Document:

Exhibit 10.1

 

EXECUTION VERSION

 

	
JPMORGAN   CHASE BANK, N.A.
   383 Madison Avenue
   New York, New York 10179
    	
GOLDMAN   SACHS BANK USA
   GOLDMAN SACHS LENDING
   PARTNERS LLC
   200 West Street
   New York, New York 10282
    

 

CONFIDENTIAL

 

October 28, 2018

 

International Business Machines Corporation
 One New Orchard Road
 Armonk, New York 10504

 

Attention:                                       Simon J. Beaumont
 Treasurer

 

Project Socrates
 364-Day Bridge Facility
 Commitment Letter

 

Ladies and Gentlemen:

 

You (“you”, the “Borrower” or “Parent”) have advised JPMorgan Chase Bank, N.A. (“JPMorgan”), Goldman Sachs Bank USA (“Goldman Sachs”) and Goldman Sachs Lending Partners LLC (“GS Lending Partners” and, together with JPMorgan and Goldman Sachs, the “Initial Lenders”, and the Initial Lenders, together with each Lender (as defined below) that becomes a party hereto pursuant to Section 1 or Section 2 hereof, collectively, the “Commitment Parties”, “we” or “us”) that you intend to acquire (the “Acquisition”) all of the outstanding equity interests of a company previously identified to us and codenamed “Rocket” (the “Target” and, together with its subsidiaries, the “Acquired Business”), through a wholly-owned subsidiary of Parent (“Merger Sub”) in the manner contemplated by the Agreement and Plan of Merger (together with the schedules and exhibits thereto, the “Acquisition Agreement”) entered (or to be entered) into among Parent, Merger Sub and the Target. Upon consummation of the Acquisition, the Target will be a wholly-owned direct or indirect subsidiary of the Borrower.

 

In connection therewith, the Borrower intends to obtain $20.0 billion of gross proceeds from (a) the issuance by the Borrower of senior unsecured debt securities through a public offering or in a private placement or the borrowing by the Borrower of term loans, or a combination of the foregoing (collectively, the “Permanent Financing”) and/or (b) to the extent the Borrower does not issue or borrow the Permanent Financing up to such amount on or prior to the Closing Date (as defined below) for any reason, loans under a 364-day bridge loan credit facility (the “Bridge Facility”) in an aggregate principal amount of $20.0 billion upon the terms and subject to the conditions set forth in this letter and in Exhibits A and B hereto (collectively,

 

 

the “Term Sheet” and, together with this letter agreement, collectively, the “Commitment Letter”).

 

The Acquisition, the issuance or borrowing of the Permanent Financing and the Bridge Facility and the other transactions contemplated by or related to the foregoing are collectively referred to herein as the “Transactions”. The date on which all conditions precedent to the consummation of the Acquisition set forth in the Acquisition Agreement are satisfied, and on which the Bridge Loans (as defined in Exhibit A hereto) will become available to be drawn under the Bridge Facility, is referred to herein as the “Closing Date.”

 

1.                                     Commitments. In connection with the foregoing,

 

(a)                                 JPMorgan is pleased to advise you of its commitment, severally and not jointly, to provide 70% of the principal amount of the Bridge Facility, Goldman Sachs is pleased to advise you of its commitment, severally and not jointly, to provide 16.25% of the principal amount of the Bridge Facility and GS Lending Partners is pleased to advise you of its commitment, severally and not jointly, to provide 13.75% of the principal amount of the Bridge Facility;

 

(b)                                (i) You hereby engage each of JPMorgan and Goldman Sachs, severally and not jointly, to act as a joint lead arranger and a joint bookrunning manager (in such capacity, each a “Lead Arranger” and collectively, the “Lead Arrangers”) for the Bridge Facility, and in connection therewith to form a syndicate of lenders for the Bridge Facility (collectively, the “Lenders”) as described below, (ii) JPMorgan is pleased to advise you of its willingness to act, and you hereby engage JPMorgan to act, as sole and exclusive administrative agent (in such capacity, the “Administrative Agent”) for the Bridge Facility, upon the terms and subject to the conditions set forth in the Term Sheet and (iii) Goldman Sachs is pleased to advise you of its willingness to act, and you hereby engage Goldman Sachs to act, as sole and exclusive syndication agent for the Bridge Facility, upon the terms and subject to the conditions set forth in the Term Sheet; and

 

(c)                                 JPMorgan will have “lead left” placement, and Goldman Sachs will have placement immediately to the right of JPMorgan, on all marketing materials relating to the Bridge Facility, and each will perform the duties and exercise the authority customarily performed and exercised by it in such role, including JPMorgan acting as manager of the physical books.  The Borrower agrees that JPMorgan may perform its responsibilities hereunder through its affiliate, J.P. Morgan Securities LLC.  You agree that no other titles will be awarded and no compensation (other than that expressly contemplated by this Commitment Letter and the Fee Letter (as herein defined)) will be paid in connection with the Bridge Facility unless you and the Lead Arrangers shall so agree; provided that it is acknowledged that you and the Lead Arrangers have agreed as of the date hereof that the appointment of titles and the allocation of compensation be in accordance with the syndication plan agreed between you and the Lead Arrangers on or prior to the date hereof (the “Syndication Plan”).  The respective commitments of the Commitment Parties in respect of the Bridge Facility and the undertaking of the Lead Arrangers to provide the services described herein are subject only to the satisfaction of each of the conditions precedent set forth in Exhibit B attached to this Commitment Letter. All

 

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capitalized terms used and not otherwise defined herein shall have the same meanings as specified therefor in the Term Sheet.

 

2.                                     Syndication. The Lead Arrangers intend to commence syndication of the Bridge Facility promptly after your acceptance of the terms of this Commitment Letter and the Fee Letter (as defined below) and the execution of the Acquisition Agreement. Such syndication shall be managed by the Lead Arrangers in consultation and coordination with the Borrower; provided, however, that (a) until the date that is 45 days after the date hereof (the “Initial Syndication Period”), the selection of any Lender, any role awarded and allocations by the Lead Arrangers shall be in accordance with the Syndication Plan, (b) following the Initial Syndication Period, if and for so long as a Successful Syndication (as defined in the Fee Letter) has not been achieved, the selection of Lenders by the Lead Arrangers shall be subject to the reasonable approval (not to be unreasonably withheld or delayed) of the Borrower other than with respect to any such Lender that is a commercial or investment bank whose senior, unsecured, long-term indebtedness has an “investment grade” rating by S&P and Moody’s (each as defined below) and shall not include any Disqualified Institution (as defined below) and (c) following the achievement of a Successful Syndication, further assignments of commitments under the Bridge Facility shall be in accordance with the section captioned “Assignment and Participations” in the Term Sheet.

 

The respective commitments of the Initial Lenders hereunder with respect to the Bridge Facility shall be reduced pursuant to the Syndication Plan as and when commitments for the Bridge Facility are received from Lenders selected in accordance with the provisions of this section to the extent that each such Lender becomes (i) party to a commitment letter on substantially the same terms and conditions as this Commitment Letter assuming a portion of the commitments with respect to the Bridge Facility or (ii) party to the applicable definitive documentation with respect to the Bridge Facility that contains terms consistent in all respects with those set forth in this Commitment Letter and otherwise as mutually agreed in good faith between the Borrower and the Lead Arrangers (the “Credit Documentation”) as a “Lender” thereunder; provided, however, that to the extent that any portion of the respective commitments of the Initial Lenders hereunder with respect to the Bridge Facility is syndicated to a Lender that, upon assuming a portion of the commitments with respect to the Bridge Facility, is not approved by the Borrower (including in the Syndication Plan) or otherwise is not a commercial or investment bank whose senior, unsecured, long-term indebtedness has an “investment grade” rating by S&P and Moody’s (each as defined below) at the time such commitments are assumed, then the Initial Lenders shall not (except to the extent such Lender is a commercial or investment bank that satisfies such ratings requirement) be relieved of their respective obligations hereunder to fund such portion of such commitment on the Closing Date to the extent that such other Lender fails to fund such commitment on the Closing Date in accordance with the terms of the Bridge Facility. For purposes hereof, “Disqualified Institutions” means, collectively, those persons that are (i) competitors of you or your subsidiaries or the Acquired Business, identified in writing by you to the Lead Arrangers from time to time prior to the Closing Date or to the Administrative Agent after the Closing Date, (ii) such other persons identified in writing by you to the Lead Arrangers prior to the date hereof and (iii) affiliates of the persons identified pursuant to clauses (i) or (ii) that are either clearly identifiable as affiliates of such persons on the basis of such affiliate’s name or identified in writing by you to the Lead Arrangers prior to the Closing Date or to the Administrative Agent after the Closing Date (it being understood that,

 

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notwithstanding anything herein to the contrary, in no event shall a supplement apply retroactively to disqualify any parties that have previously acquired an assignment or participation interest hereunder or under the Bridge Facility that is otherwise permitted hereunder, but upon the effectiveness of such designation, any such party may not acquire any additional commitments, loans or participations).

 

Until the earlier of 60 days following the Closing Date and the completion of a Successful Syndication (such date, the “Syndication Date”), you agree to actively assist, and to use your commercially reasonable efforts to cause the Acquired Business (to the extent consistent with the Acquisition Agreement) to actively assist, the Lead Arrangers in achieving a Successful Syndication. Such assistance shall include (a) your providing and causing your advisors to provide, and using your commercially reasonable efforts to cause the Acquired Business (to the extent consistent with the Acquisition Agreement) and their advisors to provide, the Lead Arrangers and the Lenders upon reasonable request with all information reasonably requested by the Lead Arrangers to complete such syndication, including, but not limited to, information and evaluations prepared by you, the Acquired Business and your and its advisors, or on your or its behalf, relating to the Transactions, (b) providing assistance to the Lead Arrangers (and to the extent consistent with the Acquisition Agreement, your using commercially reasonable efforts to cause the Acquired Business to provide assistance to the Lead Arrangers) in the preparation of confidential information memoranda with respect to the Bridge Facility in form and substance customary for transactions of this type and otherwise reasonably satisfactory to the Lead Arrangers (each, an “Information Memorandum”) and other customary marketing materials (including a customary lender presentation) (other than materials the disclosure of which would violate any law, rule or regulation or any confidentiality obligation or waive attorney-client privilege, but you hereby agree promptly (i) if and to the extent within your control, to use commercially reasonable efforts to obtain waivers with respect to confidentiality obligations (but not attorney-client privilege) and to otherwise provide such information that does not violate such confidentiality obligations and (ii) to notify the Lead Arrangers as to what is not being provided under this exception) to be used in connection with the syndication of the Bridge Facility (collectively with the Term Sheet and any additional summary of terms prepared for distribution to Public Lenders (as defined below), the “Information Materials”), (c) your using your commercially reasonable efforts to ensure that the syndication efforts of the Lead Arrangers benefit from your existing lending relationships and, to the extent practical and appropriate and consistent with the Acquisition Agreement, the existing banking relationships of the Acquired Business and (d) your otherwise reasonably assisting the Lead Arrangers in their syndication efforts, including by making your officers and advisors, and using your commercially reasonable efforts to make the officers and advisors of the Acquired Business (to the extent reasonably requested by the Lead Arrangers and consistent with the Acquisition Agreement), available from time to time to attend and make presentations at one or more meetings of prospective Lenders at reasonable times and places to be mutually agreed, subject to confidentiality agreements reasonably acceptable to the Borrower and the Lead Arrangers. In addition, you agree to use commercially reasonable efforts to promptly obtain ratings giving effect to the Transactions from each of Moody’s Investor Services, Inc. (“Moody’s”) and Standard & Poor’s Financial Services LLC (“S&P”), with respect to the Borrower’s non-credit-enhanced, senior unsecured long-term debt.

 

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In order to facilitate an orderly and successful syndication of the Bridge Facility, you agree that until the Syndication Date, the Borrower and its subsidiaries will not, without the consent of the Lead Arrangers, issue, offer, place or arrange debt or equity securities or any credit facilities of the Borrower or its subsidiaries (other than (a) the Permanent Financing, (b) intercompany debt among the Borrower and/or its subsidiaries, (c) any borrowings under, or amendment, refinancing, replacement or renewal (provided that the aggregate principal amount of indebtedness outstanding or committed (without duplication) thereunder is not increased in connection therewith) of that certain (i) 364-Day Credit Agreement, dated as of July 19, 2018 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time prior to the date hereof, the “Existing 364-Day Credit Agreement”), among you and IBM Credit LLC, as borrowers, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, (ii) Amended and Restated Three-Year Credit Agreement, dated as of July 19, 2018 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time prior to the date hereof, the “Existing Three-Year Credit Agreement”), among you and IBM Credit LLC, as borrowers, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, and (iii) Amended and Restated 5-Year Credit Agreement, dated as of July 19, 2018 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time prior to the date hereof, the “Existing 5-Year Credit Agreement” and, together with the Existing 364-Day Credit Agreement and Existing Three-Year Credit Agreement, the “Existing Credit Agreements”), among you, as borrower, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, (d) ordinary course letter of credit facilities, overdraft protection, short term working capital facilities, ordinary course local credit facilities (including the refinancing, renewal, replacement or roll-over thereof), factoring arrangements, seller lending financing activities, capital leases, commercial paper issuances, financial leases, indebtedness issued in connection with tenant leases, hedging and cash management and purchase money and facility and equipment financings (including sale-leasebacks) and similar obligations, (e) equity issuances pursuant to employee compensation plans, employee benefit plans, employee incentive plans and retirement plans or issued as compensation to officers and/or non-employee directors or issuances of directors’ qualifying shares and/or other nominal amounts required to be held by persons other than the Borrower or its subsidiaries under applicable law, (f) any refinancing, renewal, replacement or roll-over of debt of the Borrower, IBM Credit LLC or either of their respective subsidiaries maturing within two years of the date of such refinancing, renewal, replacement or roll-over (regardless of whether such refinanced, renewed, replaced or rolled-over debt remains outstanding until its maturity), (g) other debt, together with debt under the Existing Credit Agreements, the Permanent Financing, commercial paper issuances and the debt contemplated by this Commitment Letter, in an aggregate principal amount to pay the consideration for the Acquisition and to pay fees and expenses incurred in connection with the Transactions, (h) other debt incurred to finance any other acquisition or investment and related fees and expenses, (i) other debt in an aggregate principal amount not to exceed $5.0 billion and (j) any other financing agreed by the Lead Arrangers, such agreement not to be unreasonably withheld), in each case, if such issuance, offering, placement or arrangement could reasonably be expected to materially impair the primary syndication of the Bridge Facility.

 

It is understood and agreed that the Lead Arrangers will manage and control all aspects of the syndication of the Bridge Facility in consultation and coordination with you and subject to the foregoing provisions of this Section 2, decisions as to the selection of prospective

 

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Lenders and any titles offered to proposed Lenders, when commitments will be accepted and the final allocations of the commitments among the Lenders. It is understood that no Lender participating in the Bridge Facility will receive compensation from you in order to obtain its commitment, except on the terms contained herein and in the Term Sheet and Fee Letter.  Notwithstanding anything to the contrary provided herein, unless otherwise agreed in writing by you or pursuant to Section 8 or this Section 2 of this Commitment Letter, no assignment in connection with the syndication described herein will reallocate, reduce or release any Initial Lender’s obligation to fund its entire commitments in the event any assignee of such Initial Lender shall fail to do so on the Closing Date.

 

Notwithstanding anything to the contrary contained in this Commitment Letter or any other agreement or undertaking concerning the Bridge Facility, but without limiting the conditions precedent in Exhibit B, and without limiting your obligations to assist with syndication in this Section 2, none of the foregoing obligations under the provisions of this Section 2 nor the commencement, conduct or completion of the syndication contemplated by this Section 2 is a condition to the commitments or the funding of the Bridge Facility on the Closing Date.

 

3.                                     Information Requirements. You hereby represent and warrant that (a) all written information, other than (i) any Projections (as defined below), (ii) forward-looking information, (iii) estimates and (iv) other information of a general economic or industry nature (the “Information”), that has been or is hereafter made available to the Lead Arrangers or any of the Lenders by or on behalf of you or any of your representatives in connection with any aspect of the Transactions (which representation and warranty shall be only to your knowledge to the extent it relates to the Acquired Business or its businesses or to any other third party, or is of a general economic or industry nature), when taken as a whole, is and will be, when furnished, complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements were made or are made, when taken as a whole (giving effect to all supplements and updates provided thereto) and (b) any written financial projections concerning the Borrower, the Acquired Business and their respective subsidiaries that have been or are hereafter made available to the Lead Arrangers or any of the Lenders by or on behalf of you or any of your representatives (the “Projections”) have been or will be prepared in good faith based upon assumptions that were believed by the Borrower to be reasonable as of the date such Projections are prepared and as of the date such Projections are made available to the Lead Arrangers (it being understood that the Projections are as to future events and are not to be viewed as facts, the Projections are subject to significant uncertainties and contingencies, many of which are beyond your control, that no assurance can be given that any particular Projections will be realized and that actual results during the period or periods covered by any such Projections may differ significantly from the projected results and such differences may be material). You agree that if at any time prior to the Syndication Date, you become aware that any of the representations in the preceding sentence would be incorrect in any material respect (only to your knowledge with respect to Information, estimates and forward looking information relating to the Acquired Business) if the Information and Projections were being furnished, and such representations were being made, at such time, then you will (and with respect to the Acquired Business, use your commercially reasonable efforts to) promptly supplement, or cause to be supplemented, the

 

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Information and Projections so that such representations (to the best of your knowledge with respect to Information and forward looking information relating to the Acquired Business) will be correct in all material respects at such time. Notwithstanding anything set forth above, the accuracy of the foregoing representations and warranties, whether or not supplemented, and any obligation to supplement the Information and Projections shall not be a condition to the obligations of the Commitment Parties hereunder. In issuing this commitment and arranging and syndicating the Bridge Facility, the Commitment Parties are and will be using and relying on the Information and the Projections without independent verification thereof.

 

You acknowledge that (a) the Lead Arrangers will make available Information Materials to the proposed syndicate of Lenders by posting the Information Materials on IntraLinks, SyndTrak or another similar electronic system and (b) certain prospective Lenders (such Lenders, “Public Lenders”; all other Lenders, “Private Lenders”) may have personnel that do not wish to receive material non-public information (within the meaning of the United States federal and state securities laws, “MNPI”) with respect to the Borrower, the Acquired Business, their respective affiliates or any other entity, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such entities’ securities or loans. If requested, you will assist the Lead Arrangers in preparing an additional version of the Information Materials not containing MNPI (the “Public Information Materials”) to be distributed to prospective Public Lenders.

 

Before distribution of any Information Materials (a) to prospective Private Lenders, you shall provide the Lead Arrangers with a customary letter authorizing the dissemination of the Information Materials and (b) to prospective Public Lenders, you shall provide the Lead Arrangers with a customary letter authorizing the dissemination of the Public Information Materials and confirming the absence of MNPI therefrom. In addition, at our request, you shall identify Public Information Materials by clearly and conspicuously marking the same as “PUBLIC”.

 

You agree that the Lead Arrangers may (after you have had an opportunity to review such materials) distribute the following documents to all prospective Lenders, unless you advise us in writing (including by email) within a reasonable time prior to their intended distributions that such material should only be distributed to prospective Private Lenders: (a) administrative materials for prospective Lenders such as lender meeting invitations and funding and closing memoranda, (b) term sheets summarizing the Bridge Facility’s terms and notifications of changes to the terms of the Bridge Facility and (c) drafts and final versions of definitive documents with respect to the Bridge Facility and other materials intended for prospective Lenders after the initial distribution of Information Materials. If you advise us that any of the foregoing items should be distributed only to Private Lenders, then the Lead Arrangers will not distribute such materials to Public Lenders without further discussions with you.

 

4.                                     Fees and Indemnities.

 

(a)                                 You agree to pay, or cause to be paid, the fees set forth in the separate fee letter addressed to you, dated as of the date hereof, from the Initial Lenders (the “Fee Letter”). You also agree to reimburse the Commitment Parties from time to time promptly after demand for all reasonable and documented or invoiced out-of-pocket fees and expenses (including, but

 

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not limited to, the reasonable fees, disbursements and other charges of counsel which shall be limited to the reasonable and documented or invoiced out-of-pocket fees and other charges of Simpson Thacher & Bartlett LLP, as counsel to the Commitment Parties and the Administrative Agent) incurred in connection with the Bridge Facility, the syndication thereof, the preparation of the Credit Documentation therefor and the other transactions contemplated hereby and thereby, in the case of legal fees and expenses, whether or not the Closing Date occurs or any Credit Documentation is executed and delivered or any extensions of credit are made under the Bridge Facility, and in all other cases, if the Closing Date occurs. You acknowledge that we may receive a benefit, including, without limitation, a discount, credit or other accommodation, from any of such counsel based on the fees such counsel may receive on account of their relationship with us including, without limitation, fees paid pursuant hereto.

 

(b)                                You also agree to indemnify and hold harmless each of the Commitment Parties and each of their affiliates and controlling persons, successors and assigns and their respective officers, directors, employees, agents, advisors and other representatives (each, an “Indemnified Party”) from and against (and will reimburse each Indemnified Party as the same are incurred for) any and all claims, damages, losses, liabilities and expenses (limited, in the case of attorney’s fees, to the reasonable fees, disbursements and other charges of counsel (but limited, in the case of legal fees and expenses, to the reasonable and documented or invoiced out-of-pocket fees and expenses of one counsel, but excluding the allocated cost of internal counsel, representing all of the Indemnified Parties, taken as a whole, and, if necessary, of a single local counsel in each appropriate jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Indemnified Parties, taken as whole (and, in the case of an actual or perceived conflict of interest where the Indemnified Party affected by such conflict notifies you of the existence of such conflict and thereafter retains its own counsel, those of another firm of counsel for each such affected Indemnified Party))) that may be incurred by or asserted or awarded against any Indemnified Party, in each case, arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (a) any aspect of the Transactions or any of the other transactions contemplated hereby or (b) the Bridge Facility or any use made or proposed to be made with the proceeds thereof, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from (x) such Indemnified Party’s (or its Related Parties’ (as defined below)) gross negligence, bad faith or willful misconduct, (y) such Indemnified Party’s (or its Related Parties) material breach of its obligations under this Commitment Letter, the Fee Letter or any of the Credit Documentation or (z) disputes solely among Indemnified Parties not arising from or in connection with any act or omission by the Borrower or any of its affiliates (other than any Proceedings (as defined below) against a Commitment Party in its capacity or in fulfilling its role as an administrative agent or arranger or other similar role under the Bridge Facility). In the case of any claim, litigation, investigation or proceeding to which the indemnity in this paragraph applies (any of the foregoing, a “Proceeding”), such indemnity shall be effective whether or not such Proceeding is brought by you, your equity holders or creditors, the Acquired Business or their subsidiaries, affiliates or equity holders, or an Indemnified Party, whether or not an Indemnified Party is otherwise a party thereto and whether or not any aspect of the Transactions is consummated. If any Proceeding is instituted or threatened against any Indemnified Party (or its Related Parties’) in respect of which indemnity may be sought hereunder, you shall be entitled to assume the defense thereof with counsel selected by you

 

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(which counsel shall be reasonably satisfactory to such Indemnified Party) and after notice from you to such Indemnified Party of your election so to assume the defense thereof, you will not be liable to such Indemnified Party hereunder for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation and such other expenses as have been approved in advance; provided, that (i) if counsel for such Indemnified Party determines in good faith that there is a conflict that requires separate representation for you and such Indemnified Party or that there may be legal defenses available to such Indemnified Party which are different from or in addition to those available to you or (ii) you fail to assume or proceed in a timely and reasonable manner with the defense of such Proceeding or fail to employ counsel reasonably satisfactory to such Indemnified Party in any such action, then in either such event, (A) such Indemnified Party shall be entitled to one primary counsel and, if necessary, one local counsel to represent such Indemnified Party and all other Indemnified Parties similarly situated (such counsels selected by the Lead Arrangers), (B) you shall not, or shall not any longer, be entitled to assume the defense thereof on behalf of such Indemnified Party and (C) such Indemnified Party shall be entitled to indemnification for the expenses (including fees and expenses of such counsel) to the extent provided in the preceding paragraph. Such counsel shall, to the fullest extent consistent with its professional responsibilities, cooperate with you and any counsel designated by you. Nothing contained herein shall preclude any Indemnified Party, at its own expense, from retaining additional counsel to represent such Indemnified Party in any action with respect to which indemnity may be sought from you hereunder. It is further agreed that the Commitment Parties shall only have liability to you (as opposed to any other person), and that the Commitment Parties shall be severally liable solely in respect of their respective commitments to the Bridge Facility, on a several, and not joint, basis with any other Lender. Notwithstanding any other provision of this Commitment Letter, no party hereto nor any Indemnified Person shall be liable for any indirect, special, punitive or consequential damages in connection with its activities relating to the Bridge Facility, this Commitment Letter, the Fee Letter, the Transactions, the use of proceeds thereof or any related transactions; provided that the foregoing shall not limit your indemnification obligations under the provisions of this Section 4(b) with respect to any such damages claimed against any Indemnified Party. Notwithstanding any other provision of this Commitment Letter, no Indemnified Party shall be liable for any damages arising from the use by others of information or other materials obtained through electronic telecommunications or other information transmission systems, other than for direct (as opposed to special, indirect, consequential or punitive) damages determined in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s (or its Related Parties’) gross negligence, bad faith or willful misconduct. You shall not be liable for any settlement of any Proceeding effected without your prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), but if settled with your prior written consent or if there is a final judgment in any such Proceeding, you agree to indemnify and hold harmless each Indemnified Party from and against any and all losses, claims, damages, liabilities and expenses by reason of such settlement or judgment in accordance with this Section 4. You shall not, without the prior written consent of an Indemnified Party (which consent shall not be unreasonably withheld), effect any settlement or consent to the entry of any judgment of any pending or threatened Proceeding against an Indemnified Party in respect of which indemnity could have been sought hereunder by such Indemnified Party, unless such settlement (i) includes an unconditional release of such Indemnified Party from all liability or claims that are the subject

 

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matter of such Proceeding, (ii) does not include any statement as to any admission of fault by or on behalf of such Indemnified Party and (iii) contains customary confidentiality and non-disparagement provisions. Each Indemnified Party will promptly notify you upon receipt of written notice of any claim or threat to institute a claim, provided that any failure by any Indemnified Party to give such notice shall not relieve you from the obligation to indemnify the Indemnified Parties unless such failure to provide such notice is prejudicial to your interests. For purposes hereof, “Related Party” of an Indemnified Party means any (or all, as the context may require) of such Indemnified Party’s controlled affiliates and controlling persons and its or their respective directors, officers, employees, agents, advisors and other representatives thereof directly involved in the transaction and, in the case of agents, advisors and other representatives, only to the extent acting on behalf or at the instruction of such Indemnified Party or its controlled affiliates or controlling persons; provided, that each reference to a controlling person, controlled affiliate, director, officer or employee in this sentence pertains to a controlling person, controlled affiliate, director, officer or employee involved in the negotiation or syndication of this Commitment Letter and the Bridge Facility. The provisions of this Section 4(b) shall be superseded in each case by the applicable provisions contained in the definitive financing documentation upon execution thereof and thereafter shall have no further force and effect.

 

5.                                     Conditions to Financing. The Commitment Parties’ respective commitments hereunder, and each of our agreements to perform the services described herein, are subject solely to satisfaction or waiver of the conditions set forth on Exhibit B, it being understood that there are no conditions (implied or otherwise) to the commitments hereunder (including compliance with the terms of the Commitment Letter, the Fee Letter and the Credit Documentation) other than those that are expressly stated in Exhibit B to be conditions to the funding under the Bridge Facility on the Closing Date (and upon satisfaction or waiver of such conditions, the initial funding under the Bridge Facility shall occur).

 

Notwithstanding anything in this Commitment Letter, the Fee Letter, the Credit Documentation or any other letter agreement or other undertaking concerning the financing of the Transactions to the contrary, the only representations the accuracy of which shall be a condition to the availability of the Bridge Facility on the Closing Date shall be (i) such of the representations made by the Acquired Business in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that you have (or a subsidiary of yours has) the right to terminate your (or your affiliates’) obligations under the Acquisition Agreement as a result of the breach of such representations in the Acquisition Agreement, or the accuracy of such representations in the Acquisition Agreement is a condition to your (or your affiliates’) obligations to consummate the Acquisition pursuant to the Acquisition Agreement (the “Acquisition Agreement Representations”) and (ii) the Specified Representations (as defined below). For purposes hereof, “Specified Representations” means the representations and warranties of the Borrower relating to corporate status, corporate power and authority to enter into the Credit Documentation; due authorization, execution, delivery and enforceability of the Credit Documentation; no conflicts of the Credit Documentation with, or consents required under, (i) charter documents or (ii) the Existing Credit Agreements (in each case, without giving effect to any “material adverse effect” qualification in the Existing 5-Year Credit Agreement) or any other debt instruments in excess of $750,000,000; solvency as of the Closing Date (after giving effect to the Transactions) of the Borrower and its subsidiaries on a consolidated basis (such representation and warranty to be consistent with the solvency certificate in the form set

 

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forth in Annex I to Exhibit B); Federal Reserve margin regulations; use of proceeds not violating sanctions imposed by the U.S. (including OFAC), the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom, anti-corruption laws or the Patriot Act; and the Investment Company Act. This paragraph, and the provisions herein, shall be referred to as the “Limited Conditionality Provision”.

 

6.                                     Confidentiality and Other Obligations. This Commitment Letter and the Fee Letter and the contents hereof and thereof are confidential and may not be disclosed in whole or in part to any person or entity without our prior written consent (such approval not to be unreasonably withheld or delayed), except (a) on a confidential basis, to your affiliates and your and your affiliates’ directors, officers, employees, accountants, attorneys and other professional advisors in connection with the Transactions, (b) following your acceptance of the provisions hereof and your return of an executed counterpart of this Commitment Letter and the Fee Letter to the Lead Arrangers as provided below, you may disclose this Commitment Letter and the contents hereof (but not the Fee Letter or the contents thereof) in any offering memoranda relating to the Bridge Facility, in any syndication or other marketing materials in connection with the Bridge Facility or in connection with any public filing relating to the Transactions, (c) following your acceptance of the provisions hereof and your return of an executed counterpart of this Commitment Letter and the Fee Letter to the Lead Arrangers as provided below, you may file a copy of any portion of this Commitment Letter (but not the Fee Letter) in any public record in which it is required by law to be filed, (d) you may disclose, on a confidential basis, the existence and contents of this Commitment Letter, including the Exhibits hereto (but not the Fee Letter) to any rating agency or any prospective Lenders to the extent necessary to satisfy your obligations or the conditions hereunder, (e) pursuant to the order of any court or administrative agency in any pending legal, judicial or administrative proceeding, or otherwise as required by applicable law, compulsory legal process or to the extent requested or required by governmental and/or regulatory authorities, in each case, based on the advice of your legal counsel (in which case you agree, to the extent practicable and not prohibited by applicable law, to inform us promptly thereof), (f) you may disclose the aggregate fee amounts contained in the Fee Letter in financial statements or as part of Projections, pro forma information or a generic disclosure of aggregate sources and uses related to fee amounts related to the Transactions to the extent customary or required in offering materials for any securities and marketing materials for the Bridge Facility or in any public filing relating to the Transactions (which in the case of such public filing may indicate the existence of the Fee Letter), (g) in connection with the exercise of any remedy or enforcement of any right under this Commitment Letter and the Fee Letter and (h) this Commitment Letter and the Fee Letter (redacted in a manner reasonably satisfactory to us) may be disclosed to the Acquired Business, their respective subsidiaries and their officers, directors, employees, affiliates, independent auditors (but only with respect to this Commitment Letter), legal counsel and other advisors who need to know such information in connection with the Transactions on a confidential basis in connection with their consideration of the Transactions.

 

Each Commitment Party shall use all information provided to them by or on behalf of you hereunder or in connection with the Acquisition or the related Transactions solely for the purpose of providing the services which are the subject of this Commitment Letter and otherwise in connection with the Transactions and shall treat confidentially all such information

 

11

 

and shall not disclose such information; provided, however, that nothing herein shall prevent the Commitment Parties or their respective affiliates or their respective representatives from disclosing any such information (a) pursuant to the order of any court or administrative agency or in any pending legal or administrative proceeding, or otherwise as required by applicable law or compulsory legal process (in which case the Commitment Parties agree to inform you promptly thereof prior to such disclosure to the extent not prohibited by law, rule or regulation (except with respect to any audit or examination conducted by bank accountants or any governmental agency, securities or bank regulatory authority exercising examination or regulatory authority)), (b) upon the request or demand of any regulatory authority having jurisdiction over the Commitment Parties or any of their respective affiliates (in which case, such Commitment Party agrees to inform you promptly thereof prior to disclosure to the extent not prohibited by law, rule or regulation (except with respect to any audit or examination conducted by bank accountants or any governmental agency, securities or bank regulatory authority exercising examination or regulatory authority)), (c) to the extent that such information becomes publicly available other than by reason of disclosure in violation of this Commitment Letter by the Commitment Parties or any of their respective affiliates, (d) to the Commitment Parties’ affiliates’ and their and their affiliates’ respective directors, officers, employees, legal counsel, independent auditors and other experts or agents who need to know such information in connection with the Transactions, are informed of the confidential nature of such information and are instructed to keep such information confidential in accordance with the provisions of this Section 6, (e) for purposes of establishing a “due diligence” defense, (f) to the extent that such information is or was received by a Commitment Party from a third party that is not to such Commitment Party’s knowledge subject to confidentiality obligations to you or any of your affiliates, (g) to the extent that such information is independently developed by any of the Commitment Parties or any of their affiliates, (h) to actual or prospective, direct or indirect counterparties (or their advisors) to any swap or derivative transaction relating to the Borrower, the Acquired Business or any of their respective subsidiaries or any of their respective obligations; provided, that the disclosure of any such information to any actual or prospective, direct or indirect counterparty (or their advisors) to any such swap or derivative transaction shall be made subject to the acknowledgment and acceptance by such counterparty (and their advisors, as applicable) that such information is being disseminated on a confidential basis (on substantially the terms set forth in this paragraph or as is otherwise reasonably acceptable to you and the Lead Arrangers) in accordance with customary market standards for dissemination of such type of information, (i) to potential Lenders, participants or assignees who agree to be bound by the terms of this paragraph (or language substantially similar to this paragraph or as otherwise reasonably acceptable to you and the Lead Arrangers, including as may be agreed in any confidential information memorandum or other marketing material), or (j) in connection with the exercise of any remedy or enforcement of any right under this Commitment Letter and/or the Fee Letter. The obligations of the Commitment Parties under this paragraph shall terminate on the second anniversary of the date hereof.

 

You acknowledge that the Commitment Parties or their respective affiliates may be providing financing or other services to parties whose interests may conflict with yours.  In particular, each party hereto acknowledges that each of Goldman, Sachs & Co. and J.P. Morgan Securities LLC is acting as a buy-side financial advisor (in such capacities, the “Financial Advisors”) to you in connection with the Acquisition. You agree not to assert or allege any claim based on actual or potential conflict of interest arising or resulting from, on the one hand, the

 

12

 

engagement of each of Goldman, Sachs & Co. and J.P. Morgan Securities LLC in such capacity referred to in the immediately preceding sentence and our and our affiliates’ relationships an arrangements with you as described and referred to herein.  Each of the Commitment Parties hereto acknowledges (i) the retention of Goldman, Sachs & Co and J.P. Morgan Securities LLC as the Financial Advisors and (ii) that such relationship does not create any fiduciary duties or fiduciary responsibilities to such Commitment Party on the part of Goldman Sachs or its affiliates or J.P. Morgan Securities LLC or its affiliates.  Each Commitment Party agrees that it will not furnish confidential information obtained from you to any of their other customers and will treat confidential information relating to the Borrower, the Acquired Business and their respective affiliates with the same degree of care as they treat their own confidential information and otherwise subject to the immediately preceding paragraph. The Commitment Parties further advise you that they will not make available to you confidential information that they have obtained or may obtain from any other customer. In connection with the services and transactions contemplated hereby, you agree that the Commitment Parties are permitted to access, use and share, subject to the immediately preceding paragraph, with any of their bank or non-bank affiliates, agents, advisors (legal or otherwise) or representatives any information concerning the Borrower, the Acquired Business or any of their respective affiliates that is or may come into the possession of the Commitment Parties or any of such affiliates.

 

In connection with all aspects of each transaction contemplated by this Commitment Letter, you acknowledge and agree, and acknowledge your affiliates’ understanding, that: (a) the transactions contemplated by this Commitment Letter, including the Bridge Facility and any related arranging or other services described in this Commitment Letter are arm’s-length commercial transactions between you and your affiliates, on the one hand, and the Commitment Parties, on the other hand, (b) the Commitment Parties have not provided any legal, accounting, regulatory or tax advice with respect to the financing contemplated hereby and you have consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed appropriate, (c) you are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated hereby and the Commitment Parties shall have no liability to you with respect thereto, (d) in connection with the financing contemplated hereby and the process leading to such transaction, each of the Commitment Parties has been, is, and will be acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary, for you or any of your affiliates, stockholders, creditors or employees or any other party, (e) the Commitment Parties have not assumed and will not assume an advisory, agency or fiduciary responsibility in your or your affiliates’ favor with respect to the financing contemplated hereby or the process leading thereto (irrespective of whether any of the Commitment Parties has advised or is currently advising you or your affiliates on other matters) and the Commitment Parties have no obligation to you or your affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth in this Commitment Letter and (f) the Commitment Parties and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from yours and those of your affiliates, and the Commitment Parties have no obligation to disclose any of such interests to you or your affiliates.  To the fullest extent permitted by law, you hereby agree that you will not assert any claims that you may have against the Commitment Parties with respect to any breach or alleged breach of agency or fiduciary duty in connection with this Commitment Letter and the Fee Letter any aspect of any transaction contemplated by this Commitment Letter or the Fee Letter.

 

13

 

As you know, each Commitment Party (together with its respective affiliates, the “Initial Lender Parties”) is a full service financial institution engaged, either directly or through its affiliates, in a broad array of activities, including commercial and investment banking, financial advisory, market making and trading, investment management (both public and private investing), investment research, principal investment, financial planning, benefits counseling, risk management, hedging, financing, brokerage and other financial and non-financial activities and services globally. In the ordinary course of their various business activities, the Initial Lender Parties and funds or other entities in which any Initial Lender Party invests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers. In addition, any Initial Lender Party may at any time communicate independent recommendations and/or publish or express independent research views in respect of such assets, securities or instruments. Any of the aforementioned activities may involve or relate to assets, securities and/or instruments of you or the Acquired Business and/or other entities and persons which may (i) be involved in transactions arising from or relating to the arrangement contemplated by this Commitment Letter or (ii) have other relationships with you or your affiliates.

 

The Commitment Parties hereby notify you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “U.S.A. Patriot Act”), each of them and their affiliates are required to obtain, verify and record information that identifies you, which information includes your name, address, tax identification number and other information that will allow the Commitment Parties, as applicable, to identify you in accordance with the U.S.A. Patriot Act, and that such information may be shared with Lenders.  This notice is given in accordance with the requirements of the Patriot Act and is effective for each of the Commitment Parties and each of their respective affiliates.

 

7.                                     Survival of Obligations. The provisions of Sections 2, 3, 4, 6 and 8 shall remain in full force and effect regardless of whether any Credit Documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or any commitment or undertaking of the Commitment Parties hereunder; provided, that the provisions of Sections 2 and 3 shall not survive if the commitments and undertakings of the Commitment Parties are terminated prior to the effectiveness of the Bridge Facility; provided, further, that our obligations with respect to confidentiality shall terminate in accordance with and to the extent provided in Section 6; provided, further, that if the Bridge Facility closes and the Credit Documentation shall be executed and delivered, (a) the provisions of Sections 2 and 3 shall survive only until the Syndication Date and (b) the provisions of the second paragraph of Section 6 shall be superseded and deemed replaced by the applicable terms of the Credit Documentation to the extent covered thereby.

 

8.                                     Miscellaneous. This Commitment Letter and the Fee Letter may be executed in multiple counterparts and by different parties hereto in separate counterparts, all of which, taken together, shall constitute an original. Delivery of an executed counterpart of a signature page to this Commitment Letter or the Fee Letter by telecopier, facsimile or other electronic transmission (e.g., a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof. Headings are for convenience of reference only and shall not affect

 

14

 

the construction of, or be taken into consideration when interpreting, this Commitment Letter or the Fee Letter.

 

This Commitment Letter and the Fee Letter shall be governed by, and construed in accordance with, the laws of the State of New York; provided, however, that (a) the interpretation of the definition of “Material Adverse Effect” (and whether or not a “Material Adverse Effect” has occurred or would reasonably be expected to occur), (b) the determination of the accuracy of any Acquisition Agreement Representations and whether as a result of any inaccuracy of any Acquisition Agreement Representation there has been a failure of a condition precedent to your (or your affiliates’) obligation to consummate the Acquisition or such failure gives you the right to terminate your (or your affiliates’) obligations under the Acquisition Agreement and (c) the determination of whether the Acquisition has been consummated in accordance with the terms of the Acquisition Agreement shall, in each case, be governed by, and construed and interpreted in accordance with, the internal laws and judicial decisions of the State of Delaware applicable to agreements executed and performed entirely within such jurisdiction without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than the State of Delaware. Each party hereto hereby irrevocably waives any and all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter, the Fee Letter, the Transactions and the other transactions contemplated hereby and thereby or the actions of the Commitment Parties in the negotiation, performance or enforcement hereof.

 

Each party hereto hereby irrevocably and unconditionally submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the Borough of Manhattan) in respect of any suit, action or proceeding arising out of or relating to the provisions of this Commitment Letter, the Fee Letter, the Transactions and the other transactions contemplated hereby and thereby and irrevocably agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in such Federal court (or if such court lacks subject matter jurisdiction, such New York State court).  Each party hereto irrevocably waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceedings brought in the federal or state courts located in the City of New York, Borough of Manhattan, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. A final judgment in any such suit, action or proceeding brought in any such court may be enforced in any other courts to whose jurisdiction you are or may be subject by suit upon judgment.

 

This Commitment Letter, together with the Fee Letter, embodies the entire agreement and understanding among the parties hereto and your affiliates with respect to the Transactions and supersedes all prior agreements and understandings relating to the subject matter hereof. No party has been authorized by the Commitment Parties to make any oral or written statements that are inconsistent with this Commitment Letter or the Fee Letter. Neither this Commitment Letter (including the attachments hereto) nor the Fee Letter may be amended or any term or provision hereof or thereof waived or modified except by an instrument in writing signed by each of the parties hereto.

 

15

 

This Commitment Letter may not be assigned by you without our prior written consent (and any purported assignment without such consent will be null and void), is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto (and the Indemnified Parties). We may assign our commitments and agreement hereunder (a) subject to the requirements set forth in Section 2 above, to any proposed Lender prior to the Closing Date, and upon any such assignment, be released from that portion of our commitments and agreements that has been so assigned, provided that no such assignment shall relieve any Initial Lender of its obligations hereunder (other than its obligations hereunder to fund such commitments that have been so assigned to the extent assigned in accordance with the requirements set forth in Section 2 above), except to the extent such assignment is evidenced by (i) an assumption by the assignee in a form reasonably acceptable to the Borrower or (ii) from the Closing Date (after the funding of the Bridge Facility), the Credit Documentation and (b) to any of our respective affiliates that is an entity exclusively engaged in the commercial lending business whose senior, unsecured, long-term indebtedness has an “investment grade” rating by S&P and Moody’s and who is not a Disqualified Institution; provided that, notwithstanding the foregoing, Goldman Sachs shall be permitted to assign its commitments and agreement hereunder to GS Lending Partners and GS Lending Partners shall be permitted to assign its commitments and agreement hereunder to Goldman Sachs.

 

Any and all obligations of, and services to be provided by the Commitment Parties hereunder (including, without limitation, the commitments of JPMorgan, Goldman Sachs and/or GS Lending Partners) may be performed and any and all rights of the Commitment Parties hereunder may be exercised by or through any of its respective affiliates or branches and, in connection with such performance or exercise, the Commitment Parties may exchange with such affiliates or branches information concerning you and your affiliates that may be the subject of the transactions contemplated hereby and, to the extent so employed, such affiliates and branches shall be entitled to the benefits afforded to the Commitment Parties hereunder.

 

Each of the parties hereto agrees that this Commitment Letter and the Fee Letter are binding and enforceable agreements with respect to the subject matter contained herein and therein, including an agreement to negotiate in good faith the Credit Documentation by the parties hereto in a manner consistent with this Commitment Letter, it being acknowledged and agreed that the commitments provided hereunder by the Commitment Parties are subject only to conditions precedent set forth in Exhibit B.

 

Please indicate your acceptance of the terms set forth in this Commitment Letter and the Fee Letter by returning to us executed counterparts of this Commitment Letter and the Fee Letter together with a copy of the executed Acquisition Agreement prior to 9:00 a.m. (New York City time) on October 29, 2018, whereupon the undertakings of the parties with respect to the Bridge Facility shall become effective to the extent and in the manner provided hereby. This offer shall terminate with respect to the Bridge Facility if not so accepted by you at or prior to that time. Thereafter, all commitments and undertakings of each Commitment Party hereunder will expire on the earliest of (i) the execution and delivery of the Credit Documentation, (ii) the closing of the Acquisition without borrowing of the Bridge Facility, (iii) the date on which the Acquisition Agreement is terminated in accordance with its terms and such termination has either been publicly announced by a party thereto or the Commitment

 

16

 

Parties have received written notice thereof from the Borrower (which notice the Borrower agrees to provide upon such termination), (iv) receipt by the Commitment Parties of written notice from the Borrower of its election to terminate all commitments under the Bridge Facility in full and (v) the Termination Date (as defined in the Acquisition Agreement as in effect on the date hereof and as it may be extended in accordance with the terms of the Acquisition Agreement as in effect on the date hereof) (such earliest date referred to in clauses (ii) through (v), the “Commitment Termination Date”).

 

[The remainder of this page intentionally left blank.]

 

17

 

We are pleased to have the opportunity to work with you in connection with this important financing.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
JPMORGAN CHASE BANK, N.A.
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Peter B. Thauer
    
	
 
    	
 
    	
Name: 
    	
Peter B. Thauer
    
	
 
    	
 
    	
Title: 
    	
Managing Director
    

 

[Signature Page to Commitment Letter]

 

 

	
 
    	
GOLDMAN SACHS BANK USA
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Robert Ehudin
    
	
 
    	
 
    	
Name
    	
Robert Ehudin
    
	
 
    	
 
    	
Title: 
    	
Authorized Signatory
    

 

	
 
    	
GOLDMAN SACHS LENDING PARTNERS   LLC
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Robert Ehudin
    
	
 
    	
 
    	
Name: 
    	
Robert Ehudin
    
	
 
    	
 
    	
Title: 
    	
Authorized Signatory
    

 

[Signature Page to Commitment Letter]

 

 

	
Accepted and agreed to as of
    	
 
    
	
the date first written above:
    	
 
    
	
 
    	
 
    
	
INTERNATIONAL BUSINESS MACHINES
    	
 
    
	
CORPORATION
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Simon J. Beaumont
    	
 
    
	
 
    	
Name: 
    	
Simon J. Beaumont
    	
 
    
	
 
    	
Title: 
    	
Treasurer
    	
 
    

 

[Signature Page to Commitment Letter]

 

 

EXHIBIT A

 

SUMMARY OF TERMS AND CONDITIONS
 BRIDGE FACILITY

 

Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the Commitment Letter to which this Exhibit A is attached.

 

	
Borrower:
    	
 
    	
International Business Machines Corporation,   a New York corporation (the “Borrower”).
    
	
 
    	
 
    	
 
    
	
Guarantors:
    	
 
    	
None.
    
	
 
    	
 
    	
 
    
	
Administrative Agent:
    	
 
    	
JPMorgan Chase Bank, N.A. (“JPMorgan”)   will act as sole and exclusive administrative agent for the Lenders (in such   capacity, the “Administrative Agent”).
    
	
 
    	
 
    	
 
    
	
Syndication Agent:
    	
 
    	
Goldman Sachs Bank USA (“Goldman Sachs”)   will act as sole and exclusive syndication agent for the Bridge Facility.
    
	
 
    	
 
    	
 
    
	
Joint Lead Arrangers and Joint Bookrunning   Managers:
    	
 
    	
JPMorgan and Goldman Sachs will act as joint   lead arrangers and joint bookrunning managers for the Bridge Facility (in   such capacities, the “Lead Arrangers”).
    
	
 
    	
 
    	
 
    
	
Lenders:
    	
 
    	
JPMorgan, Goldman Sachs, GS Lending Partners   and other banks, financial institutions and institutional lenders selected in   accordance with the Commitment Letter (each, a “Lender” and collectively,   the “Lenders”).
    
	
 
    	
 
    	
 
    
	
Documentation Principles:
    	
 
    	
The Credit Documentation will be based upon   the Existing 5-Year Credit Agreement and only with modifications consistent   with this Exhibit A (including this paragraph) or that are   otherwise mutually and reasonably agreed by the Borrower and the Lead   Arrangers. The Credit Documentation will contain only those representations   and warranties, affirmative and negative covenants, mandatory prepayments and   commitment reductions and events of default expressly set forth in the   Commitment Letter, including this Exhibit A. For purposes hereof,   the words “based upon” or “substantially the same as” the Existing 5-Year   Credit Agreement and words of similar import mean substantially the same as   the Existing 5-Year Credit Agreement with modifications only (a) as are   necessary to reflect the other terms specifically set forth in this   Commitment Letter (including the nature of the Bridge Facility as a bridge facility),   (b) to reflect any changes in law or accounting standards (or in the   interpretation thereof) since the date of the Existing 5-Year Credit   Agreement as reasonably agreed by the Borrower and the Administrative Agent   and (c) to 
    

 

A-1

 

	
 
    	
 
    	
reflect the operational or administrative   requirements of the Administrative Agent, as reasonably agreed between the   Borrower and the Administrative Agent.
    
	
 
    	
 
    	
 
    
	
Bridge Facility:
    	
 
    	
A senior unsecured bridge loan credit   facility in an aggregate principal amount in U.S. dollars of $20.0 billion   (the “Bridge Facility”).
    
	
 
    	
 
    	
 
    
	
Purpose:
    	
 
    	
The proceeds shall be used by the Borrower   (a) to pay all or a portion of the consideration for the Acquisition and   (b) to pay fees and expenses incurred in connection with the   Transactions.
    
	
 
    	
 
    	
 
    
	
Availability:
    	
 
    	
The Bridge Facility shall be available in a   single draw on the Closing Date. Any loans made under the Bridge Facility are   referred to herein as the “Bridge Loans”.
    
	
 
    	
 
    	
 
    
	
Interest Rates and Fees:
    	
 
    	
As set forth in Annex I hereto.
    
	
 
    	
 
    	
 
    
	
Calculation of Interest and Fees:
    	
 
    	
Other than calculations in respect of   interest at the Base Rate (which shall be made on the basis of actual number   of days elapsed in a 365/366 day year), all calculations of interest and fees   shall be made on the basis of actual number of days elapsed in a 360-day   year.
    
	
 
    	
 
    	
 
    
	
Cost and Yield Protection:
    	
 
    	
Substantially the same as the Existing   5-Year Credit Agreement, including, without limitation, in respect of   breakage or redeployment costs, changes in capital adequacy, liquidity and   capital requirements or their interpretation (including pursuant to   Dodd-Frank or Basel III), illegality, unavailability and clear of   withholding or other taxes.
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
The Bridge Facility will mature on the date   that is 364 days after the Closing Date (the “Maturity Date”).
    
	
 
    	
 
    	
 
    
	
Scheduled Amortization:
    	
 
    	
None.
    
	
 
    	
 
    	
 
    
	
Mandatory Prepayments and Commitment   Reductions:
    	
 
    	
On or prior to the Closing Date, the   aggregate commitments in respect of the Bridge Facility under the Commitment   Letter or under the Credit Documentation (as applicable) shall be   automatically and permanently reduced, and after the Closing Date, the   aggregate Bridge Loans shall be prepaid, in each case, dollar-for-dollar, by   the following amounts:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)        100%   of the net cash proceeds (other than proceeds from (i) any intercompany   transfer and (ii) any single disposition or series of related   dispositions in an amount not to exceed $5.0 billion in the aggregate),   whether in cash or cash equivalents, of all non-ordinary course asset sales   or other 
    

 

A-2

 

	
 
    	
 
    	
dispositions (excluding (w) factoring   arrangements, (x) any leasing transactions, (y) sale-leaseback   transactions and (z) dispositions by the Borrower’s foreign subsidiaries   to the extent the repatriation of the proceeds of such dispositions would   result in material adverse tax consequences as reasonably determined by the   Borrower) or any casualty or condemnation event in respect of property by the   Borrower and its subsidiaries (including proceeds from the sale of stock of   any subsidiary of the Borrower, but excluding casualty or condemnation events   in respect of property of the Borrower’s foreign subsidiaries to the extent   the repatriation of the proceeds of such casualty or condemnation event would   result in material adverse tax consequences as reasonably determined by the   Borrower), other than net cash proceeds that are reinvested in or committed   to be reinvested in or applied in the replacement or repair of assets to be   used in the Borrower’s and/or its subsidiaries’ business within 12 months of   receipt of such proceeds;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)        100%   of the commitments provided to the Borrower or any of its subsidiaries   pursuant to any committed but unfunded credit agreement or similar definitive   agreement for the incurrence of debt for borrowed money other than Excluded   Debt (as defined below) that has become effective for the purpose of   financing the Transactions and having conditions to availability which are   not more restrictive than the conditions to availability of the Bridge   Facility (a “Qualifying Term Loan Facility”); and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(c)        100%   of the net cash proceeds (including in escrow; provided that there are no   conditions to the release of such proceeds from such escrow that are more   onerous than the Funding Conditions (as defined below)) of (i) any sale   or issuance of debt securities (including, without limitation, any Permanent   Financing) or incurrence of other debt for borrowed money (other than   Excluded Debt (as defined below) and without duplication of amounts referred   to in clause (b) above to the extent already applied to   reduce the commitments under the Bridge Facility) and (ii) any sale or   issuance of equity securities or equity-linked securities of the Borrower in   excess of $1.0 billion in the aggregate (other than (x) issuances   pursuant to employee compensation plans, employee benefit plans, employee   incentive plans and retirement plans or issued as compensation to officers   and/or non-employee directors, (y) issuances of directors’ qualifying   shares and/or other nominal amounts required to be held by persons other than   the Borrower or its subsidiaries under applicable law and (z) issuances   by the Borrower’s foreign subsidiaries to the 
    

 

A-3

 

	
 
    	
 
    	
extent the repatriation of the proceeds of   such issuances would result in material adverse tax consequences as   reasonably determined by the Borrower).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
For purposes hereof, “Excluded Debt”   means (i) intercompany debt among the Borrower and/or its subsidiaries,   (ii) any borrowings under, or amendment, refinancing, replacement,   roll-over or renewal of the Existing Credit Agreements; provided that   the aggregate principal amount of indebtedness outstanding or committed   (without duplication) thereunder is not increased in connection therewith,   (iii) commercial paper issuances, ordinary course letter of credit   facilities, overdraft protection, short term working capital facilities,   ordinary course local credit facilities (including the renewal, replacement,   roll-over or refinancing thereof), factoring arrangements, seller lending   financing activities, capital leases, financial leases, indebtedness issued   in connection with credit tenant leases, hedging and cash management,   purchase money and facility and equipment financings (including   sale-leasebacks) and similar obligations, (iv) debt incurred to   refinance, renew, replace or roll-over any outstanding debt of the   Borrower, IBM Credit LLC or either of their respective subsidiaries   maturing within two years of the date of such refinancing, renewal,   replacement or roll-over (regardless of whether such refinanced, renewed,   replaced or rolled-over debt remains outstanding until its maturity),   (v) other debt incurred to finance any other acquisition or investment   and related fees and expenses, (vi) other debt, together with debt under   the Existing Credit Agreements, the Permanent Financing, commercial paper   issuances and the debt contemplated by the Commitment Letter in an aggregate   principal amount to pay the consideration for the Acquisition and to pay fees   and expenses incurred in connection with the Transactions and   (vii) other debt (other than the Permanent Financing) in an aggregate   principal amount up to $5.0 billion.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Borrower shall notify the Administrative   Agent within three business days of any receipt by the Borrower or its   subsidiaries of the proceeds described above or of having entered into a   Qualifying Term Loan Facility.  Any   required commitment reduction resulting from any of the foregoing shall be   effective on the same day as such net cash proceeds are actually received or   funded into escrow, as applicable, or in the case of any Qualifying Term Loan   Facility, the date of effectiveness of the definitive credit or similar   agreement with respect thereto. Any required prepayment of the Bridge   Facility resulting from any of the foregoing shall be made on or prior to 
    

 

A-4

 

	
 
    	
 
    	
the fifth business day after such net cash   proceeds are received.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
All commitment reductions shall be permanent   and any repayment of the Bridge Loans may not be reborrowed. All commitment   reductions and prepayments shall be applied to reduce, respectively, the   commitments in respect of the Bridge Facility and Bridge Loans on a ratable   basis, or with respect to any Lenders which are affiliated with each other,   between them as they and the Administrative Agent may agree.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
In addition, the commitments shall terminate   on the Commitment Termination Date.
    
	
 
    	
 
    	
 
    
	
Optional Prepayments and Commitment   Reductions:
    	
 
    	
The Bridge Facility may be prepaid at any   time in whole or in part without premium or penalty, upon written notice, at   the option of the Borrower, except that any prepayment of LIBOR Loans other   than at the end of the applicable interest periods therefor shall be made   with reimbursement for any funding losses and redeployment costs of the   Lenders resulting therefrom. The commitments under the Bridge Facility may be   reduced permanently or terminated by the Borrower at any time without   penalty. Optional prepayments of the Bridge Loans may not be reborrowed.
    
	
 
    	
 
    	
 
    
	
Conditions Precedent to Borrowing on the   Closing Date:
    	
 
    	
The borrowing under the Bridge Facility on   the Closing Date will be subject solely to the conditions precedent set forth   in Exhibit B to the Commitment Letter (the “Funding Conditions”).
    
	
 
    	
 
    	
 
    
	
Representations and Warranties:
    	
 
    	
Subject to the Documentation Principles and   the Limited Condition Provision, substantially the same as the Existing   5-Year Credit Agreement, each to be made on the date of the Credit   Documentation and upon borrowing under the Bridge Facility; provided,   that the Credit Documentation shall include a customary representation for   transactions of this type to be agreed with respect to accuracy of disclosed   information.
    
	
 
    	
 
    	
 
    
	
Affirmative Covenants:
    	
 
    	
Subject to the Documentation Principles and   the Limited Condition Provision, substantially the same as the Existing   5-Year Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Negative Covenants:
    	
 
    	
Subject to the Documentation Principles and   the Limited Condition Provision, substantially the same as the Existing   5-Year Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Financial Maintenance Covenants:
    	
 
    	
Consolidated Net Interest Expense Ratio of   no less than 2.20 to 1.0, calculated in a manner substantially the same as   the
    

 

A-5

 

	
 
    	
 
    	
Existing 5-Year Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Events of Default:
    	
 
    	
Subject to the Documentation Principles and   the Limited Condition Provision, substantially the same as the Existing   5-Year Credit Agreement.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Without limiting (and subject to) the   conditions set forth in Exhibit B hereto, the Lenders shall not   be entitled to terminate the commitments under the Bridge Facility prior to   the Closing Date due to an event of default unless a payment or bankruptcy   event of default (with respect to the Borrower) under the Credit Documentation   has occurred and is continuing. The acceleration of the Bridge Loans shall be   permitted at any time after they have been funded only to the extent that an   event of default is outstanding and continuing at such time.
    
	
 
    	
 
    	
 
    
	
Actions between Effective Date and Closing   Date:
    	
 
    	
During the period from and including the   effectiveness of the Bridge Facility (the “Effective Date”) and to and   including the earlier of the Commitment Termination Date and the funding of   the Bridge Loans on the Closing Date, and notwithstanding (i) that any   representation given as a condition to the Effective Date (excluding the   Specified Representations and Acquisition Agreement Representations   constituting Funding Conditions) was incorrect, (ii) any failure by the   Borrower to comply with the affirmative covenants and negative covenants   (excluding compliance on the Closing Date with certain negative covenants   constituting Funding Conditions), (iii) any provision to the contrary in   the Credit Documentation or (iv) that any condition to the Effective   Date may subsequently be determined not to have been satisfied, neither the   Administrative Agent nor any Lender shall be entitled to (unless an event of   default under the Credit Documentation shall have occurred and is continuing   with respect to nonpayment of fees thereunder or bankruptcy or insolvency of   the Borrower) (a) cancel any of its commitments in respect of the Bridge   Facility (except as set forth in “Mandatory Prepayments and Commitment   Reductions” above), (b) rescind, terminate or cancel the Credit   Documentation or any of its commitments thereunder or exercise any right or   remedy under the Credit Documentation, to the extent to do so would prevent,   limit or delay the making of its Bridge Loan, (c) refuse to participate   in making its Bridge Loan or (d) exercise any right of set-off or   counterclaim in respect of its Bridge Loan to the extent to do so would   prevent, limit or delay the making of its Bridge Loan; provided, that   the Funding Conditions are satisfied. Furthermore, (a) the rights and   remedies of the Lenders and the Administrative Agent shall not be limited in   the event that any Funding Condition is not 
    

 

A-6

 

	
 
    	
 
    	
satisfied on the Closing Date and   (b) from the Closing Date after giving effect to the funding of the   Bridge Loans on such date, all of the rights, remedies and entitlements of   the Administrative Agent and the Lenders shall be available notwithstanding   that such rights were not available prior to such time as a result of the   foregoing.
    
	
 
    	
 
    	
 
    
	
Defaulting Lender:
    	
 
    	
Substantially the same as the Existing   5-Year Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Assignments and Participations:
    	
 
    	
Lenders will be permitted to assign   commitments under the Bridge Facility and Bridge Loans in a minimum amount of   $10.0 million (subject to exceptions consistent with the Existing 5-Year   Credit Agreement) with the consent of (i) the Borrower (not to be unreasonably   withheld or delayed, and such consent not to be required (a) during the   continuance of a payment or bankruptcy event of default, (b) in   connection with an assignment to a Lender, an affiliate of a Lender or   following the Closing Date an approved fund or (c) to the extent not   required in connection with assignments made by the Lead Arrangers during   primary syndication pursuant to the applicable provisions of Section 2   of the Commitment Letter) and (ii) the Administrative Agent (not to be   unreasonably withheld or delayed, and such consent of the Administrative   Agent not to be required in connection with an assignment to a Lender, an   affiliate of a Lender or following the Closing Date an approved fund); provided,   that (A) prior to the funding of the Bridge Loans on the Closing Date,   (x) the Borrower’s consent right described above shall apply, and there   shall be no Deemed Consent (as defined below), unless a bankruptcy event of   default of the Borrower shall have occurred and be continuing at the   applicable time and (y) unless otherwise consented to in writing in   advance by the Borrower in its sole discretion, any assignment of commitments   to make Bridge Loans (including assignments to another Lender, an affiliate   of a Lender or an approved fund) must be to commercial and investment banks,   in each case, whose senior, unsecured, long-term indebtedness has a rating of   BBB- or better by S&P and Baa3 or better by Moody’s and (B) no   assignment shall be made to any Disqualified Institution at any time. Subject   to the proviso to the immediately preceding sentence, if the consent of the   Borrower is required in connection with any assignment, the Borrower shall be   deemed to have provided such consent unless it has notified the   Administrative Agent of its refusal to give such consent within ten business   days of receiving written request for its consent to such assignment (“Deemed   Consent”). The Lenders will be permitted to sell participations in Bridge   
    

 

A-7

 

	
 
    	
 
    	
Loans and commitments without restriction,   other than to Disqualified Institutions. Voting rights of participants shall   be limited to significant matters such as changes in amount, rate and   maturity date. An assignment fee in the amount of $3,500 will be charged with   respect to each assignment unless waived by the Administrative Agent.   Customary pledges of Bridge Loans shall also be permitted without   restriction.
    
	
 
    	
 
    	
 
    
	
Waivers and Amendments:
    	
 
    	
Amendments and waivers of the provisions of   the Credit Documentation will require the approval of Lenders holding Bridge   Loans and commitments representing more than 50% of the aggregate Bridge   Loans and commitments under the Bridge Facility (the “Required Lenders”),   except that the consent of each Lender will be required with respect to among   other things (a) increases in commitment amount of such Lender,   (b) reductions of principal, interest, or fees payable to such Lender,   (c) extensions of scheduled maturities or times for payment of the   Bridge Loans, commitments, fees, interest, or other amounts due to such   Lender, (d) changes to the relevant percentages applicable to Lender   voting requirements and (e) modifications to certain pro rata provisions   of the Credit Documentation.
    
	
 
    	
 
    	
 
    
	
Indemnification:
    	
 
    	
Subject to the limitations set forth in Section 4   of the Commitment Letter to which this Exhibit A is attached, the   Borrower will indemnify and hold harmless the Administrative Agent, each Lead   Arranger, each Lender and each of their affiliates and their officers,   directors, employees, agents and advisors (each, an “Indemnified Party”)   from and against all losses, liabilities, claims, damages or expenses arising   out of or relating to the Transactions, the Bridge Facility, managing the   syndication thereof, the Borrower’s use of loan proceeds or the commitments,   including, but not limited to, reasonable and documented out-of-pocket   attorneys’ fees and settlement costs, except, in each case, to the extent   such losses, liabilities, claims, damages or expenses resulted from   (x) such Indemnified Party’s (or its Related Parties’) gross negligence,   bad faith or willful misconduct as determined by a final, non-appealable   judgment of a court of competent jurisdiction, (y) such Indemnified   Party’s (or its Related Parties’) material breach of its obligations under   the Credit Documentation and (z) disputes solely among the Indemnified   Parties not arising from or in connection with any act or omission by the   Borrower or any of its affiliates (other than any Proceedings against the   Administrative Agent or the Lead Arrangers in their capacity or in fulfilling   their role as such under the Bridge Facility). This indemnification shall   survive and continue for the benefit of all 
    

 

A-8

 

	
 
    	
 
    	
such persons or entities, notwithstanding   any failure of the Bridge Facility to close.
    
	
 
    	
 
    	
 
    
	
Governing Law:
    	
 
    	
New York; provided, however,   that (a) the interpretation of the definition of “Material Adverse   Effect” (and whether or not a “Material Adverse Effect” has occurred or would   reasonably be expected to occur), (b) the determination of the accuracy   of any Acquisition Agreement Representations and whether as a result of any   inaccuracy of any Acquisition Agreement Representation there has been a   failure of a condition precedent to the Borrower’s (or its affiliates’) obligation   to consummate the Acquisition or such failure gives the Borrower the right to   terminate its (or its affiliates’) obligations under the Acquisition   Agreement and (c) the determination of whether the Acquisition has been   consummated in accordance with the terms of the Acquisition Agreement shall,   in each case, be governed by, and construed and interpreted in accordance   with, the internal laws and judicial decisions of the State of Delaware   applicable to agreements executed and performed entirely within such   jurisdiction without giving effect to any choice or conflict of laws   provision or rule (whether of the State of Delaware or any other   jurisdiction) that would cause the application of laws of any jurisdiction   other than the State of Delaware.
    
	
 
    	
 
    	
 
    
	
Expenses:
    	
 
    	
The Borrower will pay all reasonable   documented or invoiced out-of-pocket fees and expenses (including, but not   limited to, the reasonable fees, disbursements and other charges of counsel   which shall be limited to the reasonable and documented or invoiced   out-of-pocket fees and other charges of one counsel to the Administrative   Agent, and, if necessary, of one regulatory counsel and one local counsel to   the Lenders retained by the Administrative Agent in each relevant regulatory   field and each relevant jurisdiction, respectively (and, in the case of an   actual or perceived conflict of interest where the Lender affected by such   conflict notifies the Borrower of the existence of such conflict and   thereafter retains its own counsel, of another firm of counsel for each such   affected Lender), and due diligence expenses) incurred in connection with the   Bridge Facility, the syndication thereof, the preparation, administration and   enforcement of all Credit Documentation, and the other transactions contemplated   thereby, whether or not the Closing Date occurs or any extensions of credit   are made under the Bridge Facility.
    
	
 
    	
 
    	
 
    
	
E.U. Bail-in Provisions:
    	
 
    	
The Credit Documentation will include   customary “E.U. Bail-in” provisions.
    

 

A-9

 

	
Counsel to the Administrative Agent and the   Lead Arrangers:
    	
 
    	
Simpson Thacher & Bartlett LLP.
    
	
 
    	
 
    	
 
    
	
Miscellaneous:
    	
 
    	
Each of the parties shall (a) waive its   right to a trial by jury and (b) submit to the exclusive jurisdiction of   the United States District Court for the Southern District of New York   sitting in the Borough of Manhattan (or if such court lacks subject matter   jurisdiction, the Supreme Court of the State of New York sitting in the   Borough of Manhattan).
    
	
 
    	
 
    	
 
    

 

A-10

 

ANNEX I
 TO EXHIBIT A

 

INTEREST AND CERTAIN FEES

 

	
Interest Rates:
    	
 
    	
The interest rates per annum applicable to   the Bridge Facility will be, at the option of the Borrower, (a) the LIBO   Rate plus the Applicable Margin (as defined below) or (b) the   Base Rate plus the Applicable Margin.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Borrower may select interest periods of   one, two, three or six months for LIBO Rate borrowings. Interest shall be   payable at the end of the selected interest period, but no less frequently   than quarterly.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
For purposes of the Credit Documentation,   (a) LIBO Rate shall be defined in a manner consistent with the   definition of “Eurodollar Rate” in the Existing 5-Year Credit Agreement and   (b) “Base Rate” shall be defined in a manner consistent with the   definition of “ABR” in the Existing 5-Year Credit Agreement.

The Credit Documentation will contain   provisions with respect to a replacement of the LIBO Rate substantially the   same as the Existing 5-Year Credit Agreement.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The “Applicable Margin” means the   applicable percentage per annum determined in accordance with the pricing   grid attached hereto as Annex I-A (the “Pricing Grid”).
    
	
 
    	
 
    	
 
    
	
Default Interest:
    	
 
    	
Automatically upon the occurrence and during   the continuation of any payment default, all overdue amounts under the Bridge   Facility shall bear interest at a rate per annum equal to (a) in the   case of principal of any Bridge Loan, 2.0% above the rate otherwise   applicable thereto or (b) in the case of any other amount, 2.0% above   the rate applicable to Base Rate Loans, with such interest being payable on   demand.
    
	
 
    	
 
    	
 
    
	
Undrawn Fees:
    	
 
    	
The Borrower will pay fees (the “Undrawn   Fees”), for the ratable benefit of the Lenders at the “Applicable   Undrawn Fee Rate” determined in accordance with the Pricing Grid on the   undrawn commitments in respect of the Bridge Facility accruing daily from and   including the later of (a) the day that is 90 days following the   execution of the Commitment Letter and (b) date of 
    

 

Annex I-1 to Exhibit A

 

	
 
    	
 
    	
execution of the Credit Documentation until   the date on which the commitments under the Bridge Facility are terminated.   Accrued Undrawn Fees shall be payable upon the date on which the commitments   under the Bridge Facility are terminated; provided that any such   Undrawn Fees shall accrue without duplication to any Ticking Fees (as defined   in the Fee Letter).
    
	
 
    	
 
    	
 
    
	
Duration Fees:
    	
 
    	
The Borrower will pay a fee (the “Duration   Fee”), for the ratable benefit of the Lenders, in an amount equal to   (i) 0.50% of the aggregate principal amount of the loans under the   Bridge Facility outstanding on the date which is 90 days after the Closing   Date, due and payable in cash on such 90th day (or if such day is not a   business day, the next business day); (ii) 0.75% of the aggregate   principal amount of the loans under the Bridge Facility outstanding on the   date which is 180 days after the Closing Date, due and payable in cash on   such 180th day (or if such day is not a business day, the next business day);   and (iii) 1.00% of the aggregate principal amount of the loans under the   Bridge Facility outstanding on the date which is 270 days after the Closing   Date, due and payable in cash on such 270th day (or if such day is not a   business day, the next business day).
    

 

Annex I-2 to Exhibit A

 

ANNEX I-A
 TO EXHIBIT A

 

PRICING GRID

 

	
 
    	
 
    	
Applicable Margin
    	
 
    	
 
    
	
Borrower’s
   Debt Ratings
   (S&P/
    	
 
    	
Closing Date through
   89 Days after Closing
   Date
    	
 
    	
90 days after Closing
   Date through 179 days
   after Closing Date
    	
 
    	
180 days after Closing
   Date through 269 days
   after Closing Date
    	
 
    	
270 days after Closing
   Date and thereafter
    	
 
    	
Applicable
   Undrawn
    
	
Moody’s)
    	
 
    	
Base Rate
    	
 
    	
LIBOR
    	
 
    	
Base Rate
    	
 
    	
LIBOR
    	
 
    	
Base Rate
    	
 
    	
LIBOR
    	
 
    	
Base Rate
    	
 
    	
LIBOR
    	
 
    	
Fee Rate
    
	
Level   I: A+/A1 or higher
    	
 
    	
0.0 bps
    	
 
    	
75.0 bps
    	
 
    	
0.0 bps
    	
 
    	
100.0 bps
    	
 
    	
25.0 bps
    	
 
    	
125.0 bps
    	
 
    	
50.0 bps
    	
 
    	
150.0 bps
    	
 
    	
3.0 bps
    
	
Level II:   A/A2
    	
 
    	
0.0 bps
    	
 
    	
87.5 bps
    	
 
    	
12.5 bps
    	
 
    	
112.5 bps
    	
 
    	
37.5 bps
    	
 
    	
137.5 bps
    	
 
    	
62.5 bps
    	
 
    	
162.5 bps
    	
 
    	
4.0 bps
    
	
Level III:   A-/A3 or lower
    	
 
    	
0.0 bps
    	
 
    	
100.0 bps
    	
 
    	
25.0 bps
    	
 
    	
125.0 bps
    	
 
    	
50.0 bps
    	
 
    	
150.0 bps
    	
 
    	
75.0 bps
    	
 
    	
175.0 bps
    	
 
    	
6.0 bps
    

 

 

“Debt Rating” means, as of any date of determination, the rating as determined by either S&P or Moody’s of the Borrower’s non-credit-enhanced, senior unsecured long-term debt; provided, that (a) if the respective Debt Ratings issued by the foregoing rating agencies differ by one level, then the Pricing Level for the higher of such Debt Ratings shall apply (with the Debt Rating for Pricing Level I being the highest and the Debt Rating for Pricing Level III being the lowest); (b) if there is a split in Debt Ratings of more than one level, the Debt Rating used to determine the Pricing Level shall be one Debt Rating level lower than the higher Debt Rating; (c) if the Borrower has only one Debt Rating, the Pricing Level of such Debt Rating shall apply; and (d) if the Borrower does not have any Debt Rating, Pricing Level III shall apply.

 

Annex I-A  to Exhibit A

 

EXHIBIT B

 

CONDITIONS PRECEDENT TO CLOSING

 

The borrowing under the Bridge Facility on the Closing Date will be subject to the following conditions precedent (subject to the Limited Conditionality Provision):

 

(a)        The Credit Documentation shall have been executed and delivered by the parties thereto; provided, that, the terms of the Credit Documentation shall be in a form such that they do not impair availability of the Bridge Facility on the Closing Date if the conditions expressly set forth in this Exhibit B are satisfied.

 

(b)        All of the conditions precedent to the consummation of the Acquisition set forth in Article VI of the Acquisition Agreement shall have been satisfied or waived in accordance with the terms and conditions of the Acquisition Agreement, and no provision of the Acquisition Agreement (in the form of the draft Acquisition Agreement, dated October 28, 2018 and marked “Execution Version” provided to the Lead Arrangers prior to its execution of the Commitment Letter) shall have been amended or modified, and no condition therein shall have been waived or consent granted, in each case, in any respect that is materially adverse to the Lenders or the Lead Arrangers without each Lead Arranger’s prior written consent (which consent shall not be unreasonably withheld or delayed); provided, that changes in the purchase price shall not be deemed to be materially adverse to the interests of the Lenders or the Lead Arrangers and shall not require the consent of the Lead Arrangers if such purchase price changes do not exceed 10.0% in aggregate and, in the case of a purchase price decrease, shall reduce the commitments in respect of the Bridge Facility proportionately.

 

(c)        Since the date of the Acquisition Agreement, no Effect has occurred that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect of which the existence or consequences are still continuing; provided that clause (ii) of the definition of Material Adverse Effect shall be excluded from such definition for the purposes of determining the satisfaction of this paragraph (c). All terms capitalized used in this paragraph (c) and not defined herein shall have the meaning assigned thereto in the Acquisition Agreement (as of the date hereof) for purposes of this paragraph (c).

 

(d)        The Lead Arrangers shall have received (i) audited consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of each of (x) the Borrower for the last three full fiscal years ended at least 60 days prior to the Closing Date and (y) the Target for each of the last three full fiscal years ended at least 60 days prior to the Closing Date and (ii) unaudited consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of the Borrower and the Target for each subsequent fiscal quarterly interim period or periods ended at least 40 days prior to the Closing Date (other than the fourth fiscal quarter of any fiscal year), together with unaudited consolidated financial statements for the corresponding period(s) of the prior fiscal year (it being understood that, with respect to such financial information for each such fiscal year and subsequent interim period, such condition shall be deemed satisfied through the filing by the Borrower or the Target of its annual report on Form 10-K or quarterly report on Form 10-Q with respect to such fiscal year or interim period), which are prepared in accordance with US GAAP and meet the requirements of

 

Exhibit B-1

 

Regulation S-X and all other accounting rules and regulations of the SEC promulgated thereunder applicable to registration statements on Form S-3.

 

(e)        The Administrative Agent shall have received (i) a customary legal opinion from Paul, Weiss, Rifkind, Wharton & Garrison LLP, the Borrower’s corporate organizational documents, good standing certificates for Borrower’s jurisdiction of incorporation, resolutions and other customary closing certificates (including a customary certificate that the conditions set forth herein have been satisfied), and a borrowing notice, each in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, (ii) a solvency certificate from the Treasurer of the Borrower in the form attached as Annex I to this Exhibit B and (iii) at least three business days prior to the Closing Date, to the extent requested at least ten business days prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the U.S.A. PATRIOT Act.

 

(f)         The Lead Arrangers, the Administrative Agent, the Commitment Parties and the Lenders shall have received all fees and invoiced expenses required to be paid on or prior to the Closing Date pursuant to the Fee Letter, Commitment Letter or the Credit Documentation (solely with respect to expenses) to the extent invoiced at least two business days prior to the Closing Date.

 

(g)        (i) There shall exist no event of default under the Credit Documentation corresponding to the following provisions of the Existing 5-Year Credit Agreement (as in effect on the date hereof): Sections 8.01(a); Section 8.01(f) (solely with respect to the Borrower); and 8.01(g) (solely with respect to the Borrower); and (ii) each of the Acquisition Agreement Representations shall be true and correct to the extent required by the Limited Conditionality Provision and each of the Specified Representations shall be true and correct in all material respects, in each case, at the time of, and after giving effect to, the making and application of the Bridge Loans on the Closing Date.

 

Exhibit B-2

 

ANNEX I
 TO EXHIBIT B

 

FORM OF
 SOLVENCY CERTIFICATE

 

[  ], 201[  ]

 

This Solvency Certificate is delivered pursuant to Section [  ] of the Credit Agreement, dated as of [  ], 201[  ] (the “Credit Agreement”), among International Business Machines Corporation, a New York corporation, as borrower (the “Borrower”), the lenders from time to time party thereto (the “Lenders”), and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.

 

The undersigned hereby certifies, solely in his capacity as an officer of the Borrower and not in his individual capacity, as follows:

 

1.         I am the Treasurer of the Borrower. I am familiar with the Transactions and have reviewed the Credit Agreement, financial statements referred to in Section [  ] of the Credit Agreement and such documents and made such investigation as I deemed relevant for the purposes of this Solvency Certificate.

 

2.         As of the date hereof, immediately after giving effect to the consummation of the Transactions, on and as of such date (a) the fair value of the assets of the Borrower and its subsidiaries on a consolidated basis, at a fair valuation on a going concern basis, will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of the Borrower and its subsidiaries on a consolidated basis; (b) the present fair saleable value of the property of the Borrower and its subsidiaries on a consolidated and going concern basis will be greater than the amount that will be required to pay the probable liability of the Borrower and its subsidiaries on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured in the ordinary course of business; (c) the Borrower and its subsidiaries on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured in the ordinary course of business; and (d) the Borrower and its subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Closing Date.

 

This Solvency Certificate is being delivered by the undersigned officer only in his capacity as Treasurer of the Borrower and not individually and the undersigned shall have no personal liability to the Administrative Agent or the Lenders with respect thereto.

 

Annex I-1 to Exhibit B

 

IN WITNESS WHEREOF, the undersigned has executed this Solvency Certificate on the date first written above.

 

	
 
    	
INTERNATIONAL BUSINESS MACHINES   CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name: Simon J. Beaumont
    
	
 
    	
 
    	
Title: Treasurer
    

 

Annex I-2 to Exhibit BExhibit 4.1

 

Exhibit 4.1

 

NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE ON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY
OTHER SECURITIES LAWS (THE “ACTS”). NEITHER THIS
WARRANT NOR THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER MAY BE
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THIS WARRANT OR COMMON STOCK
PURCHASABLE HEREUNDER, AS APPLICABLE, UNDER THE ACTS, OR (B) AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACTS.

 

YOUNGEVITY INTERNATIONAL, INC.

 

WARRANT
AGREEMENT

 

VOID AFTER 5:00 P.M. NEW YORK TIME, _________, 2022

 

Issue
Date: _________, 2018

 

1. Basic Terms. This Warrant
Agreement (the “Warrant”) certifies that, for value
received, the registered holder specified below or its registered
assigns (“Holder”) is the owner of a warrant of
Youngevity International, Inc., a Delaware corporation having its
principal place of business at 2400 Boswell Road, Chula Vista,
California 91914 (the “Corporation”), subject to
adjustments as provided herein, to purchase Six Hundred Thirty One
Thousand Five Hundred Seventy Nine (631,579) shares of the Common
Stock, $.001 par value, of the Corporation (the “Common
Stock”) from the Corporation at the price per share shown
below (the “Exercise Price”).

 

 

Holder:  
Carl Grover

 

Exercise Price per
share:   $4.75

 

Except
as specifically provided otherwise, all references in this Warrant
to the Exercise Price and the number of shares of Common Stock
purchasable hereunder shall be to the Exercise Price and number of
shares after any adjustments are made thereto pursuant to this
Warrant.

 

2. Corporation’s
Representations/Covenants. The Corporation represents and
covenants that the shares of Common Stock issuable upon the
exercise of this Warrant shall at delivery be fully paid and
non-assessable and free from taxes, liens, encumbrances and charges
with respect to their purchase. The Corporation shall take any
necessary actions to assure that the par value per share of the
Common Stock is at all times equal to or less than the then current
Exercise Price per share of Common Stock issuable pursuant to this
Warrant. The Corporation shall at all times reserve and hold
available sufficient shares of Common Stock to satisfy all
conversion and purchase rights of outstanding convertible
securities, options and warrants of the Corporation, including this
Warrant.

 

 

 

-1-

 

 

 

3. Method of Exercise; Fractional
Shares.

 

(a) This Warrant is
exercisable at the option of the Holder at any time by surrendering
this Warrant, on any business day during the period (the
“Exercise Period”) beginning the business day after the
issue date of this Warrant specified above and ending at 5:00 p.m.
(New York time) four (4) years after the issue date. To exercise
this Warrant, the Holder shall surrender this Warrant at the
principal office of the Corporation or that of the duly authorized
and acting transfer agent for its Common Stock, together with the
executed exercise form (substantially in the form of that attached
hereto) and together with payment for the Common Stock purchased
under this Warrant. The principal office of the Corporation is
located at the address specified in Section 1 of this Warrant;
provided,
however, that the
Corporation may change its principal office upon notice to the
Holder. Payment shall be made by check payable to the order of the
Corporation or by wire transfer. This Warrant is not exercisable
with respect to a fraction of a share of Common Stock. In lieu of
issuing a fraction of a share remaining after exercise of this
Warrant as to all full shares covered by this Warrant, the
Corporation shall either at its option (a) pay for the fractional
share cash equal to the same fraction at the fair market price for
such share; or (b) issue scrip for the fraction in the registered
or bearer form which shall entitle the Holder to receive a
certificate for a full share of Common Stock on surrender of scrip
aggregating a full share.

 

(b) In lieu of cash
exercising this Warrant, the Holder may elect to receive Common
Stock equal to the value of this Warrant (or the portion thereof
being canceled) by surrender of this Warrant at the principal
office of the Corporation together with notice of such election, in
which event the Corporation shall issue to the Holder a number of
shares of Common Stock computed using the following
formula:

 

Y (A - B)

X
=           
A

Where:

 

X
--           The
number of shares of Common Stock to be issued to the Holder under
this Section 3(b).

 

Y
--           The
number of shares of Common Stock purchasable under this Warrant (at
the date of such calculation).

 

A
--           The
fair market value of a share of Common Stock on the business day
immediately preceding the date of exercise.

 

B
--           The
Exercise Price (as adjusted to the date of such
calculations).

 

For
purposes of this Section 3(b), the fair market value of a share of
Common Stock shall mean the average of the closing price of the
Common Stock (or equivalent shares of capital stock for which this
Warrant is exercisable (“Capital Stock”)
underlying the Common Stock) quoted on NASDAQ or other primary
market in which the Common Stock (or equivalent shares of Capital
Stock underlying the Common Stock) are traded or the closing price
quoted on any exchange or electronic securities market on which the
Common Stock (or equivalent shares of Capital Stock underlying the
Common Stock) are listed, whichever is applicable, as published in
The Wall Street Journal for the thirty (30) trading days prior to
the date of determination of fair market value (or such shorter
period of time during which such Common Stock were traded
over-the-counter or on such exchange).

 

 

 

-2-

 

 

 

4. Protection Against Dilution. If
the Corporation, with respect to the Common Stock, (1) pays a
dividend or makes a distribution on shares of Common Stock that is
paid in shares of Common Stock or in securities convertible into or
exchangeable for Common Stock (in which latter event the number of
shares of Common Stock initially issuable upon the conversion or
exchange of such securities shall be deemed to have been
distributed), (2) subdivides outstanding shares of Common Stock,
(3) combines outstanding shares of Common Stock into a smaller
number of shares, or (4) issues by reclassification of Common Stock
any shares of capital stock of the Corporation, the number of
shares as to which this Warrant is exercisable as of the date of
such event and the Exercise Price in effect immediately prior
thereto shall be adjusted so that each Holder thereafter shall be
entitled to receive the number and kind of shares of Common Stock
or other capital stock of the Corporation that it would have owned
or been entitled to receive in respect of this Warrant immediately
after the happening of any of the events described above had this
Warrant been converted immediately prior to the happening of that
event; provided that the aggregate purchase price payable for the
total numbers of shares of Common Stock purchasable under this
Warrant shall remain the same. An adjustment made in accordance
with this section shall become effective immediately after the
record date, in the case of a dividend, and shall become effective
immediately after the effective date, in the case of a subdivision,
combination, or reclassification. If, as a result of an adjustment
made in accordance with this Section 4, the Holder becomes entitled
to receive shares of two or more classes of capital stock or shares
of Common Stock and other capital stock of the Corporation, the
board of directors (whose determination shall be conclusive) shall
determine the allocation of the adjusted Exercise Rate between or
among shares of such classes of capital stock or shares of Common
Stock and other capital stock.

 

5. Adjustment for Reorganization,
Consolidation, Merger. In the event of any consolidation or
merger to which the Corporation is a party other than a
consolidation or merger in which the Corporation is the continuing
corporation, or the sale or conveyance to another corporation of
the property of the Corporation as an entirety or substantially as
an entirety or any statutory exchange of securities with another
corporation (including any exchange effected in connection with a
merger of a third corporation into the Corporation) (each such
transaction referred to herein as “Reorganization”), no
adjustment of exercise rights or the Exercise Price shall be made;
provided,
however, the Holder
shall thereupon be entitled to receive if the Holder chooses to
exercise the Warrant within ten days of the notice of the
Reorganization and provision shall be made therefor in any
agreement relating to a Reorganization, the kind and number of
securities or property (including cash) of the corporation
resulting from such consolidation or surviving such merger or to
which such properties and assets shall have been sold or otherwise
transferred or with whom securities have been exchanged, which the
Holder would have owned or been entitled to receive as a result of
such Reorganization had this Warrant been exercised immediately
prior to such Reorganization (and assuming the Holder failed to
make an election, if any was available, as to the kind or amount of
securities, property or cash receivable by reason of such
Reorganization; provided that if the kind or amount of securities,
property or cash receivable upon such Reorganization is not the
same for each share of Common Stock in respect of which such rights
of election shall not have been exercised (“non electing
share”) then for the purpose of this section the kind and
amount of securities, property or cash receivable upon such
Reorganization for each non electing share shall be deemed to be
the kind and amount so receivable per share by a plurality of the
non electing shares). In any case, appropriate adjustment shall be
made in the application of the provisions herein set forth with
respect to the rights and interests thereafter of the Holder, to
the end that the provisions set forth herein (including the
specified changes and other adjustments to the conversion rate)
shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares, other securities or property thereafter
receivable upon exercise of this Warrant. The provisions of this
section similarly apply to successive Reorganizations.

 

 

 

-3-

 

 

 

6. Notice of Adjustment. On the
happening of an event requiring an adjustment of the Exercise Price
or the shares purchasable under this Warrant, the Corporation
shall, within thirty (30) business days, give written notice to the
Holder stating the adjusted Exercise Price and the adjusted number
and kind of securities or other property purchasable under this
Warrant resulting from the event and setting forth in reasonable
detail the method of calculation and the facts upon which the
calculation is based.

 

7. Dissolution, Liquidation. In
case of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation (other than in connection with
reorganization, consolidation, merger, or other transaction covered
by paragraph 5 above) is at any time proposed; the Corporation
shall give at least thirty days prior written notice to the Holder.
Such notice shall contain: (a) the date on which the transaction is
to take place; (b) the record date (which shall be at least thirty
(30) days after the giving of the notice) as of which holders of
Common Stock will be entitled to receive distributions as a result
of the transaction; (c) a brief description of the transaction, (d)
a brief description of the distributions to be made to holders of
Common Stock as a result of the transaction; and (e) an estimate of
the fair value of the distributions. On the date of the
transaction, if it actually occurs, this Warrant and all rights
under this Warrant shall terminate.

 

8. Rights of Holder. The
Corporation shall deliver to the Holder all notices and other
information provided to its holders of shares of Common Stock or
other securities which may be issuable hereunder concurrently with
the delivery of such information to the holders. This Warrant does
not entitle the Holder to any voting rights or, except for the
foregoing notice provisions, any other rights as a shareholder of
the Corporation. No dividends are payable or will accrue on this
Warrant or the shares of Common Stock purchasable under this
Warrant until, and except to the extent that, this Warrant is
exercised. Upon the surrender of this Warrant and payment of the
Exercise Price as provided above, the person or entity entitled to
receive the shares of Common Stock issuable upon such exercise
shall be treated for all purposes as the record holder of such
shares as of the close of business on the date of the surrender of
this Warrant for exercise as provided above. Upon the exercise of
this Warrant, the Holder shall have all of the rights of a
shareholder in the Corporation.

 

9. Exchange for Other
Denominations. This Warrant is exchangeable, on its
surrender by the Holder to the Corporation, for a new Warrant of
like tenor and date representing in the aggregate the right to
purchase the balance of the number of shares purchasable under this
Warrant in denominations and subject to restrictions on transfer
contained herein, in the names designated by the Holder at the time
of surrender.

 

10. Substitution. Upon receipt by
the Corporation of evidence satisfactory (in the exercise of
reasonable discretion) to it of the ownership of and the loss,
theft or destruction or mutilation of the Warrant, and (in the case
or loss, theft or destruction) of indemnity satisfactory (in the
exercise of reasonable discretion) to it, and (in the case of
mutilation) upon the surrender and cancellation thereof, the
Corporation will issue and deliver, in lieu thereof, a new Warrant
of like tenor.

 

 

 

-4-

 

 

 

11. Restrictions on Transfer.
Neither this Warrant nor the shares of Common Stock issuable on
exercise of this Warrant have been registered under the Securities
Act or any other securities laws (the “Acts”). Neither
this Warrant nor the shares of Common Stock purchasable hereunder
may be sold, transferred, pledged or hypothecated in the absence of
(a) an effective registration statement for this Warrant or Common
Stock purchasable hereunder, as applicable, under the Acts, or (b)
an opinion of counsel reasonably satisfactory to the Corporation
that registration is not required under such Acts. If the Holder
seeks an opinion as to transfer without registration from
Holder’s counsel, the Corporation shall provide such factual
information to Holder’s counsel as Holder’s counsel
reasonably requests for the purpose of rendering such opinion. Each
certificate evidencing shares of Common Stock purchased hereunder
will bear a legend describing the restrictions on transfer
contained in this paragraph unless, in the opinion of counsel
reasonably acceptable to the Corporation, the shares need no longer
to be subject to the transfer restrictions.

 

12. Ownership Limitation. 
Notwithstanding the provisions of this Warrant, in no event shall
this Warrant be exercisable to the extent that the issuance of
Common Stock upon the exercise hereof, after taking into account
the Common Stock then owned by the Holder and its affiliates, would
result in the beneficial ownership by the Holder and its affiliates
of more than 9.99% of the outstanding Common Stock of the
Company.  For purposes of this paragraph, beneficial ownership
shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended.

 

13. Transfer. Except as otherwise
provided in this Warrant, this Warrant is transferable only on the
books of the Corporation by the Holder in person or by attorney, on
surrender of this Warrant, properly endorsed.

 

14. Recognition of Holder. Prior to
due presentment for registration of transfer of this Warrant, the
Corporation shall treat the Holder as the person exclusively
entitled to receive notices and otherwise to exercise rights under
this Warrant. All notices required or permitted to be given to the
Holder shall be in writing and shall be given by first class mail,
postage prepaid, addressed to the Holder at the address of the
Holder appearing in the records of the Corporation.

 

15. Payment of Taxes. The
Corporation shall pay all taxes and other governmental charges,
other than applicable income taxes, that may be imposed with
respect to the issuance of shares of Common Stock pursuant to the
exercise of this Warrant.

 

16. Headings. The headings in this
Warrant are for purposes of convenience in reference only, shall
not be deemed to constitute a part of this Warrant and shall not
affect the meaning or construction of any of the provisions of this
Warrant.

 

17. Miscellaneous. This Warrant may
not be changed, waived, discharged or terminated except by an
instrument in writing signed by the Corporation and the Holder.
This Warrant shall inure to the benefit of and shall be binding
upon the successors and assigns of the Corporation. Under no
circumstances may this Warrant be assigned by the
Holder.

 

18. Governing Law. This Warrant
shall be governed by and construed in accordance with the laws of
the State of Delaware without giving effect to its principles
governing conflicts of law.

 

 

 

YOUNGEVITY
INTERNATIONAL, INC.

 

 

 

By:
_________________________________

Name:
David Briskie

Title:
President and Chief Financial Officer

 

 

-5-

 

 

 

YOUNGEVITY INTERNATIONAL, INC.

 

Form of
Transfer

 

(To be
executed by the Holder to transfer the Warrant)

 

For
value received the undersigned registered holder of the attached
Warrant hereby sells, assigns, and transfers the Warrant to the
Assignee(s) named below:

 

	

Names of
Assignee

	

Address

	

Taxpayer ID
No.

	

Number of Shares
subject to transferred Warrant

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

The
undersigned registered holder further irrevocably appoints
____________________ _______________________________ attorney (with
full power of substitution) to transfer this Warrant as aforesaid
on the books of the Corporation.

 

 

 

 

Date:
______________________________                                                                                                
___________________________________

   
           
           
           
           
           
           
           
           
           
           
           
           
       
         
Signature

 

 

 

 

-6-

 

 

 

YOUNGEVITY INTERNATIONAL, INC.

 

Exercise Form

 

(To be
executed by the Holder to purchase Common Stock pursuant to the
Warrant)

 

 

The
undersigned holder of the attached Warrant hereby irrevocably
elects to exercise purchase rights represented by such Warrant for,
and to purchase, ___________ shares of Common Stock of Youngevity
International, Inc., a Delaware corporation, for the cash payment
for those shares.

 

 

 

The
undersigned requests that (1) a certificate for the shares be
issued in the name of the undersigned and (2) if the number of
shares with respect to which the undersigned holder has exercised
purchase rights is not all of the shares purchasable under this
Warrant, that a new Warrant of like tenor for the balance of the
remaining shares purchasable under this Warrant be
issued.

 

 

 

 

 

Date:
______________________________                                                                                                
___________________________________

   
           
           
           
           
           
           
           
           
           
           
           
           
       
         
Signature

 

 

  

 

-7-

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