Document:

Exhibit 10.1

 

EXECUTION COPY

 

CREDIT AGREEMENT

 

Dated as of January 7, 2011

 

among

 

VERTEX PHARMACEUTICALS INCORPORATED,
 as the Borrower,

 

BANK OF AMERICA, N.A.,
 as Administrative Agent,

 

and

 

The Other Lenders Party Hereto

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I.
    	
DEFINITIONS AND ACCOUNTING TERMS
    	
1
    
	
1.01.
    	
Defined   Terms
    	
1
    
	
1.02.
    	
Other   Interpretive Provisions
    	
23
    
	
1.03.
    	
Accounting   Terms
    	
23
    
	
1.04.
    	
Rounding
    	
24
    
	
1.05.
    	
Times   of Day
    	
24
    
	
ARTICLE II.
    	
THE COMMITMENTS AND CREDIT EXTENSIONS
    	
24
    
	
2.01.
    	
The   Loans
    	
24
    
	
2.02.
    	
Borrowings,   Conversions and Continuations of Loans
    	
24
    
	
2.03.
    	
Prepayments
    	
26
    
	
2.04.
    	
Termination   or Reduction of Commitments; Release of Cash and Specified Securities in   Administrative Agent’s Collateral Account
    	
26
    
	
2.05.
    	
Repayment   of Loans
    	
27
    
	
2.06.
    	
Interest
    	
27
    
	
2.07.
    	
Fees
    	
28
    
	
2.08.
    	
Computation   of Interest and Fees
    	
28
    
	
2.09.
    	
Evidence   of Debt
    	
28
    
	
2.10.
    	
Payments   Generally; Administrative Agent’s Clawback
    	
29
    
	
2.11.
    	
Sharing   of Payments by Lenders
    	
31
    
	
2.12.
    	
Guaranties   and Security
    	
31
    
	
2.13.
    	
Defaulting   Lenders
    	
33
    
	
ARTICLE III.
    	
TAXES, YIELD PROTECTION AND ILLEGALITY
    	
34
    
	
3.01.
    	
Taxes
    	
34
    
	
3.02.
    	
Illegality
    	
38
    
	
3.03.
    	
Inability   to Determine Rates
    	
38
    
	
3.04.
    	
Increased   Costs
    	
39
    
	
3.05.
    	
Compensation   for Losses
    	
40
    
	
3.06.
    	
Mitigation   Obligations; Replacement of Lenders
    	
40
    
	
3.07.
    	
Survival
    	
41
    
	
ARTICLE IV.
    	
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
    	
41
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
4.01.
    	
Conditions   to Closing Date
    	
41
    
	
4.02.
    	
Conditions   to Initial Borrowing
    	
43
    
	
4.03.
    	
Conditions   to all Credit Extensions
    	
44
    
	
ARTICLE V.
    	
REPRESENTATIONS AND WARRANTIES
    	
44
    
	
5.01.
    	
Existence,   Qualification and Power
    	
44
    
	
5.02.
    	
Authorization;   No Contravention
    	
45
    
	
5.03.
    	
Governmental   Authorization; Other Consents
    	
45
    
	
5.04.
    	
Binding   Effect
    	
45
    
	
5.05.
    	
Financial   Statements; No Material Adverse Effect
    	
45
    
	
5.06.
    	
Litigation
    	
46
    
	
5.07.
    	
No   Default
    	
46
    
	
5.08.
    	
Ownership   of Property; Liens
    	
46
    
	
5.09.
    	
Environmental   Compliance
    	
47
    
	
5.10.
    	
Insurance
    	
47
    
	
5.11.
    	
Taxes
    	
47
    
	
5.12.
    	
ERISA   Compliance
    	
47
    
	
5.13.
    	
Subsidiaries;   Equity Interests; Loan Parties
    	
48
    
	
5.14.
    	
Margin   Regulations; Investment Company Act
    	
49
    
	
5.15.
    	
Disclosure
    	
49
    
	
5.16.
    	
Compliance   with Laws; Licenses
    	
49
    
	
5.17.
    	
Intellectual   Property; Licenses, Etc
    	
49
    
	
5.18.
    	
Solvency
    	
50
    
	
5.19.
    	
Collateral   Documents
    	
50
    
	
5.20.
    	
Senior   Debt
    	
50
    
	
ARTICLE VI.
    	
AFFIRMATIVE COVENANTS
    	
50
    
	
6.01.
    	
Financial   Statements
    	
50
    
	
6.02.
    	
Certificates;   Other Information
    	
51
    
	
6.03.
    	
Notices
    	
53
    
	
6.04.
    	
Payment   of Obligations
    	
54
    
	
6.05.
    	
Preservation   of Existence, Etc
    	
54
    

 

ii

 

TABLE OF CONTENTS

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Page
    
	
 
    	
 
    	
 
    
	
6.06.
    	
Maintenance   of Properties
    	
55
    
	
6.07.
    	
Maintenance   of Insurance
    	
55
    
	
6.08.
    	
Compliance   with Laws; Licenses
    	
55
    
	
6.09.
    	
Books   and Records
    	
55
    
	
6.10.
    	
Inspection   Rights
    	
55
    
	
6.11.
    	
Use   of Proceeds
    	
56
    
	
6.12.
    	
Covenant   to Guarantee Obligations
    	
56
    
	
6.13.
    	
Compliance   with Environmental Laws
    	
56
    
	
6.14.
    	
Further   Assurances
    	
56
    
	
6.15.
    	
Cash   Management
    	
57
    
	
6.16.
    	
Telaprevir   (VX-950)
    	
57
    
	
6.17.
    	
Monitoring   Rights
    	
57
    
	
ARTICLE VII.
    	
NEGATIVE COVENANTS
    	
57
    
	
7.01.
    	
Liens
    	
57
    
	
7.02.
    	
Investments
    	
59
    
	
7.03.
    	
Indebtedness
    	
59
    
	
7.04.
    	
Fundamental   Changes
    	
61
    
	
7.05.
    	
Dispositions
    	
61
    
	
7.06.
    	
Restricted   Payments
    	
62
    
	
7.07.
    	
Change   in Nature of Business
    	
62
    
	
7.08.
    	
Transactions   with Affiliates
    	
62
    
	
7.09.
    	
Burdensome   Agreements
    	
63
    
	
7.10.
    	
Use   of Proceeds
    	
63
    
	
7.11.
    	
Financial   Covenants
    	
63
    
	
7.12.
    	
Amendments   of Organization Documents
    	
63
    
	
7.13.
    	
Accounting   Changes
    	
63
    
	
7.14.
    	
Prepayments, Etc.   of Indebtedness; Amendment of Olmstead Notes
    	
63
    
	
7.15.
    	
Specified   Transfers
    	
64
    
	
ARTICLE VIII.
    	
EVENTS OF DEFAULT AND REMEDIES
    	
65
    
	
8.01.
    	
Events   of Default
    	
65
    

 

iii

 

TABLE OF CONTENTS

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Page
    
	
 
    	
 
    	
 
    
	
8.02.
    	
Remedies   Upon Event of Default
    	
67
    
	
8.03.
    	
Application   of Funds
    	
68
    
	
ARTICLE IX.
    	
ADMINISTRATIVE AGENT
    	
68
    
	
9.01.
    	
Appointment   and Authority
    	
68
    
	
9.02.
    	
Rights   as a Lender
    	
69
    
	
9.03.
    	
Exculpatory   Provisions
    	
69
    
	
9.04.
    	
Reliance   by Administrative Agent
    	
70
    
	
9.05.
    	
Delegation   of Duties
    	
70
    
	
9.06.
    	
Resignation   of Administrative Agent
    	
70
    
	
9.07.
    	
Non-Reliance   on Administrative Agent and Other Lenders
    	
71
    
	
9.08.
    	
No   Other Duties, Etc
    	
71
    
	
9.09.
    	
Administrative   Agent May File Proofs of Claim
    	
71
    
	
9.10.
    	
Collateral   and Guaranty Matters
    	
72
    
	
9.11.
    	
Cash   Management Agreements and Hedge Agreements
    	
73
    
	
ARTICLE X.
    	
MISCELLANEOUS
    	
73
    
	
10.01.
    	
Amendments,   Etc
    	
73
    
	
10.02.
    	
Notices;   Effectiveness; Electronic Communications
    	
74
    
	
10.03.
    	
No   Waiver; Cumulative Remedies; Enforcement
    	
76
    
	
10.04.
    	
Expenses;   Indemnity; Damage Waiver
    	
77
    
	
10.05.
    	
Payments   Set Aside
    	
79
    
	
10.06.
    	
Successors   and Assigns
    	
79
    
	
10.07.
    	
Treatment   of Certain Information; Confidentiality
    	
82
    
	
10.08.
    	
Right   of Setoff
    	
83
    
	
10.09.
    	
Interest   Rate Limitation
    	
84
    
	
10.10.
    	
Counterparts;   Integration; Effectiveness
    	
84
    
	
10.11.
    	
Survival   of Representations and Warranties
    	
85
    
	
10.12.
    	
Severability
    	
85
    
	
10.13.
    	
Replacement   of Lenders
    	
85
    
	
10.14.
    	
Governing   Law; Jurisdiction; Etc
    	
86
    
	
10.15.
    	
Waiver   of Jury Trial
    	
87
    

 

iv

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
10.16.
    	
No   Advisory or Fiduciary Responsibility
    	
87
    
	
10.17.
    	
Electronic   Execution of Assignments and Certain Other Documents
    	
88
    
	
10.18.
    	
USA   PATRIOT Act
    	
88
    

 

v

 

	
SCHEDULES
    	
 
    
	
 
    	
 
    
	
1.01
    	
Certain   Securities
    
	
2.01
    	
Commitments   and Applicable Percentages
    
	
5.05
    	
Supplement   to Interim Financial Statements
    
	
5.13
    	
Subsidiaries   and Other Equity Investments; Loan Parties
    
	
7.01
    	
Existing   Liens
    
	
7.03
    	
Existing   Indebtedness
    
	
7.11
    	
Consolidated   Maximum Burn Rate
    
	
10.02
    	
Administrative   Agent’s Office; Certain Addresses for Notices
    
	
 
    	
 
    
	
EXHIBITS
    	
 
    
	
 
    	
 
    
	
Form of
    	
 
    
	
A
    	
Loan   Notice
    
	
B
    	
Note
    
	
C
    	
Compliance   Certificate
    
	
D
    	
Assignment   and Assumption
    

 

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is entered into as of January 7, 2011, among VERTEX PHARMACEUTICALS INCORPORATED, a Massachusetts corporation (the “Borrower”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent.

 

PRELIMINARY STATEMENTS:

 

The Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders have indicated their willingness to lend, on the terms and subject to the conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

1.01.                     Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

“Account Control Agreements” means each Deposit Account Control Agreement, Securities Account Control Agreement and each other account control agreement entered into pursuant to the terms of this Agreement or any other Loan Document, in each case, in form and substance reasonably satisfactory to Administrative Agent.

 

“Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

 

“Administrative Agent’s Account” means, collectively, such deposit accounts and securities accounts maintained by the Administrative Agent at Bank of America or Merrill Lynch, Pierce, Fenner & Smith Incorporated, under the sole dominion and control of the Administrative Agent, as secured party.  Unless agreed to by the Administrative Agent, neither the Borrower nor any other Loan Party shall have the right to make any withdrawal, give any instructions with respect to the disposition of any funds or other assets or otherwise deal with any funds or other assets maintained in the Administrative Agent’s Account.

 

“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Advance Rate Percentage” means, (a) with respect to each Specified Security set forth on Schedule 1.01, its respective “Maximum Advance Rate Percentage” listed on Schedule 1.01

 

 

and (b) with respect to any other Specified Security, the maximum advance rate as determined by the Administrative Agent in its reasonable discretion.

 

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“Aggregate Commitments” means the Commitments of all the Lenders.  The Aggregate Commitments, as of the date of this Agreement, are $100,000,000.

 

“Agreement” means this Credit Agreement.

 

“Applicable Percentage” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment at such time.  If the commitment of each Lender to make Loans has been terminated pursuant to Section 8.02, or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments.  The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Applicable Rate” means 1.50% per annum.

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit D or any other form approved by the Administrative Agent.

 

“Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

 

“Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2009, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

 

2

 

“Availability Period” means the period from and including the Initial Availability Date to the earliest of (i) the Maturity Date, (ii) the date of termination of the Aggregate Commitments pursuant to Section 2.04, and (iii) the date of termination of the Commitment of each Lender pursuant to Section 8.02.

 

“Bank of America” means Bank of America, N.A. and its successors.

 

“Base Rate” means for any day a fluctuating rate per annum equal to the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate”.  The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Borrower” has the meaning specified in the introductory paragraph hereto.

 

“Borrower Materials” has the meaning specified in Section 6.02.

 

“Borrowing” means a borrowing consisting of simultaneous Loans of the same Type and, in the case of LIBOR Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any LIBOR Rate Loan, means any such day that is also a London Banking Day.

 

“Capital Expenditures” means, with respect to any Person for any period, any expenditure in respect of the purchase or other acquisition of any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations).

 

“Cash Equivalents” means any of the following types of Investments, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens (other than Liens created under the Collateral Documents and other Liens permitted hereunder):

 

(a)                                  readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;

 

(b)                                 time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii)

 

3

 

issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 90 days from the date of acquisition thereof;

 

(c)                                  commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; and

 

(d)                                 Investments, classified in accordance with GAAP as current assets of the Borrower or any of its Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.

 

“Cash Management Agreement” means any arrangement to provide cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management services, entered into by and between the Borrower or any Subsidiary and any Cash Management Bank.

 

“Cash Management Bank” means any Lender or an Affiliate of a Lender that has entered into a Cash Management Agreement, in its capacity as a party to such Cash Management Agreement.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

 

“Change of Control” means an event or series of events by which:

 

(a)                                  any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 35% or more of the equity securities of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such “person” or “group” has the right to acquire pursuant to any option right); or

 

(b)                                 during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of

 

4

 

such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

 

(c)                                  the passage of thirty days from the date upon which any Person or two or more Persons acting in concert shall have acquired, by contract or otherwise, the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Borrower, or control over the equity securities of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such Person or group has the right to acquire pursuant to any option right) representing 35% or more of the combined voting power of such securities.

 

“Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01.

 

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

 

“Collateral” means all of the “Collateral” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent for the benefit of the Credit Provider Parties.

 

“Collateral Documents” means, collectively, the Security Agreement, the Account Control Agreements and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Credit Provider Parties.

 

“Commitment” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 2.01, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

 

“Commitment Fee” has the meaning set forth in Section 2.07.

 

“Compliance Certificate” means a certificate in substantially the form of Exhibit C.

 

“Consolidated Burn Rate” means, for any period:

 

5

 

(a) the sum of an amount equal to (i) Consolidated Net Income plus (ii) the following to the extent deducted in calculating such Consolidated Net Income: (A) compensation paid to employees in the form of common stock during such period, (B) depreciation and amortization expense and (C) other non-recurring expenses of the Borrower and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period and minus (iii) the following to the extent included in calculating such Consolidated Net Income, (x) all non-cash items increasing Consolidated Net Income (net of any related costs and expenses), and (y) all revenue and/or royalty streams from the sale goods and services which have been sold to any third party (net of any related costs and expenses), in each case, for such period;

 

minus

 

(b) the aggregate increase (expressed as a positive number) or aggregate decrease (expressed as a negative  number) in Consolidated Net Working Capital during such period;

 

minus

 

(c) the aggregate amount of Capital Expenditures of or by the Borrower and its Subsidiaries during such period.

 

“Consolidated Net Income” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the net income of the Borrower and its Subsidiaries (excluding extraordinary gains) for that period, determined in accordance with GAAP.

 

“Consolidated Net Working Capital” means, as of any date of determination, an amount equal to (a) the sum of (i) net account receivables of the Borrower and its Subsidiaries plus (ii) net inventory of the Borrower and its Subsidiaries minus (b) account payables (including royalty payments) of the Borrower and its Subsidiaries, all as determined on a consolidated basis in accordance with GAAP.

 

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

“Control Account” means, at any time prior to the completion of the Trigger Event Day Transfer, each deposit account and securities account now or hereafter owned by the Loan Parties and maintained in the United States, other than payroll accounts (so long as each such payroll account is a zero balance account), withholding tax and other fiduciary accounts, accounts with balances of less than $500,000 and any accounts in which cash collateral is maintained for letters of credit issued by Bank of America; provided that upon the completion of the Trigger Event Day Transfer, no deposit account or securities account owned by a Loan Party shall be deemed a “Control Account”.

 

6

 

“Credit Extension” means a Borrowing.

 

“Credit Provider Parties” means, collectively, the Administrative Agent, the Lenders, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05, and the other Persons the Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Collateral Documents.

 

“Current Market Value” means:

 

(a)  With respect to stock, an amount equal to (i) the per share price of such stock at the close of the most recent regular trading day (excluding after-hours trading) on the New York Stock Exchange, American Stock Exchange or the NASDAQ Global Select or Global Market Tier (each, a “Designated Exchange”) as applicable for such stock, times (ii) the number of shares of such stock owned by the applicable Loan Party.  In the event that stock is not traded on a Designated Exchange, the Current Market Value of such stock shall be determined by obtaining the quoted value of such stock from a reputable brokerage firm selected by the Administrative Agent (which may be an Affiliate of the Administrative Agent).  If stock is traded on more than one Designated Exchange, the Current Market Value of such stock for any purpose under this Agreement shall be determined by using the lower per share price.

 

(b)  With respect to any mutual fund, an amount equal to (i) the most recent per share net asset value of such mutual fund obtained from the Wall Street Journal, or such other reputable reporting service as the Administrative Agent may select, times (ii) the number of shares of such mutual fund owned by the applicable Loan Party.  In the event that such net asset value is not available in the Wall Street Journal, or such other reputable reporting service as the Administrative Agent may select, the Current Market Value shall be the value quoted to the Administrative Agent by a reputable brokerage firm selected by the Administrative Agent (which may be an Affiliate of the Administrative Agent).

 

(c)  With respect to bonds, an amount equal to the most recent closing price for such bonds obtained from the Wall Street Journal, or such other reputable reporting service as the Administrative Agent may select.  If such closing price is not available in the Wall Street Journal, or such other reputable reporting service as the Administrative Agent may select, the Current Market Value shall be the value quoted to the Administrative Agent by a reputable brokerage firm selected by the Administrative Agent (which may be an Affiliate of the Administrative Agent).

 

(d)  With respect to any government or agency obligations or bonds, an amount equal to the most recent closing bid price for such bonds obtained from the Wall Street Journal, or such other reputable reporting service as the Administrative Agent may select.  If such closing bid price is not available in the Wall Street Journal, or such other reputable reporting service as the Administrative Agent may select, the Current Market Value shall be the value quoted to the Administrative Agent by a reputable brokerage firm selected by the Administrative Agent (which may be an Affiliate of the Administrative Agent).

 

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(e)  For any Specified Securities not covered above, or for which no quote is available from a reputable brokerage firm as set forth above, the Current Market Value shall be determined by the Administrative Agent in its sole discretion.

 

Notwithstanding anything set forth above to the contrary, to the extent that any stock, mutual fund or bond ceases to be publicly traded on a Designated Exchange or other recognized market acceptable to the Administrative Agent in its sole discretion, the Administrative Agent may, notwithstanding the availability of any brokerage firm quotations, cease to afford such Specified Security any Current Market Value or afford it only such Current Market Value as the Administrative Agent may deem appropriate in its sole discretion.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

 

“Default Rate” means an interest rate equal to (i) the Base Rate plus (ii) 2% per annum; provided, however, that with respect to a LIBOR Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum.

 

“Defaulting Lender” means, subject to Section 2.13(b), any Lender that, as determined by the Administrative Agent, (a) has failed to perform any of its funding obligations hereunder,  including in respect of its Loans or participations in respect of Letters of Credit, within three Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower, the Administrative Agent or any Lender that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent, to confirm in a manner satisfactory to the Administrative Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

 

“Deposit Account Control Agreement” means an agreement in form and substance reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s “control” (as such term is defined in the UCC) with respect to any deposit account.

 

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“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

“Dollar” and “$” mean lawful money of the United States.

 

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

 

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) and (v) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).

 

“Eligible Cash” means unrestricted cash (excluding proceeds of Loans) of the Loan Parties that is (a) denominated in Dollars, (b) deposited in a Specified Account and (c) not subject to any Lien (other than any (x) Lien in favor of the Administrative Agent on behalf of itself and the other Credit Provider Parties and (y) any Lien permitted under clauses (c) and (h) of Section 7.01).

 

“Eligible Securities” means Cash Equivalents and securities of the Loan Parties that are (a) Specified Securities, (b) deposited in or credited to a Specified Account, (c) not subject to any Lien ((other than any (x) Lien in favor of the Administrative Agent on behalf of itself and the other Credit Provider Parties and (y) any Lien permitted under clauses (c) and (h) of Section 7.01) and (d) freely transferable without restriction or limitation.

 

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

 

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

 

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights

 

9

 

for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

 

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

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon  the Borrower or any ERISA Affiliate.

 

“Event of Default” has the meaning specified in Section 8.01.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c) any backup withholding tax that is required by the Code to be withheld from amounts payable to a Lender that has failed to comply with clause (A) of Section 3.01(e)(ii), and (d) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 10.13), any United States  withholding tax that (i) is required to be imposed on amounts payable to such Foreign Lender pursuant to the Laws in force at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or (ii) is attributable to such Foreign Lender’s failure or

 

10

 

inability (other than as a result of a Change in Law) to comply with clause (B) of Section 3.01(e)(ii), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.01(a)(ii) or (c).

 

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

 

“FDA” means the U.S. Food and Drug Administration, or any Governmental Authority succeeding to any of its principal functions.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

 

“Fee Letter” means the letter agreement, dated January 7, 2011, between the Borrower and the Administrative Agent.

 

“Foreign Government Scheme or Arrangement” has the meaning specified in Section 5.12(d).

 

“Foreign Lender” means any Lender that is organized under the Laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.  For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

“Foreign Plan” has the meaning specified in Section 5.12(d).

 

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

 

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

 

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

 

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“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.

 

“Guarantors” means, collectively, the Domestic Subsidiaries of the Borrower listed below and each other Domestic Subsidiary of the Borrower that shall be required to execute and deliver a guaranty or guaranty supplement pursuant to Section 6.12.  As of the Closing Date, the Guarantors are Vertex Holdings Inc., Vertex Pharmaceuticals (San Diego) LLC, Vertex Pharmaceuticals (North America) LLC, and Vertex Securities Corporation.

 

“Guaranty” means, collectively, the Guaranty made by the Guarantors in favor of the Administrative Agent and the other Credit Provider Parties, in form and substance satisfactory to the Administrative Agent, together with each other guaranty delivered pursuant to Section 6.12.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other hazardous substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Hedge Agreements” means any Swap Contract entered into by and between the Borrower or any Subsidiary and any Hedge Bank.

 

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“Hedge Bank” means any Lender or an Affiliate of a Lender that has entered into a Swap Contract, in its capacity as a party to such Swap Contract.

 

“IDC” means Interactive Data Corporation and any successor thereto.

 

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

 

(a)                                  all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(b)                                 all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(c)                                  net obligations of such Person under any Swap Contract;

 

(d)                                 all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, in each case, not past due for more than 90 days);

 

(e)                                  indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)                                    capital leases and Synthetic Lease Obligations of such Person;

 

(g)                                 all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

 

(h)                                 all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.  The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified Taxes”  means Taxes other than Excluded Taxes.

 

“Indemnitees” has the meaning specified in Section 10.04(b).

 

“Information” has the meaning specified in Section 10.07.

 

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“Initial Availability Date” means the first date all the conditions precedent in Section 4.02 are satisfied or waived in accordance with Section 10.01.

 

“Initial Borrowing Request” means the initial Loan Notice submitted by the Borrower requesting a Borrowing.

 

“Initial Borrowing Request Delivery Date” means the date on which the initial Loan Notice is submitted by the Borrower to the Administrative Agent.

 

“Interest Payment Date” means, (a) as to any LIBOR Rate Loan, the last Business Day of each calendar month, the last day of each Interest Period applicable to such Loan and the Maturity Date; and (b) as to any Base Rate Loan, the last Business Day of each calendar month and the Maturity Date.

 

“Interest Period” means, as to each LIBOR Rate Loan, the period commencing on the date such LIBOR Rate Loan is disbursed or converted to or continued as a LIBOR Rate Loan and ending on the date one, two or three months thereafter, as selected by the Borrower in its Loan Notice; provided that:

 

(a)                                  the first day of the interest period must be a Business Day;

 

(b)                                 the last day of the interest period and the actual number of days during the interest period will be determined by the Administrative Agent using the practices of the London inter-bank market; and

 

(c)                                  no Interest Period shall extend beyond the Maturity Date.

 

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, (c) the purchase or other acquisition (for cash or non-cash consideration, in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all or a substantial part of the business of, such Person, or (d) the acquisition (through purchase, license or otherwise) of a drug candidate and/or rights to a drug candidate (including IP Rights used or to be used as the foundation for the development of a drug candidate), approved drug or other therapeutic product, including through the in-licensing of patent rights.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

“IP Rights” has the meaning specified in Section 5.17.

 

“IRS” means the United States Internal Revenue Service.

 

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“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

“Lender” has the meaning specified in the introductory paragraph hereto.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

 

“LIBOR Rate” means for any Interest Period with respect to a LIBOR Rate Loan, a rate per annum determined by the Administrative Agent pursuant to the following formula:

 

	
LIBOR   Rate =
    	
 
    	
London Inter-Bank Offered Rate
    
	
 
    	
1.00 — Reserve Percentage
    

 

Where,

 

(a)                                  “London Inter-Bank Offered Rate” means, for any applicable Interest Period, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Administrative Agent from time to time) at approximately 11:00 a.m. London time two (2) London Banking Days before the commencement of the Interest Period, for U.S. Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time for any reason, then the rate for that Interest Period will be determined by such alternate method as reasonably selected by the Administrative Agent.

 

(b)                                 “Reserve Percentage” means the total of the maximum reserve percentages for determining the reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency Liabilities, as defined in Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of one percent.  The percentage will be expressed as a decimal, and will include, but not be limited to, marginal, emergency, supplemental, special, and other reserve percentages.

 

“LIBOR Rate Loan” means a Loan that bears interest at a rate based on the definition of “LIBOR Rate.”

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

 

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“Liquidity Amount” means, as of any date of determination, (a) at any time prior to the completion of the Trigger Event Date Transfer, an amount equal to (i) the sum of (x) unrestricted cash (excluding proceeds of Loans) of the Loan Parties and (y) an amount equal to the value (as determined by reference to market data provided by IDC) of all Specified Securities of the Loan Parties, in each case, maintained in Specified Accounts and that are not subject to any Lien (other than any (x) Lien in favor of the Administrative Agent on behalf of itself and the other Credit Provider Parties and (y) any Lien permitted under clauses (c) and (h) of Section 7.01) minus (ii) the then outstanding Tax and Judgment Liabilities and (b) at any other time, an amount equal to (i) the sum of (x) unrestricted cash (excluding proceeds of Loans) of the Loan Parties, (y) an amount equal to the value (as determined by reference to market data provided by IDC) of all Specified Securities of the Loan Parties and (z) the aggregate amount of cash (and if applicable, the Advance Rate Percentage of the Current Market Value of Specified Securities (of the types set forth on Schedule 1.01)) in the Administrative Agent’s Account, in each case, that are not subject to any Lien (other than any (x) Lien in favor of the Administrative Agent on behalf of itself and the other Credit Provider Parties and (y) any Lien permitted under clauses (c) and (h) of Section 7.01) minus (ii) the then outstanding Tax and Judgment Liabilities.

 

“Loan” has the meaning specified in Section 2.01.

 

“Loan Documents” means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty, (d) the Collateral Documents, and (e) the Fee Letter.

 

“Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of LIBOR Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

 

“Loan Parties” means, collectively, the Borrower and each Guarantor.

 

“London Banking Day” means a day on which banks in London are open for business and dealing in offshore dollars.

 

“Margined Liquidity Amount” means, as of any date of determination, (a) at any time prior to the completion of the Trigger Event Date Transfer in the Administrative Agent’s Account, the sum of (i) unrestricted cash (excluding proceeds of Loans) of the Loan Parties and (ii) an amount equal to the Advance Rate Percentage of the Current Market Value of Specified Securities (of the types set forth on Schedule 1.01) of the Loan Parties, in each case, maintained in Specified Accounts and that are not subject to any Lien (other than any (x) Lien in favor of the Administrative Agent on behalf of itself and the other Credit Provider Parties and (y) any Lien permitted under clauses (c) and (h) of Section 7.01), and (b) at any other time, the aggregate amount of cash (and if applicable, the Advance Rate Percentage of the Current Market Value of Specified Securities (of the types set forth on Schedule 1.01)) in the Administrative Agent’s Account.

 

“Material Adverse Effect” means any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect upon (a) the business, liabilities (actual or contingent), assets, results of operations or financial condition of the Borrower or the Borrower and its Subsidiaries taken as a whole; (b) the ability of any Loan Party to perform its

 

16

 

obligations under any Loan Document to which it is a party; (c) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party, or upon the rights and remedies of the Administrative Agent or the Lenders under any Loan Document; or (d) the Collateral, or the Administrative Agent’s Liens on the Collateral or the priority of such Liens.

 

“Maturity Date” means the earlier of (a) July 6, 2012 and (b) the date that is ninety-one (91) days prior to the Olmstead Maturity Date; provided, however, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

 

“Medicaid” means that government-sponsored entitlement program under Title XIX, P.L. 89-97 of the Social Security Act, which provides federal grants to states for medical assistance based on specific eligibility criteria, as set forth on Section 1396, et seq. of Title 42 of the United States Code.

 

“Medicare” means that government-sponsored insurance program under Title XVIII, P.L. 89-97, of the Social Security Act, which provides for a health insurance system for eligible elderly and disabled individuals, as set forth at Section 1395, et seq. of Title 42 of the United States Code.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

 

“Note” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit B.

 

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under (a) any Loan Document, (b) any treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management services under or in respect of Cash Management Agreements, (c) all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of the foregoing under or in respect of Hedge Agreements and (d) any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding

 

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under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

 

“Olmstead Indenture” means that certain Indenture, dated as of September 30, 2009, by and among the Borrower, U.S. Bank National Association, as trustee and collateral agent, and the other Persons, if any, party thereto.

 

“Olmstead Maturity Date” means the “Maturity Date” under and as defined in the Olmstead Indenture.

 

“Olmstead Notes” means the “Notes” under and as defined in the Olmstead Indenture.

 

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

“Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

“Outstanding Amount” means with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Loans, occurring on such date.

 

“Participant” has the meaning specified in Section 10.06(d).

 

“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Act” means the Pension Protection Act of 2006, as amended.

 

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

 

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“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by the Borrower and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of the Borrower or any ERISA Affiliate or any such Plan to which the Borrower or any ERISA Affiliate is required to contribute on behalf of any of its employees.

 

“Platform” has the meaning specified in Section 6.02.

 

“Public Lender” has the meaning specified in Section 6.02.

 

“Register” has the meaning specified in Section 10.06(c).

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Person’s Affiliates.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

 

“Request for Credit Extension” means with respect to a Borrowing, conversion or continuation of Loans, a Loan Notice.

 

“Required Lenders” means, as of any date of determination, Lenders holding more than 50% of the sum of the (a) Total Outstandings and (b) aggregate unused Aggregate Commitments; provided that the unused Commitment of, and the portion of the aggregate Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

 

“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party, and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01, the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Borrower so designated by any of the foregoing officers in a notice to the Administrative Agent.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party.  Such Responsible Officer shall be conclusively presumed to have acted in his or her capacity as an officer of, and on behalf of such Loan Party, and not in his or her individual capacity.

 

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“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof).

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

 

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

“Security Agreement” means, collectively, (a) the Security Agreement, dated as of the Closing Date, among the Borrower, the other Loan Parties and the Administrative Agent and (b) any other security agreement executed after the Closing Date among one or more Loan Parties and the Administrative Agent.

 

“Securities Account Control Agreement” means an agreement in form and substance reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s “control” (as such term is defined in the UCC) with respect to any securities account.

 

“Social Security Act” means the Social Security Act of 1965.

 

“Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“Specified Accounts” means (a) the deposit accounts in the name of the Borrower and any other Loan Party subject to a Deposit Account Control Agreement and (b) securities accounts in the name of the Borrower and any other Loan Party subject to a Securities Account Control Agreement, which Account Control Agreements shall, in each case, provide the Administrative Agent with the ability to monitor the balances in such accounts (including information regarding any withdrawals, deposits and trades relating to such accounts and receipt by the Administrative Agent of continuous account information and monitoring) in a manner and pursuant to terms reasonably acceptable to the Administrative Agent.  Notwithstanding the

 

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foregoing, in no event shall (i) the Administrative Agent’s Account or (ii) any account in which cash collateral maintained for letters of credit issued by Bank of America for the account of the Borrower or any Subsidiary of the Borrower, in each case, be deemed a Specified Account.

 

“Specified Covenants” means the covenants contained in Sections 7.01, 7.02, 7.03, 7.05 and 7.14.

 

“Specified Securities” means Cash Equivalents and marketable securities owned by the Borrower and the other Loan Parties in accordance with the Borrower’s investment policies as approved by the Borrower’s Board of Directors and as in effect on the Closing Date, with such changes and other modifications as may be approved by the Administrative Agent (which approval shall not be unreasonably withheld).

 

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

 

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“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Tax and Judgment Liabilities” means, at any time, an amount equal to the sum of (a) the aggregate amount of all Taxes of the Borrower and its Subsidiaries that are the subject of any contest or dispute by such Person and (b) the aggregate amount of all final judgments or orders for the payment of money entered against the Borrower or any Subsidiary of the Borrower (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage).

 

“Telaprevir (VX-950)” means the Borrower’s proprietary oral HCV protease inhibitor intended for the treatment of hepatitis C virus infection, known as VX-950 or telaprevir.

 

“Threshold Amount” means $5,000,000.

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans.

 

“Trigger Event Date” means the earliest of the first date on which (a) a Default occurs and (b) the Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrower pursuant to Section 7.14(a)(iii)(B), which certificate shall demonstrate that the Borrower shall not be in compliance with any of the covenants contained in Section 7.11 immediately prior to or after giving pro forma effect to any payment to be made pursuant to Section 7.14(a)(iii)(B).

 

“Trigger Event Date Transfer” has the meaning specified in Section 2.12(b)(iii).

 

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a LIBOR Rate Loan.

 

“UCC” means the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the Commonwealth of Massachusetts, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

 

“United States” and “U.S.” mean the United States of America.

 

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1.02.       Other Interpretive Provisions.  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a)           The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

(b)           In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

 

(c)           Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

1.03.       Accounting Terms.  (a) Generally.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.  Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20  on financial liabilities shall be disregarded.

 

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(b)           Changes in GAAP.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

(c)           Consolidation of Variable Interest Entities.  All references herein to consolidated financial statements of the Borrower and its Subsidiaries or to the determination of any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.

 

1.04.       Rounding.  Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

1.05.       Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

 

ARTICLE II.
  THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01.       The Loans.  Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Loan”) to the Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Borrowing, (i) the Total Outstandings on such date shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Loans of any Lender shall not exceed such Lender’s Commitment.  Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.03, and reborrow under this Section 2.01.  Loans may be Base Rate Loans or LIBOR Rate Loans, as further provided herein.

 

2.02.       Borrowings, Conversions and Continuations of Loans.  (a)  Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of LIBOR Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone.  Subject to Section 4.02(b) with respect to the Initial Borrowing Request, each such notice must be received by the Administrative Agent not later than 12:00

 

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noon (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of LIBOR Rate Loans or of any conversion of LIBOR Rate Loans to Base Rate Loans, or (ii) on the requested date of any Borrowing of Base Rate Loans.  Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower.  Each Borrowing of, conversion to or continuation of LIBOR Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof.  Each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.  Each Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of LIBOR Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto.  If the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable LIBOR Rate Loans.  If the Borrower requests a Borrowing of, conversion to, or continuation of LIBOR Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

 

(b)           Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in Section 2.02(a).  In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.03 (and, if such Borrowing is the initial Borrowing, Section 4.02), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.

 

(c)           Except as otherwise provided herein, a LIBOR Rate Loan may be continued or converted only on the last day of an Interest Period for such LIBOR Rate Loan.  During the existence of a Default, no Loans may be requested as, converted to or continued as LIBOR Rate Loans without the consent of the Required Lenders.

 

(d)           The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for LIBOR Rate Loans upon determination of such interest rate.  At any time that Base Rate Loans are outstanding, the Administrative Agent

 

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shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

 

(e)           After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than 6 Interest Periods in effect.

 

2.03.       Prepayments.  (a)  Optional.  The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty; provided that (A) such notice must be received by the Administrative Agent not later than 12:00 noon (1) three Business Days prior to any date of prepayment of LIBOR Rate Loans and (2) on the date of prepayment of Base Rate Loans; (B) any prepayment of LIBOR Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (C) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if LIBOR Rate Loans are to be prepaid, the Interest Period(s) of such Loans.  The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment.  If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment of a LIBOR Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05.  Subject to Section 2.13, each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages.

 

(b)           Mandatory.  If for any reason the Total Outstandings at any time exceed the Aggregate Commitments at such time, the Borrower shall immediately prepay the Loans in an aggregate amount equal to such excess.

 

2.04.       Termination or Reduction of Commitments; Release of Cash and Specified Securities in Administrative Agent’s Collateral Account.  (a)  The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 12:00 noon three (3) Business Days (or, at any time prior to the Initial Borrowing Request Delivery Date, one (1) Business Day) prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, and (iii) the Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments.  The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments.  Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage.  All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

 

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(b)           If the Aggregate Commitments are permanently reduced as provided in Section 2.04(a), the Margined Liquidity Amount and the amount required to be transferred to and maintained in the Administrative Agent’s Collateral Account pursuant to Section 2.12 shall also be permanently reduced, on a dollar-for-dollar basis, and, at any time after the completion of the Trigger Event Date Transfer, any cash and/or Specified Securities in the Administrative Agent’s Collateral Account in excess of the newly reduced Aggregate Commitments shall either (i) be released by the Administrative Agent to the Borrower (it being understood that Specified Securities, if any, shall be released first) or (ii) at the request of the Borrower pursuant to Section 2.04(c), applied to any required concurrent prepayment of the Total Outstandings pursuant to Section 2.04(a).

 

(c)           In the event that the Borrower shall be required to make any prepayment of the Total Outstandings in connection with the termination or reduction of the Aggregate Commitments pursuant to Section 2.04(a), at the request of the Borrower at any time after the completion of the Trigger Event Date Transfer (which request shall be received concurrently with any such notice of termination or reduction of the Aggregate Commitments pursuant to Section 2.04(a)), the Administrative Agent shall apply cash and/or the proceeds of any Specified Securities in the Administrative Agent’s Collateral Account to such required prepayment of the Total Outstandings.  Upon the termination of the Aggregate Commitments and the repayment in full in cash of all Obligations under the Loan Documents, the Administrative Agent shall release to the Borrower all cash and Specified Securities in the Administrative Agent’s Collateral Account.

 

2.05.       Repayment of Loans.  The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of all Loans outstanding on such date.

 

2.06.       Interest.  (a)  Subject to the provisions of Section 2.06(b), (i) each LIBOR Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the LIBOR Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate.

 

(b)           (i)            If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)           If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iii)          Upon the request of the Required Lenders, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding

 

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Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iv)          Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

(c)           Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

2.07.       Fees.

 

(a)           Commitment Fee.  The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee (a “Commitment Fee”) equal to the 0.75% per annum times the actual daily amount by which the Aggregate Commitments exceed the Total Outstandings, subject to adjustment as provided in Section 2.13.  The Commitment Fee shall accrue at all times from and after the Closing Date until the Maturity Date or any earlier date on which the Aggregate Commitments shall terminate, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable monthly in arrears on the last Business Day of each calendar month, commencing with the first such date to occur after the Closing Date, and on the Maturity Date or any earlier date on which the Aggregate Commitments shall terminate.  The Commitment Fee shall be calculated monthly in arrears.

 

(b)           Other Fees.  The Borrower shall pay to the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

2.08.       Computation of Interest and Fees.  All computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.10(a), bear interest for one day.  Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

2.09.       Evidence of Debt.  (a)  The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender shall be prima facie evidence of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the

 

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accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

 

(b)           In addition to the accounts and records referred to in Section 2.09(a), each Lender and the Administrative Agent shall maintain in accordance with it usual practice accounts or records evidencing the purchase or sales of any Loan and Commitments by such Lender.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

 

2.10.       Payments Generally; Administrative Agent’s Clawback.  (a)  General.  All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.  The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

 

(b)           (i)            Funding by Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of LIBOR Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the

 

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Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

(ii)           Payments by Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be prima facie evidence of such amounts.

 

(c)           Failure to Satisfy Conditions Precedent.  If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

(d)           Obligations of Lenders Several.  The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 10.04(c) are several and not joint.  The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 10.04(c).

 

(e)           Funding Source.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

 

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(f)            Authorization for Payment of Interest, Fees and other Amounts.  The Borrower hereby authorizes the Administrative Agent to debit any deposit account of the Borrower and the other Loan Parties maintained with the Administrative Agent for each payment of interest, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement for fees and expenses pursuant to Section 10.04), and other sums payable under the Loan Documents.

 

2.11.       Sharing of Payments by Lenders.  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it, resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:

 

(i)            if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

 

(ii)           the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), or (y)  any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than an assignment to the Borrower or any Affiliate thereof (as to which the provisions of this Section shall apply).

 

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

 

2.12.       Guaranties and Security.

 

(a)           Guaranties.  Payment and performance of all of the Obligations shall be unconditionally guarantied by the Guarantors.

 

(b)           Security.

 

(i)            Springing Lien.  Subject to clause (iv) hereof, from and at all times after the Trigger Event Date (without any further action of the Borrower, any other Loan Party, the Administrative Agent, any other Credit Provider Party or any other Person), all of the Obligations shall be secured by a perfected first-priority Lien in the Collateral (including, without limitation, all Control Accounts, all of the cash, securities and other amounts from time to time in the Control Accounts and all of the proceeds of the foregoing, 

 

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which, at no time, shall be subject to any Lien other than (x) the Lien described in this clause (i) and (y) any Liens permitted under clauses (c) and (h) of Section 7.01) in favor of the Administrative Agent on behalf of itself and the other Credit Provider Parties.

 

(ii)           Access to Control Accounts.  Each Account Control Agreement shall provide, among other things (A) in the case of any securities account, that the applicable securities intermediary will comply, in each case without further consent of the Borrower or any other Loan Party or any other Person, at any time with entitlement orders or other instructions from the Administrative Agent to such securities intermediary as to such securities or other investment property and (B) in the case of any Deposit Account, that the applicable depositary bank will comply without further consent of the Borrower or any other Loan Party or any other Person, at any time with instructions from the Administrative Agent to such depositary bank directing the disposition of funds from time to time credited to the applicable deposit accounts.  Notwithstanding the foregoing, the Administrative Agent and the other Credit Parties agree that the Administrative Agent shall not give any such entitlement orders, instructions or otherwise withhold any withdrawal or dealing rights from the Borrower or any Loan Party, unless the Trigger Event Date has occurred, or, if effect were given to any withdrawal not otherwise permitted by the Loan Documents, would occur.

 

(iii)          Transfers Upon Occurrence of Trigger Event Date.  Upon the occurrence of a Trigger Event Date, the Administrative Agent shall cause the transfer to, and shall have received in, the Administrative Agent’s Collateral Account an aggregate amount equal to $100,000,000 (subject to adjustment pursuant to Section 2.04) of cash (or if sufficient cash is not then available, Specified Securities of the types set forth on Schedule 1.01 (the value of which shall be equal to the Advance Rate Percentage of the Current Market Value of such Specified Securities)) from the Specified Accounts, to be held by the Administrative Agent (for the benefit of the Credit Provider Parties) as collateral security for the Obligations (such transfer and receipt of such amounts being hereinafter referred to as the “Trigger Event Date Transfer”).

 

(iv)          Termination of Account Control Agreements.  Upon the completion of the Trigger Event Date Transfer, the Administrative Agent shall, at the sole cost and expense of the Borrower and the other Loan Parties, promptly take such action to terminate all Account Control Agreements with respect to each Control Account and shall release its Lien on each Control Account (including the funds on deposit in each such account); provided that (i) in no event shall the Administrative Agent release its Lien on any Collateral maintained in the Administrative Agent’s Collateral Account until the date that all Obligations under the Loan Documents are satisfied in full in cash and all Commitments of the Lenders have been terminated and (ii) the foregoing shall in no way affect any arrangements for cash collateral for any letters of credit issued by Bank of America for the account of the Borrower or any Subsidiary of the Borrower.

 

(v)           Minimum Account Balance.  If, at any time after the completion of the Trigger Event Date Transfer, the aggregate amount of cash and Specified Securities of the types set forth on Schedule 1.01 (the value of which shall be equal to the Advance Rate Percentage of the Current Market Value of such Specified Securities) maintained in 

 

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the Administrative Agent’s Collateral Account is less than $100,000,000 (subject to adjustment pursuant to Section 2.04), the Borrower shall, within two (2) Business Days, deposit additional cash or Specified Securities of the types set forth on Schedule 1.01 in the Administrative Agent’s Account such that the aggregate amount of cash and such Specified Securities (the value of which shall be equal to the Advance Rate Percentage of the Current Market Value of such Specified Securities) maintained in the Administrative Agent’s Collateral Account is at least $100,000,000 (subject to adjustment pursuant to Section 2.04).

 

(vi)          New Control Accounts.  The Loan Parties may open new Control Accounts, subject to the execution and delivery to the Administrative Agent of appropriate Account Control Agreements consistent with the provisions of this Section 2.12 and otherwise reasonably satisfactory to the Administrative Agent.  The Loan Parties shall furnish the Administrative Agent with prior written notice of their intention to open or close a Control Account.

 

2.13.       Defaulting Lenders.

 

(a)           Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

 

(i)            Waivers and Amendments.  That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 10.01.

 

(ii)           Reallocation of Payments.  Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 10.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, if so determined by the Administrative Agent, to be held as cash collateral for future funding obligations of that Defaulting Lender; third, as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such 

 

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Loans were made at a time when the conditions set forth in Section 4.03 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of that Defaulting Lender.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this Section 2.13(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

 

(iii)          Certain Fees.  That Defaulting Lender shall not be entitled to receive any Commitment Fee pursuant to Section 2.07(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

 

(b)           Defaulting Lender Cure.  If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

ARTICLE III.
  TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01.       Taxes.  (a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.  (i) Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall to the extent permitted by applicable Laws be made free and clear of and without reduction or withholding for any Taxes.  If, however, applicable Laws require the Borrower  or the Administrative Agent to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such Laws as determined by the Borrower  or the Administrative Agent, as the case may be, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

 

(ii)           If the Borrower  or the Administrative Agent shall be required by the Code to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are determined by the Administrative Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with 

 

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the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by the Borrower shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender, as the case may be, receives an amount equal to the sum it would have received had no such withholding or deduction been made.

 

(b)           Payment of Other Taxes by the Borrower.  Without limiting the provisions of subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Laws.

 

(c)           Tax Indemnifications.  (i) Without limiting the provisions of subsection (a) or (b) above, the Borrower shall, and does hereby, indemnify the Administrative Agent and each Lender, and shall make payment in respect thereof within 10 Business Days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) withheld or deducted by the Borrower or the Administrative Agent or paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  The Borrower shall also, and does hereby, indemnify the Administrative Agent, and shall make payment in respect thereof within 10 Business Days after demand therefor, for any amount which a Lender for any reason fails to pay indefeasibly to the Administrative Agent as required by clause (ii) of this subsection.  A certificate as to the amount of any such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

(ii)           Without limiting the provisions of subsection (a) or (b) above, each Lender shall, and does hereby, indemnify the Borrower and the Administrative Agent, and shall make payment in respect thereof within 10 Business Days after demand therefor, against any and all Taxes and any and all related losses, claims, liabilities, penalties, interest and expenses (including the fees, charges and disbursements of any counsel for the Borrower  or  the Administrative Agent) incurred by or asserted against the Borrower or the Administrative Agent by any Governmental Authority as a result of the failure by such Lender to deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any documentation required to be delivered by such Lender to the Borrower or the Administrative Agent pursuant to subsection (e).  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii).  The agreements in this clause (ii) shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all other Obligations.

 

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(d)           Evidence of Payments.  Upon request by the Borrower  or the Administrative Agent, as the case may be, after any payment of Taxes by the Borrower or by the Administrative Agent to a Governmental Authority as provided in this Section 3.01, the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.

 

(e)           Status of Lenders; Tax Documentation.  (i)  Each Lender shall deliver to the Borrower and to the Administrative Agent, at the time or times prescribed by applicable Laws or when reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit the Borrower or the Administrative Agent, as the case may be, to determine (A) whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be made to such Lender by the Borrower pursuant to this Agreement or otherwise to establish such Lender’s status for withholding tax purposes in the applicable jurisdiction.

 

(ii)           Without limiting the generality of the foregoing, if the Borrower is resident for tax purposes in the United States,

 

(A)          any Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code shall deliver to the Borrower  and the Administrative Agent executed originals of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable Laws or reasonably requested by the Borrower  or the Administrative Agent as will enable the Borrower  or the Administrative Agent, as the case may be, to determine whether or not such Lender is subject to backup withholding or information reporting requirements; and

 

(B)           each Foreign Lender that is entitled under the Code or any applicable treaty to an exemption from or reduction of withholding tax with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower  and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower  or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

 

(I)            executed originals of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

 

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(II)           executed originals of Internal Revenue Service Form W-8ECI,

 

(III)         executed originals of Internal Revenue Service Form W-8IMY and all required supporting documentation,

 

(IV)         in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) executed originals of Internal Revenue Service Form W-8BEN, or

 

(V)           executed originals of any other form prescribed by applicable Laws as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by applicable Laws to permit the Borrower  or the Administrative Agent to determine the withholding or deduction required to be made.

 

(iii)          Each Lender shall promptly (A) notify the Borrower and the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (B) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws of any jurisdiction that the Borrower or the Administrative Agent make any withholding or deduction for taxes from amounts payable to such Lender.

 

(f)            Treatment of Certain Refunds.  Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender, or have any obligation to pay to any Lender, any refund of Taxes withheld or deducted from funds paid for the account of such Lender.  If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses incurred by the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  This subsection shall not be 

 

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construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

 

3.02.       Illegality.  If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the LIBOR Rate, or to determine or charge interest rates based upon the LIBOR Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue LIBOR Rate Loans or to convert Base Rate Loans to LIBOR Rate Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the LIBOR Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBOR Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all LIBOR Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBOR Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the LIBOR Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the LIBOR Rate component thereof until the Administrative is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the LIBOR Rate.  Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

 

3.03.       Inability to Determine Rates.  If the Required Lenders determine that for any reason in connection with any request for a LIBOR Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such LIBOR Rate Loan, (b) adequate and reasonable means do not exist for determining the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Loan or in connection with an existing or proposed Base Rate Loan, or (c) the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender.  Thereafter, (x) the obligation of the Lenders to make or maintain LIBOR Rate Loans shall be suspended, and (y) in the event of a determination described in the preceding sentence with respect to the LIBOR Rate component of the Base Rate, the utilization of the LIBOR Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon 

 

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receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

 

3.04.       Increased Costs.  (a) Increased Costs Generally.  If any Change in Law shall:

 

(i)            impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBOR Rate);

 

(ii)           subject any Lender to any tax of any kind whatsoever with respect to this Agreement or any LIBOR Rate Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender); or

 

(iii)          impose on any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or LIBOR Rate Loans made by such Lender therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Loan the interest on which is determined by reference to the LIBOR Rate (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender, or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

 

(b)           Capital Requirements.  If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

 

(c)           Certificates for Reimbursement.  A certificate of a Lender setting forth in reasonable detail a calculation of the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

 

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(d)           Delay in Requests.  Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than six months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

3.05.       Compensation for Losses.  Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

 

(a)           any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

 

(b)           any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or

 

(c)           any assignment of a LIBOR Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.13;

 

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.  The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.  Any Lender making such demand under this Section 3.05 shall provide the Borrower with a calculation, in reasonable detail, of the amount or amounts necessary to compensate such Lender under this Section 3.05, which calculation shall be conclusive absent manifest error.

 

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each LIBOR Rate Loan made by it at the LIBOR Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such LIBOR Rate Loan was in fact so funded.

 

3.06.       Mitigation Obligations; Replacement of Lenders.

 

(a)           Designation of a Different Lending Office.  If any Lender requests compensation under Section 3.04, or the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender such designation or assignment (i) would eliminate 

 

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or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrower may replace such Lender in accordance with Section 10.13.

 

3.07.       Survival.  All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.

 

ARTICLE IV.
  CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01.       Conditions to Closing Date.  The occurrence of the Closing Date hereunder is subject to satisfaction of the following conditions precedent:

 

(a)           The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:

 

(i)            executed counterparts of this Agreement, the Guaranty, the Security Agreement, the Account Control Agreements relating to the Specified Accounts and the Fee Letter, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower;

 

(ii)           a Note executed by the Borrower in favor of each Lender requesting a Note;

 

(iii)          completed and duly executed perfection certificates from each Loan Party;

 

(iv)          completed requests for information, dated on or before the Closing Date, listing all effective financing statements that name any Loan Party as debtor, together with copies of such financing statements;

 

(v)           such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party or is to be a party;

 

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(vi)                              such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each of the Borrower and the other Loan Parties is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;

 

(vii)                           a favorable opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, as to matters concerning the Loan Parties and the Loan Documents as the Required Lenders may reasonably request;

 

(viii)                        a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

 

(ix)                                a certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.03(a) and (b) have been satisfied, and (B) that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect;

 

(x)                                   a business plan and pro forma forecast of the Borrower and its Subsidiaries on a consolidated basis, including forecasts prepared by the Borrower, of consolidated balance sheets and statements of income or operations and cash flows of the Borrower and its Subsidiaries on a quarterly basis for the 2010, 2011 and 2012 fiscal years of the Borrower and its Subsidiaries;

 

(xi)                                certificate of the Borrower attesting to its Solvency and the Solvency of the Loan Parties taken as a whole, in each case, both before and after giving effect to the transactions contemplated by the Loan Documents, from its chief financial officer or controller;

 

(xii)                             evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect; and

 

(xiii)                          such other assurances, certificates, documents, consents or opinions as the Administrative Agent or any Lender reasonably may require.

 

(b)                                 Any fees required to be paid on or before the Closing Date shall have been paid.

 

(c)                                  Unless waived by the Administrative Agent, the Borrower shall have paid all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date,

 

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plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).

 

(d)                                 The Lenders shall have completed a due diligence investigation of the Borrower and its Subsidiaries in scope, and with results, satisfactory to the Lenders, and shall have been given such access to the management, records, books of account, contracts and properties of the Borrower and its Subsidiaries and shall have received such financial, business and other information regarding each of the foregoing Persons and businesses as they shall have requested.

 

Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

4.02.                     Conditions to Initial Borrowing.  The occurrence of the Initial Availability Date and the obligation of the Lenders to make the initial Loans hereunder is subject to satisfaction of the following conditions precedent:

 

(a)                                  The Closing Date shall have occurred.

 

(b)                                 The Administrative Agent shall have received the Initial Borrowing Request at least 20 Business Days prior to the requested date of such initial Borrowing (or such date that is nearer to the date of the initial Borrowing as the Administrative Agent may agree to in its sole discretion).

 

(c)                                  The Borrower shall have (i) fully cooperated with the Lenders in connection with the due diligence to be performed by the Lenders pursuant to clause (d) below and (ii) delivered all information and other documents reasonably requested by the Lenders in connection with such due diligence at least 10 Business Days prior to the proposed date of the initial Borrowing.

 

(d)                                 The Lenders shall have completed a due diligence investigation of the Borrower and its Subsidiaries in scope, and with results, reasonably satisfactory to the Lenders (including, without limitation, results evidencing pro forma compliance with all covenants contained in the Loan Documents), and shall have been given such access to the management, records, books of account, contracts and properties of the Borrower and its Subsidiaries and shall have received such financial, business and other information regarding each of the foregoing Persons and businesses as they shall have requested.

 

(e)                                  The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower at least 10 Business Days prior to the making of such Borrowing, in form and substance reasonably satisfactory to the Administrative Agent, certifying and attaching calculations demonstrating that after giving effect to the use of proceeds of such Borrowing, on a

 

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pro forma basis, the Borrower shall be in compliance with each of the covenants set forth in Section 7.11.

 

4.03.                     Conditions to all Credit Extensions.  The obligation of each Lender to honor any Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of LIBOR Rate Loans) is subject to the following conditions precedent:

 

(a)                                  The representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and except that (i) for purposes of this Section 4.03, the representations and warranties contained in Sections 5.05(a) and (b) shall be deemed to refer to the most recent statements furnished pursuant to Sections 6.01(a) and (b), respectively and (ii) any representation and warranty which is already qualified as to “materiality”,  “Material Adverse Effect” or similar language shall be true and correct in all respects on such respective dates.

 

(b)                                 No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof, and after giving effect to such proposed Credit Extension and the application of the proceeds thereof, the Borrower shall be in pro forma compliance with the covenants contained in Section 7.11.

 

(c)                                  The Administrative Agent shall have received a Request for Credit Extension in accordance with the requirements hereof.

 

Each Request for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other Type or a continuation of LIBOR Rate Loans) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.03(a), and (b) have been satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Administrative Agent and the Lenders that:

 

5.01.                     Existence, Qualification and Power.  Each Loan Party and each Subsidiary thereof (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such

 

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qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

5.02.                     Authorization; No Contravention.  The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) result in the creation of (or the requirement to create) any Lien on any assets of any Loan Party (other than any Lien under the Loan Documents), (c) conflict with or result in any breach or contravention of or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (d) violate any Law where such conflict, breach, contravention, payment or violation referred to in clause (c) or (d) of this Section 5.02 could reasonably be expected to have a Material Adverse Effect.

 

5.03.                     Governmental Authorization; Other Consents.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, or for the consummation of the transactions contemplated hereby, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (c) the perfection or maintenance of the Liens created under the Collateral Documents (including the first priority nature thereof) or (d) the exercise by the Administrative Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for (x) the filing of UCC financing statements and the execution of Account Control Agreements in connection with this Agreement and (y) such actions, consents and approvals the failure of which to be obtained or made could not reasonably be expected to have a Material Adverse Effect.

 

5.04.                     Binding Effect.  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and by general principles of equity.

 

5.05.                     Financial Statements; No Material Adverse Effect.  (a)  The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

 

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(b)                                 The unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated September 30, 2010, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.  Schedule 5.05 sets forth all material indebtedness and other liabilities, direct or contingent, of the Borrower and its consolidated Subsidiaries as of the date of such financial statements, including liabilities for taxes, material commitments and Indebtedness.

 

(c)                                  Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

 

(d)                                 The consolidated forecasted pro forma balance sheet, statements of income and cash flows of the Borrower and its Subsidiaries delivered pursuant to Section 4.01 or Section 6.01(c) were prepared in good faith on the basis of the assumptions stated therein, which assumptions were believed by the Borrower to be fair and reasonable in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower’s reasonable estimate of its future financial condition and performance.

 

5.06.                     Litigation.  There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

 

5.07.                     No Default.  Neither any Loan Party nor any Subsidiary thereof is in default under or with respect to, or a party to, any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

 

5.08.                     Ownership of Property; Liens.  Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The property of the Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01; provided that, none of the Specified Accounts nor any property that comprises the Liquidity Amount or the Margined Liquidity Amount or is contained in the Specified Accounts is subject to any Lien (other than any (x) Lien in favor of the Administrative Agent on behalf of itself and the other Credit Provider Parties and (y) any Lien permitted under clauses (c) and (h) of Section 7.01).

 

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5.09.                     Environmental Compliance.  The Borrower has reasonably concluded (based on activities conducted in the ordinary course of business) that the effect of existing Environmental Laws and claims on the properties, business and operations of the Loan Parties and their Subsidiaries and any pending or, to the knowledge of the Borrower, threatened claims alleging potential liability or responsibility for the violation of any Environmental Law by any Loan Party or any Subsidiary of a Loan Party could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

5.10.                     Insurance.  The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.

 

5.11.                     Taxes.  The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except (a) those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP; and (b) to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.  There is no proposed tax assessment against the Borrower or any Subsidiary, to the knowledge of the Borrower, that would, if made, have a Material Adverse Effect.  Neither any Loan Party nor any Subsidiary thereof is party to any tax sharing agreement.

 

5.12.                     ERISA Compliance.  (a)  Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws.  Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service.  To the best knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status.

 

(b)                                 There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  (i)  No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date

 

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for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

 

(d)                                 With respect to each scheme or arrangement mandated by a government other than the United States (a “Foreign Government Scheme or Arrangement”) and with respect to each employee benefit plan maintained or contributed to by any Loan Party or any Subsidiary of any Loan Party that is not subject to United States law (a “Foreign Plan”):

 

(i)                                     any employer and employee contributions required by law or by the terms of any Foreign Government Scheme or Arrangement or any Foreign Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices;

 

(ii)                                  the fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the date hereof, with respect to all current and former participants in such Foreign Plan according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles; and

 

(iii)                               each Foreign Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities.

 

5.13.                     Subsidiaries; Equity Interests; Loan Parties.  No Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens.  No Loan Party has any equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13.  All of the outstanding Equity Interests in the Borrower have been validly issued, are fully paid and nonassessable.  Set forth on Part (c) of Schedule 5.13 is a complete and accurate list of all Loan Parties, showing as of the Closing Date (as to each Loan Party) the jurisdiction of its incorporation, the address of its principal place of business and its U.S. taxpayer identification number.  The copy of the charter of each Loan Party and each amendment thereto provided pursuant to Section 4.01(a)(vi) is a true and correct copy of each such document, each of which is valid and in full force and effect.

 

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5.14.                     Margin Regulations; Investment Company Act.  (a)  The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.  Following the application of the proceeds of each Loan, not more than 25% of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.01 or Section 7.05 or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) will be margin stock.

 

(b)                                 None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

5.15.                     Disclosure.  The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and that are not otherwise set forth on the Borrower’s public filings with the SEC.  No report, financial statement, certificate or other written information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed by the Borrower to be reasonable at the time.

 

5.16.                     Compliance with Laws; Licenses.  Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all licenses, all permits, all certifications, all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties (including, without limitation, all Laws, rules, regulations, licenses, permits and certifications relating to food, drug, healthcare and medical devices and all Laws, rules and regulations regulating contractors to Federal, state and local governments) except in such instances in which (a) such requirement of license, permit, certification, Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.17.                     Intellectual Property; Licenses, Etc.  Each Loan Party and each of its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “IP Rights”) that are used in the operation of their respective businesses, without conflict with the rights of any other Person, except where the failure to so own or possess, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.  To the best knowledge of the Borrower, no slogan or other advertising device, product,

 

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process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party or any of its Subsidiaries infringes upon any rights held by any other Person, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.  No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.18.                     Solvency.  The Borrower is, and the Loan Parties and their Subsidiaries are on a consolidated basis, Solvent.

 

5.19.                     Collateral Documents.  The provisions of the Collateral Documents are effective, at the times set forth therein, to create in favor of the Administrative Agent for the benefit of the Credit Provider Parties a legal, valid and enforceable first priority Lien on all right, title and interest of the respective Loan Parties in the Collateral described therein.  Except for filings contemplated by the Collateral Documents, no filing or other action will be necessary to perfect or protect such Liens.

 

5.20.                     Senior Debt.  All Obligations constitute “Senior Debt” (or any similar term) (a) under, and as defined in, the Olmstead Indenture and all supplemental indentures thereto and (b) under any other Indebtedness permitted pursuant to Section 7.03(h).

 

ARTICLE VI.

AFFIRMATIVE COVENANTS

 

From and after the Closing Date and until the date that all Obligations are satisfied in full, all commitments of the Lenders to make Loans have been terminated, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause each Subsidiary to:

 

6.01.                     Financial Statements.  Deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:

 

(a)                                  as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit;

 

(b)                                 as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each

 

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case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

 

(c)                                  as soon as available, but in any event within 60 days after the end of each fiscal year of the Borrower, an annual business plan and budget of the Borrower and its Subsidiaries on a consolidated basis, including forecasts on a pro forma basis prepared by management of the Borrower, in form reasonably satisfactory to the Administrative Agent and the Required Lenders, of consolidated balance sheets and statements of income or operations and cash flows of the Borrower and its Subsidiaries on a quarterly basis for the immediately following fiscal year (including the fiscal year in which the Maturity Date occurs).

 

As to any information contained in materials furnished pursuant to Section 6.02(c), the Borrower shall not be separately required to furnish such information under Section 6.01(a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in Sections 6.01(a) and (b) above at the times specified therein.

 

6.02.                     Certificates; Other Information.  Deliver (or, in the case of clause (e)(i) below, arrange for the securities intermediary to deliver) to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:

 

(a)                                  concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower, and in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 7.11, a statement of reconciliation conforming such financial statements to GAAP (which delivery may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);

 

(b)                                 promptly after any request by the Administrative Agent, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors), except in all instances in which the distribution to the Administrative Agent and the Lenders of such audit reports, management letters or recommendations is restricted by the independent auditors, of any Loan Party by independent accountants in connection with the accounts or books of any Loan Party or any of its Subsidiaries, or any audit of any of them;

 

(c)                                  promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the

 

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Securities Exchange Act of 1934, or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

 

(d)                                 promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or of any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;

 

(e)                                  (i) simultaneously with the delivery to the Borrower, copies of any notices regarding trade confirmations with respect to the Specified Accounts and (ii) within 5 days after the end of each calendar month (x) copies of any deposit account statements, brokerage account statements and other similar account statements for such calendar month with respect to each Specified Account and (y) deposit account statements, brokerage account statements and other similar account statements for such calendar month reflecting any unrestricted cash and any Specified Securities of the Borrower included, or to be included, in the determination of the Liquidity Amount and the Margined Liquidity Amount;

 

(f)                                    promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof; and

 

(g)                                 promptly, such additional information regarding the business, financial, or legal affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request; provided that no Loan Party nor any Subsidiary of a Loan Party shall be required to disclose additional information pursuant to this clause (g) in the event such disclosure is prohibited by Law or any binding agreement of such Person with a third party that is not an Affiliate of any Loan Party.

 

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(c) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that:  (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender upon its request to the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.  The Administrative Agent shall have no obligation to request the delivery of, or to maintain paper copies of, the documents referred to above, and in any event shall have no responsibility to monitor

 

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compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

 

The Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, 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 Persons’ securities.  The Borrower hereby agrees that so long as the Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”  Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC”.

 

6.03.                     Notices.  Promptly notify the Administrative Agent and each Lender:

 

(a)                                  of the occurrence of any Default;

 

(b)                                 of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;

 

(c)                                  of the occurrence of any ERISA Event;

 

(d)                                 of any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary thereof;

 

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(e)                                  of any intent by the Borrower or any of its Subsidiaries to initiate a voluntary product recall affecting the products manufactured or distributed by the Borrower or any Subsidiary;

 

(f)                                    the receipt by the Borrower or any of its Subsidiaries of (i) any so called “Warning Letter”, or similar notification or (ii) any notification of a mandated or requested recall affecting the products manufactured or distributed by the Borrower or such Subsidiary, in each case, from the FDA (or analogous foreign, state or local Governmental Authority);

 

(g)                                 of the occurrence of any Milestone Event (under and as defined in the Olmstead Indenture as in effect on the date hereof);

 

(h)                                 any notice of any transfer or other disposition of cash or Specified Securities required pursuant to Section 7.15; and

 

(i)                                     of any correspondence (i) to the FDA (or analogous foreign, state or local Governmental Authority) from the Borrower or any Subsidiary or (ii) to the Borrower or any Subsidiary from the FDA (or analogous foreign, state or local Governmental Authority), in each case, that contains information or data that has resulted or is reasonably expected to result in (x) a significant negative effect on the Borrower’s ability to obtain approval for Telaprevir (VX-950) in the United States or (y) a significant adverse change to the label (package insert) for Telaprevir (VX-950) in the United States or to the label (package insert) of any other drug offered for commercial sale by the Borrower or any of its Subsidiaries at the time of such correspondence.

 

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

 

6.04.                     Payment of Obligations.  Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property, unless the same are being contested in good faith by the appropriate proceedings and such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

 

6.05.                     Preservation of Existence, Etc.  (a)  Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in

 

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the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation or non-renewal of which could reasonably be expected to have a Material Adverse Effect.

 

6.06.                     Maintenance of Properties.  (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

 

6.07.                     Maintenance of Insurance.  Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business (including, without limitation, product liability losses and damages), of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and, from and after the Initial Borrowing Request Delivery Date, providing for not less than 30 days’ prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance.

 

6.08.                     Compliance with Laws; Licenses.  Comply in all material respects with the requirements of all licenses, all permits, all certifications, all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property (including, without limitation, all Laws, rules, regulations, licenses, permits and certifications relating to food, drug, healthcare and medical devices and all Laws, rules and regulations regulating contractors to Federal, state and local governments), except in such instances in which (a) such requirement of license, permit, certification, Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

 

6.09.                     Books and Records.  (a)  Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be.

 

6.10.                     Inspection Rights.  Permit duly authorized representatives and independent contractors of the Administrative Agent, on behalf of itself or any Lender, to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants (provided that the Borrower shall have the right to be present at any such discussion with such independent public accountants), all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that (a) unless a Default has occurred and is continuing, the Borrower shall only be required to reimburse the Administrative

 

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Agent for the charges, costs and expenses of the Administrative Agent in connection with one such field examination per fiscal year, which charges, costs and expenses shall not exceed $10,000 per fiscal year, and (b) after the occurrence and during the continuance of a Default, the Administrative Agent (or any of its respective representatives or independent contractors), on behalf of itself or any Lender, may do any of the foregoing at the reasonable expense of the Borrower at any time during normal business hours and without advance notice.

 

6.11.                     Use of Proceeds.  Use the proceeds of the Credit Extensions for working capital and other general corporate purposes not in contravention of any Law or of any Loan Document.

 

6.12.                     Covenant to Guarantee Obligations.  Upon the formation or acquisition of any new direct or indirect Domestic Subsidiary of the Borrower, within 20 days after such formation or acquisition, cause such Subsidiary to (a) become a Guarantor by executing and delivering to the Administrative Agent a counterpart of the Guaranty or a guaranty supplement, any applicable Collateral Documents and/or such other document as the Administrative Agent shall reasonably deem appropriate for such purpose, and (b) deliver to the Administrative Agent documents of the types referred to in clauses (v) and (vi) of Section 4.01(a) and, at the request of the Administrative Agent, favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (a)), all in form, content and scope reasonably satisfactory to the Administrative Agent.

 

6.13.                     Compliance with Environmental Laws.  Comply, and cause all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

 

6.14.                     Further Assurances.  Promptly upon request by the Administrative Agent, or any Lender through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out more effectively the purposes of the Loan Documents, (ii) to the fullest extent permitted by applicable Law, subject any Loan Party’s or any of its Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (iii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Credit Provider Parties the rights granted or now or hereafter intended to be

 

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granted to the Credit Provider Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so.

 

6.15.                     Cash Management.

 

(a)                                  Maintain, and cause each of the other Loan Parties to maintain, all of its primary commercial deposit accounts, balances and services (including, without limitation, operating accounts, Cash Management Arrangements and/or collection/lockbox services) with Bank of America (for the avoidance of doubt, this Section does not apply to investment securities accounts).

 

(b)                                 Maintain substantially all cash, Cash Equivalents and securities of the Borrower and its Subsidiaries in domestic deposit accounts and domestic securities accounts owned by the Borrower or the Guarantors; provided that the Borrower and its Subsidiaries may maintain in foreign deposit accounts and foreign securities accounts (i) cash, Cash Equivalents and securities in an aggregate amount (excluding cash receipts from foreign business activities) at any time not to exceed $100,000,000; (ii) cash receipts from foreign business activities; (iii) interest, dividends and other distributions made on account of any such amounts described in clauses (i) and (ii); (iv) investments made with the proceeds of any amounts described in clauses (i), (ii) and (iii); and (v) cash, Cash Equivalents and securities to capitalize foreign Subsidiaries for legitimate business reasons, so long as any cash distributed for such purpose is subsequently returned and maintained in deposit accounts of the Borrower and its Subsidiaries in the United States within 3 Business Days of such initial distribution.

 

6.16.                     Telaprevir (VX-950).  On or before December 31, 2011, (x) obtain approval from the FDA for the Borrower’s new drug application for Telaprevir (VX-950) and (y) commence the commercial sale of Telaprevir (VX-950) to third parties in the United States.

 

6.17.                     Monitoring Rights.  Within fifteen (15) days of the Closing Date, grant, and cause each Person with whom such Loan Party maintains a Specified Account to grant, the Administrative Agent the ability to monitor the balances and account activity in the applicable Specified Accounts (including information regarding any withdrawals, deposits and trades relating to such accounts) in a manner and pursuant to terms reasonably acceptable to the Administrative Agent.

 

ARTICLE VII.

NEGATIVE COVENANTS

 

From and after the Closing Date and until the date that all Obligations are satisfied in full, all commitments of the Lenders to make Loans have been terminated, the Borrower shall not, and shall not permit any Subsidiary to:

 

7.01.                     Liens.  Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:

 

(a)                                  Liens pursuant to any Loan Document;

 

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(b)                                 Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as contemplated by Section 7.03(b), (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.03(b);

 

(c)                                  Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP, provided that the aggregate amounts secured by such Liens shall not exceed the Threshold Amount;

 

(d)                                 carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

 

(e)                                  pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

 

(f)                                    (i) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business, and (ii) Liens arising from precautionary UCC financing statement filings regarding operating leases entered into by any Loan Party in the ordinary course of business;

 

(g)                                 easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

 

(h)                                 Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h);

 

(i)                                     Liens securing Indebtedness permitted under Section 7.03(e); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition; and

 

(j)                                     Liens securing Indebtedness permitted under Section 7.03(f);

 

provided that, notwithstanding the foregoing, none the Specified Accounts nor the property that comprises the Liquidity Amount or the Margined Liquidity Amount or the property contained in the Specified Accounts may be subject to any Lien at any time other than (x) any Lien of the Administrative Agent for the benefit of the Credit Provider Parties and (y) any Lien permitted under clauses (c) and (h) above.

 

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7.02.                     Investments.  Make any Investments, except:

 

(a)                                  Investments held by the Borrower or such Subsidiary in the form of Specified Securities (including Cash Equivalents);

 

(b)                                 advances to officers, directors and employees of the Borrower and Subsidiaries in an aggregate amount not to exceed $10,000,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;

 

(c)                                  Investments of the Borrower in any Guarantor and Investments of any Guarantor in the Borrower or in any other Guarantor;

 

(d)                                 Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

 

(e)                                  Guarantees permitted by Section 7.03;

 

(f)                                    Investments consisting of the acquisition of IP Rights, provided that any such acquisition shall be expensed, in the ordinary course of business and consistent with past practices of the Borrower and its Subsidiaries, as research and development expense; and

 

(g)                                 other Investments (including acquisitions and in-licensing transactions) (i) made in cash (including all cash indemnities, earnouts and other contingent payment obligations, and all assumptions of Indebtedness, liabilities and other obligations in connection therewith) in an aggregate amount not to exceed $50,000,000 during the term of this Agreement, (ii) made solely with the issuance of common stock of the Borrower and/or (iii) made in connection with a non-cash exchange of assets, in the ordinary course of business and consistent with past practices of the Borrower and its Subsidiaries; provided that, in each case, (A) in the case of the acquisition by Borrower or any Subsidiary of the Borrower of all or substantially all of the Equity Interests in, or all or substantially all of the property of, any Person that, upon the consummation thereof, will be wholly-owned directly by the Borrower or one or more of its wholly-owned Subsidiaries (including as a result of a merger or consolidation) (1) any such newly-created or acquired Subsidiary shall comply with the requirements of Section 6.12, and (2) the lines of business of the Person to be (or the property of which is to be) so purchased or otherwise acquired shall be related to the pharmaceutical industry, (B) immediately before and immediately after giving pro forma effect to any such Investment, no Default shall have occurred and be continuing, and (C) prior to the making of such Investment, the Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower, in form and substance reasonably satisfactory to the Administrative Agent, certifying and attaching calculations demonstrating that after the making of any such Investment, on a pro forma basis, the Borrower shall be in compliance with each of the covenants set forth in Section 7.11; provided that the Loan Parties shall not be required to comply with the requirements of this clause (C) unless Investments made under this clause (f) exceed $15,000,000 in the aggregate.

 

7.03.                     Indebtedness.  Create, incur, assume or suffer to exist any Indebtedness, except:

 

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(a)                                  Indebtedness under the Loan Documents;

 

(b)                                 Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and any refinancings, refundings, renewals or extensions thereof; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;

 

(c)                                  Guarantees of the Borrower or any Guarantor in respect of Indebtedness otherwise permitted hereunder of the Borrower or any other Guarantor;

 

(d)                                 obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

 

(e)                                  Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(i); provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $20,000,000;

 

(f)                                    secured Indebtedness in an aggregate principal amount not to exceed $10,000,000 at any time outstanding;

 

(g)                                 unsecured Indebtedness in an aggregate principal amount not to exceed $20,000,000 at any time outstanding; and

 

(h)                                 unsecured Indebtedness convertible into common stock of the Borrower; provided that such Indebtedness (i) shall not mature (including any maturity as a result of an optional redemption by the Borrower), be redeemable by the holder in whole or in part or require any principal payments, in each case, on or prior to the Maturity Date, (ii) the payment of such Indebtedness shall be subordinated to the Obligations on terms reasonably acceptable to the Administrative Agent, and (iii) after giving pro forma effect to the incurrence of such Indebtedness, no Default shall have occurred and be continuing.

 

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7.04.                     Fundamental Changes.  Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:

 

(a)                                  any Subsidiary may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that when any Guarantor is merging with another Subsidiary, the Guarantor shall be the continuing or surviving Person;

 

(b)                                 any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Subsidiary; provided that if the transferor in such a transaction is a Guarantor, then the transferee must either be the Borrower or a Guarantor; and

 

(c)                                  any merger or consolidation to effect an acquisition permitted by Section 7.02 hereof shall be permitted hereunder; provided that in any such merger or consolidation involving (i) the Borrower, the Borrower is the surviving entity or (ii) any other Loan Party, a Loan Party is the surviving entity.

 

7.05.                     Dispositions.  Make any Disposition or enter into any agreement to make any Disposition, except:

 

(a)                                  Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

 

(b)                                 Dispositions of inventory in the ordinary course of business;

 

(c)                                  Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;

 

(d)                                 Dispositions of property by any Subsidiary to the Borrower or to a wholly-owned Subsidiary; provided that if the transferor of such property is a Guarantor, the transferee thereof must either be the Borrower or a Guarantor;

 

(e)                                  Dispositions permitted by Section 7.04;

 

(f)                                    (i) licenses of IP Rights in the ordinary course of business in the biotechnology industry and licenses of research or development programs on terms that the Borrower believes in good faith to be commercially reasonable and (ii) transfer of IP Rights to the Borrower or any Subsidiary; provided, that with respect to any transfer of IP Rights related to the sale, distribution and commercialization in the United States of Telaprevir (VX-950) and other drugs and therapeutic products used for the treatment of Hepatitis C (including, but not limited to VX-222), the transferee of such IP Rights shall be the Borrower or Guarantor;

 

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(g)                                 Dispositions of defaulted accounts receivables for collection purposes for fair value; and

 

(h)                                 Dispositions by the Borrower and its Subsidiaries not otherwise permitted under this Section 7.05; provided that (i) at the time of such Disposition, no Default shall exist or would result from such Disposition and (ii) the aggregate book value of all property Disposed of in reliance on this clause (g) in any fiscal year shall not exceed $5,000,000;

 

provided, however, that any Disposition pursuant to clauses (a) through (h) (other than clause (f)(ii)) shall be for fair market value, as reasonably determined by the Borrower.

 

7.06.                     Restricted Payments.  Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that (x) the Borrower may, in the ordinary course of business and consistent with past practices, repurchase shares of the Borrower’s common stock issued pursuant to the Borrower’s stock and option plans for $0.01 per share and (y) so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:

 

(a)                                  each Subsidiary may make Restricted Payments to the Borrower, the Guarantors and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

 

(b)                                 the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;

 

(c)                                  the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests;

 

(d)                                 the Borrower may repurchase Equity Interests at a price not exceeding fair value upon termination of employment of its officers and employees, provided that the aggregate amount of payments for all such repurchases shall not exceed $5,000,000 in any fiscal year; and

 

(e)                                  the Borrower may take any of the actions permitted under clause (a) of Section 7.14.

 

7.07.                     Change in Nature of Business.  Engage in any material line of business that is not related to the pharmaceutical industry.

 

7.08.                     Transactions with Affiliates.  Enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate.

 

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7.09.       Burdensome Agreements.  Enter into or permit to exist any Contractual Obligation (other than this Agreement or any other Loan Document) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to or invest in the Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; provided, however, that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 7.03(e) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.

 

7.10.       Use of Proceeds.  Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

 

7.11.       Financial Covenants.

 

(a)           Maximum Consolidated Burn Rate. Permit the Consolidated Burn Rate as at the end of any fiscal quarter to exceed the amount set forth on Schedule 7.11 for such fiscal quarter.

 

(b)           Minimum Liquidity Amount.  Permit the Liquidity Amount at any time to be less than $400,000,000.

 

(c)           Minimum Margined Liquidity Amount.  Permit the Margined Liquidity Amount at any time to be less than $100,000,000 (as adjusted pursuant to Section 2.04).

 

7.12.       Amendments of Organization Documents.  Amend any of its Organization Documents in a manner that is materially adverse to the interests of the Lenders.

 

7.13.       Accounting Changes.  Make any change in (a) accounting policies or reporting practices, except as required or allowed by GAAP, or (b) fiscal year.

 

7.14.       Prepayments, Etc. of Indebtedness; Amendment of Olmstead Notes.  (a) Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Indebtedness, except the Borrower may (i) prepay the Credit Extensions in accordance with the terms of this Agreement, (ii) refinance and refund Indebtedness in compliance with Section 7.03(b), (iii) make mandatory prepayments under the Olmstead Notes from (A) Milestone Payments actually received by the Company from Janssen Pharmaceutica, N.V. or an Affiliate thereof or (B) cash on hand (other than any Loan) so long as the Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower, in form scope and substance reasonably satisfactory to the Administrative Agent, not less than ten (10) days (and not more than fifteen (15) days) prior to the making of such payment, setting forth a calculation of each of the covenants contained in Section 7.11 immediately prior to and after giving pro forma effect to such payment (it being understood that in the event such calculation demonstrates that the

 

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Borrower shall not be in compliance with any covenant in Section 7.11, the Trigger Event Date shall occur as of the date of the delivery of such officer’s certificate and any prepayment of the Olmstead Notes pursuant to this clause (B) shall occur only after the completion of the Trigger Event Date Transfer), and in each case of clauses (A) and (B), in accordance with the Olmstead Indenture as in effect on the date hereof, subject to the subordination provisions thereof, and (iv) prepay, redeem, purchase, defease or otherwise satisfy indebtedness permitted under Section 7.03(h), upon conversion of such Indebtedness, through the issuance of shares of the Borrower’s common stock and the payment of cash in lieu of partial shares, provided that the aggregate amount of cash payable pursuant to this clause (iv) shall not exceed $10,000,000 or (b) agree to any amendment, restatement, supplement or other modification to, or waiver of, any of its material rights under the Olmstead Notes or the Olmstead Indenture if such amendment, restatement, supplement or other modification to, or waiver of material rights, would be adverse in any material respect to the interests of the Lenders, without obtaining the prior written consent of the Required Lenders to such amendment, restatement, supplement or other modification or waiver.

 

7.15.       Specified Transfers.  In the event that the Liquidity Amount shall at any time be less than $500,000,000, no Loan Party shall make any transfer or other disposition (in one transaction or a series of related transactions) of cash or Specified Securities in any Specified Account, in each case, in excess of $50,000,000 without (a) providing not less than three (3) Business Days prior written notice to the Administrative Agent and (b) the consent of the Administrative Agent, which consent shall not be unreasonably withheld.

 

Notwithstanding anything in this Article VII or Article VIII to the contrary, with respect to the Specified Covenants only, the applicability thereof shall be suspended until the Initial Borrowing Request Delivery Date.  From and after the Initial Borrowing Request Delivery Date, such Specified Covenants shall be applicable and shall remain in full force and effect until the date that all Obligations are satisfied in full and all commitments of the Lenders to make Loans have been terminated.

 

On the Initial Borrowing Request Delivery Date compliance with the Specified Covenants (i) set forth in Section 7.01 and Section 7.03 shall be determined by reference to Liens and Indebtedness existing on the Closing Date as compared to and measured against Liens and Indebtedness existing on the Initial Borrowing Request Delivery Date (it being understood and agreed that no Event of Default shall exist if all Liens and Indebtedness existing on the Initial Borrowing Request Delivery Date are permitted pursuant to Section 7.01 and Section 7.03 as of such date and (ii) set forth in Section 7.02, Section 7.05 and Section 7.14 shall be determined by reference to all Investments, Dispositions and prepayments of Indebtedness made from and after the Closing Date (it being understood and agreed that no Event of Default shall exist if all Investments, Dispositions and prepayments of Indebtedness made since the Closing Date would have been permitted pursuant to Section 7.02, Section 7.05 and Section 7.14, respectively, if such covenants were not suspended until the Initial Borrowing Request Delivery Date).  The failure to comply with any such Specified Covenant as set forth herein (including after the Initial Borrowing Request Delivery Date) shall constitute a Default (subject to cure periods (if any) contained in Section 8.01(a)).  For the avoidance of doubt, prior to the Initial Borrowing Request Delivery Date, no Default shall occur as a result of the Borrower’s failure to comply with any Specified Covenant.

 

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ARTICLE VIII.
  EVENTS OF DEFAULT AND REMEDIES

 

8.01.       Events of Default.  Any of the following shall constitute an Event of Default:

 

(a)           Non-Payment.  The Borrower or any other Loan Party fails to (i) pay when and as required to be paid herein, any amount of principal of any Loan, or (ii) pay within three days after the same becomes due, any interest on any Loan, or any fee due hereunder, or (iii) pay within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

 

(b)           Specific Covenants.  The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 2.12, 6.01, 6.02, 6.03, 6.05, 6.07, 6.10, 6.11, 6.12, 6.16, 6.17 or Article VII (excepting the Specified Covenants that are not applicable at the relevant time) and such failure continues for 3 days; provided that if the Borrower fails to perform or observe any term, covenant or agreement referred to in this clause (b) at any time from and after the Initial Borrowing Request Delivery Date, such cure period shall no longer apply and such failure shall be an immediate Event of Default.

 

(c)           Other Defaults.  Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 8.01(a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

 

(d)           Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or

 

(e)           Cross-Default.  (i) Any Loan Party or any Subsidiary thereof (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, and such default shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness or Guarantee, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto (and all grace periods applicable to such observance, performance or condition shall have expired), or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap

 

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Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than the Threshold Amount; or

 

(f)            Insolvency Proceedings, Etc.  Any Loan Party or any Subsidiary thereof institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

 

(g)           Inability to Pay Debts; Attachment.  (i) Any Loan Party or any Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

 

(h)           Judgments.  There is entered against any Loan Party or any Subsidiary thereof (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding $7,500,000 (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 20 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)            ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

 

(j)            Invalidity of Loan Documents.  Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or

 

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enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or

 

(k)           Change of Control.  There occurs any Change of Control; or

 

(l)            Collateral Documents.  Any Collateral Document after delivery thereof pursuant to Section 4.01 or 6.12 shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority Lien on the Collateral purported to be covered thereby at the times set forth in such Collateral Document; or

 

(m)          Liens on Certain Property.  At any time, the Specified Accounts or the property that comprises the Liquidity Amount or the Margined Liquidity Amount or is contained in any Specified Account is subject to any Lien (other than any (x) Lien in favor of the Administrative Agent on behalf of itself and the other Credit Provider Parties and (y) any Lien permitted under clauses (c) and (h) of Section 7.01); or

 

(n)           Licenses; Approvals, Etc.  Any governmental license, approval or certification required for the Borrower to sell its products shall have been revoked, non-renewed or suspended, and such revocation, non-renewal or suspension has had or could reasonably be expected to have a Material Adverse Effect; or

 

(o)           Telaprevir (VX-950) Product Recall.  There has occurred a product recall regarding Telaprevir (VX-950) which either (i) has had or could reasonably be expected to have a Material Adverse Effect or (ii) has reduced, or could reasonably be expected to result in a reduction of, sales of Telaprevir (VX-950) in North America by $50,000,000 during any twelve (12) consecutive month period.

 

8.02.       Remedies Upon Event of Default.  If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

 

(a)           declare the commitment of each Lender to make Loans to be terminated, whereupon such commitments shall be terminated;

 

(b)           declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; and

 

(c)           exercise on behalf of itself and the Lenders all rights and remedies available to it, and the Lenders under the Loan Documents;

 

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, in each case without further act of the Administrative Agent or any Lender.

 

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8.03.       Application of Funds.  After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall, subject to the provisions of Section 2.13, be applied by the Administrative Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

 

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including fees, charges and disbursements of counsel to the respective Lenders and fees and time charges for attorneys who may be employees of any Lender) under the Loan Documents (other than Hedge Agreements and Cash Management Agreements) and amounts payable under Article III, ratably among them in proportion to the respective amounts described in this clause Second payable to them;

 

Third, to payment of that portion of the Obligations constituting interest on the Loans and other Obligations arising under the Loan Documents (other than Hedge Agreements and Cash Management Agreements), ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and amounts then owing under Hedge Agreements and Cash Management Agreements, ratably among the Lenders, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them;

 

Fifth, to the payment of all other Obligations; and

 

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

 

ARTICLE IX.
  ADMINISTRATIVE AGENT

 

9.01.       Appointment and Authority.  (a)  Each of the Lenders hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and the Borrower shall not have rights as a third party beneficiary of any of such provisions.

 

(b)           The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (in its capacities as a Lender, potential Hedge Bank and a potential Cash Management Bank) hereby irrevocably appoints and authorizes the

 

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Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto.  In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section 10.04(c), as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.

 

9.02.       Rights as a Lender.  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

9.03.       Exculpatory Provisions.  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Administrative Agent:

 

(a)           shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

 

(b)           shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law; and

 

(c)           shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

 

(d)           The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or

 

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(ii) in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower or a Lender.

 

(e)           The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

9.04.       Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

9.05.       Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

9.06.       Resignation of Administrative Agent.  The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within

 

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30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

 

9.07.       Non-Reliance on Administrative Agent and Other Lenders.  Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

9.08.       No Other Duties, Etc.  Anything herein to the contrary notwithstanding, no agent or arranger hereunder shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, or a Lender.

 

9.09.       Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise

 

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(a)           to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.03(h) and (i), 2.07 and 10.04) allowed in such judicial proceeding; and

 

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

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.07 and 10.04.

 

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

 

9.10.       Collateral and Guaranty Matters.  Each of the Lenders (including in its capacities as a potential Cash Management Bank and a potential Hedge Bank) irrevocably authorize the Administrative Agent, at its option and in its discretion,

 

(a)           to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) in accordance with the provisions of Section 2.12, (ii) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (A) contingent indemnification obligations and (B) obligations and liabilities under Cash Management Agreements and Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made), or (iii) if approved, authorized or ratified in writing in accordance with Section 10.01; and

 

(b)           to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

 

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10.  In each case as specified in this Section 9.10, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents, or

 

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to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.10.

 

9.11.       Cash Management Agreements and Hedge Agreements.  No Cash Management Bank or Hedge Bank that obtains the benefits of Section 8.03, any Guaranty or any Collateral by virtue of the provisions hereof or of any Guaranty or any Collateral Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents.  Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Cash Management Agreements and Hedge Agreements unless the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.

 

ARTICLE X.
  MISCELLANEOUS

 

10.01.     Amendments, Etc.  No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

 

(a)           waive any condition set forth in Section 4.01(a), or, in the case of the initial Borrowing, Section 4.02 or Section 4.03, in each case, without the written consent of each Lender;

 

(b)           extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender;

 

(c)           postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under such other Loan Document without the written consent of each Lender directly affected thereby;

 

(d)           reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (iii) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate;

 

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(e)           change Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

 

(f)            change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;

 

(g)           release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender; or

 

(h)           release all or substantially all of the value of the Guaranty, without the written consent of each Lender, except to the extent the release of any Subsidiary from the Guaranty is permitted pursuant to Section 9.10 (in which case such release may be made by the Administrative Agent acting alone);

 

and, provided  further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (ii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

 

If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of each Lender and that has been approved by the Required Lenders, the Borrower may replace such non-consenting Lender in accordance with Section 10.13; provided that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Borrower to be made pursuant to this paragraph).

 

10.02.     Notices; Effectiveness; Electronic Communications.  (a) Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

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(i)            if to the Borrower or the Administrative Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and

 

(ii)           if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).

 

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).

 

(b)           Electronic Communications.  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

 

(c)           The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR

 

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OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

 

(d)           Change of Address, Etc.  Each of the Borrower and the Administrative Agent Issuer may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.  Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent.  In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.  Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.

 

(e)           Reliance by Administrative Agent and Lenders.  The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrower shall indemnify the Administrative Agent, , each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower.  All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

 

10.03.     No Waiver; Cumulative Remedies; Enforcement.  No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right,

 

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remedy, power or privilege.  The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.11), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b) and (c) of the preceding proviso and subject to Section 2.11, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

 

10.04.     Expenses; Indemnity; Damage Waiver.  (a) Costs and Expenses.  The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all reasonable out-of-pocket expenses incurred by the Administrative Agent or any Lender (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent or any Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

 

(b)           Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions

 

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contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.01), (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party or any of the Borrower’s or such Loan Party’s directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such other Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

 

(c)           Reimbursement by Lenders.  To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent).  The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.10(d).

 

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.  No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

 

(e)           Payments.  All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

 

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(f)            Survival.  The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

 

10.05.     Payments Set Aside.  To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent, or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

 

10.06.     Successors and Assigns.  (a) Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

 

(i)            Minimum Amounts.

 

(A)          in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

 

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(B)           in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.

 

(ii)           Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned.

 

(iii)          Required Consents.  No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

 

(A)          the consent of the Borrower (such consent not to be unreasonably withheld) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;

 

(B)           the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender.

 

(iv)          Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)           No Assignment to Certain Persons.  No such assignment shall be made (A) to the Borrower or any of the Borrower’s Affiliate’s or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender

 

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hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person.

 

(vi)          Certain Additional Payments.  In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in accordance with its Applicable Percentage.  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05 and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

 

(c)           Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be prima facie evidence of the matters recorded therein, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  In

 

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addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d)           Participations.  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant.  Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender, provided such Participant agrees to be subject to Section 2.11 as though it were a Lender.

 

(e)           Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04  than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender.

 

(f)            Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

10.07.     Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be

 

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informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower; provided, however, that the Administrative Agent and the Lenders, as the case may be, shall, to the extent possible and permitted by law, provide the  Borrower with reasonable prior notice of any disclosure of information referred to in clauses (b) and (c) above to allow the Borrower to seek a protective order preventing such disclosure.

 

For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information, which shall be at least reasonable care.  The parties agree that money damages would not be a sufficient remedy for breach of this Section, and that in addition to all other remedies available at law or in equity, the Borrower shall be entitled to seek equitable relief, including injunction and specific performance, without proof of actual damages.  The provisions of this Section shall remain operative as to Information received by the Administrative Agent or any Lender during the term of this Agreement regardless of the expiration and term of this Agreement.

 

Each of the Administrative Agent and the Lenders acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

 

10.08.     Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other

 

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obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.11 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.  The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or its Affiliates may have.  Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.  Notwithstanding the provisions of this Section 10.08, if at any time any Lender or any of their respective Affiliates maintains one or more deposit accounts for the Borrower into which Medicare and/or Medicaid receivables are deposited, such Person shall waive the right of setoff set forth herein with respect to such deposit accounts.

 

10.09.     Interest Rate Limitation.  Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower.  In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

10.10.     Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic

 

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imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

 

10.11.     Survival of Representations and Warranties.  All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

 

10.12.     Severability.  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Without limiting the foregoing provisions of this Section 10.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, then such provisions shall be deemed to be in effect only to the extent not so limited.

 

10.13.     Replacement of Lenders.  If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender is a Defaulting Lender, or if any other circumstance exists hereunder that gives the Borrower the right to replace a Lender as a party hereto, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

 

(a)           the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b);

 

(b)           such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

 

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(c)           in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter; and

 

(d)           such assignment does not conflict with applicable Laws.

 

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

10.14.     Governing Law; Jurisdiction; Etc.  (a)  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER STATE).

 

(a)           SUBMISSION TO JURISDICTION.  EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS SITTING IN SUFFOLK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE DISTRICT OF MASSACHUSETTS, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH MASSACHUSETTS COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(b)           WAIVER OF VENUE.  EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT

 

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PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)           SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

10.15.     Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.16.     No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) the Administrative Agent has no obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and its respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and the Administrative Agent has no obligation to disclose any of such interests to the Borrower or its Affiliates.  To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

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10.17.     Electronic Execution of Assignments and Certain Other Documents.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

10.18.     USA PATRIOT Act.  Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Patriot Act.  The Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as a sealed instrument as of the date first above written.

 

	
 
    	
VERTEX   PHARMACEUTICALS INCORPORATED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Paul M. Silva
    
	
 
    	
Name:   
    	
Paul   M. Silva
    
	
 
    	
Title:   
    	
Vice   President and Corporate Controller
    
				

 

 

	
 
    	
BANK   OF AMERICA, N.A., as Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Linda Alto
    
	
 
    	
Name:   
    	
Linda   Alto
    
	
 
    	
Title:   
    	
SVP
    
				

 

 

	
BANK   OF AMERICA, N.A., as a Lender
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Linda Alto
    
	
 
    	
Name:   
    	
Linda   Alto
    
	
 
    	
Title:   
    	
SVPExhibit 10.7

 

STAKEHOLDERS’ AGREEMENT

 

This STAKEHOLDERS’ AGREEMENT (this “Agreement”) is dated effective as of May 5, 2011, and is made by and among LRR Energy, L.P. (“LRR Energy”), LRE GP, LLC, the general partner of LRR Energy (the “General Partner”), Lime Rock Resources GP, L.P., (“Lime Rock Resources”), Lime Rock Resources A, L.P. (“LRR-A”), Lime Rock Resources B, L.P. (“LRR-B”), Lime Rock Resources C, L.P. (“LRR-C,” and together with LRR-A and LRR-B, the “Property Contributors”), Lime Rock Management LP (“Lime Rock Management”), Lime Rock Resources GP II, L.P. (“Lime Rock Resources II”), Lime Rock Resources II-A, L.P. (“LRRA-II”) and Lime Rock Resources II-C, L.P. (“LRRC-II,” and together with LRRA-II, the “Fund II Partnerships”).  Terms that are capitalized but not defined shall have the meanings assigned to such terms in Article I of this Agreement.

 

PREAMBLE:

 

WHEREAS, the Property Contributors were formed by affiliates of Lime Rock Management to acquire mature, low-risk producing oil and natural gas properties with long lived production profiles.  The general partner of LRR-A is Lime Rock Resources A GP, LLC, whose sole member is Lime Rock Resources.  The general partner of LRR-B is Lime Rock Resources.  The general partner of LRR-C is Lime Rock Resources C GP, LLC, whose sole member is Lime Rock Resources. The limited partners of the Property Contributors (“Investors”) are principally significant institutions.

 

WHEREAS, LRR-B and LRR-C were each formed principally for the benefit of tax-exempt Investors, with each of LRR-B and LRR-C participating in acquisitions by acquiring net profits interests (“NPIs”) carved out of the working interests purchased by LRR-A.

 

WHEREAS, LRR-A desires to contribute all of its working interests in certain oil and natural gas properties and related operations, and LRR-B and LRR-C desire to sell certain of their NPIs and contribute certain of their NPIs in those oil and natural gas properties (together all working interests and NPIs conveyed to LRR Energy will be referred to as the “Contributed Properties”) to LRR Energy, in exchange for cash (including assumption of liabilities secured by the Contributed Properties) and Residual Units in LRR Energy.

 

WHEREAS, LRR Energy is a limited partnership formed in April 2011 by affiliates of the Property Contributors to acquire, exploit and develop oil and natural gas properties in North America. In connection with the sale and contribution of the Contributed Properties to LRR Energy, LRR Energy proposes to file a registration statement on Form S-1 (the “Registration Statement”) with the United States Securities and Exchange Commission (the “SEC”) to effect an initial public offering of common units of LRR Energy (the “Offering”).

 

WHEREAS, Lime Rock Management, the General Partner, LRR Energy, the Property Contributors and the Fund II Partnerships desire that at Closing (as defined below), the Property Contributors and the Fund II Partnerships will become members of the General Partner such that the Property Contributors and the Fund II Partnerships will hold member interests which entitle

 

 

them to receive 80% and 20%, respectively, of the cash distributions related to the Incentive Distributions for a period of six years following the Closing.

 

WHEREAS, prior to the initial filing of the Registration Statement, the parties to this Agreement desire to set forth the following agreements among themselves relating to: (i) with respect to the Property Contributors, the payment and distribution of cash (subject to adjustment as set forth in Annex A to account for positive and negative balances of NPIs among the Property Contributors) and the issuance of Residual Common Units and Residual Subordinated Units concurrently with the closing of the Offering (the “Closing”) and the issuance of any Over-Allotment Common Units and distribution of Over-Allotment Proceeds in connection with any exercise of the Over-Allotment Option; (ii) with respect to the General Partner, (A) the issuance of General Partner Units in exchange for the GP Capital Contribution and (B) the issuance of the Incentive Distribution Rights to the General Partner; (iii) with respect to the parties hereto that hold Common Units, whether received in exchange for the contribution of property or the conversion of Subordinated Units, registration rights with respect to such Units; and (iv) with respect to the Property Contributors, Lime Rock Management and the Fund II Partnerships, the ownership interests in the General Partner which entitle them to Incentive Distributions.

 

WHEREAS, the contribution of the Contributed Properties by LRR-A to LRR Energy is intended to constitute a tax-free contribution pursuant to Section 721 of the Internal Revenue Code of 1986, as amended (the “Code”) for federal income tax purposes except to the extent the receipt of cash or assumption of indebtedness secured by the Contributed Properties may be taxable.

 

WHEREAS, the transfer of the Contributed Properties by LRR-B and LRR-C to LRR Energy is intended to constitute a taxable sale pursuant to Section 1001 of the Code for federal income tax purposes to the extent of cash received by LRR-B and LRR-C and a tax-free contribution pursuant to Section 721 of the Code for federal income tax purposes to the extent of Units received by LRR-B and LRR-C.

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the parties agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1           Defined Terms. When used in this Agreement, the following terms shall have the respective meanings set forth below:

 

“Affiliate” shall have the meaning set forth in the Partnership Agreement.

 

“Agreement” is defined in the introductory paragraph of this Agreement.

 

“Board of Directors” means the board of directors of the General Partner.

 

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“Business Day” means any day other than a Saturday, Sunday, or a legal holiday for commercial banks in Wilmington, Delaware.

 

“Class A Interests” means the Class A member interests in the General Partner.

 

“Class B Interests” means the Class B member interests in the General Partner.

 

“Class C Interests” means the Class C member interests in the General Partner.

 

“Closing” is defined in the Preamble of this Agreement.

 

“Code” is defined in the Preamble of this Agreement.

 

“Common Units” means common units representing limited partner interests in LRR Energy.

 

“Conflicts Committee” shall have the meaning set forth in the Partnership Agreement.

 

“Contributed Properties” is defined in the Preamble of this Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“First Target Distribution” is defined in Section 4.2(a) of this Agreement.

 

“Fund II Partnerships” is defined in the introductory paragraph of this Agreement.

 

“General Partner” is defined in the Preamble of this Agreement.

 

“General Partner Units” is calculated by multiplying (i) the Total Units Outstanding by (ii) 0.1%.

 

“GP Capital Contribution” is calculated by multiplying (i) the LRR Energy Market Value by (ii) 0.1%.

 

“GP LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of LRE GP, LLC, dated as of the Closing.

 

“Holder” is defined in Section 5.1(a) of this Agreement.

 

“IDR Reset” is defined in Section 6.3 of this Agreement.

 

“Incentive Distribution Rights” means the rights of the General Partner to receive increasing distributions from LRR Energy in excess of the General Partner’s general partner interest pursuant to the Partnership Agreement.

 

“Incentive Distributions” means the additional increasing distributions payable by LRR Energy to the General Partner in excess of the General Partner’s general partner interest pursuant to the Partnership Agreement.

 

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“Indemnified Persons” is defined in Section 5.1(d) of this Agreement.

 

“Initial IPO Proceeds” is equal to (a) the product of (i) the number of IPO Units multiplied by (ii) the Market Price; plus (b) the aggregate amount of funds drawn at or prior to Closing by LRR Energy and its subsidiaries under its new credit facility minus (c) the amount of any Offering Expenses (calculated as if the Over-Allotment Option was not exercised).

 

“IPO Units” means the total number of Common Units to be sold to the public in connection with the Offering. For the avoidance of doubt, IPO Units will not include Over-Allotment Common Units.

 

“Lime Rock Management” is defined in the introductory paragraph of this Agreement.

 

“Lime Rock Resources” is defined in the introductory paragraph of this Agreement.

 

“Lime Rock Resources II” is defined in the introductory paragraph of this Agreement.

 

“LRR-A” is defined in the introductory paragraph of this Agreement.

 

“LRRA-II” is defined in the introductory paragraph of this Agreement.

 

“LRR-B” is defined in the introductory paragraph of this Agreement.

 

“LRR-C” is defined in the introductory paragraph of this Agreement.

 

“LRRC-II” is defined in the introductory paragraph of this Agreement.

 

“LRR Energy” is defined in the introductory paragraph of this Agreement.

 

“LRR Energy Market Value” is calculated by multiplying (i) the Total Units Outstanding by (ii) the Market Price.

 

“Managing Underwriter” means, with respect to any underwritten offering, the book running lead manager of such underwritten offering.

 

“Market Price” means the public offering price per unit of Common Units sold in the Offering as set forth on the outside cover page of the final prospectus to be filed by LRR Energy pursuant to Rule 424(b).

 

“Minimum Quarterly Distribution” shall have the meaning set forth in the Partnership Agreement.

 

“NPIs” is defined in the Preamble of this Agreement.

 

“Offering” is defined in the Preamble of this Agreement.

 

“Offering Expenses” includes the Underwriter Fees (calculated as if the Over-Allotment Option was exercised or not exercised, as applicable) and all other fees and expenses of LRR Energy relating to its initial public offering.

 

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“Over-Allotment Common Units” means fifteen percent (15%) of the IPO Units.

 

“Over-Allotment Option” means the option granted to the underwriters in connection with the Offering to acquire the Over-Allotment Common Units.

 

“Over-Allotment Option Period” means a period ending thirty (30) days after the pricing date of the Offering, or earlier, upon closing of the full exercise of the Over-Allotment Option by the underwriters.

 

“Over-Allotment Proceeds” is equal to the product of the Over-Allotment Common Units sold by underwriters as part of the Over-Allotment Option multiplied by the Market Price minus the additional Offering Expenses incurred by LRR Energy in connection with such exercise (calculated as if the Over-Allotment Option was exercised).

 

“Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of LRR Energy, L.P., dated as of the Closing.

 

“Partnership Interests” shall have the meaning set forth in the Partnership Agreement.

 

“Person” means any individual, corporation, company, voluntary association, partnership, joint venture, trust, limited liability company, unincorporated organization, government or any agency, instrumentality or political subdivision thereof, or any other form of entity.

 

“Property Contributor Percentages” mean (i) with respect to LRR-A, 14.2894%, (ii) with respect to LRR-B, 4.7376%, and (iii) with respect to LRR-C, 80.9730%.

 

“Property Contributors” is defined in the introductory paragraph of this Agreement.

 

“Registration Statement” is defined in the Preamble of this Agreement.

 

“Reset Minimum Quarterly Distribution” is defined in Section 4.3 of this Agreement.

 

“Residual Common Units” is calculated by subtracting from the Total Units Outstanding, (a) the number of General Partner Units, (b) the number of IPO Units, (c) the number of Residual Subordinated Units, and (d) Over-Allotment Common Units.

 

“Residual Subordinated Units” are calculated by multiplying (i) the Total Units Outstanding by (ii) thirty percent (30%).

 

“Residual Units” are calculated by subtracting (i) the IPO Units and the General Partner Units from (ii) the Total Units Outstanding.

 

“SEC” is defined in the Preamble of this Agreement.

 

“Second Target Distribution” is defined in Section 4.2(b) of this Agreement.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

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“Subordinated Units” means subordinated units representing limited partner interests in LRR Energy.

 

“Target Distribution Levels” is defined in Section 4.2(b) of this Agreement.

 

“Total Units Outstanding” means the number of Units equal to the number calculated by dividing (i) LRR Energy’s total estimated annual cash distributions in the table entitled “LRR Energy, L.P. Estimated Adjusted EBITDA” in the final prospectus to be filed by LRR Energy pursuant to Rule 424(b) by (ii) the annualized minimum quarterly distribution per unit in such table.

 

“Underwriter Fees” means the commissions, discounts and fees, including structuring fees, if any, that the underwriters receive from the sale of the IPO Units and the Over-Allotment Common Units, as applicable.

 

“Unitholder” means a holder of equity securities representing partnership interests in LRR Energy.

 

“Units” means Common Units and Subordinated Units representing limited partner interests in LRR Energy and General Partner Units.

 

ARTICLE II

 

CONDITIONS TO EFFECTIVENESS

 

The effectiveness of the provisions of this Agreement is subject to (i) the consummation by LRR Energy of the Offering with no material changes to those Offering terms reflected in the prospectus included in the initial Registration Statement filed with the SEC and (ii) (A) allocation, authorization, execution and delivery of the Residual Units to the Property Contributors and (B) the payment or distribution of cash (including the assumption of indebtedness secured by the Contributed Properties or distribution of proceeds from new borrowings, as applicable) to the Property Contributors, in each case, pursuant to the terms of this Agreement.

 

ARTICLE III

 

ALLOCATION OF EQUITY INTERESTS AND PROCEEDS

 

3.1           Allocation of Units and IPO Proceeds.

 

(a)           Allocation of Residual Units. Each Property Contributor will be allocated that number of Residual Units derived by multiplying the Residual Units by the applicable Property Contributor Percentage (rounded down to the nearest whole number of Residual Units). The Residual Units to be allocated will be comprised of: (i) Residual Common Units, (ii) Residual Subordinated Units and (iii) Over-Allotment Common Units, if any.

 

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(b)           Issuance of Residual Common Units. At Closing, each Property Contributor will receive that number of Residual Common Units (excluding Over-Allotment Common Units) derived by multiplying the Residual Common Units by the applicable Property Contributor Percentage (rounded down to the nearest whole number of Residual Common Units), and each Property Contributor will be admitted as a limited partner of LRR Energy with respect to such Common Units. Holders of Residual Common Units will immediately be entitled to all of the rights (including distribution rights), preferences and privileges contained in the Partnership Agreement for holders of Common Units, and such holders will be subject to all of the conditions and limitations contained in the Partnership Agreement.

 

(c)           Issuance of Residual Subordinated Units. At Closing, each Property Contributor will receive that number of Residual Subordinated Units derived by multiplying the Residual Subordinated Units by the applicable Property Contributor Percentage (rounded down to the nearest whole number of Residual Subordinated Units), and each Property Contributor will be admitted as a limited partner of LRR Energy with respect to such Subordinated Units. Holders of Residual Subordinated Units will immediately be entitled to all of the rights (including distribution rights), preferences and privileges contained in the Partnership Agreement for holders of Subordinated Units, and such holders will be subject to all of the conditions and limitations contained in the Partnership Agreement.

 

(d)           Payment and Distribution of Cash. At Closing, each Property Contributor will be paid or distributed cash equal to the product of (i) the Initial IPO Proceeds multiplied by (ii) the applicable Property Contributor Percentage, subject to adjustment pursuant to the formula set forth on Annex A. For purposes hereof, in lieu of a distribution of cash, LRR-A may cause LRR Energy to assume indebtedness secured by its Contributed Properties in the same amount and such assumption will be treated as a distribution of the same amount of cash hereunder.  Out of the Initial IPO Proceeds, (i) the amount distributed to LRR-A pursuant to the previous sentence will be sourced first to the proceeds of any bank indebtedness incurred by LRR Energy and its subsidiaries upon the Closing and then, to the extent necessary, to the proceeds received by LRR Energy from the sale of IPO Units, and (ii) the amount paid to LRR-B and LRR-C for a portion of the NPIs pursuant to the previous sentences will be sourced first to the proceeds received by LRR Energy from the sale of IPO Units and then, to the extent necessary, to the proceeds of any bank indebtedness incurred by LRR Energy and its subsidiaries upon the Closing.

 

3.2           Allocation of Over-Allotment.

 

(a)           Allocation of Over-Allotment Common Units. At the expiration of the Over-Allotment Option Period, each Property Contributor will receive that number of Over-Allotment Common Units that have not been sold to the public pursuant to the underwriter’s exercise of the Over-Allotment Option derived by multiplying such remaining Over-Allotment Common Units by the applicable Property Contributor Percentage (rounded down to the nearest whole number of Residual Common Units), and each Property Contributor will immediately be entitled to all of the rights (including distribution rights), preferences and privileges contained in the Partnership Agreement with respect to such Over-Allotment Common Units, and such holders will be subject to all of the conditions and limitations contained in the Partnership Agreement.

 

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(b)           Allocation of Over-Allotment Proceeds. At the expiration of the Over-Allotment Option Period, each Property Contributor will be paid or distributed cash by LRR Energy equal to the product of (i) the Over-Allotment Proceeds multiplied by (ii) the applicable Property Contributor Percentage.

 

3.3           Issuance of General Partner Units. At the Closing, LRR Energy will issue the General Partner Units to the General Partner, subject to receipt by LRR Energy of the GP Capital Contribution. The General Partner Units will be entitled to all of the rights (including distribution rights), preferences and privileges contained in the Partnership Agreement with respect to the General Partner Units, and the General Partner will be subject to such conditions and limitations in respect to the General Partner Units as contained in the Partnership Agreement. Pursuant to the terms of the Partnership Agreement, the General Partner will have sole responsibility for conducting LRR Energy’s business and managing its operations.

 

3.4           Waiver of Rights to Contributed Properties. Following receipt of the Residual Units and the cash paid and distributed, (i) none of the Property Contributors shall be entitled to any further consideration from LRR Energy with respect to the Contributed Properties nor any further exercise of rights as working interest or NPI owners with respect to the Contributed Properties and (ii) each Property Contributor shall forfeit, cancel and relinquish any and all claims and entitlements to Contributed Properties. Nothing set forth in this Section 3.4 shall preclude the Property Contributors from any rights to any distributions declared by the Board of Directors with respect to Units held by such Property Contributors.

 

3.5           Tax Treatment. The parties hereto agree to report (1) the exchange by LRR-A of the Contributed Properties for Units as a tax-free contribution pursuant to Section 721 of the Code except to the extent the receipt of cash or assumption of indebtedness secured by the Contributed Properties may be taxable, and (2) the exchange by LRR-B and LRR-C of the Contributed Properties for cash and Units as a taxable sale pursuant to Section 1001 of the Code to the extent of cash received by LRR-B and LRR-C and as a tax-free contribution pursuant to Section 721 of the Code to the extent of Units received by LRR-B and LRR-C.  The parties shall take no action that is inconsistent with the foregoing tax treatment.

 

3.6           Rights to Information. In addition to the foregoing, for so long as the Property Contributors are paying management fees pursuant to their respective partnership agreements, upon request of the Property Contributors to LRR Energy, LRR Energy agrees to provide to the Property Contributors all information relating to the Contributed Properties (and any additions thereto), as may be reasonably required by them to comply with the terms of the applicable partnership agreement, including information with respect to preparing K-1’s and preparing financial statements.

 

ARTICLE IV

 

GENERAL PARTNER INTEREST AND INCENTIVE DISTRIBUTION RIGHTS

 

4.1           General Partner Interest. The Partnership Agreement will provide that the General Partner initially will receive General Partner Units entitling it to 0.1% of all distributions 

 

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that LRR Energy makes prior to its liquidation. The General Partner has the right, but not the obligation, to contribute a proportionate amount of capital to LRR Energy to maintain its 0.1% general partner interest if LRR Energy issues additional Units (excluding Over-Allotment Common Units and General Partner Units) or other equity securities. The General Partner’s 0.1% interest in LRR Energy, and the percentage of LRR Energy’s cash distributions to which the General Partner is entitled, will be proportionately reduced if LRR Energy issues any such additional Units or other equity securities in the future and the General Partner does not contribute a proportionate amount of capital (or equity securities in lieu of capital) to LRR Energy to maintain its 0.1% general partner interest. The General Partner will be entitled to make a capital contribution to maintain its 0.1% general partner interest in the form of cash or the contribution to LRR Energy of Common Units that it may hold based on the current market value of such contributed Common Units.

 

4.2           Incentive Distribution Rights. The Partnership Agreement shall provide that for each quarter for which LRR Energy (i) has paid or is paying distributions of available cash from operating surplus that equal or exceed the Minimum Quarterly Distribution, and (ii) has paid or is paying distributions in an amount necessary to eliminate any cumulative arrearages in payment of the Minimum Quarterly Distribution to the holders of Common Units, LRR Energy will distribute any additional available cash from operating surplus for that quarter in the following manner:

 

(a)           first, 99.9% to all Unitholders, pro rata, and 0.1% to the General Partner, until each Unitholder receives 115% of the Minimum Quarterly Distribution per Unit for that quarter (the “First Target Distribution”);

 

(b)           second, 86.9% to all Unitholders, pro rata, and 13.1% (including distributions with respect to the General Partner’s 0.1% general partner interest) to the General Partner, until each Unitholder receives 125% of the Minimum Quarterly Distribution per Unit for that quarter (the “Second Target Distribution,” together with the First Target Distribution, the “Target Distribution Levels”);

 

(c)           thereafter, 76.9% to all Unitholders, pro rata, and 23.1% (including distributions with respect to the General Partner’s 0.1% general partner interest) to the General Partner.

 

4.3           General Partner’s Right to Reset Incentive Distribution Levels. The Partnership Agreement shall provide that the General Partner will have the right to elect to relinquish the right to receive the Incentive Distributions based on the initial cash Target Distribution Levels and to reset, at higher levels, the Minimum Quarterly Distribution and Target Distribution Levels.  This right to reset the Minimum Quarterly Distribution and the Target Distribution Levels may be exercised under the Partnership Agreement at any time when there are no Subordinated Units outstanding and LRR Energy has made cash distributions to the holder(s) of the Incentive Distribution Rights at the highest Target Distribution Level for each of the prior four consecutive fiscal quarters.  Upon the reset of the Minimum Quarterly Distribution and Target Distribution Levels in accordance with the Partnership Agreement, the General Partner will be entitled to receive (i) a number of newly issued Common Units equal to the quotient determined by dividing (x) the average aggregate amount of cash distributions received 

 

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by the General Partner in respect of the Incentive Distribution Rights during the two consecutive fiscal quarters ended immediately prior to the date of such reset election by (y) the average of the amount of cash distributed per Common Unit during each quarter in that two-quarter period, and (ii) a number of General Partner Units necessary to maintain its general partner interest at the same interest it was prior to such reset.  Following each reset election, in accordance with the Partnership Agreement, the Minimum Quarterly Distribution will be reset to an amount equal to the average cash distribution amount per Unit for the two fiscal quarters immediately preceding the reset election (the “Reset Minimum Quarterly Distribution”) and the Target Distribution Levels will be reset to be correspondingly higher such that LRR Energy would distribute all of its available cash for each quarter thereafter as follows (in each case, assuming that the interest of the General Partner was 0.1% at the time of the reset election):

 

(a)           first, 99.9% to all Unitholders, pro rata, and 0.1% to the General Partner, until each Unitholder receives an amount equal to 115% of the Reset Minimum Quarterly Distribution for that quarter;

 

(b)           second, 86.9% to all Unitholders, pro rata, and 13.1% (including distributions with respect to the General Partner’s 0.1% general partner interest) to the General Partner, until each Unitholder receives an amount equal to 125% of the Reset Minimum Quarterly Distribution for that quarter;

 

(c)           thereafter, 76.9% to all Unitholders, pro rata, and 23.1% (including distributions with respect to the General Partner’s 0.1% general partner interest) to the General Partner.

 

ARTICLE V

 

REGISTRATION RIGHTS

 

5.1           Registration Rights of the General Partner and its Affiliates.

 

In connection with the Closing, the General Partner and the Property Contributors will enter into the Partnership Agreement which shall provide for registration rights substantially as follows:

 

(a)           If (i) the General Partner or any Affiliate of the General Partner, including the Property Contributors (and also including for purposes of this Section 5.1, any Person that is an Affiliate of the General Partner at the date of Closing notwithstanding that it may later cease to be an Affiliate of the General Partner) holds Partnership Interests (as defined in the Partnership Agreement) that it desires to sell and (ii) Rule 144 of the Securities Act (or any successor rule or regulation to Rule 144) or another exemption from registration is not available to enable such holder of Partnership Interests (the “Holder”) to dispose of the number of Partnership Interests it desires to sell at the time it desires to do so without registration under the Securities Act, then at the option and upon the request of the Holder, LRR Energy shall file with the SEC as promptly as practicable after receiving such request, and use all commercially reasonable efforts to cause to become effective and remain effective for a period of not less than 

 

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six months following its effective date or such shorter period as shall terminate when all Partnership Interests covered by such registration statement have been sold, a registration statement under the Securities Act registering the offering and sale of the number of Partnership Interests specified by the Holder; provided, however, that if the Conflicts Committee (as defined in the Partnership Agreement) determines that a postponement of the requested registration would be in the best interests of LRR Energy and its partners due to a pending transaction, investigation or other event, the filing of such registration statement or the effectiveness thereof may be deferred until such time as the Conflicts Committee determines that such pending transaction, investigation or other event no longer requires such postponement; provided, that such postponement shall not exceed more than six months. In connection with any registration pursuant to the immediately preceding sentence, LRR Energy shall (i) promptly prepare and file (A) such documents as may be necessary to register or qualify the securities subject to such registration under the securities laws of such states as the Holder shall reasonably request; provided, that no such qualification shall be required in any jurisdiction where, as a result thereof, LRR Energy would become subject to general service of process or to taxation or qualification to do business as a foreign corporation or partnership doing business in such jurisdiction solely as a result of such registration, and (B) such documents as may be necessary to apply for listing or to list the Partnership Interests subject to such registration on such National Securities Exchange (as defined in the Partnership Agreement) as the Holder shall reasonably request, and (ii) do any and all other acts and things that may be necessary or appropriate to enable the Holder to consummate a public sale of such Partnership Interests in such states. Except as set forth in Section 5.1(d) below, all costs and expenses of any such registration and offering (other than the underwriting fees, discounts and commissions) shall be paid by LRR Energy, without reimbursement by the Holder.

 

(b)           If any Holder holds Partnership Interests that it desires to sell and Rule 144 of the Securities Act  (or any successor rule or regulation to Rule 144) or another exemption from registration is not available to  enable such Holder to dispose of the number of Partnership Interests it desires to sell at the time it desires to do so without registration under the Securities Act, then at the option and upon the request of the Holder, LRR Energy shall file with the SEC as promptly as practicable after receiving such request, and use all commercially reasonable efforts to cause to become effective and remain effective for a period of not less than six months following its effective date or such shorter period as shall terminate when all Partnership Interests covered by such shelf registration statement have been sold, a “shelf” registration statement covering the Partnership Interests specified by the Holder on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC; provided, however, that if the Conflicts Committee determines that it would be in the best interests of LRR Energy and its partners to suspend the filing of such shelf registration statement or any offering under, or use of any prospectus forming a part of, the shelf registration statement due to a pending transaction, investigation or other event, then LRR Energy shall have the right to suspend such filing, offering or use until such time as the Conflicts Committee determines that such pending transaction, investigation or other event no longer requires such suspension; provided, that such suspension shall not exceed more than six months.  In connection with any shelf registration pursuant to this Section 5.1(b), LRR Energy shall (i) promptly prepare and file (A) such documents as may be necessary to register or qualify the securities subject to such shelf registration under the securities laws of such states as the Holder shall reasonably request; provided, that no such qualification shall be required in any jurisdiction where, as a result 

 

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thereof, LRR Energy would become subject to general service of process or to taxation or qualification to do business as a foreign corporation or partnership doing business in such jurisdiction solely as a result of such shelf registration, and (B) such documents as may be necessary to apply for listing or to list the Partnership Interests subject to such shelf registration on such National Securities Exchange (as defined in the Partnership Agreement) as the Holder shall reasonably request, and (ii) do any and all other acts and things that may be necessary or appropriate to enable the Holder to consummate a public sale of such Partnership Interests in such states. Except as set forth in Section 5.1(d) below, all costs and expenses of any such shelf registration and offering (other than the underwriting fees, discounts and commissions) shall be paid by LRR Energy, without reimbursement by the Holder.

 

(c)           If LRR Energy shall at any time propose to file a registration statement under the Securities Act for an offering of Partnership Interests for cash (other than a registration relating solely to a benefit plan, a registration statement relating solely to a Rule 145 transaction or on any registration form which does not permit secondary sales), LRR Energy shall use all commercially reasonable efforts to include such number or amount of Partnership Interests held by any Holder in such registration statement as the Holder shall request; provided, that LRR Energy is not required to make any effort or take any action to so include the Partnership Interests of the Holder once the registration statement becomes or is declared effective by the Commission, including any registration statement providing for the offering from time to time of Partnership Interests pursuant to Rule 415 of the Securities Act. If the proposed offering pursuant to this Section 5.1(c) shall be an underwritten offering, then, in the event that the Managing Underwriter of such offering advises LRR Energy in writing that in its opinion the inclusion of all or some of the Holder’s Partnership Interests would adversely and materially affect the timing or success of the offering, LRR Energy shall include in such offering only that number or amount, if any, of Partnership Interests held by the Holder that, in the opinion of the Managing Underwriter, will not so adversely and materially affect the offering. Except as set forth in Section 5.1(d) below, all costs and expenses of any such registration and offering (other than the underwriting fees, discounts and commissions) shall be paid by LRR Energy, without reimbursement by the Holder.  During the 2 year period set forth in Section 5.1(e), LRR Energy shall not grant to any other party registration rights similar to the rights set forth in this Section 5.1(c) which are superior to such rights without the consent of the General Partner (and any of its Affiliates) which hold rights pursuant to Section 5.1(e).

 

(d)           If underwriters are engaged in connection with any registration referred to in this Section 5.1, LRR Energy shall provide indemnification, representations, covenants, opinions, comfort letters and other assurance to the underwriters in form and substance reasonably satisfactory to such underwriters. Further, in addition to and not in limitation of LRR Energy’s obligations under the other indemnification provisions in the Partnership Agreement, LRR Energy shall, to the fullest extent permitted by law, indemnify and hold harmless the Holder, its officers, directors and each Person who controls the Holder (within the meaning of the Securities Act) and any agent thereof (collectively, “Indemnified Persons”) from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which any Indemnified Person may be involved, or is threatened to be involved, as a party or otherwise, under the Securities Act or otherwise (hereinafter referred to in 

 

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this Section 5.1(d) as a “claim” and in the plural as “claims”) based upon, arising out of or resulting from any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which any Partnership Interests were registered under the Securities Act or any state securities or blue sky laws, in any preliminary prospectus (if used prior to the effective date of such registration statement), or in any summary or final prospectus or free writing prospectus or in any amendment or supplement thereto (if used during the period LRR Energy is required to keep the registration statement current), or arising out of, based upon or resulting from the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements made therein not misleading; provided, that LRR Energy shall not be liable to any Indemnified Person to the extent that any such claim arises out of, is based upon or results from an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, such preliminary, summary or final prospectus or free writing prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to LRR Energy by or on behalf of such Indemnified Person specifically for use in the preparation thereof.

 

(e)           The provisions of Section 5.1(a), Section 5.1(b) and Section 5.1(c) shall continue to be applicable with respect to the General Partner (and any of the General Partner’s Affiliates) after it ceases to be a general partner of LRR Energy, during a period of two years subsequent to the effective date of such cessation and for so long thereafter as is required for the Holder to sell all of the Partnership Interests with respect to which it has requested during such two-year period inclusion in a registration statement otherwise filed or that a registration statement be filed; provided, that LRR Energy shall not be required to file successive registration statements covering the same Partnership Interests for which registration was demanded during such two-year period. The provisions of Section 5.1(d) shall continue in effect thereafter.

 

(f)            The rights to cause LRR Energy to register Partnership Interests pursuant to this Section 5.1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such Partnership Interests, provided, that (i) each such transferee or assignee (or group of transferees and assignees if affiliated) holds Partnership Interests representing at least 20% (after giving effect to such transfer or assignment) of the Partnership Interests held by such Holder at the Closing; (ii) LRR Energy is given written notice prior to any said transfer or assignment, stating the name and address of such transferee or assignee and the Partnership Interests with respect to which such registration rights are being transferred or assigned; and (iii) such transferee or assignee agrees in writing to be bound by and subject to the terms set forth in this Section 5.1.

 

(g)           Any request to register Partnership Interests pursuant to this Section 5.1 shall (i) specify the Partnership Interests intended to be offered and sold by the Person making the request, (ii) express such Person’s present intent to offer such Partnership Interests for distribution, (iii) describe the nature or method of the proposed offer and sale of Partnership Interests, and (iv) contain the undertaking of such Person to provide all such information and materials and take all action as may be required in order to permit LRR Energy to comply with all applicable requirements in connection with the registration of such Partnership Interests.

 

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(h)           LRR Energy agrees to use its commercially reasonable efforts to take all actions and deliver, or cause to be delivered, all prospectuses, supplemental prospectuses and any free writing prospectus to Holders, or as directed by Holders, as required by applicable law.

 

5.2           Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the SEC that may permit the sale of Partnership Interests to the public without registration, LRR Energy agrees to use its commercially reasonable efforts to:

 

(a)           Make and keep public information regarding LRR Energy available, as those terms are understood and defined in Rule 144 of the Securities Act, at all times from and after the Closing; and

 

(b)           File with the SEC in a timely manner all reports and other documents required of LRR Energy under the Securities Act and the Exchange Act at all times from and after the Closing.

 

ARTICLE VI

 

ALLOCATION OF EQUITY INTERESTS IN THE GENERAL PARTNER

 

6.1           GP LLC Agreement.  At Closing, each of Lime Rock Management, Fund I and Fund II will enter into the GP LLC Agreement pursuant to which each of such entities will be admitted as a member of the General Partner as set forth below.

 

6.2           Issuance of Class A Interests.  At Closing, Lime Rock Management will make a capital contribution to the General Partner in an amount equal to the GP Capital Contribution and will receive 100% of the Class A Interests and become a Class A member of the General Partner.  The Class A Interests will be entitled to receive all distributions (including cash distributions with respect to the General Partner’s 0.1% general partner interest in LRR Energy), other than those distributions payable to the Class B Interests and the Class C Interests.

 

6.3           Issuance of Class B Interests.   At Closing, each Property Contributor will receive, in exchange for a capital contribution equaling its pro rata share of the then current fair market value of the Incentive Distribution Rights, that percentage of Class B Interests equal to such Property Contributor’s Percentage, and each Property Contributor will be admitted as a Class B member of the General Partner with respect to such Class B Interests.  Holders of the Class B Interests will be entitled to all of the rights, preferences and privileges with respect to the Class B Interests contained in the GP LLC Agreement, and such holders will be subject to all of the conditions and limitations contained in the GP LLC Agreement.  The Class B members will not have any voting rights.  The Class B Interests will be entitled to receive, in the aggregate, eighty percent (80%) of the cash distributions with respect to (i) the Incentive Distributions received by the General Partner from LRR Energy and (ii) any Common Units issued by LRR Energy to the General Partner in connection with the General Partner’s exercise of its right to reset the Target Distribution Levels set forth in Section 4.3 (“IDR Reset”), in each case, for a period of six years following the Closing.  However, the Class B Interests will not 

 

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participate in any appreciation in the value of the Incentive Distribution Rights or Common Units issued to the General Partner in connection with the General Partner’s IDR Reset.  After the expiration of the six year period from the Closing, the Class B Interests will be cancelled and the Property Contributors will cease to be members of the General Partner.

 

6.4           Issuance of Class C Interests.  At Closing, each of the Fund II Partnerships will receive, in exchange for a capital contribution equal to its pro rata share of the then current fair market value of the Incentive Distribution Rights, that percentage of Class C Interests equal to 16.39% with respect to LRRA-II and 83.61% with respect to LRRC-II, and each Fund II Partnership will be admitted as a Class C member of the General Partner with respect to such Class C Interests.  Holders of the Class C Interests will be entitled to all of the rights, preferences and privileges with respect to the Class C Interests contained in the GP LLC Agreement, and such holders will be subject to all of the conditions and limitations contained in the GP LLC Agreement.  The Class C members will not have any voting rights.  The Class C Interests will be entitled to receive, in the aggregate, twenty percent (20%) of the cash distributions with respect to (i) the Incentive Distributions received by the General Partner from LRR Energy and (ii) any Common Units issued to the General Partner in connection with an IDR Reset, in each case, for a period of six years following the Closing.  However, the Class C Interests will not participate in any appreciation in the value of the Incentive Distribution Rights or Common Units issued to the General Partner in connection with the General Partner’s IDR Reset.  After the expiration of the six year period from the Closing, the Class C Interests will be cancelled and the Fund II Partnerships will cease to be members of the General Partner.

 

6.5           Special Allocation of Incentive Distributions to Class A Member.  The distributions with respect to the Incentive Distributions to which the Class B and Class C members are entitled under the GP LLC Agreement shall be reduced (and thereby become distributable to the Class A members) to the extent of any corresponding reduction in management fees payable by the Class B and Class C members to Lime Rock Management.

 

ARTICLE VII

 

MISCELLANEOUS

 

7.1           Communications. All notices and other communications provided for or permitted hereunder shall be made in writing by facsimile, courier service or personal delivery:

 

(a)           if to the General Partner or LRR Energy:

 

1111 Bagby St., Suite 4600

Houston, TX 77002

	
Attention:
    	
Morrow   Evans, Chief Financial Officer
    
	
Telephone:
    	
(713)   292-9510
    
	
Facsimile:
    	
(713)   292-9560
    

 

15

 

(b)           if to Lime Rock Resources, Lime Rock Resources II, the Property Contributors or the Fund II Partnerships:

 

	
1111 Bagby St., Suite 4600
    
	
Houston, TX 77002
    
	
Attention:
    	
Eric   Mullins, Co-Chief Executive Officer
    
	
Telephone:
    	
(713)   292-9510
    
	
Facsimile:
    	
(713)   292-9560
    

 

(c)           if to Lime Rock Management:

 

	
274 Riverside Ave., 3rd Floor
    
	
Westport, CT 06880
    
	
Attention:
    	
Kris   Agarwal
    
	
Telephone:
    	
(203)   293-2750
    
	
Facsimile:
    	
(203)   429-2785
    

 

All such notices and communications shall be deemed to have been received at the time delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or sent via Internet electronic mail; and when actually received, if sent by any other means.

 

7.2           Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including subsequent transferees of registration rights related to Partnership Interests to the extent permitted by Section 5.1(f) hereof.

 

7.3           Limitation of Rights. This Agreement shall not be construed to vest any rights under this Agreement to any individual or entity other than the Holders and the Holders do not intend for any portion of this Agreement to confer rights upon any Person other than the Holders.

 

7.4           Assignment of Rights. Except as provided in Section 5.1(f) of this Agreement, none of the rights and obligations of the Holders under this Agreement may be transferred or assigned by any Holder.

 

7.5           Anti-Dilution. The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all Units of LRR Energy or any successor or assign of LRR Energy (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Partnership Interests subject to Section 5.1, and shall be appropriately adjusted for combinations, recapitalizations and the like occurring after the date of this Agreement.

 

7.6           Specific Performance. Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of 

 

16

 

jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or in equity which such Person may have.

 

7.7           Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.

 

7.8           Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

7.9           Governing Law. The laws of the State of Delaware shall govern this Agreement without regard to principles of conflict of laws.

 

7.10         Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

 

7.11         Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

7.12         Amendment. This Agreement may be amended only by means of a written amendment signed by all parties to this Agreement.

 

7.13         No Presumption. In the event any claim is made by a party relating to any conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.

 

7.14         Payment of Expenses. LRR Energy shall pay or reimburse the Holders, to the extent such costs have been incurred, for all reasonable third-party out-of-pocket costs and expenses (including the reasonable fees and expenses of legal counsel) incurred by them in connection with (i) negotiations leading to the execution of this Agreement and (ii) the review of the Registration Statement and all amendments thereto and (iii) the Partnership Agreement simultaneous with the Closing. Nothing set forth herein shall obligate LRR Energy to reimburse any Holder with respect to any other costs or expenses incurred with respect to its investment in LRR Energy or the Offering.

 

[Signature Pages Follow]

 

17

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above set forth.

 

	
 
    	
LRR   ENERGY, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
LRE   GP, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Morrow B. Evans
    
	
 
    	
Name:
    	
Morrow   B. Evans
    
	
 
    	
Title:
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
LRE   GP, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Morrow B. Evans
    
	
 
    	
Name:
    	
Morrow   B. Evans
    
	
 
    	
Title:
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
LIME   ROCK RESOURCES GP, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
LRR   GP, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Eric D. Mullins
    
	
 
    	
Name:
    	
Eric   D. Mullins
    
	
 
    	
Title:
    	
Co-Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
LIME   ROCK RESOURCES A, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Lime   Rock Resources A GP, LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
By:
    	
Lime   Rock Resources GP, L.P.,
    
	
 
    	
 
    	
its   sole member
    
	
 
    	
By:
    	
LRR   GP, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Eric D. Mullins
    
	
 
    	
Name:
    	
Eric   D. Mullins
    
	
 
    	
Title:
    	
Co-Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
LIME   ROCK RESOURCES B, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Lime   Rock Resources GP, L.P.,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
By:
    	
LRR   GP, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Eric D. Mullins
    
	
 
    	
Name:
    	
Eric   D. Mullins
    
	
 
    	
Title:
    	
Co-Chief   Executive Officer
    

 

Signature Page to Stakeholders’ Agreement

 

 

	
 
    	
LIME   ROCK RESOURCES C, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Lime   Rock Resources C GP, LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
By:
    	
Lime   Rock Resources GP, L.P.,
    
	
 
    	
 
    	
its   sole member
    
	
 
    	
By:
    	
LRR   GP, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Eric D. Mullins
    
	
 
    	
Name:
    	
Eric   D. Mullins
    
	
 
    	
Title:
    	
Co-Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
LIME   ROCK MANAGEMENT LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Lime   Rock Management GP LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jonathan C. Farber
    
	
 
    	
Name:
    	
Jonathan   C. Farber
    
	
 
    	
Title:
    	
Manager
    
	
 
    	
 
    	
 
    
	
 
    	
LIME   ROCK RESOURCES II GP, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
LRR   GP II, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Eric D. Mullins
    
	
 
    	
Name:
    	
Eric   D. Mullins
    
	
 
    	
Title:
    	
Co-Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
LIME   ROCK RESOURCES II-A, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Lime   Rock Resources II-A GP, LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
By:
    	
Lime   Rock Resources GP II, L.P.,
    
	
 
    	
 
    	
its   sole member
    
	
 
    	
By:
    	
LRR   GP II, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Eric D. Mullins
    
	
 
    	
Name:
    	
Eric   D. Mullins
    
	
 
    	
Title:
    	
Co-Chief   Executive Officer
    

 

Signature Page to Stakeholders’ Agreement

 

 

	
 
    	
LIME   ROCK RESOURCES II-C, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Lime   Rock Resources II-C GP, LLC, its
    
	
 
    	
 
    	
general   partner
    
	
 
    	
By:
    	
Lime   Rock Resources GP II, L.P.,
    
	
 
    	
 
    	
its   sole member
    
	
 
    	
By:
    	
LRR   GP II, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Eric D. Mullins
    
	
 
    	
Name:
    	
Eric   D. Mullins
    
	
 
    	
Title:
    	
Co-Chief   Executive Officer
    

 

Signature Page to Stakeholders’ Agreement

 

 

Annex A

 

The amount of cash paid or distributed to each Property Contributor pursuant to Section 3.1(d) shall be adjusted as follows:

 

The “Preliminary Calculation” shall mean the preliminary calculation as of the latest available quarter prior to the Closing of the difference between (i) the sum of the negative balances of the NPIs of LRR-B and LRR-C and (ii) the sum of the positive balances of the NPIs that have not yet become due and payable by LRR-A to LRR-B and LRR-C.

 

If the sum of the negative balances of the NPIs in the Preliminary Calculation exceeds the sum of the amounts owed to LRR-B and LRR-C, (i) LRR-A will receive an additional distribution from LRR Energy pursuant to Section 3.1(d) equal to the aggregate amount of such excess, and (ii) each of LRR-B’s and LRR-C’s payment pursuant to Section 3.1(d) will be reduced by its share of such excess, determined based on LRR-B’s and LRR-C’s relative positive and negative balances in their NPIs.

 

If the sum of the amounts owed to LRR-B and LRR-C in the Preliminary Calculation exceeds the sum of the negative balances of the NPIs, (i) each of LRR-B and LRR-C will receive an additional payment from LRR Energy pursuant to Section 3.1(d) equal to its share of such excess, determined based on LRR-B’s and LRR-C’s relative positive and negative balances in the NPIs, and (ii) LRR-A’s distribution will be reduced by the aggregate amount of such excess.

 

LRR Energy shall be entitled to rely on the Preliminary Calculations provided by Lime Rock Resources in making any adjusted payments or distributions to the Property Contributors pursuant to Section 3.1(d), and shall have no liability to the Property Contributors for any adjustments pursuant to this Annex A except as instructed by Lime Rock Resources based on the Preliminary Calculations.

 

After the Closing, Lime Rock Resources shall calculate the difference, if any, between the Preliminary Calculation and the actual calculation of the negative and positive balances of the NPIs as of the date of Closing.  To the extent further adjustments in the cash amounts paid or distributed to LRR-A, LRR-B and LRR-C are required, such adjustments will be made through a transfer of cash among LRR-A, LRR-B and LRR-C and LRR Energy shall not be responsible or liable for any such post-Closing payments.

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