Agreement Reference Date</u>" means January 3, 2022.

"<u>Credit Agreement Secured Parties</u>" has the meaning assigned to it in the Intercreditor Agreement, as in effect on the date hereof.

"<u>Credit Facility</u>" means, with respect to the Issuer or any of its Subsidiaries, one or more debt facilities, indentures or other arrangements (including the Credit Agreement or commercial paper facilities and overdraft facilities) with banks, other financial institutions or investors providing for revolving credit loans, term loans, notes, receivables financing (including through the sale of receivables to such institutions or to special purpose entities formed to borrow from such institutions against such receivables), letters of credit or other Indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced, restructured, refinanced, repaid, increased or extended in whole or in part from time to time (and whether in whole or in part and whether or not with the original administrative agent and lenders or another administrative agent or agents or other banks or institutions and whether provided under the original Credit Agreement or one or more other credit or other agreements, indentures, financing agreements or otherwise) and in each case including all agreements, instruments and documents executed and delivered pursuant to or in connection with the foregoing (including any notes and letters of credit issued pursuant thereto and any Guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit applications and other Guarantees, pledges, agreements, security agreements and collateral documents). Without limiting the generality of the foregoing, the term "Credit Facility" shall include any agreement or instrument (1) changing the maturity of any Indebtedness incurred thereunder or contemplated thereby, (2) adding Subsidiaries of the Issuer as additional borrowers or guarantors thereunder, (3) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder or (4) otherwise altering the terms and conditions thereof.

"<u>Customary Junior Lien Intercreditor Agreement</u>" means an intercreditor agreement providing for the ranking and priority of liens subject thereto as Junior Lien Priority, on customary terms, as determined in good faith by the Issuer, which determination shall be set forth in an Officer's Certificate.

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"<u>Default</u>" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default; *provided* that any Default that results solely from the taking of an action that would have been permitted but for the continuation of a previous Default will be deemed to be cured if such previous Default is cured prior to becoming an Event of Default.

"<u>Definitive Notes</u>" means certificated Notes.

"<u>Delaware Divided LLC</u>" means any Delaware LLC which has been formed upon the consummation of a Delaware LLC Division.

"<u>Delaware LLC</u>" means any limited liability company organized or formed under the laws of the State of Delaware.

"<u>Delaware LLC Division</u>" means the statutory division of any Delaware LLC into two or more Delaware LLCs pursuant to Section 18-217 of the Delaware Limited Liability Company Act.

"<u>Deposit Account</u>" has the meaning specified in the UCC.

"<u>Depositary</u>" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in <u>Section</u> <u>2.3</u> as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provisions of this Indenture.

"<u>Derivative Instrument</u>" with respect to a Person, means any contract, instrument or other right to receive payment or delivery of cash or other assets to which such Person or any Affiliate of such Person that is acting in concert with such Person in connection with such Person's investment in the Notes (other than a Screened Affiliate) is a party (whether or not requiring further performance by such Person), the value and/or cash flows of which (or any material portion thereof) are materially affected by the value and/or performance of the Notes and/or the creditworthiness of the Issuers and/or any one or more of the Guarantors (the "*Performance References*").

"<u>Designated Non-Cash Consideration</u>" means the Fair Market Value (as determined in good faith by the Issuer) of non-cash consideration received by the Issuer or any of the Restricted Subsidiaries in connection with an Asset Disposition that is so designated as Designated Non-Cash Consideration pursuant to an Officer's Certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent payment, redemption, retirement, sale or other disposition of such Designated Non-Cash Consideration. A particular item of Designated Non-Cash Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed of in compliance with <u>Section</u> <u>3.5</u>.

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*"*<u>Designated Preferred Stock</u>" means Preferred Stock of the Issuer or a Parent Entity (other than Disqualified Stock) that is issued for cash (other than to the Issuer or a Subsidiary of the Issuer or an employee stock ownership plan or trust established by the Issuer, any Parent Entity or any Subsidiary of the Issuer for the benefit of their employees to the extent funded by the Issuer or any Subsidiary of the Issuer) and that is designated as "Designated Preferred Stock" pursuant to an Officer's Certificate of the Issuers at or prior to the issuance thereof, the net cash proceeds of which are excluded from the calculation set forth in <u>Section</u> <u>3.3(a)(iii)(C)</u>.

"<u>Disinterested Director</u>" means, with respect to any Affiliate Transaction, a member of the Board of Directors having no material direct or indirect financial interest in or with respect to such Affiliate Transaction. A member of the Board of Directors shall be deemed not to have such a financial interest by reason of such member's holding Capital Stock of the Issuer or any Parent Entity or any options, warrants or other rights in respect of such Capital Stock.

"<u>Disqualified Stock</u>" means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) matures or is mandatorily redeemable for cash or in exchange for Indebtedness pursuant to a sinking fund
obligation or otherwise; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) is or may become (in accordance with its terms) upon the occurrence of certain events or otherwise redeemable
or repurchasable for cash or in exchange for Indebtedness at the option of the holder of the Capital Stock in whole or in part,

in each case on or prior to the earlier of (a) the Stated Maturity of the Notes or (b) the date on which there are no Notes outstanding; *provided*, *however*, that (i) only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock and (ii) any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Issuer to repurchase such Capital Stock upon the occurrence of a change of control or asset sale (howsoever defined or referred to) shall not constitute Disqualified Stock if any such redemption or repurchase obligation is subject to compliance by the relevant Person with <u>Section</u> <u>3.3</u>; *provided, however*, that if such Capital Stock is issued to any future, current or former employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) (excluding the Permitted Holders (but not excluding any future, current or former employee, director, officer, manager, contractor, consultant or advisor) or Immediate Family Members), of the Issuer, any of its Subsidiaries, any Parent Entity or any other entity in which the Issuer or a Restricted Subsidiary has an Investment and is designated in good faith as an "affiliate" by the Board of Directors (or the compensation committee thereof) or any other plan for the benefit of current, former or future employees (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer or its Subsidiaries or by any such plan to such employees (or their respective Controlled Investment Affiliates or Immediate Family Members), such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.

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"<u>Dollars</u>" or "<u>$</u>" means the lawful currency of the United States of America.

"<u>Domestic Subsidiary</u>" means, with respect to any Person, any Restricted Subsidiary of such Person other than a Foreign Subsidiary.

"<u>DTC</u>" means The Depository Trust Company or any successor securities clearing agency.

"<u>Equity Offering</u>" means (x) a sale of Capital Stock (other than through the issuance of Disqualified Stock or Designated Preferred Stock or through an Excluded Contribution) other than (a) offerings registered on Form S-8 (or any successor form) under the Securities Act or any similar offering in other jurisdictions or other securities of the Issuer or any Parent Entity and (b) issuances of Capital Stock to any Subsidiary of the Issuer or (y) a cash equity contribution to the Issuer.

"<u>Euro</u>" means the single currency of participating member states of the economic and monetary union as contemplated in the Treaty on European Union.

"<u>Excess Proceeds</u>" means, with respect to an Asset Disposition not with respect to Collateral, the product of (A) the excess of (x) the amount of remaining Applicable Proceeds at the expiration of the Proceeds Application Period over (y) the Applicable Proceeds Threshold Amount times (B) the Applicable Percentage in effect at such time.

"<u>Exchange Act</u>" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder, as amended.

"<u>Excluded Account</u>" means each of the following Deposit Accounts and Securities Accounts of the Issuer, the Co-Issuer or a Guarantor (and all cash, Cash Equivalents and other securities or investments credited thereto or deposited therein): (a) Deposit Accounts and Securities Accounts exclusively used for payroll, payroll Taxes (to the extent amounts in such accounts are in respect of Taxes owed and to be paid) and other employee and wage benefits, (b) each Deposit Account holding the cash constituting cash collateral in respect of letters of credit permitted to be issued pursuant to this Indenture, (c) each local checking, savings or other demand deposit account maintained by any of the Issuers or Guarantors solely for purposes of operating a Store, (d) any zero balance accounts so long as the relevant Issuer or Guarantor shall ACH or wire transfer no less frequently than daily to an account subject to a control agreement in favor of the Notes Collateral Agent (or a designated bailee, in accordance with any applicable intercreditor agreement) all amounts on deposit in each such zero balance account and (e) other Deposit Accounts and Securities Accounts, *provided* that the aggregate balance in such accounts at the end of any Business Day shall not exceed $200,000 per account and $1,000,000 in the aggregate.

"<u>Excluded Assets</u>" has the meaning assigned to it in the applicable Security Document.

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"<u>Excluded Contribution</u>" means net cash proceeds or property or assets received by the Issuer as capital contributions to the equity (other than through the issuance of Disqualified Stock or Designated Preferred Stock) of the Issuer after the Issue Date or from the issuance or sale (other than to a Restricted Subsidiary or an employee stock ownership plan or trust established by the Issuer, any Parent Entity or any Subsidiary of the Issuer for the benefit of their employees to the extent funded by the Issuer or any Restricted Subsidiary) of Capital Stock (other than Disqualified Stock or Designated Preferred Stock) of the Issuer.

"<u>Excluded Subsidiary</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any Subsidiary that is not a wholly-owned Subsidiary of an Issuer or a Guarantor,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any direct or indirect Foreign Subsidiary of an Issuer or of any direct or indirect Domestic Subsidiary or Foreign Subsidiary,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any Subsidiary that is prohibited or restricted by applicable Law from providing a Note Guarantee or by a binding contractual obligation existing on the Issue Date or at the time of the acquisition of such Subsidiary (and not incurred in contemplation of the Issue Date or such acquisition) from providing a Note Guarantee (*provided* that such contractual obligation is not entered into by the Issuer or its Restricted Subsidiaries principally for the purpose of qualifying as an "Excluded Subsidiary" under this definition) or if such Note Guarantee would require governmental (including regulatory) or third party (other than Holdings, the Issuer or a Restricted Subsidiary) consent, approval, license or authorization, unless such consent, approval, license or authorization has been obtained,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any special purpose securitization vehicle (or similar entity), including any Securitization Subsidiary created pursuant to a transaction permitted under this Indenture,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any Subsidiary that is a not-for-profit organization,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) any Captive Insurance Subsidiary,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) any other Subsidiary with respect to which, as reasonably determined by the Issuer in good faith and in consultation with the Credit Agreement Collateral Agent (or, if there is no Credit Agreement Collateral Agent, the Applicable Collateral Agent), the cost or other consequences (including any material Tax costs or adverse Tax consequences) of providing a Note Guarantee shall be excessive in view of the benefits to be obtained by the Holders therefrom; *provided* that no Canadian Subsidiary shall constitute an Excluded Subsidiary pursuant to this clause (g) as a result of any such material adverse Tax consequences under Section 956 of the Code,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) any other Subsidiary to the extent the provision of a Note Guarantee by such Subsidiary would result in material adverse Tax consequences to Holdings (or any Parent Entity to the extent such material adverse Tax consequences are related to its ownership of the Equity Interests in Holdings or the Issuer and the Restricted Subsidiaries), the Issuer or any of the Restricted Subsidiaries as reasonably determined by the Issuer in good faith and in consultation with the Credit Agreement Collateral Agent (or, if there is no Credit Agreement Collateral Agent, the Applicable Collateral Agent); *provided* that no Canadian Subsidiary shall constitute an Excluded Subsidiary pursuant to this clause (h) as a result of any such material adverse Tax consequences under Section 956 of the Code;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any Unrestricted Subsidiary, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) any Immaterial Subsidiary;

*provided* that the Issuer, in its sole discretion, may cause any Restricted Subsidiary that qualifies as an Excluded Subsidiary under <u>clauses (a)</u> through <u>(j)</u> above to become a Guarantor in accordance with the definition thereof and thereafter such Subsidiary shall not constitute an "Excluded Subsidiary" (unless and until the Issuer elects, in its sole discretion, to designate such Subsidiary as an Excluded Subsidiary), provided that no Restricted Subsidiary may be an Excluded Subsidiary pursuant to clause (g) or (h) above, unless such Excluded Subsidiary is also an Excluded Subsidiary for purposes of the Credit Agreement (if any) and does not guarantee the Credit Agreement (if any).

"<u>Fair Market Value</u>" may be conclusively established by means of an Officer's Certificate or resolutions of the Board of Directors setting out such fair market value as determined by such Officer or such Board of Directors in good faith.

"<u>First Call Date</u>" means February 15, 2025.

"<u>First Lien Obligations</u>" has the meaning assigned to it in the Intercreditor Agreement, as in effect on the date hereof.

"<u>First Lien Secured Parties</u>" has the meaning assigned to it in the Intercreditor Agreement, as in effect on the date hereof.

"<u>Fitch</u>" means Fitch Ratings, Inc. or any of its successors or assigns that is a Nationally Recognized Statistical Rating Organization.

"<u>Fixed Charge Coverage Ratio</u>" means, with respect to any Person on any determination date, the ratio of Consolidated EBITDA of such Person for the most recent four consecutive fiscal quarters ending immediately prior to such determination date (the "<u>reference period</u>") for which consolidated financial statements are available (which may, at the Issuer's election, be internal consolidated financial statements) to the Fixed Charges of such Person for the reference period. In the event that the Issuer or any Restricted Subsidiary incurs, assumes, guarantees, redeems, defeases, retires or extinguishes any Indebtedness (other than Indebtedness incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced), has caused any Reserved Indebtedness Amount to be deemed to be incurred during such period or issues or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the reference period but prior to or simultaneously with the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "<u>Fixed Charge Coverage Ratio Calculation Date</u>"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, deemed incurrence, assumption, guarantee, redemption, defeasance, retirement or extinguishment of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter period.

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For purposes of making the computation referred to above, any Investments, acquisitions, dispositions, mergers, amalgamations, consolidations, operational changes, business expansions and disposed or discontinued operations that have been made by the Issuer or any of its Restricted Subsidiaries, during the reference period or subsequent to the reference period and on or prior to or simultaneously with the Fixed Charge Coverage Ratio Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations, consolidations, operational changes, business expansions and disposed or discontinued operations (and the change in any associated fixed charge obligations and the change in Consolidated EBITDA resulting therefrom) had occurred on the first day of the reference period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged or amalgamated with or into the Issuer or any of its Restricted Subsidiaries since the beginning of such period shall have made any Investment, acquisition, disposition, merger, amalgamation, consolidation, operational change, business expansion, or disposed or discontinued operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, amalgamation, consolidation or disposed operation had occurred at the beginning of the reference period.

For purposes of this definition, whenever pro forma effect is to be given to a transaction (including the Transactions), the pro forma calculations shall be made in good faith by a responsible financial or chief accounting officer of the Issuers (and may include, for the avoidance of doubt, cost savings, operating expenses reductions and synergies resulting from such transactions which is being given pro forma effect). If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Fixed Charge Coverage Ratio Calculation Date had been the applicable rate for the entire reference period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Issuers to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed with a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the reference period except as set forth in the first paragraph of this definition. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Issuer may designate.

"<u>Fixed Charges</u>" means, with respect to any Person for any period, the sum of (without duplication):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Consolidated Interest Expense of such Person for such period;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) all cash dividends or other distributions paid (excluding items eliminated in consolidation) on any series of
Preferred Stock of any Restricted Subsidiary of such Person during such period; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) all cash dividends or other distributions paid (excluding items eliminated in consolidation) on any series of
Disqualified Stock of such Person during such period.

"<u>Foreign Subsidiary</u>" means, with respect to any Person, any Subsidiary of such Person that is not organized or existing under the laws of the United States of America or any state thereof, or the District of Columbia or the federal laws of Canada or any province or territory thereof, and any Subsidiary of such Subsidiary.

"<u>GAAP</u>" means generally accepted accounting principles in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time; *provided* that all terms of an accounting or financial nature used in this Indenture shall be construed, and all computations of amounts and ratios referred to in this Indenture shall be made (a) without giving effect to any election under Accounting Standards Codification Topic 825—Financial Instruments, or any successor thereto or comparable accounting principle (including pursuant to the Accounting Standards Codification), to value any Indebtedness of the Issuers or any Subsidiary at "fair value," as defined therein and (b) the amount of any Indebtedness under GAAP with respect to Capitalized Lease Obligations shall be determined in accordance with the definition of Capitalized Lease Obligations. At any time after the Issue Date, the Issuer may elect to apply IFRS accounting principles in lieu of GAAP and, upon any such election, references herein to GAAP shall thereafter be construed to mean IFRS (except as otherwise provided in this Indenture); *provided* that any such election, once made, shall be irrevocable; *provided, further*, any calculation or determination in this Indenture that requires the application of GAAP for periods that include fiscal quarters ended prior to the Issuer's election to apply IFRS shall remain as previously calculated or determined in accordance with GAAP. The Issuer shall give notice of any such election made in accordance with this definition to the Trustee. For the avoidance of doubt, solely making an election (without any other action) referred to in this definition shall not be treated as an incurrence of Indebtedness.

If there occurs a change in IFRS or GAAP, as the case may be, and such change would cause a change in the method of calculation of any standards, terms or measures (including all computations of amounts and ratios) used in this Indenture (an "<u>Accounting Change</u>"), then the Issuer may elect that such standards, terms or measures shall be calculated as if such Accounting Change had or had not occurred. Notwithstanding any other provision contained herein, the definitions set forth in this Indenture and any financial calculations required by this Indenture shall be computed so as to exclude, with respect to any lease that would have been treated as an "operating lease" under GAAP as it was in effect prior to the adoption of Accounting Standards Codification Topic 842, "Leases," any interest expense, depreciation, amortization or Indebtedness that would not have been recorded had such Accounting Standards Codification not been adopted.

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"<u>Global Notes</u>" has the meaning set forth in <u>Section</u> <u>2.1(b)</u>.

"<u>Governmental Authority</u>" means the government of the United States or any other nation, or of any political subdivision thereof, whether state, provincial, territorial 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).

"<u>Grantor</u>" means the Issuers and any Guarantor.

"<u>Guarantee</u>" means, any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person, including any such obligation, direct or indirect, contingent or otherwise, of such Person:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other
Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to
maintain financial statement conditions or otherwise); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) entered into primarily for purposes of assuring in any other manner the obligee of such Indebtedness of
the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); *provided*, *however*, that the term "Guarantee" will not include (x) endorsements for collection or deposit in the
ordinary course of business or consistent with past practice and (y) standard contractual indemnities or product warranties provided in the ordinary course of business, and *provided, further,* that the amount of any Guarantee shall be
deemed to be the lower of (i) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made and (ii) the maximum amount for which such guaranteeing Person may be liable pursuant
to the terms of the instrument embodying such Guarantee or, if such Guarantee is not an unconditional guarantee of the entire amount of the primary obligation and such maximum amount is not stated or determinable, the amount of such guaranteeing
Person's maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The term "Guarantee" used as a verb has a corresponding meaning.

"<u>Guarantor</u>" means Holdings, Holdings GP and any Restricted Subsidiary that Guarantees the Notes, until such Note Guarantee is released in accordance with the terms of this Indenture.

"<u>Hedge Agreement</u>" means any agreement with respect to (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

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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, including any such obligations or liabilities under any such master agreement.

"<u>Hedging Obligations</u>" means, with respect to any Person, the obligations of such Person under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign exchange contracts, currency swap agreement or similar agreement providing for the transfer or mitigation of interest rate, commodity price or currency risks either generally or under specific contingencies.

"<u>Holder</u>" means each Person in whose name the Notes are registered on the registrar's books, which shall initially be the nominee of DTC.

"<u>Holding Company</u>" means any Person so long as such Person directly or indirectly holds 100% of the total voting power of the Voting Stock of the Issuer, and at the time such Person acquired such voting power, no Person and no group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any such 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) (other than any Permitted Holder), shall have beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of such Person.

"<u>Holdings</u>" has the meaning ascribed to it in the recitals of this Indenture.

"<u>Holdings GP</u>" has the meaning ascribed to it in the recitals of this Indenture.

"<u>IFRS</u>" means the international financial reporting standards as issued by the International Accounting Standards Board as in effect from time to time.

"<u>Immaterial Subsidiary</u>" means, at any date of determination, each Restricted Subsidiary of the Issuer that (i) has not guaranteed any other Indebtedness of the Issuer and (ii) has Total Assets and revenues, in each case, of less than 5.0% of Total Assets and revenues and, together with all other Immaterial Subsidiaries, has Total Assets and revenues of less than 10.0% of Total Assets and revenues, in each case, measured at the end of the most recent fiscal period for which consolidated financial statements are available (which may, at the Issuer's election, be internal consolidated financial statements) on a pro forma basis giving effect to any acquisitions or dispositions of companies, division or lines of business since such balance sheet date or the start of such four quarter period, as applicable, and on or prior to the date of acquisition of such Subsidiary.

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"<u>Immediate Family Members</u>" means, with respect to any individual, such individual's child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, qualified domestic partner, sibling, mother-in-law, father-in-law, son-in-law and daughter-in-law (including adoptive relationships, the estate of such individual and such other individuals above) and any trust, partnership or other bona fide estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals or any private foundation or fund that is controlled by any of the foregoing individuals or any donor-advised fund of which any such individual is the donor.

"<u>incur</u>" means issue, create, assume, enter into any Guarantee of, incur, extend or otherwise become liable for; *provided*, *however*, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) will be deemed to be incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary and the terms "incurred" and "incurrence" have meanings correlative to the foregoing and any Indebtedness pursuant to any revolving credit or similar facility shall only be "incurred" at the time any funds are borrowed thereunder.

"<u>Indebtedness</u>" means, with respect to any Person on any date of determination (without duplication):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the principal of indebtedness of such Person for borrowed money;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the principal of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) all reimbursement obligations of such Person in respect of letters of credit, bankers' acceptances or
other similar instruments (the amount of such obligations being equal at any time to the aggregate then undrawn and unexpired amount of such letters of credit or other instruments plus the aggregate amount of drawings thereunder that have not been
reimbursed) (except to the extent such reimbursement obligations relate to trade payables and such obligations are satisfied within 30 days of incurrence);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of
property (except trade payables or similar obligations, including accrued expenses owed, to a trade creditor), which purchase price is due more than one year after the date of placing such property in service or taking final delivery and title
thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Capitalized Lease Obligations of such Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the principal component of all obligations, or liquidation preference, of such Person with respect to any
Disqualified Stock or, with respect to any Restricted Subsidiary, any Preferred Stock (but excluding, in each case, any accrued dividends);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; *provided*, *however*, that the amount of such Indebtedness will be the lesser of (a) the Fair Market Value of such asset at such date of determination (as determined in good
faith by the Issuer) and (b) the amount of such Indebtedness of such other Persons;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Guarantees by such Person of the principal component of Indebtedness of the type referred to in clauses (1),
(2), (3), (4), (5) and (9) of other Persons to the extent Guaranteed by such Person; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) to the extent not otherwise included in this definition, net obligations of such Person under Hedging
Obligations (the amount of any such obligations to be equal at any time to the net payments under such agreement or arrangement giving rise to such obligation that would be payable by such Person at the termination of such agreement or arrangement);

with respect to clauses (1), (2), (3), (4), (5) and (9), above, if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP.

Notwithstanding the above provisions, in no event shall the following constitute Indebtedness:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Contingent Obligations incurred in the ordinary course of business or consistent with past practice, other than
Guarantees or other assumptions of Indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Cash Management Obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) any lease, concession or license of property (or Guarantee thereof) which would be considered an operating
lease under GAAP, Non-Financing Lease Obligations, Sale and Leaseback Transactions or any prepayments of deposits received from clients or customers in the ordinary course of business or consistent with past
practice;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) obligations under any license, permit or other approval (or Guarantees given in respect of such obligations)
incurred prior to the Issue Date or in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) in connection with the purchase by the Issuer or any Restricted Subsidiary of any business, any deferred or
prepaid revenue, post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; *provided*, *however*, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid in a timely manner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) for the avoidance of doubt, any obligations in respect of workers' compensation claims, early retirement
or termination obligations, pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage Taxes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) obligations under or in respect of Qualified Securitization Financings or Receivables Facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Indebtedness of any Parent Entity appearing on the balance sheet of the Issuer solely by reason of push down
accounting under GAAP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Capital Stock (other than in the case of clause (6) above, Disqualified Stock);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) lease obligations other than Capitalized Lease Obligations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) amounts owed to dissenting stockholders (including in connection with, or as a result of, exercise of
dissenters' or appraisal rights and the settlement of any claims or action (whether actual, contingent or potential)), pursuant to or in connection with a consolidation, amalgamation, merger or transfer of assets that complies with <u>Section</u> <u>4.1</u>.

"<u>Indenture</u>" means this Indenture, as amended or supplemented from time to time.

"<u>Independent Financial Advisor</u>" means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Similar Businesses of nationally recognized standing; *provided, however*, that such firm or appraiser is not an Affiliate of the Issuer or the Co-Issuer.

"<u>Initial Notes</u>" has the meaning ascribed to it in the recitals of this Indenture.

"<u>Institutional Accredited Investor</u>" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3), (9), (12) or (13) of Regulation D under the Securities Act (with respect to clause (13), only with respect to such persons as are institutions).

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"<u>Intercompany License Agreement</u>" means any cost sharing agreement, commission or royalty agreement, license or sublicense agreement, distribution agreement, services agreement, intellectual property rights transfer agreement, any related agreements or similar agreements, in each case where all parties to such agreement are one or more of the Issuer or a Restricted Subsidiary.

"<u>Intercreditor Agreement</u>" means (i) the First Lien Pari Passu Intercreditor Agreement, dated as of February 6, 2023, among KKR Loan Administration Services LLC, as Initial First Lien Representative and Initial First Lien Collateral Agent, the Trustee, as Initial Other Representative and the Notes Collateral Agent, as Initial Other Collateral Agent, and each additional representative and collateral agent from time to time party hereto, and acknowledged and agreed to by the Issuers and the Guarantors, (ii) any replacement or other intercreditor agreement that contains terms not materially less favorable to Holders than the intercreditor agreement referred to in clause (i) (as determined by the Issuer in good faith) or (iii) another intercreditor agreement the terms of which are consistent with market terms governing security arrangements for the sharing of Liens on a pari passu basis at the time such intercreditor agreement is proposed to be established in light of the type of Indebtedness to be secured by such liens (as determined by the Issuer in good faith).

"<u>Investment</u>" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of advances, loans or other extensions of credit (excluding (i) accounts receivable, trade credit, advances or extensions of credit to customers, suppliers, future, present or former employees, directors, officers, managers, contractors, consultants or advisors (or their respective Controlled Investment Affiliates or Immediate Family Members) of any Person in the ordinary course of business or consistent with past practice, (ii) any debt or extension of credit represented by a bank deposit other than a time deposit, (iii) intercompany advances arising from cash management, Tax and accounting operations and (iv) intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms)) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or the incurrence of a Guarantee of any obligation of, or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such other Persons and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; *provided*, *however*, that endorsements of negotiable instruments and documents in the ordinary course of business or consistent with past practice will not be deemed to be an Investment.

For purposes of <u>Section</u> <u>3.3</u> and <u>Section</u> <u>3.19</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) "*Investment*" will include the portion (proportionate to the Issuer's equity interest in a
Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the Fair Market Value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; *provided*, *however*, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Issuer will be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the
Issuer's "Investment" in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Issuer's equity interest in such Subsidiary) of the Fair Market Value of the net assets (as determined by
the Issuer) of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any property transferred to or from an Unrestricted Subsidiary will be valued at its Fair Market Value at the
time of such transfer, in each case as determined by the Issuer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) if the Issuer or any Restricted Subsidiary issues, sells or otherwise disposes of Capital Stock of a Person
that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no longer a Restricted Subsidiary, any investment by the Issuer or any Restricted Subsidiary in such Person remaining after giving effect thereto shall not be
deemed to be an Investment at such time.

The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash and Cash Equivalents by the Issuer or a Restricted Subsidiary in respect of such Investment to the extent such amounts do not increase any other baskets under this Indenture.

"<u>Investment Grade Event</u>" means (1) the Issuer has obtained a rating or, to the extent such Rating Agency will not provide a rating, an advisory or prospective rating from either Rating Agency that reflects an Investment Grade Status with respect to the Notes after giving effect to the proposed release of the Collateral securing the Notes; and (2) no Default or Event of Default shall have occurred and be continuing with respect to the Notes.

"<u>Investment Grade Securities</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) securities issued or directly and fully Guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) securities issued or directly and fully guaranteed or insured by the Canadian, United Kingdom, Australian or
Japanese governments, a member state of the European Union, or any agency or instrumentality thereof (other than Cash Equivalents);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) debt securities or debt instruments with a rating of "BBB-" or higher from S&P or "Baa3" or higher by Moody's or the equivalent of such rating by such rating organization or, if no rating of Moody's or S&P then exists, the equivalent of such rating by any other Nationally
Recognized Statistical Ratings Organization, but excluding any debt securities or instruments constituting loans or advances among the Issuer and its Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) investments in any fund that invests exclusively in investments of the type described in clauses (1), (2) and
(3) above which fund may also hold cash and Cash Equivalents pending investment or distribution; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) corresponding instruments in countries other than the United States customarily utilized for high quality
investments.

"<u>Investment Grade Status</u>" shall occur when the Notes receive two of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a rating of "BBB-" or higher from S&P;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a rating of "Baa3" or higher from Moody's; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) a rating of "BBB-" or higher from Fitch;

or the equivalent of such rating by such rating organization or, if no rating of S&P, Moody's or Fitch then exists, the equivalent of such rating by any other Nationally Recognized Statistical Ratings Organization.

"<u>Investor</u>" means, individually or collectively, any fund, partnership, co-investment vehicles and/or similar vehicles or accounts, in each case managed or advised by Ares Management LLC, Ares Corporate Opportunities Fund V, L.P. or their Affiliates, or any of their respective successors.

"<u>Issue Date</u>" means February 6, 2023.

"<u>Issuer</u>" has the meaning ascribed to it in the recitals of this Indenture.

"<u>Issuers</u>" has the meaning ascribed to it in the recitals of this Indenture.

"<u>Junior Lien Priority</u>" means, with respect to a Lien on the Collateral, a Lien on such Collateral that is junior in priority to the Liens on the Collateral securing the Notes (it being understood that junior Liens are not required to rank equally and ratably with other junior Liens, and that Indebtedness secured by junior Liens may be secured by Liens that are senior in priority to, or rank equally and ratably with, or junior in priority to, other Liens constituting junior Liens, pursuant to a Customary Junior Lien Intercreditor Agreement).

"<u>Laws</u>" means, collectively, all international, foreign, federal, state, provincial, territorial and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities and executive orders, 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.

"<u>Lien</u>" means any mortgage, pledge, security interest, encumbrance, lien, hypothecation or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof); *provided* that in no event shall Non-Financing Lease Obligations be deemed to constitute a Lien.

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"<u>Limited Condition Transaction</u>" means (1) any Investment or acquisition (whether by merger, amalgamation, consolidation or other business combination or the acquisition of Capital Stock or otherwise and which may include, for the avoidance of doubt, a transaction that may constitute a Change of Control), (2) any redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock requiring irrevocable notice in advance of such redemption, repurchase, defeasance, satisfaction and discharge or repayment, (3) any Restricted Payment requiring irrevocable notice in advance thereof, (4) any asset sale or a disposition excluded from the definition of "Asset Disposition," and (5) any combination of any of the foregoing.

"<u>Long Derivative Instrument</u>" means a Derivative Instrument (i) the value of which generally increases, and/or the payment or delivery obligations under which generally decrease, with positive changes to the Performance References and/or (ii) the value of which generally decreases, and/or the payment or delivery obligations under which generally increase, with negative changes to the Performance References.

"<u>LTM EBITDA</u>" means Consolidated EBITDA of the Issuer measured for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which consolidated financial statements are available (which may, at the Issuer's election, be internal financial statements), in each case with such pro forma adjustments giving effect to such Indebtedness, acquisition or Investment, as applicable, since the start of such four quarter period and as are consistent with the pro forma adjustments set forth in the definition of "Fixed Charge Coverage Ratio."

"<u>Major Non-Controlling Super-Priority Representative</u>" means (a) the representative of the series of Super-Priority Obligations that constitutes the largest outstanding principal amount of any then outstanding series of Super-Priority Obligations, but solely to the extent that such series of Super-Priority Obligations has a larger aggregate principal amount than the Super-Priority Obligations then outstanding pursuant to the Credit Agreement; *provided*, that if there are two outstanding series of Super-Priority Obligations which have an equal outstanding principal amount, the series of Super-Priority Obligations with the earlier maturity date shall be considered to have the larger outstanding principal amount for purposes of this definition or (b) if there is no Major Non-Controlling Super-Priority Representative as described in clause (a), the Credit Agreement Administrative Agent. For purposes of this definition, "principal amount" shall be deemed to include the face amount of any outstanding letter of credit issued under the particular series.

"<u>Management Advances</u>" means loans or advances made to, or Guarantees with respect to loans or advances made to, future, present or former employees, directors, officers, managers, contractors, consultants or advisors (or their respective Controlled Investment Affiliates or Immediate Family Members) of any Parent Entity, the Issuer or any Restricted Subsidiary:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) (a) in respect of travel, entertainment, relocation or moving related expenses, payroll advances and other
analogous or similar expenses or payroll expenses, in each case incurred in the ordinary course of business or consistent with past practice or (b) for purposes of funding any such person's purchase of Capital Stock (or similar
obligations) of the Issuer, its Subsidiaries or any Parent Entity with (in the case of this clause (1)(b)) the approval of the Board of Directors of the Issuer;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in respect of relocation or moving related expenses, payroll advances and other analogous or similar expenses
or payroll expenses, in each case incurred in connection with any closing or consolidation of any facility or office; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) not exceeding the greater of (i) $14 million and (ii) 10% of LTM EBITDA in the aggregate outstanding at
the time of incurrence.

"<u>Management Stockholders</u>" means the members of management of the Issuer (or any Parent Entity) or its Subsidiaries who are holders of Capital Stock of the Issuer or of any Parent Entity on the Issue Date.

"<u>Market Capitalization</u>" means an amount equal to (i) the total number of issued and outstanding shares of common Capital Stock of the Issuer or any Parent Entity on the date of the declaration of a Restricted Payment permitted pursuant <u>Section</u> <u>3.3(b)(10)</u> multiplied by (ii) the arithmetic mean of the closing prices per share of such common Capital Stock on the principal securities exchange on which such common Capital Stock are traded for the 30 consecutive trading days immediately preceding the date of declaration of such Restricted Payment.

"<u>Material Real Property</u>" means any real property owned in fee by the Issuer, the Co-Issuer or any Restricted Subsidiary that is a Guarantor (or owned by any Person required to become a Guarantor) (a) with a Fair Market Value (as conclusively determined by the Issuer in good faith absent manifest error) in excess of the greater of (x) $14 million and (y) an amount equal to 10% of LTM EBITDA and (b) not located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be located in a special flood hazard area.

"<u>Moody's</u>*"* means Moody's Investors Service, Inc. or any of its successors or assigns that is a Nationally Recognized Statistical Rating Organization.

"<u>Nationally Recognized Statistical Rating Organization</u>" means a nationally recognized statistical rating organization within the meaning of Rule 436 under the Securities Act.

"<u>Net Available Cash</u>" with respect to any Asset Disposition means cash proceeds received (including any cash proceeds received from the sale or other disposition of any Designated Non-Cash Consideration received in any Asset Disposition, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) all legal, accounting, consulting, investment banking, survey costs, title and recording expenses, title
insurance premiums, payments made in order to obtain a necessary consent or required by applicable law, brokerage and sales commissions, relocation expenses, commissions, premiums (including tender premiums), defeasance costs, underwriting
discounts, fees, costs and expenses (including original issue discount, upfront fees or similar fees) in connection with such transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) all Taxes paid, reasonably estimated to be payable, Tax reserves set aside or payable or accrued as a liability
under GAAP (including, for the avoidance of doubt, any income, withholding and other Taxes payable as a result of the distribution or deemed distribution of such proceeds to the Issuer or any of its Subsidiaries, transfer Taxes, deed or mortgage
recording Taxes and Taxes that would be payable in connection with any deemed or actual repatriation of such proceeds), as a consequence of such transaction, including distributions for Related Taxes or any transactions occurring or deemed to occur
to effectuate a payment under this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) all payments made on any Indebtedness which is (x) secured by any assets subject to such transaction, in
accordance with the terms of any Lien upon such assets, (y) is owed by a Non-Guarantor Restricted Subsidiary or (z) which by applicable law be repaid out of the proceeds from such transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) all distributions and other payments required to be made to non-controlling interest or minority interest holders (other than any Parent Entity, the Issuer or any of its respective Subsidiaries) in Subsidiaries or joint ventures as a result of such transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) all costs associated with unwinding any related Hedging Obligations in connection with such transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the deduction of appropriate amounts required to be provided by the seller as a reserve, in accordance with
GAAP, against any liabilities associated with the assets disposed of in such transaction and retained by the Issuer or any Restricted Subsidiary after such transaction, including pension and other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification obligations associated with such transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) any portion of the purchase price from such transaction placed in escrow, whether for the satisfaction of any
indemnification obligations in respect of such transaction, as a reserve for adjustments to the purchase price associated with any such transaction or otherwise in connection with such transaction; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) the amount of any liabilities (other than Indebtedness in respect of the Credit Agreement and the Notes)
directly associated with such asset being sold and retained by the Issuer or any of its Restricted Subsidiaries.

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"<u>Net Short</u>" means, with respect to a Holder or beneficial owner, as of a date of determination, either (i) the value of its Short Derivative Instruments exceeds the sum of the (x) the value of its Notes plus (y) the value of its Long Derivative Instruments as of such date of determination or (ii) it is reasonably expected that such would have been the case were a Failure to Pay or Bankruptcy Credit Event (each as defined in the 2014 ISDA Credit Derivatives Definitions) to have occurred with respect to the Issuer or any Guarantor immediately prior to such date of determination.

"<u>Non-Controlling Super-Priority Representative</u>" means, at any time, each super-priority representative that is not the Relevant Super-Priority Agent at such time.

"<u>Non-Financing Lease Obligation</u>" means a lease obligation that is not required to be accounted for as a financing or capital lease in accordance with GAAP. For the avoidance of doubt, a straight-line or operating lease shall be considered a Non-Financing Lease Obligation.

"<u>Non-Guarantor Restricted Subsidiary</u>" means any Restricted Subsidiary that is not a Guarantor.

"<u>Non-U.S. Person</u>" means a Person who is not a U.S. Person (as defined in Regulation S).

"<u>Note Guarantees</u>" means the Guarantees of the Initial Notes and any Additional Notes.

"<u>Notes</u>" has the meaning ascribed to it in the recitals of this Indenture.

"<u>Notes Collateral Agent</u>" has the meaning ascribed to it in the recitals of this Indenture.

"<u>Notes Custodian</u>" means the custodian with respect to the Global Notes (as appointed by DTC) or any successor Person thereto, and shall initially be the Trustee.

"<u>Notes Documents</u>" means the collective reference to this Indenture, the Notes (including any Additional Notes) issued pursuant thereto, the Note Guarantees and the Collateral Documents, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified, in whole or in part, from time to time.

"<u>Notes Obligations</u>" means Obligations of the Issuers and the Guarantors under the Notes, the Note Guarantees, this Indenture and the other Notes Documents.

"<u>Notes Secured Parties</u>" means the Holders, the Trustee and the Notes Collateral Agent.

"<u>Obligations</u>*"* means any principal, interest (including Post-Petition Interest and fees accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Issuers or any Guarantor whether or not a claim for Post-Petition Interest or fees is allowed in such proceedings), penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and bankers' acceptances), damages and other liabilities payable under the documentation governing any Indebtedness.

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"<u>Offering Memorandum</u>" means the final offering memorandum dated January 26, 2023, relating to the offering by the Issuers of $550 million principal amount of their 9.750% Senior Secured Notes due 2028 and any future offering memorandum relating to Additional Notes.

"<u>Officer</u>" means, with respect to any Person, (1) the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer, any Assistant Treasurer, any Managing Director, the Secretary or any Assistant Secretary (a) of such Person or (b) if such Person is owned or managed by a single entity, of such entity, or (2) any other individual designated as an "Officer" for the purposes of this Indenture by the Board of Directors of such Person.

"<u>Officer's Certificate</u>" means, with respect to any Person, a certificate signed by one Officer of such Person.

"<u>Opinion of Counsel</u>" means a written opinion from legal counsel who is reasonably satisfactory to the Trustee. The counsel may be an employee of or counsel to the Issuer or its Subsidiaries.

"<u>Other Pari Lien Obligations</u>" means First Lien Obligations other than Obligations under this Indenture, the Notes and the Note Guarantees.

"<u>Parent Entity</u>" means any direct or indirect parent of the Issuer.

"<u>Parent Entity Expenses</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) fees, costs and expenses (including all legal, accounting and other professional fees, costs and expenses)
incurred or paid by any Parent Entity in connection with reporting obligations under or otherwise incurred or paid in connection with compliance with applicable laws, rules or regulations of any governmental, regulatory or self-regulatory body or
stock exchange, this Indenture or any other agreement or instrument relating to the Notes, the Note Guarantees or any other Indebtedness of the Issuer or any Restricted Subsidiary, including in respect of any reports filed or delivered with respect
to the Securities Act, Exchange Act or the respective rules and regulations promulgated thereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) customary salary, bonus, severance, indemnity, insurance (including premiums therefor) and other benefits
payable to any employee, director, officer, manager, contractor, consultant or advisor of any Parent Entity or other Persons under its articles, charter, by-laws, partnership agreement or other organizational
documents or pursuant to written agreements with any such Person to the extent relating to the Issuer and its Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) (x) general corporate operating and overhead fees, costs and expenses, (including all legal, accounting and
other professional fees, costs and expenses) and, following the first public offering of the Issuer's Capital Stock or the Capital Stock of any Parent Entity, listing fees and other costs and expenses attributable to being a publicly traded
company of any Parent Entity and (y) other operational expenses of any Parent Entity related to the ownership or operation of the business of the Issuer or any of the Restricted Subsidiaries;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) expenses incurred by any Parent Entity in connection with (i) any offering, sale, conversion or exchange
of Capital Stock or Indebtedness (whether or not successful) and (ii) any related compensation paid to employees, directors, officers, managers, contractors, consultants or advisors (or their respective Controlled Investment Affiliates or
Immediate Family Members) of such Parent Entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) amounts payable pursuant to any management services or similar agreements or the management services provisions
in an investor rights agreement or other equityholders' agreement (including any amendment thereto or replacement thereof so long as any such amendment or replacement is not materially disadvantageous in the reasonable determination of the
Issuer to the Holders when taken as a whole, as compared to the management services or similar agreements as in effect immediately prior to such amendment or replacement), solely to the extent such amounts are not paid directly by the Issuer or its
Subsidiaries; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) amounts to finance Investments that would otherwise be permitted to be made pursuant to <u>Section</u> <u>3.3</u> hereof if made by the Issuer or a Restricted Subsidiary; *provided*, that (A) such Restricted Payment shall be made substantially concurrently with the closing of such Investment, (B) such Parent
Entity shall, immediately following the closing thereof, cause (1) all property acquired (whether assets or Capital Stock) to be contributed to the capital of the Issuer or one of its Restricted Subsidiaries or (2) the merger,
consolidation or amalgamation of the Person formed or acquired into the Issuer or one of its Restricted Subsidiaries (to the extent not prohibited by <u>Section</u> <u>4.1</u>) in order to consummate such Investment, (C) such Parent
Entity and its Affiliates (other than the Issuer or a Restricted Subsidiary) receives no consideration or other payment in connection with such transaction except to the extent the Issuer or a Restricted Subsidiary could have given such
consideration or made such payment in compliance with this Indenture and such consideration or other payment is included as a Restricted Payment under this Indenture, (D) any property received by the Issuer or a Restricted Subsidiary shall not
increase amounts available for Restricted Payments pursuant to <u>Section</u> <u>3.3(a)(iii)</u> and (E) such Investment shall be deemed to be made by the Issuer or such Restricted Subsidiary pursuant to a provision of the covenant
described under <u>Section</u> <u>3.3</u> or pursuant to the definition of "Permitted Investment."

"<u>Pari Passu Indebtedness</u>" means Indebtedness of the Issuer which ranks equally in right of payment to the Notes or of any Guarantor if such Indebtedness ranks equally in right of payment to the Note Guarantees.

"<u>Paying Agent</u>" means any Person authorized by the Issuers to pay the principal of (and premium, if any) or interest on any Note on behalf of the Issuers.

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"<u>Permitted Asset Swap</u>" means the concurrent purchase and sale or exchange of assets used or useful in a Similar Business or a combination of such assets and cash, Cash Equivalents between the Issuer or any of the Restricted Subsidiaries and another Person; *provided* that any cash or Cash Equivalents received in excess of the value of any cash or Cash Equivalents sold or exchanged must be applied in accordance with <u>Section</u> <u>3.5</u>.

"<u>Permitted Holders</u>" means, collectively, (i) the Investor, (ii) the Management Stockholders (including any Management Stockholders holding Capital Stock through an equityholding vehicle), (iii) any Person who is acting solely as an underwriter in connection with a public or private offering of Capital Stock of any Parent Entity or the Issuer, acting in such capacity, (iv) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing, any Holding Company, Permitted Plan or any Person or group that becomes a Permitted Holder specified in the last sentence of this definition are members and any member of such group; *provided* that, in the case of such group and without giving effect to the existence of such group or any other group, Persons referred to in subclauses (i) through (iii), collectively, have beneficial ownership of more than 50% of the total voting power of the Voting Stock of the Issuer or any Parent Entity held by such group, (v) any Holding Company and (vi) any Permitted Plan. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made or waived in accordance with the requirements of this Indenture, will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

"<u>Permitted Intercompany Activities</u>" means any transactions (A) between or among the Issuer and its Restricted Subsidiaries that are entered into in the ordinary course of business or consistent with past practice of the Issuer and its Restricted Subsidiaries and, in the reasonable determination of the Issuer are necessary or advisable in connection with the ownership or operation of the business of the Issuer and its Restricted Subsidiaries, including (i) payroll, cash management, purchasing, insurance and hedging arrangements; (ii) management, technology and licensing arrangements; and (iii) customary loyalty and rewards programs; and (B) between or among the Issuer, its Restricted Subsidiaries and any Captive Insurance Subsidiary.

"<u>Permitted Investment</u>" means (in each case, by the Issuer or any of the Restricted Subsidiaries):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Investments in (a) a Restricted Subsidiary (including the Capital Stock of, or guarantees of obligations
of, a Restricted Subsidiary) or the Issuer or (b) a Person (including the Capital Stock of any such Person) that will, upon the making of such Investment, become a Restricted Subsidiary of the Issuer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Investments in another Person and as a result of such Investment such other Person, in one transaction or a
series of transactions, is merged, amalgamated, consolidated or otherwise combined with or into, or transfers or conveys all or substantially all its assets (or such division, business unit, product line or business) to, or is liquidated into, the
Issuer or a Restricted Subsidiary, and any Investment held by such Person; *provided* that such Investment was not acquired by such Person in contemplation of such acquisition, merger, amalgamation, consolidation, combination, transfer or
conveyance;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Investments in cash, Cash Equivalents or Investment Grade Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Investments in receivables owing to the Issuer or any Restricted Subsidiary created or acquired in the ordinary
course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Investments in payroll, travel, entertainment, relocation, moving related and similar advances that are made in
the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Management Advances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Investments (including debt obligations and Capital Stock) (a) received in settlement, compromise or
resolution of debts created in the ordinary course of business or consistent with past practice, (b) in exchange for any other Investment or accounts receivable, endorsements for collection or deposit held by the Issuer or any such Restricted
Subsidiary, (c) as a result of foreclosure, perfection or enforcement of any Lien, (d) in satisfaction of judgments or (e) pursuant to any plan of reorganization or similar arrangement including upon the bankruptcy or insolvency of a
debtor or litigation, arbitration or other disputes or otherwise with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Investments made as a result of the receipt of promissory notes or other non-cash consideration (including earn-outs) from a sale or other disposition of property or assets, including an Asset Disposition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Investments existing or pursuant to binding commitments, agreements or arrangements in effect on the Issue Date
and any modification, replacement, renewal, reinvestment or extension thereof; *provided* that the amount of any such Investment may not be increased except (i) as required by the terms of such Investment or binding commitment as in
existence on the Issue Date (including in respect of any unused commitment), plus any accrued but unpaid interest (including any accretion of interest, original issue discount or the issuance of pay-in-kind securities) and premium payable by the terms of such Indebtedness thereon and fees and expenses associated therewith as of the Issue Date or (ii) as otherwise permitted under this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Hedging Obligations, which transactions or obligations not prohibited by <u>Section</u> <u>3.2</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) pledges or deposits with respect to leases or utilities provided to third parties in the ordinary course of
business or Liens otherwise described in the definition of "Permitted Liens" or made in connection with Liens permitted under <u>Section</u> <u>3.6</u>;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) any Investment to the extent made using Capital Stock of the Issuer (other than Disqualified Stock) or Capital
Stock of any Parent Entity or any Unrestricted Subsidiary as consideration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) any transaction to the extent constituting an Investment that is permitted by and made in accordance with <u>Section</u> <u>3.8(b)</u> (except those described in <u>Section</u> <u>3.8(b)(1)</u>, <u>(4)</u>, <u>(8)</u> and <u>(9)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) Investments consisting of (i) purchases or other acquisitions of inventory, supplies, materials, equipment
and similar assets or (ii) licenses, sublicenses, cross-licenses, leases, subleases, assignments, contributions or other Investments of intellectual property or other intangibles or services in the ordinary course of business pursuant to any
joint development, joint venture or marketing arrangements with other Persons or any Intercompany License Agreement and any other Investments made in connection therewith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) (i) Guarantees of Indebtedness not prohibited by <u>Section</u> <u>3.2</u> and (other than with
respect to Indebtedness) guarantees, keepwells and similar arrangements in the ordinary course of business or consistent with past practice, and (ii) performance guarantees and Contingent Obligations with respect to obligations that are not
prohibited by this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) Investments consisting of earnest money deposits required in connection with a purchase agreement, or letter of
intent, or other acquisitions to the extent not otherwise prohibited by this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) Investments of a Restricted Subsidiary acquired after the Issue Date or of an entity merged or amalgamated into
or consolidated with the Issuer or merged or amalgamated into or consolidated with a Restricted Subsidiary after the Issue Date to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger,
amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) any Investment in any Subsidiary or any joint venture in the ordinary course of business or consistent with
past practice (including any cash management arrangements, cash pooling arrangements, intercompany loans or activities related thereto);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) contributions to a "rabbi" trust for the benefit of any employee, director, officer, manager,
contractor, consultant, advisor or other service providers or other grantor trust subject to claims of creditors in the case of a bankruptcy of the Issuers, and Investments relating to non-qualified deferred
payment plans in the ordinary course of business or consistent with past practice;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20) Investments in joint ventures and similar entities and Unrestricted Subsidiaries having an aggregate Fair
Market Value, when taken together with all other Investments made pursuant to this clause that are at the time outstanding, not to exceed the greater of (i) $34 million and (ii) an amount equal to 25% of LTM EBITDA at the time of such
Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value), plus the amount of any returns (including dividends, payments, interest, distributions, returns of
principal, profits on sale, repayments, income and similar amounts) in respect of such Investments (without duplication for purposes of <u>Section</u> <u>3.3</u> of any amounts applied pursuant to <u>Section</u> <u>3.3(a)(iii)</u>) with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value; *provided*, *however*, that if any Investment pursuant
to this clause is made in any Person that is not the Issuer or a Restricted Subsidiary at the date of the making of such Investment and such Person becomes the Issuer or a Restricted Subsidiary after such date, such Investment shall thereafter be
deemed to have been made pursuant to clause (1) or (2) above and shall cease to have been made pursuant to this clause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21) additional Investments having an aggregate Fair Market Value, taken together with all other Investments made
pursuant to this clause that are at that time outstanding, not to exceed the greater of (i) $102 million and (ii) an amount equal to 75% of LTM EBITDA (with the Fair Market Value of each Investment being measured at the time made and
without giving effect to subsequent changes in value), plus the amount of any returns (including dividends, payments, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) in respect of such
Investments (without duplication for purposes of <u>Section</u> <u>3.3</u> of any amounts applied pursuant to <u>Section</u> <u>3.3(a)(iii)</u>) with the Fair Market Value of each Investment being measured at the time made
and without giving effect to subsequent changes in value; *provided, however*, that if any Investment pursuant to this clause is made in any Person that is not the Issuer or a Restricted Subsidiary at the date of the making of such Investment
and such Person becomes the Issuer or a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) or (2) above and shall cease to have been made pursuant to this clause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22) any Investment in a Similar Business having an aggregate Fair Market Value, taken together with all other
Investments made pursuant to this clause that are at that time outstanding, not to exceed the greater of (i) $68 million and (ii) an amount equal to 50% of LTM EBITDA (with the Fair Market Value of each Investment being measured at the
time made and without giving effect to subsequent changes in value), plus the amount of any returns (including dividends, payments, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) in respect of
such Investments (without duplication for purposes of the covenant described in <u>Section</u> <u>3.3</u> of any amounts applied pursuant to <u>Section</u> <u>3.3(a)(iii)</u>) with the Fair Market Value of each Investment
being measured at the time made and without giving effect to subsequent changes in value; *provided, however*, that if any Investment pursuant to this clause is made in any Person that is not the Issuer or a Restricted Subsidiary at the date of
the making of such Investment and such Person becomes the Issuer or a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) or (2) above and shall cease to have been made
pursuant to this clause;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(23) (i) Investments arising or made in connection with a Qualified Securitization Financing or Receivables Facility
and (ii) distributions or payments of Securitization Fees and purchases of Securitization Assets or Receivables Assets in connection with a Qualified Securitization Financing or Receivables Facility;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(24) Investments in connection with the Transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25) repurchases of Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(26) Investments by an Unrestricted Subsidiary entered into prior to the day such Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary as described under <u>Section</u> <u>3.19</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(27) guaranty and indemnification obligations arising in connection with surety bonds issued in the ordinary course
of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(28) Investments (a) consisting of purchases and acquisitions of assets or services in the ordinary course of
business or consistent with past practice, (b) made in the ordinary course of business or consistent with past practice in connection with obtaining, maintaining or renewing client, franchisee and customer contacts and loans or
(c) advances, loans, extensions of credit (including the creation of receivables) or prepayments made to, and guarantees with respect to obligations of, franchisees, distributors, suppliers, lessors, licensors and licensees in the ordinary
course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(29) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers
compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(30) Investments consisting of UCC Article 3 endorsements for collection or deposit and Article 4 trade arrangements
with customers (or any comparable or similar provisions under the PPSA or in other applicable jurisdictions) in the ordinary course of business or consistent with past practices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(31) any Investment by any Captive Insurance Subsidiary in connection with the provision of insurance to the Issuer
or any Subsidiaries, which Investment is made in the ordinary course of business or consistent with past practice of such Captive Insurance Subsidiary, or by reason of applicable law, rule, regulation or order, or that is required or approved by any
regulatory authority having jurisdiction over such Captive Insurance Subsidiary or its business, as applicable;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(32) non-cash Investments in connection with Tax planning and reorganization
activities, and Investments in connection with a Permitted Intercompany Activities, Permitted Tax Restructuring and related transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(33) Investments made from casualty insurance proceeds in connection with the replacement, substitution, restoration
or repair of assets on account of a Casualty Event;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(34) any Investment in an Unrestricted Subsidiary having an aggregate Fair Market Value, taken together with all
other Investments made pursuant to this clause that are at that time outstanding, not to exceed the greater of (i) $48 million and (ii) an amount equal to 35% of LTM EBITDA (with the Fair Market Value of each Investment being measured at
the time made and without giving effect to subsequent changes in value), plus the amount of any returns (including dividends, payments, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) in
respect of such Investments (without duplication for purposes of the covenant described in <u>Section</u> <u>3.3</u> of any amounts applied pursuant to <u>Section</u> <u>3.3(a)(iii)</u>) with the Fair Market Value of each
Investment being measured at the time made and without giving effect to subsequent changes in value; *provided*, *however*, that if any Investment pursuant to this clause is made in any Person that is not the Issuer or a Restricted
Subsidiary at the date of the making of such Investment and such Person becomes the Issuer or a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) or (2) above and shall
cease to have been made pursuant to this clause; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(35) any other Investment so long as, immediately after giving pro forma effect to the Investment and the incurrence
of any Indebtedness the net proceeds of which are used to make such Investment, the Consolidated Total Leverage Ratio shall be no greater than 4.25 to 1.00.

"*Permitted Liens*" means, with respect to any Person:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Liens on assets or property of a Restricted Subsidiary that is not a Guarantor securing Indebtedness and other
Obligations of any Restricted Subsidiary that is not a Guarantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) pledges, deposits or Liens (a) in connection with workmen's compensation laws, payroll Taxes,
unemployment insurance laws, employers' health Tax and other social security laws or similar legislation or other insurance related obligations (including in respect of deductibles, self-insured retention amounts and premiums and adjustments
thereto), (b) securing liability, reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instruments) for the benefit of insurance carriers under insurance or
self-insurance arrangements or otherwise supporting the payments of items set forth in the foregoing clause (a), or (c) in connection with bids, tenders, completion guarantees, contracts, leases, utilities, licenses, public or statutory

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obligations, or to secure the performance of bids, trade contracts, government contracts and leases, statutory obligations, surety, stay, indemnity, warranty, release, judgment, customs, appeal, performance bonds, guarantees of government contracts, return of money bonds, bankers' acceptance facilities and obligations of a similar nature (including those to secure health, safety and environmental obligations), and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, or as security for contested Taxes or import or customs duties or for the payment of rent, or other obligations of like nature, in each case incurred in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Liens with respect to outstanding motor vehicle fines and Liens imposed by law or regulation, including
carriers', warehousemen's, mechanics', landlords', suppliers', materialmen's, repairmen's, architects', construction contractors' or other similar Liens, in each case for amounts not overdue for a period
of more than 60 days or, if more than 60 days overdue, are unfiled and no other action has been taken to enforce such Liens or that are being contested in good faith by appropriate proceedings, provided that appropriate reserves required pursuant to
GAAP have been made in respect thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Liens for Taxes, assessments or other governmental charges that are not overdue for a period of more than 60
days or not yet payable or subject to penalties for nonpayment or that are being contested in good faith by appropriate proceedings; *provided* that appropriate reserves required pursuant to GAAP have been made in respect thereof, or for
property Taxes on property of the Issuer or one of its Subsidiaries has determined to abandon if the sole recourse for such Tax is to such property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) encumbrances, charges, ground leases, easements (including reciprocal easement agreements), survey exceptions,
restrictions, encroachments, protrusions, by-law, regulation, zoning restrictions or reservations of, or rights of others for, licenses, rights of way, servitudes, sewers, electric lines, drains, telegraph,
telephone and cable television lines and other similar purposes, or zoning, building codes or other restrictions (including minor defects and irregularities in title and similar encumbrances) as to the use of real properties, exceptions on title
policies insuring Liens granted on any mortgaged properties or any other collateral or Liens incidental to the conduct of the business of such Person or to the ownership of its properties, including servicing agreements, development agreements, site
plan agreements, subdivision agreements, facilities sharing agreements, cost sharing agreements and other similar agreements, charges or encumbrances, which do not in the aggregate materially interfere with the ordinary course conduct of the
business of the Issuer and its Restricted Subsidiaries, taken as a whole;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Liens (a) securing Hedging Obligations, Cash Management Obligations and the costs thereof; (b) that
are rights of set-off, rights of pledge or other bankers' Liens (i) relating to treasury, depository and cash management services or any automated clearing house transfers of funds in the ordinary
course of business or consistent with past practice, (ii) relating to pooled deposit or sweep accounts to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Issuer or any Subsidiary or
consistent with past practice or (iii) relating to purchase orders and other agreements entered into with customers of the Issuer or any Restricted Subsidiary in the ordinary course of business or consistent with past practice; (c) on cash
accounts securing Indebtedness and other Obligations permitted to be incurred under <u>Section</u> <u>3.2(b)(8)(e)</u> with financial institutions; (d) encumbering reasonable customary initial deposits and margin deposits and
similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business or consistent with past practice and not for speculative purposes; and (e) (i) of a collection bank arising under Section 4-210 of the UCC (or the comparable provisions of the PPSA) or any comparable or successor provision on items in the course of collection and (ii) in favor of a banking or other financial
institution or electronic payment service providers arising as a matter of law encumbering deposits (including the right of set-off) arising in the ordinary course of business in connection with the
maintenance of such accounts and (iii) arising under customary general terms and conditions of the account bank in relation to any bank account maintained with such bank and attaching only to such account and the products and proceeds thereof,
which Liens, in any event, do not secure any Indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) leases, licenses, subleases and sublicenses of assets (including real property, intellectual property, software
and other technology rights), in each case entered into in the ordinary course of business, consistent with past practice or, with respect to intellectual property, software and other technology rights, that are not material to the conduct of the
business of the Issuer and its Restricted Subsidiaries, taken as a whole;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Liens securing or otherwise arising out of judgments, decrees, attachments, orders or awards not giving rise to
an Event of Default under <u>Section</u> <u>6.1(a)(6)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Liens (a) securing Capitalized Lease Obligations, or Purchase Money Obligations, or securing the payment
of all or a part of the purchase price of, or securing Indebtedness or other Obligations incurred to finance or refinance the acquisition, improvement or construction of, assets or property acquired or constructed in the ordinary course of business; *provided* that (i) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be incurred under this Indenture and (ii) any such Liens may not extend to any assets or property of the Issuer or any
Restricted Subsidiary other than assets and property affixed or appurtenant thereto and accessions, additions, improvements, proceeds, dividends or distributions thereof, including after-acquired property that is (A) affixed or incorporated
into the property or assets covered by such Lien, (B) after-acquired property or assets subject to a Lien securing such Indebtedness, the terms of which Indebtedness require or include a pledge of after-acquired property or assets and
(C) the proceeds and products thereof and (b) any interest or title of a lessor, sublessor, franchisor, licensor or sublicensor or secured by a lessor's, sublessor's, franchisor's, licensor's or sublicensor's
interest under any Capitalized Lease Obligations or Non-Financing Lease Obligations;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Liens arising from UCC or PPSA financing statements, including precautionary financing statements (or similar
filings) regarding operating leases or consignments entered into by the Issuer and its Restricted Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) Liens existing on the Issue Date, including any Liens securing any Refinancing Indebtedness of any Indebtedness
secured by such Liens but excluding Liens securing the Credit Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) Liens on property, other assets or shares of stock of a Person at the time such Person becomes a Subsidiary (or
at the time the Issuer or a Subsidiary acquires such property, other assets or shares of stock, including any acquisition by means of a merger, amalgamation, consolidation or other business combination transaction with or into the Issuer or any
Restricted Subsidiary); *provided*, *however*, that such Liens are not created in anticipation of such other Person becoming a Subsidiary (or such acquisition of such property, other assets or stock); *provided*, *further*, that
such Liens are limited to all or part of the same property, other assets or stock (plus property and assets affixed or appurtenant thereto and additions, improvements, accessions, proceeds, dividends or distributions thereof, including
after-acquired property that is (i) affixed or incorporated into the property or assets covered by such Lien, (ii) after-acquired property or assets subject to a Lien securing such Indebtedness, the terms of which Indebtedness require or
include a pledge of after-acquired property or assets and (iii) the proceeds and products thereof) that secured (or, under the written arrangements under which such Liens arose, could secure) the Obligations relating to any Indebtedness or
other obligations to which such Liens relate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) Liens securing Obligations relating to any Indebtedness or other obligations of the Issuer or a Restricted
Subsidiary owing to the Issuer or another Restricted Subsidiary, or Liens in favor of the Issuer or any Restricted Subsidiary or the Trustee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) Liens securing Refinancing Indebtedness incurred to refinance Indebtedness that was previously so secured, and
permitted to be secured under this Indenture; *provided* that any such Lien is limited to all or part of the same property or assets (plus property and assets affixed or appurtenant thereto and additions, improvements, accessions, proceeds,
dividends or distributions thereof, including after-acquired property that is (i) affixed or incorporated into the property or assets covered by such Lien, (ii) after-acquired property or assets subject to a Lien securing such
Indebtedness, the terms of which Indebtedness require or include a pledge of after-acquired property or assets and (iii) the proceeds and products thereof) that secured (or, under the written arrangements under which the original Lien arose,
could secure) the Obligations relating to the Indebtedness or other obligations being refinanced or is in respect of property or assets that is or could be the security for or subject to a Permitted Lien hereunder;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) (a) mortgages, liens, security interests, restrictions, encumbrances or any other matters of record that have
been placed by any government, statutory or regulatory authority, developer, landlord or other third party on property over which the Issuer or any Restricted Subsidiary has easement rights or on any leased property and subordination or similar
arrangements relating thereto and (b) any condemnation or eminent domain proceedings affecting any real property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any joint
venture securing financing arrangement, joint venture or similar arrangement pursuant to any joint venture securing financing agreement, joint venture or similar agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) Liens on property or assets under construction (and related rights) in favor of a contractor or developer or
arising from progress or partial payments by a third party relating to such property or assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) Liens arising out of conditional sale, title retention, hire purchase, consignment or similar arrangements for
the sale or purchase of goods entered into in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) Liens securing Indebtedness and other Obligations in respect of (a) Credit Facilities, including any
letter of credit facility relating thereto, under <u>Section</u> <u>3.2(b)(1)</u> and (b) obligations of the Issuer or any Subsidiary in respect of any Cash Management Obligation or Hedging Obligation provided by any lender party to
any Credit Facility or Affiliate of such lender (or any Person that was a lender or an Affiliate of a lender at the time the applicable agreements in respect of such Cash Management Obligation or Hedging Obligation were entered into);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20) Liens securing Indebtedness and other Obligations under <u>Section</u> <u>3.2(b)(5)</u>; *provided* that such Liens shall only be permitted if such Liens are limited to all or part of the same property or assets, including Capital Stock (plus property and assets affixed or appurtenant thereto and additions, improvements,
accessions, proceeds, dividends or distributions thereof, including after-acquired property that is (i) affixed or incorporated into the property or assets covered by such Lien, (ii) after-acquired property or assets subject to a Lien
securing such Indebtedness, the terms of which Indebtedness require or include a pledge of after-acquired property or assets and (iii) the proceeds and products thereof) acquired, or of any Person acquired or merged, consolidated or amalgamated
with or into the Issuer or any Restricted Subsidiary, in any transaction to which such Indebtedness or other Obligation relates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21) Liens securing Indebtedness and other Obligations permitted by <u>Section</u> <u>3.2(b)(4)(c)</u>, <u>(7)</u>, <u>(10)</u>, <u>(13)</u>, <u>(16)</u> or <u>(18)</u> (*provided* that, in the case of clause (18), such Liens cover only the assets of such Subsidiary);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22) [Reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(23) Liens on Capital Stock or other securities or assets of any Unrestricted Subsidiary that secure Indebtedness or
other obligations of such Unrestricted Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(24) Liens deemed to exist in connection with Investments permitted under clause (4) of the definition of
"Cash Equivalents";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25) Liens on (i) goods the purchase price of which is financed by a documentary letter of credit issued for
the account of the Issuer or any Subsidiary or Liens on bills of lading, drafts or other documents of title arising by operation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and other similar
instruments and (ii) specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances or documentary letters of credit issued or created for the account of
such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(26) Liens on vehicles or equipment of the Issuer or any Restricted Subsidiary in the ordinary course of business or
consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(27) Liens on assets or securities deemed to arise in connection with and solely as a result of the execution,
delivery or performance of contracts to sell such assets or securities if such sale is otherwise not prohibited by this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(28) (a) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect
thereto, and (b) Liens, pledges, deposits made or other security provided to secure liabilities to, or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefits of), insurance
carriers in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(29) Liens solely on any cash earnest money deposits made in connection with any letter of intent or purchase
agreement permitted under this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(30) Liens (i) on cash advances or escrow deposits in favor of the seller of any property to be acquired in an
Investment permitted under this Indenture to be applied against the purchase price for such Investment or otherwise in connection with any escrow arrangements with respect to any such Investment (including any letter of intent or purchase agreement
with respect to such Investment), and (ii) consisting of an agreement to sell, transfer, lease or otherwise dispose of any property in an asset sale, in each case, solely to the extent such Investment or sale, transfer, lease or other
disposition, as the case may be, would have been permitted on the date of the creation of such Lien;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(31) Liens securing Indebtedness and other Obligations in an aggregate principal amount not to exceed the greater of
(a) $136 million and (b) an amount equal to 100% of LTM EBITDA at the time incurred;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(32) Liens then existing with respect to assets of an Unrestricted Subsidiary on the day such Unrestricted
Subsidiary is redesignated as a Restricted Subsidiary pursuant to <u>Section</u> <u>3.19</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(33) Liens securing Indebtedness and other Obligations permitted under <u>Section</u> <u>3.2</u>; *provided* that with respect to liens securing Indebtedness or other Obligations permitted under this clause secured by the Collateral, at the time of incurrence and after giving pro forma effect thereto, the Consolidated Secured Leverage Ratio
would either (i) be no greater than 4.50 to 1.00 or (ii) in connection with an acquisition, the Consolidated Secured Leverage Ratio of the Issuer and its Restricted Subsidiaries would not be greater than it was immediately prior to the
incurrence of such Indebtedness and the related Liens and the use of the proceeds therefrom;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(34) Liens deemed to exist in connection with Investments in repurchase agreements permitted by <u>Section</u> <u>3.2</u>; *provided* that such Liens do not extend to any assets other than those that are the subject of such repurchase agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(35) Liens arising in connection with a Qualified Securitization Financing or a Receivables Facility;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(36) Settlement Liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(37) rights of recapture of unused real property in favor of the seller of such property set forth in customary
purchase agreements and related arrangements with any government, statutory or regulatory authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(38) the rights reserved to or vested in any Person or government, statutory or regulatory authority by the terms of
any lease, license, franchise, grant or permit held by the Issuer or any Restricted Subsidiary or by a statutory provision, to terminate any such lease, license, franchise, grant or permit, or to require annual or periodic payments as a condition to
the continuance thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(39) restrictive covenants affecting the use to which real property may be put and Liens or covenants restricting or
prohibiting access to or from lands abutting on controlled access highways or covenants affecting the use to which lands may be put; *provided* that such Liens or covenants do not interfere with the ordinary conduct of the business of the
Issuer or any Restricted Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(40) Liens on property, assets or Permitted Investments used to defease or to satisfy or discharge Indebtedness; *provided* that such defeasance, satisfaction or discharge is not prohibited by this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(41) Liens relating to escrow arrangements securing Indebtedness, including (i) Liens on escrowed proceeds from
the issuance of Indebtedness for the benefit of the related holders of debt securities or other Indebtedness (or the underwriters, arrangers, trustee or collateral agent thereof) and (ii) Liens on cash or Cash Equivalents set aside at the time
of the incurrence of any Indebtedness, in either case to the extent such cash or Cash Equivalents prefund the payment of interest or premium or discount on such Indebtedness (or any costs related to the issuance of such Indebtedness) and are held in
an escrow account or similar arrangement to be applied for such purpose;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(42) Liens securing the Notes (other than any Additional Notes) and the Note Guarantees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(43) Liens on assets securing any Indebtedness owed to any Captive Insurance Subsidiary by the Issuer or any
Restricted Subsidiary; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(44) Liens arising in connection with any Permitted Intercompany Activities, Permitted Tax Restructuring and related
transactions.

In the event that a Permitted Lien meets the criteria of more than one of the types of Permitted Liens (at the time of incurrence or at a later date), the Issuers in their sole discretion may divide, classify or from time to time reclassify all or any portion of such Permitted Lien in any manner that complies with this Indenture and such Permitted Lien shall be treated as having been made pursuant only to the clause or clauses of the definition of Permitted Lien to which such Permitted Lien has been classified or reclassified.

For the avoidance of doubt, a Lien may be reclassified at a time subsequent to the time it was originally incurred, so long as such Lien would have been able to have been incurred at the time of such reclassification pursuant to the provision to which such Lien is being reclassified.

"<u>Permitted Plan</u>" means any employee benefits plan of the Issuer or any of its Affiliates and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan.

"<u>Permitted Tax Amount</u>" means (a) if and for so long as the Issuer is a member of or a disregarded entity owned by a member of a group filing a consolidated, combined group, affiliated, unitary or similar Tax return with any Parent Entity that is a parent of such group, any dividends or other distributions to fund any income Taxes for which such Parent Entity is liable up to an amount not to exceed the amount of any such Taxes that the Issuer and its Subsidiaries would have been required to pay on a separate company basis or on a consolidated basis calculated as if the Issuer and its Subsidiaries had paid Tax on a consolidated, combined, group, affiliated, unitary or similar basis on behalf of a consolidated, combined affiliated, unitary or similar group consisting only of the Issuer and its Subsidiaries with the Issuer treated as the parent corporation for U.S. federal income Tax purposes, taking into account any net operating losses or other attributes of the Issuer and its Subsidiaries, less any amounts paid directly by the Issuer and its Subsidiaries with respect to such Taxes; *provided* that in the case of any such amounts attributable to any Taxes of any Unrestricted Subsidiaries, the Issuer shall use commercially reasonable efforts to cause such Unrestricted Subsidiary (or any other Unrestricted Subsidiary) to make cash distributions to such Issuer or its Restricted Subsidiaries in an aggregate amount that the Issuer determines in its reasonable discretion equals the Tax liability of the Unrestricted Subsidiary had such Unrestricted Subsidiary been required to pay Taxes on a

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separate company basis; and (b) to the extent clause (a) is not applicable, for any taxable year (or portion thereof) ending after the Issue Date for which the Issuer is treated as a partnership or other flow-through entity for U.S. federal, state, provincial, territorial, and/or local income Tax purposes (including if the Issuer is treated as a disregarded entity for any such income Tax purposes and its (and any of its Subsidiary's) taxable income is included on the income Tax return of any Parent Entity (or another direct or indirect owner) that is treated as a partnership or other flow-through entity for U.S. federal, state and/or local income Tax purposes), the payment of dividends or other distributions to the direct or indirect owner or owners of equity of the Issuer in an aggregate amount equal to each of the direct or indirect owners' Tax Amount. Each direct or indirect owner's "Tax Amount" is the product of (i) the taxable net income of the Issuer and its Subsidiaries allocated to such owner for income Tax purposes for such taxable year (or portion thereof), reducing such net income by any net losses allocated to such owner by the Issuer in any prior taxable period to the extent such losses have not previously been utilized in determining such owner's Tax liability for any prior period and may reasonably be used by such owner against such net income and (ii) the highest combined marginal federal, state and/or local income Tax rate applicable to any direct or indirect equity owner of the Issuer taking into account the character of the income and the deductibility of state and local income Taxes as applicable at the time for United States federal income Tax purposes and any limitations thereon; *provided* that (1) such Tax Amount shall be reduced by any amounts paid directly by the issuer and its applicable Subsidiaries with respect to such Taxes and (2) in the case of any Tax Amount in respect of the taxable income of any Unrestricted Subsidiary, the Issuer shall use commercially reasonable efforts to cause such Unrestricted Subsidiary (or any other Unrestricted Subsidiary) to make cash distributions to such Issuer or its Restricted Subsidiaries in an aggregate amount that the Issuer determines in its reasonable discretion equals the Tax Amount with respect to the taxable income of such Unrestricted Subsidiary.

"<u>Permitted Tax Restructuring</u>" means (i) any reorganizations and other activities in connection with or related to Tax planning and Tax reorganization so long as such Permitted Tax Restructuring is not materially adverse to the Holders of the Notes and the Liens of the Notes Collateral Agent on the Collateral are not materially impaired, in each case, as reasonably determined by the Issuer and (ii) any reorganizations and other activities in connection with or related to a Qualifying IPO of the Issuer or any Parent Entity (including, for the avoidance of doubt, any transfer (including by contribution, merger or otherwise) of interests in the Issuer to a wholly owned domestic subsidiary of a Parent Entity).

"<u>Person</u>" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision thereof or any other entity.

"<u>Post-Petition Interest</u>" means any interest or entitlement to fees or expenses or other charges that accrue after the commencement of any bankruptcy or insolvency proceeding, whether or not allowed or allowable as a claim in any such bankruptcy or insolvency proceeding.

"<u>PPSA</u>" means the Personal Property Security Act (British Columbia) together with any regulations thereto; provided, however, if granting, attachment, perfection or priority of the Liens in any Collateral are governed by the personal property security or any other applicable laws of any Canadian jurisdiction other than British Columbia, "PPSA" means those personal property security laws or other applicable laws in such other jurisdiction for the purposes of the provisions of this Indenture, including in the case of Québec, the Civil Code of Québec, relating to such granting, attachment, perfection or priority and for the definitions related to such provisions.

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"<u>Predecessor Note</u>" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under <u>Section</u> <u>2.11</u> in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note.

"<u>Preferred Stock</u>," as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.

"<u>Public Company Costs</u>" means, as to any Person, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and costs relating to compliance with the provisions of the Securities Act and the Exchange Act or any other comparable body of laws, rules or regulations, as companies with listed equity, directors' compensation, fees and expense reimbursement, costs relating to enhanced accounting functions and investor relations, stockholder meetings and reports to stockholders, directors' and officers' insurance and other executive costs, legal and other professional fees, listing fees and other transaction costs, in each case to the extent arising solely by virtue of the listing of such Person's equity securities on a national securities exchange or issuance of public debt securities.

"<u>Purchase Money Obligations</u>" means any Indebtedness incurred to finance or refinance the acquisition, leasing, expansion, construction, installation, replacement, repair or improvement of property (real or personal), equipment or assets (including Capital Stock), and whether acquired through the direct acquisition of such property or assets, or the acquisition of the Capital Stock of any Person owning such property or assets, or otherwise.

"<u>QIB</u>" means any "qualified institutional buyer" as such term is defined in Rule 144A.

"<u>Qualified Securitization Financing</u>" means any Securitization Facility that meets the following conditions: (i) the Board of Directors shall have determined in good faith that such Securitization Facility (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Issuer and its Restricted Subsidiaries, (ii) all sales of Securitization Assets and related assets by the Issuer or any Restricted Subsidiary to the Securitization Subsidiary or any other Person are made for fair consideration (as determined in good faith by the Issuer) and (iii) the financing terms, covenants, termination events and other provisions thereof shall be fair and reasonable terms (as determined in good faith by the Issuer) and may include Standard Securitization Undertakings.

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"<u>Qualifying IPO</u>" means (a) an underwritten public Equity Offering of the Issuer or any Parent Entity or (b) a transaction where the Capital Stock of the Issuer or any Parent Entity (including Holdings) thereof is listed on any United States national securities exchange.

"<u>Rating Agencies</u>" means S&P, Moody's and Fitch or if no rating of S&P, Moody's or Fitch is publicly available, as the case may be, the equivalent of such rating selected by the Issuers by any other Nationally Recognized Statistical Ratings Organization.

"<u>Receivables Assets</u>" means (a) any accounts receivable owed to the Issuer or a Restricted Subsidiary subject to a Receivables Facility and the proceeds thereof and (b) all collateral securing such accounts receivable, all contracts and contract rights, guarantees or other obligations in respect of such accounts receivable, all records with respect to such accounts receivable and any other assets customarily transferred together with accounts receivable in connection with a non-recourse accounts receivable factoring arrangement.

"<u>Receivables Facility</u>" means an arrangement between the Issuer or a Subsidiary and a commercial bank, an asset based lender or other financial institution or an Affiliate thereof pursuant to which (a) the Issuer or such Subsidiary, as applicable, sells (directly or indirectly) to such commercial bank, asset based lender or other financial institution (or such Affiliate) Receivables Assets and (b) the obligations of the Issuer or such Restricted Subsidiary, as applicable, thereunder are non-recourse (except for Securitization Repurchase Obligations) to the Issuer and such Subsidiary and (c) the financing terms, covenants, termination events and other provisions thereof shall be on market terms (as determined in good faith by the Issuer) and may include Standard Securitization Undertakings, and shall include any guaranty in respect of such arrangements.

"<u>refinance</u>" means, in respect of any Indebtedness, to refinance, extend, renew, defease, amend, increase, modify, supplement, restructure, refund, replace or repay, or to issue other Indebtedness or enter into alternative financing arrangements, in exchange or replacement for such Indebtedness, including by adding or replacing lenders, creditors, agents, borrowers and/or guarantors, and including in each case, but not limited to, after the original instrument giving rise to such Indebtedness has been terminated. "<u>refinanced</u>" and "<u>refinancing</u>" have correlative meanings.

"<u>Refinancing Indebtedness</u>" means Indebtedness that is incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) any Indebtedness (or unutilized commitment in respect of Indebtedness) existing on the Issue Date or incurred (or established) in compliance with this Indenture (including Indebtedness of the Issuer that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of the Issuer or another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, and Indebtedness incurred pursuant to a commitment that refinances any Indebtedness or unutilized commitment; *provided*, *however*, that:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) (a) such Refinancing Indebtedness has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of the Indebtedness being refunded, refinanced, replaced, exchanged, renewed, repaid or extended (or requires no or nominal payments in cash (other than
interest payments) prior to the date that is 91 days after the maturity date of the Notes); and (b) to the extent such Refinancing Indebtedness refinances Subordinated Indebtedness, such Refinancing Indebtedness is Subordinated Indebtedness,
respectively, and, in the case of Subordinated Indebtedness, is subordinated to the Notes on terms at least as favorable to the Holders as those contained in the documentation governing the Indebtedness being refinanced;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Refinancing Indebtedness shall not include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Indebtedness of a Subsidiary of the Issuer that is not a Guarantor that refinances Indebtedness of the Issuer,
the Co-Issuer or a Guarantor; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Indebtedness of the Issuer or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) such Refinancing Indebtedness is incurred in an aggregate principal amount (or if issued with original issue
discount, an aggregate issue price) that is equal to or less than the sum of (x) the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced, *plus* (y) an amount equal to any unutilized commitment relating to the Indebtedness being refinanced or otherwise then outstanding under a Credit Facility or other financing arrangement being refinanced to the extent the unutilized
commitment being refinanced could be drawn in compliance with <u>Section</u> <u>3.2</u> immediately prior to such refinancing, *plus* (z) accrued and unpaid interest, dividends, premiums (including tender premiums), defeasance
costs, underwriting discounts, fees, costs and expenses (including original issue discount, upfront fees or similar fees) in connection with such refinancing; *provided,* that clause (1) above will not apply to any extension, replacement,
refunding, refinancing, renewal or defeasance of any Credit Facilities or Secured Indebtedness. Refinancing Indebtedness in respect of any Credit Facility or any other Indebtedness may be incurred from time to time after the termination, discharge
or repayment of any such Credit Facility or other Indebtedness.

"<u>Regulation S</u>" means Regulation S under the Securities Act.

"<u>Regulation S Global Note</u>" has the meaning set forth in <u>Section</u> <u>2.1(b)</u>.

"<u>Regulation S-X</u>" means Regulation S-X under the Securities Act.

"<u>Related Taxes</u>" means (i) any franchise and excise Taxes, and other fees and expenses, required to maintain a Parent Entity's corporate existence and good standing under applicable law (including any such Taxes, fees and expenses (such as any corporate operating and overhead expenses) attributable to the ownership or operation of the Issuer and its Subsidiaries); and (ii) any Permitted Tax Amount.

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"<u>Relevant Super-Priority Agent</u>" means (a) prior to the discharge in full of all Obligations under the Super-Priority Revolving Credit Facility (the "<u>Existing Super-Priority Revolver Discharge Date</u>"), the administrative agent under the Credit Agreement and (b) from and after the Existing Super-Priority Revolver Discharge Date, the agent in respect of the agreement or instrument representing the largest then outstanding principal amount of Super-Priority Indebtedness.

"<u>Replacement Collateral Agent</u>" has the meaning assigned to it in the Intercreditor Agreement, as in effect on the date hereof.

"<u>Replacement Representative</u>" has the meaning assigned to it in the Intercreditor Agreement, as in effect on the date hereof.

"<u>Reserved Indebtedness Amount</u>" has the meaning set forth in <u>Section</u> <u>3.2(c)(9)</u>.

"<u>Restricted Investment</u>" means any Investment other than a Permitted Investment.

"<u>Restricted Notes</u>" means Initial Notes and Additional Notes bearing the Restricted Notes Legend.

"<u>Restricted Notes Legend</u> " means the legend set forth in <u>Section</u> <u>2.1(d)(1)</u>.

"<u>Restricted Period</u>" has the meaning set forth in <u>Section</u> <u>2.1(b)</u>.

"<u>Restricted Subsidiary</u>" means any Subsidiary of the Issuer other than an Unrestricted Subsidiary, which, for the avoidance of doubt, includes the Co-Issuer.

"<u>Rule 144A</u>" means Rule 144A under the Securities Act.

"<u>S&P</u>" means Standard & Poor's Investors Ratings Services or any of its successors or assigns that is a Nationally Recognized Statistical Rating Organization.

"<u>Sale and Leaseback Transaction</u>" means any arrangement providing for the leasing by the Issuer or any of the Restricted Subsidiaries of any real or tangible personal property, which property has been or is to be sold or transferred by the Issuer or such Restricted Subsidiary to a third Person in contemplation of such leasing.

"<u>Screened Affiliate</u>" means any Affiliate of a Holder (i) that makes investment decisions independently from such Holder and any other Affiliate of such Holder that is not a Screened Affiliate, (ii) that has in place customary information screens between it and such Holder and any other Affiliate of such Holder that is not a Screened Affiliate and such screens prohibit the sharing of information with respect to the Issuer or its Subsidiaries, (iii) whose investment policies are not directed by such Holder or any other Affiliate of such Holder that is acting in concert with such Holder in connection with its investment in the Notes, and (iv) whose investment decisions are not influenced by the investment decisions of such Holder or any other Affiliate of such Holder that is acting in concert with such Holders in connection with its investment in the Notes.

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"<u>SEC</u>" means the Securities and Exchange Commission or any successor thereto.

"<u>Secured Indebtedness</u>" means any Indebtedness secured by a Lien other than Indebtedness with respect to Cash Management Obligations.

"<u>Securities Account</u>" has the meaning specified in the UCC or the PPSA, as applicable.

"<u>Securities Act</u>" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder, as amended.

"<u>Securitization Asset</u>" means (a) any accounts receivable, mortgage receivables, loan receivables, royalty, franchise fee, license fee, patent or other revenue streams and other rights to payment or related assets and the proceeds thereof and (b) all collateral securing such receivable or asset, all contracts and contract rights (including licenses and leases), guarantees or other obligations in respect of such receivable or asset, lockbox accounts and records with respect to such account or asset and any other assets customarily transferred (or in respect of which security interests are customarily granted) together with accounts or assets in connection with a securitization, factoring or receivable sale transaction.

"<u>Securitization Facility</u>" means any of one or more securitization, financing, factoring or sales transactions, as amended, supplemented, modified, extended, renewed, restated or refunded from time to time, pursuant to which the Issuer or any of the Restricted Subsidiaries sells, transfers, pledges or otherwise conveys any Securitization Assets (whether now existing or arising in the future) to a Securitization Subsidiary or any other Person.

"<u>Securitization Fees</u>" means distributions or payments made directly or by means of discounts with respect to any Securitization Asset or Receivables Asset or participation interest therein issued or sold in connection with, and other fees, expenses and charges (including commissions, yield, interest expense and fees and expenses of legal counsel) paid in connection with, any Qualified Securitization Financing or Receivables Facility.

"<u>Securitization Repurchase Obligation</u>" means any obligation of a seller of Securitization Assets or Receivables Assets in a Qualified Securitization Financing or a Receivables Facility to repurchase or otherwise make payments with respect to Securitization Assets arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, offset or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

"<u>Securitization Subsidiary</u>" means any Subsidiary of the Issuer in each case formed for the purpose of and that solely engages in one or more Qualified Securitization Financings or Receivables Facilities and other activities reasonably related thereto or another Person formed for this purpose.

"<u>Security Documents</u>" means the U.S. Security Agreement and the Canadian Security Agreement.

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"<u>Settlement</u>" means the transfer of cash or other property with respect to any credit or debit card charge, check or other instrument, electronic funds transfer, or other type of paper-based or electronic payment, transfer, or charge transaction for which a Person acts as a processor, remitter, funds recipient or funds transmitter in the ordinary course of its business.

"<u>Settlement Asset</u>" means any cash, receivable or other property, including a Settlement Receivable, due or conveyed to a Person in consideration for a Settlement made or arranged, or to be made or arranged, by such Person or an Affiliate of such Person.

"<u>Settlement Indebtedness</u>" means any payment or reimbursement obligation in respect of a Settlement Payment.

"<u>Settlement Lien</u>" means any Lien relating to any Settlement or Settlement Indebtedness (and may include, for the avoidance of doubt, the grant of a Lien in or other assignment of a Settlement Asset in consideration of a Settlement Payment, Liens securing intraday and overnight overdraft and automated clearing house exposure, and similar Liens).

"<u>Settlement Payment</u>" means the transfer, or contractual undertaking (including by automated clearing house transaction) to effect a transfer, of cash or other property to effect a Settlement.

"<u>Settlement Receivable</u>" means any general intangible, payment intangible, or instrument representing or reflecting an obligation to make payments to or for the benefit of a Person in consideration for a Settlement made or arranged, or to be made or arranged, by such Person.

"<u>Short Derivative Instrument</u>" means a Derivative Instrument (i) the value of which generally decreases, and/or the payment or delivery obligations under which generally increase, with positive changes to the Performance References and/or (ii) the value of which generally increases, and/or the payment or delivery obligations under which generally decrease, with negative changes to the Performance References.

"<u>Significant Subsidiary</u>" means any Restricted Subsidiary that would be a "significant subsidiary" (pursuant to the "investment test" or the "asset test" thereunder), as defined in Article 1, Rule 1-02(w)(1) of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the Issue Date. Notwithstanding anything to the contrary in this Indenture, for purposes of <u>Sections 6.1(a)(7)</u> and <u>(8)</u>, a Subsidiary that was not a Significant Subsidiary at the time of the initiation of the various actions described in <u>Sections 6.1(a)(7)</u> and <u>(8)</u> shall not be deemed a Significant Subsidiary until after such Subsidiary emerges from such actions.

"<u>Similar Business</u>" means (a) any businesses, services or activities engaged in by the Issuer or any of its Subsidiaries or any Associates on the Issue Date, (b) any businesses, services and activities engaged in by the Issuer or any of its Subsidiaries or any Associates that are related, complementary, incidental, ancillary or similar to any of the foregoing or are extensions or developments of any thereof, and (c) a Person conducting a business, service or activity specified in clauses (a) and (b), and any Subsidiary thereof. For the avoidance of doubt, any Person that invests in or owns Capital Stock or Indebtedness of another Person that is engaged in a Similar Business shall be deemed to be engaged in a Similar Business.

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"<u>STA</u>" means the Securities Transfer Act (British Columbia), including the regulations thereto; provided, however, if perfection or the effect of perfection or non-perfection or the priority of any Lien on any Collateral that is investment property is governed by the laws in effect in any province or territory of Canada other than British Columbia in which there is in force legislation substantially the same as the Securities Transfer Act (British Columbia) (an "<u>Other STA Province</u>"), then "STA" shall mean such other legislation as in effect from time to time in such Other STA Province for purposes of the provisions thereof referring to or incorporating by reference provisions of the STA.

"<u>Standard Securitization Undertakings</u>" means representations, warranties, covenants, guarantees and indemnities entered into by the Issuer or any Subsidiary of the Issuer which the Issuer has determined in good faith to be customary in a Securitization Facility or Receivables Facility, including those relating to the servicing of the assets of a Securitization Subsidiary, it being understood that any Securitization Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking or, in the case of a Receivables Facility, a non-credit related recourse accounts receivable factoring arrangement.

"<u>Stated Maturity</u>" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

"<u>Store</u>" means any retail store or retail warehouse (which includes any real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by the Issuer or any Restricted Subsidiary.

"<u>Subordinated Indebtedness</u>" means, with respect to any person, any Indebtedness (whether outstanding on the Issue Date or thereafter incurred) which is expressly subordinated in right of payment to the Notes and Note Guarantees pursuant to a written agreement.

"<u>Subsidiary</u>" means, with respect to any Person:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any corporation, association, or other business entity (other than a partnership, joint venture, limited
liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at
the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any partnership, joint venture, limited liability company or similar entity of which:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or
limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or
limited partnership interests or otherwise; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such
entity; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) at the election of the Issuers, any partnership, joint venture, limited liability company or similar entity of
which such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

"<u>Super-Priority Indebtedness</u>" means Indebtedness and other Obligations pursuant to the Super-Priority Revolving Credit Facility and other instruments specified in an Officer's Certificate as evidencing "Super-Priority Indebtedness" that is intended to rank senior in right of payment pursuant to the Notes and Note Guarantees.

"<u>Super-Priority Revolving Credit Facility</u>" means the "Revolving Facility" under the Credit Agreement.

"<u>Super-Priority Obligations</u>" means all amounts owing to any lender, agent, letter of credit issuer, counterparty to a secured hedge agreement or cash management agreement, arranger, representative or any affiliate of any of the foregoing, pursuant to the terms of any Super-Priority Indebtedness, including all amounts in respect of any principal, interest (including any post-petition interest), premium (if any), penalties, fees, expenses (including fees, expenses and disbursements of agents, professional advisors and legal counsel), indemnifications, reimbursements, damages and other liabilities, advances, participations, cash collateral obligations and guarantees of the foregoing amounts, in each case whether or not allowed or allowable in an insolvency or liquidation proceeding.

"<u>Tax</u>" and/or "<u>Taxes</u>" means all present and future taxes, levies, imposts, deductions, charges, duties and withholdings and any charges of a similar nature (including interest, penalties and other liabilities with respect thereto) that are imposed by any taxing authority.

"<u>Temporary Regulation S Global Note</u>" has the meaning set forth in <u>Section</u> <u>2.1(b)</u>.

"<u>Total Assets</u>" means, as of any date, the total consolidated assets of the Issuer and its Restricted Subsidiaries on a consolidated basis, as shown on the most recent consolidated balance sheet of the Issuer and its Restricted Subsidiaries, determined on a pro forma basis in a manner consistent with the definition of Fixed Charge Coverage Ratio.

"<u>Transaction Expenses</u>" means any fees, costs and expenses (including all legal, accounting and other professional fees, costs and expenses) incurred or paid by the Issuer or any Restricted Subsidiary associated or in connection with the Transactions.

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"<u>Transactions</u>" means the issuance of the Notes, the payment of Transaction Expenses, other related transactions as described in the Offering Memorandum (including the use of proceeds of the Notes described therein) and the consummation of any other related, complementary, incidental or ancillary transaction in connection with the foregoing or extensions or developments of any thereof.

"<u>Trust Indenture Act</u>" means the Trust Indenture Act of 1939, as amended.

"<u>Trust Officer</u>" means, when used with respect to the Trustee or the Notes Collateral Agent, any officer within the corporate trust department of the Trustee or the Notes Collateral Agent, respectively, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee or the Notes Collateral Agent, respectively, who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter relating to this Indenture is referred because of such Person's knowledge of and familiarity with the particular subject and who, in each case, shall have direct responsibility for the administration of this Indenture.

"<u>Trustee</u>" means Wilmington Trust, National Association, together with its successors and assigns, in such capacity.

"<u>UCC</u>" means the Uniform Commercial Code (or equivalent statute) as in effect from time to time in the State of New York; *provided, however,* that at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of a collateral agent's 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 of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.

"<u>Unrestricted Subsidiary</u>" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any Subsidiary of the Issuer that at the time of determination is an Unrestricted Subsidiary (as designated by
the Issuers in the manner provided below); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any Subsidiary of an Unrestricted Subsidiary.

The Issuers may designate any Subsidiary of the Issuer, (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger, consolidation or other business combination transaction, or Investment therein), other than the Co-Issuer, to be an Unrestricted Subsidiary only if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) at the time of such designation, such Subsidiary or any of its Subsidiaries does not own any Capital Stock of
the Issuer or any other Subsidiary of the Issuer which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) such designation and the Investment, if any, of the Issuer in such Subsidiary complies with <u>Section</u> <u>3.3</u> hereof.

"<u>U.S. Government Obligations</u>" means securities that are (1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally Guaranteed as a full faith and credit obligation of the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depositary receipt, *provided* that (except as required by Law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary receipt.

"<u>U.S. Security Agreement</u>" means the U.S. Security Agreement, dated as of February 6, 2023, as amended, restated, amended and restated, supplemented or otherwise modified from time to time, by and among the Issuers, Holdings, Holdings GP, the other Guarantors party thereto from time to time and the Notes Collateral Agent.

"<u>Voting Stock</u>" of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors.

"<u>Weighted Average Life to Maturity</u>" means, when applied to any Indebtedness at any date, the quotient (in number of years) obtained by dividing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the sum of the products obtained by multiplying (i) the number of years (calculated to the nearest one-twelfth) from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock or Preferred
Stock, by (ii) the amount of such payment, by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the sum of all such payments; *provided* that, for purposes of determining the Weighted Average
Life to Maturity of any Indebtedness, the effects of any prepayments or amortization made on such Indebtedness prior to the date of such determination will be disregarded.

Section 1.2 <u>Other Definitions</u>.

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| | |
|:---|:---|
| **Term** | **Section** |
| Acceptable Commitment | Section 3.5(a)(3)(ii) |
| Action | Section 12.7(v) |
| Additional Restricted Notes | Section 2.1(b) |
| Advance Offer | Section 3.5(a)(3)(iii) |

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| | |
|:---|:---|
| **Term** | **Section** |
| Advance Portion | Section 3.5(a)(3)(iii) |
| Affiliate Transaction | Section 3.8(a) |
| agent | Section 12.7(a) |
| Agent Members | Section 2.1(e)(2) |
| Applicable Premium Deficit | Section 8.4(1) |
| Applicable Proceeds | Section 3.5(a)(3) |
| Applicable Proceeds Threshold Amount | Section 3.5(a)(3)(iii) |
| Asset Disposition Offer | Section 3.5(a)(3)(iii) |
| Authenticating Agent | Section 2.2 |
| Available Amount | Section 3.3(a)(iii) |
| CERCLA | Section 12.7(q) |
| change of control | Section 3.3(b)(5)(ii) |
| Change of Control Offer | Section 3.9(a) |
| Change of Control Payment | Section 3.9(a) |
| Change of Control Payment Date | Section 3.9(a)(2) |
| Clearstream | Section 2.1(b) |
| Collateral Advance Offer | Section 3.5(a)(3)(iii) |
| Collateral Advance Portion | Section 3.5(a)(3)(iii) |
| Collateral Asset Disposition Offer | Section 3.5(a)(3)(iii) |
| Collateral Excess Proceeds | Section 3.5(a)(3)(iii) |
| Covenant Defeasance | Section 8.3 |
| Declined Collateral Excess Proceeds | Section 3.5(a)(3)(iii) |
| Declined Excess Proceeds | Section 3.5(a)(3)(iii) |
| Defaulted Interest | Section 2.15 |
| Description of Notes | Section 9.1(1) |
| Directing Holder | Section 6.1(a)(10) |
| Discharge of Super-Priority Claims | Section 2.18 |
| Election Date | 0 |
| Euroclear | Section 2.1(b) |
| Foreign Disposition | Section 3.5(c)(i) |
| Increased Amount | Section 3.6(2) |
| Initial Agreement | Section 3.4(b)(16) |
| Initial Default | Section 6.1(b) |
| Initial Lien | Section 3.6 |
| Issuer Order | Section 2.2 |
| Judgment Currency | Section 13.19 |
| LCT Election | Section 1.4(c) |
| LCT Public Offer | Section 1.4(c) |
| LCT Test Date | Section 1.4(c) |
| Legal Defeasance | Section 8.2 |
| Legal Holiday | Section 13.6 |
| Noteholder Direction | Section 6.1(a)(10) |
| Notes Register | Section 2.3 |
| notice of default | Section 12.7(e) |

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| | |
|:---|:---|
| **Term** | **Section** |
| Other Guarantee | Section 10.2(b)(5) |
| Permanent Regulation S Global Note | Section 2.1(b) |
| Permitted Debt | Section 3.2(b) |
| Permitted Payments | Section 3.3(b) |
| Position Representation | Section 6.1(a)(10) |
| Proceeds Application Period | Section 3.5(a)(3) |
| protected purchaser | Section 2.11 |
| Redemption Date | Section 5.7(a) |
| Refunding Capital Stock | Section 3.3(b)(2) |
| Registrar | Section 2.3 |
| Regular-Priority First Lien Obligations | Section 2.18 |
| Regulation S Notes | Section 2.1(b) |
| Restricted Payment | Section 3.3(a)(4) |
| Reversion Date | Section 3.20 |
| Rule 144A Global Note | Section 2.1(b) |
| Rule 144A Notes | Section 2.1(b) |
| Security Document Order | Section 12.7(r) |
| Special Interest Payment Date | Section 2.15(a) |
| Special Record Date | Section 2.15(a) |
| Successor Company | Section 4.1(a)(1) |
| Successor Person | Section 4.1(f)(1) |
| Super-Priority Enforcement Event | Section 2.18 |
| Suspended Covenants | Section 3.20 |
| Suspension Period | Section 3.20 |
| Treasury Capital Stock | Section 3.3(b)(2) |
| Verification Covenant | Section 6.1(a)(10) |

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Section 1.3 <u>UCC, PPSA and STA</u>. Unless otherwise defined in this Indenture, terms defined in Article 8 or 9 of the UCC (or the comparable provisions of the PPSA or the STA, as applicable) are used in this Indenture as such terms are defined in such Article 8 or 9 (or the comparable provisions of the PPSA or the STA, as applicable).

Section 1.4 <u>Rule</u><u>s</u> <u>of Con</u><u>s</u><u>truc</u><u>t</u><u>ion</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Unless the context otherwise requires:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a term has the meaning assigned to it;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) "or" is not exclusive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) "including" means including without limitation;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) words in the singular include the plural and words in the plural include the singular;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) "will" shall be interpreted to express a command;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the Issuer dated such date prepared in accordance with GAAP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) the principal amount of any preferred stock shall be (i) the maximum liquidation value of such preferred stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such preferred stock, whichever is greater;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) all amounts expressed in this Indenture or in any of the Notes in terms of money refer to the lawful currency of the United States of America;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) except as otherwise stated, (a) references herein to Articles, Sections and Exhibit mean the Articles and Sections of and Exhibits to this Indenture and (b) each reference herein to a particular Article or Section includes the Sections, subsections and paragraphs subsidiary thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) unless otherwise specifically indicated, the term "consolidated" with respect to any Person refers to such Person consolidated with its Restricted Subsidiaries, and excludes from such consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate of such Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) where a determination, election or choice is required to be made or a notice or approval is required to be given, by the "Issuers" or the "Co-Issuer" (or by officers, employees, directors or governing bodies of any of the foregoing), such determination, election or choice may be made and such notice or approval may be given, by the Issuer or Holdings (or by officers, employees, directors or governing body of the Issuer or Holdings as the case may be); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) the words "execution," "signed," "signature," "delivery" and words of like import in or relating to this Indenture or any document to be signed in connection with this Indenture shall be deemed to include electronic signatures, deliveries 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, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means; *provided* that, notwithstanding anything herein to the contrary, neither the Trustee nor the Notes Collateral Agent is under any obligation to agree to accept electronic signatures in any form or in any format except for facsimile and PDF unless expressly agreed to by the Trustee or Notes Collateral Agent, as applicable, pursuant to reasonable procedures approved by the Trustee or Notes Collateral Agent, as applicable.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding anything to the contrary herein, in the event an item of Indebtedness (or any portion thereof) is incurred or issued, any Lien is incurred or other transaction is undertaken in reliance on any ratio based exceptions, thresholds and baskets, such ratio(s) shall be calculated with respect to such incurrence, issuance or other transaction without giving effect to amounts being utilized under any other exceptions, thresholds or baskets (other than ratio based baskets) on the same date. Each item of Indebtedness that is incurred or issued, each Lien incurred and each other transaction undertaken will be deemed to have been incurred, issued or taken first, to the extent available, pursuant to the relevant ratio based test.

Notwithstanding anything to the contrary herein, in the event an item of Indebtedness (or any portion thereof) is incurred or issued, any Lien is incurred or other transaction is undertaken in reliance on any ratio based exceptions, thresholds and baskets, such ratio(s) shall be calculated without regard to the incurrence of any Indebtedness under any revolving facility or letter of credit facility (1) immediately prior to or in connection therewith or (2) used to finance working capital needs of the Issuer and its Restricted Subsidiaries.

Any calculation or measure that is determined with reference to the Issuers' financial statements (including Consolidated EBITDA, Consolidated Interest Expense, Consolidated Net Income, Fixed Charges, Fixed Charge Coverage Ratio, Consolidated Secured Leverage Ratio and Consolidated Total Leverage Ratio) may be determined with reference to the financial statements of a Parent Entity instead, so long as such Parent Entity does not hold any material assets other than, directly or indirectly, the Capital Stock of the Issuer.

This Indenture shall not treat (1) unsecured Indebtedness as subordinated or junior to Secured Indebtedness merely because it is unsecured or (2) Indebtedness as subordinated or junior to any other Indebtedness merely because it has a junior priority with respect to the same collateral or is secured by different collateral or because it is guaranteed or incurred by different obligors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) When calculating the availability under any basket or ratio under this Indenture or compliance with any provision of this Indenture in connection with any Limited Condition Transaction and any actions or transactions related thereto (including acquisitions, Investments, the incurrence, issuance or assumption of Indebtedness and the use of proceeds thereof, the incurrence or creation of Liens, repayments, Restricted Payments and Asset Dispositions), in each case, at the option of the Issuer (the Issuer's election to exercise such option, an "<u>LCT Election</u>"), the date of determination for availability under any such basket or ratio and whether any such action or transaction is permitted (or any requirement or condition therefor is complied with or satisfied (including as to the absence of any continuing Default or Event of Default)) under this Indenture shall be deemed to be the date (the "<u>LCT Test Date</u>") either (a) the definitive agreement for such Limited Condition Transaction is entered into (or, if applicable, the date of delivery of an irrevocable declaration of a Restricted Payment or similar event), or (b) solely in connection with an acquisition to which the United Kingdom City Code on Takeovers and Mergers applies, the date on which a "Rule 2.7 announcement" of a firm intention to make an offer (or equivalent announcement in another jurisdiction) (an "<u>LCT Public</u>

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 <u>Offer</u>") in respect of a target of a Limited Condition Transaction and, in each case, if, after giving pro forma effect to the Limited Condition Transaction and any actions or transactions related thereto (including acquisitions, Investments, the incurrence, issuance or assumption of Indebtedness and the use of proceeds thereof, the incurrence or creation of Liens, repayments, Restricted Payments and Asset Dispositions) and any related pro forma adjustments, the Issuer or any of its Restricted Subsidiaries would have been permitted to take such actions or consummate such transactions on the relevant LCT Test Date in compliance with such ratio, test or basket (and any related requirements and conditions), such ratio, test or basket (and any related requirements and conditions) shall be deemed to have been complied with (or satisfied) for all purposes (in the case of Indebtedness, for example, whether such Indebtedness is committed, issued, assumed or incurred at the LCT Test Date or at any time thereafter); provided, that (a) if financial statements for one or more subsequent fiscal quarters shall have become available, the Issuers may elect, in their sole discretion, to redetermine all such ratios, tests or baskets on the basis of such financial statements, in which case, such date of redetermination shall thereafter be the applicable LCT Test Date for purposes of such ratios, tests or baskets, (b) except as contemplated in the foregoing clause (a), compliance with such ratios, test or baskets (and any related requirements and conditions) shall not be determined or tested at any time after the applicable LCT Test Date for such Limited Condition Transaction and any actions or transaction related thereto (including acquisitions, Investments, the incurrence, issuance or assumption of Indebtedness and the use of proceeds thereof, the incurrence or creation of Liens, repayments, Restricted Payments and Asset Dispositions) and (c) Consolidated Interest Expense for purposes of the Fixed Charge Coverage Ratio will be calculated using an assumed interest rate as reasonably determined by the Issuer.

For the avoidance of doubt, if the Issuer has made an LCT Election, (1) if any of the ratios, tests or baskets for which compliance was determined or tested as of the LCT Test Date would at any time after the LCT Test Date have been exceeded or otherwise failed to have been complied with as a result of fluctuations in any such ratio, test or basket, including due to fluctuations in LTM EBITDA or Total Assets of the Issuer and its Restricted Subsidiaries or the Person subject to such Limited Condition Transaction, such baskets, tests or ratios shall not be deemed to have been exceeded or failed to have been complied with as a result of such fluctuations; (2) if any related requirements and conditions (including as to the absence of any continuing Default or Event of Default) for which compliance or satisfaction was determined or tested as of the LCT Test Date would at any time after the LCT Test Date not have been complied with or satisfied (including due to the occurrence or continuation of an Default or Event of Default), such requirements and conditions shall not be deemed to have been failed to be complied with or satisfied (and such Default or Event of Default shall be deemed not to have occurred or be continuing); and (3) in calculating the availability under any ratio, test or basket in connection with any action or transaction unrelated to such Limited Condition Transaction following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement or date for redemption, purchase or repayment specified in an irrevocable notice for such Limited Condition Transaction is terminated, expires or passes (or, if applicable, the irrevocable notice is terminated, expires or passes or, as applicable, the offer in respect of an LCT Public Offer for, such acquisition is terminated), as applicable, without consummation of such Limited Condition Transaction, any such ratio, test or basket shall be determined or tested giving pro forma effect to such Limited Condition Transaction.

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**ARTICLE II** 

**<u>THE NOTES</u>**

Section 2.1 <u>Form, Dating and Terms</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited. The Initial Notes issued on the date hereof will be in an aggregate principal amount of $550,000,000. In addition, the Issuers may issue, from time to time in accordance with the provisions of this Indenture, Additional Notes (as provided herein). Furthermore, Notes may be authenticated and delivered upon registration of transfer, exchange or in lieu of, other Notes pursuant to <u>Sections 2.2</u>, <u>2.6</u>, <u>2.11</u>, <u>2.13</u>, <u>5.6</u> or <u>9.5</u>, in connection with an Asset Disposition Offer, Collateral Asset Disposition Offer or Collateral Advance Offer pursuant to <u>Section</u> <u>3.5</u> or in connection with a Change of Control Offer pursuant to <u>Section</u> <u>3.9</u>.

Notwithstanding anything to the contrary contained herein, the Issuers may not issue any Additional Notes, unless such issuance is in compliance with <u>Section</u> <u>3.2</u>.

With respect to any Additional Notes, the Issuers shall set forth in one or more indentures supplemental hereto, the following information:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the issue price and the issue date of such Additional Notes, including the date from which interest shall accrue; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) whether such Additional Notes shall be Restricted Notes.

In authenticating and delivering Additional Notes, the Trustee shall be entitled to receive and shall be fully protected in relying upon, in addition to the Opinion of Counsel and Officer's Certificate required by <u>Section</u> <u>13.2</u>, an Opinion of Counsel as to the due authorization, execution, delivery, validity and enforceability of such Additional Notes.

The Initial Notes and the Additional Notes shall be considered collectively as a single class for all purposes of this Indenture, *provided* that any Additional Notes shall not be issued with the same CUSIP, ISIN or other identifying number as the Initial Notes unless such Additional Notes are fungible with the Initial Notes for U.S. federal income tax purposes. Holders of the Initial Notes and the Additional Notes will vote and consent together on all matters to which such Holders are entitled to vote or consent as one class, and none of the Holders of the Initial Notes or the Additional Notes shall have the right to vote or consent as a separate class on any matter to which such Holders are entitled to vote or consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Initial Notes are being offered and sold by the Issuers pursuant to a Purchase Agreement, dated January 26, 2023, among the Issuer, the Co-Issuer, the Guarantors and Jefferies LLC, as representatives for the several initial purchasers listed on Schedule I thereto. The Initial Notes and any Additional Notes (if issued as Restricted Notes) (the "<u>Additional Restricted Notes</u>") will be resold initially only to (A) Persons they reasonably

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believe to be QIBs in reliance on Rule 144A and (B) Non-U.S. Persons in reliance on Regulation S. Such Initial Notes and Additional Restricted Notes may thereafter be transferred to, among others, persons reasonably believed to be QIBs and purchasers in reliance on Regulation S in each case, in accordance with the procedure described herein. Additional Notes offered after the date hereof may be offered and sold by the Issuers from time to time pursuant to one or more purchase agreements in accordance with applicable Law.

Initial Notes and Additional Restricted Notes offered and sold to persons reasonably believed to be QIBs in the United States of America in reliance on Rule 144A (the "<u>Rule 144A Notes</u>") shall be issued in the form of a permanent global Note substantially in the form of <u>Exhibit A</u>, which is hereby incorporated by reference and made a part of this Indenture, including appropriate legends as set forth in <u>Section</u> <u>2.1(d)</u> (the "<u>Rule 144A Global Note</u>"), deposited with the Trustee, as custodian for DTC, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. The Rule 144A Global Note may be represented by more than one certificate if so required by DTC's rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Rule 144A Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

Initial Notes and any Additional Restricted Notes offered and sold to Non-U.S. Persons outside the United States of America (the "<u>Regulation S Notes</u>") in reliance on Regulation S initially will be represented by temporary global notes in registered, global form without interest coupons (each, a "<u>Temporary Regulation S Global Note</u>"). Each Temporary Regulation S Global Note will be exchangeable for a single permanent note in registered, global form (each a "<u>Permanent Regulation S Global Note</u>" and, together with the Temporary Regulation S Global Notes, a "<u>Regulation S Global Note</u>") after the expiration of the "distribution compliance period" (as defined in Regulation S). Each Regulation S Global Note will be deposited upon issuance with, or on behalf of, the Trustee as custodian for DTC in the manner described in this <u>Article II</u>. Through and including the period ending 40 days after the commencement of the offering of the Notes (the "<u>Restricted Period</u>"), beneficial interests in the Temporary Regulation S Global Note may only be held through Euroclear and Clearstream (as indirect participants in DTC).

Within a reasonable time period after the expiration of the Restricted Period, the Temporary Regulation S Global Note will be exchanged for the Permanent Regulation S Global Note upon delivery to DTC of certification of compliance with the transfer restrictions applicable to the Notes and pursuant to Regulation S as provided in this Indenture and compliance with DTC's procedures.

Investors may hold their interests in the Regulation S Global Note through organizations other than Euroclear Bank S.A./N.V. ("<u>Euroclear</u>") or Clearstream Banking, *société anonyme* ("<u>Clearstream</u>") that are participants in DTC's system or directly through Euroclear or Clearstream, if they are participants in such systems, or indirectly through organizations which are participants in such systems. If such interests are held through Euroclear or Clearstream, Euroclear and Clearstream will hold such interests in the applicable Regulation S Global Note on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositaries. Such depositaries, in turn, will hold such interests in the applicable Regulation S Global Note in customers' securities accounts in the depositaries' names on the books of DTC.

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The Regulation S Global Note may be represented by more than one certificate if so required by DTC's rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

The Rule 144A Global Note and the Regulation S Global Note are sometimes collectively herein referred to as the "<u>Global Notes</u>."

The principal of (and premium, if any) and interest on the Notes shall be payable at the office or agency of the Paying Agent designated by the Issuer maintained for such purpose (which shall initially be the office of the Trustee maintained for such purpose), or at such other office or agency of the Issuer as may be maintained for such purpose pursuant to <u>Section</u> <u>2.3</u>; *provided*, *however*, that, at the option of the Paying Agent, each installment of interest may be paid by (i) check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Notes Register or (ii) wire transfer to an account located in the United States maintained by the payee, subject to the last sentence of this paragraph. Payments in respect of Notes represented by a Global Note (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by DTC. Payments in respect of Notes represented by Definitive Notes (including principal, premium, if any, and interest) held by a Holder of at least $1,000,000 aggregate principal amount of Notes represented by Definitive Notes will be made in accordance with the Notes Register, or by wire transfer to a Dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee or Paying Agent, as applicable, may accept in its discretion).

The Notes may have notations, legends or endorsements required by Law, stock exchange rule or usage, in addition to those set forth on <u>Exhibit A</u> and in <u>Section</u> <u>2.1(d)</u>. The Issuers shall approve any notation, endorsement or legend on the Notes. Each Note shall be dated the date of its authentication. The terms of the Notes set forth in <u>Exhibit A</u> are part of the terms of this Indenture and, to the extent applicable, the Issuer, the Co-Issuer, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to be bound by such terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Denominations</u>. The Notes shall be issuable only in fully registered form in minimum denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Restrictive and Global Note Legends</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Unless and until (i) an Initial Note or an Additional Note issued as a Restricted Note is sold under an effective registration statement or (ii) the Issuers and the Trustee receive an Opinion of Counsel satisfactory to the Issuers to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act, the Rule 144A Global Note and the Regulation S Global Note shall each bear the following legend (such legend, the "<u>Restricted Notes Legend</u>") on the face thereof:

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN AND ARE NOT EXPECTED TO BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "<u>SECURITIES ACT</u>") OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND, ACCORDINGLY, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE AND PROVIDED THAT PRIOR TO SUCH TRANSFER, THE TRUSTEE IS FURNISHED WITH AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (5) TO THE ISSUERS OR THEIR SUBSIDIARIES OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Each Global Note, whether or not an Initial Note, shall bear the following legend on the face thereof:

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

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TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

In the case of a Regulation S Global Note: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON, NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON, AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Book-Entry Provisions</u>. (i) This <u>Section</u> <u>2.1(e)</u> shall apply only to Global Notes deposited with the Trustee, as custodian for DTC, and for which the applicable procedures of DTC shall govern.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Each Global Note initially shall (x) be registered in the name of DTC or the nominee of DTC, (y) be delivered to the Notes Custodian for DTC and (z) bear legends as set forth in <u>Section</u> <u>2.1(d)(2)</u>. Transfers of a Global Note (but not a beneficial interest therein) will be limited to transfers thereof in whole, but not in part, to DTC, its successors or its respective nominees, except as set forth in <u>Section</u> <u>2.1(e)(4)</u> and <u>2.1(f)</u>. If a beneficial interest in a Global Note is transferred or exchanged for a beneficial interest in another Global Note, the Notes Custodian will (x) record a decrease in the principal amount of the Global Note being transferred or exchanged equal to the principal amount of such transfer or exchange and (y) record a like increase in the principal amount of the other Global Note. Any beneficial interest in one Global Note that is transferred to a Person who takes delivery in the form of an interest in another Global Note, or exchanged for an interest in another Global Note, will, upon transfer or exchange, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer and exchange restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Members of, or participants in, DTC ("<u>Agent Members</u>") shall have no rights under this Indenture with respect to any Global Note held on their behalf by DTC or by the Notes Custodian as the custodian of DTC or under such Global Note, and DTC may be treated by the Issuer, the Co-Issuer, the Trustee and any agent of the Issuer, the Co-Issuer or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Co-Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of customary practices of DTC governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) In connection with any transfer of a portion of the beneficial interest in a Global Note pursuant to <u>Section</u> <u>2.1(f)</u> to beneficial owners who are required to hold Definitive Notes, the Notes Custodian shall reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Issuers shall execute, and the Trustee shall authenticate and make available for delivery, one or more Definitive Notes of like tenor and amount.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) In connection with the transfer of an entire Global Note to beneficial owners pursuant to <u>Section</u> <u>2.1(f)</u>, such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Issuers shall execute, and the Trustee shall authenticate and make available for delivery, to each beneficial owner identified by DTC in exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) The registered Holder of a Global Note may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected only through a book-entry system maintained by (i) the Holder of such Global Note (or its agent) or (ii) any holder of a beneficial interest in such Global Note, and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Definitive Notes</u>. Except as provided below, owners of beneficial interests in Global Notes shall not be entitled to receive Definitive Notes. Definitive Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Note if (A) DTC notifies the Issuers that it is unwilling or unable to continue as Depositary for such Global Note or DTC ceases to be a clearing agency registered under the Exchange Act, at a time when DTC is required to be so registered in order to act as depositary, and in each case a successor depositary is not appointed by the Issuers within 90 days of such notice, (B) the Issuers in their sole discretion executes and deliver to the Trustee and Registrar an Officer's Certificate stating that such Global Note shall be so exchangeable or (C) an Event of Default has occurred and is continuing and the Registrar has received a written request from DTC. In the event of the occurrence of any of the events specified in the second preceding sentence or in clause (A), (B) or (C) of the preceding sentence, the Issuers shall promptly make available to the Registrar a reasonable supply of Definitive Notes. In addition, any Note transferred to an affiliate (as defined in Rule 405 under the Securities Act) of the Issuers or evidencing a Note that has been acquired by an affiliate in a transaction or series of transactions not involving any public offering must, until one year after the last date on which either the Issuers or any affiliate of the Issuers was an owner of the Note, be in the form of a Definitive Note and bear the legend regarding transfer restrictions in <u>Section</u> <u>2.1(d)(1)</u>. If required to do so pursuant to any applicable Law, beneficial owners may also obtain Definitive Notes in exchange for their beneficial interests in a Global Note upon written request in accordance with DTC's and the Registrar's procedures.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Any Definitive Note delivered in exchange for an interest in a Global Note pursuant to <u>Section</u> <u>2.1(e)</u> shall, except as otherwise provided by <u>Section</u> <u>2.6(d)</u>, bear the applicable legend regarding transfer restrictions applicable to the Global Note set forth in <u>Section</u> <u>2.1(d)(1)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) If a Definitive Note is transferred or exchanged for a beneficial interest in a Global Note, the Trustee will (x) cancel such Definitive Note, (y) record an increase in the principal amount of such Global Note equal to the principal amount of such transfer or exchange and (z) in the event that such transfer or exchange involves less than the entire principal amount of the canceled Definitive Note, the Issuers shall execute, and the Trustee shall authenticate and make available for delivery, to the transferring Holder a new Definitive Note representing the principal amount not so transferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) If a Definitive Note is transferred or exchanged for another Definitive Note, (x) the Trustee will cancel the Definitive Note being transferred or exchanged, (y) the Issuers shall execute, and the Trustee shall authenticate and make available for delivery, one or more new Definitive Notes in authorized denominations having an aggregate principal amount equal to the principal amount of such transfer or exchange to the transferee (in the case of a transfer) or the Holder of the canceled Definitive Note (in the case of an exchange), registered in the name of such transferee or Holder, as applicable, and (z) if such transfer or exchange involves less than the entire principal amount of the canceled Definitive Note, the Issuers shall execute, and the Trustee shall authenticate and make available for delivery to the Holder thereof, one or more Definitive Notes in authorized denominations having an aggregate principal amount equal to the untransferred or unexchanged portion of the canceled Definitive Notes, registered in the name of the Holder thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Notwithstanding anything to the contrary in this Indenture, in no event shall a Definitive Note be delivered upon exchange or transfer of a beneficial interest in the Regulation S Global Note prior to the end of the Restricted Period.

Section 2.2 <u>Execution and Authentication</u>. One Officer of the Issuers shall sign the Notes for the Issuers by manual, facsimile, PDF or other electronic signature. If the Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

A Note shall not be valid until an authorized officer of the Trustee manually authenticates the Note. The signature of the Trustee on a Note shall be conclusive evidence that such Note has been duly and validly authenticated and issued under this Indenture. A Note shall be dated the date of its authentication.

At any time and from time to time after the execution and delivery of this Indenture, the Trustee shall authenticate and make available for delivery: (1) Initial Notes for original issue on the Issue Date in an aggregate principal amount of $550,000,000, and (2) subject to the terms of this Indenture, Additional Notes for original issue in an unlimited principal amount, in each case upon a written order of the Issuers signed by one Officer (the "<u>Issuer Order</u>"). Such Issuer Order shall specify whether the Notes will be in the form of Definitive Notes or Global Notes, the amount of the Notes to be authenticated, the date on which the original issue of Notes is to be authenticated, the Holder of the Notes and whether the Notes are to be Initial Notes or Additional Notes.

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The Trustee may appoint an agent (the "<u>Authenticating Agent</u>") reasonably acceptable to the Issuers to authenticate the Notes. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Issuers. Unless limited by the terms of such appointment, any such Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by the Authenticating Agent. An Authenticating Agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

In case any of the Issuers or any Guarantor, pursuant to <u>Article IV</u> or <u>Section</u> <u>10.2</u>, as applicable, shall be consolidated, merged or amalgamated with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation or amalgamation, or surviving such merger, or into which the Issuers or any Guarantor shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to <u>Article IV</u>, any of the Notes authenticated or delivered prior to such consolidation or amalgamation, merger, conveyance, transfer, lease or other disposition may (but shall not be required), from time to time, at the request of the successor Person, be exchanged for other Notes executed in the name of the successor Person with such changes in phraseology and form as may be appropriate to reflect such successor Person, but otherwise in substance of like tenor as the Notes surrendered for such exchange and of like principal amount; and the Trustee, upon receipt of the Issuer Order of the successor Person, shall authenticate and make available for delivery Notes as specified in such order for the purpose of such exchange. If Notes shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this <u>Section</u> <u>2.2</u> in exchange or substitution for or upon registration of transfer of any Notes, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Notes at the time outstanding for Notes authenticated and delivered in such new name.

Section 2.3 <u>Registrar and Paying Agent</u>. The Issuers shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the "<u>Registrar</u>") and an office or agency where Notes may be presented for payment. The Registrar shall keep a register of the Notes and of their transfer and exchange (the "<u>Notes Register</u>"). The Issuers may have one or more co-registrars and one or more additional paying agents. The term "<u>Paying Agent</u>" includes any additional paying agent and the term "<u>Registrar</u>" includes any co-registrar.

The Issuers shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuers shall notify the Trustee in writing of the name and address of each such agent. If the Issuers fail to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to <u>Section</u> <u>7.7</u>. The Issuers or any Guarantor may act as Paying Agent, Registrar or transfer agent.

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The Issuers initially appoint DTC to act as Depositary with respect to the Global Notes. The Issuers initially appoint the Trustee as Registrar and Paying Agent for the Notes. The Issuers may change any Registrar or Paying Agent without prior notice to the Holders, but upon written notice to such Registrar or Paying Agent and to the Trustee; *provided*, *however*, that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Issuers and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee and the passage of any waiting or notice periods required by DTC procedures or (ii) written notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) above. The Registrar or Paying Agent may resign at any time upon written notice to the Issuers and the Trustee.

Section 2.4 <u>Paying Agent to Hold Money in Trust</u>. By no later than 11:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Note is due and payable, the Issuers shall deposit with the Paying Agent a sum sufficient in immediately available funds to pay such principal, premium or interest when due. The Issuers shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders and the Trustee all money held by such Paying Agent for the payment of principal of, premium, if any, or interest on the Notes (whether such assets have been distributed to it by the Issuers or other obligors on the Notes), shall notify the Trustee in writing of any default by the Issuers or any Guarantor in making any such payment and shall during the continuance of any default by the Issuers (or any other obligor upon the Notes) in the making of any payment in respect of the Notes, upon the written request of the Trustee, forthwith deliver to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Notes together with a full accounting thereof. If the Issuer, the Co-Issuer or a Subsidiary of the Issuer or Co-Issuer acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Issuers at any time may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee and to account for any funds or assets disbursed by such Paying Agent. Upon complying with this <u>Section</u> <u>2.4</u>, the Paying Agent (if other than the Issuers or a Subsidiary of the Issuer) shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Issuer and/or the Co-Issuer, the Trustee shall serve as Paying Agent for the Notes.

Section 2.5 <u>Holder Lists</u>. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Issuer or the Co-Issuer, each on its own behalf and on behalf of each of the Guarantors, shall furnish or cause the Registrar to furnish to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders.

Section 2.6 <u>Transfer and Exchange</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A Holder may transfer a Note (or a beneficial interest therein) to another Person or exchange a Note (or a beneficial interest therein) for another Note or Notes of any authorized denomination by presenting to the Registrar a written request therefor stating the name of the proposed transferee or requesting such an exchange, accompanied by any certification, opinion or other document required by this <u>Section</u> <u>2.6</u>. The Registrar will promptly register any transfer or exchange that meets the requirements of this <u>Section</u> <u>2.6</u> by noting the same in the Notes Register maintained by the Registrar for the purpose, and no transfer or exchange will be effective until it is registered in such Notes Register. The transfer or exchange of any Note (or a beneficial interest therein) may only be made in accordance with this <u>Section</u> <u>2.6</u> and <u>Section</u> <u>2.1(e)</u> and <u>2.1(f)</u>, as applicable, and, in the case of a Global Note (or a beneficial interest therein), the applicable rules and procedures of DTC, Euroclear and Clearstream. The Registrar shall refuse to register any requested transfer or exchange that does not comply with this paragraph.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Transfers of Rule 144A Notes</u>. The following provisions shall apply with respect to any proposed registration of transfer of a Rule 144A Note prior to the date that is one year after the later of the date of its original issue and the last date on which the Issuers or any Affiliate of the Issuers was the owner of such Notes (or any predecessor thereto):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a registration of transfer of a Rule 144A Note or a beneficial interest therein to a QIB shall be made upon the representation of the transferee in the form as set forth on the reverse of the Note that it is purchasing for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; *provided* that no such written representation or other written certification shall be required in connection with the transfer of a beneficial interest in the Rule 144A Global Note to a transferee in the form of a beneficial interest in that Rule 144A Global Note in accordance with this Indenture and the applicable procedures of DTC; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a registration of transfer of a Rule 144A Note or a beneficial interest therein to a Non-U.S. Person shall be made upon receipt by the Registrar or its agent of a certificate substantially in the form set forth in <u>Section</u> <u>2.9</u> from the proposed transferee and the delivery of an Opinion of Counsel, certification and/or other information satisfactory to the Issuers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) A registration of transfer of a Rule 144A Note or a beneficial interest therein to an Institutional Accredited Investor shall be made upon receipt by the Registrar or its agent of a certificate substantially in the form set forth in <u>Section</u> <u>2.10</u> from the proposed transferee and the delivery of an Opinion of Counsel, certification and/or other information satisfactory to the Issuers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Transfers of Regulation S Notes</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) During the Restricted Period, a Regulation S Note or a beneficial interest therein may be transferred to a person who takes delivery in the form of an interest in the Rule 144A Global Note only if such transfer is made pursuant to Rule 144A and the transferor first delivers to the Trustee a certificate substantially in the form set forth in <u>Section</u> <u>2.9</u> that such transfer is being made to a person who the transferor reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A or otherwise in accordance with the transfer restrictions described under "Note to Investors" in the Offering Memorandum and in accordance with all applicable securities laws of the states of the United States and other jurisdictions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Prior to the exchange of any beneficial interest in a Temporary Regulation S Global Note for a beneficial interest in a Permanent Regulation S Global Note, (x) the holder of the beneficial interest in the Temporary Regulation S Global Note must provide Euroclear or Clearstream, as the case may be, with a certificate substantially in the form set forth in <u>Section</u> <u>2.17</u> and (y) Euroclear or Clearstream, as the case may be, must provide to the Trustee (or the paying agent if other than the Trustee) a certificate substantially in the form set forth in <u>Section</u> <u>2.17</u>.

After the expiration of the Restricted Period, interests in the Regulation S Note may be transferred in accordance with applicable Law without requiring the certification set forth in <u>Section</u> <u>2.9</u> or any additional certification.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Restricted Notes Legend</u>. Upon the transfer, exchange or replacement of Notes not bearing a Restricted Notes Legend, the Registrar shall deliver Notes that do not bear a Restricted Notes Legend. Upon the transfer, exchange or replacement of Notes bearing a Restricted Notes Legend, the Registrar shall deliver only Notes that bear a Restricted Notes Legend unless (1) an Initial Note is being transferred pursuant to an effective registration statement, (2) Initial Notes are being exchanged for Notes that do not bear the Restricted Notes Legend in accordance with <u>Section</u> <u>2.6(e)</u> or (3) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Issuers to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. Any Additional Notes sold in a registered offering shall not be required to bear the Restricted Notes Legend.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>[Reserved]</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Retention of Written Communications</u>. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to <u>Section</u> <u>2.1</u> or this <u>Section</u> <u>2.6</u> in accordance with applicable Law and the Registrar's customary procedures. The Issuers shall have the right to inspect and make copies of all such letters, notices or other written communications, at the Issuers' expense, at any reasonable time upon the giving of reasonable prior written notice to the Registrar.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Obligations with Respect to Transfers and Exchanges of Notes</u>. To permit registrations of transfers and exchanges, the Issuers shall, subject to the other terms and conditions of this <u>Article II</u>, execute and the Trustee shall authenticate Definitive Notes and Global Notes at the Issuers' and the Registrar's written request.

No service charge shall be made to a Holder for any registration of transfer or exchange, but the Issuers may require the Holder to pay a sum sufficient to cover any transfer tax assessments or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charges payable upon exchange or transfer pursuant to <u>Sections 2.2</u>, <u>2.6</u>, <u>2.11</u>, <u>2.13</u>, <u>3.5</u>, <u>5.6</u> or <u>9.5</u>).

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The Issuers (and the Registrar) shall not be required to register the transfer of or exchange of any Note (A) for a period beginning (1) fifteen (15) calendar days before the mailing (or electronic delivery) of a notice of an offer to repurchase or redeem Notes and ending at the close of business on the day of such mailing (or electronic delivery) or (2) fifteen (15) calendar days before an interest payment date and ending on such interest payment date or (B) called for redemption, except the unredeemed portion of any Note being redeemed in part.

Prior to the due presentation for registration of transfer of any Note, the Issuers, the Trustee, the Paying Agent or the Registrar may deem and treat the person in whose name a Note is registered as the owner of such Note for the purpose of receiving payment of principal of, premium, if any, and (subject to paragraph 2 of the form of Notes attached hereto as <u>Exhibit A</u>) interest on such Note and for all other purposes whatsoever, including without limitation the transfer or exchange of such Note, whether or not such Note is overdue, and none of the Issuers, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.

Any Definitive Note delivered in exchange for an interest in a Global Note pursuant to <u>Section</u> <u>2.1(f)</u> shall, except as otherwise provided by <u>Section</u> <u>2.6(d)</u>, bear the applicable legend regarding transfer restrictions applicable to the Definitive Note set forth in <u>Section</u> <u>2.1(d)(1)</u>.

All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>No Obligation of the Trustee</u>. (1) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in, DTC or other Person with respect to the accuracy of the records of DTC or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than DTC) of any notice (including any notice of redemption or purchase) or the payment of any amount or delivery of any Notes (or other security or property) under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Notes shall be given or made only to or upon the order of the registered Holders (which shall be DTC or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through DTC subject to the applicable rules and procedures of DTC. The Trustee may rely and shall be fully protected in relying upon information furnished by DTC with respect to its members, participants and any beneficial owners.

Neither the Registrar nor the Trustee shall have any obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable Law with respect to any transfer of any interest in any Note (including any transfers between or among DTC participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

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Neither the Trustee nor any of its agents shall have any responsibility for any actions taken or not taken by DTC.

Section 2.7 <u>[Reserved]</u>.

Section 2.8 <u>[Reserved]</u>.

Section 2.9 <u>Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S</u>.

[Date]

Evergreen AcqCo 1 LP

TVI, Inc.

11400 S.E. 6th Street, Suite 125

Bellevue, WA 98004

Attention: Richard Medway

Email: rmedway@savers.com

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Attention: Lawrence G. Wee, Esq.

Facsimile: (212) 492-0052

Wilmington Trust, National Association, as Trustee

Global Capital Markets

1100 North Market Street

Wilmington, Delaware 19890

Attention: Evergreen AcqCo 1 LP/TVI, Inc. Administrator

Telecopy: (302) 636-4149

Re: Evergreen AcqCo 1 LP and TVI, Inc. (the "<u>Issuers</u>")

<u>9.750% Senior Secured Notes due 2028 (the "Notes")</u> 

Ladies and Gentlemen:

In connection with our proposed sale of $[ ] aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S ("<u>Regulation S</u>") under the United States Securities Act of 1933, as amended (the "<u>Securities Act</u>"), and, accordingly, we represent that:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the offer of the Notes was not made to a person in the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) either (i) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (ii) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(a)(2) or Rule 904(a)(2) of Regulation S, as applicable; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

In addition, if the sale is made during a restricted period and the provisions of Rule 903(b)(2), Rule 903(b)(3) or Rule 904(b)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(b)(2), Rule 903(b)(3) or Rule 904(b)(1), as the case may be.

We also hereby certify that we [are][are not] an Affiliate of the Issuers and, to our knowledge, the transferee of the Notes [is][is not] an Affiliate of the Issuers.

The Trustee and the Issuers are entitled to conclusively rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate and not otherwise defined herein have the meanings set forth in Regulation S.

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| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| [Name of Transferor] | [Name of Transferor] |
| By: |  |
|  | Authorized Signature |

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Section 2.10 <u>Form of Certificate for Transfer to Institutional Accredited Investor</u>.

[Date]

Evergreen AcqCo 1 LP

TVI, Inc.

11400 S.E. 6th Street, Suite 125

Bellevue, WA 98004

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Attention: Richard Medway

Email: rmedway@savers.com

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Attention: Lawrence G. Wee, Esq.

Facsimile: (212) 492-0052

Wilmington Trust, National Association, as Trustee

Global Capital Markets

1100 North Market Street

Wilmington, Delaware 19890

Attention: Evergreen AcqCo 1 LP/TVI, Inc. Administrator

Telecopy: (302) 636-4149

Re: Evergreen AcqCo 1 LP and TVI, Inc. (the "<u>Issuers</u>")

<u>9.750% Senior Secured Notes due 2028 (the "Notes")</u> 

Ladies and Gentlemen:

In connection with our proposed sale of $[ ] aggregate principal amount of the Notes, we confirm that such sale has been effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended (the "<u>Securities Act</u>") other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby certifies, and, accordingly, we represent that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, prior to the expiration of the holding period applicable to sales of the Notes under Rule 144 of the Securities Act, we will do so only (A) to the Issuers or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Issuers a signed letter substantially in the form of this letter and an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 903 or Rule 904 of

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Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act, (F) in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel acceptable to the Issuers) or (G) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (F) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.

We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Issuers such certifications, legal opinions and other information as you and the Issuers may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3), (7), (9), (12) or (13) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion.

We also hereby certify that we [are][are not] an Affiliate of the Issuers and, to our knowledge, the transferee of the Notes [is][is not] an Affiliate of the Issuers.

The Trustee and the Issuers are entitled to conclusively rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate and not otherwise defined herein have the meanings set forth in Regulation S.

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| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| [Name of Transferor] | [Name of Transferor] |
| By: |  |
|  | Authorized Signature |

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Section 2.11 <u>Mutilated, Destroyed, Lost or Stolen Notes</u>.

If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the UCC are met, such that the Holder (a) satisfies the Issuers and the Trustee that such Note has been lost, destroyed or wrongfully taken within a reasonable time after such Holder has notice of such loss, destruction or wrongful taking and the Registrar has not registered a transfer prior to receiving such notification, (b) makes such request to the Issuers and the Trustee in writing prior to the Note being acquired by a protected purchaser as defined in Section 8-303 of the UCC (a "<u>protected purchaser</u>"), (c) satisfies any other reasonable requirements of the Trustee and (d) provides an indemnity bond, as more fully described below; *provided*, *however*, if after the delivery of such replacement Note, a protected purchaser of the Note for which such replacement Note was issued presents for payment or registration such replaced Note, the Trustee and/or the Issuers shall be entitled to recover such replacement Note from the Person to whom it was issued and delivered or any Person taking therefrom, except a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuers or the Trustee in connection therewith. Such Holder shall furnish an indemnity bond sufficient in the judgment of the (i) Trustee to protect the Trustee and (ii) the Issuers to protect the Issuers, the Trustee, the Paying Agent and the Registrar, from any loss which any of them may suffer if a Note is replaced, and, in the absence of notice to the Issuers, any Guarantor or the Trustee that such Note has been acquired by a protected purchaser, the Issuers shall execute, and upon receipt of an Issuer Order, the Trustee shall authenticate and make available for delivery, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.

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

Upon the issuance of any new Note under this <u>Section</u> <u>2.11</u>, the Issuers may require that such Holder pay a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of counsel and of the Trustee) in connection therewith.

Subject to the proviso in the initial paragraph of this <u>Section</u> <u>2.11</u>, every new Note issued pursuant to this <u>Section</u> <u>2.11</u>, in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuers, any Guarantor (if applicable) and any other obligor upon the Notes, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this <u>Section</u> <u>2.11</u> are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

Section 2.12 <u>Outstanding Notes</u>. Notes outstanding at any time are all Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those paid pursuant to <u>Section</u> <u>2.11</u> and those described in this <u>Section</u> <u>2.12</u> as not outstanding. A Note does not cease to be outstanding in the event any Issuer or an Affiliate of any Issuer holds the Note; *provided*, *however*, that (i) for purposes of determining which are

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outstanding for consent or voting purposes hereunder, the provisions of <u>Section</u> <u>13.4</u> shall apply and (ii) in determining whether the Trustee shall be protected in making a determination whether the Holders of the requisite principal amount of outstanding Notes are present at a meeting of Holders of Notes for quorum purposes or have consented to or voted in favor of any request, demand, authorization, direction, notice, consent, waiver, amendment or modification hereunder, or relying upon any such quorum, consent or vote, only Notes which a Trust Officer of the Trustee actually knows to be held by an Issuer or a Guarantor shall not be considered outstanding.

If a Note is replaced pursuant to <u>Section</u> <u>2.11</u> (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee and the Issuers receive proof satisfactory to them that the replaced Note is held by a protected purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement pursuant to <u>Section</u> <u>2.11</u>.

If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a Redemption Date or maturity date, money sufficient to pay all principal, premium, if any, and accrued interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

Section 2.13 <u>Temporary Notes</u>. In the event that Definitive Notes are to be issued under the terms of this Indenture, until such Definitive Notes are ready for delivery, the Issuers may prepare and upon receipt of an Issuer Order, the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form, and shall carry all rights, of Definitive Notes but may have variations that the Issuers consider appropriate for temporary Notes. Without unreasonable delay, the Issuers shall prepare and upon receipt of an Issuer Order, the Trustee shall authenticate Definitive Notes. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at any office or agency maintained by the Issuers for that purpose and such exchange shall be without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Issuers shall execute, and the Trustee shall, upon receipt of an Issuer Order, authenticate and make available for delivery in exchange therefor, one or more Definitive Notes representing an equal principal amount of Notes. Until so exchanged, the Holder of temporary Notes shall in all respects be entitled to the same benefits under this Indenture as a Holder of Definitive Notes.

Section 2.14 <u>Cancellation</u>. The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment or cancellation and dispose of such Notes in accordance with its internal policies and customary procedures (subject to the record retention requirements of the Exchange Act and the Trustee). If the Issuers or any Guarantor acquires any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this <u>Section</u> <u>2.14</u>. The Issuers may not issue new Notes to replace Notes they have paid or delivered to the Trustee for cancellation for any reason other than in connection with a transfer or exchange.

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At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, transferred, redeemed, repurchased or canceled, such Global Note shall be returned by the Depositary to the Trustee for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.

Section 2.15 <u>Payment of Interest; Defaulted Interest</u>. Interest on any Note which is payable, and is punctually paid or duly provided for, on any interest payment date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered at the close of business on the regular record date for such payment at the office or agency of the Issuers maintained for such purpose pursuant to <u>Section</u> <u>2.3</u>.

Any interest on any Note which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to be payable to the Holder on the regular record date, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called "<u>Defaulted Interest</u>") shall be paid by the Issuers, at their election, as provided in clause (a) or (b) below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Issuers may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Issuers shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date (not less than 30 days after such notice) of the proposed payment (the "<u>Special Interest Payment Date</u>"), and at the same time the Issuers shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this <u>Section</u> <u>2.15(a)</u>. Thereupon the Issuers shall fix a record date (the "<u>Special Record Date</u>") for the payment of such Defaulted Interest, which date shall be not more than twenty (20) calendar days and not less than fifteen (15) calendar days prior to the Special Interest Payment Date and not less than ten (10) calendar days after the receipt by the Trustee of the notice of the proposed payment. The Issuers shall promptly notify the Trustee in writing of such Special Record Date, and in the name and at the expense of the Issuers, the Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in <u>Section</u> <u>13.1</u>, not less than ten (10) calendar days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the provisions in <u>Section</u> <u>2.15(b)</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Issuers may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after written notice given by the Issuers to the Trustee of the proposed payment pursuant to this <u>Section</u> <u>2.15(b)</u>, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this <u>Section</u> <u>2.15</u>, each Note delivered under this Indenture upon registration of, transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

Section 2.16 <u>CUSIP and ISIN Numbers</u>.

The Issuers in issuing the Notes may use "<u>CUSIP</u>" and "<u>ISIN</u>" numbers and, if so, the Trustee shall use "<u>CUSIP</u>" and "<u>ISIN</u>" numbers in notices of redemption or purchase as a convenience to Holders; *provided*, *however*, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption or purchase and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption or purchase shall not be affected by any defect in or omission of such CUSIP and ISIN numbers. The Issuers shall promptly notify the Trustee in writing of any change in the CUSIP and ISIN numbers.

Section 2.17 <u>Form of Certificate to be Delivered Upon Termination of Restricted Period</u>.

[Date]

Evergreen AcqCo 1 LP

TVI, Inc.

11400 S.E. 6th Street, Suite 125

Bellevue, WA 98004

Attention: Richard Medway, General Counsel, Chief Compliance Officer and Secretary

Email: rmedway@savers.com

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Attention: Lawrence G. Wee, Esq.

Facsimile: (212) 492-0052

Wilmington Trust, National Association, as Trustee

Global Capital Markets

1100 North Market Street

Wilmington, Delaware 19890

Attention: Evergreen AcqCo 1 LP/TVI, Inc. Administrator

Telecopy: (302) 636-4149

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Re: Evergreen AcqCo 1 LP and TVI, Inc. (the "<u>Issuers</u>")

This letter relates to Notes represented by a temporary global Note (the "<u>Temporary Regulation S Global</u> <u>Note</u>"). Pursuant to Section 2.6 of the Indenture dated as of February 6, 2023 relating to the Notes (the "<u>Indenture</u>"), we hereby certify that the persons who are the beneficial owners of $[ ] principal amount of Notes represented by the Temporary Regulation S Global Note are persons outside the United States to whom beneficial interests in such Notes could be transferred in accordance with Rule 904 of Regulation S promulgated under the Securities Act of 1933, as amended. Accordingly, you are hereby requested to issue a Permanent Regulation S Global Note representing the undersigned's interest in the principal amount of Notes represented by the Temporary Regulation S Global Note, all in the manner provided by the Indenture. We certify that we [are][are not] an Affiliate of the Issuers.

The Trustee and the Issuers are entitled to conclusively rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this letter have the meanings set forth in Regulation S.

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| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| [Name of Transferor] | [Name of Transferor] |
| By: |  |
|  | Authorized Signature |

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Section 2.18 <u>Subordination to Super-Priority Indebtedness</u>.

By accepting a Note, each Holder of the Notes agrees that if, after the occurrence of any of (a) the exercise of remedies upon an event of default (or the automatic acceleration of the applicable Super Priority Indebtedness), (b) the occurrence of a payment event of default or an insolvency event of default, (c) an event of default due to the failure to comply with a financial covenant or (d) an event of default occurs due to the failure by the Issuer to provide required annual or quarterly financial reports, in each case, under the Credit Agreement or under the agreements governing other Super-Priority Indebtedness (each a "<u>Super-Priority Enforcement Event</u>"), and before the Issuer and its Restricted Subsidiaries have discharged in full any Super-Priority Indebtedness (or related Obligations) that are then due and payable (a "<u>Discharge of Super-Priority Claims</u>"), a holder of any First Lien Obligations (other than Super-Priority Indebtedness) (the "<u>Regular-Priority First Lien Obligations</u>") or any trustee or agent with respect to such Regular-Priority First Lien Obligations receives payment in respect of such Regular-Priority First Lien Obligations, the recipient of such payment will be required to pay and deliver such payment to the Relevant Super-Priority Agent for payment until a Discharge of Super-Priority Claims has occurred or no Super-Priority Enforcement Event continues to exist.

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Super-Priority Indebtedness shall continue to be Super-Priority Indebtedness and entitled to the benefits of the subordination provisions of this Indenture irrespective of any amendment, modification, or waiver of any term of the Super-Priority Indebtedness or extension or renewal of the Super-Priority Indebtedness.

**ARTICLE III** 

**<u>COVENANTS</u>**

Section 3.1 <u>Payment of Notes</u>. The Issuers shall promptly pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal, premium, if any, and interest shall be considered paid on the date due if by 11:00 a.m. New York City time on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal, premium, if any, and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.

The Issuers shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

Notwithstanding anything to the contrary contained in this Indenture, the Issuers may, to the extent it is required to do so by Law, deduct or withhold income or other similar Taxes imposed by any Governmental Authority from principal or interest payments hereunder.

Section 3.2 <u>Limitation on Indebtedness</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Issuer shall not, and the Issuer shall not permit any of its Restricted Subsidiaries to, incur any Indebtedness (including Acquired Indebtedness); *provided, however*, that the Issuer and any of its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness), if on the date of such incurrence and after giving pro forma effect thereto (including pro forma application of the proceeds thereof), either (i) the Fixed Charge Coverage Ratio of the Issuer and its Restricted Subsidiaries is greater than 2.00 to 1.00 or (ii) the Consolidated Total Leverage Ratio of the Issuer and its Restricted Subsidiaries is no greater than 5.00 to 1.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Section 3.2(a)</u> shall not prohibit the incurrence of the following Indebtedness (collectively, "<u>Permitted Debt</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Indebtedness incurred under any Credit Facility (including letters of credit or bankers' acceptances issued or created under any Credit Facility), and Guarantees in respect of such Indebtedness, up to an aggregate principal amount at the time of incurrence not exceeding (a) $660 million, plus (b) the greater of (i) $136 million and (ii) an amount equal to 100% of LTM EBITDA, plus (c) the greater of (i) $102 million and (ii) an amount equal to 50% of LTM EBITDA, provided that any Indebtedness incurred pursuant to this clause (c) may be

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Super-Priority Indebtedness, plus (d) an unlimited amount if on the date of such incurrence and after giving pro forma effect thereto (including pro forma application of the proceeds thereof) the Consolidated Secured Leverage Ratio of the Issuer and its Restricted Subsidiaries is no greater than 4.50 to 1.00 (or, with respect to an acquisition (by merger, consolidation, amalgamation or otherwise), if the Consolidated Secured Leverage Ratio after giving effect to such acquisition of the Issuer and its Restricted Subsidiaries is no worse than the Consolidated Secured Leverage Ratio of the Issuer and its Restricted Subsidiaries immediately prior to such acquisition), and any Refinancing Indebtedness in respect thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Guarantees by the Issuer or any Restricted Subsidiary of Indebtedness or other obligations of the Issuer or any Restricted Subsidiary so long as the incurrence of such Indebtedness or other obligations guaranteed pursuant hereto was not prohibited by the terms of this Indenture at the time it was incurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Indebtedness of the Issuer to any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary to the Issuer or to any Restricted Subsidiary; *provided, however*, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being held by a Person other than the Issuer or a Restricted Subsidiary, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any sale or other transfer of any such Indebtedness to a Person other than the Issuer or a Restricted Subsidiary,

shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Issuer or such Restricted Subsidiary, as the case may be;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Indebtedness represented by (a) the Notes (other than any Additional Notes), including any Guarantee thereof, (b) any Indebtedness (other than Indebtedness incurred pursuant to clauses (1) and (4)(a) of this <u>Section</u> <u>3.2(b</u>)) outstanding on the Issue Date and any Guarantees thereof, (c) Refinancing Indebtedness (including, with respect to the Notes and any Guarantee thereof) incurred in respect of any Indebtedness described in this clause (4) or clause (2), (5) or (10) of this <u>Section</u> <u>3.2(b)</u> or incurred pursuant to <u>Section</u> <u>3.2(a)</u>, and (d) Management Advances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Indebtedness of (x) the Issuer or any Restricted Subsidiary incurred or issued to finance an acquisition or Investment or (y) Persons that are acquired by the Issuer or any Restricted Subsidiary or merged into, amalgamated or consolidated with the Issuer or a Restricted Subsidiary in accordance with the terms of this Indenture (including designating an Unrestricted Subsidiary as a Restricted Subsidiary); *provided* that such Indebtedness is in an aggregate amount not to exceed (i) the greater of (a) $27 million and (b) an amount equal to 20% of LTM EBITDA at the time of incurrence, plus (ii) unlimited additional Indebtedness if after giving pro forma effect to such acquisition, merger, amalgamation or consolidation, either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Issuer and its Restricted Subsidiaries would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to <u>Section</u> <u>3.2(a)</u>; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) either the Fixed Charge Coverage Ratio of the Issuer and its Restricted Subsidiaries would not be lower or the
Consolidated Total Leverage Ratio of the Issuer and its Restricted Subsidiaries would not be higher, in each case, than it was immediately prior to such acquisition, merger, amalgamation or consolidation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Indebtedness (i) represented by Capitalized Lease Obligations or Purchase Money Obligations in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness incurred pursuant to this clause (i) and then outstanding, does not exceed the greater of (a) $68 million and (b) an amount equal to 50% of LTM EBITDA at the time of incurrence, and any Refinancing Indebtedness in respect thereof and (ii) arising out of Sale and Leaseback Transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Indebtedness in respect of (a) workers' compensation claims, health, disability or other employee benefits, property, casualty or liability insurance, self-insurance obligations, customer guarantees, performance, indemnity, surety, judgment, bid, appeal, advance payment (including progress premiums), customs, value added or other Tax or other guarantees or other similar bonds, instruments or obligations, completion guarantees and warranties or relating to liabilities, obligations or guarantees incurred in the ordinary course of business or consistent with past practice; (b) the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business or consistent with past practice; (c) customer deposits and advance payments (including progress premiums) received from customers for goods or services purchased in the ordinary course of business or consistent with past practice; (d) letters of credit, bankers' acceptances, discounted bills of exchange, discounting or factoring of receivables or payables for credit management purposes, warehouse receipts, guarantees or other similar instruments or obligations issued or entered into, or relating to liabilities or obligations incurred in the ordinary course of business or consistent with past practice; (e) Cash Management Obligations; and (f) Settlement Indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Indebtedness arising from agreements providing for guarantees, indemnification, obligations in respect of earn-outs, deferred purchase price or other adjustments of purchase price or, in each case, similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets, a Person (including any Capital Stock of a Subsidiary) or Investment (other than Guarantees of Indebtedness incurred by any Person acquiring or disposing of such business, assets, Person or Investment for the purpose of financing such acquisition or disposition);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Indebtedness in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness incurred pursuant to this clause and then outstanding, shall not exceed 200% of the net cash proceeds received by the Issuer or its Restricted Subsidiaries from the issuance or sale (other than to a Restricted Subsidiary) of its Capital Stock or otherwise contributed to the equity (in each case, other than through the issuance of Disqualified Stock, Designated Preferred Stock or an Excluded

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Contribution) of the Issuer or its Restricted Subsidiaries, in each case, subsequent to the Issue Date, and any Refinancing Indebtedness in respect thereof; provided, however, that (i) any such net cash proceeds that are so received or contributed shall not increase the Available Amount to the extent the Issuer and its Restricted Subsidiaries incur Indebtedness pursuant to this clause (10) in reliance thereon and (ii) any net cash proceeds that are so received or contributed shall be excluded for purposes of incurring Indebtedness pursuant to this clause (10) to the extent such net cash proceeds or cash have been applied to make Restricted Payments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) (a) Indebtedness issued by the Issuer or any of its Subsidiaries to any future, present or former employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer, any of its Subsidiaries or any Parent Entity, in each case to finance the purchase or redemption of Capital Stock of the Issuers or any Parent Entity that is permitted by <u>Section</u> <u>3.3</u> and (b) Indebtedness consisting of obligations under deferred compensation or any other similar arrangements incurred in the ordinary course of business, consistent with past practice or in connection with any Investment or any acquisition (by merger, consolidation, amalgamation or otherwise);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) Indebtedness of the Issuer or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case incurred in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) Indebtedness in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness incurred pursuant to this clause and then outstanding, shall not exceed the greater of (i) $136 million and (ii) an amount equal to 100% of LTM EBITDA and any Refinancing Indebtedness in respect thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) Indebtedness in respect of any Qualified Securitization Financing or any Receivables Facility;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) any obligation, or guaranty of any obligation, of the Issuer or any Restricted Subsidiary to reimburse or indemnify a Person extending credit to customers of the Issuer or a Restricted Subsidiary incurred in the ordinary course of business or consistent with past practice for all or any portion of the amounts payable by such customers to the Person extending such credit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) Indebtedness to a customer to finance the acquisition of any equipment necessary to perform services for such customer; *provided* that the terms of such Indebtedness are consistent with those entered into with respect to similar Indebtedness prior to the Issue Date, including, if so consistent, that (1) the repayment of such Indebtedness is conditional upon such customer ordering a specific amount of goods or services and (2) such Indebtedness does not bear interest or provide for scheduled amortization or maturity;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) Indebtedness incurred by the Issuer or any of its Restricted Subsidiaries to the extent that the net proceeds thereof are promptly deposited with the Trustee to satisfy or discharge the Notes or exercise the Issuers' legal defeasance or covenant defeasance, in each case, in accordance with this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) (i) Indebtedness incurred by Foreign Subsidiaries that does not exceed the greater of (a) $23 million and (b) an amount equal to 16.7% of LTM EBITDA, and any Refinancing Indebtedness in respect thereof and (ii) Indebtedness of any Non-Guarantor Restricted Subsidiary that does not exceed the greater of (a) $45 million and (b) an amount equal to 33% of LTM EBITDA, and any Refinancing Indebtedness in respect thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) Indebtedness constituting (i) indemnification obligations or (ii) obligations in respect of purchase price (including earn-outs and seller notes) or other similar adjustments; provided that the aggregate principal amount of such Indebtedness at any one time outstanding incurred pursuant to this clause (ii) shall not exceed the greater of (a) $48 million and (b) an amount equal to 35% of LTM EBITDA, and any Refinancing Indebtedness in respect thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20) Indebtedness incurred on behalf of, or representing Guarantees of Indebtedness of, any Joint Ventures in an aggregate principal amount at any time outstanding not to exceed the greater of (a) $41 million and (b) an amount equal to 30% of LTM EBITDA, and any Refinancing Indebtedness in respect thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21) Indebtedness of the Issuer or any of its Restricted Subsidiaries arising pursuant to any Permitted Intercompany Activities, Permitted Tax Restructuring and related transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness incurred pursuant to and in compliance with, this <u>Section</u> <u>3.2</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) in the event that all or any portion of any item of Indebtedness meets the criteria of more than one of the types of Indebtedness described in <u>Sections 3.2(a) and (b)</u>, the Issuers, in their sole discretion, shall classify, and may from time to time reclassify, such item of Indebtedness (or any portion thereof) and only be required to include the amount and type of such Indebtedness in <u>Section</u> <u>3.2(a)</u> or one of the clauses of <u>Section</u> <u>3.2(b)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) additionally, all or any portion of any item of Indebtedness may later be reclassified as having been incurred pursuant to any type of Indebtedness described in <u>Section</u> <u>3.2(a)</u> or <u>(b)</u> so long as such Indebtedness is permitted to be incurred pursuant to such provision and any related Liens are permitted to be incurred at the time of reclassification (it being understood that any Indebtedness incurred pursuant to one of the clauses of <u>Section</u> <u>3.2(b)</u> shall cease to be deemed incurred or outstanding for purposes of such clause but shall be deemed incurred for the purposes of the <u>Section</u> <u>3.2(a)</u> from and after the first date on which the Issuer or its Restricted Subsidiaries could have incurred such Indebtedness under <u>Section</u> <u>3.2(a)</u> without reliance on such clause);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) all Indebtedness outstanding on the Issue Date under the Credit Agreement shall be deemed incurred on the Issue Date under <u>Section</u> <u>3.2(b)(1)</u>, with any Indebtedness outstanding under the Super-Priority Revolving Credit Facility on the Issue Date being deemed incurred on the Issue Date under subclause (c) thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) in the case of any Refinancing Indebtedness, when measuring the outstanding amount of such Indebtedness, such amount shall not include the aggregate amount of accrued and unpaid interest, dividends, premiums (including tender premiums), defeasance costs, underwriting discounts, fees, costs and expenses (including original issue discount, upfront fees or similar fees) in connection with such refinancing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Guarantees of, or obligations in respect of letters of credit, bankers' acceptances or other similar instruments relating to, or Liens securing, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) if obligations in respect of letters of credit, bankers' acceptances or other similar instruments are incurred pursuant to any Credit Facility and are being treated as incurred pursuant to <u>Section</u> <u>3.2(a)</u> or any clause of <u>Section</u> <u>3.2(b)</u> and the letters of credit, bankers' acceptances or other similar instruments relate to other Indebtedness, then such other Indebtedness shall not be included;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the principal amount of any Disqualified Stock of the Issuer or a Restricted Subsidiary, or Preferred Stock of the Co-Issuer or any other Restricted Subsidiary, will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Indebtedness permitted by this <u>Section</u> <u>3.2</u> need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this <u>Section</u> <u>3.2</u> permitting such Indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) for all purposes under this Indenture, including for purposes of calculating the Fixed Charge Coverage Ratio, the Consolidated Secured Leverage Ratio, the Consolidated Total Leverage Ratio or LTM EBITDA-based basket, as applicable, in connection with the incurrence, issuance or assumption of any Indebtedness pursuant to <u>Section</u> <u>3.2(a)</u> or <u>Section</u> <u>3.2(b)</u> or the incurrence or creation of any Lien pursuant to the definition of "Permitted Liens," the Issuer may elect, at its option, to treat all or any portion of the committed amount of any Indebtedness (and the issuance and creation of letters of credit and bankers' acceptances thereunder) which is to be incurred (or any commitment in respect thereof) or secured by such Lien, as the case may be (any such committed amount elected until revoked as described below, the "<u>Reserved Indebtedness Amount</u>"), as being incurred as of such election date, and, if such Fixed Charge Coverage Ratio,

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the Consolidated Secured Leverage Ratio, the Consolidated Total Leverage Ratio, LTM EBITDA-based basket or other provision of this Indenture, as applicable, is complied with (or satisfied) with respect thereto on such election date, any subsequent borrowing or reborrowing thereunder (and the issuance and creation of letters of credit and bankers' acceptances thereunder) will be deemed to be permitted under this <u>Section</u> <u>3.2</u> or the definition of "<u>Permitted Liens</u>," as applicable, whether or not the Fixed Charge Coverage Ratio, the Consolidated Secured Leverage Ratio, the Consolidated Total Leverage Ratio, LTM EBITDA-based basket or other provision of this Indenture, as applicable, at the actual time of any subsequent borrowing or reborrowing (or issuance or creation of letters of credit or bankers' acceptances thereunder) is complied with (or satisfied) for all purposes (including as to the absence of any continuing Default or Event of Default); provided that for purposes of subsequent calculations of the Fixed Charge Coverage Ratio, the Consolidated Secured Leverage Ratio, the Consolidated Total Leverage Ratio, LTM EBITDA-based basket or other provision of this Indenture, as applicable, the Reserved Indebtedness Amount shall be deemed to be outstanding, whether or not such amount is actually outstanding, for so long as such commitments are outstanding or until the Issuer revokes an election of a Reserved Indebtedness Amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) notwithstanding anything in this <u>Section</u> <u>3.2</u> to the contrary, in the case of any Indebtedness incurred to refinance Indebtedness initially incurred in reliance on <u>Section</u> <u>3.2(b)</u> measured by reference to a percentage of LTM EBITDA at the time of incurrence, if such refinancing would cause the percentage of LTM EBITDA restriction to be exceeded if calculated based on the percentage of LTM EBITDA on the date of such refinancing, such percentage of LTM EBITDA restriction shall not be deemed to be exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced, plus accrued and unpaid interest, dividends, premiums (including tender premiums), defeasance costs, underwriting discounts, fees, costs and expenses (including original issue discount, upfront fees or similar fees) in connection with such refinancing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

Accrual of interest, accrual of dividends, the accretion of accreted value, the accretion or amortization of original issue discount, the payment of interest in the form of additional Indebtedness, the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock or the reclassification of commitments or obligations not treated as Indebtedness due to a change in GAAP, shall not be deemed to be an incurrence of Indebtedness for purposes of this <u>Section</u> <u>3.2</u>.

If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under this <u>Section</u> <u>3.2</u>, the Issuers shall be in default of this <u>Section</u> <u>3.2</u>).

For purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, the Dollar equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided, that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such

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refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed (a) the principal amount of such Indebtedness being refinanced plus (b) the aggregate amount of accrued and unpaid interest, dividends, premiums (including tender premiums) defeasance costs, underwriting discounts, fees, costs and expenses (including original issue discount, upfront fees or similar fees) in connection with such refinancing.

Notwithstanding any other provision of this <u>Section</u> <u>3.2</u>, the maximum amount of Indebtedness that the Issuer or a Restricted Subsidiary may incur pursuant to this <u>Section</u> <u>3.2</u> shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.

Section 3.3 <u>Limitation on Restricted Payments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries, directly or indirectly, to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) declare or pay any dividend or make any distribution on or in respect of the Issuer's or any Restricted Subsidiary's Capital Stock (including any such payment in connection with any merger or consolidation involving the Issuer or any of the Restricted Subsidiaries) except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) dividends, payments or distributions payable in Capital Stock of the Issuer (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock of the Issuer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) dividends, payments or distributions payable to the Issuer or a Restricted Subsidiary (and, in the case of any such Restricted Subsidiary making such dividend or distribution, to holders of its Capital Stock other than the Issuer or another Restricted Subsidiary on no more than a *pro rata* basis);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) purchase, repurchase, redeem, retire or otherwise acquire or retire for value any Capital Stock of the Issuer or any Parent Entity held by Persons other than the Issuer or a Restricted Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Indebtedness, other than: (i) any such purchase, repurchase, redemption, defeasance or other acquisition or retirement in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case, due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement and (ii) any such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Indebtedness owing to the Issuers or a Guarantor incurred pursuant to <u>Section</u> <u>3.2(b)(3)</u>); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) make any Restricted Investment;

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(any such dividend, distribution, payment, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (4) above are referred to herein as a "<u>Restricted Payment</u>"), if at the time the Issuer or such Restricted Subsidiary makes such Restricted Payment:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) in the case of a Restricted Payment other than a Restricted Investment, an Event of Default shall have occurred and be continuing (or would immediately thereafter result therefrom);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) in the case of a Restricted Payment, other than a Restricted Investment, the Issuers are not able to incur an additional $1.00 of Indebtedness pursuant to <u>Section</u> <u>3.2(a)</u> immediately after giving effect, on a pro forma basis, to such Restricted Payment; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the aggregate amount of such Restricted Payment and all other Restricted Payments made subsequent to the Credit Agreement Reference Date (and not returned or rescinded) (including Permitted Payments made pursuant to <u>Section</u> <u>3.3(b)(1)</u> (without duplication) and <u>Section</u> <u>3.3(b)(7)</u>, but excluding all other Restricted Payments permitted by <u>Section</u> <u>3.3(b)</u>) would exceed the sum of (without duplication) (the "<u>Available Amount</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) 50% of Consolidated Net Income for the period (treated as one accounting period) from the Credit Agreement Reference Date to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which consolidated financial statements are available (which may, at the Issuer's election, be internal financial statements);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) 100% of the aggregate amount of cash, and the Fair Market Value of property or assets or marketable securities, received by the Issuer from the issue or sale of its Capital Stock or as the result of a merger or consolidation with another Person subsequent to the Credit Agreement Reference Date or otherwise contributed to the equity (in each case other than through the issuance of Disqualified Stock or Designated Preferred Stock) of the Issuer or a Restricted Subsidiary (including the aggregate principal amount of any Indebtedness of the Issuer or a Restricted Subsidiary contributed to the Issuer or a Restricted Subsidiary for cancellation) or that becomes part of the capital of the Issuer or a Restricted Subsidiary through consolidation or merger subsequent to the Credit Agreement Reference Date (other than (x) net cash proceeds or property or assets or marketable securities received from an issuance or sale of such Capital Stock to a Restricted Subsidiary or an employee stock ownership plan or trust established a Parent Entity, the Issuer or any Subsidiary of the Issuer for the benefit of their employees to the extent funded by the Issuer or any Restricted Subsidiary, (y) cash or property or assets or marketable securities to the extent that any Restricted Payment has been made from such proceeds in reliance on <u>Section</u> <u>3.3(b)(6)</u> and (z) Excluded Contributions);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) 100% of the aggregate amount of cash, and the Fair Market Value of property or assets or marketable securities, received by the Issuer or any Restricted Subsidiary from the issuance or sale (other than to the Issuer or a Restricted Subsidiary or an employee stock ownership plan or trust established by a Parent Entity, the Issuer or any Subsidiary of the Issuer for the benefit of their employees to the extent funded by the Issuer or any Restricted Subsidiary) by the Issuer or any Restricted Subsidiary subsequent to the Credit Agreement Reference Date of any Indebtedness, Disqualified Stock or Designated Preferred Stock that has been converted into or exchanged for Capital Stock of the Issuer (other than Disqualified Stock or Designated Preferred Stock) plus, without duplication, the amount of any cash, and the Fair Market Value of property or assets or marketable securities, received by the Issuer or any Restricted Subsidiary upon such conversion or exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) 100% of the aggregate amount received in cash and the Fair Market Value, as determined in good faith by the Issuer, of marketable securities or other property received by means of: (i) the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) of, or other returns on Investment from, Restricted Investments made by the Issuer or the Restricted Subsidiaries and repurchases and redemptions of, or cash distributions or cash interest received in respect of, such Investments from the Issuer or the Restricted Subsidiaries and repayments of loans or advances, and releases of guarantees, which constitute Restricted Investments by the Issuer or the Restricted Subsidiaries, in each case after the Credit Agreement Reference Date; or (ii) the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) of the Capital Stock of an Unrestricted Subsidiary or a dividend, payment or distribution from an Unrestricted Subsidiary (other than to the extent of the amount of the Investment that constituted a Permitted Investment or was made under <u>Section</u> <u>3.3(b)(17)</u> and will increase the amount available under the applicable clause of the definition of "<u>Permitted</u> <u>Investment</u>" or <u>Section</u> <u>3.3(b)(17)</u>, as the case may be) or a dividend from a Person that is not a Restricted Subsidiary after the Credit Agreement Reference Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary or the merger, amalgamation or consolidation of an Unrestricted Subsidiary into the Issuer or a Restricted Subsidiary or the transfer of all or substantially all of the assets of an Unrestricted Subsidiary to the Issuer or a Restricted Subsidiary after the Credit Agreement Reference Date, the Fair Market Value of the Investment in such Unrestricted Subsidiary (or the assets transferred), as determined in good faith by the Issuer at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary or at the time of such merger, amalgamation or consolidation or transfer of assets (after taking into consideration any Indebtedness associated with the Unrestricted Subsidiary so designated or merged, amalgamated or consolidated or Indebtedness associated with the assets so transferred), other than to the extent of the amount of the Investment that constituted a Permitted Investment or was made under <u>Section</u> <u>3.3(b)(17)</u> and will increase the amount available under the applicable clause of the definition of "<u>Permitted Investment</u>" or <u>Section</u> <u>3.3(b)(17)</u>, as the case may be; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F) the sum of (a) the greater of (x) $102 million and (y) an amount equal to 75% of LTM EBITDA; plus (b) any Declined Excess Proceeds; plus (c) any Declined Collateral Excess Proceeds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Section 3.3(a)</u> shall not prohibit any of the following (collectively, "<u>Permitted Payments</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Indenture or the redemption, repurchase or retirement of Indebtedness if, at the date of any redemption notice, such payment would have complied with the provisions of this Indenture as if it were and is deemed at such time to be a Restricted Payment at the time of such notice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) (a) any prepayment, purchase, repurchase, redemption, defeasance, discharge, retirement or other acquisition of Capital Stock, including any accrued and unpaid dividends thereon ("<u>Treasury Capital Stock</u>") or Subordinated Indebtedness made by exchange (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares) for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Issuer or any Parent Entity to the extent contributed to the Issuer (in each case, other than Disqualified Stock or Designated Preferred Stock) ("<u>Refunding Capital Stock</u>"), (b) the declaration and payment of dividends on Treasury Capital Stock out of the proceeds of the substantially concurrent sale or issuance (other than to a Subsidiary of the Issuer or to an employee stock ownership plan or any trust established by a Parent Entity, the Issuer or any of its Subsidiaries) of Refunding Capital Stock and (c) if immediately prior to the retirement of Treasury Capital Stock, the declaration and payment of dividends thereon was permitted under <u>Section</u> <u>3.3(b)(13)</u>, the declaration and payment of dividends on the Refunding Capital Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any Capital Stock of a Parent Entity) in an aggregate amount per year no greater than the aggregate amount of dividends per annum that were declarable and payable on such Treasury Capital Stock immediately prior to such retirement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any prepayment, purchase, repurchase, exchange, redemption, defeasance, discharge, retirement or other acquisition of Subordinated Indebtedness made by exchange for, or out of the proceeds of the substantially concurrent sale of, Refinancing Indebtedness permitted to be incurred pursuant to <u>Section</u> <u>3.2</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) any prepayment, purchase, repurchase, exchange, redemption, defeasance, discharge, retirement or other acquisition of Preferred Stock of the Issuer or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Preferred Stock of the Issuer or a Restricted Subsidiary, as the case may be, that, in each case, is permitted to be incurred pursuant to <u>Section</u> <u>3.2</u>;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) any prepayment, purchase, repurchase, redemption, defeasance, discharge, retirement or other acquisition of Subordinated Indebtedness of the Issuer or a Restricted Subsidiary:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) from net cash proceeds to the extent permitted under <u>Section</u> <u>3.5</u>, but only if the Issuer shall have first complied with <u>Section</u> <u>3.5</u> and purchased all Notes tendered pursuant to any offer to repurchase all the Notes required thereby, prior to prepaying, purchasing, repurchasing, redeeming, defeasing, discharging, retiring or otherwise acquiring such Subordinated Indebtedness; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to the extent required by the agreement governing such Subordinated Indebtedness, following the occurrence of (i) a Change of Control (or other similar event described therein as a "<u>change of control</u>") or (ii) an Asset Disposition (or other similar event described therein as an "asset disposition" or "asset sale"), but only if the Issuers shall have first complied with <u>Section</u> <u>3.5</u> or <u>Section</u> <u>3.9</u>, as applicable, and purchased all Notes tendered pursuant to the offer to repurchase all the Notes required thereby, prior to purchasing, repurchasing, redeeming, defeasing or otherwise acquiring or retiring such Subordinated Indebtedness; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) consisting of Acquired Indebtedness (other than Indebtedness incurred (A) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was otherwise acquired by the Issuer or a Restricted Subsidiary or (B) otherwise in connection with or contemplation of such acquisition);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) a Restricted Payment to pay for the prepayment, purchase, repurchase, redemption, defeasance, discharge, retirement or other acquisition of Capital Stock of the Issuer or any Parent Entity held by any future, present or former employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer, any of its Subsidiaries or any Parent Entity pursuant to any management equity plan, stock option plan, phantom equity plan or any other management, employee benefit or other compensatory plan or agreement (and any successor plans or arrangements thereto), employment, termination or severance agreement, or any stock subscription or equityholder agreement (including, for the avoidance of doubt, any principal and interest payable on any Indebtedness issued by the Issuer or any Parent Entity in connection with such prepayment, purchase, repurchase, redemption, defeasance, discharge, retirement or other acquisition), including any Capital Stock rolled over, accelerated or paid out by or to any employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer, any of its Subsidiaries or any Parent Entity in connection with any transaction; *provided, however*, that the aggregate Restricted Payments made under this clause do not exceed (x) the greater of (i) $14 million and (ii) an amount equal to 10% of LTM EBITDA in any fiscal year (with unused amounts in any fiscal year being carried over to succeeding fiscal years) or (y) subsequent to the consummation of a Qualifying IPO of the Issuer or any Parent Entity, the greater of (i) $18 million and (ii) an amount equal to 13% of LTM EBITDA in any fiscal year (with unused amounts in any fiscal year being carried over to succeeding fiscal years); provided, further, that such amount in any fiscal year may be increased by an amount not to exceed:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the cash proceeds from the sale of Capital Stock (other than Disqualified Stock) of the Issuer and, to the extent contributed to the capital of the Issuer, the cash proceeds from the sale of Capital Stock of any Parent Entity, in each case, to any future, present or former employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer, any of its Subsidiaries or any Parent Entity that occurred after the Issue Date, to the extent the cash proceeds from the sale of such Capital Stock have not otherwise been applied to the payment of Restricted Payments by virtue of <u>Section</u> <u>3.3(a)(iii)</u>; *plus*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the cash proceeds of key man life insurance policies received by the Issuer or its Restricted Subsidiaries (or any Parent Entity to the extent contributed to the Issuer) after the Issue Date; *less*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the amount of any Restricted Payments made in previous calendar years pursuant to clauses (i) and (ii) of this clause (6);

*provided*, that the Issuer may elect to apply all or any portion of the aggregate increase contemplated by subclauses (a) and (b) of this clause in any fiscal year; *provided, further,* that (i) cancellation of Indebtedness owing to the Issuer or any Restricted Subsidiary from any future, present or former employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer or Restricted Subsidiaries or any Parent Entity in connection with a repurchase of Capital Stock of the Issuer or any Parent Entity and (ii) the repurchase of Capital Stock deemed to occur upon the exercise of options, warrants or similar instruments if such Capital Stock represents all or a portion of the exercise price thereof and payments, in lieu of the issuance of fractional shares of such Capital Stock or withholding to pay other Taxes payable in connection therewith, in the case of each of clauses (i) and (ii), shall not be deemed to constitute a Restricted Payment for purposes of this <u>Section</u> <u>3.3</u> or any other provision of this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the declaration and payment of dividends on Disqualified Stock of the Issuer or any of its Restricted Subsidiaries or Preferred Stock of a Restricted Subsidiary, issued in accordance with <u>Section</u> <u>3.2</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) payments made or expected to be made by the Issuer or any Restricted Subsidiary in respect of withholding or similar Taxes payable in connection with the exercise or vesting of Capital Stock or any other equity award by any future, present or former employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer or any Restricted Subsidiary or any Parent Entity and purchases, repurchases, redemptions, defeasances or other acquisitions or retirements of Capital Stock deemed to occur upon the exercise, conversion or exchange of stock options, warrants, equity-based awards or other rights in respect thereof if such Capital Stock represents a portion of the exercise price thereof or payments in respect of withholding or similar Taxes payable upon exercise or vesting thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) dividends, loans, advances or distributions to any Parent Entity or other payments by the Issuer or any Restricted Subsidiary in amounts equal to (without duplication):

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the amounts required for any Parent Entity to pay or distribute any Parent Entity Expenses or any Related Taxes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) amounts constituting or to be used for purposes of making payments to the extent specified in <u>Sections 3.8(b)(2)</u>, (<u>3)</u>, (<u>5)</u>, (<u>11)</u>, <u>(12)</u>, <u>(13)</u>, <u>(15)</u> and <u>(19)</u>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) up to the greater of (i) $1 million and (ii) an amount equal to 1% of LTM EBITDA per calendar year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) (a) the declaration and payment of dividends on the common stock or common equity interests of the Issuer or any Parent Entity (and any equivalent declaration and payment of a distribution of any security exchangeable for such common stock or common equity interests to the extent required by the terms of any such exchangeable securities and any Restricted Payment to any such Parent Entity to fund the payment by such Parent Entity of dividends on such entity's Capital Stock), following a public offering of such common stock or common equity interests (or such exchangeable securities, as applicable), in an amount in any fiscal year not to exceed the sum of (i) 6% of the amount of net cash proceeds received by or contributed to the Issuer or any of its Restricted Subsidiaries from any such public offering and (ii) 7% of Market Capitalization; or (b) in lieu of all or a portion of the dividends permitted by clause (a), any prepayment, purchase, repurchase, redemption, defeasance, discharge, retirement or other acquisition of the Issuer's Capital Stock (and any equivalent declaration and payment of a distribution of any security exchangeable for such common stock or common equity interests to the extent required by the terms of any such exchangeable securities and any Restricted Payment to any such Parent Entity to fund the payment by such Parent Entity of dividends on such entity's Capital Stock) for aggregate consideration that, when taken together with dividends permitted by clause (a), does not exceed the amount contemplated by clause (a);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) payments by the Issuer, or loans, advances, dividends or distributions to any Parent Entity to make payments, to holders of Capital Stock of the Issuer or any Parent Entity in lieu of the issuance of fractional shares of such Capital Stock; *provided*, *however*, that any such payment, loan, advance, dividend or distribution shall not be for the purpose of evading any limitation of this <u>Section</u> <u>3.3</u> or otherwise to facilitate any dividend or other return of capital to the holders of such Capital Stock (as determined in good faith by the Issuer);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) Restricted Payments that are made (a) in an amount not to exceed the amount of Excluded Contributions or (b) in an amount equal to the amount of net cash proceeds from an asset sale or disposition in respect of property or assets acquired, if the acquisition of such property or assets was financed with Excluded Contributions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) (i) the declaration and payment of dividends on Designated Preferred Stock of the Issuer or any of its Restricted Subsidiaries issued after the Issue Date; (ii) the declaration and payment of dividends to a Parent Entity in an amount sufficient to allow the Parent Entity to pay dividends to holders of its Designated Preferred Stock issued after the Issue Date; and (iii) the declaration and payment of dividends on Refunding Capital Stock that is Preferred Stock; *provided*, *however*, that, in the case of clause (ii), the amount of dividends paid to a Person pursuant to such clause shall not exceed the cash proceeds received by the Issuer or

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the aggregate amount contributed in cash to the equity of the Issuer (other than through the issuance of Disqualified Stock or an Excluded Contribution of the Issuer), from the issuance or sale of such Designated Preferred Stock; *provided further*, in the case of clauses (i) and (iii), that for the most recently ended four fiscal quarters for which consolidated financial statements are available (which may, at the Issuer's election, be internal financial statements) immediately preceding the date of issuance of such Designated Preferred Stock or declaration of such dividends on such Refunding Capital Stock, after giving effect to such payment on a pro forma basis the Issuer and its Restricted Subsidiaries would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the test set forth in <u>Section</u> <u>3.2(a)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) distributions, by dividend or otherwise, or other transfer or disposition of shares of Capital Stock of, or equity interests in, an Unrestricted Subsidiary (or a Restricted Subsidiary that owns one or more Unrestricted Subsidiaries and no other material assets), or Indebtedness owed to the Issuer or a Restricted Subsidiary by an Unrestricted Subsidiary (or a Restricted Subsidiary that owns one or more Unrestricted Subsidiaries and no other material assets), in each case, other than Unrestricted Subsidiaries, substantially all of the assets of which are cash and Cash Equivalents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) distributions or payments of Securitization Fees, sales contributions and other transfers of Securitization Assets or Receivables Assets and purchases of Securitization Assets or Receivables Assets pursuant to a Securitization Repurchase Obligation, in each case in connection with a Qualified Securitization Financing or Receivables Facility;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) any Restricted Payment made in connection with the Transactions and any fees, costs and expenses (including all legal, accounting and other professional fees, costs and expenses) related thereto, including Transaction Expenses, or used to fund amounts owed to Affiliates in connection with the Transactions (including dividends to any Parent Entity to permit payment by such Parent Entity of such amounts);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) (i) so long as, immediately after giving pro forma effect to the payment of any such Restricted Payment and the incurrence of any Indebtedness the net proceeds of which are used to make such Restricted Payment, no Default or Event of Default has occurred and is continuing (or would result therefrom), Restricted Payments (including loans or advances) in an aggregate amount outstanding at the time made not to exceed the greater of (x) 102 million and (y) an amount equal to 75% of LTM EBITDA at such time, and (ii) any Restricted Payments, so long as, immediately after giving pro forma effect to the payment of any such Restricted Payment and the incurrence of any Indebtedness the net proceeds of which are used to make such Restricted Payment, (A) no Default or Event of Default has occurred and is continuing (or would result therefrom) and (B) the Consolidated Total Leverage Ratio shall be no greater than 4.00 to 1.00;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) mandatory redemptions of Disqualified Stock issued as a Restricted Payment or as consideration for a Permitted Investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) payments or distributions to dissenting stockholders pursuant to applicable Law (including in connection with, or as a result of, exercise of dissenters' or appraisal rights and the settlement of any claims or action (whether actual, contingent or potential)), pursuant to or in connection with a merger, amalgamation, consolidation or transfer of assets that complies with <u>Section</u> <u>4.1</u> hereof;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20) Restricted Payments to a Parent Entity to finance Investments that would otherwise be permitted to be made pursuant to this <u>Section</u> <u>3.3</u> if made by the Issuer; *provided* that (a) such Restricted Payment shall be made substantially concurrently with the closing of such Investment, (b) such Parent Entity shall, promptly following the closing thereof, cause (1) all property acquired (whether assets or Capital Stock) to be contributed to the capital of the Issuer or one of its Restricted Subsidiaries or (2) the merger or amalgamation of the Person formed or acquired into the Issuer or one of its Restricted Subsidiaries (to the extent not prohibited by <u>Section</u> <u>4.1</u>) to consummate such Investment, (c) such Parent Entity and its Affiliates (other than the Issuer or a Restricted Subsidiary) receives no consideration or other payment in connection with such transaction except to the extent the Issuer or a Restricted Subsidiary could have given such consideration or made such payment in compliance with this Indenture, (d) any property received by the Issuer shall not increase the Available Amount, except to the extent the Fair Market Value at the time of such receipt of such property exceeds the Restricted Payments made pursuant to this clause and (e) such Investment shall be deemed to be made by the Issuer or such Restricted Subsidiary pursuant to another provision of this <u>Section</u> <u>3.3</u> (other than pursuant to <u>Section</u> <u>3.3(b)(12)</u> hereof) or pursuant to the definition of "<u>Permitted</u> <u>Investment</u>" (other than pursuant to clause (12) thereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21) any Restricted Payment made in connection with a Permitted Intercompany Activity, Permitted Tax Restructuring or related transactions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22) the making of (i) cash payments made by the Issuer or any of its Restricted Subsidiaries in satisfaction of the conversion obligation upon conversion of convertible Indebtedness issued in a convertible notes offering (it being understood that the satisfaction of such conversion obligation in cash shall not increase the Available Amount) and (ii) any payments by the Issuer or any of its Restricted Subsidiaries pursuant to the initiation, exercise, settlement or termination of any related capped call, hedge, warrant or other similar transactions.

For purposes of determining compliance with this <u>Section</u> <u>3.3</u>, in the event that a Restricted Payment or Investment (or portion thereof) meets the criteria of more than one of the categories of Permitted Payments described in the clauses above, or is permitted pursuant to <u>Section</u> <u>3.3(a)</u> and/or one or more of the clauses contained in the definition of "<u>Permitted Investment</u>," the Issuer will be entitled to divide or classify (or later divide, classify or reclassify in whole or in part in its sole discretion) such Restricted Payment or Investment (or portion thereof) in any manner that complies with this <u>Section</u> <u>3.3</u>, including as an Investment pursuant to one or more of the clauses contained in the definition of "<u>Permitted Investment</u>."

For the avoidance of doubt, a Restricted Payment or Investment (or portion thereof) may be reclassified at a time subsequent to the time it was originally made, so long as such Restricted Payment or Investment (or portion thereof) would have been able to have been made at the time of such reclassification pursuant to the provision to which such Restricted Payment or Investment (or portion thereof) is being reclassified.

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The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The Fair Market Value of any cash Restricted Payment shall be its face amount, and the Fair Market Value of any non-cash Restricted Payment, property or assets other than cash shall be determined conclusively by the Issuer acting in good faith.

In connection with any commitment, definitive agreement or similar event relating to an Investment, the Issuer or applicable Restricted Subsidiary may designate such Investment as having occurred on the date of the commitment, definitive agreement or similar event relating thereto (such date, the "<u>Election Date</u>") if, after giving pro forma effect to such Investment and all related transactions in connection therewith and any related pro forma adjustments, the Issuer or any of its Restricted Subsidiaries would have been permitted to make such Investment on the relevant Election Date in compliance with this Indenture, and any related subsequent actual making of such Investment will be deemed for all purposes under this Indenture to have been made on such Election Date, including for purposes of calculating any ratio, compliance with any test, usage of any baskets hereunder (if applicable) and Consolidated EBITDA and for purposes of determining whether there exists any Default or Event of Default (and all such calculations on and after the Election Date until the termination, expiration, passing, rescission, retraction or rescindment of such commitment, definitive agreement or similar event shall be made on a pro forma basis giving effect thereto and all related transactions in connection therewith).

Unrestricted Subsidiaries may use value transferred from the Issuer and its Restricted Subsidiaries in a Permitted Investment to purchase or otherwise acquire Indebtedness or Capital Stock of the Issuer, any Parent Entity or any of the Issuer's Restricted Subsidiaries, and to transfer value to the holders of the Capital Stock of the Issuer or any Restricted Subsidiary or any Parent Entity and to Affiliates thereof, and such purchase, acquisition, or transfer shall not be deemed to be a "direct or indirect" action by the Issuer or its Restricted Subsidiaries.

If the Issuer or a Restricted Subsidiary makes a Restricted Payment which at the time of the making of such Restricted Payment would in the good faith determination of the Issuer be permitted under the provisions of this Indenture, such Restricted Payment shall be deemed to have been made in compliance with this Indenture notwithstanding any subsequent adjustments made in good faith to the Issuer's financial statements affecting Consolidated Net Income or Consolidated EBITDA of the Issuer for any period.

For the avoidance of doubt, this <u>Section</u> <u>3.3</u> shall not restrict the making of, or dividends or other distributions in amounts sufficient to make, any AHYDO Payment with respect to any Indebtedness of any Parent Entity, the Issuer or any of its Restricted Subsidiaries permitted to be incurred under this Indenture. For the avoidance of doubt, any dividend or distribution otherwise permitted pursuant to the foregoing may instead be made as a loan or advance.

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Section 3.4 <u>Limitation on Restrictions on Distributions from Restricted Subsidiaries</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Issuers shall not, and the Issuers shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) pay dividends or make any other distributions in cash or otherwise on its Capital Stock or pay any Indebtedness or other obligations owed to the Issuer or any Restricted Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) make any loans or advances to the Issuer or any Restricted Subsidiary; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) sell, lease or transfer any of its property or assets to the Issuer or any Restricted Subsidiary;

*provided* that (x) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock and (y) the subordination of (including the application of any standstill requirements to) loans or advances made to the Issuer or any Restricted Subsidiary to other Indebtedness incurred by the Issuer or any Restricted Subsidiary shall not be deemed to constitute such an encumbrance or restriction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The provisions of <u>Section</u> <u>3.4(a)</u> shall not prohibit:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any encumbrance or restriction pursuant to any Credit Facility or any other agreement or instrument, in each case, in effect at or entered into on the Issue Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any encumbrance or restriction pursuant to the Notes Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any encumbrance or restriction pursuant to applicable Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) any encumbrance or restriction pursuant to an agreement or instrument of a Person or relating to any Capital Stock or Indebtedness of a Person, entered into on or before the date on which such Person was acquired by or merged, consolidated or otherwise combined with or into the Issuer or any Restricted Subsidiary, or was designated as a Restricted Subsidiary or on which such agreement or instrument is assumed by the Issuer or any Restricted Subsidiary in connection with an acquisition of assets (other than Capital Stock or Indebtedness incurred as consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was acquired by the Issuer or a Restricted Subsidiary or was merged, consolidated or otherwise combined with or into the Issuer or any Restricted Subsidiary or entered into in contemplation of or in connection with such transaction) and outstanding on such date; *provided* that, for the purposes of this clause (4), if another Person is the Successor Company (as defined below), any Subsidiary thereof or agreement or instrument of such Person or any such Subsidiary shall be deemed acquired or assumed by the Issuer or any Restricted Subsidiary when such Person becomes the Successor Company;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) any encumbrance or restriction: (i) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract or agreement, or the assignment or transfer of any lease, license or other contract or agreement; (ii) contained in mortgages, pledges, charges or other security agreements permitted under this Indenture or securing Indebtedness of the Issuer or a Restricted Subsidiary permitted under this Indenture to the extent such encumbrances or restrictions restrict the transfer or encumbrance of the property or assets subject to such mortgages, pledges, charges or other security agreements; (iii) contained in any trading, netting, operating, construction, service, supply, purchase, sale or other agreement to which the Issuer or any of its Restricted Subsidiaries is a party entered into in the ordinary course of business or consistent with past practice; *provided* that such agreement prohibits the encumbrance of solely the property or assets of the Issuer or such Restricted Subsidiary that are subject to such agreement, the payment rights arising thereunder or the proceeds thereof and does not extend to any other asset or property of the Issuer or such Restricted Subsidiary or the assets or property of another Restricted Subsidiary; or (iv) pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Issuer or any Restricted Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) any encumbrance or restriction pursuant to Purchase Money Obligations and Capitalized Lease Obligations permitted under this Indenture, in each case, that impose encumbrances or restrictions on the property so acquired;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) any encumbrance or restriction imposed pursuant to an agreement entered into for the direct or indirect sale or disposition to a Person of all or substantially all of the Capital Stock or assets of the Issuer or any Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) customary provisions in leases, licenses, equityholder agreements, joint venture agreements, organizational documents and other similar agreements and instruments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order, or required by any regulatory authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) any encumbrance or restriction on cash or other deposits or net worth imposed by customers under agreements entered into in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) any encumbrance or restriction pursuant to Hedging Obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) other Indebtedness of Foreign Subsidiaries permitted to be incurred or issued subsequent to the Issue Date pursuant to <u>Section</u> <u>3.2</u> that impose restrictions solely on the Foreign Subsidiaries party thereto or their Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) restrictions created in connection with any Qualified Securitization Financing or Receivables Facility that, in the good faith determination of the Issuer, are necessary or advisable to effect such Securitization Facility or Receivables Facility;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) any encumbrance or restriction arising pursuant to an agreement or instrument relating to any Indebtedness permitted to be incurred subsequent to the Issue Date pursuant to <u>Section</u> <u>3.2</u> if the encumbrances and restrictions contained in any such agreement or instrument (i) taken as a whole, are not materially less favorable to the Holders than the encumbrances and restrictions contained in the Credit Agreement, together with the collateral or other documents associated therewith, or this Indenture as in effect on the Issue Date, (ii) at the time of entry into such agreement or instrument, are determined by the Issuer in good faith to not adversely affect, in any material respect, the Issuers' ability to make principal or interest payments on the Notes or (iii) apply only during the continuance of a default in respect of a payment relating to such agreement or instrument;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) any encumbrance or restriction existing by reason of any Lien permitted under <u>Section</u> <u>3.6</u>; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) any encumbrance or restriction pursuant to an agreement or instrument effecting a refinancing of Indebtedness incurred pursuant to, or that otherwise refinances, an agreement or instrument referred to in the clauses above or this clause (16) (an "<u>Initial Agreement</u>") or contained in any amendment, supplement or other modification to an agreement referred to in the clauses above or this clause (16); *provided*, *however*, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement or instrument (i) are no less favorable in any material respect to the Holders taken as a whole than the encumbrances and restrictions contained in the Initial Agreement or Initial Agreements to which such refinancing or amendment, supplement or other modification relates (as determined in good faith by the Issuer) or (ii) are determined by the Issuer in good faith, at the time of entering into such refinancing, amendment, supplement or other modification, will not adversely affect, in any material respect, the Issuers' ability to make principal or interest payments on the Notes.

Section 3.5 <u>Limitation on Sales of Assets and Subsidiary Stock</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Issuers shall not, and the Issuers shall not permit any Restricted Subsidiary to, make any Asset Disposition unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at least equal to the Fair Market Value (such Fair Market Value to be determined on the date of contractually agreeing to such Asset Disposition), as determined in good faith by the Issuer, of the shares and assets subject to such Asset Disposition (including, for the avoidance of doubt, if such Asset Disposition is a Permitted Asset Swap);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in any such Asset Disposition, or series of related Asset Dispositions (except to the extent the Asset Disposition is a Permitted Asset Swap), with a purchase price in excess of the greater of (i) $14 million and (ii) an amount equal to 10% of LTM EBITDA, at least 75% of the consideration from such Asset Disposition, together with all other Asset Dispositions since the Issue Date (on a cumulative basis), (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) received by the Issuer or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) within 450 days from the later of (A) the date of such Asset Disposition and (B) the receipt of the Net Available Cash from such Asset Disposition (as may be extended by an Acceptable Commitment as set forth below, the "<u>Proceeds Application Period</u>"), an amount equal to the Net Available Cash (the "<u>Applicable Proceeds</u>") is applied, to the extent the Issuer or any Restricted Subsidiary, as the case may be, elects:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) (A) to the extent such Applicable Proceeds are from an Asset Disposition of Collateral, (x) to reduce, prepay, repay or purchase any Super-Priority Indebtedness or Other Pari Lien Obligations or (y) to make an offer (in accordance with the procedures set forth below for a Collateral Asset Disposition Offer or Asset Disposition Offer), redeem Notes as described under <u>Section</u> <u>5.7</u> or purchase Notes through open-market purchases or in privately negotiated transactions (in each case, other than Indebtedness owed to the Issuer or any Restricted Subsidiary); *provided, however*, that, in connection with any reduction, prepayment, repayment or purchase of Indebtedness pursuant to this clause (i), the Issuer or such Restricted Subsidiary will retire such Indebtedness and will cause the related commitment (other than obligations in respect of any revolving credit facility (including Indebtedness under the Credit Agreement or any Refinancing Indebtedness in respect thereof)) to be reduced in an amount equal to the principal amount so reduced, prepaid, repaid or purchased;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) to the extent such Applicable Proceeds are from an Asset Disposition that does not constitute Collateral, (w) to reduce, prepay, repay or purchase any Indebtedness secured by a Lien on such asset, (x) to reduce, prepay, repay or purchase Super-Priority Indebtedness or Pari Passu Indebtedness; (y) to make an offer (in accordance with the procedures set forth below for an Asset Disposition Offer), redeem Notes as described under <u>Section</u> <u>5.7</u> or purchase Notes through open-market purchases or in privately negotiated transactions, or (z) to reduce, prepay, repay or purchase any Indebtedness of a Non-Guarantor Restricted Subsidiary (in each case, other than Indebtedness owed to the Issuer or any Restricted Subsidiary); provided, however, that, in connection with any reduction, prepayment, repayment or purchase of Indebtedness pursuant to this clause (i), the Issuer or such Restricted Subsidiary will retire such Indebtedness and will cause the related commitment (other than obligations in respect of any revolving credit facility (including Indebtedness under the Credit Agreement or any Refinancing Indebtedness in respect thereof)) to be reduced in an amount equal to the principal amount so reduced, prepaid, repaid or purchased;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) (a) to invest (including capital expenditures) in or commit to invest in Additional Assets (including by means of an investment in Additional Assets by a Restricted Subsidiary); or (b) to invest (including capital expenditures) in any one or more businesses (provided that any such business shall be a Restricted Subsidiary), properties or assets that replace the businesses, properties and/or assets that are the subject of such Asset Disposition, with any such investment made by way of a capital or other lease valued at the present value of the minimum amount of payments under such lease (as reasonably determined by the Issuer); provided, however, that a binding agreement shall be treated as a permitted application of Applicable Proceeds from the date of such commitment with the good faith expectation that an amount equal to the Applicable Proceeds will be applied to satisfy such commitment within 180 days of such commitment (an "<u>Acceptable Commitment</u>"); or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) any combination of the foregoing;

*provided* that (I) pending the final application of the amount of any such Applicable Proceeds pursuant to this <u>Section</u> <u>3.5</u>, the Issuer or the applicable Restricted Subsidiaries may apply such Applicable Proceeds temporarily to reduce Indebtedness (including under the Credit Facilities) or otherwise apply such Applicable Proceeds in any manner not prohibited by this Indenture (II) the Issuer (or any Restricted Subsidiary, as the case may be) may elect to invest in Additional Assets prior to receiving the Applicable Proceeds attributable to any given Asset Disposition (provided that such investment shall be made no earlier than the earliest of notice to the Trustee of the relevant Asset Disposition, execution of a definitive agreement for the relevant Asset Disposition, and consummation of the relevant Asset Disposition) and deem the amount so invested to be applied pursuant to and in accordance with clause (ii) above with respect to such Asset Disposition; and (III) the determinations as to compliance with clauses (1) and (2) above may be made, at the Issuers' option, either (x) at the time such Asset Disposition is completed or (y) at the time a definitive agreement is entered into with respect to such Asset Disposition.

If, with respect to any Asset Disposition of Collateral, at the expiration of the Proceeds Application Period with respect to such Asset Disposition, there remains Applicable Proceeds in excess of the greater of (i) $23 million and (ii) an amount equal to 16.7% of LTM EBITDA (the "<u>Applicable Proceeds Threshold Amount</u>"), then subject to the limitations with respect to Foreign Dispositions set forth below, the Issuers shall make an offer (a "<u>Collateral Asset Disposition Offer</u>") no later than ten Business Days after the expiration of the Proceeds Application Period to all Holders of Notes and, if required by the terms of any Other Pari Lien Obligations, to all holders of such Other Pari Lien Obligations, to purchase the maximum principal amount of such Notes or such Other Pari Lien Obligations, as appropriate, on a pro rata basis, that may be purchased out of such Collateral Excess Proceeds, if any, at an offer price, in the case of the Notes, in cash in an amount equal to 100% of the principal amount thereof (or in the event such other Indebtedness was issued with original issue discount, 100% of the accreted value thereof), plus accrued and unpaid interest, if any (or such lesser price with respect to such Other Pari Lien Obligations, if any, as may be provided by the terms of such Other Pari Lien Obligations), to, but not including, the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture and the agreement governing such Other Pari Lien Obligations, as applicable, in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof. Notices of a Collateral Asset Disposition Offer shall be sent by first class mail or sent electronically, at least 10 days but not more than 60 days before the purchase date to each Holder of the Notes at such Holder's registered address or otherwise in accordance with the applicable procedures of DTC, with a copy to the Trustee. The Issuers may satisfy the foregoing obligation with respect to the Applicable Proceeds from an Asset Disposition by making an Asset Disposition Offer prior to the expiration of the Proceeds Application Period (the "<u>Collateral Advance Offer</u>") with respect to all or a part of the Applicable Proceeds (the "<u>Collateral Advance Portion</u>") in advance of being required to do so by this Indenture.

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To the extent that the aggregate amount (or accreted value, as applicable) of Notes and, if applicable, any Other Pari Lien Obligations secured by a Lien permitted under this Indenture on the Collateral disposed of, as the case may be, validly tendered or otherwise surrendered in connection with a Collateral Asset Disposition Offer is less than the amount offered in a Collateral Asset Disposition Offer (or, in the case of a Collateral Advance Offer, the Collateral Advance Portion), the amount of any remaining Collateral Excess Proceeds (or, in the case of an Collateral Advance Offer, the Collateral Advance Portion), together with Applicable Proceeds from such Asset Disposition of Collateral equal to the Applicable Proceeds Threshold Amount, may be added (at the option of the Issuer) to the amount of "<u>Declined Collateral Excess Proceeds</u>," and the Issuer and its Restricted Subsidiaries, may use such Declined Collateral Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount (or accreted value, as applicable) of the Notes or, if applicable, Other Pari Lien Obligations, as the case may be, validly tendered pursuant to any Collateral Asset Disposition Offer exceeds the amount of Collateral Excess Proceeds (or, in the case of a Collateral Advance Offer, the amount of the Collateral Advance Portion), the Issuers shall allocate the Collateral Excess Proceeds among the Notes and such Other Pari Lien Obligations to be purchased on a pro rata basis on the basis of the aggregate principal amount (or accreted value, as applicable) of tendered Notes and such Other Pari Lien Obligations; *provided* that no Notes or such Other Pari Lien Obligations will be selected and purchased in an unauthorized denomination. Upon completion of any Collateral Asset Disposition Offer, the amount of Applicable Proceeds and Collateral Excess Proceeds shall be reset at zero.

If, with respect to any Asset Disposition that is not with respect to Collateral, at the expiration of the Proceeds Application Period with respect to such Asset Disposition, there remains Applicable Proceeds in excess of the Applicable Proceeds Threshold Amount, then subject to the limitations with respect to Foreign Dispositions set forth below, the Issuers shall make an offer (an "<u>Asset Disposition Offer</u>") no later than ten Business Days after the expiration of the Proceeds Application Period to all Holders of Notes and, if required by the terms of any Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness, to purchase the maximum principal amount of such Notes and Pari Passu Indebtedness, as appropriate, on a pro rata basis, that may be purchased out of such Excess Proceeds, if any, at an offer price, in the case of the Notes, in cash in an amount equal to 100% of the principal amount thereof (or in the event such other Indebtedness was issued with original issue discount, 100% of the accreted value thereof), plus accrued and unpaid interest, if any (or such lesser price with respect to Pari Passu Indebtedness, if any, as may be provided by the terms of such Pari Passu Indebtedness), to, but not including, the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture and the agreement governing the Pari Passu Indebtedness, as applicable, in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof. Notices of an Asset Disposition Offer shall be sent by first class mail or sent electronically, at least 10 days but not more than 60 days before the purchase date to each Holder of the Notes at such Holder's registered address or otherwise in accordance with the applicable procedures of DTC, with a copy to the Trustee. The Issuers may satisfy the foregoing obligation with respect to the Applicable Proceeds from an Asset Disposition by making an Asset Disposition Offer prior to the expiration of the Proceeds Application Period (the "<u>Advance Offer</u>") with respect to all or a part of the Applicable Proceeds (the "<u>Advance</u> <u>Portion</u>") in advance of being required to do so by this Indenture.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the extent that the aggregate amount (or accreted value, as applicable) of Notes and, if applicable, any other Pari Passu Indebtedness validly tendered or otherwise surrendered in connection with an Asset Disposition Offer is less than the amount offered in an Asset Disposition Offer (or, in the case of an Advance Offer, the Advance Portion), the Issuers may include any remaining Excess Proceeds (or, in the case of an Advance Offer, the Advance Portion)), together with Applicable Proceeds from such Asset Disposition equal to the Applicable Proceeds Threshold Amount, may be added (at the option of the Issuer) to the amount of "<u>Declined Excess Proceeds</u>," and the Issuer and its Restricted Subsidiaries may use such Declined Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount (or accreted value, as applicable) of the Notes or, if applicable, Pari Passu Indebtedness validly tendered pursuant to any Asset Disposition Offer exceeds the amount of Excess Proceeds (or, in the case of an Advance Offer, the Advance Portion), the Issuers shall allocate the Excess Proceeds among the Notes and Pari Passu Indebtedness to be purchased on a pro rata basis on the basis of the aggregate principal amount (or accreted value, as applicable) of tendered Notes and Pari Passu Indebtedness; provided that no Notes or other Pari Passu Indebtedness will be selected and purchased in an unauthorized denomination. Upon completion of any Asset Disposition Offer, the amount of Applicable Proceeds and Excess Proceeds shall be reset at zero.

To the extent that any portion of Net Available Cash payable in respect of the Notes is denominated in a currency other than Dollars, the amount thereof payable in respect of the Notes shall not exceed the net amount of funds in Dollars that is actually received by the Issuers upon converting such portion into Dollars.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding any other provisions of this <u>Section</u> <u>3.5</u>,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to the extent that any of or all the Net Available Cash of any Asset Disposition is received or deemed to be received by a Foreign Subsidiary (a "<u>Foreign</u> <u>Disposition</u>") is (x) prohibited or delayed by applicable local law, (y) restricted by applicable organizational documents or any agreement or (z) subject to other onerous organizational or administrative impediments, in each case, from being repatriated to the United States, the portion of such Net Available Cash so affected shall not be required to be applied in compliance with this <u>Section</u> <u>3.5</u>, and such amounts may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law or regulation, applicable organizational documents or other impediments shall not permit repatriation to the United States (the Issuers hereby agreeing to use reasonable efforts (as determined in the Issuers' reasonable business judgment) to otherwise cause the applicable Foreign Subsidiary to within one year following the date on which the respective payment would otherwise have been required, promptly take all actions reasonably required by the applicable local law, applicable organizational documents or other impediments to permit such repatriation), and if within one year following the date on which the respective payment would otherwise have been required, such repatriation of any of such affected Net Available Cash is permitted under the applicable local law, applicable organizational documents other impediments, such repatriation will be promptly effected and the amount of such repatriated Net Available Cash will be promptly (and in any event not later than five Business Days after such repatriation could be made) applied (net of additional Taxes payable or reserved against as a result thereof) (whether or not repatriation actually occurs) in compliance with this <u>Section</u> <u>3.5</u>; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to the extent that the Issuer has reasonably determined that repatriation of, or an obligation to repatriate, any of or all the Net Available Cash of any Foreign Disposition would reasonably be expected to have a material adverse Tax consequence (which for the avoidance of doubt, includes, but is not limited to, any prepayment out of such Net Available Cash whereby doing so the Issuer, any of its Subsidiaries, any Parent Entity or any of their respective affiliates and/or direct or indirect equity owners would incur a Tax liability, including receipt of a Tax dividend, deemed dividend pursuant to Code Section 956 or a withholding Tax), the Net Available Cash so affected may be retained by the applicable Foreign Subsidiary. The non- application of any prepayment amounts as a consequence of the foregoing provisions shall not, for the avoidance of doubt, constitute a Default or an Event of Default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) For the purposes of <u>Section</u> <u>3.5(a)(2)</u> hereof, the following will be deemed to be cash:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the assumption by the transferee of Indebtedness or other liabilities, contingent or otherwise of the Issuer or a Restricted Subsidiary (other than Subordinated Indebtedness of the Issuers or a Guarantor) or the release of the Issuer or such Restricted Subsidiary from all liability on such Indebtedness or other liability in connection with such Asset Disposition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) securities, notes or other obligations received by the Issuer or any Restricted Subsidiary from the transferee that are converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents, or by their terms are required to be satisfied for cash and Cash Equivalents (to the extent of the cash or Cash Equivalents received), in each case, within 180 days following the closing of such Asset Disposition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Disposition, to the extent that the Issuer and each other Restricted Subsidiary are released from any Guarantee of payment of such Indebtedness in connection with such Asset Disposition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) consideration consisting of Indebtedness of the Issuer or a Restricted Subsidiary (other than Subordinated Indebtedness) received after the Issue Date from Persons who are not the Issuer or any Restricted Subsidiary; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) any Designated Non-Cash Consideration received by the Issuer or any Restricted Subsidiary in such Asset Dispositions having an aggregate Fair Market Value, taken together with all other Designated Non-Cash Consideration received pursuant to this <u>Section</u> <u>3.5</u> that is at that time outstanding, not to exceed the greater of (i) $34 million and (ii) an amount equal to 25% of LTM EBITDA (with the Fair Market Value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) To the extent that the provisions of any securities laws, rules or regulations, including Rule 14e-1 under the Exchange Act, conflict with the provisions of this Indenture, the Issuers shall not be deemed to have breached its obligations described in this Indenture by virtue of compliance therewith.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Issuers' obligation to make an offer to repurchase the Notes as a result of an Asset Disposition may be waived or modified with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding.

Section 3.6 <u>Limitation on Liens</u>. The Issuers shall not, and the Issuers shall not permit any Restricted Subsidiary that is a Guarantor to, directly or indirectly, create, incur or permit to exist any Lien (except Permitted Liens) (each, an "<u>Initial Lien</u>") that secures obligations under any Indebtedness or any related guarantee, on any asset or property of the Issuers or any Restricted Subsidiary that is a Guarantor, unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) in the case of Initial Liens on any Collateral, (i) such Initial Lien expressly has Junior Lien Priority on the Collateral relative to the Liens securing the Notes and the Note Guarantees or (ii) such Initial Lien is a Permitted Lien; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in the case of any Initial Lien on any asset or property that is not Collateral, (i) the Notes (or a Guarantee in the case of Initial Liens on assets or property of a Guarantor) are equally and ratably secured with (or on a senior basis to, in the case such Initial Lien secures any Subordinated Indebtedness) the Obligations secured by such Initial Lien until such time as such Obligations are no longer secured by such Initial Lien or (ii) such Initial Lien is a Permitted Lien, except that the foregoing shall not apply to Liens securing the Notes (other than any Additional Notes) and the Note Guarantees.

Any Lien created for the benefit of the Holders pursuant to the preceding sentence shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien.

With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness. The "<u>Increased Amount</u>" of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness with the same terms, accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness.

Section 3.7 <u>Limitation on Guarantees</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Issuers shall not permit any of the Issuer's Restricted Subsidiaries, other than the Guarantors or the Excluded Subsidiaries, to Guarantee the payment of Indebtedness in a principal amount in excess of the greater of (x) $100 million and (y) 33% of LTM EBITDA under (i) any syndicated Credit Facility incurred under <u>Section</u> <u>3.2(b)(1)</u> or (ii) Capital Markets Debt Securities of the Issuer, the Co-Issuer or any Guarantor that is a Restricted Subsidiary unless:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) such Restricted Subsidiary within 60 days executes and delivers a supplemental indenture to this Indenture providing for a Guarantee by such Restricted Subsidiary, except that with respect to a guarantee of Indebtedness of the Issuers or any Guarantor, if such Indebtedness is by its express terms subordinated in right of payment to the Notes or such Guarantor's Guarantee, any such guarantee by such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Guarantee substantially to the same extent as such Indebtedness is subordinated to the Notes or such Guarantor's Guarantee of the Notes, and joinders to the Collateral Documents or new Collateral Documents, together with any filings and agreements required by the Collateral Documents to create or perfect the security interests for the benefit of the Holders in the Collateral of such Subsidiary; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) such Restricted Subsidiary waives and shall not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Issuer or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee until payment in full of Obligations under this Indenture.

*provided* that this <u>Section</u> <u>3.7</u> shall not be applicable (i) to any guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary, or (ii) in the event that the Guarantee of the Issuers' obligations under the Notes or this Indenture by such Subsidiary would not be permitted under applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Issuers may elect, in their sole discretion, to cause or allow, as the case may be, any Subsidiary or any of its Parent Entities that is not otherwise required to be a Guarantor to become a Guarantor, in which case, such Subsidiary or Parent Entity shall not be required to comply with the 60-day period described in <u>Section</u> <u>3.7(a)</u> and such Guarantee may be released at any time in the Issuers' sole discretion so long as any Indebtedness of such Subsidiary then outstanding could have been incurred by such Subsidiary (either (x) when so incurred or (y) at the time of the release of such Guarantee) assuming such Subsidiary were not a Guarantor at such time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If any Guarantor becomes an Immaterial Subsidiary, the Issuers shall have the right, by delivery of a supplemental indenture executed by the Issuers to the Trustee, to cause such Immaterial Subsidiary to automatically and unconditionally cease to be a Guarantor, subject to the requirement described in <u>Section</u> <u>3.7(a)</u> above that such Subsidiary shall be required to become a Guarantor if it ceases to be an Immaterial Subsidiary (except that if such Subsidiary has been properly designated as an Unrestricted Subsidiary it shall not be so required to become a Guarantor or execute a supplemental indenture); *provided* that such Immaterial Subsidiary shall not be permitted to Guarantee the Credit Agreement or other Indebtedness of the Issuers or the other Guarantors, unless it again becomes a Guarantor.

Section 3.8 <u>Limitation on Affiliate Transactions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Issuers shall not, and the Issuers shall not permit any Restricted Subsidiary to enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Issuer (an "<u>Affiliate Transaction</u>") involving aggregate value in excess of the greater of (i) $10 million and (ii) an amount equal to 7.5% of LTM EBITDA unless:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the terms of such Affiliate Transaction taken as a whole are not materially less favorable to the Issuer or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable transaction at the time of such transaction or the execution of the agreement providing for such transaction in arm's length dealings with a Person who is not such an Affiliate; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in the event such Affiliate Transaction involves an aggregate value in excess of the greater of (i) $23 million and (ii) an amount equal to 16.7% of LTM EBITDA, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Issuer.

Any Affiliate Transaction shall be deemed to have satisfied the requirements set forth in clause (2) of this <u>Section</u> <u>3.8(a)</u> if such Affiliate Transaction is approved by a majority of the Disinterested Directors of the Issuer, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The provisions of <u>Section</u> <u>3.8(a)</u> above shall not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any Restricted Payment or other transaction permitted to be made or undertaken pursuant to <u>Section</u> <u>3.3</u> (including Permitted Payments) or any Permitted Investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any issuance, transfer or sale of (a) Capital Stock, options, other equity-related interests or other securities, or other payments, awards or grants in cash, securities or otherwise to any Parent Entity, Permitted Holder or future, current or former employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer, any of its Subsidiaries or any of its Parent Entities and (b) directors' qualifying shares and shares issued to foreign nationals as required under applicable Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any Management Advances and any waiver or transaction with respect thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) (a) any transaction between or among the Issuer and any Restricted Subsidiary (or entity that becomes a Restricted Subsidiary as a result of such transaction), or between or among Restricted Subsidiaries and (b) any merger, amalgamation or consolidation with any Parent Entity, *provided* that such Parent Entity shall have no material liabilities and no material assets other than cash, Cash Equivalents and the Capital Stock of the Issuer and such merger, amalgamation or consolidation is otherwise permitted under this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) the payment of compensation, fees, costs and expenses to, and indemnities (including under insurance policies) and reimbursements, employment and severance arrangements, and employee benefit and pension expenses provided on behalf of, or for the benefit of, future, current or former employees, directors, officers, managers, contractors, consultants, distributors or advisors (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer, any Parent Entity or any Restricted Subsidiary (whether directly or indirectly and including through their Controlled Investment Affiliates or Immediate Family Members);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the entry into and performance of obligations of the Issuer or any of its Restricted Subsidiaries under the terms of any transaction arising out of, and any payments pursuant to or for purposes of funding, any agreement or instrument in effect as of or on the Issue Date, as these agreements and instruments may be amended, modified, supplemented, extended, renewed or refinanced from time to time in accordance with the other terms of this <u>Section</u> <u>3.8</u> or to the extent not disadvantageous in any material respect in the reasonable determination of the Issuer to the Holders when taken as a whole as compared to the applicable agreement as in effect on the Issue Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) any transaction effected as part of a Qualified Securitization Financing or Receivables Facility, any disposition or acquisition of Securitization Assets, Receivables Assets or related assets in connection with any Qualified Securitization Financing or Receivables Facility;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) transactions with customers, vendors, clients, joint venture partners, suppliers, contractors, distributors or purchasers or sellers of goods or services, in each case in the ordinary course of business or consistent with past practice, which are fair to the Issuer and the Restricted Subsidiaries, in the reasonable determination of the Issuer, or are on terms, taken as a whole, that are not materially less favorable as might reasonably have been obtained at such time from an unaffiliated party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) any transaction between or among the Issuer or any Restricted Subsidiary and any Person (including a joint venture or an Unrestricted Subsidiary) that is an Affiliate of the Issuer or an Associate or similar entity solely because the Issuer or a Restricted Subsidiary or any Affiliate of the Issuer or a Restricted Subsidiary or any Affiliate of any Permitted Holder owns an equity interest in or otherwise controls such Affiliate, Associate or similar entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) any issuance, sale or transfer of Capital Stock (other than Disqualified Stock or Designated Preferred Stock) of the Issuer, any Parent Entity or any of its Restricted Subsidiaries or options, warrants or other rights to acquire such Capital Stock and the granting of registration and other customary rights (and the performance of the related obligations) in connection therewith or any contribution to capital of the Issuer or any Restricted Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) (a) payments by the Issuer or any Restricted Subsidiary (or distributions or dividends by the Issuer in lieu of such payments) to any Permitted Holder (whether directly or indirectly), including to its affiliates or its designees, of management, consulting, monitoring, refinancing, transaction, advisory, indemnities and other fees, costs and expenses (plus any unpaid management, consulting, monitoring, transaction, advisory, indemnities and other fees, costs and expenses accrued in any prior year) and any exit and termination fees (including any such cash lump sum or present value fee upon the consummation of a corporate event, including an initial public offering) pursuant to any management or similar agreements or the management or other relevant provisions in an investor rights agreement, limited partnership agreement, limited liability company agreement or other equityholders' agreement, as the case may be, with terms reasonably consistent with the terms of similar agreements entered into by similar financial sponsors and portfolio companies as reasonably

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determined by the Issuer or any Parent Entity on behalf of the Issuer at the time such management or similar agreement is entered into by the Investors and the Issuer or any Parent Entity and (b) payments by the Issuer or any Restricted Subsidiary to any Permitted Holder (whether directly or indirectly, including through any Parent Entity) for financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including in connection with acquisitions or divestitures, which payments are approved in the reasonable determination of the Issuer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) payment to any Permitted Holder of all out of pocket expenses incurred by such Permitted Holder in connection with its direct or indirect investment in the Issuer and its Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) the Transactions and the payment of all fees, costs and expenses (including all legal, accounting and other professional fees, costs and expenses) related to the Transactions, including Transaction Expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) transactions in which the Issuer or any Restricted Subsidiary, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Issuer or such Restricted Subsidiary from a financial point of view or meets the requirements of <u>Section</u> <u>3.8(a)(1)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) the existence of, or the performance by the Issuer or any Restricted Subsidiary of its obligations under the terms of, any equityholders, investor rights or similar agreement (including any registration rights agreement or purchase agreements related thereto) to which it is party as of the Issue Date and any similar agreement that it (or any Parent Entity) may enter into thereafter; *provided* that the existence of, or the performance by the Issuer or any Restricted Subsidiary (or any Parent Entity) of its obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date will only be permitted under this clause to the extent that the terms of any such amendment or new agreement are not otherwise, when taken as a whole, more disadvantageous to the Holders in any material respect in the reasonable determination of the Issuer than those in effect on the Issue Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) any purchases by the Issuer's Affiliates of Indebtedness or Disqualified Stock of the Issuer or any of the Restricted Subsidiaries the majority of which Indebtedness or Disqualified Stock is purchased by Persons who are not the Issuer's Affiliates; *provided* that such purchases by the Issuer's Affiliates are on the same terms as such purchases by such Persons who are not the Issuer's Affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) (i) investments by Affiliates in securities or loans of the Issuer or any of the Restricted Subsidiaries (and payment of reasonable out-of-pocket expenses incurred by such Affiliates in connection therewith) so long as the investment is being offered by the Issuer or such Restricted Subsidiary generally to other non-affiliated third party investors on the same or more favorable terms and (ii) payments to Affiliates in respect of securities or loans of the Issuer or any of the Restricted Subsidiaries contemplated in the foregoing subclause (i) or that were acquired from Persons other than the Issuer and its Restricted Subsidiaries, in each case, in accordance with the terms of such securities or loans;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) the entering into of any Tax sharing agreement or arrangement and payments made with respect thereto, in each case between or among the Issuer, any Parent Entity and its Subsidiaries; provided that, in each case the amount of such payments in any taxable year does not exceed the amount that the Issuer, its Restricted Subsidiaries and its Unrestricted Subsidiaries (to the extent of amounts actually received from the Unrestricted Subsidiaries) would be required to pay in respect of foreign, federal, state and local Taxes for such taxable year were the Issuer, its Restricted Subsidiaries and its Unrestricted Subsidiaries (to the extent of amounts actually received from the Unrestricted Subsidiaries) to pay such Taxes separately from any such Parent Entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) payments, Indebtedness and Disqualified Stock (and cancellation of any thereof) of the Issuer and its Restricted Subsidiaries and Preferred Stock (and cancellation of any thereof) of any Restricted Subsidiary to any future, current or former employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Issuer, any of its Subsidiaries or any of its Parent Entities pursuant to any management equity plan, stock option plan, phantom equity plan or any other management, employee benefit or other compensatory plan or agreement (and any successor plans or arrangements thereto), employment, termination or severance agreement, or any stock subscription or equityholder agreement with any such employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) that are, in each case, approved by the Issuer in good faith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20) any management equity plan, stock option plan, phantom equity plan or any other management, employee benefit or other compensatory plan or agreement (and any successor plans or arrangements thereto), employment, termination or severance agreement, or any stock subscription or equityholder agreement between the Issuer or its Restricted Subsidiaries and any distributor, employee, director, officer, manager, contractor, consultant or advisor (or their respective Controlled Investment Affiliates or Immediate Family Members) approved by the reasonable determination of the Issuer or entered into in connection with the Transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21) any transition services arrangement, supply arrangement or similar arrangement entered into in connection with or in contemplation of the disposition of assets or Capital Stock in any Restricted Subsidiary permitted under <u>Section</u> <u>3.5</u> or entered into with any Business Successor, in each case, that the Issuer determines in good faith is either fair to the Issuer or otherwise on customary terms for such type of arrangements in connection with similar transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22) transactions entered into by an Unrestricted Subsidiary with an Affiliate (other than the Issuer or a Restricted Subsidiary) prior to the day such Unrestricted Subsidiary is redesignated as a Restricted Subsidiary as described in <u>Section</u> <u>3.19</u> and pledges of Capital Stock of Unrestricted Subsidiaries;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(23) any lease entered into between the Issuer or any Restricted Subsidiary, as lessee, and any Affiliate of the Issuer, as lessor and any operational services or other arrangement entered into between the Issuer or any Restricted Subsidiary and any Affiliate of the Issuer, in each case, which is approved by the reasonable determination of the Issuer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(24) intellectual property licenses and research and development agreements in the ordinary course of business or consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25) payments to or from, and transactions with, any Subsidiary or any joint venture in the ordinary course of business or consistent with past practice (including any cash management arrangements or activities related thereto);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(26) the payment of fees, costs and expenses related to registration rights and indemnities provided to equityholders pursuant to equityholders, investor rights, registration rights or similar agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(27) transactions undertaken in the ordinary course of business pursuant to membership in a purchasing consortium; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(28) Permitted Intercompany Activities, Permitted Tax Restructurings or Intercompany License Agreements and related transactions.

In addition, if the Issuer or any of its Restricted Subsidiaries (i) purchases or otherwise acquires assets or properties from a Person which is not an Affiliate, the purchase or acquisition by an Affiliate of the Issuer of an interest in all or a portion of the assets or properties acquired shall not be deemed an Affiliate Transaction (or cause such purchase or acquisition by the Issuer or a Restricted Subsidiary to be deemed an Affiliate Transaction) or (ii) sells or otherwise disposes of assets or other properties to a Person who is not an Affiliate, the sale or other disposition by an Affiliate of the Issuer of an interest in all or a portion of the assets or properties sold shall not be deemed an Affiliate Transaction (or cause such sale or other disposition by the Issuer or a Restricted Subsidiary to be deemed an Affiliate Transaction).

Section 3.9 <u>Change of Control</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If a Change of Control occurs, unless a third party makes a Change of Control Offer or the Issuers have previously or substantially concurrently therewith delivered a redemption notice with respect to all of the outstanding Notes as described in Section <u>3.9(c)</u>, the Issuers shall make an offer (the "<u>Change of Control Offer</u>") to purchase all of the Notes at a price in cash (the "<u>Change of Control Payment</u>") equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to but excluding the date of repurchase; provided that if the repurchase date is on or after the record date and on or before the corresponding interest payment date, then Holders in whose names the Notes are registered at the close of business on such record date will receive the interest due on the repurchase date. Within 30 days following any Change of Control, the Issuers will deliver or cause to be delivered a notice of such Change of Control Offer electronically in accordance with the applicable procedures of DTC or by first class mail, to each Holder of Notes at the address of such Holder appearing in the security register, or otherwise in accordance with the applicable procedures of DTC, with a copy to the Trustee, with the following information:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) that a Change of Control Offer is being made pursuant to this <u>Section</u> <u>3.9</u>, and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment by the Issuers;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the purchase price and the purchase date, which will be no earlier than 10 days nor later than 60 days from the date such notice is delivered (the "<u>Change of Control Payment Date</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) that any Note not properly tendered will remain outstanding and continue to accrue interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) that unless the Issuers default in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest, on the Change of Control Payment Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled "<u>Option of Holder to Elect Purchase</u>" on the reverse of such Notes completed, to the applicable Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date, or otherwise comply with DTC procedures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) that Holders shall be entitled to withdraw their tendered Notes and their election to require the Issuers to purchase such Notes; *provided* that the applicable Paying Agent receives, not later than the close of business on the second Business Day prior to the expiration date of the Change of Control Offer, a telegram, facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased, or otherwise comply with DTC procedures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) that Holders whose Notes are being purchased only in part will be issued new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered. The unpurchased portion of the Notes must be equal to at least $2,000 or any integral multiple of $1,000 in excess of $2,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) to the extent the Change of Control Offer is subject to the satisfaction of one or more conditions precedent, a description of such conditions precedent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) the other instructions, as determined by the Issuers, consistent with this <u>Section</u> <u>3.9</u>, that a Holder must follow.

The applicable Paying Agent shall promptly deliver to each Holder of the Notes tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; *provided* that each such new Note shall be in a minimum principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. The Issuers shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

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If the Change of Control Payment Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid on the Change of Control Payment Date to the Person in whose name a Note is registered at the close of business on such record date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On the Change of Control Payment Date, the Issuers shall, to the extent permitted by Law,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) accept for payment all Notes issued by it or portions thereof properly tendered pursuant to the Change of Control Offer,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) deposit with the applicable Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officer's Certificate to the Trustee stating that such Notes or portions thereof have been tendered to and purchased by the Issuers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Issuers shall not be required to make a Change of Control Offer following a Change of Control if (x) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Issuers and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer or (y) a notice of redemption of all outstanding Notes has been given pursuant to one or more of the applicable clauses of <u>Section</u> <u>5.7</u> hereof unless and until there is a default in the payment of the redemption price on the applicable redemption date or the redemption is not consummated due to the failure of a condition precedent contained in the applicable redemption notice to be satisfied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding anything to the contrary in this <u>Section</u> <u>3.9</u>, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control or other events or circumstances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) [Reserved]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) While the Notes are in global form and the Issuers make an offer to purchase all of the Notes pursuant to the Change of Control Offer, a Holder may exercise its option to elect for the purchase of the Notes through the facilities of DTC, subject to its rules and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Issuers shall comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws, rules and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws, rules or regulations conflict with the provisions of this Indenture, the Issuers shall not be deemed to have breached their obligations described in this Indenture by virtue of compliance therewith.

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Section 3.10 <u>Reports</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding that the Issuers may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, from and after the Issue Date, the Issuers will furnish to the Trustee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) within 120 days after the end of each fiscal year ending after the Issue Date (or if such day is not a Business Day, on the next succeeding Business Day), all financial information of the Issuer that would be required to be contained in an annual report on Form 10-K, or any successor or comparable form, filed with the SEC, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and a report on the annual financial statements by the Issuer's independent registered public accounting firm;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) within 60 days after the end of each of the first three fiscal quarters of each fiscal year ending after the Issue Date (or if such day is not a Business Day, on the next succeeding Business Day), all financial information of the Issuer that would be required to be contained in a quarterly report on Form 10-Q, or any successor or comparable form, filed with the SEC, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations," and financial statements prepared in accordance with GAAP; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) within four Business Days after the occurrence of any of the following events, all current reports that would be required to be filed with the SEC on Form 8-K as in effect on the Issue Date (if the Issuer had been a reporting company under Section 15(d) of the Exchange Act); *provided*, that the foregoing shall not obligate the Issuers to make available (i) any information regarding the occurrence of any of the following events if the Issuer determines in its reasonable determination that such event that would otherwise be required to be disclosed is not material to the Holders or the business, assets, operations, financial positions or prospects of the Issuer and its Restricted Subsidiaries taken as a whole, (ii) an exhibit or a summary of the terms of, any employment or compensatory arrangement, agreement, plan or understanding between the Issuer or any of its Subsidiaries and any director, officer or manager of the Issuer or any of its Subsidiaries, (iii) copies of any agreements, financial statements or other items that would be required to be filed as exhibits to a current report on Form 8-K or (iv) any trade secrets, privileged or confidential information obtained from another Person and competitively sensitive information:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) the entry into or termination of material agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) significant acquisitions or dispositions (which shall only be with respect to acquisitions or dispositions that are significant pursuant to the definition of "Significant Subsidiary");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) bankruptcy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) cross-default under direct material financial obligations;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) a change in the Issuer's certifying independent auditor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F) the appointment or departure of directors or executive officers (with respect to the principal executive officer, president, principal financial officer, principal accounting officer and principal operating officer only);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G) non-reliance on previously issued financial statements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(H) change of control transactions,

in each case, in a manner that complies in all material respects with the requirements specified in such form, as in effect, at the option of the Issuer, on the Issue Date or on the date such report is due, except as described above or below and subject to exceptions consistent with the presentation of information in the Offering Memorandum; *provided*, *however*, that the Issuers shall not be required to provide (i) segment reporting and disclosure (including any required by FASB Accounting Standards Codification Topic 280), (ii) separate financial statements or other information contemplated by Rules 3-05, 3-09, 3-10, 3-16 or 4-08 of Regulation S-X (or any successor provisions) or any schedules required by Regulation S-X, (iii) information required by Regulation G under the Exchange Act or Item 10, Item 302, Item 402 or Item 601 of Regulation S-K (or any successor provision), (iv) XBRL exhibits, (v) earnings per share information, (vi) information regarding executive compensation and related party disclosure related to SEC Release Nos. 33-8732A, 34-54302A and IC-27444A, and (vii) other information customarily excluded from an Offering Memorandum, including any information that is not otherwise of the type and form currently included in the Offering Memorandum relating to the Notes. In addition, notwithstanding the foregoing, the Issuers shall not be required to (i) comply with Sections 302, 906 and 404 of the Sarbanes-Oxley Act of 2002, as amended, or (ii) otherwise furnish any information, certificates or reports required by Items 307 or 308 of Regulation S-K (or any successor provision). To the extent any such information is not so filed or furnished, as applicable, within the time periods specified above and such information is subsequently filed or furnished, as applicable, the Issuers will be deemed to have satisfied their obligations with respect thereto at such time and any Default with respect thereto shall be deemed to have been cured; *provided* that such cure shall not otherwise affect the rights of the Holders under <u>Section</u> <u>6.1</u> hereof if Holders of at least 30.0% in aggregate principal amount of the outstanding Notes have declared the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately and such declaration shall not have been rescinded or cancelled prior to such cure. In addition, to the extent not satisfied by the foregoing, the Issuers shall, for so long as any Notes are outstanding, furnish to Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Issuer has designated any of its Subsidiaries as Unrestricted Subsidiaries and such Unrestricted Subsidiaries or group of Unrestricted Subsidiaries, if taken together as one Subsidiary, would constitute a Significant Subsidiary of the Issuer, then the annual and quarterly financial information required by <u>Section</u> <u>3.10(a)(1)</u> and (<u>2</u>) will include a presentation of selected financial metrics, in the Issuer's sole discretion, of such Unrestricted Subsidiaries as a group in the "Management's Discussion and Analysis of Financial Condition and Results of Operations."

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Substantially concurrently with the furnishing of such information to the Trustee pursuant to <u>Section</u> <u>3.10(a)</u>, the Issuers shall also use their commercially reasonable efforts to post copies of such information required by <u>Section</u> <u>3.10(a)</u> on a website (which may be nonpublic, require a confidentiality acknowledgement and may be maintained by the Issuers or a third party) to which access will be given to Holders, bona fide prospective investors in the Notes (which prospective investors shall be limited to "qualified institutional buyers" within the meaning of Rule 144A of the Securities Act or Non-U.S. Persons that certify their status as such to the reasonable satisfaction of the Issuers), and securities analysts (to the extent providing analysis of an investment in the Notes) and market making financial institutions that are reasonably satisfactory to the Issuers who agree to treat such information and reports as confidential; *provided* that the Issuers may deny access to any competitively-sensitive information and reports otherwise to be provided pursuant to this paragraph to any Holder, bona fide prospective investors, security analyst or market maker that is a competitor of the Issuer and its Subsidiaries to the extent that the Issuer reasonably determines in good faith that the provision of such information and reports to such Person would be competitively harmful to the Issuer and its Subsidiaries. The Issuers may condition the delivery of any such reports to such Holders, prospective investors in the Notes and securities analysts and market making financial institutions on the agreement of such Persons to (i) treat all such reports (and the information contained therein) and information as confidential, (ii) not use such reports (and the information contained therein) and information for any purpose other than their investment or potential investment in the Notes and (iii) not publicly disclose any such reports (and the information contained therein) and information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Issuers will participate in quarterly conference calls (which may be a single conference call together with investors and lenders holding other securities or Indebtedness of the Issuer, its Restricted Subsidiaries and/or any Parent Entity) to discuss results of operations. The conference call will be following the last day of each fiscal quarter of the Issuer after the Issue Date and no later than ten (10) Business Days following the date the Issuers are required to provide the financial information as set forth in <u>Section</u> <u>3.10(a)(1)</u> and <u>(2)</u> to the Trustee. No fewer than two days prior to the conference call, the Issuers will issue a press release or otherwise announce the time and date of such conference call and providing instructions for Holders, prospective investors in the Notes, securities analysts and market making financial institutions to obtain access to such call.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Issuer may satisfy its obligations pursuant to this <u>Section</u> <u>3.10</u> with respect to financial information relating to the Issuer by furnishing financial information relating to Holdings. In addition, the Issuers may to satisfy their obligations in this covenant with respect to financial information relating to the Issuer by furnishing financial information relating to a Parent Entity (other than Holdings); *provided* that the same is accompanied by disclosure that explains in reasonable detail the differences between the information relating to such Parent Entity (and other Parent Entities included in such information, if any), on the one hand, and the information relating to the Issuer and its Restricted Subsidiaries on a standalone basis, on the other hand. For the avoidance of doubt, the disclosure referred to in the proviso in the preceding sentence need not be audited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding anything to the contrary set forth in this <u>Section</u> <u>3.10</u>, if the Issuer or any Parent Entity has furnished to the Holders of Notes or filed with the SEC the reports described in this <u>Section</u> <u>3.10</u> with respect to the Issuer or any Parent Entity, the Issuers shall be deemed to be in compliance with the provisions of this <u>Section</u> <u>3.10</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Delivery of reports, information and documents to the Trustee under this Indenture is for informational purposes only and the information and the Trustee's receipt of the foregoing shall not constitute actual or constructive notice of any information contained therein, or determinable from information contained therein, including the Issuers' compliance with any of its covenants thereunder (as to which the Trustee is entitled to rely exclusively on an Officer's Certificate). The Trustee shall have no duty to review or analyze reports delivered to it or to determine whether the Issuers post such reports, information and documents on the Issuers' website (or that of any of Parent Entity) or the SEC's EDGAR service, or collect any such information from the Issuers' (or any of the Issuers' parent companies') website or the SEC's EDGAR service.

Section 3.11 <u>[Reserved]</u>.

Section 3.12 <u>Maintenance of Office or Agency</u>.

The Issuers shall maintain an office or agency where the Notes may be presented or surrendered for payment, where, if applicable, the Notes may be surrendered for registration of transfer or exchange. The corporate trust office of the Trustee, which initially shall be located at Wilmington Trust, National Association, Global Capital Markets, 1100 North Market Street, Wilmington, Delaware 19890, Attention: Evergreen AcqCo 1 LP/TVI, Inc. Administrator, shall be such office or agency of the Issuers, unless the Issuers shall designate and maintain some other office or agency for one or more of such purposes. The Issuers shall give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations and surrenders may be made or served at the corporate trust office of the Trustee, and the Issuers hereby appoint the Trustee as its agent to receive all such presentations and surrenders.

The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation.

The Issuers will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency. No office of the Trustee shall be an office or agency of the Issuers for the purposes of service of legal process on the Issuers or any Guarantor.

Section 3.13 <u>[Reserved]</u>.

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Section 3.14 <u>After-Acquired Collateral</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If (a) any Subsidiary becomes a Guarantor or (b) the Issuers or any Guarantor acquires any property or rights which are of a type constituting Collateral under any Collateral Document (excluding, for the avoidance of doubt, any Excluded Assets or assets not required to be Collateral pursuant to this Indenture or the Collateral Documents), the Issuers or such Guarantor shall be required to execute and deliver such security instruments, financing statements and such certificates as are required under this Indenture or any Collateral Document, and, with respect to property that constitutes Material Real Property, deliver security instruments, title insurance policies, local counsel opinions, and real property surveys within the same timeline and otherwise covering the same scope as are required by the Credit Agreement, to vest in the Notes Collateral Agent a security interest (subject to Permitted Liens) in such after-acquired collateral (or all of its assets, except Excluded Assets, in the case of a new Guarantor) and to take such actions to add such after-acquired collateral to the Collateral, and thereupon all provisions of this Indenture and the Collateral Documents relating to the Collateral shall be deemed to relate to such after-acquired collateral to the same extent and with the same force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding the foregoing, opinions of counsel will not be required in connection with any additional Guarantors entering into the Collateral Documents or to vest in the Notes Collateral Agent a perfected security interest in after-acquired collateral owned by such Guarantors.

Section 3.15 <u>Compliance Certificate</u>. The Issuer shall deliver to the Trustee within 135 days after the end of each fiscal year of the Issuer an Officer's Certificate, the signer of which shall be the principal executive officer, principal financial officer, principal accounting officer, principal legal officer, secretary or treasurer of the Issuer, stating that in the course of the performance by the signer of his or her duties as an Officer of the Issuer he or she would normally have knowledge of any Default or Event of Default and whether or not the signer knows of any Default or Event of Default that occurred during the previous fiscal year; *provided* that no such Officer's Certificate shall be required for any fiscal year ended prior to the Issue Date. If such Officer does have such knowledge, the certificate shall describe the Default or Event of Default, its status and the action the Issuer is taking or proposes to take with respect thereto.

Section 3.16 <u>[Reserved]</u>.

Section 3.17 <u>[Reserved]</u>.

Section 3.18 <u>Statement by Officers as to Default</u>. The Issuer shall deliver to the Trustee, as soon as possible and in any event within 30 days after an Officer becomes aware of the occurrence of any Default or Event of Default, an Officer's Certificate setting forth the details of such Event of Default or Default, its status and the actions which the Issuer is taking or proposes to take with respect thereto.

Section 3.19 <u>Designation of Restricted and Unrestricted Subsidiaries</u>. The Issuers may designate any Restricted Subsidiary (other than the Co-Issuer) to be an Unrestricted Subsidiary if that designation would not cause a Default or an Event of Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Issuer and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments pursuant to <u>Section</u> <u>3.3</u> hereof or under one or more clauses of the definition of Permitted Investments, as determined by the Issuer. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Issuers may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause an Event of Default.

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Any designation of a Subsidiary of the Issuer as an Unrestricted Subsidiary (other than the Co-Issuer who, for the avoidance of doubt, cannot be an Unrestricted Subsidiary) will be evidenced to the Trustee by delivering to the Trustee an Officer's Certificate certifying that such designation complies with the preceding conditions and was permitted by <u>Section</u> <u>3.3</u> hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary as of such date and, if such Indebtedness is not permitted to be incurred as of such date by <u>Section</u> <u>3.2</u> hereof, the Issuers will be in default of such covenant.

The Issuers may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; *provided* that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under <u>Section</u> <u>3.2</u> hereof (including pursuant to <u>Section</u> <u>3.2(b)(5)</u> treating such redesignation as an acquisition for the purpose of such clause), calculated on a *pro forma* basis as if such designation had occurred at the beginning of the applicable Reference Period; and (2) no Default or Event of Default would be in existence following such designation. Any such designation by the Issuers shall be evidenced to the Trustee by delivering to the Trustee an Officer's Certificate certifying that such designation complies with the preceding conditions.

Section 3.20 <u>Suspension of Certain Covenants on Achievement of Investment Grade Status</u><u>.</u>Following the first day (a) the Notes have achieved Investment Grade Status and (b) no Default or Event of Default has occurred and is continuing under this Indenture, then, beginning on that day and continuing until the Reversion Date (as defined below) (such period a "<u>Suspension Period</u>"), the Issuer and its Restricted Subsidiaries will not be subject to <u>Sections 3.2</u>, <u>3.3</u>, <u>3.4</u>, <u>3.5</u>, <u>3.6</u>, <u>3.7</u>, <u>3.8</u> and <u>4.1(a)(3)</u> (the "<u>Suspended Covenants</u>").

If at any time the Notes cease to have such Investment Grade Status, then the Suspended Covenants shall thereafter be reinstated as if such covenants had never been suspended (the "<u>Reversion Date</u>") and be applicable pursuant to the terms of this Indenture (including in connection with performing any calculation or assessment to determine compliance with the terms of this Indenture), unless and until the Notes subsequently attain Investment Grade Status and no Default or Event of Default is in existence (in which event the Suspended Covenants shall no longer be in effect for such time that the Notes maintain an Investment Grade Status); provided, however, that no Default, Event of Default or breach of any kind shall be deemed to exist under this Indenture, the Notes or the Note Guarantees with respect to the Suspended Covenants based on, and none of the Issuer or any of its Subsidiaries shall bear any liability for, any actions taken or events occurring during the Suspension Period, or any actions taken at any time pursuant to any contractual obligation arising prior to the applicable Reversion Date, regardless of whether such actions or events would have been permitted if the applicable Suspended Covenants remained in effect during such period.

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On the Reversion Date, all Indebtedness incurred during the applicable Suspension Period will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under <u>Section</u> <u>3.2(b)(4)</u>. On and after the Reversion Date, all Liens created during the Suspension Period will be considered Permitted Liens pursuant to clause (11) of such definition. Calculations made after the Reversion Date of the amount available to be made as Restricted Payments under <u>Section</u> <u>3.3</u> will be made as though <u>Section</u> <u>3.3</u> had been in effect since the Issue Date and prior to, but not during, the Suspension Period. Accordingly, Restricted Payments made during the Suspension Period will not reduce the amount available to be made as Restricted Payments under <u>Section</u> <u>3.3(a)</u>. In addition, during the Suspension Period, any future obligation to grant further Note Guarantees shall be suspended. All such further obligations to grant Note Guarantees shall be reinstated on the Reversion Date. As described above, however, no Default, Event of Default or breach of any kind shall be deemed to have occurred as a result of the Reversion Date occurring on the basis of any actions taken or the continuance of any circumstances resulting from actions taken or the performance of obligations under agreements entered into by the Issuer or any of its Restricted Subsidiaries during the Suspension Period (other than agreements to take actions after the Reversion Date that would not be permitted outside of the Suspension Period entered into in contemplation of the Reversion Date).

On and after each Reversion Date, the Issuer and its Subsidiaries will be permitted to consummate the transactions contemplated by any contract entered into during the Suspension Period, so long as such contract and such consummation would have been permitted during such Suspension Period.

The Trustee shall have no duty to monitor the ratings of the Notes, shall not be deemed to have any knowledge of the ratings of the Notes and shall have no duty to notify Holders if the Notes achieve Investment Grade Status or of the occurrence of a Reversion Date or to independently determine or verify such events have occurred.

**ARTICLE IV** 

**<u>SUCCESSOR COMPANY; SUCCESSOR PERSON</u>**

Section 4.1 <u>Merger and Consolidation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Neither the Issuer nor the Co-Issuer shall consolidate or amalgamate with or merge with or into, or convey, transfer or lease all or substantially all such Issuer's or Co-Issuer's respective assets (as the case may be), in one transaction or a series of related transactions, to any Person, unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Issuer or the Co-Issuer, as applicable, is the surviving Person or the resulting, surviving or transferee Person (the "<u>Successor Company</u>") will be a Person organized or existing under the laws of the jurisdiction of the Issuer or the Co-Issuer, as applicable, or the United States of America, any State of the United States or the District of Columbia or any territory thereof and the Successor Company (if not the Issuer or the Co-Issuer, as applicable) will expressly assume all the obligations of the Issuer or the Co-Issuer, as applicable, under the Notes, this Indenture and the applicable Collateral Documents pursuant to supplemental indentures or other documents and instruments;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the applicable Successor Company or any Subsidiary of the applicable Successor Company as a result of such transaction as having been incurred by the applicable Successor Company or such Subsidiary at the time of such transaction), no Event of Default shall have occurred and be continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) immediately after giving pro forma effect to such transaction, either (a) the applicable Successor Company or the Issuer or the Co-Issuer, as applicable, would be able to incur at least an additional $1.00 of Indebtedness pursuant to <u>Section</u> <u>3.2(a)</u> hereof or (b) the Fixed Charge Coverage Ratio of the Successor Company or the Issuer or the Co-Issuer, as applicable, and its Restricted Subsidiaries would not be lower than it was immediately prior to giving effect to such transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the Issuer or the Co-Issuer, as applicable, shall have delivered to the Trustee and the Notes Collateral Agent an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or transfer and such supplemental indenture and other documents or instruments (if any) comply with this Indenture and Collateral Documents and an Opinion of Counsel stating that such supplemental indenture and other document or instrument (if any) is a legal and binding agreement enforceable against the Successor Company; *provided* that in giving an Opinion of Counsel, counsel may rely on an Officer's Certificate as to any matters of fact, including as to satisfaction of clauses (2) and (3) above; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) to the extent any assets of the Person which is merged or consolidated with or into the Issuer or the Co-Issuer, as applicable, are assets of the type which would constitute Collateral under the Collateral Documents, the Issuer, the Co-Issuer or the Successor Company, as applicable, will take such action, if any, as may be reasonably necessary to cause such property and assets to be made subject to the Lien of the applicable Collateral Documents in the manner and to the extent required in this Indenture or the applicable Collateral Documents and shall take all reasonably necessary action so that such Lien is perfected to the extent required by this Indenture or the applicable Collateral Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>[Reserved]</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Issuer or the Co-Issuer, as applicable, under the Notes, the applicable Collateral Documents, and this Indenture, and the Issuer or the Co-Issuer, as applicable, will automatically and unconditionally be released and discharged from its obligations under the Notes, the applicable Collateral Documents, and this Indenture.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding any other provisions of this <u>Section</u> <u>4.1</u>, (i) the Issuer and the Co-Issuer may consolidate or otherwise combine with, merge into or transfer all or part of their respective properties and assets to each other, (ii) the Issuer and the Co-Issuer may consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to a Guarantor, (iii) the Issuer and the Co-Issuer may consolidate or otherwise combine with or merge into an Affiliate organized or existing under the laws of the jurisdiction of the Issuer or the Co-Issuer, as applicable, or the United States of America, any State of the United States or the District of Columbia incorporated or organized for the purpose of changing the legal domicile of the Issuer or the Co-Issuer, reincorporating the Issuer or the Co-Issuer in another jurisdiction, or changing the legal form of the Issuer or the Co-Issuer, (iv) any Restricted Subsidiary may consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to the Issuer, the Co-Issuer or a Guarantor, (v) any Restricted Subsidiary may consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to any other Restricted Subsidiary, (vi) the Issuer and its Restricted Subsidiaries may complete any Permitted Tax Restructuring and (vii) the Issuer and its Restricted Subsidiaries (and their direct or indirect parent companies) may complete corporate reorganization transactions that are reasonably necessary or advisable (in the good-faith judgment of the Issuer) in connection with an initial public offering or other going-public transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Sections 4.1(a)</u> through <u>(d)</u> (other than the requirements of clause (a)(2)) shall not apply to the creation of a new Subsidiary as a Restricted Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Subject to <u>Section</u> <u>10.2(b)</u>, no Guarantor may consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets, in one or a series of related transactions, to any Person, unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) (a) the other Person is the Issuer, the Co-Issuer or any Restricted Subsidiary that is a Guarantor or becomes a Guarantor concurrently with the transaction; or either (x) the Issuer, the Co-Issuer or a Guarantor is the continuing Person or (y) the resulting, surviving or transferee Person (the "<u>Successor Person</u>") expressly assumes all the obligations of the Guarantor under its Note Guarantee, this Indenture and the applicable Collateral Documents;

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to the extent any assets of the Person which is merged, consolidated or amalgamated with or into such Guarantor are assets of the type which would constitute Collateral under this Indenture and the Collateral Documents, such Guarantor or the Successor Person will take such action, if any, as may be reasonably necessary to cause such property and assets to be made subject to the Lien of this Indenture and the applicable Collateral Documents in the manner and to the extent required in this Indenture or the applicable Collateral Documents and shall take all reasonably necessary action so that such Lien in perfected to the extent required by this Indenture and the applicable Collateral Documents; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the transaction constitutes a sale, disposition or transfer of the Guarantor or the conveyance, transfer or lease of all or substantially all of the assets of the Guarantor (in each case other than to the Issuer or a Restricted Subsidiary) otherwise not prohibited by this Indenture.

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Notwithstanding any other provision of this <u>Section</u> <u>4.1</u>, any Guarantor may (a) consolidate or otherwise combine with, merge into or transfer all or part of its properties and assets to another Guarantor, the Issuer or the Co-Issuer, (b) consolidate or otherwise combine with or merge into an Affiliate incorporated or organized for the purpose of changing the legal domicile of the Guarantor, reincorporating the Guarantor in another jurisdiction, or changing the legal form of the Guarantor, (c) convert into a corporation, partnership, limited partnership, limited liability company or trust organized or existing under the laws of the jurisdiction of organization of such Guarantor, (d) liquidate or dissolve or change its legal form if the Issuer determines in good faith that such action is in the best interests of the Issuers and (e) complete any Permitted Tax Restructuring. Notwithstanding anything to the contrary in this <u>Section</u> <u>4.1</u>, the Issuer or the Co-Issuer may contribute Capital Stock of any or all of its Subsidiaries to any Guarantor.

Any reference herein to a merger, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, limited partnership or trust, or an allocation of assets to a series of a limited liability company, limited partnership or trust (or the unwinding of such a division or allocation), as if it were a merger, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company, limited partnership or trust shall constitute a separate Person hereunder (and each division of any limited liability company, limited partnership or trust that is a Subsidiary, Restricted Subsidiary, Unrestricted Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).

**ARTICLE V** 

**<u>REDEMPTION OF SECURITIES</u>**

Section 5.1 <u>Notices to Trustee</u>. If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of <u>Section</u> <u>5.7</u>, they must furnish to the Trustee, at least 10 days but not more than 75 days before a redemption date, an Officer's Certificate setting forth:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the clause of this Indenture pursuant to which the redemption shall occur;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the principal amount of Notes to be redeemed; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the redemption price.

Any optional redemption referenced in such Officer's Certificate may be cancelled by the Issuer at any time prior to notice of redemption being sent to any Holder and thereafter shall be null and void.

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Section 5.2 <u>Selection of Notes to Be Redeemed or Purchased</u>. If less than all of the Notes are to be redeemed pursuant to <u>Section</u> <u>5.7</u> or purchased in an Asset Disposition Offer pursuant to <u>Section</u> <u>3.5</u>, the Trustee will select Notes for redemption or purchase (a) if the Notes are in global form, on a pro rata basis, by lot, or by such other method in accordance with the applicable procedures of the Depositary and (b) if the Notes are in definitive form in their entirety, on a pro rata basis (subject to adjustments to maintain the authorized Notes denomination requirements) or by lot, except if otherwise required by Law.

No Notes in an unauthorized denomination or of $2,000 in aggregate principal amount or less shall be redeemed in part. In the event of partial redemption, the particular Notes to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 10 days nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Notes not previously called for redemption or purchase; *provided* that the Issuer shall provide the Trustee with sufficient notice of such partial redemption to enable the Trustee to select the Notes for partial redemption.

The Trustee will promptly notify the Issuer in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in minimum principal amounts of $2,000 and whole multiples of $1,000 in excess of $2,000; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not in a minimum principal amount of $2,000 or a multiple of $1,000 in excess thereof, shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.

Section 5.3 <u>Notice of Redemption</u>. At least 10 days but not more than 60 days before the redemption date, the Issuer will send or cause to be sent, by electronic delivery or by first class mail postage prepaid, a notice of redemption to each Holder (with a copy to the Trustee) whose Notes are to be redeemed at the address of such Holder appearing in the security register or otherwise in accordance with the applicable procedures of the Depositary, except that redemption notices may be delivered electronically or mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to <u>Articles VIII</u> or <u>XI</u> hereto.

The notice will identify the Notes (including the CUSIP or ISIN number) to be redeemed and will state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the redemption price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the name and address of the Paying Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) that, unless the Issuer defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) to the extent the notice or redemption is subject to the satisfaction of one or more conditions precedent, a description of such conditions precedent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.

At the Issuers' request, the Trustee will give the notice of redemption in the Issuers' name and at their expense; *provided*, *however*, that the Issuers have delivered to the Trustee, at least three Business Days (or if any of the Notes to be redeemed are in definitive form, five Business Days) prior to the date on which the Issuer instructs the Trustee to give the notice (or such shorter period as the Trustee may agree), an Officer's Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

Notice of any redemption of the Notes may, at the Issuers' discretion, be given prior to the completion of a transaction (including but not limited to an Equity Offering, an incurrence of Indebtedness, a Change of Control or other transaction) and any redemption notice and any relevant redemption may, at the Issuers' discretion, be subject to one or more conditions precedent, including, but not limited to, completion of a related transaction. If such redemption or purchase is so subject to satisfaction of one or more conditions precedent such notice shall describe each such condition, and if applicable, shall state that, in the Issuers' discretion, the redemption date may be delayed until such time (including more than 60 days after the date of notice of redemption was mailed or delivered, including any electronic transmission) as any or all such conditions shall be satisfied, or such redemption or purchase may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or by the redemption date as so delayed. In addition, the Issuers may provide in such notice that payment of the redemption price and performance of the Issuers' obligations with respect to such redemption may be performed by another Person.

Section 5.4 <u>[Reserved]</u>.

Section 5.5 <u>Deposit of Redemption or Purchase Price</u>. Prior to 11:00 a m. New York City Time on the redemption or purchase date, the Issuers will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued interest, if any, on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent will promptly return, on or following the applicable redemption or repurchase date, to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption or purchase price of, and accrued interest, if any, on all Notes to be redeemed or purchased.

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If the Issuers comply with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after a record date but on or prior to the corresponding interest payment date, then any accrued and unpaid interest up to, but excluding, the redemption date or purchase date shall be paid on the redemption date or purchase date to the Person in whose name such Note was registered at the close of business on such record date in accordance with the applicable procedures of DTC. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Issuers to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in <u>Section</u> <u>3.1</u>.

Section 5.6 <u>Notes Redeemed or Purchased in Part</u>. Upon surrender of a Note issued in physical form that is redeemed or purchased in part, the Issuers will issue and the Trustee will authenticate for the Holder at the expense of the Issuers a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered; *provided*, that each such new Note will be in a minimum principal amount of $2,000 or integral multiple of $1,000 in excess thereof.

In the case of a Note issued as a global note, an appropriate notation will be made on such Note to decrease the principal amount thereof to an amount equal to the unredeemed portion thereof; *provided*, that the unredeemed portion thereof will be in a minimum principal amount of $2,000 or integral multiple of $1,000 in excess thereof.

Section 5.7 <u>Optional Redemption</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) At any time prior to the First Call Date, the Issuers may redeem the Notes in whole or in part, at their option, upon not less than 10 nor more than 60 days' prior notice, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the Notes Register, at a redemption price (expressed as a percentage of the principal amount of the Notes to be redeemed) equal to 100.000% plus the relevant Applicable Premium as of, and accrued and unpaid interest, if any, to but excluding, the date of redemption (the "<u>Redemption</u> <u>Date</u>"), subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At any time and from time to time prior to the First Call Date, the Issuers may, at their option, on one or more occasions, upon not less than 10 nor more than 60 days' prior notice, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the Notes Register, redeem up to 40.0% of the original aggregate principal amount of Notes issued under this Indenture on the Issue Date (together with Additional Notes) at a redemption price (expressed as a percentage of the principal amount of Notes to be redeemed) equal to 109.750%, plus accrued and unpaid interest, if any, to but excluding, the applicable Redemption Date, subject to the right of Holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds received by the Issuers of one or more Equity Offerings of the Issuers; *provided* that not less than 50.0% of the original aggregate principal amount of then-outstanding Notes issued under this Indenture remains outstanding immediately after the occurrence of each such redemption (including Additional Notes but excluding Notes held by the Issuers or any of their Restricted Subsidiaries) unless all such Notes are redeemed substantially concurrently; *provided further* that each such redemption occurs not later than 180 days after the date of closing of the related Equity Offering. The Trustee shall select the Notes to be purchased in the manner described under <u>Sections 5.1</u> through <u>5.6</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) At any time and from time to time on or prior to the First Call Date, the Issuers may redeem up to 10% of the then outstanding aggregate principal amount of the Notes issued under this Indenture (including any Additional Notes) during each of the twelve-month periods ending after the Issue Date, upon not less than 10 nor more than 60 days' prior notice, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the Notes Register, at a redemption price (expressed as a percentage of the principal amount of the Notes to be redeemed) equal to 103.000% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the applicable Redemption Date, subject to the right of Holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except pursuant to clauses (a), (b) and (c) of this <u>Section</u> <u>5.7</u>, the Notes will not be redeemable at the Issuers' option prior to the First Call Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) At any time and from time to time on or after the First Call Date, the Issuers may redeem the Notes, in whole or in part, at their option, upon not less than 10 nor more than 60 days' prior notice, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the Notes Register at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth in the table below, plus accrued and unpaid interest thereon, if any, to but excluding the applicable Redemption Date, subject to the right of Holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the twelve-month period beginning on February 15 of each of the years indicated in the table below:

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| | |
|:---|:---|
| **Year** | **Percentage** |
| 2025 | 104.875% |
| 2026 | 102.438% |
|  2027 and thereafter | 100.000% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) In addition, Holdings or its Affiliates may acquire Notes by means other than redemption, whether by tender or exchange offer, open market purchases, negotiated transactions or otherwise, upon such terms, at such prices and with such consideration as Holdings or any such affiliates may determine. Notwithstanding the foregoing, in connection with any tender offer for the Notes, including a Change of Control Offer, Asset Disposition Offer, Collateral Asset Disposition Offer or Collateral Advance Offer, if Holders of not less than 90.0% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in such tender

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offer and the Issuers, or any third party making such tender offer in lieu of the Issuers, purchase all of the Notes validly tendered and not withdrawn by such Holders, the Issuers or such third party shall have the right upon not less than 10 nor more than 60 days' prior notice, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the Notes Register, given not more than 30 days following such purchase date to redeem all Notes that remain outstanding following such purchase at a redemption price equal to the price offered to each other Holder (excluding any early tender or incentive fee) in such tender offer plus, to the extent not included in the tender offer payment, accrued and unpaid interest, if any, thereon, to but excluding, the date of such redemption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Unless the Issuers default in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable Redemption Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Any redemption pursuant to this <u>Section</u> <u>5.7</u> shall be made pursuant to the provisions of <u>Sections 5.1</u> through <u>5.6</u>.

Section 5.8 <u>Mandatory Redemption</u>. The Issuers are not required to make mandatory redemption or sinking fund payments with respect to the Notes; *provided*, however, that under certain circumstances, the Issuers may be required to offer to purchase Notes under <u>Section</u> <u>3.5</u> and <u>Section</u> <u>3.9</u>. As market conditions warrant, the Issuers and their equity holders, including the Investor, its respective Affiliates and members of our management, may from time to time seek to purchase its outstanding debt securities or loans, including the Notes, in privately negotiated or open market transactions, by tender offer or otherwise.

**ARTICLE VI** 

**<u>DEFAULTS AND REMEDIES</u>**

Section 6.1 <u>Events of Default</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each of the following is an "<u>Event of Default</u>":

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) default in any payment of interest on any Note when due and payable, continued for 30 days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) default in the payment of the principal amount of or premium, if any, on any Note issued under this Indenture when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration of acceleration or otherwise (in each case, other than a payment upon Stated Maturity or acceleration, for a period of longer than two Business Days);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) failure by the Issuer, the Co-Issuer or any Guarantor to comply for 60 days after written notice by the Trustee on behalf of the Holders or by the Holders of at least 30% in aggregate principal amount of the outstanding Notes with any agreement or obligation (other than a default referred to in clause (1) or (2) above) contained in this Indenture; *provided* that in the case of a failure to comply with this Indenture provisions described under <u>Section</u> <u>3.10</u>, such period of continuance of such default or breach shall be 120 days after written notice described in this clause (3) has been given;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) default under any mortgage, indenture, agreement or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Issuer or any Significant Subsidiary (or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries) would constitute a Significant Subsidiary) (or the payment of which is Guaranteed by the Issuer or any Significant Subsidiary (or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries) would constitute a Significant Subsidiary)) other than Indebtedness owed to the Issuer or a Restricted Subsidiary whether such Indebtedness or Guarantee now exists, or is created after the date hereof, which default:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) is caused by a failure to pay principal of such Indebtedness, at its stated final maturity (after giving effect to any applicable grace periods provided in such Indebtedness); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) results in the acceleration of such Indebtedness prior to its stated final maturity;

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default of principal at its stated final maturity (after giving effect to any applicable grace periods) or the maturity of which has been so accelerated, aggregates to the greater of (i) $75 million and (ii) an amount equal to 25% of LTM EBITDA or more at any one time outstanding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) failure by the Issuer or a Significant Subsidiary (or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries) would constitute a Significant Subsidiary) to pay final judgments aggregating in excess of the greater of (i) $75 million and (ii) an amount equal to 25% of LTM EBITDA other than any judgments covered by indemnities provided by, or insurance policies issued by, reputable and creditworthy companies, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) (x) any Guarantee of the Notes by a Significant Subsidiary ceases to be in full force and effect or (y) a Guarantor that is a Significant Subsidiary denies or disaffirms its obligations under its Note Guarantee, other than, in the case of (x) and (y), in accordance with the terms of this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the Issuer or a Significant Subsidiary (or any group of Restricted Subsidiaries, that taken together as of the latest audited consolidated financial statements of the Issuer and its Restricted Subsidiaries, would constitute a Significant Subsidiary) pursuant to or within the meaning of any Bankruptcy Law:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) commences a voluntary case or proceeding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) consents to the entry of an order for relief against it in an involuntary case or proceeding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) consents to the appointment of a custodian of it or for substantially all of its property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) makes a general assignment for the benefit of its creditors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F) takes any comparable action under any foreign laws relating to insolvency;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) is for relief against the Issuer or a Significant Subsidiary (or any group of Restricted Subsidiaries, that taken together as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries, would constitute a Significant Subsidiary) in an involuntary case;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) appoints a custodian of the Issuer or a Significant Subsidiary (or any group of Restricted Subsidiaries, that taken together as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries, would constitute a Significant Subsidiary) for substantially all of its property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) orders the winding up or liquidation of the Issuer or a Significant Subsidiary (or any group of Restricted Subsidiaries, that taken together as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries, would constitute a Significant Subsidiary); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) or any similar relief is granted under any foreign laws and the order, decree or relief remains unstayed and in effect for 60 consecutive days;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) the Issuer, the Co-Issuer or any Guarantor that is a Significant Subsidiary (or any group of Subsidiary Guarantors that, taken together (as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries) would constitute a Significant Subsidiary) shall assert, in any pleading in any court of competent jurisdiction, that any security interest in any Collateral Document is invalid or unenforceable;

provided that a Default under clause (3), (4) or (5) above shall not constitute an Event of Default until the Trustee or the Holders of at least 30% in principal amount of the outstanding Notes notify the Issuers of the Default (with a copy to the Trustee if notice is given by the Holders) and, with respect to clauses (3) and (5), the Issuers do not cure such Default within the time specified in clause (3) or (5) after receipt of such notice; *provided* that a notice of Default may not be given with respect to any action taken, and reported publicly or to Holders, more than two years prior to such notice of Default.

Any notice of Default, notice of acceleration or instruction to the Trustee or the Notes Collateral Agent, as applicable, to provide a notice of Default, notice of acceleration or take any other action (a "<u>Noteholder Direction</u>") provided by any one or more Holders (each a "<u>Directing Holder</u>") must be accompanied by a written representation from each such Holder delivered to the Issuers and the Trustee and the Notes Collateral Agent, as applicable, that such Holder is not (or, in the case such Holder is DTC or its nominee, that such Holder is being instructed solely by beneficial owners that are not) Net Short (a "<u>Position Representation</u>"), which representation, in the case of a Noteholder Direction relating to the delivery of a notice of Default shall be deemed a continuing representation until the resulting Event of Default is cured or otherwise ceases to exist or the Notes are accelerated. In addition, each Directing Holder is deemed, at the time of providing a Noteholder Direction, to covenant to provide the Issuers with such other information as the Issuers may reasonably request from time to time in order to verify the accuracy of such Noteholder's Position Representation within five Business Days of request therefor (a "<u>Verification Covenant</u>"). In any case in which the Holder is DTC or its nominee, any Position Representation or Verification Covenant required hereunder shall be provided by the beneficial owner of the Notes in lieu of DTC or its nominee and DTC shall be entitled to conclusively rely on such Position Representation and Verification Covenant in delivering its direction to the Trustee or the Notes Collateral Agent, as applicable.

If, following the delivery of a Noteholder Direction, but prior to acceleration of the Notes, the Issuers determine in good faith that there is a reasonable basis to believe a Directing Holder was, at any relevant time, in breach of its Position Representation and provides to the Trustee an Officer's Certificate stating that the Issuers have initiated litigation in a court of competent jurisdiction seeking a determination that such Directing Holder was, at such time, in breach of its Position Representation, and seeking to invalidate any Default, Event of Default or acceleration (or notice thereof) that resulted from the applicable Noteholder Direction, the cure period with respect to such Default shall be automatically stayed and the cure period with respect to such Default or Event of Default shall be automatically reinstituted and any remedy stayed pending a final and non-appealable determination of a court of competent jurisdiction on such matter. If, following the delivery of a Noteholder Direction, but prior to acceleration of the Notes, the Issuers provide to the Trustee an Officer's Certificate stating that a Directing Holder failed to satisfy its Verification Covenant, the cure period with respect to such Default shall be automatically stayed and the cure period with respect to any Default or Event of Default that

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resulted from the applicable Noteholder Direction shall be automatically reinstituted and any remedy stayed pending satisfaction of such Verification Covenant. Any breach of the Position Representation shall result in such Holder's participation in such Noteholder Direction being disregarded; and, if, without the participation of such Holder, the percentage of Notes held by the remaining Holders that provided such Noteholder Direction would have been insufficient to validly provide such Noteholder Direction, such Noteholder Direction shall be void ab initio (other than any indemnity such Holder may have offered the Trustee or the Notes Collateral Agent), with the effect that such Default or Event of Default shall be deemed never to have occurred, acceleration voided and the Trustee and the Notes Collateral Agent, as applicable, shall be deemed not to have received such Noteholder Direction or any notice of such Default or Event of Default.

Notwithstanding anything in the preceding two paragraphs to the contrary, any Noteholder Direction delivered to the Trustee or the Notes Collateral Agent during the pendency of an Event of Default as the result of a bankruptcy or similar proceeding shall not require compliance with the preceding two paragraphs.

For the avoidance of doubt, each of the Trustee and the Notes Collateral Agent shall be entitled to conclusively rely on any Noteholder Direction delivered to it in accordance with this Indenture, and shall have no duty to inquire as to or investigate the accuracy of any Position Representation, enforce compliance with any Verification Covenant, verify any statements in any Officer's Certificate delivered to it, or otherwise make calculations, investigations or determinations with respect to Derivative Instruments, Net Shorts, Long Derivative Instruments, Short Derivative Instruments or otherwise. Neither the Trustee nor the Notes Collateral Agent shall have any liability to the Issuers, any Holder or any other Person in acting in good faith on a Noteholder Direction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If a Default for a failure to report or failure to deliver a required certificate in connection with another default (the "<u>Initial Default</u>") occurs, then at the time such Initial Default is cured, such Default for a failure to report or failure to deliver a required certificate in connection with another default that resulted solely because of that Initial Default shall also be cured without any further action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any Default or Event of Default for the failure to comply with the time periods prescribed in <u>Section</u> <u>3.10</u> or otherwise to deliver any notice or certificate pursuant to any other provision of this Indenture shall be deemed to be cured upon the delivery of any such report required by such provision or such notice or certificate, as applicable, even though such delivery is not within the prescribed period specified in this Indenture.

Section 6.2 <u>Acceleration</u>. If any Event of Default (other than an Event of Default described in clause (7) or (8) of <u>Section</u> <u>6.1(a)</u> with respect to the Issuers) occurs and is continuing, the Trustee by written notice to the Issuers or the Holders of at least 50% in principal amount of the outstanding Notes by written notice to the Issuers and the Trustee may declare the principal of and accrued and unpaid interest, if any, on all the Notes to be due and payable. Upon such a declaration, such principal and accrued and unpaid interest, will be due and payable immediately.

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In the event of a declaration of acceleration of the Notes because an Event of Default specified in clause (4) of <u>Section</u> <u>6.1(a)</u>, such Event of Default and all consequences thereof (including the declaration of acceleration of the Notes) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if within 30 days after the declaration of acceleration with respect to such Event of Default arose:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) (x) the Indebtedness that gave rise to such Event of Default shall have been discharged in full; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) the holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) if the default that is the basis for such Event of Default has been remedied or cured; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction.

If an Event of Default described in clause (7) or (8) of <u>Section</u> <u>6.1(a)</u> with respect to the Issuers occurs and is continuing, the principal of and accrued and unpaid interest, if any, on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.

Section 6.3 <u>Other Remedies</u>. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of, or premium, if any, or interest, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

Section 6.4 <u>Waiver of Past Defaults</u>. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders, (a) waive, by their consent (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), an existing Default or Event of Default and its consequences under this Indenture and the Collateral Documents except (i) a Default or Event of Default in the payment of the principal of, or interest, on a Note or (ii) a Default or Event of Default in respect of a provision that under <u>Section</u> <u>9.2</u> cannot be amended without the consent of each Holder affected and (b) rescind any acceleration with respect to the Notes and its consequences if (1) such rescission would not conflict with any judgment or decree of a court of competent jurisdiction, (2) all existing Events of Default have been cured or waived except nonpayment of principal, premium, if any, interest, if any, that has become due solely because of the acceleration, (3) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid, (4) the Issuer has paid the

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Trustee its compensation and reimbursed the Trustee for its reasonable expenses, disbursements and advances and (5) in the event of the cure or waiver of an Event of Default of the type described in clause (4) of <u>Section</u> <u>6.1(a)</u>, the Trustee shall have received an Officer's Certificate and an Opinion of Counsel stating that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any consequent right.

Section 6.5 <u>Control by Majority</u>. The Holders of a majority in aggregate principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or the Notes Collateral Agent or of exercising any trust or power conferred on the Trustee or the Notes Collateral Agent. However, the Trustee or the Notes Collateral Agent, as applicable, may refuse to follow any direction that conflicts with Law or this Indenture or the Notes or, subject to <u>Sections 7.1</u> and <u>7.2</u>, that the Trustee determines is unduly prejudicial to the rights of other Holders or would involve the Trustee or Notes Collateral Agent in personal liability (it being understood that the Trustee has no duty to determine whether any action is prejudicial to any Holder); *provided*, *however*, that the Trustee or Notes Collateral Agent, as applicable, may take any other action deemed proper by the Trustee or Notes Collateral Agent that is not inconsistent with such direction. Prior to taking any such action hereunder, the Trustee or Notes Collateral Agent, as applicable, shall be entitled to indemnification satisfactory to the Trustee or the Notes Collateral Agent against all fees, losses, liabilities and expenses (including attorneys' fees and expenses) caused by taking or not taking such action.

Section 6.6 <u>Limitation on Suits</u> . Subject to <u>Section</u> <u>6.7</u>, a Holder may not pursue any remedy with respect to this Indenture or the Notes unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Holders of at least a majority in principal amount of the outstanding Notes have requested in writing the Trustee or the Notes Collateral Agent, as applicable to pursue the remedy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) such Holders have offered in writing and, if requested, provided to the Trustee and the Notes Collateral Agent, as applicable, security or indemnity satisfactory to the Trustee and the Notes Collateral Agent, as applicable, against any loss, liability or expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the Trustee or the Notes Collateral Agent has not complied with such request within 60 days after the receipt of the written request and the offer of security or indemnity; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee or the Notes Collateral Agent a written direction that, in the opinion of the Trustee or the Notes Collateral Agent, as applicable, is inconsistent with such request within such 60-day period.

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A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders).

Section 6.7 <u>Rights of Holders to Receive Payment</u>. Notwithstanding any other provision of this Indenture (including, without limitation, <u>Section</u> <u>6.6</u>), the contractual right of any Holder to receive payment of interest on the Notes held by such Holder or to institute suit for the enforcement of any such payment on or with respect to such Holder's Notes shall not be impaired or affected without the consent of such Holder (and, for the avoidance of doubt, the amendment, supplement or modification in accordance with the terms of this Indenture of <u>Articles III</u> and IV and <u>Section</u> <u>6.1(a)(3)</u>, (<u>4)</u>, <u>(5)</u> and (<u>6)</u> and the related definitions shall be deemed not to impair the contractual right of any Holder to receive payments of principal of and interest on such Holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any such payment on or with respect to such Holder's Note).

Section 6.8 <u>Collection Suit by Trustee</u>. If an Event of Default specified in clauses (1) or (2) of <u>Section</u> <u>6.1(a)</u> occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuers for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in <u>Section</u> <u>7.7</u>.

Section 6.9 <u>Trustee May File Proofs of Claim</u>. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Notes Collateral Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of each of the Trustee and the Notes Collateral Agent, and its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Issuer, its Subsidiaries or its or their respective creditors or properties and, unless prohibited by Law or applicable regulations, may be entitled and empowered to participate as a member of any official committee of creditors appointed in such matter and may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the compensation, expenses, disbursements and advances of the Trustee, the Notes Collateral Agent, their agents and counsel, and any other amounts due the Trustee and the Notes Collateral Agent under <u>Section</u> <u>7.7</u>.

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

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Section 6.10 <u>Priorities</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the Intercreditor Agreement and <u>Section</u> <u>2.18</u>, if the Trustee collects any money or property pursuant to this <u>Article VI</u> (including upon exercise of remedies with respect to the Collateral), it shall pay out the money or property in the following order:

FIRST: to the Trustee and to the Notes Collateral Agent, in each case for amounts due to it under <u>Section</u> <u>7.7</u> and <u>Section</u> <u>12.7(z)</u>;

SECOND: to Holders for amounts due and unpaid on the Notes for principal of, or premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal of, or premium, if any, and interest, respectively; and

THIRD: to the Issuers, or to the extent the Trustee collects any amount for any Guarantor, to such Guarantor or their successors or assigns, as their interest may appear, or to whosoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Trustee may fix a record date and payment date for any payment to Holders pursuant to this <u>Section</u> <u>6.10</u>. At least 15 days before such record date, the Issuers shall send or cause to be sent to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.

Section 6.11 <u>Undertaking for Costs</u>. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This <u>Section</u> <u>6.11</u> does not apply to a suit by the Trustee, a suit by the Issuers, a suit by a Holder pursuant to <u>Section</u> <u>6.7</u> or a suit by Holders of more than 20.0% in outstanding aggregate principal amount of the Notes.

**ARTICLE VII** 

**<u>TRUSTEE</u>**

Section 7.1 <u>Duties of Trustee</u>.

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in the absence of gross negligence or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates, opinions or orders furnished to the Trustee and conforming to the requirements of this Indenture or the Notes, as the case may be. However, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture or the Notes, as the case may be (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) this paragraph does not limit the effect of <u>Section</u> <u>7.1(b)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to <u>Section</u> <u>6.5</u>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) no provision of this Indenture or the Notes shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or thereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Every provision of this Indenture that in any way relates to the Trustee is subject to clauses (a), (b) and (c) of this <u>Section</u> <u>7.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this <u>Section</u> <u>7.1</u>.

Section 7.2 <u>Rights of Trustee</u>. Subject to <u>Section</u> <u>7.1</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Trustee may conclusively rely on and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, judgment or other paper or document (whether in its original or facsimile form) reasonably believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. The Trustee shall receive and retain financial reports and statements of the Issuers as provided herein, but shall have no duty to review or analyze such reports or statements to determine compliance with covenants or other obligations of the Issuers.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Trustee may execute any of the trusts and powers hereunder or perform any duties hereunder either directly or by or through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care by it hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred upon it by this Indenture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Trustee may consult with counsel of its selection, and the advice or opinion of counsel relating to this Indenture or the Notes shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder or under the Notes in good faith and in accordance with the advice or opinion of such counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Neither the Trustee nor the Notes Collateral Agent shall be deemed to have notice of any Default or Event of Default or whether any entity or group of entities constitutes a Significant Subsidiary unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default or Event of Default or of any such Significant Subsidiary is received by a Trust Officer of the Trustee or the Notes Collateral Agent at the corporate trust office of the Trustee and the Notes Collateral Agent specified in <u>Section</u> <u>3.12</u>, and such notice references the Notes, the Issuers and this Indenture and states that it is a "notice of default".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, including without limitation, as Notes Collateral Agent, and to each agent, custodian and other Person employed to act hereunder and under all other agreements executed by the Trustee in connection with the Notes and this Indenture, including the other Notes Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Neither the Trustee nor the Notes Collateral Agent shall be under any obligation to exercise any of the rights or powers vested in it by this Indenture or the Notes at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered and if requested, provided to the Trustee or the Notes Collateral Agent, as the case may be, security or indemnity satisfactory to the Trustee or the Notes Collateral Agent, as the case may be, against the costs, expenses and liabilities which may be incurred therein or thereby.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Trustee shall not be deemed to have knowledge of any fact or matter unless such fact or matter is known to a Trust Officer of the Trustee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Whenever in the administration of this Indenture or the Notes the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder or thereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of gross negligence or willful misconduct on its part, as determined by a final nonappealable order of a court of competent jurisdiction, conclusively rely upon an Officer's Certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, report, notice, request, direction, consent, order, judgment, bond, debenture, coupon or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine, during business hours and upon reasonable notice, the books, records and premises of the Issuers and the Restricted Subsidiaries, personally or by agent or attorney at the sole cost of the Issuers and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) The Trustee may request that the Issuer deliver an Officer's Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture or the Notes.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer shall be sufficient if signed by one Officer of the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) The permissive rights of the Trustee under this Indenture and the other Notes Documents shall not be construed as duties.

Section 7.3 <u>Individual Rights of Trustee</u>. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuers, Guarantors or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with <u>Sections 7.10</u> and <u>7.11</u>. In addition, the Trustee shall be permitted to engage in transactions with the Issuer and its Affiliates and Subsidiaries.

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Section 7.4 <u>Trustee</u><u>'</u><u>s Disclaimer</u>. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Notes, any Intercreditor Agreement or the Collateral Documents, shall not be accountable for the Issuers' use of the proceeds from the sale of the Notes, shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee or any money paid to the Issuers pursuant to the terms of this Indenture and shall not be responsible for any statement of the Issuers in this Indenture, the Intercreditor Agreement, the Collateral Documents or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee's certificate of authentication.

Section 7.5 <u>Notice of Defaults</u> . If a Default or Event of Default occurs and is continuing and if a Trust Officer has actual knowledge thereof, the Trustee shall send electronically or by first class mail to each Holder at the address set forth in the Notes Register notice of the Default or Event of Default within 60 days after it is actually known to a Trust Officer. Except in the case of a Default or Event of Default in payment of principal of or interest, if any, on any Note (including payments pursuant to the optional redemption or required repurchase provisions of such Note), the Trustee may withhold the notice if and so long it in good faith determines that withholding the notice is in the interests of Holders.

Section 7.6 <u>[Reserved]</u>.

Section 7.7 <u>Compensation and Indemnity</u>. The Issuers shall pay to the Trustee and the Notes Collateral Agent from time to time compensation for its services hereunder and under the Notes as the Issuers, the Trustee and the Notes Collateral Agent shall from time to time agree in writing. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers shall reimburse the Trustee and the Notes Collateral Agent upon request for all reasonable out-of-pocket expenses incurred or made by it, including, but not limited to, costs of collection, costs of preparing reports, certificates and other documents, costs of preparation and mailing of notices to Holders. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the agents, counsel, accountants and experts of the Trustee and the Notes Collateral Agent. The Issuers and the Guarantors, jointly and severally, shall indemnify each of the Trustee and the Notes Collateral Agent, their directors, officers, employees and agents against any and all loss, liability, damages, claims or expense, including taxes (other than taxes based upon the income of the Trustee or the Notes Collateral Agent) (including reasonable attorneys' and agents' fees and expenses) incurred by it without willful misconduct or gross negligence, as determined by a final nonappealable order of a court of competent jurisdiction, on its part in connection with the administration of this trust and the performance of its duties hereunder and under the other Notes Documents, including the costs and expenses of enforcing this Indenture (including this <u>Section</u> <u>7.7</u>) and the Notes and of defending itself against any claims (whether asserted by any Holder, the Issuers or otherwise). The Trustee and the Notes Collateral Agent, as applicable, shall notify the Issuers promptly of any claim for which it may seek indemnity of which it has received written notice. Failure by the Trustee or the Notes Collateral Agent to so notify the Issuers shall not relieve the Issuers of its obligations hereunder. The Issuers shall defend the claim and the Trustee and the Notes Collateral Agent, as applicable, shall provide reasonable cooperation at the Issuers' expense in the defense. The Trustee and the Notes Collateral Agent, as applicable, may have separate counsel and the Issuers shall pay the fees and expenses of such counsel; *provided that* the Issuers shall not be required to pay the fees and expenses of such separate counsel if it assumes the Trustee's and the Notes Collateral Agent's defense, and, in the reasonable judgment of outside counsel to the Trustee or the Notes Collateral Agent, as applicable, there is no conflict of interest between the Issuers and the Trustee or the Notes Collateral Agent in connection with such defense; *provided further that*, the Issuers shall be required to pay the reasonable fees and expenses of such counsel in evaluating such conflict.

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To secure the Issuers' payment obligations in this <u>Section</u> <u>7.7</u>, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Notes. Such lien shall survive the satisfaction and discharge of this Indenture. The Trustee's and the Notes Collateral Agent's respective right to receive payment of any amounts due under this <u>Section</u> <u>7.7</u> shall not be subordinate to any other liability or Indebtedness of the Issuers.

The Issuers' payment and indemnification obligations pursuant to this <u>Section</u> <u>7.7</u> shall survive the discharge of this Indenture and any resignation or removal of the Trustee and the Notes Collateral Agent under <u>Sections 7.8 and 12.7(f)</u>. Without prejudice to any other rights available to the Trustee or the Notes Collateral Agent under applicable Law, when the Trustee or the Notes Collateral Agent incurs fees, expenses or renders services after the occurrence of a Default specified in clause (7) or clause (8) of <u>Section</u> <u>6.1(a)</u>, the fees and expenses (including the reasonable fees and expenses of its counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

Section 7.8 <u>Replacement of Trustee</u>. The Trustee may resign at any time by so notifying the Issuers in writing not less than 30 days prior to the effective date of such resignation. The Holders of a majority in aggregate principal amount of the Notes may remove the Trustee by so notifying the removed Trustee in writing not less than 30 days prior to the effective date of such removal. The Issuers shall remove the Trustee if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Trustee fails to comply with <u>Section</u> <u>7.10</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Trustee is adjudged bankrupt or insolvent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) a receiver or other public officer takes charge of the Trustee or its property; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the Trustee otherwise becomes incapable of acting.

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

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall, at the expense of the Issuers, promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in <u>Section</u> <u>7.7</u>.

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If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least 10.0% in aggregate principal amount of the Notes may petition, at the Issuers' expense, any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with <u>Section</u> <u>7.10</u>, any Holder, who has been a bona fide holder of a Note for at least six months, may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this <u>Section</u> <u>7.8</u>, the Issuers' obligations under <u>Section</u> <u>7.7</u> shall continue for the benefit of the retiring Trustee. The predecessor Trustee shall have no liability for any action or inaction of any successor Trustee.

Section 7.9 <u>Successor Trustee by Merger</u>. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

Section 7.10 <u>Eligibility; Disqualification</u>. This Indenture shall always have a Trustee. The Trustee shall have a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition.

Section 7.11 <u>[Reserved]</u>.

Section 7.12 <u>Trustee</u><u>'</u><u>s Application for Instruction from the Issuers</u>. Any application by the Trustee for written instructions from the Issuers may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any Officer of the Issuer and of the Co-Issuer actually receives such application, unless any such Officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions in response to such application specifying the action to be taken or omitted.

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Section 7.13 <u>Collateral Documents; Intercreditor Agreement</u>. By their acceptance of the Notes, the Holders hereby authorize and direct the Trustee and the Notes Collateral Agent, as the case may be, to execute and deliver the Intercreditor Agreement, a Customary Junior Lien Intercreditor Agreement and any other Collateral Document in which the Trustee or the Notes Collateral Agent, as applicable, is named as a party, including any Collateral Documents and any supplements thereto. It is hereby expressly acknowledged and agreed that, in doing so, the Trustee and the Notes Collateral Agent are not responsible for the terms or contents of such agreements, or for the validity or enforceability thereof, or the sufficiency thereof for any purpose. Whether or not so expressly stated therein, in entering into, or taking (or forbearing from) any action under, the Intercreditor Agreement, a Customary Junior Lien Intercreditor Agreement or any other Collateral Documents, the Trustee and the Notes Collateral Agent each shall have all of the rights, privileges, benefits, immunities, indemnities and other protections granted to it under this Indenture (in addition to those that may be granted to it under the terms of such other agreement or agreements).

Section 7.14 <u>Limitation on Duty of Trustee in Respect of Collateral; Indemnification</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Beyond the exercise of reasonable care in the custody thereof, the Trustee shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and the Trustee shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Collateral. Each of the Trustee and the Notes Collateral Agent shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property and shall not be liable or responsible for any loss or diminution in the value of any of the Collateral, by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Trustee or the Notes Collateral Agent in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Trustee and Notes Collateral Agent shall not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the Liens in any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title of the Issuers to the Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral (except with respect to certificates delivered to the Notes Collateral Agent representing securities pledged under the Collateral Documents). The Trustee and Notes Collateral Agent shall have no duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture, the Intercreditor Agreement or the Security Documents by the Issuer, any Guarantor or any representative for the First Lien Secured Parties.

Section 7.15 <u>Qu</u><u>é</u><u>bec Security</u>. For greater certainty, the duties of the Notes Collateral Agent to act as notes collateral agent for each Note Secured Party under Collateral Documents as contemplated under <u>Section</u> <u>7.13</u> shall include, for the purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Issuers and the Guarantors pursuant to or governed by the laws of the Province of Québec, to act as the hypothecary representative within the meaning of article 2692 of the Civil Code of Québec for all present and

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future Notes Secured Parties in order to hold any Collateral Document granted under the laws of the Province of Québec, and to exercise such rights and duties as are conferred upon a hypothecary representative under the relevant Collateral Document and applicable laws (with the power to delegate any such rights or duties). The Notes Collateral Agent, acting as hypothecary representative, will have the same rights, powers, immunities, indemnities and exclusions from liability as are prescribed in favour of the Notes Collateral Agent under this Indenture, which will apply *mutatis mutandis*. In the event of the resignation and appointment of a successor Notes Collateral Agent, such successor Notes Collateral Agent will also act as hypothecary representative.

**ARTICLE VIII** 

**<u>LEGAL DEFEASANCE AND COVENANT DEFEASANCE</u>**

Section 8.1 <u>Option to Effect Legal Defeasance or Covenant Defeasance; Defeasance</u>. The Issuers may, at their option and at any time, elect to have either <u>Section</u> <u>8.2</u> or <u>8.3</u> be applied to all outstanding Notes upon compliance with the conditions set forth below in this <u>Article VIII</u>.

Section 8.2 <u>Legal Defeasance and Discharge</u>. Upon the Issuers' exercise under <u>Section</u> <u>8.1</u> of the option applicable to this <u>Section</u> <u>8.2</u>, the Issuers and each of the Guarantors will, subject to the satisfaction of the conditions set forth in <u>Section</u> <u>8.4</u>, be deemed to have been discharged from their obligations with respect to all outstanding Notes (including the Note Guarantees) and the Collateral Documents with respect to such Series on the date the conditions set forth below are satisfied (hereinafter, "<u>Legal Defeasance</u>"). For this purpose, Legal Defeasance means that the Issuers and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Note Guarantees), which will thereafter be deemed to be "outstanding" only for the purposes of <u>Section</u> <u>8.5</u> and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all of their other obligations under the Notes Documents (and the Trustee, on written demand of and at the expense of the Issuers, shall execute such instruments reasonably requested by the Issuers acknowledging the same), and to have cured all then existing Events of Default, except for the following provisions which will survive until otherwise terminated or discharged hereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the rights of Holders of Notes issued under this Indenture to receive payments in respect of the principal of, premium, if any, and interest, if any, on the Notes when such payments are due solely out of the trust referred to in <u>Section</u> <u>8.4</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Issuers' obligations with respect to the Notes under <u>Article II</u> concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and <u>Section</u> <u>3.12</u> concerning the maintenance of an office or agency for payment and money for security payments held in trust;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the rights, powers, trusts, duties and immunities of the Trustee and the Issuers' or Guarantors' obligations in connection therewith; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) this <u>Article VIII</u> with respect to provisions relating to Legal Defeasance.

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Section 8.3 <u>Covenant Defeasance</u>. Upon the Issuers' exercise under <u>Section</u> <u>8.1</u> of the option applicable to this <u>Section</u> <u>8.3</u>, the Issuers and each of the Guarantors will, subject to the satisfaction of the conditions set forth in <u>Section</u> <u>8.4</u>, be released from each of their obligations under the covenants contained in <u>Section</u> <u>3.2</u>, <u>3.3</u>, <u>3.4</u>, <u>3.5</u>, <u>3.6</u>, <u>3.7</u>, <u>3.8</u>, <u>3.9</u>, <u>3.10</u>, <u>3.11</u>, <u>3.15</u>, <u>3.16</u>, <u>3.19</u>, <u>3.20</u>, and <u>Section</u> <u>4.1</u> (except <u>Section</u> <u>4.1(a)(1)</u> and <u>(a)(2)</u>) with respect to the outstanding Notes on and after the date the conditions set forth in <u>Section</u> <u>8.4</u> are satisfied (hereinafter, "<u>Covenant Defeasance</u>"), and the Notes will thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed "outstanding" for all other purposes hereunder. For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Note Guarantees, the Issuers and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under <u>Section</u> <u>6.1(a)</u>, but, except as specified above, the remainder of this Indenture and such Notes and Note Guarantees will be unaffected thereby. In addition, upon the Issuers' exercise under <u>Section</u> <u>8.1</u> of the option applicable to this <u>Section</u> <u>8.3</u>, subject to the satisfaction of the conditions set forth in <u>Section</u> <u>8.4</u>, <u>Sections 6.1(a)(3)</u> (other than with respect to <u>Section</u> <u>4.1(a)(1)</u> and <u>(a)(2)</u>), <u>6.1(a)(4)</u>, <u>6.1(a)(5)</u>, <u>6.1(a)(6)</u>, <u>6.1(a)(7)</u> (with respect only to a Guarantor that is a Significant Subsidiary or any group of Guarantors that taken together would constitute a Significant Subsidiary), <u>6.1(a)(8)</u> (with respect only to a Guarantor that is a Significant Subsidiary or any group of Guarantors that taken together would constitute a Significant Subsidiary), 6.1(a)(9) and 6.1(a)(10) shall not constitute Events of Default.

Section 8.4 <u>Conditions to Legal or Covenant Defeasance</u>. In order to exercise either Legal Defeasance or Covenant Defeasance under either <u>Section</u> <u>8.2</u> or <u>8.3</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in Dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of and premium, if any, and interest, due on the Notes issued under this Indenture on the stated maturity date or on the applicable redemption date, as the case may be, and the Issuers must specify whether such Notes are being defeased to maturity or to a particular redemption date; *provided*, that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, as calculated by the Issuers or on behalf of the Issuers by such Person as the Issuers shall designate, with any deficit as of the date of redemption (any such amount, the "<u>Applicable Premium Deficit</u>") only required to be deposited with the Trustee on or prior to the date of redemption. Any Applicable Premium Deficit shall be set forth in an Officer's Certificate delivered to the Trustee at least two Business Days prior to deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be applied toward such redemption;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in the case of Legal Defeasance, the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that, subject to customary assumptions and exclusions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) the Issuers have received from, or there has been published by, the United States Internal Revenue Service a ruling; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) since the issuance of such Notes, there has been a change in the applicable U.S. federal income tax law;

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, subject to customary assumptions and exclusions, the beneficial owners of the Notes, in their capacity as beneficial owners of the Notes, will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) in the case of Covenant Defeasance, the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that, subject to customary assumptions and exclusions, the beneficial owners of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) no Default or Event of Default (other than that resulting from borrowing funds to be applied to make such deposit and the granting of Liens in connection therewith) shall have occurred and be continuing on the date of such deposit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Credit Facilities or any other material agreement or instrument (other than this Indenture) to which, the Issuers or any Guarantor is a party or by which the Issuer or any Guarantor is bound;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) [reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the Issuers shall have delivered to the Trustee an Officer's Certificate stating that the deposit was not made by the Issuers with the intent of defeating, hindering, delaying, defrauding or preferring any creditors of the Issuers or any Guarantor; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) the Issuers shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) each to the effect that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.

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Section 8.5 <u>Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions</u>. Subject to <u>Section</u> <u>8.6</u>, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this <u>Section</u> <u>8.5</u>, the "<u>Trustee</u>") pursuant to <u>Section</u> <u>8.4</u> in respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuers acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, and interest, but such money need not be segregated from other funds except to the extent required by Law.

The Issuers will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Obligations deposited pursuant to <u>Section</u> <u>8.4</u> or the principal and interest received in respect thereof other than any such tax, fee or other charge which by Law is for the account of the Holders of the outstanding Notes.

Notwithstanding anything in this <u>Article VIII</u> to the contrary, the Trustee will deliver or pay to the Issuers from time to time upon the request of the Issuers any money or U.S. Government Obligations held by it as provided in <u>Section</u> <u>8.4</u> which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under <u>Section</u> <u>8.4(1)</u>), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.6 <u>Repayment to the Issuers</u>. Any money deposited with the Trustee or any Paying Agent, or then held by the Issuers, in trust for the payment of the principal of, premium or interest on, any Note and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Issuers on their written request unless an abandoned property law designates another Person or (if then held by the Issuers) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Issuers for payment thereof unless an abandoned property law designates another Person, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuers as trustee thereof, will thereupon cease; *provided*, *however*, that the Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense of the Issuers cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Issuers.

Section 8.7 <u>Reinstatement</u>. If the Trustee or Paying Agent is unable to apply any money or Dollars or U.S. Government Obligations in accordance with <u>Section</u> <u>8.2</u> or <u>8.3</u>, as the case may be, by reason of any order or judgment of any court or Governmental Authority enjoining, restraining or otherwise prohibiting such application, then the Issuers' and the Guarantors' obligations under this Indenture and the Notes and the Note Guarantees will be revived and reinstated as though no deposit had occurred pursuant to <u>Section</u> <u>8.2</u> or <u>8.3</u> until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with <u>Section</u> <u>8.2</u> or <u>8.3</u>, as the case may be; *provided*, *however*, that, if the Issuers make any payment of principal of, premium, or interest on, any Note following the reinstatement of its obligations, the Issuers will be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

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**ARTICLE IX** 

**<u>AMENDMENTS</u>**

Section 9.1 <u>Without Consent of Holders</u>. Notwithstanding <u>Section</u> <u>9.2</u> of this Indenture, the Issuers, any Guarantor (with respect to its Guarantee, this Indenture or the Collateral Documents), the Trustee and/or the Notes Collateral Agent may amend, supplement or modify this Indenture, any Guarantee, the Collateral Documents and the Notes without the consent of any Holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) to cure any ambiguity, omission, mistake, defect, error or inconsistency, conform any provision to any provision under the heading "<u>Description of Notes</u>" in the Offering Memorandum or reduce the minimum denomination of the Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) to provide for the assumption by a successor Person of the obligations of the Issuer, Co-Issuer or a Guarantor under any Notes Document or to comply with <u>Section</u> <u>4.1</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of this Indenture relating to the form of the Notes (including related definitions) (*provided*, *however*, that such uncertificated Notes are in "registered" form within the meaning of Section 163 of the Code and Treasury regulations thereunder);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) to add to or modify the covenants or provide for a Note Guarantee for the benefit of the Holders or to surrender any right or power conferred upon the Issuer or any Restricted Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) to make any change (including changing the CUSIP or other identifying number on any Notes) that would provide any additional rights or benefits to the Holders or that does not materially and adversely affect the rights of any Holder in any material respect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) at the Issuers' election, to comply with any requirement of the SEC in connection with the qualification of this Indenture under the Trust Indenture Act, if such qualification is required;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) to make such provisions as necessary for the issuance of Additional Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) to provide for any Restricted Subsidiary to provide a Guarantee in accordance with <u>Section</u> <u>3.2</u>, to add Guarantees with respect to the Notes, to add security to or for the benefit of the Notes, or to confirm and evidence the release, termination, discharge or retaking of any Guarantee or Lien with respect to or securing the Notes when such release, termination, discharge or retaking is provided for under this Indenture;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) to evidence and provide for the acceptance and appointment under this Indenture or the Collateral Documents of a successor Trustee, successor Notes Collateral Agent or successor Paying Agent thereunder pursuant to the requirements hereof or to provide for the accession by the Trustee or the Notes Collateral Agent to any Notes Document;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) to secure the Notes and/or the Note Guarantees or to add collateral thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) to add an obligor or a Guarantor under this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes not prohibited by this Indenture, including to facilitate the issuance and administration of Notes; *provided, however*, that such amendment does not materially and adversely affect the rights of Holders to transfer the Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) to comply with the rules and procedures of any applicable securities depositary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) to make any amendment to the provisions of this Indenture, the Note Guarantees and/or the Notes to eliminate the effect of any Accounting Change or in the application thereof as described in the last paragraph of the definition of "GAAP";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) to mortgage, pledge, hypothecate or grant any other Lien in favor of the Trustee or the Notes Collateral Agent for the benefit of the Notes Secured Parties, as additional security for the payment and performance of all or any portion of the Notes Obligations, in any property or assets, including any which are required to be mortgaged, pledged or hypothecated, or in which a Lien is required to be granted to or for the benefit of the Trustee or the Notes Collateral Agent pursuant to this Indenture, any of the Collateral Documents or otherwise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) to add additional secured parties to any Collateral Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) to enter into (i) any intercreditor agreement having substantially similar terms with respect to the Holders as those set forth in the Intercreditor Agreement, taken as a whole, or any joinder thereto or (ii) a Customary Junior Lien Intercreditor Agreement or any joinder thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) in the case of any Collateral Document, to include therein any legend required to be set forth therein pursuant to the Intercreditor Agreement or any Customary Junior Lien Intercreditor Agreement or to modify any such legend as required by the Intercreditor Agreement or any Customary Junior Lien Intercreditor Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) to provide for the accession, joinder or succession of any parties to the Collateral Documents (and other amendments that are administrative or ministerial in nature) in connection with an amendment, renewal, extension, substitution, refinancing, restructuring, replacement, supplementing or other modification from time to time of the Credit Agreement or any other agreement that is not prohibited by this Indenture.

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Subject to <u>Section</u> <u>9.2</u>, upon the request of the Issuer and upon receipt by the Trustee and the Notes Collateral Agent of the documents described in <u>Sections 9.6</u> and <u>13.2</u>, the Trustee and/or the Notes Collateral Agent will join with the Issuers and the Guarantors in the execution of such amended or supplemental indenture, security documents or intercreditor agreements, unless such amended or supplemental indenture, security documents or intercreditor agreements affects the Trustee's or Notes Collateral Agent's own rights, duties, liabilities or immunities under this Indenture and the Collateral Documents or otherwise, in which case the Trustee or Notes Collateral Agent, as applicable, may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture, security documents or intercreditor agreements.

Section 9.2 <u>With Consent of Holders</u>. Except as provided below in this <u>Section</u> <u>9.2</u>, the Issuers, the Guarantors, the Trustee and the Notes Collateral Agent may amend or supplement this Indenture, any Guarantee, the Collateral Documents and the Notes issued hereunder with the consent of the Holders of at least a majority in principal amount of all the outstanding Notes issued under this Indenture, including, without limitation, consents obtained before or after a Change of Control or in connection with a purchase of, or tender offer or exchange offer for, Notes, and any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes, the Note Guarantees or the Collateral Documents may be waived with the consent of the Holders of at least a majority in principal amount of all the outstanding Notes issued under this Indenture (including consents obtained before or after a Change of Control or in connection with a purchase of or tender offer or exchange offer for Notes). <u>Section</u> <u>2.12</u> and <u>Section</u> <u>13.4</u> shall determine which Notes are considered to be "outstanding" for the purposes of this <u>Section</u> <u>9.2</u>.

Upon the request of the Issuer, and upon delivery to the Trustee and the Notes Collateral Agent, as applicable, of evidence of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee and/or the Notes Collateral Agent of the documents described in <u>Sections 9.6</u> and <u>13.2</u>, the Trustee and/or the Notes Collateral Agent will join with the Issuers and the Guarantors in the execution of such amended or supplemental indenture, security documents or intercreditor agreements unless such amended or supplemental indenture, security documents or intercreditor agreements affect the Trustee's or the Notes Collateral Agent's own rights, duties, liabilities or immunities under this Indenture or otherwise, in which case the Trustee or the Notes Collateral Agent, as applicable, may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture, security documents or intercreditor agreements.

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Without the consent of each Holder of Notes affected, an amendment, supplement or waiver may not, with respect to any Notes issued thereunder and held by a nonconsenting Holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) reduce the principal amount of such Notes whose Holders must consent to an amendment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) reduce the stated rate of or extend the stated time for payment of interest on any such Note (other than provisions relating to <u>Section</u> <u>3.5</u> and <u>Section</u> <u>3.9</u>);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) reduce the principal of or extend the Stated Maturity of any such Note (other than provisions relating to <u>Section</u> <u>3.5</u> and <u>Section</u> <u>3.9</u>);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) reduce the premium payable upon the redemption of any such Note or change the time at which any such Note may be redeemed, in each case as set forth in <u>Section</u> <u>5.7</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) make any such Note payable in currency other than that stated in such Note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) impair the right of any Holder to institute suit for the enforcement of any payment of principal of and interest on such Holder's Notes on or after the due dates therefor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) waive a Default or Event of Default with respect to the nonpayment of principal, premium or interest (except pursuant to a rescission of acceleration of the Notes by the Holders of at least a majority in principal amount of such Notes outstanding and a waiver of the payment default that resulted from such acceleration); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) make any change in the amendment or waiver provisions which require the Holders' consent described in this <u>Section</u> <u>9.2</u>.

Notwithstanding the foregoing, without the consent of the Holders of at least 66-2/3% in aggregate principal amount of the Notes then outstanding, no amendment or waiver may (A) make any change in any Collateral Document or the provisions in this Indenture dealing with Collateral or application of trust proceeds of the Collateral with the effect of releasing the Liens on all or substantially all of the Collateral which secure the Obligations in respect of the Notes or (B) change or alter the priority of the Liens securing the Obligations in respect of the Notes in all or substantially all of the Collateral in any way materially adverse, taken as a whole, to the Holders, other than, in each case, as provided under the terms of this Indenture, the Collateral Documents or any Intercreditor Agreement.

It shall not be necessary for the consent of the Holders under this Indenture to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. A consent to any amendment, supplement or waiver under this Indenture by any Holder of the Notes given in connection with a tender or exchange of such Holder's Notes shall not be rendered invalid by such tender or exchange.

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Section 9.3 <u>[Reserved]</u>.

Section 9.4 <u>Revocation and Effect of Consents and Waivers</u>. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent or waiver is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent or waiver as to such Holder's Note or portion of its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described in this <u>Section</u> <u>9.4</u> or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.

Section 9.5 <u>Notation on or Exchange of Notes</u>. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee shall, upon receipt of an Issuer Order, authenticate new Notes that reflect the amendment, supplement or waiver.

Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

Section 9.6 <u>Trustee to Sign Amendments</u>. The Trustee and the Notes Collateral Agent shall sign any amended or supplemental indenture, security documents or intercreditor agreements authorized pursuant to this <u>Article IX</u> if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee or the Notes Collateral Agent, as applicable. In executing any amended or supplemental indenture, the Trustee will be entitled to receive and (subject to <u>Sections 7.1</u> and <u>7.2</u>) shall be fully protected in conclusively relying upon, in addition to the documents required by <u>Section</u> <u>13.2</u>, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture or security documents or intercreditor agreements is authorized or permitted by this Indenture and is valid, binding and enforceable against the Issuers or any Guarantor, as the case may be, in accordance with its terms.

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**ARTICLE X** 

**<u>GUARANTEE</u>**

Section 10.1 <u>Guarantee</u>. Subject to the provisions of this <u>Article X</u>, each Guarantor that executes this Indenture or a supplemental indenture hereto will fully, unconditionally and irrevocably guarantee, as primary obligor and not merely as surety, jointly and severally with each other Guarantor, to each Holder, the Trustee and the Notes Collateral Agent the full and punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Notes and all other obligations and liabilities of the Issuers under this Indenture (including without limitation interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Issuers or any Guarantor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and the obligations under <u>Section</u> <u>7.7</u>), (all the foregoing being hereinafter collectively called the "<u>Guaranteed Obligations</u>"). Each Guarantor agrees that the Guaranteed Obligations will rank equally in right of payment with other Indebtedness of such Guarantor, except to the extent such other Indebtedness is subordinate to the Guaranteed Obligations, in which case the obligations of the Guarantors under the Note Guarantees will rank senior in right of payment to such other Indebtedness.

To evidence its Note Guarantee set forth in this <u>Section</u> <u>10.1</u>, each Guarantor hereby agrees that this Indenture shall be executed on behalf of such Guarantor by an Officer of such Guarantor.

Each Guarantor hereby agrees that its Note Guarantee set forth in this <u>Section</u> <u>10.1</u> shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Note, the Note Guarantee shall be valid nevertheless.

Each Guarantor further agrees (to the extent permitted by Law) that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound under this <u>Article X</u> notwithstanding any extension or renewal of any Guaranteed Obligation.

Each Guarantor waives presentation to, demand of payment from and protest to the Issuers of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Notes or the Guaranteed Obligations.

Each Guarantor further agrees that its Note Guarantee herein constitutes a Guarantee of payment when due (and not a Guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Guaranteed Obligations.

Except as set forth in <u>Section</u> <u>10.2</u>, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Guaranteed Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the Guaranteed Obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Issuers or any other person under this Indenture, the

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Notes or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement; (d) the release of any security held by any Holder for the Guaranteed Obligations; (e) the failure of any Holder to exercise any right or remedy against any other Guarantor; (f) any change in the ownership of the Issuers; (g) any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations; or (h) any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.

Each Guarantor agrees that its Note Guarantee herein shall remain in full force and effect until payment in full of all the Guaranteed Obligations or such Guarantor is released from its Note Guarantee in compliance with <u>Section</u> <u>10.2</u>, <u>Article VIII</u> or <u>Article XI</u>. Each Guarantor further agrees that its Note Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of, premium, if any, interest on any of the Guaranteed Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Issuers or otherwise.

In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuers to pay any of the Guaranteed Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, each Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee on behalf of the Holders an amount equal to the sum of (i) the unpaid amount of such Guaranteed Obligations then due and owing and (ii) accrued and unpaid interest on such Guaranteed Obligations then due and owing (but only to the extent not prohibited by Law) (including interest accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Issuers or any Guarantor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding).

Each Guarantor further agrees that, as between such Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of its Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Guaranteed Obligations, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Guarantee.

Each Guarantor also agrees to pay any and all fees, costs and expenses (including attorneys' fees and expenses) incurred by the Trustee, the Notes Collateral Agent or the Holders in enforcing any rights under this <u>Section</u> <u>10.1</u>.

Notwithstanding anything to the contrary contained in this Indenture, each Guarantor may, to the extent it is required to do so by Law, deduct or withhold income or other similar Taxes imposed by any Governmental Authority from principal or interest payments hereunder.

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Section 10.2 <u>Limitation on Liability; Termination, Release and Discharge</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any term or provision of this Indenture to the contrary notwithstanding, the obligations of each Guarantor hereunder will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal, foreign, state or provincial law and not otherwise being void or voidable under any similar laws affecting the rights of creditors generally.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Note Guarantee of a Guarantor shall be automatically and unconditionally released and discharged upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a sale, exchange, transfer or other disposition (including by way of merger, amalgamation, consolidation, dividend distribution or otherwise) of the Capital Stock of such Guarantor or the sale, exchange, transfer or other disposition, of all or substantially all of the assets of the Guarantor to a Person other than to the Issuer or a Restricted Subsidiary, in each case, so long as such sale, transfer or other disposition does not violate <u>Section</u> <u>3.5</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the designation in accordance with this Indenture of the Guarantor as an Unrestricted Subsidiary or the occurrence of any event after which the Guarantor is or becomes an Excluded Subsidiary or is no longer a Restricted Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) defeasance or discharge of the Notes pursuant to <u>Article VIII</u> or <u>Article XI</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) to the extent that such Guarantor is not an Immaterial Subsidiary solely due to the operation of clause (i) of the definition of "<u>Immaterial Subsidiary</u>," upon the release of the guarantee referred to in such clause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) such Guarantor being (or being substantially concurrently) released or discharged from all of (i) its Guarantees of payment by the Issuers of any Indebtedness under the Credit Agreement or (ii) in the case of a Note Guarantee made by a Guarantor (each, an "<u>Other Guarantee</u>") as a result of its Guarantee of other Indebtedness of the Issuer, the Co-Issuer or a Guarantor pursuant to <u>Section</u> <u>3.7</u>, the relevant Indebtedness, except in the case of (i) or (ii), a release as a result of the repayment in full or termination of the Indebtedness specified in (i) or (ii) under such Guarantee (it being understood that a release subject to a contingent reinstatement is still considered a release, and if any such Indebtedness or such Guarantor under the Credit Agreement or any Other Guarantee is so reinstated, such Note Guarantee shall also be reinstated);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) upon the merger, amalgamation or consolidation of any Guarantor with and into the Issuer, the Co-Issuer or another Guarantor or upon the liquidation of such Guarantor, in each case, in compliance with the applicable provisions of this Indenture; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) upon the achievement of Investment Grade Status by the Notes; *provided* that such Note Guarantee shall be reinstated upon the Reversion Date.

Section 10.3 <u>Right of Contribution</u>. Each Guarantor hereby agrees that to the extent that any Guarantor shall have paid more than its proportionate share of any payment made on the obligations under the Note Guarantees, such Guarantor shall be entitled to seek and receive contribution from and against the Issuers or any other Guarantor who has not paid its proportionate share of such payment. The provisions of this <u>Section</u> <u>10.3</u> shall in no respect limit the obligations and liabilities of each Guarantor to the Trustee, the Notes Collateral Agent and the Holders and each Guarantor shall remain liable to the Trustee, the Notes Collateral Agent and the Holders for the full amount guaranteed by such Guarantor hereunder.

Section 10.4 <u>No Subrogation</u>. Notwithstanding any payment or payments made by each Guarantor hereunder, no Guarantor shall be entitled to be subrogated to any of the rights of the Trustee, the Notes Collateral Agent or any Holder against the Issuers or any other Guarantor or any collateral security or guarantee or right of offset held by the Trustee, the Notes Collateral Agent or any Holder for the payment of the Guaranteed Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Issuers or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Trustee, the Notes Collateral Agent and the Holders by the Issuers on account of the Guaranteed Obligations are paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Guaranteed Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Trustee, the Notes Collateral Agent and the Holders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Trustee, if required), to be applied against the Guaranteed Obligations.

**ARTICLE XI** 

**<u>SATISFACTION AND DISCHARGE</u>**

Section 11.1 <u>Satisfaction and Discharge</u>. This Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder, when:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) all Notes that have been authenticated and delivered, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust, have been delivered to the Trustee for cancellation; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) all such Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable by reason of the making of a notice of redemption or otherwise or (ii) will become due and payable within one year at their Stated Maturity or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee, in the name, and at the expense of the Issuer;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the Issuers have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in Dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on such Notes not previously delivered to the Trustee for cancellation, for principal, premium, if any, and interest to the date of deposit (in the case of Notes that have become due and payable), or to the Stated Maturity or redemption date, as the case may be; *provided* that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee equal to the Applicable Premium calculated as of the date of the notice of redemption, as calculated by the Issuers or on behalf of the Issuers by such Person as the Issuers shall designate, with any Applicable Premium Deficit only required to be deposited with the Trustee on or prior to the date of redemption, and any Applicable Premium Deficit shall be set forth in an Officer's Certificate delivered to the Trustee at least two Business Days prior to the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be applied toward such redemption;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) no Default or Event of Default (other than that resulting from borrowing funds to be applied to make such deposit and the granting of Liens in connection therewith) with respect to this Indenture or the Notes issued hereunder shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit shall not result in a breach or violation of, or constitute a default under the Credit Facilities or any other material agreement or instrument (other than this Indenture) to which the Issuers or any Guarantor is a party or by which the Issuers or any Guarantor is bound;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Issuers have paid or caused to be paid all sums payable by the Issuers under this Indenture; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the Issuers have delivered irrevocable instructions to the Trustee to apply the deposited money in Dollars toward the payment of such Notes issued hereunder at maturity or the redemption date, as the case may be.

In addition, the Issuers shall deliver an Officer's Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge of this Indenture have been satisfied.

Notwithstanding the satisfaction and discharge of this Indenture, the Issuers' obligations to the Trustee and the Notes Collateral Agent in <u>Section</u> <u>7.7</u> and <u>Section</u> <u>12.7(z)</u> and, if money in Dollars has been deposited with the Trustee pursuant to clause (a)(2) of this <u>Section</u> <u>11.1</u>, the provisions of <u>Sections 11.2</u> and <u>8.6</u> will survive.

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Section 11.2 <u>Application of Trust Money</u>. Subject to the provisions of <u>Section</u> <u>8.6</u>, all money in Dollars or U.S. Government Obligations deposited with the Trustee pursuant to <u>Section</u> <u>11.1</u> shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium) and interest for whose payment such money in Dollars or U.S. Government Obligations has been deposited with the Trustee; but such money in Dollars or U.S. Government Obligations need not be segregated from other funds except to the extent required by Law.

If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with <u>Section</u> <u>11.1</u> by reason of any legal proceeding or by reason of any order or judgment of any court or Governmental Authority enjoining, restraining or otherwise prohibiting such application, the Issuers' and any Guarantor's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to <u>Section</u> <u>11.1</u>; *provided* that if the Issuers have made any payment of principal of, premium or interest on, any Notes because of the reinstatement of its obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

**ARTICLE XII** 

**<u>COLLATERAL</u>**

Section 12.1 <u>Collateral Documents</u>.

The due and punctual payment of the principal of, premium and interest on the Notes when and as the same shall be due and payable, whether on an Interest Payment Date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of, premium and interest on the Notes and performance of all other Obligations of the Issuers and the Guarantors to the Holders, the Trustee or the Notes Collateral Agent under this Indenture, the Notes, the Note Guarantees, and the Collateral Documents, according to the terms hereunder or thereunder, shall be secured as provided in the Collateral Documents (upon the entry into such documents), which define the terms of the Liens that secure Notes Obligations, subject to the terms of the Intercreditor Agreement. The Trustee, the Issuers and the Guarantors hereby acknowledge and agree that the Notes Collateral Agent holds its Lien on the Collateral for the benefit of the Holders, the Trustee and the Notes Collateral Agent and pursuant to the terms of the Collateral Documents and subject to the Intercreditor Agreement. Each Holder, by accepting a Note, consents and agrees to the terms of the Collateral Documents (including the provisions providing for the possession, use, release and foreclosure of Collateral) and the Intercreditor Agreement, each as may be in effect or may be amended from time to time in accordance with their terms and this Indenture, and authorizes and directs the Notes Collateral Agent to enter into the Collateral Documents and the Intercreditor Agreement and to perform its obligations and exercise its rights thereunder in accordance therewith. The Issuers shall deliver to the Notes Collateral Agent copies of all documents required to be filed pursuant to the Collateral Documents, and will do or cause to be done all such acts and things as may be reasonably required by the next sentence of this <u>Section</u> <u>12.1</u>, to assure and confirm to the Notes Collateral Agent the security interest in the Collateral contemplated hereby, by the Collateral Documents or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby,

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Section 12.2 <u>Release of Collateral</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) to enable the Issuers and/or one or more Guarantors to consummate the sale, transfer or other disposition (including by the termination of capital leases or the repossession of the leased property in a capital lease by the lessor) of such property or assets (to a Person that is not the Issuer or a Subsidiary of the Issuer) to the extent permitted by <u>Section</u> <u>3.5</u>; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in the case of a Guarantor that is released from its Guarantee with respect to the Notes pursuant to the terms of this Indenture, the release of the property and assets of such Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Liens on the Collateral securing the Notes and the Note Guarantees also will be automatically released:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) upon payment in full of the principal of, together with accrued and unpaid interest on, the Notes and all other Obligations under this Indenture, the Note Guarantees and the Collateral Documents that are due and payable at or prior to the time such principal, together with accrued and unpaid interest, are paid,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) upon a Legal Defeasance or Covenant Defeasance under this Indenture as described under <u>Section</u> <u>8.2</u> and <u>Section</u> <u>8.3</u>, respectively, or a discharge of this Indenture as described under <u>Section</u> <u>11.1</u>,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) upon the occurrence of an Investment Grade Event; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) pursuant to the Collateral Documents or the Intercreditor Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding <u>Section</u> <u>12.2(b)(3)</u>, if, after any Investment Grade Event, both of the Rating Agencies withdraw their Investment Grade Status or downgrade the rating assigned to the Notes below an Investment Grade Status, the Issuers shall use commercially reasonable efforts to take all actions reasonably necessary to (i) cause Holdings, Holdings GP and the Issuer's Restricted Subsidiaries, other than Excluded Subsidiaries, to provide Note Guarantees in favor of the Trustee and (ii) to provide to the Notes Collateral Agent for its benefit and the benefit of the Trustee and the Holders of the Notes valid, perfected, first priority security interests (subject to Permitted Liens) in the Collateral within ninety (90) days after such Reversion Date or as soon as reasonably practicable thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) With respect to any release of Collateral, upon receipt of an Officer's Certificate stating that all conditions precedent under this Indenture, the Collateral Documents and the Intercreditor Agreement, as applicable, to such release have been met and that it is permitted for the Trustee and/or Notes Collateral Agent to execute and deliver the documents requested by the Issuers in connection with such release and any necessary or proper instruments of termination, satisfaction or release prepared by the Issuers, the Trustee and the Notes Collateral Agent shall execute, deliver or acknowledge (at the Issuers' expense) such instruments or releases to evidence the release of any Collateral permitted to be released pursuant to this Indenture or the Collateral Documents or the Intercreditor Agreement and shall do or cause to be done (at the Issuers' expense) all acts reasonably requested of them to release such Lien as soon as is reasonably practicable. Neither the Trustee nor the Notes Collateral Agent shall be liable for any such release undertaken in reliance upon any such Officer's Certificate, and notwithstanding any term hereof or in any Collateral Document or in the Intercreditor Agreement to the contrary, the Trustee and the Notes Collateral Agent shall not be under any obligation to release any such Lien and security interest, or execute and deliver any such instrument of release, satisfaction or termination, unless and until it receives such Officer's Certificate, upon which it shall be entitled to conclusively rely.

Section 12.3 <u>Suits to Protect the Collateral</u>.

Subject to the provisions of <u>Article VII</u> and the Collateral Documents and the Intercreditor Agreement, the Trustee may or may direct the Notes Collateral Agent to take all actions it determines in order to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) enforce any of the terms of the Collateral Documents; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) collect and receive any and all amounts payable in respect of the Obligations hereunder.

Subject to the provisions of the Collateral Documents and the Intercreditor Agreement, the Trustee and the Notes Collateral Agent shall have the power to institute and to maintain such suits and proceedings as the Trustee or the Notes Collateral Agent may determine to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of any of the Collateral Documents or this Indenture, and such suits and proceedings as the Trustee or the Notes Collateral Agent may determine to preserve or protect its interests and the interests of the Holders in the Collateral. Nothing in this <u>Section</u> <u>12.3</u> shall be considered to impose any such duty or obligation to act on the part of the Trustee or the Notes Collateral Agent.

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Section 12.4 <u>Authorization of Receipt of Funds by the Trustee Under the Collateral Documents</u>.

Subject to the provisions of the Intercreditor Agreement, the Trustee is authorized to receive any funds for the benefit of the Holders distributed under the Collateral Documents, and to make further distributions of such funds to the Holders according to the provisions of this Indenture.

Section 12.5 <u>Purchaser Protected</u>.

In no event shall any purchaser in good faith of any property purported to be released hereunder be bound to ascertain the authority of the Notes Collateral Agent or the Trustee to execute the applicable release or to inquire as to the satisfaction of any conditions required by the provisions hereof for the exercise of such authority or to see to the application of any consideration given by such purchaser or other transferee; nor shall any purchaser or other transferee of any property or rights permitted by this <u>Article XII</u> to be sold be under any obligation to ascertain or inquire into the authority of the Issuer or the applicable Guarantor to make any such sale or other transfer.

Section 12.6 <u>Powers Exercisable by Receiver or Trustee</u>.

In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this <u>Article XII</u> upon the Issuers or a Guarantor with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Issuers or a Guarantor or of any Officer or Officers thereof required by the provisions of this <u>Article XII</u>; and if the Trustee or the Notes Collateral Agent shall be in the possession of the Collateral under any provision of this Indenture, then such powers may be exercised by the Trustee or the Notes Collateral Agent.

Section 12.7 <u>Notes Collateral Agent</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each of the Issuer and the Co-Issuer and each of the Holders by acceptance of the Notes hereby designates and appoints the Notes Collateral Agent as its agent under this Indenture, the Collateral Documents and the Intercreditor Agreement, and each of the Issuer and the Co-Issuer and each of the Holders by acceptance of the Notes hereby irrevocably authorizes the Notes Collateral Agent to take such action on its behalf under the provisions of this Indenture, the Collateral Documents and the Intercreditor Agreement, and to exercise such powers and perform such duties as are expressly delegated to the Notes Collateral Agent by the terms of this Indenture, the Collateral Documents and the Intercreditor Agreement, and consents and agrees to the terms of the Intercreditor Agreement and each Collateral Document, as the same may be in effect or may be amended, restated, supplemented or otherwise modified from time to time in accordance with their respective terms. The Notes Collateral Agent agrees to act as such on the express conditions contained in this <u>Section</u> <u>12.7</u>. Each Holder agrees that any action taken by the Notes Collateral Agent in accordance with the provisions of this Indenture, the Intercreditor Agreement and the Collateral Documents, and the exercise by the Notes Collateral Agent of any rights or remedies set forth herein and therein shall be authorized and

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binding upon all Holders. Notwithstanding any provision to the contrary contained elsewhere in this Indenture, the Collateral Documents and the Intercreditor Agreement, the duties of the Notes Collateral Agent shall be ministerial and administrative in nature, and the Notes Collateral Agent shall not have any duties or responsibilities, except those expressly set forth herein and in the Collateral Documents and the Intercreditor Agreement, to which the Notes Collateral Agent is a party, nor shall the Notes Collateral Agent have or be deemed to have any trust or other fiduciary relationship with the Trustee, any Holder or any Grantor, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Indenture, the Collateral Documents and the Intercreditor Agreement, or otherwise exist against the Notes Collateral Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in this Indenture with reference to the Notes Collateral 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 merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Notes Collateral Agent may perform any of its duties under this Indenture, the Collateral Documents or the Intercreditor Agreement by or through receivers, agents, employees, attorneys-in-fact or with respect to any specified Person, such Person's Affiliates, and the respective officers, directors, employees, agents, advisors and attorneys-in-fact of such Person and its Affiliates (a "<u>Related Person</u>"), and shall be entitled to advice of counsel concerning all matters pertaining to such duties, and shall be entitled to act upon, and shall be fully protected in taking action in reliance upon any advice or opinion given by legal counsel. The Notes Collateral Agent shall not be responsible for the negligence or misconduct of any receiver, agent, employee, attorney-in-fact or Related Person that it selects as long as such selection was made in good faith and with due care.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Notes Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, certification, telephone message, statement, or other communication, document or conversation (including those by telephone or e-mail) believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including, without limitation, counsel to the Issuer or any other Grantor), independent accountants and other experts and advisors selected by the Notes Collateral Agent. The Notes Collateral Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, or other paper or document. The Notes Collateral Agent shall be fully justified in failing or refusing to take any action under this Indenture, the Collateral Documents or the Intercreditor Agreement unless it shall first receive such advice or concurrence of the Trustee or the Holders of a majority in aggregate principal amount of the Notes as it determines and, if it so requests, it shall first be indemnified to its satisfaction by the Holders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Notes Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Indenture, the Collateral Document or the Intercreditor Agreement in accordance with a request, direction, instruction or consent of the Trustee or the Holders of a majority in aggregate principal amount of the then outstanding Notes and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Holders.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) [Reserved]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Notes Collateral Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, unless a Trust Officer of the Notes Collateral Agent shall have received written notice from the Trustee or the Issuer referring to this Indenture, describing such Default or Event of Default and stating that such notice is a "notice of default." The Notes Collateral Agent shall take such action with respect to such Default or Event of Default as may be requested by the Trustee in accordance with <u>Article VI</u> or the Holders of a majority in aggregate principal amount of the Notes (subject to this <u>Section</u> <u>12.7</u>).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Notes Collateral Agent may resign at any time by 30 days' written notice to the Trustee and the Issuers, such resignation to be effective upon the acceptance of a successor agent to its appointment as Notes Collateral Agent. If the Notes Collateral Agent resigns under this Indenture, the Issuer shall appoint a successor collateral agent. If no successor collateral agent is appointed prior to the intended effective date of the resignation of the Notes Collateral Agent (as stated in the notice of resignation), the Trustee, at the direction of the Holders of a majority of the aggregate principal amount of the Notes then outstanding, may appoint a successor collateral agent, subject to the consent of the Issuer (which consent shall not be unreasonably withheld and which shall not be required during a continuing Event of Default). If no successor collateral agent is appointed and consented to by the Issuer pursuant to the preceding sentence within thirty (30) days after the intended effective date of resignation (as stated in the notice of resignation) the Notes Collateral Agent shall be entitled to petition a court of competent jurisdiction to appoint a successor. Upon the acceptance of its appointment as successor collateral agent hereunder, such successor collateral agent shall succeed to all the rights, powers and duties of the retiring Notes Collateral Agent, and the term "<u>Notes Collateral Agent</u>" shall mean such successor collateral agent, and the retiring Notes Collateral Agent's appointment, powers and duties as the Notes Collateral Agent shall be terminated. If the Notes Collateral Agent consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Notes Collateral Agent. After the retiring Notes Collateral Agent's resignation hereunder, the provisions of this <u>Section</u> <u>12.7</u> (and <u>Section</u> <u>7.7</u>) shall continue to inure to its benefit and the retiring Notes Collateral Agent shall not by reason of such resignation be deemed to be released from liability as to any actions taken or omitted to be taken by it while it was the Notes Collateral Agent under this Indenture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Wilmington Trust, National Association shall initially act as Notes Collateral Agent and shall be authorized to appoint co-Notes Collateral Agents as necessary in its sole discretion. Except as otherwise explicitly provided herein or in the Collateral Documents or the Intercreditor Agreement, neither the Notes Collateral Agent nor any of its respective officers, directors, employees or agents or other Related Persons shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The Notes Collateral Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither the Notes Collateral Agent nor any of its officers, directors, employees or agents shall be responsible for any act or failure to act hereunder, except for its own gross negligence or willful misconduct.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Notes Collateral Agent is authorized and directed to (i) enter into the Collateral Documents to which it is party, (ii) enter into the Intercreditor Agreement and any supplement thereto from time to time, (iii) enter into any equal priority or junior lien intercreditor agreement in respect of Liens that are not prohibited (including as to priority) under this Indenture (and any supplement thereto from time to time), (iv) make the representations of the Holders set forth in the Collateral Documents, the Intercreditor Agreement and such other intercreditor agreements, (iv) bind the Holders on the terms as set forth in the Collateral Documents, the Intercreditor Agreement and such other intercreditor agreements, and (v) perform and observe its obligations under the Collateral Documents, the Intercreditor Agreement and such other intercreditor agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If at any time or times the Trustee shall receive (i) by payment, foreclosure, set-off or otherwise, any proceeds of Collateral or any payments with respect to the Obligations arising under, or relating to, this Indenture, except for any such proceeds or payments received by the Trustee from the Notes Collateral Agent pursuant to the terms of this Indenture, or (ii) payments from the Notes Collateral Agent in excess of the amount required to be paid to the Trustee pursuant to <u>Article VI</u>, the Trustee shall promptly turn the same over to the Notes Collateral Agent, in kind, and with such endorsements as may be required to negotiate the same to the Notes Collateral Agent such proceeds to be applied by the Notes Collateral Agent pursuant to the terms of this Indenture, the Collateral Documents and the Intercreditor Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The Notes Collateral Agent (and its designated bailees, in accordance with the Intercreditor Agreement or any other applicable intercreditor agreement) is each Holder's agent and bailee for the purpose of perfecting the Holders' security interest in assets which, in accordance with Article 9 of the UCC (or the comparable provisions of the PPSA), can be perfected only by possession. Should the Trustee obtain possession of any such Collateral, upon request from the Issuers, the Trustee shall notify the Notes Collateral Agent thereof and promptly shall deliver such Collateral to the Notes Collateral Agent or otherwise deal with such Collateral in accordance with the Notes Collateral Agent's instructions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) The Notes Collateral Agent shall have no obligation whatsoever to the Trustee or any of the Holders to assure that the Collateral exists or is owned by any Grantor or is cared for, protected, or insured or has been encumbered, or that the Notes Collateral Agent's Liens have been properly or sufficiently or lawfully created, perfected, protected, maintained or enforced or are entitled to any particular priority, or to determine whether all of the Grantor's property constituting Collateral intended to be subject to the Lien and security interest of the Collateral Documents has been properly and completely listed or delivered, as the case may be, or the genuineness, validity, marketability or sufficiency thereof or title thereto, or to exercise at all or in any particular manner or under any duty of care, disclosure, or fidelity, or to continue exercising, any of the rights, authorities, and powers granted or available to the Notes Collateral Agent pursuant to this Indenture, any Collateral Document or the Intercreditor Agreement other than pursuant to the instructions of the Holders of a majority in aggregate principal amount of the Notes or as otherwise provided in the Collateral Documents.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) If the Issuers or any Guarantor (i) incurs any obligations in respect of Other Pari Lien Obligations or Notes Obligations or obligations with a Junior Lien Priority at any time when no applicable intercreditor agreement is in effect or at any time when Indebtedness constituting Other Pari Lien Obligations or Notes Obligations or obligations with a Junior Lien Priority entitled to the benefit of the Intercreditor Agreement is concurrently retired, and (ii) delivers to the Trustee and the Notes Collateral Agent an Officer's Certificate so stating and requesting the Trustee and Notes Collateral Agent, if applicable, to enter into an intercreditor agreement in favor of a designated agent or representative for the holders of the Other Pari Lien Obligations or Notes Obligations or obligations with a Junior Lien Priority so incurred, together with an Opinion of Counsel, the Notes Collateral Agent and Trustee, if applicable, shall (and are hereby authorized and directed to) enter into such intercreditor agreement (at the sole expense and cost of the Issuers, including legal fees and expenses of the Trustee and Notes Collateral Agent), bind the Holders on the terms set forth therein and perform and observe its obligations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) No provision of this Indenture, the Intercreditor Agreement or any Collateral Document shall require the Notes Collateral Agent (or the Trustee) to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder or to take or omit to take any action hereunder or thereunder or take any action at the request or direction of Holders (or the Trustee in the case of the Notes Collateral Agent) unless it shall have received indemnity satisfactory to the Notes Collateral Agent and the Trustee against potential costs and liabilities incurred by the Notes Collateral Agent relating thereto. Notwithstanding anything to the contrary contained in this Indenture, the Intercreditor Agreement or the Collateral Documents, in the event the Notes Collateral Agent is entitled or required to commence an action to foreclose or otherwise exercise its remedies to acquire control or possession of the Collateral, the Notes Collateral Agent shall not be required to commence any such action or exercise any remedy or to inspect or conduct any studies of any property under the mortgages or take any such other action if the Notes Collateral Agent has determined that the Notes Collateral Agent may incur personal liability as a result of the presence at, or release on or from, the Collateral or such property, of any hazardous substances. The Notes Collateral Agent shall at any time be entitled to cease taking any action described in this clause (m) if it no longer reasonably deems any indemnity, security or undertaking from the Issuer or the Holders to be sufficient.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) The Notes Collateral Agent (i) shall not be liable for any action taken or omitted to be taken by it in connection with this Indenture, the Intercreditor Agreement and the Collateral Documents or instrument referred to herein or therein, except to the extent that any of the foregoing are found by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from its own gross negligence or willful misconduct, (ii) shall not be liable for interest on any money received by it except as the Notes Collateral Agent may agree in writing with the Issuers (and money held in trust by the Notes Collateral Agent need not be segregated from other funds except to the extent required by Law) and (iii) may consult with counsel of its selection and the advice or opinion of such counsel as to matters of Law shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it in good faith and in accordance with the advice or opinion of such counsel. The grant of permissive rights or powers to the Notes Collateral Agent shall not be construed to impose duties to act.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Neither the Notes Collateral Agent nor the Trustee shall be liable for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters. Neither the Notes Collateral Agent nor the Trustee shall be liable for any indirect, special, punitive, incidental or consequential damages (included but not limited to lost profits) whatsoever, even if it has been informed of the likelihood thereof and regardless of the form of action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) The Notes Collateral Agent does not assume any responsibility for any failure or delay in performance or any breach by the Issuer or any other Grantor under this Indenture, the Intercreditor Agreement and the Collateral Documents. The Notes Collateral Agent shall not be responsible to the Holders or any other Person for any recitals, statements, information, representations or warranties contained in this Indenture, the Collateral Documents, the Intercreditor Agreement or in any certificate, report, statement, or other document referred to or provided for in, or received by the Notes Collateral Agent under or in connection with, this Indenture, the Intercreditor Agreement or any Collateral Document; the execution, validity, genuineness, effectiveness or enforceability of the Intercreditor Agreement and the Collateral Documents of any other party thereto; the genuineness, enforceability, collectability, value, sufficiency, location or existence of any Collateral, or the validity, effectiveness, enforceability, sufficiency, extent, perfection or priority of any Lien therein; the validity, enforceability or collectability of any Obligations; the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any obligor; or for any failure of any obligor to perform its Obligations under this Indenture, the Intercreditor Agreement and the Collateral Documents. The Notes Collateral Agent shall have no obligation to any Holder or any other Person to ascertain or inquire into the existence of any Default or Event of Default, the observance or performance by any obligor of any terms of this Indenture, the Intercreditor Agreement and the Collateral Documents, or the satisfaction of any conditions precedent contained in this Indenture, the Intercreditor Agreement and any Collateral Documents. The Notes Collateral Agent shall not be required to initiate or conduct any litigation or collection or other proceeding under this Indenture, the Intercreditor Agreement and the Collateral Documents unless expressly set forth hereunder or thereunder. The Notes Collateral Agent shall have the right at any time to seek instructions from the Holders with respect to the administration of this Indenture, the Collateral Documents and the Intercreditor Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) The parties hereto and the Holders hereby agree and acknowledge that neither the Notes Collateral Agent nor the Trustee shall assume, be responsible for or otherwise be obligated for any liabilities, claims, causes of action, suits, losses, allegations, requests, demands, penalties, fines, settlements, damages (including foreseeable and unforeseeable), judgments, expenses and costs (including but not limited to, any remediation, corrective action, response, removal or remedial action, or investigation, operations and maintenance or monitoring costs, for personal injury or property damages, real or personal) of any kind whatsoever, pursuant to any environmental law as a result of this Indenture, the Intercreditor Agreement and the Collateral Documents or any actions taken pursuant hereto or thereto. Further, the parties hereto and the Holders hereby agree and acknowledge that in the exercise of its rights under this Indenture, the Intercreditor Agreement and the Collateral Documents, the Notes Collateral Agent may hold or obtain indicia of ownership primarily to protect the security interest of the Notes

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Collateral Agent in the Collateral and that any such actions taken by the Notes Collateral Agent shall not be construed as or otherwise constitute any participation in the management of such Collateral. In the event that the Notes Collateral Agent or the Trustee is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any fiduciary or trust obligation for the benefit of another, which in either of the Notes Collateral Agent or the Trustee's sole discretion may cause the Notes Collateral Agent or the Trustee, as applicable, to be considered an "owner or operator" under the provisions of the Comprehensive Environmental Response, Compensation and Liability Act ("<u>CERCLA</u>"), 42 U.S.C. §9601, et seq., or otherwise cause the Notes Collateral Agent or the Trustee to incur liability under CERCLA or any other federal, state, provincial, territorial or local law, each of the Notes Collateral Agent and the Trustee reserves the right, instead of taking such action, to either resign as the Notes Collateral Agent or the Trustee or arrange for the transfer of the title or control of the asset to a court-appointed receiver. Neither the Notes Collateral Agent nor the Trustee shall be liable to the Issuers, the Guarantors or any other Person for any environmental claims or contribution actions under any federal, state, provincial, territorial or local law, rule or regulation by reason of either of the Notes Collateral Agent's or the Trustee's actions and conduct as authorized, empowered and directed hereunder or relating to the discharge, release or threatened release of hazardous materials into the environment. If at any time it is necessary or advisable for property to be possessed, owned, operated or managed by any Person (including the Notes Collateral Agent or the Trustee) other than the Issuers or the Guarantors, Holders of a majority in aggregate principal amount of the then outstanding Notes shall direct the Notes Collateral Agent or the Trustee to appoint an appropriately qualified Person (excluding the Notes Collateral Agent or the Trustee) who they shall designate to possess, own, operate or manage, as the case may be, the property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) Upon the receipt by the Notes Collateral Agent of a written request of the Issuers signed by an Officer (a "<u>Security Document Order</u>"), the Notes Collateral Agent is hereby authorized to execute and enter into, and shall execute and enter into, without the further consent of any Holder or the Trustee, any Collateral Document or amendment or supplement thereto to be executed after the Issue Date; provided that the Notes Collateral Agent shall not be required to execute or enter into any such Collateral Document which, in the Notes Collateral Agent's reasonable opinion is reasonably likely to adversely affect the rights, duties, liabilities or immunities of the Notes Collateral Agent or that the Notes Collateral Agent determines is reasonably likely to involve the Notes Collateral Agent in personal liability. Such Collateral Document Order shall (i) state that it is being delivered to the Notes Collateral Agent pursuant to, and is a Security Document Order referred to in, this <u>Section</u> <u>12.7(r)</u>, and (ii) instruct the Notes Collateral Agent to execute and enter into such Collateral Document. Other than as set forth in this Indenture, any such execution of a Collateral Document shall be at the direction and expense of the Issuers, upon delivery to the Notes Collateral Agent of an Officer's Certificate and Opinion of Counsel stating that all conditions precedent to the execution and delivery of the Collateral Document have been satisfied. The Holders, by their acceptance of the Notes, hereby authorize and direct the Notes Collateral Agent to execute such Collateral Documents (subject to the first sentence of this <u>Section</u> <u>12.7(r)</u>).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) Subject to the provisions of the applicable Collateral Documents and the Intercreditor Agreement, each Holder, by acceptance of the Notes, agrees that the Notes Collateral Agent shall execute and deliver the Intercreditor Agreement and the Collateral Documents to which it is a party and all agreements, documents and instruments incidental thereto, and act in accordance with the terms thereof. For the avoidance of doubt, the Notes Collateral Agent shall have no discretion under this Indenture, the Intercreditor Agreement or the Collateral Documents and shall not be required to make or give any determination, consent, approval, request or direction without the written direction of the Holders of a majority in aggregate principal amount of the then outstanding Notes or the Trustee, as applicable. Each Holder, by acceptance of the Notes, authorizes and directs the Notes Collateral Agent to execute and deliver the Intercreditor Agreement, in its capacity as Initial Other Collateral Agent (as defined therein), and all agreements, documents and instruments incidental thereto, and act in accordance with the terms thereof. Each Holder, by acceptance of the Notes, authorizes and directs the Notes Collateral Agent and the Trustee, as applicable to execute and deliver the Intercreditor Agreement and all agreements, documents and instruments incidental thereto, and act in accordance with the terms thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) After the occurrence and continuance of an Event of Default, the Trustee, acting at the direction of the Holders of a majority of the aggregate principal amount of the Notes then outstanding, may direct the Notes Collateral Agent in connection with any action required or permitted by this Indenture, the Collateral Documents or the Intercreditor Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) The Notes Collateral Agent is authorized to receive any funds for the benefit of itself, the Trustee and the Holders distributed under the Collateral Documents or the Intercreditor Agreement and to the extent not prohibited under the Intercreditor Agreement for turnover to the Trustee to make further distributions of such funds to itself, the Trustee and the Holders in accordance with the provisions of <u>Section</u> <u>6.10</u> and the other provisions of this Indenture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) In each case that the Notes Collateral Agent may or is required hereunder or under any Collateral Document or the Intercreditor Agreement to take any action (an "<u>Action</u>"), including without limitation to make any determination, to give consents, to exercise rights, powers or remedies, to release or sell Collateral or otherwise to act hereunder or under any Collateral Document or the Intercreditor Agreement, the Notes Collateral Agent may seek direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes. The Notes Collateral Agent shall not be liable with respect to any Action taken or omitted to be taken by it in accordance with the direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes. If the Notes Collateral Agent shall request direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes with respect to any Action, the Notes Collateral Agent shall be entitled to refrain from such Action unless and until the Notes Collateral Agent shall have received direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes, and the Notes Collateral Agent shall not incur liability to any Person by reason of so refraining.

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Agreement (including without limitation the filing or continuation of any UCC or PPSA financing, continuation statements or financing change statements or similar documents or instruments), nor shall the Notes Collateral Agent or the Trustee be responsible for, and neither the Notes Collateral Agent nor the Trustee makes any representation regarding, the validity, effectiveness or priority of any of the Collateral Documents or the security interests or Liens intended to be created thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Before the Notes Collateral Agent acts or refrains from acting in each case at the request or direction of the Issuers or the Guarantors, other than as set forth in this Indenture, it may require an Officer's Certificate and an Opinion of Counsel, which shall conform to the provisions of this <u>Section</u> <u>12.7</u> and <u>Section</u> <u>13.2</u>. The Notes Collateral Agent shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) Notwithstanding anything to the contrary contained herein, the Notes Collateral Agent shall act pursuant to the instructions of the Holders and the Trustee with respect to the Collateral Documents and the Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) The rights, privileges, benefits, immunities, indemnities and other protections given to the Trustee are extended to, and shall be enforceable by, the Notes Collateral Agent as if the Notes Collateral Agent were named as the Trustee herein and the Collateral Documents were named as this Indenture herein. The Notes Collateral Agent shall be entitled to compensation, reimbursement and indemnity as set forth in <u>Section</u> <u>7.7</u>, as if references therein to Trustee were references to Notes Collateral Agent.

**ARTICLE XIII** 

**<u>MISCELLANEOUS</u>**

Section 13.1 <u>Notices</u>. Any notice, request, direction, consent or communication made pursuant to the provisions of this Indenture or the Notes shall be in writing and delivered in person, sent by facsimile, sent by electronic mail in pdf format, delivered by commercial courier service or mailed by first-class mail, postage prepaid, addressed as follows:

if to the Issuers or to any Guarantor:

Evergreen AcqCo 1 LP

TVI, Inc.

11400 S.E. 6th Street, Suite 125

Bellevue, WA 98004

Attention: Richard Medway, General Counsel, Chief Compliance Officer and Secretary

Email: rmedway@savers.com

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

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New York, NY 10019-6064

Attention: Lawrence G. Wee, Esq.

Facsimile: (212) 492-0052

if to the Trustee or the Notes Collateral Agent, at its corporate trust office, which corporate trust office for purposes of this Indenture is at the date hereof located at:

Wilmington Trust, National Association

Global Capital Markets

1100 North Market Street

Wilmington, Delaware 19890

Attention: Evergreen AcqCo 1 LP/TVI, Inc. Administrator

Telecopy: (302) 636-4149

The Issuers, the Trustee or the Notes Collateral Agent, by written notice to the others, may designate additional or different addresses for subsequent notices or communications.

Any notice or communication to the Issuers or the Guarantors shall be deemed to have been given or made as of the date so delivered if personally delivered or if delivered electronically, in pdf format; when receipt is acknowledged, if telecopied; and seven (7) calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication to the Trustee or Notes Collateral Agent shall be deemed delivered upon receipt.

Any notice or communication sent to a Holder shall be electronically delivered or mailed to the Holder at the Holder's address as it appears in the Notes Register and shall be sufficiently given if so sent within the time prescribed.

Failure to mail or deliver electronically a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is sent in the manner provided above, it is duly given, whether or not the addressee receives it, except that notices to the Trustee shall be effective only upon receipt.

Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event (including any notice of redemption or purchase) to a Holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to DTC (or its designee) pursuant to the standing instructions from DTC or its designee.

Section 13.2 <u>Certificate and Opinion as to Conditions Precedent</u>.

Upon any request or application by the Issuers or any of the Guarantors to the Trustee and/or the Notes Collateral Agent to take or refrain from taking any action under this Indenture, the Issuers or such Guarantor, as the case may be, shall furnish to the Trustee or, if such action relates to a Collateral Document or an Intercreditor Agreement, the Notes Collateral Agent:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) an Officer's Certificate in form satisfactory to the Trustee or the Notes Collateral Agent, as applicable, (which shall include the statements set forth in <u>Section</u> <u>13.3</u>) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) an Opinion of Counsel in form satisfactory to the Trustee or the Notes Collateral Agent, as applicable, (which shall include the statements set forth in <u>Section</u> <u>13.3</u>) stating that, in the opinion of such counsel, all such conditions precedent have been satisfied and all covenants have been complied with.

Section 13.3 <u>Statements Required in Certificate or Opinion</u>. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a statement that the individual making such certificate or opinion has read such covenant or condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) a statement that, in the opinion of such individual, such individual has made such examination or investigation as is necessary to enable such individual to express an informed opinion as to whether or not such covenant or condition has been complied with; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officer's Certificate or on certificates of public officials.

Section 13.4 <u>When Notes Disregarded</u>. In determining whether the Holders of the required aggregate principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuers or any Subsidiaries shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee or the Notes Collateral Agent shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer of the Trustee or the Notes Collateral Agent, as the case may be, actually knows are so owned shall be so disregarded. Also, subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

Section 13.5 <u>Rules by Trustee, Paying Agent and Registrar</u>. The Trustee may make reasonable rules for action by, or at meetings of, Holders. The Registrar and the Paying Agent may make reasonable rules for their functions.

Section 13.6 <u>Legal Holidays</u>. A "<u>Legal Holiday</u>" is a Saturday, a Sunday or other day on which commercial banking institutions are authorized or required to be closed in New York, New York or the jurisdiction of the place of payment. If a payment date or a Redemption Date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.

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Section 13.7 <u>Governing Law</u>. THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES AND THE RIGHTS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 13.8 <u>Jurisdiction</u>. The Issuers and the Guarantors agree that any suit, action or proceeding against the Issuers or any Guarantor brought by any Holder, the Trustee or the Notes Collateral Agent arising out of or based upon this Indenture, the Guarantee or the Notes may be instituted in any state or Federal court in the Borough of Manhattan, New York, New York, and any appellate court from any thereof, and each of them irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding. The Issuers and the Guarantors irrevocably waive, to the fullest extent permitted by Law, any objection to any suit, action, or proceeding that may be brought in connection with this Indenture, the Guarantee or the Notes, including such actions, suits or proceedings relating to securities laws of the United States of America or any state thereof, in such courts whether on the grounds of venue, residence or domicile or on the ground that any such suit, action or proceeding has been brought in an inconvenient forum. The Issuers and the Guarantors agree that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the Issuers or the Guarantors, as the case may be, and may be enforced in any court to the jurisdiction of which the Issuers or the Guarantors, as the case may be, are subject by a suit upon such judgment.

Section 13.9 <u>Waivers of Jury Trial</u>. EACH OF THE ISSUER, THE CO-ISSUER, THE GUARANTORS, THE NOTES COLLATERAL AGENT AND THE TRUSTEE HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE NOTE GUARANTEES AND FOR ANY COUNTERCLAIM THEREIN.

Section 13.10 <u>USA PATRIOT Act</u>. The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, the Trustee and the Notes Collateral Agent, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account. The parties to this Indenture agree that they will provide the Trustee and the Notes Collateral Agent with such information as it may request in order to satisfy the requirements of the USA PATRIOT Act.

Section 13.11 <u>No Recourse Against Others</u>. No director, officer, employee, incorporator or shareholder of the Issuers or any of their respective Subsidiaries or Affiliates, or such (other than the Issuers and the Guarantors), shall have any liability for any obligations of the Issuers or the Guarantors under the Notes, the Note Guarantees or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

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Section 13.12 <u>Successors</u>. All agreements of the Issuers and each Guarantor in this Indenture and the Notes shall bind their respective successors, except, with respect to the Guarantors, as otherwise provided in Section 10.2(b). All agreements of the Trustee and the Notes Collateral Agent in this Indenture shall bind their respective successors.

Section 13.13 <u>Multiple Originals</u>. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile, PDF or other electronic transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile, PDF or other electronic transmission shall be deemed to be their original signatures for all purposes. Unless otherwise provided in this Indenture or in any Note, the words "execute," "execution," "signed" and "signature" and words of similar import used in or related to any document to be signed in connection with this Indenture, any Note or any of the transactions contemplated hereby (including amendments, waivers, consents and other modifications) shall be deemed to include electronic signatures and 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 in ink or the use of a paper-based recordkeeping system, as applicable, to the fullest 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 and any other similar state laws based on the Uniform Electronic Transactions Act; provided that, notwithstanding anything herein to the contrary, neither the Trustee nor the Notes Collateral Agent is under any obligation to agree to accept electronic signatures in any form or in any format except for facsimile and PDF unless expressly agreed to by the Trustee or the Notes Collateral Agent pursuant to reasonable procedures approved by the Trustee or the Notes Collateral Agent, as applicable.

Section 13.14 <u>**Table of Contents**; Headings</u>. The table of contents, cross-reference table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

Section 13.15 <u>Force Majeure</u>. In no event shall the Trustee or the Notes Collateral Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, epidemics, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, it being understood that the Trustee and Notes Collateral Agent shall use reasonable best efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

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Section 13.16 <u>Severability</u>. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 13.17 <u>Trust Indenture Act</u>. This Indenture is not qualified under the Trust Indenture Act, and the provisions of the Trust Indenture Act are not incorporated in this Indenture by reference.

Section 13.18 <u>Waiver of Immunities</u>. To the extent that the Issuers or any Guarantor or any of its properties, assets or revenues may have or may hereafter become entitled to, or have attributed to them, any right of immunity, on the grounds of sovereignty, from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, or from attachment in aid of execution of judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to their obligations, liabilities or any other matter under or arising out of or in connection with this Indenture, the Notes or the Note Guarantees, the Issuers and each Guarantor hereby irrevocably and unconditionally, to the extent permitted by applicable Law, waives and agrees not to plead or claim any such immunity and consents to such relief and enforcement.

Section 13.19 <u>Judgment Currency</u>. The Issuers and each Guarantor, jointly and severally, agrees to indemnify the recipient against any loss incurred by such recipient as a result of any judgment or order being given or made against the Issuers or any Guarantor for any amount due hereunder and such judgment or order being expressed and paid in a currency (the "<u>Judgment Currency</u>") other than Dollars and as a result of any variation as between (i) the rate of exchange at which the Dollar amount is converted into the Judgment Currency for the purpose of such judgment or order, and (ii) the rate of exchange in The City of New York at which such party on the date of payment of such judgment or order is able to purchase Dollars with the amount of the Judgment Currency actually received by such party if such party had utilized such amount of Judgment Currency to purchase Dollars as promptly as practicable upon such party's receipt thereof. The foregoing indemnity shall constitute a separate and independent obligation of the Issuers and each Guarantor and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term "rate of exchange" shall include any premiums and costs of exchange payable in connection with the purchase of, or conversion into, the relevant currency.

Section 13.20 <u>Intercreditor Agreement</u>. Reference is made to the Intercreditor Agreement. Each Holder, by its acceptance of a Note, (a) agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement and (b) authorizes and instructs the Trustee and the Notes Collateral Agent, as applicable, to enter into the Intercreditor Agreement as Trustee and as Notes Collateral Agent, as the case may be, and on behalf of such Holder, including without limitation, making the representations of the Holders contained therein. The foregoing provisions are intended as an inducement to the lenders under the Credit Agreement to extend credit and such lenders are intended third party beneficiaries of such provisions and the provisions of the Intercreditor Agreement.

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Section 13.21 <u>Criminal Code (Canada)</u>. If any provision of this Indenture would oblige any Guarantor that is incorporated or otherwise organized under the laws of Canada or any province or territory thereof, to make any payment of interest or other amount payable to any Holder in an amount or calculated at a rate which would be prohibited by applicable law or would result in a receipt by such Holder of "interest" at a "criminal rate" (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by that Holder of "interest" at a "criminal rate", such adjustment to be effected, to the extent necessary (but only to the extent necessary), as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) first, by reducing the amount or rate of interest required to be paid to the affected Holder under <u>Section</u> <u>2.15</u>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) thereafter, by reducing any fees, commissions, costs, expenses, premiums and other amounts required to be paid to the affected Lender which would constitute interest for purposes of section 347 of the Criminal Code (Canada).

[Signature on following pages]

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

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| | |
|:---|:---|
| **EVERGREEN ACQCO 1 LP** | **EVERGREEN ACQCO 1 LP** |
| By: Evergreen AcqCo GP LLC, its general partner | By: Evergreen AcqCo GP LLC, its general partner |
| By: | /s/ Jay Stasz |
|  | Name: Jay Stasz |
|  | Title: Chief Financial Officer and Treasurer |
| **TVI, INC.** | **TVI, INC.** |
| By: | /s/ Jay Stasz |
|  | Name: Jay Stasz |
|  | Title: Chief Financial Officer and Treasurer |
| **S-EVERGREEN HOLDING CORP.** | **S-EVERGREEN HOLDING CORP.** |
| **EVERGREEN ACQCO GP LLC** | **EVERGREEN ACQCO GP LLC** |
| **EVERGREEN ACQCO 2, INC.** | **EVERGREEN ACQCO 2, INC.** |
| **SAVERS RECYCLING, INC.** | **SAVERS RECYCLING, INC.** |
| **THRIFT INTERMEDIATE HOLDINGS I, INC.** | **THRIFT INTERMEDIATE HOLDINGS I, INC.** |
| **THRIFT INTERMEDIATE HOLDINGS II, INC.** | **THRIFT INTERMEDIATE HOLDINGS II, INC.** |
| **THRIFT ACQUISITION, INC.** | **THRIFT ACQUISITION, INC.** |
| **VILLAGE ECONOMY STORES, INC.** | **VILLAGE ECONOMY STORES, INC.** |
| **VILLAGE THRIFT STORES, INC.** | **VILLAGE THRIFT STORES, INC.** |
| **RLJNJ, INC. 2ND AVE. LLC** | **RLJNJ, INC. 2ND AVE. LLC** |
| **GREENDROP, LLC** | **GREENDROP, LLC** |
| **GREENDROP TRUCKING LLC** | **GREENDROP TRUCKING LLC** |
| **GREENDROP REALTY LLC** | **GREENDROP REALTY LLC** |
| **NARBERTH GREENDROP, LLC** | **NARBERTH GREENDROP, LLC** |
| **TAILING PERMIT LLC** | **TAILING PERMIT LLC** |
| **RCR REALTY MANAGEMENT LLC** | **RCR REALTY MANAGEMENT LLC** |
| **KENSINGTON PARTNERS L.P.** | **KENSINGTON PARTNERS L.P.** |
| **VALUE VILLAGE CANADA, INC.** | **VALUE VILLAGE CANADA, INC.** |
| **VALUE VILLAGE RECYCLING, ULC** | **VALUE VILLAGE RECYCLING, ULC** |
| **VALUE VILLAGE STORES** | **VALUE VILLAGE STORES** |
| By: | /s/ Jay Stasz |
|  | Name: Jay Stasz |
|  | Title: Chief Financial Officer and Treasurer |

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[Signature Page to this Indenture]

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| | |
|:---|:---|
| WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee and as Notes Collateral Agent | WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee and as Notes Collateral Agent |
| By: | /s/ Karen Ferry |
| Name: | Karen Ferry |
| Title: | Vice President |

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[Signature Page to this Indenture]

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EXHIBIT A

[FORM OF FACE OF GLOBAL RESTRICTED NOTE]

[Applicable Restricted Notes Legend]

[Depository Legend, if applicable]

[OID Legend, if applicable]

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| | |
|:---|:---|
| No. [<u> </u>] | Principal Amount<u> </u> $[as revised by the Schedule of Increases and Decreases in Global Note attached hereto]<sup>1</sup> |
|  | CUSIP NO. _______________________________ |
|  | ISIN NO. _________________________________ |

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EVERGREEN ACQCO 1 LP

TVI, INC.

9.750% Senior Secured Notes due 2028

Evergreen AcqCo 1 LP, a Delaware limited partnership (the "<u>Issuer</u>"), and TVI, Inc., a Washington state corporation (the "<u>Co-Issuer</u>" and, together with the Issuer, the "<u>Issuers</u>") promise to pay to [Cede & Co.],<sup>2</sup> or its registered assigns, the principal sum of<u> </u> U. S. dollars, [as revised by the Schedule of Increases and Decreases in Global Note attached hereto],<sup>3</sup> on April 26, 2028.

Interest Payment Dates: February 15 and August 15 commencing on August 15, 2023

Record Dates: February 1 and August 1

Additional provisions of this Note are set forth on the other side of this Note.

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<sup>1</sup> Insert in Global Notes only.

<sup>2</sup> Insert in Global Notes only.

<sup>3</sup> Insert in Global Notes only.

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IN WITNESS WHEREOF, the Issuers have caused this instrument to be duly executed.

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| | |
|:---|:---|
| EVERGREEN ACQCO 1 LP | EVERGREEN ACQCO 1 LP |
| By: |  |
|  | Name: |
|  | Title: |
| TVI, INC. | TVI, INC. |
| By: |  |
|  | Name: |
|  | Title: |

---

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TRUSTEE CERTIFICATE OF AUTHENTICATION

This Note is one of the 9.750% Senior Secured Notes due 2028 referred to in the within-mentioned Indenture.

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| | |
|:---|:---|
| WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee | WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee |
| By: |  |
|  | Authorized Signatory |

---

Dated:<u> </u>

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[FORM OF REVERSE SIDE OF NOTE]

EVERGREEN ACQCO 1 LP

TVI, INC.

9.750% SENIOR SECURED NOTES DUE 2028

Capitalized terms used herein and not defined herein have the

meanings ascribed thereto in the Indenture.

1. <u>Interest</u> 

The Issuers promise to pay interest on the principal amount of this Note at 9.750% per annum from February 6, 2023<sup>4</sup> until maturity. The Issuers will pay interest semi-annually in arrears every February 15 and August 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an "<u>Interest Payment Date</u>"). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; *provided*, that the first Interest Payment Date shall be August 15, 2023. The Issuers shall pay interest on overdue principal at the rate specified herein, and it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months.

2. <u>Method of Payment</u> 

By no later than 11:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest, on any Note is due and payable, the Issuers shall deposit with the Paying Agent a sum sufficient in immediately available funds to pay such principal, premium, and interest when due. Interest on any Note which is payable, and is timely paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered at the close of business on the preceding February 1 and August 1 at the office or agency of the Issuers maintained for such purpose pursuant to <u>Section</u> <u>2.3</u> of the Indenture. The principal of (and premium, if any) and interest on the Notes shall be payable at the office or agency of Paying Agent or Registrar designated by the Issuers maintained for such purpose (which shall initially be the corporate trust office of the Trustee maintained for such purpose), or at such other office or agency of the Issuers as may be maintained for such purpose pursuant to <u>Section</u> <u>2.3</u> of the Indenture; *provided*, *however*, that, at the option of the Paying Agent, each installment of interest may be paid by (i) check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Notes Register or (ii) wire transfer to an account located in the United States maintained by the payee, subject to the third to the last sentence of this paragraph. Payments in respect of Notes represented by a Global Note (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depository. Payments in respect of Notes represented by Definitive Notes (including principal, premium, if any, and interest) held by a Holder of at least $1,000,000 aggregate principal amount of Notes represented by Definitive

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<sup>4</sup> Or another date, to the extent Notes are issued after the Issue Date.

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Notes will be made in accordance with the Notes Register, or by wire transfer to a Dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). If an Interest Payment Date or a Redemption Date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.

3. <u>Paying Agent and Registrar</u> 

The Issuers initially appoint Wilmington Trust, National Association, as trustee (the "<u>Trustee</u>"), as Registrar and Paying Agent for the Notes. The Issuers may change any Registrar or Paying Agent without prior notice to the Holders. The Issuers or any Guarantor may act as Paying Agent, Registrar or transfer agent.

4. <u>Indenture</u> 

The Issuers issued the Notes under an Indenture dated as of February 6, 2023, among the Issuers, the Guarantors from time to time party thereto, the Trustee and the Notes Collateral Agent (as it may be amended or supplemented from time to time in accordance with the terms thereof, the "<u>Indenture</u>"). The terms of the Notes include those stated in the Indenture. The Notes are subject to all terms and provisions of the Indenture, and Holders are referred to the Indenture for a statement of those terms. In the event of a conflict between the terms of the Notes and the terms of the Indenture, the terms of the Indenture shall control.

The Notes are senior secured obligations of the Issuers. The aggregate principal amount of Notes that may be authenticated and delivered under the Indenture is unlimited. This Note is one of the 9.750% Senior Secured Notes due 2028 referred to in the Indenture. The Notes include (i) $550,000,000 principal amount of the Issuers' 9.750% Senior Secured Notes due 2028 issued under the Indenture on February 6, 2023 (the "<u>Initial Notes</u>") and (ii) if and when issued, additional Notes that may be issued from time to time under the Indenture subsequent to February 6, 2023 (the "<u>Additional Notes</u>") as provided in <u>Section</u> <u>2.1(a)</u> of the Indenture. The Initial Notes and the Additional Notes shall be considered collectively as a single class for all purposes of the Indenture; *provided* that the Additional Notes shall not be issued with the same CUSIP as the existing Notes unless such Additional Notes are fungible with the existing Notes for U.S. federal income tax purposes. The Indenture imposes certain limitations on the incurrence of indebtedness, the making of restricted payments, the sale of assets, the incurrence of certain liens, the making of payments for consents, the entering into of agreements that restrict distribution from restricted subsidiaries and the consummation of mergers and consolidations. The Indenture also imposes requirements with respect to the provision of financial information and the provision of guarantees of the Notes by certain subsidiaries.

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5. <u>Guarantees</u> 

To guarantee the due and punctual payment of the principal, premium, if any, and interest (including post-filing or post-petition interest in any proceeding under Bankruptcy Law) on the Notes and all other amounts payable by the Issuers under the Indenture and the Notes when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Notes and the Indenture, each Guarantor will unconditionally guarantee (and future guarantors, jointly and severally with the Guarantors, will fully and unconditionally Guarantee) such obligations on a senior secured basis pursuant to the terms of the Indenture.

6. <u>Redemption and Repurchase</u> 

The Notes are subject to optional and mandatory redemption, and may be the subject of certain repurchase events, as further described in the Indenture. Except as provided in the Indenture, the Issuers shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

7. <u>Denominations; Transfer; Exchange</u> 

The Notes shall be issuable only in fully registered form in minimum denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay a sum sufficient to cover any tax and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Note (A) for a period beginning (1) fifteen (15) calendar days before the mailing of a notice of an offer to repurchase or redeem Notes and ending at the close of business on the day of such mailing or (2) fifteen (15) calendar days before an Interest Payment Date and ending on such Interest Payment Date or (B) called for redemption, except the unredeemed portion of any Note being redeemed in part.

8. <u>Persons Deemed Owners</u> 

The registered Holder of this Note may be treated as the owner of it for all purposes.

9. <u>Unclaimed Money</u> 

If money for the payment of principal, premium, if any, interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuers at their written request unless an abandoned property law designates another Person to receive such money. After any such payment, Holders entitled to the money must look only to the Issuers and not to the Trustee for payment as general creditors unless an abandoned property law designates another person for payment.

10. <u>Discharge and Defeasance</u> 

Subject to certain exceptions and conditions set forth in the Indenture, the Issuers at any time may terminate some or all of their obligations under the Notes and the Indenture, as provided in Article VIII of the Indenture.

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11. <u>Amendment, Supplement, Waiver</u> 

Subject to certain exceptions contained in the Indenture, the Indenture, the Notes and the Collateral Documents may be amended, or a Default thereunder may be waived, as provided in Article IX of the Indenture.

12. <u>Defaults and Remedies</u> 

The Notes are subject to provisions with respect to Events of Default and remedies, as set forth in Article VI of the Indenture.

13. <u>Trustee Dealings with the Issuers</u> 

Subject to certain limitations set forth in the Indenture, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuers, Guarantors or their Affiliates with the same rights it would have if it were not Trustee. In addition, the Trustee shall be permitted to engage in transactions with the Issuers and their Affiliates and Subsidiaries.

14. <u>No Recourse Against Others</u> 

No director, officer, employee, incorporator or shareholder of the Issuers or any of their Subsidiaries or Affiliates, as such (other than the Issuers and the Guarantors), shall have any liability for any obligations of the Issuers or the Guarantors under the Notes, the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

15. <u>Authentication</u> 

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Note.

16. <u>Abbreviations</u> 

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors Act).

17. <u>CUSIP and ISIN Numbers</u> 

The Issuers have caused CUSIP and ISIN numbers, if applicable, to be printed on the Notes and has directed the Trustee to use CUSIP and ISIN numbers, if applicable, in notices of redemption or purchase as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption or purchase and reliance may be placed only on the other identification numbers placed thereon.

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18. <u>Governing Law</u> 

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

19. <u>Security</u> 

The Notes and the Note Guarantees will be secured by the Collateral on the terms and subject to the conditions set forth in the Indenture and the Collateral Documents. The Trustee and the Notes Collateral Agent, as the case may be, hold a security interest in the Collateral for the benefit of themselves and the Holders of the Notes, in each case pursuant to the Collateral Documents and the Intercreditor Agreement. Each Holder, by accepting this Note, consents and agrees to the terms of the Collateral Documents (including the provisions providing for the foreclosure and release of Collateral) and the Intercreditor Agreement, each as may be in effect or may be amended from time to time in accordance with their terms and the Indenture, and authorizes and directs each of the Trustee and the Notes Collateral Agent, as applicable, to enter into the Collateral Documents, the Intercreditor Agreement and any Customary Junior Lien Intercreditor Agreement on or following the Issue Date, and to perform its obligations and exercise its rights thereunder in accordance therewith.

The Issuers will furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture and the Collateral Documents. Requests may be made to:

Evergreen AcqCo 1 LP

TVI, Inc.

11400 S.E. 6th Street, Suite 125

Bellevue, WA 98004

Attention: Richard Medway, General Counsel, Chief Compliance Officer and Secretary

Email: rmedway@savers.com

With a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Attention: Lawrence G. Wee, Esq.

Facsimile: (212) 492-0052

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to:

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(Print or type assignee's name, address and zip code)

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(Insert assignee's social security or tax I.D. No.)

and irrevocably appoint ______________ agent to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.

Date: Your Signature:<u> </u>

Signature Guarantee:<u> </u> <br> (Signature must be guaranteed)

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Sign exactly as your name appears on the other side of this Note.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Exchange Act Rule 17Ad-15.

The undersigned hereby certifies that it is / is not an Affiliate of the Issuers and that, to its knowledge, the proposed transferee is / is not an Affiliate of the Issuers.

In connection with any transfer or exchange of any of the Notes evidenced by this certificate occurring prior to the date that is one year after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Issuers or any Affiliate of the Issuers, the undersigned confirms that such Notes are being:

CHECK ONE BOX BELOW:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) acquired for the undersigned's own account, without transfer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) transferred to the Issuers; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the "<u>Securities Act</u>"); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) transferred pursuant to an effective registration statement under the Securities Act; or

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)  |  | transferred pursuant to and in compliance with Regulation S under the Securities Act; or |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)  | ☐ | transferred pursuant to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904; or |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7)  | ☐ | transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933, as amended. |

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Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; *provided*, *however*, that if box (5), (6) or (7) is checked, the Issuers may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications and other information as the Issuers may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended, such as the exemption provided by Rule 144 under such Act.

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| | |
|:---|:---|
|  | Signature |
| Signature Guarantee: |  |
| (Signature must be guaranteed) | Signature |

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The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Exchange Act Rule 17Ad-15.

TO BE COMPLETED BY PURCHASER IF BOX (1) OR (3) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:

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[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTES

The following increases or decreases in this Global Note have been made:

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| | | | | |
|:---|:---|:---|:---|:---|
| Date of Exchange | Amount of decrease<br> in Principal Amount<br> of this Global Note | Amount of increase<br> in Principal Amount<br> of this Global Note | Principal Amount of<br> this Global Note<br> following such<br> decrease or increase | Signature of<br> authorized signatory<br> of Trustee or Notes<br> Custodian |

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OPTION OF HOLDER TO ELECT PURCHASE

If you elect to have this Note purchased by the Issuers pursuant to <u>Section</u> <u>3.5</u> or <u>3.9</u> of the Indenture, check either box:

Section 3.5 Section 3.9

If you want to elect to have only part of this Note purchased by the Issuers pursuant to <u>Section</u> <u>3.5</u> or <u>3.9</u> of the Indenture, state the principal amount (must be in minimum denominations of $2,000 or an integral multiple of $1,000 in excess thereof): $______________ and specify the denomination or denominations (which shall not be less than the minimum authorized denomination) of the Notes to be issued to the Holder for the portion of the within Note not being repurchased (in the absence of any such specification, one such Note will be issued for the portion not being repurchased): ______________.

Date:<u> </u> Your Signature<u> </u> <br> (Sign exactly as your name appears on the other side of the Note)

Signature Guarantee: <br> ((Signature must be guaranteed))

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Exchange Act Rule 17Ad-15.

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EXHIBIT B

Form of Supplemental Indenture to Add Guarantors

[ ] SUPPLEMENTAL INDENTURE, (this "<u>Supplemental Indenture</u>") dated as of [ ], by and among the parties that are signatories hereto as Guarantors (the "<u>Guaranteeing Entities</u>" and each a "<u>Guaranteeing Entity</u>"), Evergreen AcqCo 1 LP, as Issuer, TVI, Inc., as Co-Issuer, and Wilmington Trust, National Association, a national banking association, as Trustee and Notes Collateral Agent under the Indenture referred to below.

<u>W</u> <u>I</u> <u>T</u> <u>N</u> <u>E</u> <u>S</u> <u>S</u> <u>E</u> <u>T</u> <u>H</u>:

WHEREAS, each of the Issuer, the Co-Issuer, the Guarantors party thereto and the Trustee and the Notes Collateral Agent have heretofore executed and delivered an indenture dated as of February 6, 2023 (as amended, supplemented, waived or otherwise modified, the "<u>Indenture</u>"), providing for the issuance of an aggregate principal amount of $550 million of 9.750% Senior Secured Notes due 2028 of the Issuer and the Co-Issuer (the "<u>Notes</u>");

WHEREAS, the Indenture provides that under certain circumstances each Guaranteeing Entity shall execute and deliver to the Trustee and Notes Collateral Agent a supplemental indenture pursuant to which such Guaranteeing Entity shall unconditionally guarantee, on a joint and several basis with the other Guarantors, all of the Issuer's and Co-Issuers' Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the "<u>Guarantee</u>"); and

WHEREAS, pursuant to <u>Section</u> <u>9.1</u> of the Indenture, the Issuer, the Co-Issuer, any Guarantor, the Trustee and the Notes Collateral Agent are authorized to execute and deliver a supplemental indenture to add additional Guarantors, without the consent of any Holder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Entity, the Issuer, the Co-Issuer, the other Guarantors, the Trustee and the Notes Collateral Agent mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

DEFINITIONS

Section 1.1. *Defined Terms*. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words "herein," "hereof" and "hereby" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

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ARTICLE II

AGREEMENT TO BE BOUND; GUARANTEE

Section 2.1. *Agreement to be Bound*. Each Guaranteeing Entity hereby becomes a party to the Indenture as a Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Guarantor under the Indenture.

Section 2.2. *Guarantee*. Each Guaranteeing Entity agrees, on a joint and several basis with all the existing Guarantors [and the other Guaranteeing Entities], to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes, the Trustee and the Notes Collateral Agent the Guaranteed Obligations pursuant to Article <u>X</u> of the Indenture on a senior basis.

ARTICLE III

MISCELLANEOUS

Section 3.1. *Notices*. All notices and other communications to the Guaranteeing Entities shall be given as provided in the Indenture to such Guaranteeing Entities, at their addresses set forth below, with a copy to the Issuers as provided in the Indenture for notices to the Issuers.

[INSERT ADDRESS]

Section 3.2. *Merger, Consolidation or Amalgamation*. No Guaranteeing Entity shall sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into another Person (other than the Issuer or any Restricted Subsidiary that is a Guarantor or becomes a Guarantor concurrently with the transaction) except in accordance with <u>Section</u> <u>4.1(f)</u> of the Indenture.

Section 3.3. *Release of Guarantee*. This Guarantee shall be released in accordance with <u>Section</u> <u>10.2</u> of the Indenture.

Section 3.4. *Parties*. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders, the Trustee and the Notes Collateral Agent, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained.

Section 3.5. *Governing Law*. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 3.6. *Severability*. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

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Section 3.7. *Benefits Acknowledged*. Each Guaranteeing Entity's Guarantee is subject to the terms and conditions set forth in the Indenture. Each Guaranteeing Entity acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.

Section 3.8. *Ratification of Indenture; Supplemental Indentures Part of Indenture*. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

Section 3.9. *The Trustee and the Notes Collateral Agent*. The Trustee and the Notes Collateral Agent make no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

Section 3.10. *Counterparts*. The parties hereto may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 3.11. *Execution and Delivery*. Each Guaranteeing Entity agrees that its Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.

Section 3.12. *Headings*. The headings of the Articles and the Sections in this Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

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

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| |
|:---|
| [GUARANTEEING ENTITY], as a Guarantor |
| By: |
| Name: |
| Title: |

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| |
|:---|
| EVERGREEN ACQCO 1 LP |
| By: |
| Name: |
| Title: |

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| |
|:---|
| TVI, INC. |
| By: |
| Name: |
| Title: |

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| |
|:---|
| WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee and Notes Collateral Agent |
| By: |
| Name: |
| Title: |

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*[Signature Page to Supplemental Indenture]*

## Exhibit 23.1

**Exhibit 23.1** 

**Consent of Independent Registered Public Accounting Firm** 

We consent to the use of our report dated May 4, 2022, with respect to the consolidated financial statements of Savers Value Village, Inc. (Successor), formerly known as S-Evergreen Holding LLC, included herein and to the reference to our firm under the heading "Experts" in the prospectus.

/s/ KPMG LLP

Boise, Idaho

February 7, 2023

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**Consent of Independent Registered Public Accounting Firm** 

We consent to the use of our report dated May 4, 2022, with respect to the consolidated financial statements of S-Evergreen Holding Corp. (Predecessor), included herein and to the reference to our firm under the heading "Experts" in the prospectus.

/s/ KPMG LLP

Boise, Idaho

February 7, 2023

## Exhibit 23.2

**Exhibit 23.2** 

Consent of Independent Auditors

We consent to the inclusion in this Registration Statement on Form S-1 (file no. 333-261850) of Savers Value Village, Inc. of our report dated November 22, 2021, on our audit of the financial statements of Thrift Intermediate Holdings I, Inc. and Subsidiaries as of January 3, 2021 and for the year then ended. We also consent to the reference to our firm under the caption "Experts".

/s/ CohnReznick LLP

Parsippany, New Jersey

February 7, 2023

## Ex-Filing

**Exhibit 107** 

**Calculation of Filing Fee Tables** 

**<u>Form S-1</u>**

(Form Type)

**<u>Savers Value Village, Inc.</u>**

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered Securities</u> 

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Security<br> Type<br>| Security<br> Class<br> Title<br>| Fee<br> Calculation<br> or Carry<br> Forward<br> Rule<br>| Maximum<br> Aggregate<br> Offering<br> Price(1)(2)<br>| Fee<br> Rate<br>| Amount of<br> Registration<br> Fee<br>|
| &nbsp;&nbsp;&nbsp; Fees to Be<br> Paid<br>| Equity<br>| Common Stock, par value $0.001 per share<br>| Rule 457(o)<br>| $100000000<br>| 0.0000927<br>| $9270<br>|
| &nbsp;&nbsp;&nbsp; Fees<br> Previously<br> Paid<br>| Equity<br>| Common Stock, par value $0.001 per share<br>| Rule 457(o)<br>| $100000000<br>| 0.0000927<br>| $9270<br>|
|  | Total Offering Amounts  | Total Offering Amounts  | Total Offering Amounts  | $100000000<br>|  | $9270<br>|
|  | Total Fees Previously Paid  | Total Fees Previously Paid  | Total Fees Previously Paid  |  |  | $9270<br>|
|  | Net Fee Due  | Net Fee Due  | Net Fee Due  |  |  | $0.00<br>|

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(1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the
Securities Act of 1933, as amended.

(2) Includes the aggregate offering price of additional shares that the underwriters have the option to purchase.
See "Underwriting."