Document:

JOINT
VENTURE AGREEMENT

 

This
Joint Venture Agreement (this “Agreement”) is made and entered into as of July 11, 2019 (the “Execution
Date”), by and between NY – SHI, LLC, a New York limited liability company, with its principal place
of business located at 1345 Avenue of the Americas New York, NY 10105 (“NY – SHI”), EWSD I
LLC dba SHI Farms, a Delaware limited liability company, with its principal place of business located at 7887 East Belleview
Ave., Suite 1100, Denver, Colorado 80111 (“SHI Farms”), NY Hemp Depot LLC, a Nevada limited liability
company and wholly-owned subsidiary of Canbiola, with its principal place of business located at 960 S. Broadway, Ste 120, Hicksville,
NY 11801 (“Canbiola Sub”), and CANBIOLA, INC., a Florida corporation with its principal place
of business located at 960 South Broadway, Suite 120, Hicksville, New York 11801 (“Canbiola”). NY –
SHI, SHI Farms, Canbiola Sub, and Canbiola are referred to herein individually as a “Party” and, collectively,
the “Parties.”

 

RECITALS

 

WHEREAS,
NY – SHI has technical expertise and growing technology in the industrial hemp industry and holds a license from the New
York State Department of Agriculture and Markets that permits the growth of industrial hemp (the “Cultivating License”);

 

WHEREAS,
SHI Farms has entered into a Partner Farm Agreement and Supply Agreement with Mile High Labs (“MHL”),
a copy of each of which is attached hereto as Exhibit A and Exhibit B, respectively, pursuant to which SHI Farms
has agreed to deliver agricultural products and provide a physical location to MHL to operate a processing facility in Pueblo,
Colorado, to produce high quality hemp oil isolate and distillate from industrial hemp biomass;

 

WHEREAS,
NY – SHI and Canbiola Sub desire to enter into a joint venture for the purpose of jointly implementing a business model
referred to as the “Depot Model” (the “Joint Venture”) to aggregate and purchase fully-grown,
harvested industrial hemp from third-party farmers (“Farmers”) in the State of New York to be processed
in a Processing Facility;

 

WHEREAS,
Canbiola Sub was formed to manage the day-to-day operations of the Joint Venture, including the operation of the NY Hemp Depot
Facility (as hereinafter defined);

 

WHEREAS,
(i) Canbiola Sub has agreed, among other things, to provide certain funds to NY – SHI, to secure a building for the
operation of the Joint Venture (the “Building”), and to manage and direct the operation of the
Joint Venture; (ii) Canbiola has agreed to issue to NY – SHI the shares of Canbiola Stock; and (iii) NY – SHI has
agreed, among other things, to provide technical expertise to the Joint Venture, to sell certain products to the Joint
Venture (that may include feminized hemp seeds and/or clone plants) for the growth and cultivation of industrial hemp by the
Farmers, and to provide hands-on experience to assist in the development of the Farmers for the Depot Model; and

 

WHEREAS,
NY – SHI and Canbiola Sub propose to conduct the business operations of the Joint Venture as set forth in, subject to, and
under the terms and conditions contained in this Agreement.

 

    	 

    	 

    

 

NOW,
THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, and for such other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties, intending to be legally bound,
agree as follows:

 

AGREEMENT

 

1.
Definitions. The following terms used in this Agreement have the meanings ascribed to
them below (unless otherwise expressly provided herein):

 

“10
Basis Point Payments” has the meaning set forth in Section 3(a)(iv).

 

“Affiliate”
means, with respect to any Person, any Person directly or indirectly Controlling, Controlled by, or under common Control with
such other Person.

 

“Agreement”
has the meaning set forth in the Preamble.

 

“Applicable
Law” means any applicable statute, law, rule, regulation, ordinance, order, code, ruling, judgment, writ, injunction,
decree, or other official act of or by any Governmental Authority.

 

“Authorized
Representatives” has the meaning set forth in Section 5(c)(i).

 

“Building”
has the meaning set forth in the Recitals.

 

“Business
Day” means a day other than a Saturday, Sunday, or other day on which commercial banks in the State of New York
are authorized or required by law to close.

 

“Business
Scope” has the meaning set forth in Section 2(c).

 

“Canbiola”
has the meaning set forth in the Preamble.

 

“Canbiola
Common Stock” means shares of common stock, no par value, of Canbiola.

 

“Canbiola
Indemnified Parties” has the meaning set forth in Section 8(b)(i).

 

“Canbiola
Cash” has the meaning set forth in Section 3(a)(i).

 

“Canbiola
Stock” has the meaning set forth Section 3(a)(ii).

 

“Canbiola
Stock Price” means the volume weighted average price of the Canbiola Common Stock for the ten (10) Business Days
prior to the Closing Date.

 

“Canbiola
Sub” has the meaning set forth in the Preamble.

 

“Change
of Control” means with respect to a Party, a change of the Person that has Control, directly or indirectly, of that
Party.

 

“Closing”
has the meaning set forth in Section 6(a).

 

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“Closing
Date” has the meaning set forth in Section 6(a).

 

“Confidential
Information” has the meaning set forth in Section 5(c)(i).

 

“Continuing
Party” has the meaning set forth in Section 10(c).

 

“Contracts”
means all written or oral contracts, agreements, leases, licenses, commitments (including outstanding bids and proposals), sales
and purchase orders, and any other legally binding arrangement.

 

“Control,”
“Controlling,” or “Controlled” means the ownership of more than 50% of the
equity interests of a Person, or the right, contractual or otherwise, to control the management and operations of a Person.

 

“Covered
Employee” has the meaning set forth in Section 5(i).

 

“Cultivating
License” has the meaning set forth in the Recitals.

 

“Direct
Operational Costs” means those costs and expenses incurred in connection with Joint Venture’s operations,
including, without limitation, those costs and expenses directly related to the operational development of the Joint Venture,
management of the Joint Venture, costs paid to Farmers for the Product, and the handling, shipping, and administrative fees of
the Joint Venture, all of which shall be paid from the Joint Venture prior to the distribution of Gross Profits. Direct Operational
Costs exclude (i) any and all corporate allocations of overhead, salaries, and costs other than those directly associated with
the management and maintenance of the Joint Venture, (ii) directors or outside fees of the Parties not directly relating to operational
necessity of the Joint Venture, (iii) owner or manager distributions of any kind made by the Parties (other than distributions
of Gross Profits pursuant to Section 3(b)), and (iv) any expenses, costs, or fees related to the foregoing.

 

“Encumbrance”
means, with respect to any property, any mortgage, lien, pledge, charge, security interest, restriction, preemptive, preferential,
or similar purchase rights, hypothecation, and/or encumbrances of any kind, title defect, easement, or invalidity of leasehold
interests in respect of such property.

 

“Excluded
Liabilities” means (i) any indebtedness of the Parties; (ii) any Damages related or attributable to any business
of the Parties other than the Joint Venture; and (iii) any Damages related or attributable to the businesses of the Parties conducted
prior to the Closing Date.

 

“Execution
Date” has the meaning set forth in the Preamble.

 

“Farmer
Recruitment Services” means the recruitment of Farmers to grow and cultivate industrial hemp for sale to the Joint
Venture.

 

“Farmers”
has the meaning set forth in the Recitals.

 

“Governmental
Authority” means (i) any foreign or domestic, federal, territorial, state, or local governmental authority; (ii)
quasi-governmental authority, instrumentality, court, commission, or tribunal; (iii) any regulatory, administrative, or other
agency; or (iv) any political or other subdivision, department, or branch of any of the foregoing.

 

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“Gross
Profits” has the meaning set forth in Section 2(b)(ii).

 

“Gross
Revenue” means all revenue generated by the Joint Venture including, without limitation, all revenue from the sale
of the Product to a Processing Facility and the sale of hemp oil isolate and distillate from the industrial hemp biomass.

 

“Indemnified
Party” means the Party and/or other Persons having the right to be indemnified with respect to Liabilities by the
Indemnifying Party.

 

“Indemnifying
Party” has the meaning set forth in Section 8(d)(i).

 

“Indemnity
Deductible” has the meaning set forth in Section 8(c)(i).

 

“Individual
Indemnity Threshold” has the meaning set forth in Section 8(c)(i).

 

“Joint
Venture” has the meaning set forth in the Recitals.

 

“Knowledge”
with respect to a Person, means after reasonable due diligence and due inquiry, (i) with respect to NY – SHI, the knowledge
of Thomas Gallo, President of NY – SHI; and (ii) with respect to Canbiola Sub or Canbiola, the knowledge of the following
individual: Marco Alfonsi.

 

“Liabilities”
means any and all claims, obligations, causes of action, payments, charges, judgments, assessments, liabilities, losses, damages,
penalties, fines, costs, and expenses, including any reasonable attorneys’ and experts’ fees, legal, or other expenses
incurred in connection therewith, including, without limitation, liabilities, costs, losses, and damages for personal injury,
death, property damage, or environmental damage.

 

“Liquidator”
has the meaning set forth in Section 11(c).

 

“Material
Adverse Effect” means, with respect to any event, occurrence, or condition, or series of events, occurrences, or
conditions, a material adverse effect on the operations, property, or financial condition of the affected business or entity taken
as a whole.

 

“MHL”
has the meaning set forth in the Recitals.

 

“NY
Hemp Depot Facility” has the meaning set forth in Section 2(b).

 

“NY
– SHI” has the meaning set forth in the Preamble.

 

“Party”
or “Parties” has the meaning set forth in the Recitals.

 

“Person”
means an individual, a corporation, a partnership, a limited liability company, an association, a trust, or any other entity or
organization, including a government or political subdivision or an agency or instrumentality thereof.

 

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“Permitted
Encumbrance” means any (i) Encumbrance that would not have a Material Adverse Effect; (ii) Encumbrance for
taxes not yet due and payable or that is being contested in good faith by appropriate procedures; (iii) zoning, entitlement,
conservation restriction, and other land use and environmental regulations by Governmental Authorities that do not materially
interfere with the present or proposed use of the applicable property or asset; (iv) covenants, conditions, restrictions,
easements, charges, rights-of-way, and similar Encumbrances that do not materially impair the current or proposed use of the
applicable property or asset; or (v) Encumbrances that would be disclosed by an accurate survey or inspection of real
property that do not materially impair the occupancy or use of the real property they encumber.

 

“Processing
Facility” shall mean any processing facility chosen by NY – SHI to process the Product from the NY Hemp Depot.
It may include, but shall not be limited to, the processing facility in Pueblo, Colorado (known as the “Monster”),
the machinery of which is owned and operated by or on behalf of MHL and the real property on which the machinery is located is
owned by or on behalf of SHI Farms.

 

“Product”
has the meaning set forth in Section 2(a).

 

“Restricted
Person” has the meaning set forth in Section 5(i).

 

“SHI
Farms” has the meaning set forth in the Recitals.

 

“SHI
Indemnified Parties” has the meaning set forth in Section 8(b)(iii).

 

“Third
Party” means any Person other than a Party to this Agreement or an Affiliate of a Party to this Agreement.

 

“Third-Party
Claim” has the meaning set forth in Section 8(d)(i).

 

“Transition
Notice” has the meaning set forth in Section 10(b).

 

“Transition
Period” has the meaning set forth in Section 10(c).

 

2.
Purpose and Business.

 

(a)
Purpose of Joint Venture. NY – SHI and Canbiola Sub hereby agree jointly to develop a business model referred to
as the “Depot Model” and to combine their complementary skills, resources, and efforts to form the Joint Venture.
The purpose of the Joint Venture is to aggregate and purchase fully-grown, harvested industrial hemp (the “Product”)
from Farmers in the State of New York to be processed at a Processing Facility.

 

(b)
Location and Conduct of Business. Canbiola Sub shall secure the Building on behalf of the Joint Venture in the State of
New York to house certain of the operations of the business of the Joint Venture (the “NY
Hemp Depot Facility”). The Building will be owned by Canbiola Sub or its designee.
In the event that the Building is sold or leased at any time whether before or after the expiration or termination of this Agreement,
NY – SHI shall receive proceeds from such transaction in accordance with the allocated provided in Section 3(b)(i),
subject only to Canbiola Sub’s receipt of the equivalent of the Canbiola Cash that it paid pursuant to Section 3(a)(i).
The physical aspects of the business contemplated by this Agreement will be substantially conducted at the NY Hemp Depot Facility,
or at such other places or locations as NY – SHI and Canbiola Sub may determine.

 

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(c)
Scope of Joint Venture. The Joint Venture shall be engaged in the business of aggregating and purchasing fully-grown, harvested
industrial hemp from Farmers in the State of New York to be processed at a Processing Facility. NY – SHI and Canbiola Sub
agree jointly to seek Farmers to grow and cultivate the industrial hemp in the State of New York for the Joint Venture (with an
initial target of 200 to 400 acres under contract with Farmers for the year 2020), for which the Farmers will be paid on a per-pound
basis, depending on the percentage potency of the Product (as more fully described in the model set forth in Exhibit C,
attached hereto, which includes assumptions relating to revenues, costs, and potency of CBD for the Depot Model and does not guarantee
any specific results). In addition, the Joint Venture may sell to the Farmers feminized hemp seeds, clone plants, and additional
materials required to grow and cultivate industrial hemp and provide to the Farmers the initial training reasonably required for
them to be able to grow industrial hemp and maximize CBD potency. The business and purpose of the Joint Venture described in this
Section 2(c) is referred to in this Agreement as the “Business
Scope.” Canbiola Sub will manage and operate the Joint Venture in accordance with
the terms of this Agreement. 

 

(d)
Responsibilities of NY – SHI and Canbiola Sub.

 

(i)
NY – SHI shall be responsible for providing to the Joint Venture (A) technical expertise regarding the growth and cultivation
of industrial hemp, (B) growing technology and expertise to grow, cultivate, and harvest industrial hemp, including the initial
training of Farmers to grow industrial hemp and maximize CBD potency, (C) the Cultivating License, which shall be amended to add
the NY Hemp Depot Facility once the NY Hemp Depot Facility location is obtained by Canbiola Sub, and (D) Farmer Recruitment Services.
NY – SHI agrees to sell certain products to the Joint Venture, including feminized hemp seeds and/or clone plants, at the
prevailing market price for such products at the time of the sale.

 

(ii)
Canbiola Sub shall be responsible for providing to the Joint Venture (A) location services in connection with it securing the
Building for the NY Hemp Depot Facility, (B) management and direction of the day-to-day operations of the Joint Venture, and (C)
Farmer Recruitment Services.

 

(e)
Management of the Joint Venture. The day-to-day operations of the Joint Venture shall be managed by Canbiola Sub. Canbiola
Sub shall have full and complete discretion to manage and control the business and affairs of the Joint Venture, to make all decisions
affecting the business and affairs of the Joint Venture, and to take all such actions as it deems necessary or appropriate to
accomplish the purposes of the Joint Venture. The actions of Canbiola Sub taken in accordance with the provisions of this Agreement
shall bind the Joint Venture.

 

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(f)
Actions Requiring Unanimous Approval of NY – SHI and Canbiola Sub. Notwithstanding the management obligations of
Canbiola Sub pursuant Section 2(e), without the approval of each of NY – SHI and Canbiola Sub, neither the Joint
Venture nor any Party acting individually on behalf of the Joint Venture shall do, or shall enter into any commitment to do, any
of the following:

 

(i)
Amend, modify, or waive the terms of this Agreement, whether temporarily or permanently;

 

(ii)
Make any material change to the Business Scope or enter into any other business not contemplated by this Agreement;

 

(iii)
Take any action that is in contravention of this Agreement that is not apparent on its face required to carry out the ordinary
course of business of the Joint Venture as defined by the Business Scope or that would make it impossible to carry out the ordinary
course of business of the Joint Venture as defined by the Business Scope;

 

(iv)
Incur any indebtedness, pledge or grant liens on any assets, or guarantee, assume, endorse, or otherwise become responsible for
the obligations of any other Person;

 

(v)
Obligate the Joint Venture for borrowed money (including by guaranteeing or giving an indemnity with respect to the obligation
of any other Person) or other financing in excess of Twenty Thousand Dollars ($20,000.00), enter into any contract or series of
related contracts, either obligating the Joint Venture, or under which another Person becomes obligated to the Joint Venture,
for in excess of Twenty Thousand Dollars ($20,000), or create or permit to exist any Encumbrance upon any property of the Joint
Venture that secures debt or other obligations with an aggregate value in excess of Twenty Thousand Dollars ($20,000.00);

 

(vi)
Enter into or effect any transaction or series of related transactions involving the sale, lease, license, exchange, or other
disposition (including by merger, consolidation, sale of equity, or sale of assets) by the Joint Venture of any assets, other
than sales of inventory in the ordinary course of business consistent with past practice and with the Business Scope;

 

(vii)
Enter into or effect any transaction or series of related transactions involving the purchase, exchange, or other acquisition
(including by merger, consolidation, acquisition of equity, or acquisition of assets) by the Joint Venture of any material assets
and/or equity interests of any Person, other than in the ordinary course of business consistent with the Business Scope, in excess
of Twenty Thousand Dollars ($20,000.00) in any calendar year;

 

(viii)
Purchase or acquire any real property in excess of Twenty Thousand Dollars ($20,000.00);

 

(ix)
Sell any real property owned by the Joint Venture in excess of Twenty Thousand Dollars ($20,000.00);

 

(x)
Make an assignment for the benefit of creditors of the Joint Venture;

 

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(xi)
Confess any judgment against the Joint Venture or settle any lawsuit, action, dispute, or other proceeding or otherwise assume
any liability with a value in excess of Twenty Thousand Dollars ($20,000.00) or agree to the provision of any equitable relief
against the Joint Venture;

 

(xii)
Terminate the Joint Venture; or

 

(xiii)
Reinstate the Joint Venture after termination.

 

3.
Transactions and Closing.

 

(a)
Canbiola Cash; Canbiola Stock; Other Actions.
Upon the terms set forth in this Agreement:

 

(i)
Upon the execution of this Agreement, Canbiola Sub shall deliver to NY – SHI a cash payment of Five Hundred Thousand Dollars
($500,000.00) (the “Canbiola Cash”).

 

(ii)
Within thirty (30) days of the Closing Date; provided that the Cultivating License has been amended to add the NY Hemp Depot Facility,
Canbiola shall issue and deliver to NY – SHI the aggregate number of restricted shares of Canbiola Common Stock (rounded
up to the nearest whole share) equal to the quotient of (A) Five Hundred Thousand Dollars ($500,000.00), divided by (B) the Canbiola
Stock Price (collectively, the “Canbiola
Stock”).

 

(iii)
NY – SHI shall (A) upon the execution of this Agreement, provide a copy of the Cultivating License to Canbiola Sub; and
(B) once the NY Hemp Depot Facility location has been secured by Canbiola Sub, complete a Hemp Growers Amendment Application to
add the NY Hemp Depot Facility to the Cultivating License.

 

(iv)
SHI Farms hereby grants Canbiola Sub an irrevocable interest in and to the “10 Basis Point Payments,”
as further described in Exhibit D attached hereto (which is a model containing various assumptions and does not guarantee
any specific results), and shall tender the 10 Basis Point Payments to Canbiola Sub within thirty (30) days following SHI Farms’
receipt from MHL of the one and one-half percent (1.5%) payments due to SHI Farms in connection with its agreements with MHL.
SHI Farms will provide Canbiola statements accounting for the amount being received by Canbiola. Canbiola shall have the authority
to, at its own expense, review and/or audit the books and records of SHI Farms relating to payments received by MHL and the payments
to Canbiola. The 10 Basis Point Payments will terminate upon the expiration, including all extensions and renewals, or termination
of the Partner Farm Agreement and Supply Agreement with MHL. Notwithstanding the foregoing, nothing in this Section 3(a)(iv)
obligates the Joint Venture to send Product to be processed at the Monster, and the Joint Venture may utilize any Processing
Facility for the processing and extraction of the Product.

 

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(b)
Distributions of Gross Profits.

 

(i)
Commencing on the Closing Date and ending on the termination of the Joint Venture, all of the Gross Profits (as hereinafter defined)
from the Joint Venture shall be distributed quarterly in arrears with the first distribution being made on March 31, 2020, in
the following percentages:

 

	Member
    of Joint Venture	 	Distribution
    Percentages	 
	Canbiola
    Sub	 	 	70	%
	NY – SHI	 	 	30	%

 

(ii)
For purposes of this Agreement, “Gross
Profits” shall mean (A) the Gross Revenue from the Joint Venture less (B) Direct
Operational Costs.

 

(iii)
All Direct Operational Costs of the Joint Venture shall be paid by the Joint Venture out of the bank account established by Canbiola
Sub for the Joint Venture; provided, however, in the event that the Joint Venture does not have sufficient funds to cover
Direct Operational Costs, such costs shall be borne by Canbiola Sub as a reimbursable advance. Any customary expenses incurred
by NY – SHI or Canbiola Sub for the benefit of the Joint Venture to fulfill the obligations, roles, and responsibilities
of NY – SHI or Canbiola Sub to the Joint Venture shall be reimbursed by the Joint Venture.

 

(c)
Sale of Isolate to Canbiola Sub. SHI Farms hereby agrees that, during the term of the Joint Venture, it will sell isolate
that was processed at the Production Facility to Canbiola or its designated Affiliate at the cost of processing the isolate from
biomass in accordance with such other terms as are customary between SHI Farms and its customers. For purposes of this Section
3(c), “cost of processing” shall mean the actual cost of the biomass plus the cost of processing the biomass
at the Production Facility, net of any commissions, fees, and overhead of SHI Farms in connection with the processing of
the biomass and the sale of the isolate to Canbiola Sub. SHI Farms acknowledges and agrees that the ability for Canbiola
to purchase isolate at cost is a material consideration for its entry into this Agreement. 

 

4.
Representations and Warranties.

 

(a)
Representations and Warranties of NY – SHI. NY – SHI represents and warrants to Canbiola Sub and Canbiola as
of the Execution Date and as of the Closing Date, as follows:

 

(i)
Good Standing and Qualification. NY – SHI is a limited liability company duly formed, validly existing, and in good
standing under the laws of the State of New York and has the requisite power and authority to own, lease, and operate its assets
and properties and to carry on its business as it is now being conducted. NY – SHI is qualified to transact business and
is in good standing in each jurisdiction in which the properties owned, leased, or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to be so qualified and in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(ii)
Authority. NY – SHI has full power and authority to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement, the performance
by NY – SHI of its obligations hereunder, and the consummation of the transactions provided for herein have been duly and
validly authorized by all necessary limited liability company action on the part of NY – SHI. This Agreement has been duly
and validly executed and delivered by NY – SHI and, assuming due execution and delivery by each of the other Parties, is
legal, valid, and binding with respect to NY – SHI and is enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, or similar Applicable Laws affecting creditors’ rights generally.

 

(iii)
Absence of Restrictions and Conflicts; Consents. The execution, delivery, and performance by NY – SHI of this Agreement
and the consummation of the transactions contemplated hereby will not (A) conflict with or result in a breach of any provisions
of the organizational documents of NY – SHI; (B) result in a material default or the creation of any Encumbrance (except
for Permitted Encumbrance) or give rise to any right of termination, cancellation, or acceleration under any of the terms, conditions,
or provisions of any material note, bond, mortgage, indenture, license, or other material Contract to which NY – SHI is
a party or by which NY – SHI may be bound; or (C) violate any Applicable Law in any material respect applicable to NY –
SHI.

 

(iv)
License. NY – SHI holds a Cultivating License with the New York State Department of Agriculture and Markets that
is valid for a term of three (3) years and permits the growth of industrial hemp. To the Knowledge of NY – SHI, there is
no condition, state of event, claim, or development that is reasonably expected to impact the amendment of the Cultivating License
to include the NY Hemp Depot Facility.

 

(v)
Litigation. There is no claim, litigation, action, suit, proceeding, investigation, or inquiry by any Person or before
any Governmental Authority pending of which NY – SHI has received notice or service or, to the Knowledge of NY – SHI,
threatened against NY – SHI, that would, individually or in the aggregate, have a Material Adverse Effect on the ability
of NY – SHI to perform its respective obligations under this Agreement or the transactions contemplated hereby.

 

(vi)
Brokers, Finders, and Investment Bankers. Neither NY – SHI nor any officer, director, manager, employee, or Affiliate
thereof, has employed any broker, finder, or investment banker or incurred any liability for any investment banking fees, financial
advisory fees, brokerage fees, or finders’ fees in connection with the transactions contemplated by this Agreement.

 

(vii)
Securities Representations. NY – SHI acknowledges and agrees that the shares of Canbiola Stock to be issued hereunder
are considered “restricted securities,” as that term is defined in Rule 144 under the Securities Act of 1933, and
are being acquired for account of NY – SHI and not with a view towards distribution. NY – SHI has, by reason of its
business and financial experience, such knowledge, sophistication and experience in financial and business matters and in making
investment decisions of this type that it is capable of (A) evaluating the merits and risks of an investment in the Canbiola Common
Stock and making an informed investment decision; (B) protecting its own interest; and (C) bearing the economic risk of such investment
for an indefinite period of time. NY – SHI has had opportunity to ask questions of and receive answers from Canbiola regarding
its business and Canbiola Common Stock.

 

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(viii)
Compliance with Laws. NY – SHI is
in material compliance with all Applicable Laws relating to (i) NY – SHI’s obligations under this Agreement and (ii)
the business of NY – SHI to the extent relating to the Business Scope.

 

(b)
Representations and Warranties of SHI Farms.
SHI Farms represents and warrants to Canbiola Sub and Canbiola as of the Execution Date and as of the Closing Date, as follows:

 

(i)
Good Standing and Qualification. SHI Farms is a limited liability company formed, validly existing, and in good standing
under the laws of the State of Delaware and has the requisite power and authority to own, lease, and operate its assets and properties
and to carry on its business as it is now being conducted. SHI Farms is qualified to transact business and is in good standing
in each jurisdiction in which the properties owned, leased, or operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so qualified and in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(ii)
Authority. SHI Farms has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder,
and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement, the performance by SHI Farms
of its obligations hereunder, and the consummation of the transactions provided for herein have been duly and validly authorized
by all necessary limited liability company action on the part of SHI Farms. This Agreement has been duly and validly executed
and delivered by SHI Farms and, assuming due execution and delivery by each of the other Parties, is legal, valid, and binding
with respect to SHI Farms and is enforceable in accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, or similar Applicable Laws affecting creditors’ rights generally.

 

(iii) Absence
of Restrictions and Conflicts; Consents. The execution, delivery, and performance by SHI Farms of this Agreement and the
consummation of the transactions contemplated hereby will not (A) conflict with or result in a breach of any provisions of
the organizational documents of SHI Farms; (B) result in a material default or the creation of any Encumbrance (except
for Permitted Encumbrance) or give rise to any right of termination, cancellation, or acceleration under any of the terms,
conditions, or provisions of any material note, bond, mortgage, indenture, license, or other material Contract to which SHI
Farms is a party or by which SHI Farms may be bound; or (C) violate any Applicable Law in any material respect applicable to
SHI Farms.

 

(iv)
Litigation. There is no claim, litigation, action, suit, proceeding, investigation, or inquiry by any Person or before
any Governmental Authority pending of which SHI Farms has received notice or service or, to the Knowledge of SHI Farms, threatened
against SHI Farms, that would, individually or in the aggregate, have a Material Adverse Effect on the ability of SHI Farms to
perform its respective obligations under this Agreement or the transactions contemplated hereby.

 

    	11

    	 

    

 

(v)
Compliance with Laws. SHI Farms is in
material compliance with all Applicable Laws relating to (i) SHI Farms’ obligations under this Agreement and (ii) the business
of SHI Farms to the extent relating to the Business Scope.

 

(c)
Representations and Warranties of Canbiola Sub and Canbiola. Canbiola Sub and Canbiola, jointly and severally, hereby represent
and warrant to NY – SHI and SHI Farms as of the Execution Date and as of the Closing Date, as follows:

 

(i)
Good Standing and Qualification. Canbiola Sub is a Nevada limited liability company formed, validly existing, and in good
standing under the laws of the State of Nevada and has the requisite limited liability company power and authority to own, lease,
and operate its assets and properties and to carry on its business as it is now being conducted. Canbiola is a corporation formed,
validly existing, and in good standing under the laws of the State of Florida and has the requisite corporate power and authority
to own, lease, and operate its assets and properties and to carry on its business as it is now being conducted. Each of Canbiola
Sub and Canbiola is qualified to transact business and is in good standing in each jurisdiction in which the properties owned,
leased, or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure
to be so qualified and in good standing would not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(ii)
Authority. Each of Canbiola Sub and Canbiola has full power and authority to execute and deliver this Agreement, to perform
its respective obligations hereunder, and to consummate the transactions contemplated hereby. The execution and delivery of this
Agreement, the performance by each of Canbiola Sub and Canbiola of its respective obligations hereunder, and the consummation
of the transactions provided for herein have been duly and validly authorized by all necessary limited liability company action
on the part of Canbiola Sub and corporate action on the part of Canbiola. This Agreement has been duly and validly executed and
delivered by Canbiola Sub and Canbiola and, assuming due execution and delivery by each of the other Parties, is legal, valid,
and binding with respect to Canbiola Sub and Canbiola and is enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, or similar Applicable Laws affecting creditors’ rights generally.

 

(iii)
Absence of Restrictions and Conflicts, Consents. The execution, delivery, and performance by each of Canbiola Sub and Canbiola
of this Agreement and the consummation of the transactions contemplated hereby will not (A) conflict with or result in a breach
of any provisions of the organizational documents of Canbiola Sub or Canbiola; (B) result in a material default or the creation
of any Encumbrance (except for Permitted Encumbrance) or give rise to any right of termination, cancellation, or acceleration
under any of the terms, conditions, or provisions of any material note, bond, mortgage, indenture, license, or other material
Contract to which Canbiola Sub or Canbiola is a party or by which Canbiola Sub or Canbiola may be bound; or (C) violate any Applicable
Law in any material respect applicable to Canbiola Sub or Canbiola.

 

    	12

    	 

    

 

(iv)
Litigation. There is no claim, litigation, action, suit, proceeding, investigation, or inquiry by any Person or before
any Governmental Authority pending of which Canbiola Sub or Canbiola has received notice or service or, to the Knowledge of Canbiola
Sub or Canbiola, threatened against Canbiola Sub or Canbiola, that would, individually or in the aggregate, have a Material Adverse
Effect on the ability of Canbiola Sub or Canbiola to perform its respective obligations under this Agreement or the transactions
contemplated hereby.

 

(v)
Brokers, Finders, and Investment Bankers. Neither Canbiola Sub nor any officer, director, manager, employee, or Affiliate
of Canbiola Sub, has employed any broker, finder, or investment banker or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees, or finders’ fees in connection with the transactions contemplated by this Agreement.

 

(vi)
Compliance with Laws. Each of Canbiola
Sub and Canbiola is in material compliance with all Applicable Laws relating to (i) such Party’s obligations under this
Agreement and (ii) the business of such Party to the extent relating to the Business Scope.

 

(vii)
Capitalization.

 

(A)
The authorized capital of Canbiola consists solely of (i) 1,500,000,000 shares of Canbiola Common Stock, (ii) 5,000,000 shares
of preferred stock of Canbiola, comprised 20 shares of Series A Preferred Stock, no par value per share, and (iii) 500,000 shares
of Series B Preferred Stock, $.001 per share. As of the Execution Date, the only issued and outstanding equity interests of Canbiola
were 610,319,302 shares of Canbiola Common Stock, 20 shares of Series A Preferred Stock, and 227,590 shares of Series B Preferred
Stock. Canbiola has, and at the time of issuance will have, sufficient authorized shares of Canbiola Common Stock to enable it
to issue the Canbiola Stock in accordance with Section 3(a)(ii). All of the issued and outstanding shares of Canbiola Common
Stock are duly authorized and validly issued in accordance with the governing documents of Canbiola, are fully paid and non-assessable,
and were not issued in violation of any preemptive or similar right.

 

(B)
There are no outstanding preemptive or other similar rights with respect to the equity interests of Canbiola. Except as set forth
of on Schedule 4(vii)(B), there are no appreciation rights, redemption rights, repurchase rights, agreements, arrangements,
calls, subscription agreements, rights of first offer, rights of first refusal, tag along rights, drag along rights, subscription
rights, or commitments or other rights or contracts of any kind or character relating to or entitling any Person to purchase or
otherwise acquire any equity interests of Canbiola or requiring Canbiola to issue, transfer, convey, assign, redeem or otherwise
acquire or sell any equity interests. There are no equity holder agreements, voting agreements, proxies, or other similar agreements
or understandings with respect to the equity interests of Canbiola, and no equity interests of Canbiola are reserved for issuance.

 

    	13

    	 

    

 

(viii)
Valid Issuance. The shares of Canbiola Common Stock comprising the Canbiola Stock, when issued pursuant to the terms of
this Agreement, will be duly authorized, validly issued, fully paid, and non-assessable, will have the rights, preferences and
privileges specified in Canbiola’s governing documents for Canbiola Common Stock, will not be issued in violation of any
preemptive or similar rights, and will, in the hands of NY – SHI or its designee(s), be free of any and all Encumbrances,
other than restrictions on transfer pursuant to applicable state and federal securities laws.

 

5.
Covenants of the Parties.

 

(a)
Further Assurances. Subject to the terms and conditions of this Agreement, each Party will use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under Applicable Law
and otherwise to cause the conditions to Closing set forth in Section 7 to be satisfied, to consummate the transactions
contemplated hereby, and to refrain from taking any action that would prevent or delay the consummation of the transactions contemplated
hereby. Each of the Parties will execute and deliver such other documents, certificates, agreements, and other writings and take
such other actions as may be reasonable and necessary or desirable in order to consummate or implement expeditiously the transactions
contemplated hereby or as may otherwise be reasonably requested by any other Party, whether requested prior to or after the Closing
Date.

 

(b)
Public Announcements. The Parties shall promptly consult with each other before issuing any press release or making any
public statement with respect to the execution of this Agreement or consummation of the transactions contemplated hereby and,
except as may be required by Applicable Law or any national securities exchange on which the Canbiola Common Stock is then listed
for trading, will not issue any such press release or make any such public statement without the consent of the other Parties
hereto. Nothing in this Section 5(b) shall restrict disclosures by any Party that are required by Applicable Laws or the
applicable rules of any stock exchange having jurisdiction over the disclosing Party or its Affiliates, provided that such disclosures
shall be made only to the extent required thereunder.

 

(c)
Confidentiality.

 

(i)
Each of the Parties acknowledges and agrees that it has received or will receive as a result of this Agreement certain information
and data concerning the business and affairs of the other Parties that is proprietary in nature or confidential, including, without
limitation, confidential or proprietary methods, records, data, trade secrets, pricing policies, know-how and show-how, methods
or practices of soliciting or doing business, or other confidential or proprietary information relating to the business or affairs
of the other Parties (collectively, “Confidential
Information”). Each Party hereby covenants and agrees that, except as may otherwise
be agreed between the owner of Confidential Information and the Party desiring to disclose or use such Confidential Information,
it will not reveal, divulge, or make known to any Person other than a Party’s authorized representatives who are bound by
a covenant of confidentiality similar to or greater in scope than this Section 5(c) (“Authorized
Representatives”), or use for its own account, any Confidential Information of any
other Party, except (A) to the extent required by Applicable Law or (B) as necessary for a Party to enforce its rights hereunder.

 

    	14

    	 

    

 

(ii)
Notwithstanding anything contained in this Agreement to the contrary, “Confidential Information” does not include,
and the covenant of confidentiality and limitation on use set forth in Section 5(c)(i) shall not apply to, any information
that:

 

(A)
is independently developed by the receiving Party without reference to any Confidential Information of the other Party;

 

(B)
is already in the public domain at the time of disclosure by the owner of the information or thereafter becomes publicly known
other than as the result of a breach by a receiving Party of its obligations under this Section 5(c) or any other confidentiality
obligation under another binding agreement between the receiving Party and the owner of the information; or

 

(C)
is received from a third party without any obligation to maintain the confidentiality thereof.

 

(d)
Books and Records. The Joint Venture shall
keep adequate books and records at its primary place of business, setting forth a true and accurate account of all business transactions
arising out of or with respect to the business of the Joint Venture. For a period of five (5) years after the termination of the
Joint Venture, each Party agrees to make available to the other Parties, the Affiliates of the other Parties, and their respective
agents and representatives any and all books, records, information, and documents in the possession of such Party relating to
the Joint Venture, to the extent that such access may reasonably be required by a Party in connection with the transactions contemplated
hereby or other matters relating to or affected by the operation of Joint Venture. Such access shall be afforded by the Party
in possession of such books and records upon receipt of reasonable advance notice and during normal business hours; provided,
however, that: (i) any such access shall be conducted in such a manner as not to interfere unreasonably with the operation
of the business of any Party or its Affiliates and (ii) no Party shall be required to take any action that would constitute a
waiver of the attorney-client privilege or would threaten disclosure of such Party’s Confidential Information. The Party
exercising this right of access shall be solely responsible for any costs or expenses incurred by it pursuant to this Section
5(d). If the Party in possession of such books and records wishes to dispose of any such books and records upon or prior to
the expiration of such period, such Party, prior to such disposition, shall give the other Parties reasonable prior notice and,
at such other Parties’ expense, the opportunity to segregate and remove such books and records.

 

(e)
Expenses. Except as otherwise specifically provided herein, all fees, costs, and expenses incurred by the Parties in negotiating
this Agreement shall be borne by the Party incurring the same, including all legal fees, costs, and expenses.

 

(f)
Company Employees. NY – Shi and Canbiola Sub are committed to the Joint Venture having employees or contractors as
soon as practicable and will cooperate in good faith to engage employees or contractors as soon as practicable following the Closing
Date.

 

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(g)
Preserve Accuracy of Representations and Warranties. From the Execution Date until the Closing Date, each of the Parties
shall use commercially reasonable efforts to refrain from taking any action that would render any representation or warranty of
such Party contained in Section 4 of this Agreement to be untrue or inaccurate in any material respect as of the Closing
Date. From the Execution Date to the Closing Date, each Party will promptly notify the other Parties in writing if such Party
becomes aware of any fact or condition that causes or constitutes a breach of any representation or warranty of such Party, or
if such Party becomes aware of the occurrence after the date of this Agreement, through and including the Closing Date, of any
fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a breach of any such representation
or warranty had such representation or warranty been made as of the time of the occurrence or discovery of such fact or condition.
During the same period, each Party shall promptly notify the other Parties in writing of the occurrence of any breach of any covenant
of such Party in this Section 5 or the occurrence of any event that may make the satisfaction of the conditions in Section
7 impossible or unlikely.

 

(h)
Operations Prior to the Closing Date. During the period between the Execution Date and the Closing Date, each Party shall
continue to operate its business relating to the Business Scope in the ordinary course of business as conducted on the Execution
Date, including, without limitation, using commercially reasonable efforts consistent with past practice to preserve the goodwill
of the suppliers, contractors, licensors, employees, customers, distributors, and others having business relations with such Party’s
business relating to the Business Scope.

 

(i)
Non-Solicitation. During the period beginning on the Execution Date and ending on the Closing Date, each Party covenants
and agrees that it will not, either directly or indirectly, whether for itself or on behalf of another Person, and that it shall
cause each of its respective officers, directors, managers, employees, and Affiliates (each, a “Restricted
Person”) not to, solicit for employment or otherwise induce, influence, or encourage
the termination of employment with any other Party or any of its Affiliates, or employ or engage as an independent contractor,
any current or former employee of any other Party or any of its Affiliates with whom the Restricted Person had contact or who
became known to the Restricted Person as a result of the transactions contemplated hereby (each, a “Covered
Employee”), except (A) pursuant to a general solicitation through the media or by
a search firm, in either case, that is not directed specifically to any employees of any of the other Parties or (B) if any other
Party terminated the employment of such Covered Employee prior to the Restricted Person having solicited or otherwise contacted
such Covered Employee or discussed the employment or other engagement of the Covered Employee.

 

(j)
Non-Circumvention.

 

(i)
During the period beginning on the Execution Date and ending on the Closing Date, NY – SHI covenants and agrees not to,
and shall cause the Restricted Persons,
directly or indirectly, not to, communicate with or solicit business from any suppliers, clients, consultants, or intermediaries
of Canbiola Sub, Canbiola, or any of their Affiliates that became known to the Restricted Person directly or indirectly pursuant
to any discussions or communications relating to the evaluation or negotiation of the transactions contemplated by this Agreement.

 

    	16

    	 

    

 

(ii)
During the period beginning on the Execution Date and ending on the Closing Date, Canbiola Sub and Canbiola each covenants and
agrees not to, and shall cause the Restricted Persons, directly or indirectly, not to, communicate with or solicit business from
any suppliers, clients, consultants, or intermediaries of NY – SHI, SHI Farms, or any of their Affiliates that became known
to the Restricted Person directly or indirectly pursuant to any discussions or communications relating to the evaluation or negotiation
of the transactions contemplated by this Agreement.

 

(k)
Other Businesses. The Parties to this Agreement and their respective Affiliates may have interests in non-competing businesses
other than the Joint Venture. In furtherance of the foregoing, the Parties and their Affiliates shall have the right to develop,
manufacture, create, market, or sell any of their products in a wholesale or retail environment, and the Joint Venture shall not
have the right to any income or proceeds from the other businesses of the Parties or their Affiliates and, even if such business
is in competition with the Joint Venture’s business, such business interest shall not be deemed wrongful or improper.

 

6.
Closing; Deliverables.

 

(a)
Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”)
shall occur on the fifth (5th) Business Day following the date on which the last of the conditions set forth in Section
7 hereof has been satisfied or waived (other than those conditions that by their nature are to be satisfied upon the execution
and delivery of this Agreement or at the Closing, but subject to the satisfaction or waiver of such conditions), or such other
time and date as the Parties may agree (the “Closing
Date”). The Closing shall take place electronically or at such place as may be agreed
upon by the Parties hereto. The Closing shall be deemed effective at 12:01 a.m. Eastern Time on the Closing Date.

 

(b)
Deliveries by NY – SHI and SHI Farms. At or prior to the Closing Date, NY – SHI and SHI Farms shall each deliver
to Canbiola Sub each of the following: (i) a certificate of an officer of NY – SHI and a certificate of an officer of SHI
Farms, dated the Closing Date, in form and substance reasonably satisfactory to Canbiola Sub and Canbiola, delivered in accordance
with Section 7(c)(iv), and (ii) all other documents, certificates, instruments, or writings reasonably requested by Canbiola
Sub and Canbiola in connection with this Agreement and the transactions contemplated hereby.

 

(c)
Deliveries by Canbiola Sub and Canbiola. At or prior to the Closing Date, Canbiola Sub and Canbiola shall deliver to NY
– SHI and SHI Farms each of the following: (i) a certificate of an officer of Canbiola Sub and a certificate of an officer
of Canbiola, dated the Closing Date, in form and substance reasonably satisfactory to NY – SHI and SHI Farms, delivered
in accordance with Section 7(b)(iv), and (ii) all other documents, certificates, instruments, or writings reasonably requested
by NY – SHI and SHI Farms in connection herewith.

 

(d)
Deliveries by Canbiola. Within thirty (30) days of the Closing Date, Canbiola shall deliver, or cause to be delivered to
NY – SHI in the name of NY – SHI, the Canbiola Stock (i) in certificated form or (ii) in restricted book entry form
by notation on the books and records of Canbiola’s transfer agent, which Canbiola Stock shall be free and clear of all Encumbrances,
other than restrictions on transfer pursuant to applicable state and federal securities laws.

 

    	17

    	 

    

 

7.
Conditions Precedent to Closing Obligations.

 

(a)
Conditions to Each Party’s Obligations. The respective obligations of each Party to effect the transactions contemplated
by this Agreement will be subject to the fulfillment or waiver at or prior to the Closing of each of the following conditions:

 

(i)
No Legal Proceedings; Governmental Prohibitions. No material suit, action, litigation, or other proceeding instituted by
any Third Party shall be pending before any Governmental Authority seeking to restrain, prohibit, enjoin, or declare illegal,
or seeking substantial damages in connection with, the transactions contemplated by this Agreement, and no statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent injunction, judgment, or other order shall have
been enacted, entered, promulgated, enforced, or issued by any Governmental Authority preventing the consummation of the transactions
contemplated by this Agreement.

 

(ii)
Governmental Consents; Third-Party Consents. All consents, approvals, orders, or authorizations of, or registrations, declarations,
or filings with, any Governmental Authority or any Third Party required in connection with the execution, delivery, or performance
of this Agreement will have been obtained or made, except where the failure to have obtained or made any such consent, approval,
order, authorization, declaration, or filing would not have a Material Adverse Effect on the Joint Venture or the Parties after
the Closing.

 

(b)
Conditions to Obligations of NY – SHI and SHI Farms. The obligations of NY – SHI and SHI Farms to consummate
the transactions contemplated by this Agreement will be subject to the fulfillment or waiver at or prior to the Closing Date of
each of the following additional conditions:

 

(i)
Representations and Warranties. All of the representations and warranties of Canbiola Sub and Canbiola in this Agreement
shall have been true and correct in all material respects as of the Execution Date and shall be true and correct in all material
respects as of the Closing Date as though made on and as of the Closing Date.

 

(ii)
Performance of Obligations of Canbiola Sub and Canbiola. Canbiola Sub and Canbiola shall have performed or complied in
all material respects with all obligations, agreements, and covenants contained in this Agreement as to which performance or compliance
by Canbiola Sub or Canbiola is required prior to or at the Closing Date.

 

(iii)
No Material Adverse Change. Between the Execution Date and the Closing Date, there shall not have occurred any Material
Adverse Effect relating to Canbiola Sub or Canbiola.

 

(iv)
Certificate. An officer of Canbiola Sub and Canbiola shall have each executed and delivered to NY – SHI and SHI Farms
a certificate as to compliance with the conditions set forth in Section 7(b)(i), Section 7(b)(ii), and Section
7(b)(iii).

 

(v)
Canbiola Sub and Canbiola Closing Deliveries. Canbiola Sub and Canbiola shall have made all other deliveries required by
Section 6(c).

 

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(vi)
Payment of Canbiola Cash. Canbiola Sub shall have delivered the Canbiola Cash to NY – SHI upon execution and delivery
of this Agreement.

 

(c)
Conditions to Obligations of Canbiola Sub and Canbiola. The obligations of Canbiola Sub and Canbiola to consummate the
transactions contemplated by this Agreement will be subject to the fulfillment or waiver at or prior to the Closing Date of each
of the following additional conditions:

 

(i)
Representations and Warranties. All of the representations and warranties of NY – SHI and SHI Farms in this Agreement
shall have been true and correct in all material respects as of the Execution Date and shall be true and correct in all material
respects as of the Closing Date as though made on and as of the Closing Date.

 

(ii)
Performance of Obligations of NY – SHI and SHI Farms. NY – SHI and SHI Farms shall have performed or complied
in all material respects with all obligations, agreements, and covenants contained in this Agreement as to which performance or
compliance by NY – SHI or SHI Forms is required prior to or at the Closing Date.

 

(iii)
No Material Adverse Change. Between the Execution Date and the Closing Date, there shall not have occurred any Material
Adverse Effect relating to NY – SHI.

 

(iv)
Certificate. An officer of NY – SHI and SHI Farms shall have each executed and delivered to Canbiola Sub and Canbiola
a certificate as to compliance with the conditions set forth in Section 7(c)(i), Section 7(c)(ii), and Section
7(c)(iii).

 

(v)
NY – SHI and SHI Farms Closing Deliveries. NY – SHI and SHI Farms shall have made all other deliveries required
by Section 6(b).

 

(vi)
Cultivating License. Canbiola Sub shall have verified, to its reasonable satisfaction, that the Cultivating License can
be amended to include the NY Hemp Depot Facility.

 

8.
Survival of Representations and Warranties; Indemnification.

 

(a)
Survival of Representations and Warranties. Notwithstanding any investigation made by a Party or its Authorized Representatives
with respect to the representations or warranties of the other Parties, all representations and warranties of the Parties contained
in this Agreement shall survive the Closing for a period of twenty-four (24) months from and after the Closing Date. No claim
for indemnification with respect to a breach of or inaccuracy in any representation or warranty contained in this Agreement may
be asserted after the expiration of the aforementioned twenty-four month period. Representations, warranties, covenants, and agreements
shall be of no further force or effect after the date of their expiration; provided that there shall be no termination
of any bona fide claim asserted pursuant to this Agreement with respect to such a representation, warranty, covenant, or agreement
prior to its expiration date.

 

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(b)
Indemnification Claims.

 

(i)
Indemnification by NY – SHI. Effective as of the Closing Date, subject to the limitations set forth in Section
8(a) and Section 8(c), NY – SHI shall be responsible for, shall pay on a current basis, and hereby agree to defend,
indemnify, hold harmless, and forever release Canbiola Sub, Canbiola, the Affiliates of Canbiola and Canbiola Sub, and each of
their respective equity holders, directors, officers, managers, employees, attorneys, consultants, agents, and representatives
(collectively, the “Canbiola Indemnified
Parties”) from and against any and all Liabilities, whether or not incurred in the
investigation or defense of any of the same or in asserting, preserving, or enforcing any of their respective rights hereunder,
arising from, based upon, related to, or associated with: (A) any misrepresentation or breach of any representation or warranty
made by NY – SHI in this Agreement, provided a claim for such breach is made in writing before the expiration of the period
set forth in Section 8(a); (B) the breach or non-performance of any covenant or obligation required by this Agreement to
be observed or performed by NY – SHI; or (C) any Excluded Liabilities of NY – SHI.

 

(ii)
Indemnification by SHI Farms. Effective as of the Closing Date, subject to the limitations set forth in Section 8(a)
and Section 8(c), SHI Farms shall be responsible for, shall pay on a current basis, and hereby agree to defend, indemnify,
hold harmless, and forever release the Canbiola Indemnified Parties from and against any and all Liabilities, whether or not incurred
in the investigation or defense of any of the same or in asserting, preserving, or enforcing any of their respective rights hereunder,
arising from, based upon, related to, or associated with: (A) any misrepresentation or breach of any representation or warranty
made by SHI Farms in this Agreement, provided a claim for such breach is made in writing before the expiration of the period set
forth in Section 8(a); (B) the breach or non-performance of any covenant or obligation required by this Agreement to be
observed or performed by SHI Farms; or (C) any Excluded Liabilities of SHI Farms.

 

(iii)
Indemnification by Canbiola Sub and Canbiola. Effective as of the Closing, subject to the limitations set forth in Section
8(a) and Section 8(c), Canbiola Sub and Canbiola shall be jointly and severally responsible for, shall pay on a current
basis, and hereby agree to defend, indemnify, hold harmless, and forever release each of NY – SHI, SHI Farms,, the Affiliates
of NY – SHI, the Affiliates of SHI Farms, and each of their respective equity holders, directors, officers, managers, employees,
attorneys, consultants, agents, and representatives (collectively, the “SHI
Indemnified Parties”) from and against any and all Liabilities, whether or not incurred
in the investigation or defense of any of the same or in asserting, preserving, or enforcing any of their respective rights hereunder,
arising from, based upon, related to, or associated with: (A) any misrepresentation or breach of any representation or warranty
made by Canbiola Sub or Canbiola in this Agreement, provided a claim for such breach is made in writing before the expiration
of the period set forth in Section 8(a); (B) the breach or non-performance of any covenant or obligation required by this
Agreement to be observed or performed by Canbiola Sub or Canbiola; or (C) any Excluded Liabilities of Canbiola Sub or Canbiola.

 

    	20

    	 

    

 

(c)
Limitations on Indemnification. Rights to indemnification under this Section 8 are subject to the following limitations:

 

(i)
Notwithstanding anything contained in this Agreement to the contrary, no Indemnifying Party shall have any liability pursuant
to Section 8(b)(i)(A), Section 8(b)(ii)(A), or Section 8(b)(iii)(A), as the case may be, (A) for any individual
Liability unless the amount of such Liability exceeds $5,000.00 (the “Individual Indemnity Threshold”)
and (B) until and unless the aggregate amount of all Liabilities (each of which Liability having exceeded the Individual Indemnity
Threshold) exceeds $25,000.00 (the “Indemnity
Deductible”), and then only to the extent such Liabilities exceed the Indemnity
Deductible.

 

(ii)
Except for Liabilities paid in connection with a Third-Party Claim (as hereinafter defined), none of the Indemnified Parties shall
be entitled to recover from the Parties or their respective Affiliates, any special, indirect, consequential, punitive, exemplary,
remote, or speculative damages (including damages for lost profits of any kind) arising under or in connection with this Agreement
or the transactions contemplated hereby, except to the extent any such Person suffers such damages to a Third Party, which damages
to a Third Party (including costs of defense and reasonable attorneys’ fees incurred in connection with defending against
such damages) shall not be excluded by this provision as to recovery hereunder. Subject to the preceding sentence, NY –
SHI and SHI Farms, on behalf of each of the SHI Indemnified Parties, and Canbiola Sub and Canbiola, on behalf of each of the Canbiola
Indemnified Parties, waives any right to recover any special, indirect, consequential, punitive, exemplary, remote, or speculative
damages (including damages for lost profits of any kind) arising in connection with or with respect to this Agreement or the transactions
contemplated hereby.

 

(d)
Procedures.

 

(i)
Notice. To make a claim for indemnification under this Agreement, an Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying
Party”) in writing of its claim under this Section 8, including the specific
details of and specific basis under this Agreement for its claim (the “Claim
Notice”). In the event that the claim for indemnification is based upon a claim by
a Third Party against the Indemnified Party (a “Third-Party
Claim”), the Indemnified Party shall provide its Claim Notice promptly after the Indemnified
Party has actual knowledge of the Third-Party Claim and shall enclose a copy of all papers (if any) served with respect to the
Third-Party Claim; provided that the failure of any Indemnified Party to give notice of a Third-Party Claim as provided in this
Section 8.3(d) shall not relieve the Indemnifying Party of its obligations under this Section 8, except to the extent
such failure results in insufficient time being available to permit the Indemnifying Party to effectively defend against the Third-Party
Claim or otherwise materially prejudices the Indemnifying Party’s ability to defend against the Third-Party Claim. In the
event that the claim for indemnification is based upon an inaccuracy or a breach of a representation, warranty, covenant, or agreement,
the Claim Notice shall specify the representation, warranty, covenant, or agreement that was inaccurate or breached.

 

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(ii)
Defense and Settlement of Claims.

 

(A)
In the case of a claim for indemnification based upon a Third-Party Claim, the Indemnifying Party shall have thirty (30) days
from its receipt of the Claim Notice to notify the Indemnified Party whether it admits or denies its obligation to defend and
indemnify the Indemnified Party against such Third-Party Claim at the sole cost and expense of the Indemnifying Party. The Indemnified
Party is authorized, prior to and during such thirty (30)-day period, at the expense of the Indemnifying Party, to file any motion,
answer, or other pleading that it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Party
and that is not prejudicial to the Indemnifying Party.

 

(B)
If the Indemnifying Party admits its obligation to defend and indemnify the Indemnified Party against a Third-Party Claim, it
shall have the right and obligation diligently to defend and indemnify, at its sole cost and expense, the Indemnified Party against
such Third-Party Claim. The Indemnifying Party shall have full control of such defense and proceedings, including any compromise
or settlement thereof. If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate in contesting any Third-Party
Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control, at its own expense,
any defense or settlement of any Third-Party Claim controlled by the Indemnifying Party pursuant to this Section 8(d).
An Indemnifying Party shall not, without the written consent of the Indemnified Party (which shall not be unreasonably withheld,
denied, conditioned, or delayed), (i) settle any Third-Party Claim or consent to the entry of any judgment with respect thereto
that does not include an unconditional written release of the Indemnified Party from all Liability in respect of such Third-Party
Claim or (ii) settle any Third-Party Claim or consent to the entry of any judgment with respect thereto in any manner that may
materially and adversely affect the Indemnified Party (other than as a result of money damages covered by the indemnity).

 

(C)
If the Indemnifying Party does not admit its obligation or admits its obligation to defend and indemnify the Indemnified Party
against a Third-Party Claim, but fails diligently to prosecute, indemnify against, or settle such Third-Party Claim, then the
Indemnified Party shall have the right to defend against the Third-Party Claim at the sole cost and expense of the Indemnifying
Party, with counsel of the Indemnified Party’s choosing, subject to the right of the Indemnifying Party to admit its obligation
and assume the defense of the Third-Party Claim at any time prior to settlement or final determination thereof. If settlement
has been offered and the Indemnifying Party has not yet admitted its obligation to defend and indemnify the Indemnified Party
against a Third-Party Claim, the Indemnified Party shall send written notice to the Indemnifying Party of any proposed settlement
and the Indemnifying Party shall have the option for ten (10) days following receipt of such notice to (i) admit in writing its
obligation to indemnify the Indemnified Party from and against the liability and consent to such settlement, (ii) if liability
is so admitted, reject, in its reasonable judgment, the proposed settlement, or (iii) deny liability. Any failure by the Indemnifying
Party to respond to such notice shall be deemed to be an election under subsection (iii), above.

 

    	22

    	 

    

 

(iii)
Non-Third-Party Claims. In the case of a claim for indemnification not based upon a Third-Party Claim, the Indemnifying
Party shall have thirty (30) days from its receipt of the Claim Notice to (A) cure the Liabilities complained of, (B) admit its
liability for such Liabilities, or (C) dispute the claim for such Liabilities. If the Indemnifying Party does not notify the Indemnified
Party within such thirty (30)-day period that it has cured the Liabilities or that it disputes the claim for such Liabilities,
the Indemnifying Party shall be deemed to have disputed the claim for such Liabilities.

 

9.
Termination Prior to Closing.

 

(a)
Termination Prior to Closing. This Agreement
may, by written notice given prior to or at the Closing, be terminated:

 

(i)
by NY – SHI or SHI Farms, at such Party’s
option, if any of the conditions in Section 7(a) or Section 7(b) have not been satisfied as of the Closing Date
or if satisfaction of such a condition is or becomes impossible (other than through the failure of NY – SHI or SHI Farms
to comply with its obligations under this Agreement), and NY – SHI or SHI Farms has not waived such condition on or before
the Closing Date;

 

(ii)
by Canbiola Sub or Canbiola, at such Party’s option, if any of the conditions in Section 7(a) or Section 7(c)
have not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than
through the failure of Canbiola Sub or Canbiola to comply with its obligations under this Agreement), and Canbiola Sub or Canbiola,
as applicable, has not waived such condition on or before the Closing Date;

 

(iii)
by mutual consent of the Parties on or prior to the Closing Date; or

 

(iv)
by any Party if the Closing has not occurred on or before July 15, 2019 (or such later date as agreed to in writing by the Parties);

 

provided,
however, that no Party shall have the right to terminate this Agreement pursuant to clause (a)(i), (a)(ii), or (a)(iv), above,
if such Party or its Affiliates are at such time in material breach of any provision of this Agreement.

 

(b)
Effect of Termination Prior to Closing. Each Party’s right of termination under Section 9(a) is in addition
to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9(a), all further obligations of the Parties under this
Agreement will terminate, except that the obligations in Section 5(c), Section 5(e), Section 12(d), and Section
12(h) will survive; provided, however, that if this Agreement is terminated by a Party because of the breach
of the Agreement by the other Party or because one or more of the conditions to the terminating Party’s obligations under
this Agreement is not satisfied as a result of the other Party’s failure to comply with its obligations under this Agreement,
the terminating Party’s right to pursue all legal remedies will survive such termination.

 

    	23

    	 

    

 

10.
Term and Termination of this Agreement.

 

(a)
Term. This Agreement shall commence on the Execution Date and, unless terminated earlier, shall remain in force until the
Joint Venture is dissolved in accordance with Section 11 and Applicable Law.

 

(b)
Termination for Cause.

 

(i)
Any Party may terminate this Agreement if another Party materially breaches this Agreement and (if such breach is curable) fails
to cure such breach within sixty (60) days of being notified in writing to do so; provided, however, such sixty
(60) day period shall be extended if the breaching Party has begun good faith efforts to remedy such breach within the initial
sixty (60)-day period and provides a written explanation to the non-breaching Parties of the reasons for the breach, actions it
is taking to remedy the breach, and the anticipated time it will take to remedy the breach.

 

(ii)
Any Party may terminate this Agreement if another Party (A) becomes insolvent or admits its inability to pay its debts generally
as they become due; (B) becomes subject, voluntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency
law; (C) becomes subject, involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law that is
not dismissed within sixty (60) Business Days after filing; (D) is dissolved or liquidated or takes any corporate action for such
purpose; (E) makes a general assignment for the benefit of creditors; or (F) has a receiver, trustee, custodian, or similar agent
appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.

 

(iii)
Any Party may terminate this Agreement if there is a Change of Control of another Party.

 

(iv)
In the event of a termination of this Agreement pursuant to this Section 10(b), the terminating, non-breaching Party shall
provide written notice of its termination of this Agreement to the breaching Party and the other Parties and such termination
shall be effective as of the effective date of the notice in accordance with the terms of Section 12(a), provided, however,
that the non-breaching Parties may elect to continue the transactions contemplated by this Agreement, at such Party’s sole
cost and expense, by notifying the breaching Party of this election. Such notice shall be deemed a “Transition
Notice.”

 

(c)
Transition. A Party providing a Transition Notice (the “Continuing
Party”) is solely responsible for its costs and expenses for the development of the
Depot Model incurred on or after the effective date of the Transition Notice. The non-continuing Party shall use commercially
reasonable efforts to promptly transfer all of its responsibilities (to the extent applicable) to the Continuing Party, provided,
that, except as otherwise provided in this Agreement, the non-continuing Party shall not have any obligation to incur any
expenses in connection with this Agreement on or after the end of the Transition Period, except for its internal costs in transferring
its responsibilities to the Continuing Party. Except as otherwise agreed to in writing by the Parties, the non-continuing Party
shall complete the transition of its responsibilities as soon as practicable and, in any event, no later than ninety (90) days
after the effective date of the Transition Notice (the “Transition
Period”).

 

    	24

    	 

    

 

(d)
Effect of Termination. The termination of this Agreement shall not relieve the Parties of any obligations accruing prior
to the effective date of such termination. Any termination of this Agreement shall not preclude any Party from pursuing all rights
and remedies it may have hereunder in accordance with Applicable Law or in equity with respect to any breach of this Agreement
nor prejudice any Party’s right to obtain performance of any obligation.

 

11.
Termination of the Joint Venture.

 

(a)
Events of Termination. The Joint Venture shall be terminated and its affairs wound up only upon the occurrence of any of
the following events:

 

(i)
The determination of NY – SHI and Canbiola
Sub to terminate the Joint Venture;

 

(ii)
NY – SHI or Canbiola Sub (A) becomes insolvent
or admits its inability to pay its debts generally as they become due; (B) becomes subject, voluntarily, to any proceeding under
any domestic or foreign bankruptcy or insolvency law; (C) becomes subject, involuntarily, to any proceeding under any domestic
or foreign bankruptcy or insolvency law that is not dismissed within sixty (60) Business Days after filing; (D) is dissolved or
liquidated or takes any corporate action for such purpose; (E) makes a general assignment for the benefit of creditors; or (F)
has a receiver, trustee, custodian, or similar agent appointed by order of any court of competent jurisdiction to take charge
of or sell any material portion of its property or business, unless within ten (10) Business days after the occurrence
of such event, the other Party agrees in writing to continue the business of the Joint Venture;

 

(iii)
At the election of a non-defaulting Party, in
its sole discretion, if the other Party breaches any material covenant, duty, or obligation under this Agreement, which breach
remains uncured for sixty (60) days after written notice of such breach was received by the defaulting Party; provided,
however, such sixty (60)-day period shall be extended if the breaching Party has begun good faith efforts to remedy such
breach within the initial sixty (60)-day period and provides a written explanation to the non-breaching Parties of the reasons
for the breach, actions it is taking to remedy the breach, and the anticipated time it will take to remedy the breach; or

 

(iv)
The sale, exchange, involuntary conversion, or other disposition of all or substantially all of the assets of the Joint Venture.

 

    	25

    	 

    

 

(b)
Liquidator; Accounting.

 

(i)
The Joint Venture shall not terminate until the winding up of the Joint Venture has been completed and the assets of the Joint
Venture have been distributed as provided in Section 11(c).

 

(ii)
NY – SHI and Canbiola Sub shall jointly appoint a liquidator to wind up the Joint Venture (the “Liquidator”).
The Liquidator shall have full power and authority to sell, assign, and encumber any or all of the Joint Venture’s assets
and to wind up and liquidate the affairs of the Joint Venture in an orderly and business-like manner.

 

(iii)
The Liquidator shall cause a proper accounting to be made of the Joint Venture’s assets, liabilities, and operations through
the last day of the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable.

 

(c)
Distribution of Proceeds. The assets of the Joint Venture shall be liquidated, and the proceeds of such liquidation shall
be distributed in the following order of priority, unless otherwise required by mandatory provisions of Applicable Law:

 

(i)
first, to the payment of all of the Joint Venture’s debts and liabilities to its creditors (including the Parties, if applicable)
and the expenses of liquidation (including sales commissions incident to any sales of assets of the Joint Venture);

 

(ii)
second, to the establishment of and additions to reserves that are determined to be reasonably necessary for any contingent unforeseen
liabilities or obligations of the Joint Venture; and

 

(iii)
third, to NY – SHI and Canbiola Sub in accordance with their respective distribution percentages set forth in Section
3(b).

 

12.
Miscellaneous.

 

(a)
Notices. All notices, requests, and other communications to any Party shall be in writing (including electronic mail or
similar writing) and shall be given to all Parties at the notice addresses set forth below:

 

	 	To
    NY – SHI:	NY
    – SHI, LLC
	 	 	1345
    Avenue of the Americas
	 	 	New
    York, NY 10105
	 	 	Attention:
    Thomas A. Gallo, President
	 	 	E-Mail:
    tgallo@notis.global

 

	 	To
    SHI Farms:	EWSD
    I LLC dba SHI Farms
	 	 	7887
    East Belleview Ave., Suite 1100
	 	 	Denver,
    Colorado 80111
	 	 	Attention:
    Thomas A. Gallo, Executive Director
	 	 	E-Mail:
    tgallo@notis.global

 

	 	With,
    for each of	 
	 	NY
    – SHI and SHI Farms, a copy to:	Baker
    & Hostetler LLP
	 	(which
    shall not constitute notice)	600
    Anton Blvd., Suite 900
	 	 	Costa
    Mesa, California 92626-7221
	 	 	Attention:
    Randolf W. Katz
	 		E-Mail:
    rwkatz@bakerlaw.com

 

    	26

    	 

    

 

	 	To
    Canbiola Sub:	[Canbiola
    Subsidiary]
	 	 	960
    South Broadway, Suite 120
	 	 	Hicksville,
    New York 11801
	 	 	Attention:
    Marco Alfonsi, Chief Executive Officer and Stanley Teeple, Chief Financial Officer
	 		E-Mail:
    marco@canbiola.com and stan@canbiola.com

 

	 	To
    Canbiola:	Canbiola,
    Inc.
	 	 	960
    South Broadway, Suite 120
	 	 	Hicksville,
    New York 11801
	 	 	Attention:
    Marco Alfonsi, Chief Executive Officer and Stanley Teeple, Chief Financial Officer
	 	 	E-Mail:
    marco@canbiola.com and stan@canbiola.com

 

	 	With,
    for each of Canbiola Sub and	 
	 	Canbiola,
    a copy to:	Austin
    Legal Group, APC
	 	(which
    shall not constitute notice)	3990
    Old Town Ave., A-101
	 	 	San
    Diego, California 92110
	 	 	Attention:
    Arden Anderson
	 	 	E-Mail:
    arden@austinlegalgroup.com

 

or
to such other address or e-mail address and with such other copies, as such Party may hereafter specify by notice to the other
Parties. Each such notice, request, or other communication shall be effective upon receipt, provided, if the day of receipt
is not a Business Day, then it shall be deemed to have been received on the next succeeding Business Day.

 

(b)
Amendments. This Agreement may be amended, restated, supplemented, or otherwise modified only by an instrument in writing
executed and delivered by all Parties and expressly identified as an amendment, restatement, supplement, or modification.

 

(c)
Waiver. Any of the terms, covenants, representations, warranties, or conditions hereof may be waived only by a written
instrument executed and delivered by or on behalf of the Party waiving compliance. No course of dealing on the part of any Party
or its officers, directors, managers, employees, agents, or representatives, and no failure by any Party to exercise any of its
rights under this Agreement, shall, in any such case, operate as a waiver thereof or affect in any way the right of such Party
at a later time to enforce the performance of such provision. No waiver by any Party of any condition, or any breach of any term,
covenant, representation, or warranty contained in this Agreement, in any one or more instances, shall be deemed to be or construed
as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of any breach of any other
term, covenant, representation, or warranty. The rights of the Parties under this Agreement shall be cumulative, and the exercise
or partial exercise of any such right shall not preclude the exercise of any other right.

 

    	27

    	 

    

 

(d)
Governing Law; Jurisdiction. This Agreement shall be construed in accordance with and governed by the laws of the State
of New York (without regard to the choice of law provisions thereof). The Parties agree that any action arising under or otherwise
related to this Agreement will be brought only in the courts of the State of New York sitting in New York County, New York, unless
such courts lack jurisdiction, in which case, the action will be brought in the United States District Court for Southern District
of New York. Each of the Parties hereto consents to venue of any dispute in New York County, New York, and further agrees that
a non-appealable final judgment in any action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by Applicable Law.

 

(e)
Successors and Assigns. No Party shall assign this Agreement or any of its rights in and to this Agreement without the
prior written approval of the other Party. Subject to the preceding sentence, the provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and assigns.

 

(f)
No Third-Party Beneficiaries. The Parties and this Agreement do not confer any rights or remedies upon any Person other
than the Parties to this Agreement and their respective successors and permitted assigns. Notwithstanding anything herein to the
contrary, MHL is not a party to this Agreement and does not have any rights, remedies, or obligations hereunder.

 

(g)
Illegality and Severability. If application of any one or more of the provisions of this Agreement shall be unlawful under
Applicable Law, then the Parties will attempt in good faith to make such alternative arrangements as may be legally permissible
and that carry out as nearly as practicable the terms of this Agreement. Should any portion of this Agreement be deemed unenforceable
by a court of competent jurisdiction, the remaining portions hereof shall remain unaffected and be interpreted as if such unenforceable
portion had been initially deleted.

 

(h)
Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures to such counterparts and to this Agreement were upon the same instrument.

 

(i)
Entire Agreement. This Agreement (and
any other agreements contemplated hereby or thereby) constitutes the entire agreement among the Parties with respect to the subject
matter of this Agreement and supersedes all prior agreements, understandings, and negotiations, both written and oral, among the
Parties with respect to the subject matter hereof. No representation, inducement, promise, understanding, condition, or warranty
not set forth in this Agreement has been made or relied upon by any Party. This Agreement is not intended to confer upon any Person
other than the Parties hereto any rights or remedies hereunder. The Exhibits to this Agreement are and shall be deemed to be a
part of this Agreement.

 

(j)
Advice of Counsel. The Parties have each consulted counsel of their choice regarding this Agreement and each acknowledges
and agrees that this Agreement shall not be deemed to have been drafted by one Party or another and shall be construed accordingly.

 

(k)
Captions. The captions in this Agreement are included for convenience of reference only and shall be ignored in the construction
or interpretation hereof.

 

[SIGNATURES
ON FOLLOWING PAGE]

 

    	28

    	 

    

 

IN
WITNESS WHEREOF, the Parties to this Agreement have caused this Agreement to be duly executed by their respective authorized representatives
on the day and year first above written.

 

	 	ny
    – SHI, LLC
	 	 
	 	By:
    	/s/
    Thomas A. Gallo
	 	Name:	Thomas
    A. Gallo
	 	Title:	President

 

	 	EWSD
    I LLC dba SHI FARMS
	 	 
	 	By:	/s/
    Thomas A. Gallo
	 	Name:	Thomas
    A. Gallo
	 	Title:	Executive
    Director

 

IN
WITNESS WHEREOF, the Parties to this Agreement have caused this Agreement to be duly executed by their respective authorized representatives
on the day and year first above written.

 

	 	NY
    HEMP DEPOT LLC
	 	 
	 	By:	/s/
    Marco Alfonsi
	 	Name:	Marco
    Alfonsi
	 	Title:	Chief
    Executive Officer

 

	 	canbiola,
    inc.
	 	 
	 	By:
    	/s/
    Marco Alfonsi
	 	Name:	Marco
    Alfonsi
	 	Title:	Chief
    Executive Officer

 

SIGNATURE
PAGE TO

JOINT
VENTURE AGREEMENTExhibit 10.1

 

Published CUSIP Number:  70438WAA2

Revolving Credit CUSIP Number:  70438WAB0

 

$250,000,000 REVOLVING CREDIT FACILITY

 

CREDIT AGREEMENT

 

by and among

 

PAYLOCITY HOLDING CORPORATION

 

and

 

THE GUARANTORS PARTY HERETO

 

and

 

THE LENDERS PARTY HERETO

 

and

 

PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent

 

and

 

PNC CAPITAL MARKETS, LLC, as Sole Lead Arranger and Sole Bookrunner

 

Dated as of July 17, 2019

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
CERTAIN DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Certain Definitions
    	
1
    
	
 
    	
1.2
    	
Construction
    	
31
    
	
 
    	
1.3
    	
Accounting Principles;   Changes in GAAP
    	
31
    
	
 
    	
1.4
    	
LIBOR Notification
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
REVOLVING CREDIT AND   SWING LOAN FACILITIES
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Revolving Credit   Commitments
    	
32
    
	
 
    	
2.2
    	
Nature of Lenders’   Obligations with Respect to Revolving Credit Loans
    	
33
    
	
 
    	
2.3
    	
Commitment Fees
    	
33
    
	
 
    	
2.4
    	
Termination or   Reduction of Revolving Credit Commitments; Increase to Revolving Credit Commitments
    	
33
    
	
 
    	
2.5
    	
Revolving Credit Loan   Requests; Swing Loan Requests
    	
35
    
	
 
    	
2.6
    	
Making Revolving Credit   Loans and Swing Loans; Presumptions by the Administrative Agent; Repayment of   Revolving Credit Loans; Borrowings to Repay Swing Loans
    	
36
    
	
 
    	
2.7
    	
Notes
    	
38
    
	
 
    	
2.8
    	
Use of Proceeds
    	
38
    
	
 
    	
2.9
    	
Letter of Credit   Subfacility
    	
38
    
	
 
    	
2.10
    	
Defaulting Lenders
    	
45
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
[RESERVED]
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
INTEREST RATES
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
Interest Rate Options
    	
47
    
	
 
    	
4.2
    	
Interest Periods
    	
48
    
	
 
    	
4.3
    	
Interest After Default
    	
48
    
	
 
    	
4.4
    	
LIBOR Rate Unascertainable;   Illegality; Increased Costs; Deposits Not Available
    	
49
    
	
 
    	
4.5
    	
Selection of Interest   Rate Options
    	
50
    
	
 
    	
4.6
    	
Successor LIBOR Rate   Index
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
PAYMENTS
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
Payments
    	
51
    
	
 
    	
5.2
    	
Pro Rata Treatment of   Lenders
    	
52
    
	
 
    	
5.3
    	
Sharing of Payments by   Lenders
    	
52
    
	
 
    	
5.4
    	
Presumptions by   Administrative Agent
    	
53
    
	
 
    	
5.5
    	
Interest Payment Dates
    	
53
    
	
 
    	
5.6
    	
Voluntary Prepayments
    	
53
    
	
 
    	
5.7
    	
[Reserved]
    	
55
    
	
 
    	
5.8
    	
Increased Costs
    	
55
    
	
 
    	
5.9
    	
Taxes
    	
56
    
					

 

i

 

	
 
    	
5.10
    	
Indemnity
    	
60
    
	
 
    	
5.11
    	
Settlement Date   Procedures
    	
61
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
REPRESENTATIONS AND   WARRANTIES
    	
61
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
Representations and   Warranties
    	
61
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
CONDITIONS OF LENDING   AND ISSUANCE OF LETTERS OF CREDIT
    	
66
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
First Loans and Letters   of Credit
    	
66
    
	
 
    	
7.2
    	
Each Loan or Letter of   Credit
    	
68
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
COVENANTS
    	
68
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.1
    	
Affirmative Covenants
    	
68
    
	
 
    	
8.2
    	
Negative Covenants
    	
72
    
	
 
    	
8.3
    	
Reporting Requirements
    	
76
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
DEFAULT
    	
78
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.1
    	
Events of Default
    	
78
    
	
 
    	
9.2
    	
Consequences of Event   of Default
    	
80
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
THE ADMINISTRATIVE   AGENT
    	
82
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.1
    	
Appointment and   Authority
    	
82
    
	
 
    	
10.2
    	
Rights as a Lender
    	
83
    
	
 
    	
10.3
    	
Exculpatory Provisions
    	
83
    
	
 
    	
10.4
    	
Reliance by   Administrative Agent
    	
84
    
	
 
    	
10.5
    	
Delegation of Duties
    	
84
    
	
 
    	
10.6
    	
Resignation of   Administrative Agent
    	
84
    
	
 
    	
10.7
    	
Non-Reliance on   Administrative Agent and Other Lenders
    	
85
    
	
 
    	
10.8
    	
No Other   Duties, etc.
    	
85
    
	
 
    	
10.9
    	
Administrative Agent’s   Fee
    	
86
    
	
 
    	
10.10
    	
Authorization to   Release Collateral and Guarantors
    	
86
    
	
 
    	
10.11
    	
No Reliance on Administrative   Agent’s Customer Identification Program
    	
86
    
	
 
    	
10.12
    	
Certain ERISA Matters
    	
86
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
MISCELLANEOUS
    	
88
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.1
    	
Modifications,   Amendments or Waivers
    	
88
    
	
 
    	
11.2
    	
No Implied Waivers;   Cumulative Remedies
    	
89
    
	
 
    	
11.3
    	
Expenses; Indemnity;   Damage Waiver
    	
90
    
	
 
    	
11.4
    	
Holidays
    	
91
    
	
 
    	
11.5
    	
Notices; Effectiveness;   Electronic Communication
    	
92
    
	
 
    	
11.6
    	
Severability
    	
93
    
	
 
    	
11.7
    	
Duration; Survival
    	
93
    
	
 
    	
11.8
    	
Successors and Assigns
    	
93
    
	
 
    	
11.9
    	
Confidentiality
    	
96
    
	
 
    	
11.10
    	
Counterparts;   Integration; Effectiveness
    	
97
    

 

ii

 

	
 
    	
11.11
    	
CHOICE OF LAW;   SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF   JURY TRIAL
    	
98
    
	
 
    	
11.12
    	
USA Patriot Act Notice
    	
99
    
	
 
    	
11.13
    	
Consent to Bail-In of   EEA Financial Institutions
    	
99
    

 

LIST OF SCHEDULES AND EXHIBITS

 

SCHEDULES

 

	
SCHEDULE 1.1(A)
    	
 
    	
-
    	
 
    	
PRICING GRID
    
	
SCHEDULE 1.1(B)
    	
 
    	
-
    	
 
    	
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
    
	
SCHEDULE 1.1(P)
    	
 
    	
-
    	
 
    	
PERMITTED LIENS
    
	
SCHEDULE 6.1.1
    	
 
    	
-
    	
 
    	
QUALIFICATIONS TO DO BUSINESS
    
	
SCHEDULE 6.1.2
    	
 
    	
-
    	
 
    	
SUBSIDIARIES
    
	
SCHEDULE 8.1.3
    	
 
    	
-
    	
 
    	
INSURANCE REQUIREMENTS RELATING TO COLLATERAL
    
	
SCHEDULE 8.2.1
    	
 
    	
-
    	
 
    	
PERMITTED INDEBTEDNESS
    
	
SCHEDULE 8.2.4
    	
 
    	
-
    	
 
    	
PERMITTED INVESTMENTS
    

 

EXHIBITS

 

	
EXHIBIT 1.1(A)
    	
 
    	
-
    	
 
    	
ASSIGNMENT AND ASSUMPTION AGREEMENT
    
	
EXHIBIT 1.1(G)(1)
    	
 
    	
-
    	
 
    	
GUARANTOR JOINDER
    
	
EXHIBIT 1.1(G)(2)
    	
 
    	
-
    	
 
    	
GUARANTY AGREEMENT
    
	
EXHIBIT 1.1(I)(2)
    	
 
    	
-
    	
 
    	
INTERCOMPANY SUBORDINATION AGREEMENT
    
	
EXHIBIT 1.1(N)(1)
    	
 
    	
-
    	
 
    	
REVOLVING CREDIT NOTE
    
	
EXHIBIT 1.1(N)(2)
    	
 
    	
-
    	
 
    	
SWING LOAN NOTE
    
	
EXHIBIT 1.1(P)(1)
    	
 
    	
-
    	
 
    	
PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT
    
	
EXHIBIT 1.1(P)(2)
    	
 
    	
-
    	
 
    	
PLEDGE AGREEMENT
    
	
EXHIBIT 1.1(S)
    	
 
    	
-
    	
 
    	
SECURITY AGREEMENT
    
	
EXHIBIT 2.5.1
    	
 
    	
-
    	
 
    	
LOAN REQUEST
    
	
EXHIBIT 2.5.2
    	
 
    	
-
    	
 
    	
SWING LOAN REQUEST
    
	
EXHIBIT 5.9.7(A)
    	
 
    	
-
    	
 
    	
U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders   That Are Not Partnerships For U.S. Federal Income Tax Purposes)
    
	
EXHIBIT 5.9.7(B)
    	
 
    	
-
    	
 
    	
U.S. TAX COMPLIANCE CERTIFICATE (For Foreign   Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
    
	
EXHIBIT 5.9.7(C)
    	
 
    	
-
    	
 
    	
U.S. TAX COMPLIANCE CERTIFICATE (For Foreign   Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
    
	
EXHIBIT 5.9.7(D)
    	
 
    	
-
    	
 
    	
U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders   That Are Partnerships For U.S. Federal Income Tax Purposes)
    

 

iii

 

	
EXHIBIT 8.3.3
    	
 
    	
-
    	
 
    	
QUARTERLY COMPLIANCE CERTIFICATE
    

 

iv

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (as hereafter amended, the “Agreement”) is dated as of July 17, 2019 and is made by and among PAYLOCITY HOLDING CORPORATION, a Delaware corporation (the “Borrower”), each of the GUARANTORS (as hereinafter defined), the LENDERS (as hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lenders under this Agreement (hereinafter referred to in such capacity as the “Administrative Agent”).

 

The Borrower has requested the Lenders to provide a revolving credit facility to the Borrower in an aggregate principal amount not to exceed $250,000,000.  In consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto covenant and agree as follows:

 

1.                                      CERTAIN DEFINITIONS

 

1.1                               Certain Definitions.  In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:

 

Acquisition shall mean any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or division of a Person, (b) the acquisition of all or substantially all of the Capital Stock of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is already a Subsidiary).

 

Administrative Agent shall have the meaning specified in the introductory paragraph.

 

Administrative Agent’s Fee shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee].

 

Administrative Agent’s Letter shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee].

 

Affiliate as to any Person shall mean any other Person (i) which directly or indirectly controls, is controlled by, or is under common control with such Person, (ii) which beneficially owns or holds 10% or more of any class of the voting or other equity interests of such Person, or (iii) 10% or more of any class of voting interests or other equity interests of which is beneficially owned or held, directly or indirectly, by such Person.  For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

 

Agreement shall have the meaning specified in the introductory paragraph.

 

 

Anti-Corruption Laws means all Laws, rules, and regulations of any jurisdiction applicable to any Loan Party from time to time concerning or relating to bribery or corruption including but not limited to the US Foreign and Corrupt Practices Act 1977, as amended, and the Bribery Act 2010 of the United Kingdom.

 

Anti-Terrorism Laws shall mean any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws, all as amended, supplemented or replaced from time to time.

 

Applicable Commitment Fee Rate shall mean the percentage rate per annum based on the Net Senior Secured Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Commitment Fee.”

 

Applicable Letter of Credit Fee Rate shall mean the percentage rate per annum based on the Net Senior Secured Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Letter of Credit Fee.”

 

Applicable Margin shall mean, as applicable:

 

(i)                                     the percentage spread to be added to the Base Rate applicable to Revolving Credit Loans under the Base Rate Option based on the Net Senior Secured Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Revolving Credit Base Rate Spread”, or

 

(ii)                                  the percentage spread to be added to the LIBOR Rate applicable to Revolving Credit Loans under the LIBOR Rate Option based on the Net Senior Secured Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Revolving Credit LIBOR Rate Spread”.

 

Approved Fund shall mean any fund that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of business and that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Assignment and Assumption Agreement shall mean an assignment and assumption agreement entered into by a Lender and an assignee permitted under Section 11.8 [Successors and Assigns], in substantially the form of Exhibit 1.1(A).

 

Authorized Officer shall mean, with respect to any Loan Party, the Chief Executive Officer, President, Chief Financial Officer, Chief Accounting Officer, Treasurer or Assistant Treasurer of such Loan Party, any manager or the members (as applicable) in the case of any Loan Party which is a limited liability company, or such other individuals, designated by written notice to the Administrative Agent from the Borrower, authorized to execute notices, reports and other documents on behalf of such Loan Party required hereunder.  The Borrower may amend such list of individuals from time to time by giving written notice of such amendment to the Administrative Agent.

 

2

 

Bail-In Action shall mean the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

Bail-In Legislation shall mean with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

Base Rate shall mean, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Federal Funds Open Rate, plus 0.5%, (ii) the Prime Rate, and (iii) the Daily LIBOR Rate, plus 100 basis points (1.0%).  Any change in the Base Rate (or any component thereof) shall take effect at the opening of business on the day such change occurs.

 

Base Rate Option shall mean the option of the Borrower to have Loans bear interest at the rate and under the terms set forth in Section 4.1.1(i) [Revolving Credit Base Rate Options].

 

Beneficial Owner shall mean, for each Loan Party, each of the following:  (a) each individual, if any, who, directly or indirectly, owns 25% or more of such Loan Party’s Capital Stock; and (b) a single individual with significant responsibility to control, manage, or direct each Loan Party.

 

Benefit Plan shall mean any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

 

Borrower shall have the meaning specified in the introductory paragraph.

 

Borrowing Date shall mean, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day.

 

Borrowing Tranche shall mean specified portions of Loans outstanding as follows:  (i) any Loans to which a LIBOR Rate Option applies which become subject to the same Interest Rate Option under the same Loan Request by the Borrower and which have the same Interest Period shall constitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche.

 

Business Day shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Pittsburgh, Pennsylvania and if the applicable Business Day relates to any Loan to which the LIBOR Rate Option applies, such day must also be a day on which dealings are carried on in the London interbank market.

 

3

 

Capital Expenditures shall mean for any period, with respect to any Person, the aggregate of all expenditures by such Person for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which are required to be capitalized under GAAP on a consolidated balance sheet of such Person.

 

Capital Stock shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

 

Cash Collateralize means to pledge and deposit with or deliver to Administrative Agent, for the benefit of each Issuing Lender and the Lenders, as collateral for the Letter of Credit Obligations, cash or deposit account balances pursuant to documentation reasonably satisfactory to Administrative Agent and each Issuing Lender (which documents are hereby consented to by the Lenders).  Such cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at the Administrative Agent.

 

Cash Management Agreements shall have the meaning specified in Section 2.6.6 [Swing Loans Under Cash Management Agreements].

 

CEA shall mean the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended from time to time, and any successor statute.

 

Certificate of Beneficial Ownership shall mean, for each Loan Party, a certificate in form and substance acceptable to Administrative Agent (as amended or modified by Administrative Agent from time to time in its sole discretion), certifying, among other things, the Beneficial Owner of such Loan Party.

 

CFTC shall mean the Commodity Futures Trading Commission.

 

Change in Law shall mean the occurrence, after the date of this Agreement, of any of the following: (i) the adoption or taking effect of any Law, (ii) any change in any Law or in the administration, interpretation, implementation or application thereof by any Official Body or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Official Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of Law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of Law), in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law regardless of the date enacted, adopted, issued, promulgated or implemented.

 

Change of Control shall mean (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a Permitted Holder, shall become, or obtain rights (whether by means of

 

4

 

warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 35% of the Capital Stock of the Borrower, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated or approved by the board of directors of the Borrower nor (ii) appointed by directors so nominated; or (c) the Borrower shall cease to own, directly or indirectly, free and clear of all Liens or other encumbrances (other than Permitted Liens), 100% of the outstanding voting Capital Stock of each of its Subsidiaries on a fully diluted basis (unless such Subsidiary is an Immaterial Subsidiary that is disposed under and in accordance with the terms of Section 8.2.7(v) [Dispositions of Assets or Subsidiaries].

 

CIP Regulations shall have the meaning specified in Section 10.11 [No Reliance on Administrative Agent’s Customer Identification Program].

 

Closing Date shall mean the Business Day on which the first Loan shall be made, which shall be July 17, 2019.

 

Code shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

 

Collateral shall mean the collateral under the (i) Security Agreement, (ii) Pledge Agreement, or (iii) Patent, Trademark and Copyright Security Agreement and any cash collateral referred to in the definition of Cash Collateralize.

 

Collateral Documents shall have the meaning specified in Section 6.1.11 [Liens in the Collateral].

 

Commitment shall mean as to any Lender the aggregate of its Revolving Credit Commitment and, in the case of PNC, its Swing Loan Commitment, and Commitments shall mean the aggregate of the Revolving Credit Commitments and Swing Loan Commitment of all of the Lenders.

 

Commitment Fee shall have the meaning specified in Section 2.3 [Commitment Fees].

 

Compliance Certificate shall have the meaning specified in Section 8.3.3 [Certificate of the Borrower].

 

Connection Income Taxes shall mean Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

Consolidated EBITDA shall mean, for any period of determination, the sum of the following: (a) net income for such period, plus (b) the sum of the following, without duplication, to the extent deducted in determining consolidated net income for such period:

 

(i) expense for taxes paid in cash or accrued,

 

5

 

(ii) Consolidated Interest Expense,

 

(iii) depreciation,

 

(iv) amortization,

 

(v) documented fees, costs and expenses relating to the Transaction incurred within ninety (90) days of the Closing Date,

 

(vi) documented fees, costs, transaction expenses and non-recurring charges (other than depreciation or amortization expense) relating to Permitted Acquisitions, amendments to the Loan Documents, investments, loans, issuances of equity, and restricted payments, in each case, permitted hereby (including, without limitation, legal costs, accounting fees, third party consultant charges and severance costs), in each case, whether or not consummated,

 

(vii) losses resulting from the disposition of assets of the Loan Parties outside of the ordinary course of business,

 

(viii) losses resulting from the early termination of leases and other lease exit costs,

 

(ix) litigation related charges, costs and expenses incurred outside of the ordinary course of business (including any settlement costs related thereto),

 

(x) non-recurring expenses relating to unforeseen regulatory compliance,

 

(xi) non-recurring business optimization expenses and other restructuring charges, reserves or expenses (including such charges, reserves and expenses incurred in connection with Permitted Acquisitions), including charges or expenses arising from start-up or initial costs for any project or new line of business, facility consolidations and integration costs, and systems establishment costs; provided that, the aggregate amount added back pursuant to this clause (xi) plus the amount added back pursuant to clause (xii) shall not exceed 15% of Consolidated EBITDA (before giving effect to any such addback) for any period of determination,

 

(xii) for any period on or after the Closing Date, those demonstrable cost-savings relating to operational changes (including cost saving initiatives), net of actual amounts realized, and that are reasonably anticipated by the Borrower in good faith to be realized within twelve (12) months following such event or action as of any date of determination, for which such event or action resulting in such cost-savings is implemented on or after the Closing Date and calculated as if such event or action had occurred on the first day of the Test Period provided that, the aggregate amount added back pursuant to this clause (xii) plus the amount added back pursuant to clause (xi) shall not exceed 15% of Consolidated EBITDA (before giving effect to any such addback) for any period of determination,

 

6

 

(xiii) other reasonable, non-recurring charges,

 

(xiv) adjustments to eliminate stock based compensation expense and employer payroll taxes related to stock releases and stock option exercises, and

 

(xv) extraordinary losses (excluding extraordinary losses from discontinued operations),

 

minus (c) to the extent included in determining consolidated net income for such period: non-recurring, non-cash gains or non-cash items that increased consolidated net income (excluding non-cash credits that represent an accrual or reserve for a future or potential future cash payment), in each case of the Borrower and its Subsidiaries for such period determined and consolidated in accordance with GAAP.

 

For purposes of determining compliance with the Financial Covenants, each Subject Transaction that constitutes a significant acquisition for purposes of Rule 3-05 or Article 11under Regulation S-X that occurs during any Test Period shall be deemed to have occurred on and as of the first day of such Test Period and Consolidated EBITDA shall be adjusted to include income statement items attributable to acquisitions and exclude income statement items attributable to dispositions, in each case, for the relevant Test Period.

 

Consolidated Interest Expense shall mean, for any period of determination, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense under capitalized leases that is treated as interest in accordance with GAAP, in each case, of or by the Borrower and its Subsidiaries on a consolidated basis.

 

Consolidated Senior Secured Indebtedness shall mean, at any date of determination, consolidated Indebtedness of the Borrower and its Subsidiaries as of such date that, in each case, is then secured by Liens on the property or assets of the Borrower or any of its Subsidiaries (other than Indebtedness secured by a Lien ranking junior to or subordinated to the Liens securing the Obligations pursuant to a written agreement).

 

Control Agreement shall mean each deposit account control agreement or securities account control agreement, as applicable, entered into by a Loan Party, each depository institution or securities intermediary party thereto and Administrative Agent in form and substance reasonably satisfactory to Administrative Agent.

 

Controlled Deposit Account shall mean a deposit account of a Loan Party subject to a Control Agreement.

 

Covered Entity shall mean (a) the Borrower, each of Borrower’s Subsidiaries, all Guarantors and all pledgors of Collateral, and (b) each Person that, directly or indirectly, is in control of a Person described in clause (a) above.  For purposes of this definition, control of a

 

7

 

Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

 

Customer Funds shall mean any funds that are received by any Loan Party from or on behalf of any customer or its Related Parties that are required to make payroll, payroll taxes, other employment-related taxes or other payments by the Loan Party or its Subsidiaries on behalf of such customer or its Related Parties pursuant to any direct or indirect services or other arrangement between such Loan Party or any of its Subsidiaries and such customer.

 

Daily LIBOR Rate shall mean, for any day, the rate per annum determined by the Administrative Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the LIBOR Reserve Percentage on such day.  Notwithstanding the foregoing, if the Daily LIBOR Rate as determined above would be less than zero (0.00), such rate shall be deemed to be zero (0.00) for purposes of this Agreement.

 

Defaulting Lender shall mean any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swing Loans or (iii) pay over to the Administrative Agent, the Issuing Lender, PNC (as the Swing Loan Lender) or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or the Administrative Agent in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within two Business Days after request by the Administrative Agent or the Borrower, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s or the Borrower’s receipt of such certification in form and substance satisfactory to the Administrative Agent or the Borrower, as the case may be, (d) has become the subject of a Bankruptcy Event, (e) has failed at any time to comply with the provisions of Section 5.3 [Sharing of Payments by Lenders] with respect to purchasing participations from the other Lenders, whereby such Lender’s share of any payment received, whether by setoff or otherwise, is in excess of its Ratable Share of such payments due and payable to all of the Lenders or (f) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action.

 

8

 

As used in this definition and in Section 2.10 [Defaulting Lenders], the term “Bankruptcy Event” means, with respect to any Person, such Person or such Person’s direct or indirect parent company becoming the subject of a bankruptcy or insolvency proceeding, or having had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by an Official Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Official Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

 

Delaware LLC means any limited liability company organized or formed under the laws of the State of Delaware.

 

Delaware Divided LLC means any Delaware LLC which has been formed upon the consummation of a Delaware LLC Division.

 

Delaware LLC Division means the statutory division of any Delaware LLC into two or more Delaware LLCs pursuant to Section 18-217 of the Delaware Limited Liability Company Act.

 

Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of the United States of America.

 

Drawing Date shall have the meaning specified in Section 2.9.3 [Disbursements, Reimbursement].

 

EEA Financial Institution shall mean (a) any credit institution or investment firm established in an EEA Member Country that is subject to the supervision of an EEA Resolution Authority; (b) any entity established in an EEA Member Country that is a parent of an institution described in clause (a) above; or (c) any financial institution established in an EEA Member Country that is a subsidiary of an institution described in the foregoing clauses and is subject to consolidated supervision with its parent.

 

EEA Member Country shall mean any of the member states of the European Union, Iceland, Liechtenstein and Norway.

 

EEA Resolution Authority shall mean any public administrative authority or any Person entrusted with public administrative authority of an EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

Effective Date means the date indicated in a document or agreement to be the date on which such document or agreement becomes effective, or, if there is no such indication, the date of execution of such document or agreement.

 

9

 

Eligible Contract Participant shall mean an “eligible contract participant” as defined in the CEA and regulations thereunder.

 

Eligibility Date shall mean, with respect to each Loan Party and each Swap, the date on which this Agreement or any other Loan Document becomes effective with respect to such Swap (for the avoidance of doubt, the Eligibility Date shall be the Effective Date of such Swap if this Agreement or any other Loan Document is then in effect with respect to such Loan Party, and otherwise it shall be the Effective Date of this Agreement and/or such other Loan Document(s) to which such Loan Party is a party).

 

Environmental Laws shall mean all applicable federal, state, local, tribal, territorial and foreign Laws (including common law), constitutions, statutes, treaties, regulations, rules, ordinances and codes and any consent decrees, settlement agreements, judgments, orders, directives, policies or programs issued by or entered into with an Official Body pertaining or relating to: (i) pollution or pollution control; (ii) protection of human health from exposure to regulated substances; (iii) protection of the environment and/or natural resources; (iv) the presence, use, management, generation, manufacture, processing, extraction, treatment, recycling, refining, reclamation, labeling, packaging, sale, transport, storage, collection, distribution, disposal or release or threat of release of regulated substances; (v) the presence of contamination; (vi) the protection of endangered or threatened species; and (vii) the protection of environmentally sensitive areas.

 

ERISA shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

 

ERISA Event shall mean (a) with respect to a Pension Plan, a reportable event under Section 4043 of ERISA as to which event (after taking into account notice waivers provided for in the regulations) there is a duty to give notice to the PBGC; (b) a withdrawal by Borrower or any member of the ERISA Group from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any member of the ERISA Group from a Multiemployer Plan, notification that a Multiemployer Plan is in reorganization, or occurrence of an event described in Section 4041A(a) of ERISA that results in the termination of a Multiemployer Plan; (d) the filing of a notice of intent to terminate a Pension Plan, the treatment of a Pension Plan amendment as a termination under Section 4041(e) of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any member of the ERISA Group.

 

ERISA Group shall mean, at any time, the Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with the Borrower, are treated as a single employer under Section 414 of the Code or Section 4001(b)(1) of ERISA.

 

10

 

EU Bail-In Legislation Schedule shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association, as in effect from time to time.

 

Event of Default shall mean any of the events described in Section 9.1 [Events of Default] and referred to therein as an “Event of Default.”

 

Excluded Hedge Liability or Liabilities shall mean, with respect to each Loan Party, each of its Swap Obligations if, and only to the extent that, all or any portion of this Agreement or any other Loan Document that relates to such Swap Obligation is or becomes illegal under the CEA, or any rule, regulation or order of the CFTC, solely by virtue of such Loan Party’s failure to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap. Notwithstanding anything to the contrary contained in the foregoing or in any other provision of this Agreement or any other Loan Document, the foregoing is subject to the following provisos: (a) if a Swap Obligation arises under a master agreement governing more than one Swap, this definition shall apply only to the portion of such Swap Obligation that is attributable to Swaps for which such guaranty or security interest is or becomes illegal under the CEA, or any rule, regulations or order of the CFTC, solely as a result of the failure by such Loan Party for any reason to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap, (b) if a guarantee of a Swap Obligation would cause such obligation to be an Excluded Hedge Liability but the grant of a security interest would not cause such obligation to be an Excluded Hedge Liability, such Swap Obligation shall constitute an Excluded Hedge Liability for purposes of the guaranty but not for purposes of the grant of the security interest, and (c) if there is more than one Loan Party executing this Agreement or the other Loan Documents and a Swap Obligation would be an Excluded Hedge Liability with respect to one or more of such Persons, but not all of them, the definition of Excluded Hedge Liability or Liabilities with respect to each such Person shall only be deemed applicable to (i) the particular Swap Obligations that constitute Excluded Hedge Liabilities with respect to such Person, and (ii) the particular Person with respect to which such Swap Obligations constitute Excluded Hedge Liabilities.

 

Excluded Taxes shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (a) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (b) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (a) such Lender acquires such interest in such Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 5.6.2 [Replacement of a Lender]) or (b) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 5.9.7 [Status of Lenders], amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 5.9.7 [Status of Lenders], and (iv) any U.S. federal withholding Taxes imposed under FATCA.

 

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Executive Order No. 13224 shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

 

Exempt Accounts shall mean (i) any account exclusively used for payroll, taxes, employee wage and benefits payments or fiduciary or trust purposes, in each case, of any Loan Party, (ii) zero balance accounts, pension accounts and 401(k) accounts, (iii) Segregated Customer Funds Accounts, (iv) accounts, if any, that contain or receive governmental payor receivables, and (v) any account the daily balance in which does not at any time exceed $5,000,000, provided, that to the extent the daily balances in all accounts that would not otherwise be Exempt Accounts but for their balances exceed $10,000,000 in the aggregate, such accounts shall no longer be Exempt Accounts.

 

Expiration Date shall mean, with respect to the Revolving Credit Commitments, July 17, 2024.

 

FATCA shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Official Bodies and implementing such Sections of the Code.

 

Federal Funds Effective Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.

 

Federal Funds Open Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as reasonably selected by the Administrative Agent (for purposes of this definition, an “Alternate Source”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate reasonably determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate

 

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for such day shall be the “open” rate on the immediately preceding Business Day.  If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to the Borrower, effective on the date of any such change.

 

Financial Covenant Compliance shall mean, as of any date of determination and with respect to any Subject Transaction, that the Loan Parties are in compliance with the Financial Covenants immediately before and after giving effect to such transaction determined on the basis of the financial information most recently delivered pursuant to Section 8.3.1 [Quarterly Financial Statements] or 8.3.2 [Annual Financial Statements] and recalculated as though such Subject Transaction (including any Indebtedness incurred in connection therewith (including any commitments that are being incurred on such date of determination, assuming the borrowing of the entire amount thereof on such date)) had been consummated on the first day of the Test Period covered by such financial information. Any Indebtedness actually or proposed to be incurred or assumed in connection with such Subject Transaction shall be deemed to have been incurred as of the first day of the applicable Test Period, and interest thereon shall be deemed to have accrued from such day on such Indebtedness at the applicable rates provided therefor (and in the case of interest that does or would accrue at a formula or floating rate, at the rate in effect at the time of determination) and shall be included in the results of the Borrower and its Subsidiaries for such Test Period and any Indebtedness repaid in connection with such Subject Transaction shall be deemed to have been repaid as of the first day of the applicable Test Period.

 

Financial Covenants shall mean the covenants set forth in Sections 8.2.14 [Maximum Net Total Leverage Ratio], Section 8.2.15 [Maximum Net Senior Secured Leverage Ratio] and Section 8.2.16 [Minimum Consolidated Interest Coverage Ratio].

 

Foreign Currency Hedge shall mean any foreign exchange transaction, including spot and forward foreign currency purchases and sales, listed or over-the-counter options on foreign currencies, non-deliverable forwards and options, foreign currency swap agreements, currency exchange rate price hedging arrangements, and any other similar transaction providing for the purchase of one currency in exchange for the sale of another currency.

 

Foreign Currency Hedge Liabilities shall have the meaning assigned in the definition of Lender Provided Foreign Currency Hedge.

 

Foreign Lender shall mean (i) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (ii) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the Laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.

 

GAAP shall mean generally accepted accounting principles as are in effect from time to time, subject to the provisions of Section 1.3 [Accounting Principles; Changes in GAAP], and applied on a consistent basis both as to classification of items and amounts.

 

Guarantor shall mean each of the parties to this Agreement which is designated as a “Guarantor” on the signature page hereof and each other Person which joins this Agreement as

 

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a Guarantor after the date hereof.  As of the Closing Date, the only Guarantor is Paylocity Corporation.

 

Guarantor Joinder shall mean a joinder by a Person as a Guarantor under the Loan Documents in the form of Exhibit 1.1(G)(1).

 

Guaranty of any Person shall mean any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business.

 

Guaranty Agreement shall mean the Continuing Agreement of Guaranty and Suretyship in substantially the form of Exhibit 1.1(G)(2) executed and delivered by each of the Guarantors to the Administrative Agent for the benefit of the Lenders.

 

Hedge Liabilities shall mean collectively, the Foreign Currency Hedge Liabilities and the Interest Rate Hedge Liabilities.

 

ICC shall have the meaning specified in Section 11.11.1 [Governing Law].

 

Immaterial Subsidiary shall mean each subsidiary (i) that contributes 5.0% or less to Consolidated EBITDA for the most recently ended Test Period for which financial statements have been delivered, or (ii) that contributes 5.0% or less to the consolidated assets of the Borrower and its Subsidiaries for the most recently ended Test Period for which financial statements have been delivered; provided that, if at the end of any fiscal quarter the aggregate amount of Consolidated EBITDA or consolidated assets of all Immaterial Subsidiaries exceeds 5.0% of Consolidated EBITDA or 5.0% of consolidated assets of the Borrower and its Subsidiaries, as applicable, the Borrower shall cause such Subsidiaries to not be Immaterial Subsidiaries and to join this Agreement as Guarantors in accordance with Section 8.2.9 [Subsidiaries, Partnerships and Joint Ventures] to eliminate such excess.

 

Increasing Lender shall have the meaning assigned to that term in Section 2.4.2 [Increase in Revolving Credit Commitments].

 

Indebtedness shall mean, as to any Person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of:  (i) borrowed money, (ii) obligations evidenced by notes, bonds, debentures or similar instruments, (iii) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (iv) reimbursement obligations (contingent or otherwise) under any letter of credit agreement or similar facilities, (v) obligations under any currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate or currency risk management device, (vi) any other transaction (including, without limitation, forward sale or purchase agreements, capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of business which

 

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are not represented by a promissory note or other evidence of indebtedness and which are not subject to a good faith dispute or more than sixty (60) days past due), (vii) any Guaranty of Indebtedness of a type referred to in clauses (i) through (vi) above and (viii) all obligations of the kind referred to in clauses (i) through (vii) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation. For the avoidance of doubt, “Indebtedness” of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent that such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor .

 

Indemnified Taxes shall mean (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document, and (ii) to the extent not otherwise described in the preceding clause (i), Other Taxes.

 

Indemnitee shall have the meaning specified in Section 11.3.2 [Indemnification by the Loan Parties].

 

Information shall mean all information received from the Loan Parties or any of their Subsidiaries relating to the Loan Parties or any of such Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Issuing Lender on a non-confidential basis prior to disclosure by the Loan Parties or any of their Subsidiaries, provided that, in the case of information received from the Loan Parties or any of their Subsidiaries after the date of this Agreement, such information is clearly identified at the time of delivery as confidential.

 

Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of its creditors; undertaken under any Law.

 

Intercompany Subordination Agreement shall mean a Subordination Agreement among the Loan Parties in the form attached hereto as Exhibit 1.1(I)(2).

 

Interest Period shall mean the period of time selected by the Borrower in connection with (and to apply to) any election permitted hereunder by the Borrower to have Revolving Credit Loans bear interest under the LIBOR Rate Option.  Subject to the last sentence of this definition, such period shall be one, two, three or six Months.  Such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be (i) the Borrowing

 

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Date if the Borrower is requesting new Loans, or (ii) the date of renewal of or conversion to the LIBOR Rate Option if the Borrower is renewing or converting to the LIBOR Rate Option applicable to outstanding Loans.  Notwithstanding the second sentence hereof: (A) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (B) the Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Expiration Date.

 

Interest Rate Hedge shall mean an interest rate exchange, collar, cap, swap, floor, adjustable strike cap, adjustable strike corridor, cross-currency swap or similar agreements entered into by any Loan Party in order to provide protection to, or minimize the impact upon, such Loan Party of increasing floating rates of interest applicable to Indebtedness.

 

Interest Rate Hedge Liabilities shall have the meaning assigned in the definition of Lender Provided Interest Rate Hedge.

 

Interest Rate Option shall mean any LIBOR Rate Option or Base Rate Option.

 

IRS shall mean the United States Internal Revenue Service.

 

ISP98 shall have the meaning specified in Section 11.11.1 [Governing Law].

 

Issuing Lender shall mean PNC, in its individual capacity as issuer of Letters of Credit hereunder, and any other Lender that Borrower, Administrative Agent and such other Lender may agree may from time to time issue Letters of Credit hereunder.

 

Joint Venture shall mean a corporation, partnership, limited liability company or other entity in which any Person other than the Loan Parties and their Subsidiaries holds, directly or indirectly, an equity interest.

 

Law shall mean any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Official Body, foreign or domestic.

 

Lead Arranger shall mean PNC Capital Markets, LLC, and its successors and assigns in such capacity.

 

Lender Provided Foreign Currency Hedge shall mean a Foreign Currency Hedge which is provided by any Lender or its Affiliate and for which such Lender confirms to the Administrative Agent in writing prior to the execution thereof that it: (a) is documented in a standard International Swaps and Derivatives Association Master Agreement or another reasonable and customary manner, and (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner.  The liabilities owing to the provider of any Lender Provided Foreign Currency Hedge (the “Foreign Currency Hedge Liabilities”) by any Loan Party that is party to such Lender

 

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Provided Foreign Currency Hedge shall, for purposes of this Agreement and all other Loan Documents be “Obligations” of such Person and of each other Loan Party, be guaranteed obligations under the Guaranty Agreement and secured obligations under any other Loan Document, as applicable, and otherwise treated as Obligations for purposes of the other Loan Documents, except to the extent constituting Excluded Hedge Liabilities of such Person. The Liens securing the Foreign Currency Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the other Loan Documents, subject to the express provisions of Section 9.2.5 [Application of Proceeds].

 

Lender Provided Interest Rate Hedge shall mean an Interest Rate Hedge which is provided by any Lender or its Affiliate and with respect to which such Lender confirms to Administrative Agent in writing prior to the execution thereof that it: (a) is documented in a standard International Swaps and Derivatives Association Master Agreement or another reasonable and customary manner, and (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner.  The liabilities owing to the provider of any Lender Provided Interest Rate Hedge (the “Interest Rate Hedge Liabilities”) by any Loan Party that is party to such Lender Provided Interest Rate Hedge shall, for purposes of this Agreement and all other Loan Documents be “Obligations” of such Person and of each other Loan Party, be guaranteed obligations under any Guaranty Agreement and secured obligations under any other Loan Document, as applicable, and otherwise treated as Obligations for purposes of the other Loan Documents, except to the extent constituting Excluded Hedge Liabilities of such Person. The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the other Loan Documents, subject to the express provisions of Section 9.2.5 [Application of Proceeds].

 

Lenders shall mean the financial institutions named on Schedule 1.1(B) and their respective successors and assigns as permitted hereunder, each of which is referred to herein as a Lender.  For the purpose of any Loan Document which provides for the granting of a security interest or other Lien to the Lenders or to the Administrative Agent for the benefit of the Lenders as security for the Obligations, “Lenders” shall include any Affiliate of a Lender to which such Obligation is owed.

 

Letter of Credit shall have the meaning specified in Section 2.9.1 [Issuance of Letters of Credit].

 

Letter of Credit Borrowing shall have the meaning specified in Section 2.9.3 [Disbursements, Reimbursement].

 

Letter of Credit Fee shall have the meaning specified in Section 2.9.2 [Letter of Credit Fees].

 

Letter of Credit Obligation shall mean, as of any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit on such date (if any Letter of Credit shall increase in amount automatically in the future, such aggregate amount available to be drawn shall currently give effect to any such future increase) plus the aggregate Reimbursement Obligations and Letter of Credit Borrowings on such date.

 

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Letter of Credit Sublimit shall have the meaning specified in Section 2.9.1 [Issuance of Letters of Credit].

 

LIBOR Rate shall mean, with respect to the Loans comprising any Borrowing Tranche to which the LIBOR Rate Option applies for any Interest Period, the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by the Administrative Agent as an authorized information vendor for the purpose of displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (for purposes of this definition, an “Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount comparable to such Borrowing Tranche and having a borrowing date and a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the LIBOR Reserve Percentage.  Notwithstanding the foregoing, if the LIBOR Rate as determined under any method above would be less than zero (0.00), such rate shall be deemed to be zero (0.00) for purposes of this Agreement.

 

The LIBOR Rate shall be adjusted with respect to any Loan to which the LIBOR Rate Option applies that is outstanding on the effective date of any change in the LIBOR Reserve Percentage as of such effective date.  The Administrative Agent shall give prompt notice to the Borrower of the LIBOR Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

 

LIBOR Rate Option shall mean the option of the Borrower to have Loans bear interest at the rate and under the terms set forth in Section 4.1.1(ii) [Revolving Credit LIBOR Rate Option].

 

LIBOR Reserve Percentage shall mean as of any day the maximum percentage in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).

 

LIBOR Termination Date shall have the meaning given to such term in Section 4.6 [Successor LIBOR Rate Index].

 

Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any

 

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filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).

 

Loan Documents shall mean this Agreement, the Administrative Agent’s Letter, the Guaranty Agreement, the Intercompany Subordination Agreement, the Notes, the Patent, Trademark and Copyright Security Agreement, the Pledge Agreement, the Security Agreement, and any other instruments, certificates or documents delivered in connection herewith or therewith, in each case as amended, restated, replaced, supplemented, or otherwise modified from time to time, and all amendments to any or all of the foregoing.

 

Loan Parties shall mean the Borrower and the Guarantors.

 

Loan Request shall have the meaning specified in Section 2.5 [Revolving Credit Loan Requests; Swing Loan Requests].

 

Loans shall mean collectively and Loan shall mean separately all Revolving Credit Loans and Swing Loans or any Revolving Credit Loan or Swing Loan.

 

Material Adverse Change shall mean any set of circumstances or events which (a) has or would reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (b) is or would reasonably be expected to be material and adverse to the business, properties, assets, financial condition or results of operations of the Loan Parties taken as a whole, (c) impairs materially or would reasonably be expected to impair materially the ability of the Loan Parties taken as a whole to duly and punctually pay or perform any of the Obligations, or (d) impairs materially or would reasonably be expected to impair materially the ability of the Administrative Agent or any of the Lenders, to the extent permitted, to enforce their legal remedies pursuant to this Agreement or any other Loan Document.

 

Month, with respect to an Interest Period under the LIBOR Rate Option, shall mean the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period.  If any LIBOR Rate Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.

 

Multiemployer Plan shall mean any employee pension benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any member of the ERISA Group is then making or accruing an obligation to make contributions or, within the preceding five plan years, has made or had an obligation to make such contributions.

 

Net Senior Secured Leverage Ratio shall mean, as of any date of determination, the ratio of (A) Consolidated Senior Secured Indebtedness of Borrower and its Subsidiaries net of unrestricted domestic cash and cash equivalents of the Loan Parties on such date to (B) Consolidated EBITDA (i) for the Test Period then ended if such date is a fiscal quarter end or (ii) for the Test Period most recently ended if such date is not a fiscal quarter end.

 

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Net Total Leverage Ratio shall mean, as of any date of determination, the ratio of (A) consolidated Indebtedness of Borrower and its Subsidiaries net of unrestricted domestic cash and cash equivalents of the Loan Parties on such date to (B) Consolidated EBITDA (i) for the Test Period then ended if such date is a fiscal quarter end or (ii) for the Test Period most recently ended if such date is not a fiscal quarter end.

 

New Lender shall have the meaning assigned to that term in Section 2.4.2 [Increase in Revolving Credit Commitments].

 

Non-Consenting Lender shall have the meaning specified in Section 11.1 [Modifications, Amendments or Waivers].

 

Non-Qualifying Party shall mean any Loan Party that fails for any reason to qualify as an Eligible Contract Participant on the Effective Date of the applicable Swap.

 

Notes shall mean collectively, and Note shall mean separately, the promissory notes in the form of Exhibit 1.1(N)(1) evidencing the Revolving Credit Loans and in the form of Exhibit 1.1(N)(2) evidencing the Swing Loan.

 

Obligation shall mean any obligation or liability of any of the Loan Parties, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with (i) this Agreement, the Notes, the Letters of Credit, the Administrative Agent’s Letter or any other Loan Document whether to the Administrative Agent, any of the Lenders or their Affiliates or other persons provided for under such Loan Documents, (ii) any Lender Provided Interest Rate Hedge, (iii) any Lender Provided Foreign Currency Hedge, and (iv) any Other Lender Provided Financial Service Product.  Notwithstanding anything to the contrary contained in the foregoing, the Obligations shall not include any Excluded Hedge Liabilities.

 

Official Body shall mean the government of the United States of America 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) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).

 

Order shall have the meaning specified in Section 2.9.9 [Liability for Acts and Omissions].

 

Other Connection Taxes shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient (or an agent or affiliate thereof) and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any

 

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other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

Other Lender Provided Financial Service Product shall mean agreements or other arrangements under which any Lender or Affiliate of a Lender provides any of the following products or services to any of the Loan Parties: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions, or (f) cash management, including controlled disbursement, accounts or services.

 

Other Taxes shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.6.2 [Replacement of a Lender]).

 

Participant has the meaning specified in Section 11.8.4 [Participations].

 

Participant Register shall have the meaning specified in Section 11.8.4 [Participations].

 

Participation Advance shall have the meaning specified in Section 2.9.3 [Disbursements, Reimbursement].

 

Patent, Trademark and Copyright Security Agreement shall mean the Patent, Trademark and Copyright Security Agreement in substantially the form of Exhibit 1.1(P)(1) executed and delivered by each of the Loan Parties to the Administrative Agent for the benefit of the Lenders.

 

Payment Date shall mean the first day of each calendar quarter after the date hereof and on the Expiration Date or upon acceleration of the Notes.

 

Payment In Full and Paid in Full shall mean (a) the indefeasible payment in full in cash of the Loans and other Obligations (other than contingent obligations for which no claim has been made), (b) termination of the Commitments, (c) with respect to all Letters of Credit either (i) expiration or termination thereof or (ii) Cash Collateralization thereof, in accordance with this Agreement, and (d) expiration or termination of any and all Lender Provided Foreign Currency Hedges, Lender Provided Interest Rate Hedges, and Other Lender Provided Financial Service Products in a manner reasonably satisfactory to the Lender or its Affiliate providing those Lender Provided Foreign Currency Hedges, Lender Provided Interest Rate Hedges, and Other Lender Provided Financial Service Products, to the extent required by such Lender or Affiliate.

 

PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.

 

Pension Plan shall mean at any time an “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA) (including a “multiple employer plan” as described in

 

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Sections 4063 and 4064 of ERISA, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 or Section 430 of the Code and either (i) is sponsored, maintained or contributed to by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been sponsored, maintained or contributed to by any entity which was at such time a member of the ERISA Group for employees of any entity which was at such time a member of the ERISA Group, or in the case of a “multiple employer” or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

 

Permitted Acquisition means any Acquisition by any Loan Party where:

 

(a)                                 the business, division or assets acquired are for use, or the Person acquired is engaged, in the Permitted Business;

 

(b)                                 immediately before and after giving effect to such Acquisition, no Potential Default or Event of Default exists;

 

(c)                                  immediately before and after giving effect to such Acquisition, the Loan Parties are in Financial Covenant Compliance;

 

(d)                                 in the case of the Acquisition of any Person, the board of directors or similar governing body of that Person has approved such Acquisition;

 

(e)                                  the provisions of Section 8.1.8 [Further Assurances] have been satisfied, and within thirty (30) days after the closing of such Acquisition, the target company (if such Acquisition is structured as a purchase of equity) or the Loan Party (if such Acquisition is structured as a purchase of assets or a merger and a Loan Party is the surviving entity) executes and delivers to Administrative Agent (i) all documents necessary to grant to Administrative Agent a first-priority Lien on all of the assets of each of the target company or surviving company and its Subsidiaries, each in form and substance reasonably satisfactory to Administrative Agent, and (ii) Guarantor Joinder, in each case, to the extent required by Section 8.2.9 [Subsidiaries, Partnerships and Joint Ventures];

 

(f)                                   if the Acquisition is structured as a merger, the Borrower or a domestic Subsidiary that is a Loan Party will be the surviving entity;

 

(g)                                  with respect to any Acquisition (or series of related Acquisitions) with respect to which the consideration is greater than $50,000,000:

 

i.                        the Administrative Agent (for distribution to the Lenders) shall have received not less than ten (10) days prior to the consummation of any such Acquisition (A) a description of the material terms of such Acquisition, and (B) to the extent available to Borrower, the audited financial statements (or, if unavailable, management-prepared financial statements) of such Person and/or business, division or

 

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assets to be acquired for its most recent fiscal year and for any fiscal quarters ended within the fiscal year to date;

 

ii.                     (A) not less than ten (10) Business Days prior to such Acquisition (or any later date approved by Administrative Agent in its sole discretion), Administrative Agent has received drafts of each material document, instrument and agreement to be executed in connection with such Acquisition, and (B) not less than two (2) Business Days prior to such Acquisition (or any later date approved by Administrative Agent in its sole discretion), Administrative Agent has received complete executed or conformed copies of each material document, instrument and agreement to be executed in connection with such Acquisition together with all lien search reports and lien release letters and other documents as Administrative Agent reasonably requires to evidence the termination of Liens on the assets, business, or division to be acquired; and

 

iii.                  to the extent readily available to Borrower, and not otherwise subject to confidentiality restrictions, and subject to customary non-reliance letters, Borrower has provided Administrative Agent with all other information with respect to such Acquisition as reasonably requested by Administrative Agent (including, without limitation, if reasonably requested by Administrative Agent, one or more third-party due-diligence reports and quality-of-earnings reports); and

 

(h)                                 with respect to any Acquisition (or series of related Acquisitions) that constitutes a significant acquisition for purposes of Rule 3-05 or Article 11 under Regulation S-X, the Loan Parties shall deliver to the Administrative Agent a certificate in form and substance reasonably acceptable to the Administrative Agent, executed by the Chief Executive Officer, President, Chief Financial Officer or Chief Accounting Officer of the Borrower, and demonstrating in detail comparable to a Compliance Certificate that, immediately before and after giving effect to such Acquisition, the Loan Parties are in Financial Covenant Compliance and certifying that such Acquisition is a Permitted Acquisition that complies with all of the requirements of this Agreement.

 

Permitted Business shall mean the lines of business as conducted and operated from time to time of the Loan Parties and any other activities that are reasonably similar, ancillary, incidental, complimentary or related to, or a reasonable extension, development or expansion of, such business, including, without limitation, providing business-to-business software and technology services.

 

Permitted Holder shall mean Steven I. Sarowitz and any Person which directly or indirectly is controlled by Steven I. Sarowitz.

 

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Permitted Investments shall mean:

 

(i)                                     direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition;

 

(ii)                                  commercial paper maturing in 180 days or less rated not lower than A-1, by Standard & Poor’s or P-1 by Moody’s Investors Service, Inc. on the date of acquisition;

 

(iii)                               demand deposits, time deposits or certificates of deposit maturing within one year in commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard & Poor’s on the date of acquisition;

 

(iv)                              money market or mutual funds whose investments are limited to those types of investments described in clauses (i)-(iii) above;

 

(v)                                 investments made under the Cash Management Agreements or under cash management agreements with any other Lenders; and

 

(vi)                              any other investments made pursuant to the Borrower’s Investment Policy dated February 2016, as such policy may be amended or replaced from time to time with the Administrative Agent’s prior written consent.

 

Permitted Liens shall mean:

 

(i)                                     Liens for Taxes, assessments, or similar charges, incurred in the ordinary course of business and which are not yet due and payable;

 

(ii)                                  Pledges or deposits made in the ordinary course of business to secure payment of workmen’s compensation, or to participate in any fund in connection with workmen’s compensation, unemployment insurance, old-age pensions or other social security programs;

 

(iii)                               Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default;

 

(iv)                              Good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money or as security for Hedge Liabilities or margining related to commodities hedges) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business;

 

(v)                                 Encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property

 

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or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use;

 

(vi)                              Liens, security interests and mortgages in favor of the Administrative Agent for the benefit of the Lenders and their Affiliates securing the Obligations (including Lender Provided Interest Rate Hedges, Lender Provided Foreign Currency Hedges, and Other Lender Provided Financial Services Obligations);

 

(vii)                           Any Lien existing on the date of this Agreement and described on Schedule 1.1(P), provided that the principal amount secured thereby is not hereafter increased, and no additional assets become subject to such Lien;

 

(viii)                        Purchase Money Security Interests and capitalized leases to the extent permitted under Section 8.2.1(iii) [Indebtedness]; provided that such Liens shall be limited to the assets acquired with such purchase money financing or leased pursuant to such capital lease;

 

(ix)                              Other Liens to the extent that the Indebtedness secured thereby does not exceed $15,000,000;

 

(x)                                 Any interest or title of a lessor or sublessor under, and Liens arising from, precautionary Uniform Commercial Code financing statements (or equivalent filings);

 

(xi)                              Customary rights of setoff upon deposits of cash in favor of banks or other depository institutions holding such deposits and Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the ordinary course of collection;

 

(xii)                           Liens on cash earnest money deposits or other deposits and cash equivalents held in escrow to secure contractual payments (contingent or otherwise) payable by a Loan Party or any Subsidiary to a seller in connection with Investments permitted under Section 8.2.4 [Loans and Investments] and Permitted Acquisitions;

 

(xiii)                        Any interest or title of a lessor, sublessor, licensor or sublicensor under leases or licenses permitted by this Agreement that are entered into in the ordinary course of business;

 

(xiv)                       The following, (A) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed or (B) if a final judgment is entered and such judgment is discharged within thirty (30) days of entry, and in either case they do not affect the Collateral or, in the aggregate, materially impair the ability of any Loan Party to perform its Obligations hereunder or under the other Loan Documents:

 

(1)                                 claims or Liens for Taxes, assessments or charges due and payable and subject to interest or penalty; provided that the applicable Loan Party maintains such reserves or other appropriate provisions as shall be required by GAAP and pays all such Taxes, assessments or charges forthwith upon the commencement of proceedings to foreclose any such Lien;

 

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(2)                                 claims, Liens or encumbrances upon, and defects of title to, real or personal property other than the Collateral, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits;

 

(3)                                 claims or Liens of mechanics, materialmen, warehousemen, carriers, or other statutory nonconsensual Liens; or

 

(4)                                 Liens resulting from final judgments or orders described in Section 9.1.7 [Final Judgments or Orders].

 

Permitted Unsecured Indebtedness shall mean Indebtedness permitted pursuant to Section 8.2.1(vii) [Indebtedness].

 

Person shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.

 

Pledge Agreement shall mean the Pledge Agreement in substantially the form of Exhibit 1.1(P)(2) executed and delivered by each of the Loan Parties to the Administrative Agent for the benefit of the Lenders.

 

PNC shall mean PNC Bank, National Association, its successors and assigns.

 

Potential Default shall mean any event or condition which with notice or passage of time, or both, would constitute an Event of Default.

 

Prime Rate shall mean the interest rate per annum announced from time to time by the Administrative Agent at its Principal Office as its then prime rate, which rate may not be the lowest or most favorable rate then being charged commercial borrowers or others by the Administrative Agent.  Any change in the Prime Rate shall take effect at the opening of business on the day such change is announced.

 

Principal Office shall mean the main banking office of the Administrative Agent in Pittsburgh, Pennsylvania.

 

Prior Security Interest shall mean a valid and enforceable perfected first-priority security interest under the UCC in the Collateral which is subject only to statutory Liens for Taxes not yet due and payable or Purchase Money Security Interests.

 

PTE shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

 

Published Rate shall mean the rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the rate at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market for a one month period as published in another publication selected by the Administrative Agent).

 

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Purchase Money Security Interest shall mean Liens upon tangible personal property securing loans to any Loan Party or Subsidiary of a Loan Party or deferred payments by such Loan Party or Subsidiary for the purchase of such tangible personal property.

 

Qualified ECP Loan Party shall mean each Loan Party that on the Eligibility Date is (a) a corporation, partnership, proprietorship, organization, trust, or other entity other than a “commodity pool” as defined in Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets exceeding $10,000,000, or (b) an Eligible Contract Participant that can cause another person to qualify as an Eligible Contract Participant on the Eligibility Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise providing a “letter of credit or keepwell, support, or other agreement” for purposes of Section 1a(18)(A)(v)(II) of the CEA.

 

Ratable Share shall mean, with respect all matters as to a particular Lender, the proportion that such Lender’s Revolving Credit Commitment bears to the Revolving Credit Commitments of all of the Lenders, provided however that if the Revolving Credit Commitments have terminated or expired, the Ratable Shares shall be determined based upon the Revolving Credit Commitments most recently in effect, giving effect to any assignments, and not on the current amount of the Revolving Credit Commitments and provided further in the case of Section 2.10 [Defaulting Lenders] when a Defaulting Lender shall exist, “Ratable Share” shall mean the percentage of the aggregate Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment.

 

Recipient shall mean (i) the Administrative Agent, (ii) any Lender and (iii) the Issuing Lender, as applicable.

 

Reimbursement Obligation shall have the meaning specified in Section 2.9.3 [Disbursements, Reimbursement].

 

Related Parties shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

 

Relief Proceeding shall mean any proceeding seeking a decree or order for relief in respect of any Loan Party or Subsidiary of a Loan Party in a voluntary or involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or Subsidiary of a Loan Party for any substantial part of its property, or for the winding-up or liquidation of its affairs, or an assignment for the benefit of its creditors.

 

Reportable Compliance Event shall mean that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or Anti-Corruption Law or any predicate crime to any Anti-Terrorism Law or Anti-Corruption Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in actual or probable violation of any Anti-Terrorism Law or Anti-Corruption Law.

 

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Required Lenders shall mean

 

(A)                               If there exists fewer than three (3) Lenders, all Lenders (other than any Defaulting Lender), and

 

(B)                               If there exist three (3) or more Lenders, Lenders (other than any Defaulting Lender) having more than 50% of the aggregate amount of the Revolving Credit Commitments of the Lenders (excluding any Defaulting Lender) or, after the termination of the Revolving Credit Commitments, the outstanding Revolving Credit Loans and Ratable Share of Letter of Credit Obligations of the Lenders (excluding any Defaulting Lender).

 

Required Share shall have the meaning assigned to such term in Section 5.11 [Settlement Date Procedures].

 

Revolving Credit Commitment shall mean, as to any Lender at any time, the amount initially set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of Commitment for Revolving Credit Loans,” as such Commitment is thereafter assigned or modified and Revolving Credit Commitments shall mean the aggregate Revolving Credit Commitments of all of the Lenders.

 

Revolving Credit Loans shall mean collectively and Revolving Credit Loan shall mean separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lenders or one of the Lenders to the Borrower pursuant to Section 2.1 [Revolving Credit Commitments] or Section 2.9.3 [Disbursements, Reimbursement].

 

Revolving Facility Usage shall mean at any time the sum of the outstanding Revolving Credit Loans, the outstanding Swing Loans, and the Letter of Credit Obligations.

 

Sanctioned Country shall mean a country subject to a sanctions program maintained under any Anti-Terrorism Law.

 

Sanctioned Person shall mean any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person, group, regime, entity or thing, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Law.

 

Security Agreement shall mean the Security Agreement in substantially the form of Exhibit 1.1(S) executed and delivered by each of the Loan Parties to the Administrative Agent for the benefit of the Lenders.

 

Segregated Customer Funds Account shall mean any deposit or securities account of a Loan Party into which Customer Funds are deposited.

 

Settlement Date shall mean the Business Day on which the Administrative Agent elects to effect settlement pursuant Section 5.11 [Settlement Date Procedures].

 

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Solvent shall mean, with respect to any Person on any date of determination, taking into account any right of reimbursement, contribution or similar right available to such Person from other Persons, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (ii) the present fair saleable 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, (iii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (iv) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (v) 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 unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged.  In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that would reasonably be expected to become an actual or matured liability.

 

Specified Event of Default shall mean an Event of Default under Section 9.1.1 [Payments Under Loan Document] or Section 9.1.12 [Relief Proceedings].

 

Standard & Poor’s shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

 

Statements shall have the meaning specified in Section 6.1.6(i) [Historical Statements].

 

Subject Transaction shall mean any Permitted Acquisition or any other event that by the terms of this Agreement requires that the Loan Parties are in Financial Covenant Compliance.

 

Subsidiary of any Person at any time shall mean any corporation, trust, partnership, limited liability company or other business entity (i) of which more than 50% of the outstanding voting securities or other interests normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person’s Subsidiaries, or (ii)  which is controlled or capable of being controlled by such Person or one or more of such Person’s Subsidiaries.

 

Subsidiary Equity Interests shall have the meaning specified in Section 6.1.2 [Subsidiaries and Owners; Investment Companies].

 

Swap shall mean any “swap” as defined in Section 1a(47) of the CEA and regulations thereunder, other than (a) a swap entered into, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the CEA, or  (b) a commodity option entered into pursuant to CFTC Regulation 32.3(a).

 

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Swap Obligation shall mean any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap which is also a Lender Provided Interest Rate Hedge or a Lender Provided Foreign Currency Hedge.

 

Swing Loan Commitment shall mean PNC’s commitment to make Swing Loans to the Borrower pursuant to Section 2.1.2 [Swing Loan Commitment] hereof in an aggregate principal amount up to $25,000,000.

 

Swing Loan Lender shall mean PNC, in its capacity as a lender of Swing Loans.

 

Swing Loan Note shall mean the Swing Loan Note of the Borrower in the form of Exhibit 1.1(N)(2) evidencing the Swing Loans, together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.

 

Swing Loan Request shall mean a request for Swing Loans made in accordance with Section 2.5.2 [Swing Loan Requests] hereof.

 

Swing Loans shall mean collectively and Swing Loan shall mean separately all Swing Loans or any Swing Loan made by PNC to the Borrower pursuant to Section 2.1.2 [Swing Loan Commitment] hereof.

 

Taxes shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges in the nature of a tax imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto.

 

Test Period shall mean a period of four (4) consecutive fiscal quarters.

 

Transaction shall mean, collectively, the execution and delivery of this Agreement, the making of the initial Loans on the Closing Date, if any, the payment of all fees, costs and expenses associated with all of the foregoing and the execution and delivery of all other Loan Documents.

 

UCC shall means the Uniform Commercial Code as in effect from time to time in the State of New York.

 

UCP shall have the meaning specified in Section 11.11.1 [Governing Law].

 

USA Patriot Act shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

 

U.S. Person shall mean any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

 

U.S. Tax Compliance Certificate shall have the meaning specified in Section 5.9.7 [Status of Lenders].

 

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Withholding Agent shall mean any Loan Party and the Administrative Agent.

 

Write-Down and Conversion Powers shall mean the write-down and conversion powers of the applicable EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which powers are described in the EU Bail-In Legislation Schedule.

 

1.2                               Construction.  Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents: (i) references to the plural include the singular, the plural, the part and the whole and the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (ii) the words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole; (iii) article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified; (iv) reference to any Person includes such Person’s successors and assigns; (v) reference to any agreement, including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto, document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or restated; (vi) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means “through and including”; (vii) 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, (viii) section headings herein and in each other Loan Document are included for convenience and shall not affect the interpretation of this Agreement or such Loan Document, and (ix) unless otherwise specified, all references herein to times of day shall constitute references to Eastern Time.

 

1.3                               Accounting Principles; Changes in GAAP.  Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP; provided, however, that all accounting terms used in Section 8.2 [Negative Covenants] (and all defined terms used in the definition of any accounting term used in Section 8.2) shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent with those used in preparing Statements referred to in Section 6.1.6(i) [Historical Statements].  Notwithstanding the foregoing, if the Borrower notifies the Administrative Agent in writing that the Borrower wishes to amend any financial covenant in Section 8.2 of this Agreement, any related definition and/or the definition of the term Net Senior Secured Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations to eliminate the effect of any change in GAAP occurring after the Closing Date on the operation of such financial covenants and/or interest, Letter of Credit Fee or Commitment Fee determinations (or if the Administrative Agent notifies the Borrower in writing that the Required Lenders wish to amend any financial covenant in Section 8.2, any related definition and/or the definition of the term Net Senior Secured Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations to eliminate the effect of any such

 

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change in GAAP), then the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratios or requirements 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, the Loan Parties’ compliance with such covenants and/or the definition of the term Net Senior Secured Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenants or definitions are amended in a manner satisfactory to the Borrower and the Required Lenders, and the Loan Parties shall provide to the Administrative Agent, when they deliver their financial statements pursuant to Sections 8.3.1 [Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements] of this Agreement, such reconciliation statements as shall be reasonably requested by the Administrative Agent.

 

1.4                               LIBOR Notification.  Section 4.6 [Successor LIBOR Rate Index] of this Agreement provides a mechanism for determining an alternative rate of interest in the event that the London interbank offered rate is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBOR Rate” or with respect to any alternative or successor rate thereto, or replacement rate therefor.

 

2.                                      REVOLVING CREDIT AND SWING LOAN FACILITIES

 

2.1                               Revolving Credit Commitments.

 

2.1.1                                 Revolving Credit Loans.  Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Lender severally agrees to make Revolving Credit Loans to the Borrower at any time or from time to time on or after the date hereof to the Expiration Date; provided that after giving effect to each such Loan (i) the aggregate amount of Revolving Credit Loans from such Lender shall not exceed such Lender’s Revolving Credit Commitment minus such Lender’s Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations and (ii) the Revolving Facility Usage shall not exceed the Revolving Credit Commitments.  Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.

 

2.1.2                                 Swing Loan Commitment.  Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, and in order to facilitate loans and repayments between Settlement Dates, PNC may, at its option, cancelable at any time for any reason whatsoever, make swing loans (the “Swing Loans”) to the Borrower at any time or from time to time after the date hereof to, but not including, the Expiration Date, in an aggregate principal amount up to but not in excess of $25,000,000, provided that after giving effect to such Loan, the Revolving Facility Usage shall not exceed the aggregate Revolving Credit Commitments of the Lenders.  Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.2.

 

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2.2                               Nature of Lenders’ Obligations with Respect to Revolving Credit Loans.  Each Lender shall be obligated to participate in each request for Revolving Credit Loans pursuant to Section 2.5 [Revolving Credit Loan Requests; Swing Loan Requests] in accordance with its Ratable Share.  The aggregate of each Lender’s Revolving Credit Loans outstanding hereunder to the Borrower at any time shall never exceed its Revolving Credit Commitment minus its Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations.  The obligations of each Lender hereunder are several.  The failure of any Lender to perform its obligations hereunder shall not affect the Obligations of the Borrower to any other party nor shall any other party be liable for the failure of such Lender to perform its obligations hereunder.  The Lenders shall have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date.

 

2.3                               Commitment Fees.  Accruing from the date hereof until the Expiration Date, the Borrower agrees to pay to the Administrative Agent for the account of each Lender according to its Ratable Share, a nonrefundable commitment fee (the “Commitment Fee”) equal to the Applicable Commitment Fee Rate (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) multiplied by the average daily difference between the amount of (i) the Revolving Credit Commitments and (ii) the Revolving Facility Usage (provided however, that solely in connection with determining the share of each Lender in the Commitment Fee, the Revolving Facility Usage with respect to the portion of the Commitment Fee allocated to PNC shall include the full amount of the outstanding Swing Loans, and with respect to the portion of the Commitment Fee allocated by the Administrative Agent to all of the Lenders other than PNC, such portion of the Commitment Fee shall be calculated (according to each such Lender’s Ratable Share) as if the Revolving Facility Usage excludes the outstanding Swing Loans); provided, further, that any Commitment Fee accrued with respect to the Revolving Credit Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such Commitment Fee shall otherwise have been due and payable by the Borrower prior to such time; and provided further that no Commitment Fee shall accrue with respect to the Revolving Credit Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender.  Subject to the proviso in the directly preceding sentence, all Commitment Fees shall be payable in arrears on each Payment Date.

 

2.4                               Termination or Reduction of Revolving Credit Commitments; Increase to Revolving Credit Commitments.

 

2.4.1                                 Termination or Reduction of Revolving Credit Commitment. The Borrower shall have the right, upon not less than three (3) Business Days’ notice to the Administrative Agent, to terminate the Revolving Credit Commitments or, from time to time, to reduce the aggregate amount of the Revolving Credit Commitments (ratably among the Lenders in proportion to their Ratable Shares); provided that no such termination or reduction of Revolving Credit Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans made on the effective date thereof, the Revolving Facility Usage would exceed the aggregate Revolving Credit Commitments of the Lenders.  Any such reduction shall be in an amount equal to $5,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Credit Commitments then in effect.  Any such reduction or

 

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termination shall be accompanied by prepayment of the Notes, together with outstanding Commitment Fees, and the full amount of interest accrued on the principal sum to be prepaid (and all amounts referred to in Section 5.10 [Indemnity] hereof) to the extent necessary to cause the aggregate Revolving Facility Usage after giving effect to such prepayments to be equal to or less than the Revolving Credit Commitments as so reduced or terminated.  Any notice to reduce the Revolving Credit Commitments under this Section 2.4 shall be irrevocable; provided such prepayment may be conditioned on the occurrence of any subsequent event (including an acquisition or refinancing transaction).

 

2.4.2                                 Increase in Revolving Credit Commitments.

 

2.4.2.1                                   Increasing Lenders and New Lenders.  The Borrower may request that (a) the current Lenders increase their Revolving Credit Commitments (any current Lender which elects to increase its Revolving Credit Commitment shall be referred to as an “Increasing Lender”) or (b) one or more new lenders (each a “New Lender”) join this Agreement and provide a Revolving Credit Commitment hereunder, subject to the following terms and conditions:

 

(i)                                     No Obligation to Increase.  No current Lender shall be obligated to increase its Revolving Credit Commitment, and any increase in the Revolving Credit Commitment by any current Lender shall be in the sole discretion of such current Lender.

 

(ii)                                  Defaults.  There shall exist no Event of Default or Potential Default on the effective date of such increase after giving effect to such increase.

 

(iii)                               Aggregate Commitments.  After giving effect to such increase, the total Revolving Credit Commitments shall not exceed $375,000,000.

 

(iv)                              Minimum Commitments; Minimum Increase.  After giving effect to such increase, the amount of the Revolving Credit Commitments provided by each of the New Lenders and each of the Increasing Lenders shall be at least $5,000,000.  Each such increase shall be in an amount equal to at least $20,000,000.

 

(v)                                 Resolutions; Opinion.  The Loan Parties shall deliver to the Administrative Agent on or before the effective date of such increase the following documents in a form reasonably acceptable to the Administrative Agent: (A) certifications of their corporate secretaries with attached resolutions certifying that the applicable increase in the Commitments have been approved by such Loan Parties and (B) an opinion of counsel addressed to the Administrative Agent and the Lenders addressing the authorization and execution of the Loan Documents by, and enforceability of the Loan Documents against, the Loan Parties, and such other matters as are requested by the Administrative Agent.

 

(vi)                              Notes.  The Borrower shall execute and deliver (A) to each Increasing Lender a replacement revolving credit Note reflecting the new amount of such Increasing Lender’s Revolving Credit Commitment after giving effect to the increase and (B) to each New Lender a revolving credit Note reflecting the amount of such New Lender’s Revolving Credit Commitment.

 

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(vii)                           Approval of New Lenders.  Any New Lender shall be subject to the approval of the Administrative Agent.

 

(viii)                        Increasing Lenders.  Each Increasing Lender shall confirm its agreement to increase its Revolving Credit Commitment pursuant to an acknowledgement in a form acceptable to the Administrative Agent, signed by it and the Borrower and delivered to the Administrative Agent at least five (5) days before the effective date of such increase.

 

(ix)                              New Lenders—Joinder.  Each New Lender shall execute a lender joinder in form and substance acceptable to the Administrative Agent in all respects pursuant to which such New Lender shall join and become a party to this Agreement and the other applicable Loan Documents with a Revolving Credit Commitment in the amount set forth in such lender joinder.

 

(x)                                 Amendment.  The Administrative Agent, the Increasing Lenders, the New Lenders, and the Loan Parties shall deliver to the Administrative Agent on or before the effective date of such increase an amendment to this Agreement and to such other Loan Documents as are requested by the Administrative Agent addressing such matters as are reasonably requested by the Administrative Agent in connection with such increase, in each case in form and substance acceptable to the Administrative Agent in all respects.

 

2.4.2.2                                   Treatment of Outstanding Loans and Letters of Credit.

 

(i)                                     Repayment of Outstanding Loans; Borrowing of New Loans.  On the effective date of such increase to the Revolving Credit Commitments, the Borrower shall repay all Revolving Credit Loans then outstanding, subject to the Borrower’s indemnity obligations under Section 5.10 [Indemnity]; provided that it may borrow new Revolving Credit Loans with a borrowing on such date. Each of the Lenders shall participate in any new Revolving Credit Loans made on or after such date in accordance with their respective Ratable Shares after giving effect to any increase in Revolving Credit Commitments contemplated by this Section 2.4.2 [Increase in Revolving Credit Commitments].

 

(ii)                                  Outstanding Letters of Credit; Repayment of Outstanding Loans; Borrowing of New Loans.  On the effective date of any such increase to the Revolving Credit Commitments, each Increasing Lender and each New Lender with a Revolving Credit Commitment (A) will be deemed to have purchased a participation in each then outstanding Letter of Credit equal to its Ratable Share of such Letter of Credit and the participation of each other Lender in such Letter of Credit shall be adjusted accordingly and (B) will acquire (and will pay to the Administrative Agent, for the account of each Lender, in immediately available funds, an amount equal to) its Ratable Share of all outstanding Participation Advances.

 

2.5                               Revolving Credit Loan Requests; Swing Loan Requests.

 

2.5.1                                 Revolving Credit Loan Requests.  Except as otherwise provided herein, the Borrower may from time to time prior to the Expiration Date request the Lenders to make Revolving Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans pursuant to Section 4.2 [Interest Periods], by delivering to the Administrative Agent, not later than 10:00 a.m., (i) three (3) Business Days prior to the proposed

 

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Borrowing Date with respect to the making of Revolving Credit Loans to which the LIBOR Rate Option applies or the conversion to or the renewal of the LIBOR Rate Option for any Loans; and (ii) the same Business Day of the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a duly completed request therefor substantially in the form of Exhibit 2.5.1 or a request by telephone immediately confirmed in writing by letter, facsimile or telex in such form (each, a “Loan Request”), it being understood that the Administrative Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation.  Each Loan Request shall be irrevocable and shall specify the aggregate amount of the proposed Loans comprising each Borrowing Tranche, and, if applicable, the Interest Period, which amounts shall be in (x) integral multiples of $1,000,000 and not less than $5,000,000 for each Borrowing Tranche under the LIBOR Rate Option, and (y) integral multiples of $1,000,000 and not less than $1,000,000 for each Borrowing Tranche under the Base Rate Option.

 

2.5.2                                 Swing Loan Requests.  Except as otherwise provided herein, the Borrower may from time to time prior to the Expiration Date request the Swing Loan Lender to make Swing Loans by delivery to the Swing Loan Lender not later than 12:00 noon on the proposed Borrowing Date of a duly completed request therefor substantially in the form of Exhibit 2.5.2 hereto or a request by telephone immediately confirmed in writing by letter, facsimile or telex (each, a “Swing Loan Request”), it being understood that the Administrative Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation.  Each Swing Loan Request shall be irrevocable and shall specify the proposed Borrowing Date and the principal amount of such Swing Loan, which shall be not less than $500,000.

 

2.6                               Making Revolving Credit Loans and Swing Loans; Presumptions by the Administrative Agent; Repayment of Revolving Credit Loans; Borrowings to Repay Swing Loans.

 

2.6.1                                 Making Revolving Credit Loans.  The Administrative Agent shall, promptly after receipt by it of a Loan Request pursuant to Section 2.5 [Revolving Credit Loan Requests; Swing Loan Requests], notify the Lenders of its receipt of such Loan Request specifying the information provided by the Borrower and the apportionment among the Lenders of the requested Revolving Credit Loans as determined by the Administrative Agent in accordance with Section 2.2 [Nature of Lenders’ Obligations with Respect to Revolving Credit Loans].  Each Lender shall remit the principal amount of each Revolving Credit Loan to the Administrative Agent such that the Administrative Agent is able to, and the Administrative Agent shall, to the extent the Lenders have made funds available to it for such purpose and subject to Section 7.2 [Each Loan or Letter of Credit], fund such Revolving Credit Loans to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 2:00 p.m., on the applicable Borrowing Date; provided that if any Lender fails to remit such funds to the Administrative Agent in a timely manner, the Administrative Agent may elect in its sole discretion to fund with its own funds the Revolving Credit Loans of such Lender on such Borrowing Date, and such Lender shall be subject to the repayment obligation in Section 2.6.2 [Presumptions by the Administrative Agent].

 

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2.6.2                                 Presumptions by the Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed time of any Loan that such Lender will not make available to the Administrative Agent such Lender’s share of such Loan, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.6.1 [Making Revolving Credit Loans] 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 Loan 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 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 (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Loans under the Base Rate Option.  If such Lender pays its share of the applicable Loan to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan.  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.

 

2.6.3                                 Making Swing Loans.  So long as PNC elects to make Swing Loans, PNC shall, after receipt by it of a Swing Loan Request pursuant to Section 2.5.2, [Swing Loan Requests] fund such Swing Loan to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 4:00 p.m. on the Borrowing Date.

 

2.6.4                                 Repayment of Revolving Credit Loans.  The Borrower shall repay the Revolving Credit Loans together with all outstanding interest thereon on the Expiration Date.

 

2.6.5                                 Borrowings to Repay Swing Loans.  PNC may, at its option, exercisable at any time for any reason whatsoever, demand repayment of the Swing Loans, and each Lender shall make a Revolving Credit Loan in an amount equal to such Lender’s Ratable Share of the aggregate principal amount of the outstanding Swing Loans, plus, if PNC so requests, accrued interest thereon, provided that no Lender shall be obligated in any event to make Revolving Credit Loans in excess of its Revolving Credit Commitment minus its Ratable Share of Letter of Credit Obligations.  Revolving Credit Loans made pursuant to the preceding sentence shall bear interest at the Base Rate Option and shall be deemed to have been properly requested in accordance with Section 2.5.1 [Revolving Credit Loan Requests] without regard to any of the requirements of that provision.  PNC shall provide notice to the Lenders (which may be telephonic or written notice by letter, facsimile or telex) that such Revolving Credit Loans are to be made under this Section 2.6.5 and of the apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not the conditions specified in Section 2.5.1 [Revolving Credit Loan Requests] are then satisfied) by the time PNC so requests, which shall not be earlier than 3:00 p.m. on the Business Day next after the date the Lenders receive such notice from PNC.

 

2.6.6                                 Swing Loans Under Cash Management Agreements.  In addition to making Swing Loans pursuant to the foregoing provisions of Section 2.6.3 [Making Swing Loans], without the requirement for a specific request from the Borrower pursuant to Section

 

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2.5.2 [Swing Loan Requests], PNC as the Swing Loan Lender may make Swing Loans to the Borrower in accordance with the provisions of the agreements between the Borrower and such Swing Loan Lender relating to the Borrower’s deposit, sweep and other accounts at such Swing Loan Lender and related arrangements and agreements regarding the management and investment of the Borrower’s cash assets as in effect from time to time (the “Cash Management Agreements”) to the extent of the daily aggregate net negative balance in the Borrower’s accounts which are subject to the provisions of the Cash Management Agreements.  Swing Loans made pursuant to this Section 2.6.6 in accordance with the provisions of the Cash Management Agreements shall (i) be subject to the limitations as to aggregate amount set forth in Section 2.1.2 [Swing Loan Commitment], (ii) not be subject to the limitations as to individual amount set forth in Section 2.5.2 [Swing Loan Requests], (iii) be payable by the Borrower, both as to principal and interest, at the rates and times set forth in the Cash Management Agreements (but in no event later than the Expiration Date), (iv) not be made at any time after such Swing Loan Lender has received written notice of the occurrence of an Event of Default and so long as such shall continue to exist, or, unless consented to by the Required Lenders, a Potential Default and so long as such shall continue to exist, (v) if not repaid by the Borrower in accordance with the provisions of the Cash Management Agreements, be subject to each Lender’s obligation pursuant to Section 2.6.5 [Borrowings to Repay Swing Loans], and (vi) except as provided in the foregoing subsections (i) through (v), be subject to all of the terms and conditions of this Section 2.

 

2.7                               Notes.  The Obligation of the Borrower to repay the aggregate unpaid principal amount of the Revolving Credit Loans and Swing Loans made to it by each Lender, together with interest thereon, to the extent requested by such Lender, shall be evidenced by a revolving credit Note and a swing Note, dated the Closing Date (or such later date, if such Lender becomes a party hereto after the Closing Date) payable to the order of such Lender in a face amount equal to the Revolving Credit Commitment or Swing Loan Commitment, as applicable, of such Lender.

 

2.8                               Use of Proceeds.  The proceeds of the Loans shall be used to fund ongoing working capital, Capital Expenditures and general corporate purposes, including Permitted Acquisitions, permitted investments, permitted distributions and share repurchases.

 

2.9                               Letter of Credit Subfacility.

 

2.9.1                                 Issuance of Letters of Credit.  The Borrower or any Loan Party may at any time prior to the Expiration Date request the issuance of a letter of credit (each a “Letter of Credit”) for its own account or the account of another Loan Party, or the amendment or extension of an existing Letter of Credit, by delivering or transmitting electronically, or having such other Loan Party deliver or transmit electronically to the Issuing Lender (with a copy to the Administrative Agent) a completed application for letter of credit, or request for such amendment or extension, as applicable, in such form as the Issuing Lender may specify from time to time by no later than 10:00 a.m. at least five (5) Business Days, or such shorter period as may be agreed to by the Issuing Lender, in advance of the proposed date of issuance.  Each Letter of Credit shall be a Standby Letter of Credit (and may not be a Commercial Letter of Credit).  The Borrower or any Loan Party shall authorize and direct the Issuing Lender to name the Borrower or any Loan Party as the “Applicant” or “Account Party” of each Letter of Credit.

 

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Promptly after receipt of any letter of credit application, the Issuing Lender shall confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit application and if not, such Issuing Lender will provide the Administrative Agent with a copy thereof.

 

2.9.1.1                                   Unless the Issuing Lender has received notice from any Lender, the Administrative Agent or any Loan Party, at least one day prior to the requested date of issuance, amendment or extension of the applicable Letter of Credit, that one or more applicable conditions in Section 7 [Conditions of Lending and Issuance of Letters of Credit] is not satisfied, then, subject to the terms and conditions hereof and in reliance on the agreements of the other Lenders set forth in this Section 2.9, the Issuing Lender or any of the Issuing Lender’s Affiliates will issue the proposed Letter of Credit or agree to such amendment or extension, provided that each Letter of Credit shall (A) have a maximum maturity of twelve (12) months from the date of issuance, and (B) in no event expire later than the date which is 364 days after the Expiration Date and provided further that in no event shall (i) the Letter of Credit Obligations exceed, at any one time, $25,000,000 (the “Letter of Credit Sublimit”) or (ii) the Revolving Facility Usage exceed, at any one time, the Revolving Credit Commitments.  Each request by the Borrower for the issuance, amendment or extension of a Letter of Credit shall be deemed to be a representation by the Borrower that it shall be in compliance with the preceding sentence and with Section 7 [Conditions of Lending and Issuance of Letters of Credit] after giving effect to the requested issuance, amendment or extension of such Letter of Credit.  Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to the beneficiary thereof, the applicable Issuing Lender will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

 

2.9.1.2                                   Notwithstanding Section 2.9.1.1, the Issuing Lender shall not be under any obligation to issue any Letter of Credit if (i) any order, judgment or decree of any Official Body or arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender from issuing the Letter of Credit, or any Law applicable to the Issuing Lender or any request or directive (whether or not having the force of law) from any Official Body with jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing Lender refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the Issuing Lender with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Lender is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Lender in good faith deems material to it, or (ii) the issuance of the Letter of Credit would violate one or more policies of the Issuing Lender applicable to letters of credit generally.

 

2.9.1.3                                   Upon the request of Administrative Agent, (i) if any Issuing Lender has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in a Letter of Credit Borrowing, or (ii) if, on the Expiration Date, any Letter of Credit Obligation for any reason remains outstanding, Borrower shall, in each case, promptly Cash Collateralize 103% of the then outstanding amount of all Letter of Credit Obligations.  Borrower hereby grants to Administrative Agent, for the benefit of each Issuing Lender and the Lenders, a security interest in all cash collateral pledged pursuant to this Section or otherwise under this Agreement.

 

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2.9.2                                 Letter of Credit Fees.  The Borrower shall pay (i) to the Administrative Agent for the ratable account of the Lenders a fee (the “Letter of Credit Fee”) equal to the Applicable Letter of Credit Fee Rate on the daily amount available to be drawn under each Letter of Credit, and (ii) to the Issuing Lender for its own account a fronting fee equal to 0.125% per annum on the daily amount available to be drawn under each Letter of Credit.  All Letter of Credit Fees and fronting fees shall be computed on the basis of a year of 360 days and actual days elapsed and shall be payable quarterly in arrears on each Payment Date following issuance of each Letter of Credit.  The Borrower shall also pay to the Issuing Lender for the Issuing Lender’s sole account the Issuing Lender’s then in effect customary fees and administrative expenses payable with respect to the Letters of Credit as the Issuing Lender may generally charge or incur from time to time in connection with the issuance, maintenance, amendment (if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit.

 

2.9.3                                 Disbursements, Reimbursement.  Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Lender a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Ratable Share of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively.

 

2.9.3.1                                   In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Issuing Lender will promptly notify the Borrower and the Administrative Agent thereof.  Provided that it shall have received such notice, the Borrower shall reimburse (such obligation to reimburse the Issuing Lender shall sometimes be referred to as a “Reimbursement Obligation”) the Issuing Lender prior to 12:00 noon on each date that an amount is paid by the Issuing Lender under any Letter of Credit (each such date, a “Drawing Date”) by paying to the Administrative Agent for the account of the Issuing Lender an amount equal to the amount so paid by the Issuing Lender.  In the event the Borrower fails to reimburse the Issuing Lender (through the Administrative Agent) for the full amount of any drawing under any Letter of Credit by 12:00 noon on the Drawing Date, the Administrative Agent will promptly notify each Lender thereof, and the Borrower shall be deemed to have requested that Revolving Credit Loans be made by the Lenders under the Base Rate Option to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the Revolving Credit Commitment and subject to the conditions set forth in Section 7.2 [Each Loan or Letter of Credit] other than any notice requirements.  Any notice given by the Administrative Agent or Issuing Lender pursuant to this Section 2.9.3.1 may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

 

2.9.3.2                                   Each Lender shall upon any notice pursuant to Section 2.9.3.1 make available to the Administrative Agent for the account of the Issuing Lender an amount in immediately available funds equal to its Ratable Share of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.9.3 [Disbursements; Reimbursement]) each be deemed to have made a Revolving Credit Loan under the Base Rate Option to the Borrower in that amount.  If any Lender so notified fails to make available to the Administrative Agent for the account of the Issuing Lender the amount of such Lender’s Ratable Share of such amount by no later than 2:00 p.m. on the Drawing Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which

 

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such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three (3) days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving Credit Loans under the Base Rate Option on and after the fourth day following the Drawing Date.  The Administrative Agent and the Issuing Lender will promptly give notice (as described in Section 2.9.3.1 above) of the occurrence of the Drawing Date, but failure of the Administrative Agent or the Issuing Lender to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.9.3.2.

 

2.9.3.3                                   With respect to any unreimbursed drawing that is not converted into Revolving Credit Loans under the Base Rate Option to the Borrower in whole or in part as contemplated by Section 2.9.3.1, because of the Borrower’s failure to satisfy the conditions set forth in Section 7.2 [Each Loan or Letter of Credit] other than any notice requirements, or for any other reason, the Borrower shall be deemed to have incurred from the Issuing Lender a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing.  Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to the Revolving Credit Loans under the Base Rate Option.  Each Lender’s payment to the Administrative Agent for the account of the Issuing Lender pursuant to Section 2.9.3 [Disbursements, Reimbursement] shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing (each a “Participation Advance”) from such Lender in satisfaction of its participation obligation under this Section 2.9.3.

 

2.9.4                                 Repayment of Participation Advances.

 

2.9.4.1                                   Upon (and only upon) receipt by the Administrative Agent for the account of the Issuing Lender of immediately available funds from the Borrower (i) in reimbursement of any payment made by the Issuing Lender under the Letter of Credit with respect to which any Lender has made a Participation Advance to the Administrative Agent, or (ii) in payment of interest on such a payment made by the Issuing Lender under such a Letter of Credit, the Administrative Agent on behalf of the Issuing Lender will pay to each Lender, in the same funds as those received by the Administrative Agent, the amount of such Lender’s Ratable Share of such funds, except the Administrative Agent shall retain for the account of the Issuing Lender the amount of the Ratable Share of such funds of any Lender that did not make a Participation Advance in respect of such payment by the Issuing Lender.

 

2.9.4.2                                   If the Administrative Agent is required at any time to return to any Loan Party, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of any payment made by any Loan Party to the Administrative Agent for the account of the Issuing Lender pursuant to this Section in reimbursement of a payment made under any Letter of Credit or interest or fees thereon, each Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative Agent for the account of the Issuing Lender the amount of its Ratable Share of any amounts so returned by the Administrative Agent plus interest thereon from the date such demand is made to the date such amounts are returned by such Lender to the Administrative Agent, at a rate per annum equal to the Federal Funds Effective Rate in effect from time to time.

 

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2.9.5                                 Documentation.  Each Loan Party agrees to be bound by the terms of the Issuing Lender’s application and agreement for letters of credit and the Issuing Lender’s written regulations and customary practices relating to letters of credit, though such interpretation may be different from such Loan Party’s own.  In the event of a conflict between such application or agreement and this Agreement, this Agreement shall govern.  It is understood and agreed that, except in the case of gross negligence or willful misconduct, the Issuing Lender shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following any Loan Party’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.

 

2.9.6                                 Determinations to Honor Drawing Requests.  In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.

 

2.9.7                                 Nature of Participation and Reimbursement Obligations.  Each Lender’s obligation in accordance with this Agreement to make the Revolving Credit Loans or Participation Advances, as contemplated by Section 2.9.3 [Disbursements, Reimbursement], as a result of a drawing under a Letter of Credit, and the Obligations of the Borrower to reimburse the Issuing Lender upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.9 under all circumstances, including the following circumstances:

 

(i)                                     any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Issuing Lender or any of its Affiliates, the Borrower or any other Person for any reason whatsoever, or which any Loan Party may have against the Issuing Lender or any of its Affiliates, any Lender or any other Person for any reason whatsoever;

 

(ii)                                  the failure of any Loan Party or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in Sections 2.1 [Revolving Credit Commitments], 2.5 [Revolving Credit Loan Requests; Swing Loan Requests], 2.6 [Making Revolving Credit Loans and Swing Loans; Etc.] or 7.2 [Each Loan or Letter of Credit] or as otherwise set forth in this Agreement for the making of a Revolving Credit Loan, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section 2.9.3 [Disbursements, Reimbursement];

 

(iii)                               any lack of validity or enforceability of any Letter of Credit;

 

(iv)                              any claim of breach of warranty that might be made by any Loan Party or any Lender against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Loan Party or any Lender may have at any time against a beneficiary, successor beneficiary any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the Issuing Lender or its Affiliates or any Lender or any other Person,

 

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whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any Letter of Credit was procured);

 

(v)                                 the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provision of services relating to a Letter of Credit, in each case even if the Issuing Lender or any of its Affiliates has been notified thereof;

 

(vi)                              payment by the Issuing Lender or any of its Affiliates under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;

 

(vii)                           the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;

 

(viii)                        any failure by the Issuing Lender or any of its Affiliates to issue any Letter of Credit in the form requested by any Loan Party, unless the Issuing Lender has received written notice from such Loan Party of such failure within three Business Days after the Issuing Lender shall have furnished such Loan Party and the Administrative Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;

 

(ix)                              any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Loan Party or Subsidiaries of a Loan Party;

 

(x)                                 any breach of this Agreement or any other Loan Document by any party thereto;

 

(xi)                              the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party;

 

(xii)                           the fact that an Event of Default or a Potential Default shall have occurred and be continuing;

 

(xiii)                        the fact that the Expiration Date shall have passed or this Agreement or the Commitments hereunder shall have been terminated; and

 

(xiv)                       any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

 

2.9.8                                 Indemnity.  The Borrower hereby agrees to protect, indemnify, pay and save harmless the Issuing Lender and any of its Affiliates that has issued a Letter of Credit from

 

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and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel) which the Issuing Lender or any of its Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of the gross negligence or willful misconduct of the Issuing Lender as determined by a final non-appealable judgment of a court of competent jurisdiction.

 

2.9.9                                 Liability for Acts and Omissions.  As between any Loan Party and the Issuing Lender, or the Issuing Lender’s Affiliates, such Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the foregoing, the Issuing Lender shall not be responsible for any of the following, including any losses or damages to any Loan Party or other Person or property relating therefrom:  (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the Issuing Lender or its Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Loan Party against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Loan Party and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Issuing Lender or its Affiliates, as applicable, including any act or omission of any Official Body, and none of the above shall affect or impair, or prevent the vesting of, any of the Issuing Lender’s or its Affiliates rights or powers hereunder.  Nothing in the preceding sentence shall relieve the Issuing Lender from liability for the Issuing Lender’s gross negligence or willful misconduct in connection with actions or omissions described in such clauses (i) through (viii) of such sentence.  In no event shall the Issuing Lender or its Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.

 

Without limiting the generality of the foregoing, the Issuing Lender and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by the Issuing Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or

 

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otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the Issuing Lender or its Affiliate; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on the Issuing Lender or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.

 

In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the Issuing Lender or its Affiliates under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put the Issuing Lender or its Affiliates under any resulting liability to the Borrower or any Lender.

 

2.9.10                          Issuing Lender Reporting Requirements.  Each Issuing Lender shall, on the first Business Day of each month, provide to Administrative Agent and Borrower a schedule of the Letters of Credit issued by it, in form and substance satisfactory to Administrative Agent, showing the date of issuance of each Letter of Credit, the account party, the original face amount (if any), and the expiration date of any Letter of Credit outstanding at any time during the preceding month, and any other information relating to such Letter of Credit that the Administrative Agent may request.

 

2.10                        Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(i)                                     fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.3 [Commitment Fees];

 

(ii)                                  the Commitment and outstanding Loans of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 11.1 [Modifications, Amendments or Waivers]); provided, that this clause (ii) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender directly affected thereby;

 

(iii)                               if any Swing Loans are outstanding or any Letter of Credit Obligations exist at the time such Lender becomes a Defaulting Lender, then:

 

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(a)                                   all or any part of the outstanding Swing Loans and Letter of Credit Obligations of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Ratable Shares but only to the extent that (x) the Revolving Facility Usage does not exceed the total of all non-Defaulting Lenders’ Revolving Credit Commitments, and (y) no Potential Default or Event of Default has occurred and is continuing at such time;

 

(b)                                   if the reallocation described in clause (a) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent (x) first, prepay such outstanding Swing Loans, and (y) second, cash collateralize for the benefit of the Issuing Lender the Borrower’s obligations corresponding to such Defaulting Lender’s Letter of Credit Obligations (after giving effect to any partial reallocation pursuant to clause (a) above) in a deposit account held at the Administrative Agent for so long as such Letter of Credit Obligations are outstanding;

 

(c)                                    if the Borrower cash collateralizes any portion of such Defaulting Lender’s Letter of Credit Obligations pursuant to clause (b) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.9.2 [Letter of Credit Fees] with respect to such Defaulting Lender’s Letter of Credit Obligations during the period such Defaulting Lender’s Letter of Credit Obligations are cash collateralized;

 

(d)                                   if the Letter of Credit Obligations of the Defaulting Lenders are reallocated pursuant to clause (a) above, then the fees payable to the Lenders pursuant to Section 2.9.2 [Letter of Credit Fees] shall be adjusted in accordance with such non-Defaulting Lenders’ Ratable Share; and

 

(e)                                    if all or any portion of such Defaulting Lender’s Letter of Credit Obligations are neither reallocated nor cash collateralized pursuant to clause (a) or (b) above, then, without prejudice to any rights or remedies of the Issuing Lender or any other Lender hereunder, all Letter of Credit Fees payable under Section 2.9.2 [Letter of Credit Fees] with respect to such Defaulting Lender’s Letter of Credit Obligations shall be payable to the Issuing Lender (and not to such Defaulting Lender) until and to the extent that such Letter of Credit Obligations are reallocated and/or cash collateralized; and

 

(iv)                              so long as such Lender is a Defaulting Lender, PNC shall not be required to fund any Swing Loans and the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless the Issuing Lender is satisfied that the related exposure and the Defaulting Lender’s then outstanding Letter of Credit Obligations will be 100% covered by the Revolving Credit Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.10(iii), and participating interests in any newly made Swing Loan or any newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.10(iii)(a) (and such Defaulting Lender shall not participate therein).

 

If (i) a Bankruptcy Event with respect to a parent company of any Lender shall occur following the date hereof and for so long as such event shall continue, or (ii) PNC or the Issuing Lender has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more

 

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other agreements in which such Lender commits to extend credit, PNC shall not be required to fund any Swing Loan and the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless PNC or the Issuing Lender, as the case may be, shall have entered into arrangements with the Borrower or such Lender, satisfactory to PNC or the Issuing Lender, as the case may be, to defease any risk to it in respect of such Lender hereunder.

 

In the event that the Administrative Agent, the Borrower, PNC and the Issuing Lender agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Administrative Agent will so notify the parties hereto, and the Ratable Share of the Swing Loans and Letter of Credit Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment, and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Ratable Share.

 

3.                                      [RESERVED]

 

4.                                      INTEREST RATES

 

4.1                               Interest Rate Options.  The Borrower shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by it from the Base Rate Option or LIBOR Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of this Agreement, the Borrower may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising any Borrowing Tranche; provided that there shall not be at any one time outstanding more than six (6) Borrowing Tranches in the aggregate among all of the Loans that bear interest under the LIBOR Rate Option and provided further that if an Event of Default or Potential Default exists and is continuing, the Borrower may not request, convert to, or renew the LIBOR Rate Option for any Loans and the Required Lenders may demand that all existing Borrowing Tranches bearing interest under the LIBOR Rate Option shall be converted immediately to the Base Rate Option, subject to the obligation of the Borrower to pay any indemnity under Section 5.10 [Indemnity] in connection with such conversion.  If at any time the designated rate applicable to any Loan made by any Lender exceeds such Lender’s highest lawful rate, the rate of interest on such Lender’s Loan shall be limited to such Lender’s highest lawful rate.

 

4.1.1                                 Revolving Credit Interest Rate Options; Swing Line Interest Rate.  The Borrower shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans:

 

(i)                                     Revolving Credit Base Rate Option:  A fluctuating rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate; or

 

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(ii)                                  Revolving Credit LIBOR Rate Option:  A rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to the LIBOR Rate as determined for each applicable Interest Period plus the Applicable Margin.

 

Subject to Section 4.3 [Interest After Default], only the Base Rate Option applicable to Revolving Credit Loans shall apply to the Swing Loans.

 

4.1.2                                 [Reserved].

 

4.1.3                                 Rate Quotations.  The Borrower may call the Administrative Agent on or before the date on which a Loan Request is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.

 

4.2                               Interest Periods.  At any time when the Borrower shall select, convert to or renew a LIBOR Rate Option, the Borrower shall notify the Administrative Agent thereof at least three (3) Business Days prior to the effective date of such LIBOR Rate Option by delivering a Loan Request.  The notice shall specify an Interest Period during which such Interest Rate Option shall apply.  Notwithstanding the preceding sentence, the following provisions shall apply to any selection of, renewal of, or conversion to a LIBOR Rate Option:

 

4.2.1                                 Amount of Borrowing Tranche.  Each Borrowing Tranche of Loans under the LIBOR Rate Option shall be in integral multiples of, and not less than, the respective amounts set forth in Section 2.5.1 [Revolving Credit Loan Requests]; and

 

4.2.2                                 Renewals.  In the case of the renewal of a LIBOR Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day.

 

4.3                               Interest After Default.  To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived, at the discretion of the Administrative Agent or upon written demand by the Required Lenders to the Administrative Agent:

 

4.3.1                                 Letter of Credit Fees, Interest Rate.  The Letter of Credit Fees and the rate of interest for each Loan otherwise applicable pursuant to Section 2.9.2 [Letter of Credit Fees] or Section 4.1 [Interest Rate Options], respectively, shall be increased by 2.0% per annum;

 

4.3.2                                 Other Obligations.  Each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sum of the rate of interest applicable to Revolving Credit Loans under the Base Rate Option plus an additional 2.0% per annum from the time such Obligation becomes due and payable and until it is Paid In Full; and

 

4.3.3                                 Acknowledgment.  The Borrower acknowledges that the increase in rates referred to in this Section 4.3 reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lenders

 

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are entitled to additional compensation for such risk; and all such interest shall be payable by Borrower upon demand by Administrative Agent.

 

4.4                               LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.

 

4.4.1                                 Unascertainable.  If on any date on which a LIBOR Rate would otherwise be determined, the Administrative Agent shall have determined that:

 

(i)                                     adequate and reasonable means do not exist for ascertaining such LIBOR Rate, or

 

(ii)                                  a contingency has occurred which materially and adversely affects the London interbank eurodollar market relating to the LIBOR Rate,

 

then the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative Agent’s and Lender’s Rights].

 

4.4.2                                 Illegality; Increased Costs; Deposits Not Available.  If at any time any Lender shall have determined that:

 

(i)                                     the making, maintenance or funding of any Loan to which a LIBOR Rate Option applies has been made impracticable or unlawful by compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or

 

(ii)                                  such LIBOR Rate Option will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of any such Loan, or

 

(iii)                               after making all reasonable efforts, deposits of the relevant amount in Dollars for the relevant Interest Period for a Loan, or to banks generally, to which a LIBOR Rate Option applies, respectively, are not available to such Lender with respect to such Loan, or to banks generally, in the interbank eurodollar market,

 

then the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative Agent’s and Lender’s Rights].

 

4.4.3                                 Administrative Agent’s and Lender’s Rights.  In the case of any event specified in Section 4.4.1 [Unascertainable] above, the Administrative Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in Section 4.4.2 [Illegality; Increased Costs; Deposits Not Available] above, such Lender shall promptly so notify the Administrative Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Administrative Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrower.  Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (A) the Lenders, in the case of such notice given by the Administrative Agent, or (B) such Lender, in the case of such notice given by such Lender, to allow the Borrower to select, convert to or renew a LIBOR Rate Option shall be suspended until the Administrative

 

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Agent shall have later notified the Borrower, or such Lender shall have later notified the Administrative Agent, of the Administrative Agent’s or such Lender’s, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist.  If at any time the Administrative Agent makes a determination under Section 4.4.1 [Unascertainable] and the Borrower has previously notified the Administrative Agent of its selection of, conversion to or renewal of a LIBOR Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans.  If any Lender notifies the Administrative Agent of a determination under Section 4.4.2 [Illegality; Increased Costs; Deposits Not Available], the Borrower shall, subject to the Borrower’s indemnification Obligations under Section 5.10 [Indemnity], as to any Loan of the Lender to which a LIBOR Rate Option applies, on the date specified in such notice either convert such Loan to the Base Rate Option otherwise available with respect to such Loan or prepay such Loan in accordance with Section 5.6 [Voluntary Prepayments].  Absent due notice from the Borrower of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date.  Notwithstanding anything to the contrary in this Agreement, if the Administrative Agent reasonably determines that the making of any Loan could reasonably be expected to contravene any Law applicable to the Administrative Agent and/or the Lenders, then the Administrative Agent and/or the Lenders shall not be obligated to advance such Loan.

 

4.5                               Selection of Interest Rate Options.  If the Borrower fails to select a new Interest Period to apply to any Borrowing Tranche of Loans under the LIBOR Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of Section 4.2 [Interest Periods], the Borrower shall be deemed to have converted such Borrowing Tranche to the Base Rate Option, as applicable to Revolving Credit Loans, commencing upon the last day of the existing Interest Period.

 

4.6                               Successor LIBOR Rate Index.

 

4.6.1                                 If the Administrative Agent determines (which determination shall be final and conclusive, absent manifest error) that either (a) (i) the circumstances set forth in Section 4.4.1 [LIBOR Rate Unascertainable] have arisen and are unlikely to be temporary, or (ii) the circumstances set forth in Section 4.4.1 [LIBOR Rate Unascertainable] have not arisen but the applicable supervisor or administrator (if any) of the LIBOR Rate or an Official Body having jurisdiction over the Administrative Agent has made a public statement identifying the specific date after which the LIBOR Rate shall no longer be used for determining interest rates for loans (either such date, a “LIBOR Termination Date”), or (b) a rate other than the LIBOR Rate has become a widely recognized benchmark rate for newly originated syndicated loans in Dollars in the U.S. market, then the Administrative Agent may (in consultation with the Borrower) choose a replacement index for the LIBOR Rate and make adjustments to applicable margins and related amendments to this Agreement as referred to below such that, to the extent practicable, the all-in interest rate based on the replacement index will be substantially equivalent to the all-in LIBOR Rate-based interest rate in effect prior to its replacement.

 

4.6.2                                 The Administrative Agent and the Borrower shall enter into an amendment to this Agreement to reflect the replacement index, the adjusted margins and such

 

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other related amendments as may be appropriate, in the discretion of the Administrative Agent, for the implementation and administration of the replacement index-based rate.  Notwithstanding anything to the contrary in this Agreement or the other Loan Documents (including, without limitation, Section 11.1 [Modifications, Amendments or Waivers]), such amendment shall become effective without any further action or consent of any other party to this Agreement at 5:00 p.m. New York City time on the tenth (10th) Business Day after the date a draft of the amendment is provided to the Lenders, unless the Administrative Agent receives, on or before such tenth (10th) Business Day, a written notice from the Required Lenders stating that such Lenders object to such amendment.

 

4.6.3                                 Selection of the replacement index, adjustments to the applicable margins, and amendments to this Agreement (i) will be determined with due consideration to the then-current market practices for determining and implementing a rate of interest for newly originated loans in the United States and loans converted from a LIBOR Rate-based rate to a replacement index-based rate, and (ii) may also reflect adjustments to account for (x) the effects of the transition from the LIBOR Rate to the replacement index and (y) yield- or risk-based differences between the LIBOR Rate and the replacement index.

 

4.6.4                                 Until an amendment reflecting a new replacement index in accordance with this Section 4.6 [Successor LIBOR Rate Index] is effective, each advance, conversion and renewal of a Loan under the LIBOR Rate Option will continue to bear interest with reference to the LIBOR Rate; provided however, that if the Administrative Agent determines (which determination shall be final and conclusive, absent manifest error) that a LIBOR Termination Date has occurred, then following the LIBOR Termination Date, all Loans as to which the LIBOR Rate Option would otherwise apply shall automatically be converted to the Base Rate Option until such time as an amendment reflecting a replacement index and related matters as described above is implemented.

 

4.6.5                                 Notwithstanding anything to the contrary contained herein, if at any time the replacement index is less than zero, at such times, such index shall be deemed to be zero for purposes of this Agreement.

 

5.                                      PAYMENTS

 

5.1                               Payments.  All payments and prepayments to be made in respect of principal, interest, Commitment Fees, Letter of Credit Fees, Administrative Agent’s Fee or other fees or amounts due from the Borrower hereunder shall be payable prior to 11:00 a.m. on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue.  Such payments shall be made to the Administrative Agent at the Principal Office for the account of PNC with respect to the Swing Loans and for the ratable accounts of the Lenders with respect to the Revolving Credit Loans in U.S. Dollars and in immediately available funds, and the Administrative Agent shall promptly distribute such amounts to the Lenders in immediately available funds; provided that in the event payments are received by 11:00 a.m. by the Administrative Agent with respect to the Loans and such payments are not distributed to the Lenders on the same day received by the Administrative Agent, the Administrative Agent shall pay the Lenders interest at the Federal Funds Effective

 

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Rate with respect to the amount of such payments for each day held by the Administrative Agent and not distributed to the Lenders.  The Administrative Agent’s and each Lender’s statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and interest on the Loans and other amounts owing under this Agreement.

 

5.2                               Pro Rata Treatment of Lenders.  Each borrowing of Revolving Credit Loans shall be allocated to each Lender according to its Ratable Share, and each selection of, conversion to or renewal of any Interest Rate Option and each payment or prepayment by the Borrower with respect to principal, interest, Commitment Fees and Letter of Credit Fees (but excluding the Administrative Agent’s Fee and the Issuing Lender’s fronting fee) shall (except as otherwise may be provided with respect to a Defaulting Lender and except as provided in Sections 4.4.3 [Administrative Agent’s and Lender’s Rights] in the case of an event specified in Section 4.4 [LIBOR Rate Unascertainable; Etc.], 5.6.2 [Replacement of a Lender] or 5.8 [Increased Costs]) be payable ratably among the Lenders entitled to such payment in accordance with the amount of principal, interest, Commitment Fees and Letter of Credit Fees, as set forth in this Agreement.  Notwithstanding any of the foregoing, each borrowing or payment or prepayment by the Borrower of principal, interest, fees or other amounts from the Borrower with respect to Swing Loans shall be made by or to PNC according to Section 2.6.5 [Borrowings to Repay Swing Loans].

 

5.3                               Sharing of Payments by Lenders.  If any Lender shall, by exercising any right of setoff, counterclaim or banker’s lien, by receipt of voluntary payment, by realization upon security, or by any other non-pro rata source, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than the pro-rata share of the amount such Lender is entitled thereto, 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 and such other obligations 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, together with interest or other amounts, if any, required by Law (including court order) to be paid by the Lender or the holder making such purchase; and

 

(ii)                                  the provisions of this Section 5.3 shall not be construed to apply to (x) any payment made by the Loan Parties pursuant to and in accordance with the express terms of the Loan Documents or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or Participation Advances to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section 5.3 shall apply).

 

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Each Loan Party 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 each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Loan Party in the amount of such participation.

 

5.4                               Presumptions by Administrative Agent.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Lender, 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 Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

5.5                               Interest Payment Dates.  Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on each Payment Date.  Interest on Loans to which the LIBOR Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also on the 90th day of such Interest Period.  Interest on the principal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated Expiration Date, upon acceleration or otherwise).

 

5.6                               Voluntary Prepayments.

 

5.6.1                                 Right to Prepay.  The Borrower shall have the right at its option from time to time to prepay the Loans in whole or part without premium or penalty (except as provided in Section 5.6.2 [Replacement of a Lender] below, in Section 5.8[Increased Costs] and Section 5.10 [Indemnity]).  Whenever the Borrower desires to prepay any part of the Loans, it shall provide a prepayment notice to the Administrative Agent by 1:00 p.m. at least one (1) Business Day prior to the date of prepayment of the Revolving Credit Loans or no later than 1:00 p.m. on the date of prepayment of Swing Loans, setting forth the following information:

 

(w)                               the date, which shall be a Business Day, on which the proposed prepayment is to be made;

 

(x)                                 a statement indicating the application of the prepayment between the Revolving Credit Loans and Swing Loans;

 

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(y)                                 a statement indicating the application of the prepayment between Loans to which the Base Rate Option applies and Loans to which the LIBOR Rate Option applies; and

 

(z)                                  the total principal amount of such prepayment, which shall not be less than the lesser of (i) the Revolving Facility Usage or (ii) $1,000,000 for any Swing Loan or $1,000,000 for any Revolving Credit Loan.

 

All prepayment notices shall be irrevocable.  The principal amount of the Loans for which a prepayment notice is given, together with interest on such principal amount, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made.  Except as provided in Section 4.4.3 [Administrative Agent’s and Lender’s Rights], if the Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche which the Borrower is prepaying, the prepayment shall be applied first to Loans to which the Base Rate Option applies, then to Loans to which the LIBOR Rate Option applies.  Any prepayment hereunder shall be subject to the Borrower’s Obligation to indemnify the Lenders under Section 5.10 [Indemnity].

 

5.6.2                                 Replacement of a Lender.  In the event any Lender (i) gives notice under Section 4.4 [LIBOR Rate Unascertainable, Etc.], (ii) requests compensation under Section 5.8 [Increased Costs], or requires the Borrower to pay any Indemnified Taxes or additional amount to any Lender or any Official Body for the account of any Lender pursuant to Section 5.9 [Taxes], (iii) is a Defaulting Lender, (iv) becomes subject to the control of an Official Body (other than normal and customary supervision), or (v) is a Non-Consenting Lender referred to in Section 11.1 [Modifications, Amendments or Waivers], then in any such event the Borrower may, at its sole expense, 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 11.8 [Successors and Assigns]), all of its interests, rights (other than existing rights to payments pursuant to Sections 5.8 [Increased Costs] or 5.9 [Taxes]) 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:

 

(i)                                     the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 11.8 [Successors and Assigns];

 

(ii)                                  such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and Participation Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 5.10 [Indemnity]) 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);

 

(iii)                               in the case of any such assignment resulting from a claim for compensation under Section 5.8.1 [Increased Costs Generally] or payments required to be made pursuant to Section 5.9 [Taxes], such assignment will result in a reduction in such compensation or payments thereafter; and

 

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(iv)                              such assignment does not conflict with applicable Law.

 

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.

 

5.6.3                                 Designation of a Different Lending Office.  If any Lender requests compensation under Section 5.8 [Increased Costs], or the Borrower is or will be required to pay any Indemnified Taxes or additional amounts to any Lender or any Official Body for the account of any Lender pursuant to Section 5.9 [Taxes], then such Lender shall (at the request of the Borrower) 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 reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 5.8 [Increased Costs] or Section 5.9 [Taxes], as the case may be, in the future, and (ii) would not subject such Lender to any material unreimbursed cost or expense and would not otherwise be materially 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.

 

5.7                               [Reserved].

 

5.8                               Increased Costs.

 

5.8.1                                 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) or the Issuing Lender;

 

(ii)                                  subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

 

(iii)                               impose on any Lender, the Issuing Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, the Issuing Lender or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, the Issuing Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Issuing Lender or other Recipient, the Borrower will pay to such Lender, the Issuing Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate

 

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such Lender or the Issuing Lender, as the case may be, for such additional costs incurred or reduction suffered.

 

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

 

5.8.3                                 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans.  A certificate of a Lender or the Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in Sections 5.8.1 [Increased Costs Generally] or 5.8.2 [Capital Requirements] and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

5.8.4                                 Delay in Requests.  Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing 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 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

 

5.9                               Taxes.

 

5.9.1                                 Issuing Lender.  For purposes of this Section 5.9, the term “Lender” includes the Issuing Lender and the term “applicable Law” includes FATCA.

 

5.9.2                                 Payments Free of Taxes.  Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be without deduction or withholding for any Taxes, except as required by applicable Law.  If any applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the

 

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deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Official Body in accordance with applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 5.9 [Taxes]) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

 

5.9.3                                 Payment of Other Taxes by the Loan Parties.  The Loan Parties shall timely pay to the relevant Official Body in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

5.9.4                                 Indemnification by the Loan Parties.  The Loan Parties shall jointly and severally indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.9 [Taxes]) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Official Body.  A certificate as to the amount of 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.

 

5.9.5                                 Indemnification by the Lenders.  Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of any of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.8.4 [Participations] relating to the maintenance of a Participant Register, and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Official Body.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 5.9.5 [Indemnification by the Lenders].

 

5.9.6                                 Evidence of Payments.  As soon as practicable after any payment of Taxes by any Loan Party to an Official Body pursuant to this Section 5.9 [Taxes], such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Official Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

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5.9.7                                 Status of Lenders.

 

(i)                                     Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 5.9.7(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

(ii)                                  Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Borrower,

 

(A)                   any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

 

(B)                   any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

 

(i)                                     in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(ii)                                  executed originals of IRS Form W-8ECI;

 

(iii)                               in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate

 

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substantially in the form of Exhibit 5.9.7(A) 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 (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN or W-8BEN-E; or

 

(iv)                              to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit 5.9.7(B) or Exhibit 5.9.7(C), IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit 5.9.7(D) on behalf of each such direct and indirect partner;

 

(C)                   any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

 

(D)                   if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

 

5.9.8                                 Treatment of Certain Refunds.  If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 5.9 [Taxes] (including by the payment of additional

 

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amounts pursuant to this Section 5.9 [Taxes]), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 5.9 [Taxes] with respect to the Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Official Body with respect to such refund).  Such indemnifying party, upon the request of such indemnified party incurred in connection with obtaining such refund, shall repay to such indemnified party the amount paid over pursuant to this Section 5.9.8 [Treatment of Certain Refunds] (plus any penalties, interest or other charges imposed by the relevant Official Body) in the event that such indemnified party is required to repay such refund to such Official Body.  Notwithstanding anything to the contrary in this Section 5.9.8 [Treatment of Certain Refunds]), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 5.9.8 [Treatment of Certain Refunds] the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

5.9.9                                 Survival.  Each party’s obligations under this Section 5.9 [Taxes] shall survive the resignation of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all Obligations.

 

5.10                        Indemnity.  In addition to the compensation or payments required by Section 5.8 [Increased Costs] or Section 5.9 [Taxes], the Borrower shall indemnify each Lender against all liabilities, losses or expenses (including loss of anticipated profits, any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract) which such Lender sustains or incurs as a consequence of any:

 

(i)                                     payment, prepayment, conversion or renewal of any Loan to which a LIBOR Rate Option applies on a day other than the last day of the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is then due), or

 

(ii)                                  attempt by the Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests under Section 2.5 [Revolving Credit Loan Requests; Swing Loan Requests] or Section 4.2 [Interest Periods] or notice relating to prepayments under Section 5.6 [Voluntary Prepayments].

 

If any Lender sustains or incurs any such loss or expense, it shall from time to time notify the Borrower of the amount determined in good faith by such Lender (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as such Lender shall deem reasonable) to be necessary to indemnify such

 

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Lender for such loss or expense.  Such notice shall set forth in reasonable detail the basis for such determination.  Such amount shall be due and payable by the Borrower to such Lender ten (10) Business Days after such notice is given.

 

5.11                        Settlement Date Procedures.  In order to minimize the transfer of funds between the Lenders and the Administrative Agent, the Borrower may borrow, repay and reborrow Swing Loans and PNC may make Swing Loans as provided in Section 2.1.2 [Swing Loan Commitments] hereof during the period between Settlement Dates.  The Administrative Agent shall notify each Lender of its Ratable Share of the total of the Revolving Credit Loans and the Swing Loans (each a “Required Share”).  On such Settlement Date, each Lender shall pay to the Administrative Agent the amount equal to the difference between its Required Share and its Revolving Credit Loans, and the Administrative Agent shall pay to each Lender its Ratable Share of all payments made by the Borrower to the Administrative Agent with respect to the Revolving Credit Loans.  The Administrative Agent shall also effect settlement in accordance with the foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and on any mandatory prepayment date as provided for herein and may at its option effect settlement on any other Business Day.  These settlement procedures are established solely as a matter of administrative convenience, and nothing contained in this Section 5.11 shall relieve the Lenders of their obligations to fund Revolving Credit Loans on dates other than a Settlement Date pursuant to Section 2.1.2 [Swing Loan Commitment].  The Administrative Agent may at any time at its option for any reason whatsoever require each Lender to pay immediately to the Administrative Agent such Lender’s Ratable Share of the outstanding Revolving Credit Loans and each Lender may at any time require the Administrative Agent to pay immediately to such Lender its Ratable Share of all payments made by the Borrower to the Administrative Agent with respect to the Revolving Credit Loans.

 

6.                                      REPRESENTATIONS AND WARRANTIES

 

6.1                               Representations and Warranties.  The Loan Parties, jointly and severally, represent and warrant to the Administrative Agent and each of the Lenders as follows:

 

6.1.1                                 Organization and Qualification; Power and Authority; Compliance With Laws; Title to Properties; Event of Default.  Each Loan Party and each Subsidiary of each Loan Party (i) is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (ii) has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct, (iii) is duly licensed or qualified and in good standing in (x) each jurisdiction where such Loan Party is incorporated or formed, as applicable, which such jurisdiction as of the Closing Date is listed on Schedule 6.1.1 and (y) in all other jurisdictions where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or qualification necessary and where the failure to be so qualified and in good standing would not reasonably be expected to result in a Material Adverse Change, (iv) has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part, (v) is in compliance in all material respects with all applicable Laws (other than Environmental Laws which are

 

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specifically addressed in Section 6.1.14 [Environmental Matters]) in all jurisdictions in which any Loan Party or Subsidiary of any Loan Party is presently or will be doing business except where the failure to do so would not constitute a Material Adverse Change, and (vi) has good and marketable title to or valid leasehold interest in all properties, assets and other rights which it purports to own or lease or which are reflected as owned or leased on its books and records, free and clear of all Liens and encumbrances except Permitted Liens.  No Event of Default or Potential Default exists or is continuing.

 

6.1.2                                 Subsidiaries and Owners; Investment Companies.  As of the Closing Date, Schedule 6.1.2 states (i) the name of each of the Borrower’s Subsidiaries, its jurisdiction of organization and the amount, percentage and type of equity interests in such Subsidiary (the “Subsidiary Equity Interests”), and (ii) any options, warrants or other rights outstanding to purchase any such Subsidiary Equity Interests or any equity interests in the Borrower.  The Borrower and each Subsidiary of the Borrower has good and marketable title to all of the Subsidiary Equity Interests it purports to own, free and clear in each case of any Lien (other than Permitted Liens) and all such Subsidiary Equity Interests have been validly issued, fully paid and nonassessable.  None of the Loan Parties or Subsidiaries of any Loan Party is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.”

 

6.1.3                                 Validity and Binding Effect.  This Agreement and each of the other Loan Documents (i) has been duly and validly executed and delivered by each Loan Party, and (ii) constitutes, or will constitute, legal, valid and binding obligations of each Loan Party which is or will be a party thereto, enforceable against such Loan Party in accordance with its terms.

 

6.1.4                                 No Conflict; Material Agreements; Consents.  Neither the execution and delivery of this Agreement or the other Loan Documents by any Loan Party nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents of any Loan Party or (ii) any Law or any material agreement or instrument or order, writ, judgment, injunction or decree to which any Loan Party or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which it is subject (other than, in the case of material agreements or instruments, any such default or breach which would not reasonably be expected to result in a Material Adverse Change), or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan Party or any of its Subsidiaries (other than Liens granted under the Loan Documents).  There is no default under such material agreement (referred to above) and none of the Loan Parties or their Subsidiaries is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which would result in a Material Adverse Change.  No consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents.

 

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6.1.5                                 Litigation.  There are no actions, suits, proceedings or investigations pending or, to the knowledge of any Loan Party, threatened against such Loan Party or any Subsidiary of such Loan Party at law or in equity before any Official Body which individually or in the aggregate may result in any Material Adverse Change.  None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of any order, writ, injunction or any decree of any Official Body which may result in any Material Adverse Change.

 

6.1.6                                 Financial Statements.

 

(i)                                     Historical Statements.  The Borrower has delivered to the Administrative Agent copies of its audited consolidated year-end financial statements for and as of the end of the fiscal year ended June 30, 2018.  In addition, the Borrower has delivered to the Administrative Agent copies of its unaudited consolidated interim financial statements for the fiscal year to date and as of the end of the fiscal quarter ended March 31, 2019 (all such annual and interim statements being collectively referred to as the “Statements”).  The Statements were compiled from the books and records maintained by the Borrower’s management, are correct and complete in all material respects and fairly represent the consolidated financial condition of the Borrower and its Subsidiaries as of the respective dates thereof and the results of operations for the fiscal periods then ended and have been prepared in accordance with GAAP consistently applied, subject (in the case of the interim statements) to normal year-end audit adjustments.

 

(ii)                                  Accuracy of Financial Statements.  Neither the Borrower nor any Subsidiary of the Borrower has any liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the Statements or in the notes thereto, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of the Borrower or any Subsidiary of the Borrower which may cause a Material Adverse Change.  Since June 30, 2018, no Material Adverse Change has occurred.

 

6.1.7                                 Margin Stock.  None of the Loan Parties or any Subsidiaries of any Loan Party engages or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System).  No part of the proceeds of any Loan has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System.  None of the Loan Parties or any Subsidiary of any Loan Party holds or intends to hold margin stock in such amounts that more than 25% of the reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party are or will be represented by margin stock.

 

6.1.8                                 Full Disclosure.  Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other documents furnished in writing by any Loan Party or on such Loan Party’s behalf to the Administrative Agent or any Lender in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, taken as a whole, in light of the circumstances under which they were made, not misleading as of the date furnished.

 

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There is no fact known to any Loan Party which materially adversely affects the business, property, assets, financial condition, or results of operations of any Loan Party or Subsidiary of any Loan Party which has not been set forth in this Agreement or in the certificates, statements, agreements or other documents furnished in writing to the Administrative Agent and the Lenders prior to or at the date hereof in connection with the transactions contemplated hereby.

 

6.1.9                                 Taxes.  All federal, state, local and other tax returns required to have been filed (taking into account applicable extensions of time to file) with respect to each Loan Party and each Subsidiary of each Loan Party have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments and other governmental charges which have or may become due pursuant to said returns or to assessments received, except to the extent that such taxes, fees, assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made.

 

6.1.10                          Patents, Trademarks, Copyrights, Licenses, Etc.  Each Loan Party and each Subsidiary of each Loan Party owns or possesses or believes it can acquire on commercially reasonable terms sufficient rights to all the material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights necessary to own and operate its properties and to carry on its business as presently conducted and planned to be conducted by such Loan Party or Subsidiary, without known possible, alleged or actual conflict with the rights of others.

 

6.1.11                          Liens in the Collateral.  The Liens in the Collateral granted to the Administrative Agent for the benefit of the Lenders pursuant to Patent, Trademark and Copyright Security Agreement, the Pledge Agreement and the Security Agreement (collectively, the “Collateral Documents”) constitute and will continue to constitute Prior Security Interests.  All filing fees and other expenses in connection with the perfection of such Liens have been or will be paid by the Borrower.

 

6.1.12                          Insurance.  The properties of each Loan Party and each of its Subsidiaries are insured pursuant to policies and other bonds which are valid and in full force and effect and which provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of each such Loan Party and Subsidiary in accordance with prudent business practice in the industry of such Loan Parties and Subsidiaries.

 

6.1.13                          ERISA Compliance.

 

(i)                                     Each Pension 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 qualify under Section 401(a) of the Code has received from the IRS a favorable determination or opinion letter, which has not by its terms expired, that such Pension Plan is so qualified, or such Pension Plan is entitled to rely on an IRS advisory or opinion letter with respect to an IRS-approved master and prototype or volume submitter plan,  or a timely application for such a determination or opinion letter is currently being processed by the IRS with respect thereto; and, to the best knowledge of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification.  Borrower and each member of the ERISA

 

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Group have made all required contributions to each Pension Plan subject to Sections 412 or 430 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Sections 412 or 430 of the Code has been made with respect to any Pension Plan.

 

(ii)                                  No ERISA Event has occurred or is reasonably expected to occur; (a) no Pension Plan has any unfunded pension liability (i.e., excess of benefit liabilities over the current value of that Pension Plan’s assets, determined pursuant to the assumptions used for funding the Pension Plan for the applicable plan year in accordance with Section 430 of the Code); (b) neither Borrower nor any member of the ERISA Group has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (c) neither Borrower nor any member of the ERISA Group has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 of ERISA, with respect to a Multiemployer Plan; (d) neither Borrower nor any member of the ERISA Group has received notice pursuant to Section 4242(a)(1)(B) of ERISA that a Multiemployer Plan is in reorganization and that additional contributions are due to the Multiemployer Plan pursuant to Section 4243 of ERISA; and (e) neither Borrower nor any member of the ERISA Group has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

 

6.1.14                          Environmental Matters.  Each Loan Party is and, to the knowledge of each respective Loan Party, each of its Subsidiaries is, in compliance with applicable Environmental Laws except where such non-compliance would not in the aggregate result in a Material Adverse Change.

 

6.1.15                          Solvency.  On the Closing Date and after giving effect to the initial Loans hereunder, the Borrower, on a consolidated basis with its Subsidiaries, is Solvent.

 

6.1.16                          Anti-Terrorism Laws; Anti-Corruption Laws.  (i) No Covered Entity is a Sanctioned Person, and (ii) no Covered Entity, either in its own right or through any third party, (a) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law, (b) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; or (c) engages in any dealings or transactions prohibited by any Anti-Terrorism Law.  The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower and the other Loan Parties and their respective directors, officers, employees and agents with Anti-Corruption Laws and Anti-Terrorism Laws. The Borrower, its Subsidiaries and their respective officers, directors, employees and agents are in compliance with Anti-Terrorism Laws and Anti-Corruption Laws in all material respects.   No borrowing of Revolving Credit Loans or Letter of Credit Borrowing, use of proceeds or other transaction contemplated by this Agreement or the other Loan Documents will violate Anti-Terrorism Laws or Anti-Corruption Laws.

 

6.1.17                          Certificate of Beneficial Ownership.  The Certificate of Beneficial Ownership executed and delivered to Administrative Agent and Lenders for each Loan Party on or prior to the date of this Agreement, as updated from time to time in accordance with this Agreement, is accurate, complete and correct as of the date hereof and as of the date any such

 

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update is delivered. Each Loan Party acknowledges and agrees that the Certificate of Beneficial Ownership is one of the Loan Documents.

 

6.1.18                          EEA Financial Institution.  No Loan Party is an EEA Financial Institution.

 

6.1.19                          Senior Indebtedness Status.  The Obligations constitute “Senior Indebtedness” or any similar designation (with respect to Indebtedness having the maximum rights as “senior indebtedness”) under and as defined in any agreement governing any Indebtedness of the Loan Parties that is by its terms subordinated in right of payment to the Obligations and the subordination provisions set forth in each such agreement are legally valid and enforceable against the parties thereto.

 

6.1.20                          Labor Matters.  There are no collective bargaining agreements covering the employees of the Borrower or any of its Subsidiaries and neither the Borrower nor any Subsidiary has suffered any strikes, walkouts, working stoppages or other labor-related strife within the last five (5) years preceding the Closing Date.

 

7.                                      CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT

 

The obligation of each Lender to make Loans and of the Issuing Lender to issue Letters of Credit hereunder is subject to the performance by each of the Loan Parties of its Obligations to be performed hereunder at or prior to the making of any such Loans or issuance of such Letters of Credit and to the satisfaction or waiver of the following further conditions:

 

7.1                               First Loans and Letters of Credit.

 

7.1.1                                 Deliveries.  On the Closing Date, the Administrative Agent shall have received each of the following in form and substance reasonably satisfactory to the Administrative Agent:

 

(i)                                     A certificate of each of the Loan Parties signed by an Authorized Officer, dated the Closing Date stating that (w) all representations and warranties of the Loan Parties set forth in the Loan Documents are true and correct in all material respects (except for representations and warranties that are qualified as to materiality or Material Adverse Change, in which case such representations and warranties shall be true in all respects) on and as of such date (except to the extent any such representation or warranty expressly relates only to an earlier and/or specified date, in which case such representation and warranty shall be true and correct (or true and correct in all material respects, as applicable) as of such date), (x) the Loan Parties are in compliance with each of the covenants and conditions hereunder and under the Loan Documents, (y) no Event of Default or Potential Default exists, and (z) no Material Adverse Change has occurred since the date of the last audited financial statements of the Borrower delivered to the Administrative Agent;

 

(ii)                                  A certificate dated the Closing Date and signed by the Secretary or an Assistant Secretary of each of the Loan Parties, certifying as appropriate as to: (a) all action taken by each Loan Party in connection with this Agreement and the other Loan Documents; (b) the names of the Authorized Officers authorized to sign the Loan Documents and their true

 

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signatures; and (c) copies of its organizational documents as in effect on the Closing Date certified by the appropriate state official where such documents are filed in a state office together with certificates from the appropriate state officials as to the continued existence and good standing of each Loan Party in each state where organized;

 

(iii)                               This Agreement and each of the other Loan Documents signed by an Authorized Officer and all appropriate financing statements in form for filing and appropriate stock powers and certificates evidencing the pledged Collateral;

 

(iv)                              A written opinion of counsel for the Loan Parties, dated the Closing Date and in form and substance reasonably satisfactory to the Administrative Agent;

 

(v)                                 Evidence that adequate insurance, including flood insurance, if applicable, required to be maintained under this Agreement is in full force and effect, with additional insured and lender loss payable special endorsements attached thereto in form and substance satisfactory to the Administrative Agent and its counsel naming the Administrative Agent as additional insured and lender loss payee;

 

(vi)                              A duly completed Compliance Certificate setting forth pro forma compliance with the financial covenants as of the last day of the fiscal quarter of Borrower most recently ended for which financial statements have been delivered prior to the Closing Date, signed by the Chief Executive Officer, President, Chief Financial Officer or Chief Accounting Officer of Borrower;

 

(vii)                           All consents required to effectuate the transactions contemplated hereby and all regulatory approvals and licenses necessary for the financing have been completed;

 

(viii)                        [Reserved];

 

(ix)                              A Lien search in reasonably acceptable scope and with acceptable results;

 

(x)                                 A duly completed perfection certificate in form and substance satisfactory to the Administrative Agent;

 

(xi)                              No material adverse change to information previously supplied to the Administrative Agent;

 

(xii)                           [Reserved]

 

(xiii)                        [Reserved]; and

 

(xiv)                       Such other documents in connection with such transactions as the Administrative Agent or its counsel may reasonably request.

 

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7.1.2                                 Payment of Fees.  The Borrower shall have paid all fees and expenses payable on or before the Closing Date as required by this Agreement, the Administrative Agent’s Letter or any other Loan Document.

 

7.1.3                                 Certificate of Beneficial Ownership; USA Patriot Act.  Administrative Agent and each Lender shall have received, in form and substance acceptable to Administrative Agent and each Lender an executed Certificate of Beneficial Ownership with respect to each Loan Party and such other documentation and other information requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act.

 

7.2                               Each Loan or Letter of Credit.  At the time of making any Loans or issuing, extending or increasing any Letters of Credit and after giving effect to the proposed extensions of credit: (i) all representations and warranties of the Loan Parties set forth in the Loan Documents are true and correct in all material respects (except for representations and warranties that are qualified as to materiality or Material Adverse Change, in which case such representations and warranties shall be true in all respects) on and as of such date (except to the extent any such representation or warranty expressly relates only to an earlier and/or specified date, in which case such representation and warranty shall be true and correct (or true and correct in all material respects, as applicable) as of such date), (ii) no Event of Default or Potential Default shall have occurred and be continuing, and (iii) the Borrower shall have delivered to the Administrative Agent a duly executed and completed Loan Request or to the Issuing Lender an application for a Letter of Credit, as the case may be.

 

Each Lender, by delivering its signature page to this Agreement on the Closing Date shall be deemed to have acknowledged receipt of, and consented to and approved, or to have waived receipt of, each Loan Document and each other document, instrument or agreement required to be approved by it on the Closing Date.

 

8.                                      COVENANTS

 

The Loan Parties, jointly and severally, covenant and agree that until Payment In Full, the Loan Parties shall comply at all times with the following covenants:

 

8.1                               Affirmative Covenants.

 

8.1.1                                 Preservation of Existence, Etc.  Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain its legal existence as a corporation, limited partnership or limited liability company and its license or qualification and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary, except as otherwise expressly permitted in Section 8.2.6 [Liquidations, Mergers, Etc.] and except in each jurisdiction where the failure to be so qualified or in good standing would not reasonably be expected to result in a Material Adverse Change.

 

8.1.2                                 Payment of Liabilities, Including Taxes, Etc.  Each Loan Party shall, and shall cause each of its Subsidiaries to, duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable, including all taxes, assessments and governmental charges upon it or any of its properties, assets,

 

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income or profits, prior to the date on which penalties attach thereto, except to the extent that such liabilities, including taxes, assessments or charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made.

 

8.1.3                                 Maintenance of Insurance.  Each Loan Party shall, and shall cause each of its Subsidiaries to, insure its properties and assets against loss or damage by fire and such other insurable hazards as such assets are commonly insured (including fire, extended coverage, property damage, workers’ compensation, public liability and business interruption insurance) and against other risks (including errors and omissions) in such amounts as similar properties and assets are insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable and financially sound insurers, including self-insurance to the extent customary, all as reasonably determined by the Administrative Agent.  The Loan Parties shall comply with the covenants and provide the endorsement set forth on Schedule 8.1.3 relating to property and related insurance policies covering the Collateral.

 

8.1.4                                 Maintenance of Properties and Leases.  Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties useful or necessary to its business, and from time to time, such Loan Party will make or cause to be made all appropriate repairs, renewals or replacements thereof.

 

8.1.5                                 Visitation Rights.  Each Loan Party shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorized employees or representatives of the Administrative Agent or any of the Lenders to visit and inspect any of its properties and to examine and make excerpts from its books and records and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times during normal business hours and as often as any of the Lenders may reasonably request, provided that each Lender shall provide the Borrower and the Administrative Agent with reasonable notice prior to any visit or inspection.  In the event any Lender desires to conduct an audit of any Loan Party, such Lender shall make a reasonable effort to conduct such audit contemporaneously with any audit to be performed by the Administrative Agent, provided further, that so long as no Event of Default has occurred and is continuing, the Administrative Agent and the Lenders shall together only be permitted to make one such visit in each fiscal year of the Borrower.

 

8.1.6                                 Keeping of Records and Books of Account.  The Borrower shall, and shall cause each Subsidiary of the Borrower to, maintain and keep proper books of record and account which enable the Borrower and its Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws of any Official Body having jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs.

 

8.1.7                                 Compliance with Laws; Use of Proceeds.  Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with all applicable Laws, including all Environmental Laws, in all respects; provided that it shall not be deemed to be a violation of this

 

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Section 8.1.7 if any failure to comply with any Law would not result in fines, penalties, remediation costs, other similar liabilities or injunctive relief which in the aggregate would constitute a Material Adverse Change.  The Loan Parties will use the Letters of Credit and the proceeds of the Loans only in accordance with Section 2.8 [Use of Proceeds] and as permitted by applicable Law.  The Borrower will maintain in effect policies and procedures designed to promote and achieve compliance by the Borrower and the other Loan Parties with applicable Laws.

 

8.1.8                                 Further Assurances.  Each Loan Party shall, from time to time, at its expense, faithfully preserve and protect the Administrative Agent’s Lien on and Prior Security Interest in the Collateral of the Loan Parties whether now owned or hereafter acquired as a continuing first priority perfected Lien, subject only to Permitted Liens, and shall do such other acts and things as the Administrative Agent in its sole discretion may deem reasonably necessary from time to time in order to preserve, perfect and protect the Liens granted under the Loan Documents and to exercise and enforce its rights and remedies thereunder with respect to the Collateral.  If at any point any real property shall be mortgaged under the Loan Documents, notwithstanding anything herein to the contrary, no such mortgage will be executed and delivered unless each Lender has received a life of loan flood zone determination and, as applicable, a borrower notice and flood insurance policy for the relevant property each in compliance with applicable laws and regulations, at least twenty days in advance of execution, and each Lender has confirmed to the Administrative Agent its satisfactory completion of flood compliance and due diligence.

 

8.1.9                                 Anti-Terrorism Laws; International Trade Law Compliance.  (a) No Covered Entity will become a Sanctioned Person, (b) no Covered Entity, either in its own right or through any third party, will (A) have any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (B) do business in or with, or derive any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; (C) engage in any dealings or transactions prohibited by any Anti-Terrorism Law; or (D) use the proceeds of the Loans or any Letter of Credit in violation of any Anti-Terrorism Law or Anti-Corruption Law or to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law or in violation of any Anti-Corruption Law, (c) the funds used to repay the Obligations will not be derived from any unlawful activity, (d) each Covered Entity shall comply with  all Anti-Terrorism Laws, and (e) the Borrower shall promptly notify the Agent in writing upon the occurrence of a Reportable Compliance Event.

 

8.1.10                          Keepwell.  Each Qualified ECP Loan Party jointly and severally (together with each other Qualified ECP Loan Party) hereby absolutely unconditionally and irrevocably (a) guarantees the prompt payment and performance of all Swap Obligations owing by each Non-Qualifying Party (it being understood and agreed that this guarantee is a guaranty of payment and not of collection), and (b) undertakes to provide such funds or other support as may be needed from time to time by any Non-Qualifying Party to honor all of such Non-Qualifying Party’s obligations under this Agreement or any other Loan Document in respect of Swap Obligations (provided, however, that each Qualified ECP Loan Party shall only be liable under this Section 8.1.10 for the maximum amount of such liability that can be hereby incurred

 

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without rendering its obligations under this Section 8.1.10, or otherwise under this Agreement or any other Loan Document, voidable under applicable law, including applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Qualified ECP Loan Party under this Section 8.1.10 shall remain in full force and effect until Payment in Full and termination of this Agreement and the other Loan Documents.  Each Qualified ECP Loan Party intends that this Section 8.1.10 constitute, and this Section 8.1.10 shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18(A)(v)(II) of the CEA.

 

8.1.11                          Certificate of Beneficial Ownership and Other Additional Information.  The Loan Parties shall provide to the Administrative Agent or the applicable Lender requesting the information referenced in clause (i) or (iii): (i) upon request from the Administrative Agent or any Lender, confirmation of the accuracy of the information set forth in the most recent Certificate of Beneficial Ownership provided to the Administrative Agent and Lenders; (ii) a new Certificate of Beneficial Ownership, in form and substance acceptable to the Administrative Agent and each Lender, when the individual(s) to be identified as a Beneficial Owner have changed; and (iii) such other information and documentation as may reasonably be requested by the Administrative Agent or any Lender from time to time for purposes of compliance by the Administrative Agent or such Lender with applicable laws (including without limitation the USA Patriot Act and other “know your customer” and anti-money laundering rules and regulations), and any policy or procedure implemented by the Administrative Agent or such Lender to comply therewith.

 

8.1.12                          No Commingling of Customer Funds; Sweep of Interest Income.  None of Borrower or any other Loan Party nor any of their respective Subsidiaries shall deposit any funds into a Segregated Customer Funds Account or direct or permit any other Person to deposit any funds into such Segregated Customer Funds Account, other than Customer Funds. Borrower and the other Loan Parties shall cause all amounts on deposit or investment in the Segregated Customer Funds Accounts that constitute interest income (or otherwise no longer constitute Customer Funds) to be swept on at least a quarterly basis to a Controlled Deposit Account.

 

8.1.13                          Post-Closing Obligations.  The Loan Parties shall deliver, or cause to be delivered, the following items to the Administrative Agent, in each case in form and substance reasonably satisfactory to Agent and its counsel, and/or cause the following to occur, in each case on or before expiration of the respective specified time periods, in each case as may be extended in writing by the Administrative Agent in the sole discretion of the Administrative Agent:

 

8.1.13.1                            Unless Administrative Agent otherwise consents in writing, no later than sixty (60) calendar days after the Closing Date, maintain all of their deposit accounts and securities accounts (other than Exempt Accounts) with institutions that have entered into one or more Control Agreements with the Administrative Agent and the applicable Loan Party granting “control” (as defined in the UCC) of each applicable account to the Administrative Agent.

 

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8.2                               Negative Covenants.

 

8.2.1                                 Indebtedness.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Indebtedness, except:

 

(i)                                     Indebtedness under the Loan Documents;

 

(ii)                                  Existing Indebtedness as set forth on Schedule 8.2.1 (including any extensions, replacements or renewals thereof; provided there is no increase in the amount thereof or other significant change in the terms thereof);

 

(iii)                               Indebtedness incurred with respect to Purchase Money Security Interests and capitalized leases in the amount not to exceed $25,000,000 at any time outstanding;

 

(iv)                              Indebtedness of a Loan Party to another Loan Party which Indebtedness (A) is subordinated pursuant to the Intercompany Subordination Agreement and (B) is evidenced by a demand note in form and substance reasonably satisfactory to the Administrative Agent and pledged and delivered to the Administrative Agent pursuant to the Loan Documents as collateral security for the Obligations;

 

(v)                                 Any (i) Lender Provided Interest Rate Hedge, (ii) Lender Provided Foreign Currency Hedge, (ii) other Interest Rate Hedge or Foreign Currency Hedge approved by the Administrative Agent or (iii) Indebtedness under any Other Lender Provided Financial Services Product; provided however, the Loan Parties shall enter into an Interest Rate Hedge or Foreign Currency Hedge only for hedging (rather than speculative) purposes;

 

(vi)                              Indebtedness of any Person that becomes a Subsidiary, or merges into the Borrower or a Subsidiary after the Closing Date that is assumed in connection with a Permitted Acquisition; provided that, in each case, such Indebtedness exists at the time such Person becomes a Subsidiary, or merges into the Borrower or a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary, or merging into the Company or a Subsidiary, and provided further that the total amount of Indebtedness permitted by clause (vi) shall not exceed $10,000,000 at any time outstanding;

 

(vii)                           Unsecured Indebtedness (including, without limitation, convertible debt)so long as, both immediately before and after giving effect to the incurrence of such Indebtedness, (A) no Potential Default or Event of Default has occurred and is continuing and (B) the Loan Parties are in Financial Covenant Compliance; and

 

(viii)                        Other Indebtedness in an amount not to exceed $15,000,000 at any time outstanding.

 

8.2.2                                 Liens; Lien Covenants.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so, except Permitted Liens.

 

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8.2.3                                 Guaranties.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time, directly or indirectly, become or be liable in respect of any Guaranty, or assume, guarantee, become surety for, endorse or otherwise agree, become or remain directly or contingently liable upon or with respect to any obligation or liability of any other Person, except for Guaranties of Indebtedness of the Loan Parties permitted hereunder.

 

8.2.4                                 Loans and Investments.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time make or suffer to remain outstanding any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or limited liability company interest in, or any other investment or interest in, or make any capital contribution to, any other Person, or agree, become or remain liable to do any of the foregoing, except:

 

(i)                                     any Investment existing on the date of this Agreement and described on Schedule 8.2.4;

 

(ii)                                  trade credit extended on usual and customary terms in the ordinary course of business;

 

(iii)                               advances to employees to meet expenses incurred by such employees in the ordinary course of business;

 

(iv)                              Permitted Investments;

 

(v)                                 loans, advances and investments in other Loan Parties;

 

(vi)                              other loans and investments so long as, both immediately before and after giving effect to such dividend or distribution, (A) no Potential Default or Event of Default has occurred and is continuing, (B) the Loan Parties are in Financial Covenant Compliance, and (C) with respect to loans and investments to entities that are not Loan Parties, such loans and investments do not exceed $20,000,000 at any time outstanding; and

 

(vii)                           investments permitted under Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions].

 

8.2.5                                 Dividends and Related Distributions.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, make or pay, or agree to become or remain liable to make or pay, any dividend or other distribution of any nature (whether in cash, property, securities or otherwise) on account of or in respect of its shares of Capital Stock, on account of the purchase, redemption, retirement or acquisition of its shares of Capital Stock (or warrants, options or rights therefor), except (i) dividends or other distributions payable to another Loan Party and (ii) other dividends and distributions so long as, both immediately before and after giving effect to such dividend or distribution, (A) no Potential Default or Event of Default has occurred and is continuing and (B) the Loan Parties are in Financial Covenant Compliance.

 

8.2.6                                 Liquidations, Mergers, Consolidations, Acquisitions.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or

 

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otherwise all or substantially all of the assets or Capital Stock of any other Person (including, in each case any disposition of property to a Delaware Divided LLC pursuant to a Delaware LLC Division), except (i) any Loan Party other than the Borrower may consolidate or merge into, or otherwise dispose of (including in each case any disposition of property to a Delaware Divided LLC pursuant to a Delaware LLC Division) all or any substantial part of its assets to, another Loan Party; (ii) Permitted Acquisitions; (iii) any non-Loan Party Subsidiary may consolidate or merge into, or otherwise dispose of (including in each case any disposition of property to a Delaware Divided LLC pursuant to a Delaware LLC Division) all or any substantial part of its assets to, another Subsidiary which is wholly-owned by one or more of the Loan Parties; and (iv) a Loan Party may sell an Immaterial Subsidiary to the extent such sale is permitted under Section 8.2.7(v) [Dispositions of Assets or Subsidiaries].

 

8.2.7                                 Dispositions of Assets or Subsidiaries.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, sell, convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or intangible (including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general intangibles with or without recourse or of Capital Stock of a Subsidiary of such Loan Party), except:

 

(i)                                     transactions involving the sale of inventory in the ordinary course of business;

 

(ii)                                  any sale, transfer or lease of assets in the ordinary course of business which are no longer necessary or required in the conduct of such Loan Party’s or such Subsidiary’s business;

 

(iii)                               any sale, transfer or lease of assets by any wholly owned Subsidiary of such Loan Party to another Loan Party;

 

(iv)                              any sale, transfer or lease of assets in the ordinary course of business which are replaced by substitute assets in transactions otherwise permitted hereby; provided such substitute assets are subject to the Lenders’ Prior Security Interest; or

 

(v)                                 so long as, both immediately before and after giving effect to such disposition (A) no Potential Default or Event of Default has occurred and is continuing and (B) the Loan Parties are in Financial Covenant Compliance, other dispositions in an amount not to exceed $15,000,000 in the aggregate per fiscal year;

 

(vi)                              dispositions permitted under Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions]; and

 

(vii)                           any sale, transfer or lease of assets, other than those specifically excepted pursuant to clauses (i) through (vi) above, which is approved by the Required Lenders.

 

8.2.8                                 Affiliate Transactions.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction with any Affiliate of any Loan Party (including purchasing property or services from or selling property or services to any Affiliate of any Loan Party or other Person) unless (i) such transaction is between or among

 

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Loan Parties, (ii) such transaction is not otherwise prohibited by this Agreement, is entered into in the ordinary course of business upon fair and reasonable arm’s-length terms and conditions that are fully disclosed to the Administrative Agent and is in accordance with all applicable Law, or (iii) both immediately before and after giving effect to such affiliate transaction, (A) no Potential Default or Event of Default has occurred and is continuing and (B) the Loan Parties are in Financial Covenant Compliance.

 

8.2.9                                 Subsidiaries, Partnerships and Joint Ventures.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to own or create directly or indirectly any Subsidiaries other than (i) any Subsidiary which has joined this Agreement as Guarantor on the Closing Date; (ii) any Subsidiary (other than an Immaterial Subsidiary) formed after the Closing Date which joins this Agreement as a Guarantor by delivering to the Administrative Agent within thirty (30) days after the formation of such Subsidiary (A) a signed Guarantor Joinder; (B) documents in the forms described in Section 7.1 [First Loans and Letters of Credit] modified as appropriate; and (C) documents necessary to grant and perfect Prior Security Interests to the Administrative Agent for the benefit of the Lenders in the equity interests of, and Collateral held by, such Subsidiary, and (iii) any Immaterial Subsidiary.  Notwithstanding the foregoing, the parties hereto agree that Benefits Administration Technologies, Inc. is not required to be a Guarantor.  Each of the Loan Parties shall not become or agree to become a party to a Joint Venture, unless such Joint Venture is permitted under Section 8.2.4(vi) [Loans and Investments] hereof.

 

8.2.10                          Continuation of or Change in Business.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, engage in any business other than the Permitted Business.

 

8.2.11                          Fiscal Year.  The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, change its fiscal year from the twelve-month period beginning July 1st and ending June 30th.

 

8.2.12                          Issuance of Stock.  No Subsidiary of the Borrower shall issue any additional shares of its Capital Stock or any options, warrants or other rights in respect thereof other than to a Loan Party.

 

8.2.13                          Changes in Organizational Documents.  Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, amend in any respect its certificate of incorporation (including any provisions or resolutions relating to Capital Stock), by-laws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents without providing at least thirty (30) calendar days’ prior written notice to the Administrative Agent and the Lenders and, in the event such change would be materially adverse to the Lenders as determined by the Administrative Agent in its sole discretion, obtaining the prior written consent of the Required Lenders.

 

8.2.14                          Maximum Net Total Leverage Ratio.  The Loan Parties shall not permit the Net Total Leverage Ratio to exceed 4.00 to 1.00 as of the last day of each fiscal quarter for the Test Period then ended.

 

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8.2.15                          Maximum Net Senior Secured Leverage Ratio.  The Loan Parties shall not permit the Net Senior Secured Leverage Ratio to exceed 3.50 to 1.00 as of the last day of each fiscal quarter for the Test Period then ended.

 

8.2.16                          Minimum Interest Coverage Ratio.  The Loan Parties shall not permit the ratio of Consolidated EBITDA to Consolidated Interest Expense of the Borrower and its Subsidiaries, calculated as of the last day of each fiscal quarter for the Test Period then ended, to be less than 3.00 to 1.00.

 

8.2.17                          Limitation on Negative Pledges.  Each of the Loan Parties shall not, and shall not permit any Subsidiary, to enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of such Loan Party or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure the Obligations, other than (a) this Agreement and the other Loan Documents, (b) with respect to a Subsidiary, limitations imposed pursuant to an agreement that has been entered into in connection with a disposition of assets permitted under this Agreement of all or substantially all of the equity interests or assets of such Subsidiary, (c) any agreements governing any purchase money Liens or capital lease obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby), (d) customary provisions restricting assignment of any licensing agreement (in which a Loan Party or its Subsidiaries are the licensee) with respect to a contract entered into by a Loan Party or its Subsidiaries in the ordinary course of business and (e) customary provisions restricting subletting, sublicensing or assignment of any intellectual property license or any lease governing any leasehold interests of a Loan Party and its Subsidiaries.

 

8.2.18                          Prepayment on Permitted Unsecured Indebtedness.  The Loan Parties shall not, and shall not permit any of their Subsidiaries to, prepay, repay, redeem, purchase, defease, or otherwise satisfy or obligate itself to do so prior to the scheduled maturity thereof in any manner (including by the exercise of any right of setoff), any Permitted Unsecured Indebtedness, except (a) regularly scheduled or required repayments, refinancings and refundings of such Permitted Unsecured Indebtedness, and (b) other prepayments, repayments, redemptions, purchases, or defeasances of Permitted Unsecured Indebtedness so long as, both immediately before and after giving effect to such prepayment, (i) no Potential Default or Event of Default has occurred and is continuing and (ii) the Loan Parties are in Financial Covenant Compliance.

 

8.3                               Reporting Requirements.  The Loan Parties will furnish or cause to be furnished to the Administrative Agent and each of the Lenders:

 

8.3.1                                 Quarterly Financial Statements.  As soon as available and in any event within forty-five (45) calendar days after the end of each of the first three fiscal quarters in each fiscal year, financial statements of the Borrower, consisting of a consolidated balance sheet as of the end of such fiscal quarter and related consolidated statements of income, stockholders’ equity and cash flows for the fiscal quarter then ended and the fiscal year through that date, all in reasonable detail and certified (subject to normal year-end audit adjustments) by the Chief Executive Officer, President, Chief Financial Officer or Chief Accounting Officer of the Borrower as having been prepared in accordance with GAAP, consistently applied, and setting

 

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forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year.

 

8.3.2                                 Annual Financial Statements.  As soon as available and in any event within ninety (90) days after the end of each fiscal year of the Borrower, financial statements of the Borrower consisting of a consolidated balance sheet as of the end of such fiscal year, and related consolidated statements of income, stockholders’ equity and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants of nationally recognized standing satisfactory to the Administrative Agent.  The certificate or report of accountants shall be free of qualifications (other than any consistency qualification that may result from a change in the method used to prepare the financial statements as to which such accountants concur or the impending maturity of any Indebtedness in the upcoming twelve (12) months, including the Loans hereunder) and shall not indicate the occurrence or existence of any event, condition or contingency which would materially impair the prospect of payment or performance of any covenant, agreement or duty of any Loan Party under any of the Loan Documents.

 

8.3.3                                 Certificate of the Borrower.  Concurrently with the financial statements of the Borrower furnished to the Administrative Agent and to the Lenders pursuant to Sections 8.3.1 [Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements], a certificate (each a “Compliance Certificate”) of the Borrower signed by the Chief Executive Officer, President, Chief Financial Officer or Chief Accounting Officer of the Borrower, in the form of Exhibit 8.3.3.

 

8.3.4                                 Notices.

 

8.3.4.1                                   Default.  Promptly after any officer of any Loan Party has learned of the occurrence of an Event of Default or Potential Default, a certificate signed by an Authorized Officer setting forth the details of such Event of Default or Potential Default and the action which such Loan Party proposes to take with respect thereto.

 

8.3.4.2                                   Litigation.  Promptly after the commencement thereof, notice of all actions, suits, proceedings or investigations before or by any Official Body or any other Person against any Loan Party or Subsidiary of any Loan Party which relate to the Collateral, involve a claim or series of claims in excess of $10,000,000 or which if adversely determined would constitute a Material Adverse Change.

 

8.3.4.3                                   Organizational Documents.  Within the time limits set forth in Section 8.2.13 [Changes in Organizational Documents], any amendment to the organizational documents of any Loan Party.

 

8.3.4.4                                   Erroneous Financial Information.  Promptly in the event that the Borrower or its accountants conclude or advise that any previously issued financial statement, audit report or interim review should no longer be relied upon or that disclosure should be made or action should be taken to prevent future reliance, notice in writing setting forth the details thereof and the action which the Borrower proposes to take with respect thereto.

 

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8.3.4.5                                   ERISA Event.  Promptly upon the occurrence of any ERISA Event, notice in writing setting forth the details thereof and the action which the Borrower proposes to take with respect thereto.

 

8.3.4.6                                   Other Reports.  Promptly upon their becoming available to the Borrower:

 

(i)                                     [Reserved],

 

(ii)                                  [Reserved],

 

(iii)                               SEC Reports; Shareholder Communications.  Reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses and other shareholder communications, filed by the Borrower with the Securities and Exchange Commission.

 

(iv)                              Other Information.  Such other reports and information as any of the Lenders may from time to time reasonably request.

 

Documents required to be delivered pursuant to Sections 8.3.1, 8.3.2 and 8.3.4.6(iii) shall be deemed to have been delivered on the date on which such documents are filed for public availability on the SEC’s Electronic Data Gathering and Retrieval System or posting to the Borrower’s website; provided that the Borrower shall notify (which may be by facsimile or electronic mail and may also be included in the certificate delivered pursuant to Section 8.3.3) the Administrative Agent of the filing or posting of any such documents. Notwithstanding anything contained herein, in every instance the Company shall be required to deliver copies of the compliance certificates to the extent  required by Section 8.3.3 to the Administrative Agent.

 

9.                                      DEFAULT

 

9.1                               Events of Default.  An Event of Default shall mean the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):

 

9.1.1                                 Payments Under Loan Documents.  The Borrower shall fail to pay (i) when due in accordance with the terms hereof any principal of any Loan (including scheduled installments or the payment due at maturity), or (ii) within three (3) Business Days after the same becomes due, any Reimbursement Obligation or Letter of Credit or Obligation or any interest on any Loan, Reimbursement Obligation or Letter of Credit Obligation or any other amount owing hereunder or under the other Loan Documents;

 

9.1.2                                 Breach of Warranty.  Any representation or warranty made at any time by any of the Loan Parties herein or by any of the Loan Parties in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect as of the time it was made or furnished;

 

9.1.3                                 Anti-Terrorism Laws.  Any representation or warranty contained in Section 6.1.16 [Anti-Terrorism Laws] is or becomes false or misleading at any time;

 

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9.1.4                                 Breach of Certain Covenants.  Any of the Loan Parties shall default in the observance or performance of any covenant contained in Section 8.1.1 [Preservation of Existence] (as to legal existence only), Section 8.1.5 [Visitation Rights], Section 8.1.9 [Anti-Terrorism Laws; International Trade Law Compliance], Section 8.1.13 [Post-Closing Obligations], Section 8.2 [Negative Covenants] or Section 8.3 [Reporting Requirements];

 

9.1.5                                 Breach of Other Covenants.  Any of the Loan Parties shall default in the observance or performance of any other covenant, condition or provision hereof or of any other Loan Document and such default shall continue unremedied for a period of thirty (30) days;

 

9.1.6                                 Defaults in Other Agreements or Indebtedness.  A default or event of default shall occur at any time under the terms of any other agreement involving borrowed money or the extension of credit or any other Indebtedness under which any Loan Party or Subsidiary of any Loan Party may be obligated as a borrower or guarantor in excess of $10,000,000 in the aggregate, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any Indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any Indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend;

 

9.1.7                                 Final Judgments or Orders.  Any final judgments or orders for the payment of money in excess of $10,000,000 in the aggregate shall be entered against any Loan Party by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of thirty (30) days from the date of entry;

 

9.1.8                                 Loan Document Unenforceable.  Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the party executing the same or such party’s successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative or shall in any way be challenged or contested or cease to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby, or any Loan Party or Subsidiary (or any Person on behalf of any Loan Party or Subsidiary) denies or contests the validity, binding nature or enforceability of any Loan Document or any of the Obligations;

 

9.1.9                                 Uninsured Losses; Proceedings Against Assets.  There shall occur any material uninsured damage to or loss, theft or destruction of any of the Collateral in excess of $10,000,000 or the Collateral or any other of the Loan Parties’ or any of their Subsidiaries’ assets are attached, seized, levied upon or subjected to a writ or distress warrant; or such come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the same is not cured within thirty (30) days thereafter;

 

9.1.10                          Events Relating to Pension Plans and Multiemployer Plans.  An ERISA Event occurs with respect to a Pension Plan which has resulted or would reasonably be expected to result in liability of Borrower or any member of the ERISA Group under Title IV of ERISA to the Pension Plan or the PBGC in an aggregate amount in excess of $10,000,000, or Borrower or any member of the ERISA Group fails to pay when due, after the expiration of any applicable

 

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grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan, where the aggregate amount of unamortized withdrawal liability is in excess of $10,000,000;

 

9.1.11                          Change of Control.  A Change of Control shall occur.

 

9.1.12                          Relief Proceedings.  A Relief Proceeding shall have been instituted against any Loan Party or Subsidiary of a Loan Party or a substantial part of the assets of any Loan Party or Subsidiary and such Relief Proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting any of the relief sought in such Relief Proceeding, (ii) any Loan Party or Subsidiary of a Loan Party institutes, or takes any action in furtherance of, a Relief Proceeding, or (iii) any Loan Party or any Subsidiary of a Loan Party ceases to be Solvent or admits in writing its inability to pay its debts as they mature.

 

9.2                               Consequences of Event of Default.

 

9.2.1                                 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.  If an Event of Default specified under Sections 9.1.1 through 9.1.11shall occur and be continuing, the Lenders and the Administrative Agent shall be under no further obligation to make Loans and the Issuing Lender shall be under no obligation to issue Letters of Credit and the Administrative Agent may, and upon the request of the Required Lenders, shall (i) by written notice to the Borrower, declare the unpaid principal amount of the Notes then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Administrative Agent for the benefit of each Lender without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and (ii) require the Borrower to, and the Borrower shall thereupon, deposit in a non-interest-bearing account with the Administrative Agent, as cash collateral for its Obligations under the Loan Documents, an amount equal to the maximum amount currently or at any time thereafter available to be drawn on all outstanding Letters of Credit, and the Borrower hereby pledges to the Administrative Agent and the Lenders, and grants to the Administrative Agent and the Lenders a security interest in, all such cash as security for such Obligations; and

 

9.2.2                                 Bankruptcy, Insolvency or Reorganization Proceedings.  If an Event of Default specified under Section 9.1.12 [Relief Proceedings] shall occur, the Lenders shall be under no further obligations to make Loans hereunder and the Issuing Lender shall be under no obligation to issue Letters of Credit and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; and

 

9.2.3                                 Set-off.  If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Lender, and each of their respective Affiliates and any participant of such Lender or Affiliate which has agreed in writing to be bound by the provisions of Section 5.3 [Sharing of Payments by Lenders] is hereby authorized at any time and from time to time, to the

 

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fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Lender or any such Affiliate or participant to or for the credit or the account of any Loan Party against any and all of the Obligations of such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender, the Issuing Lender, Affiliate or participant, irrespective of whether or not such Lender, Issuing Lender, Affiliate or participant shall have made any demand under this Agreement or any other Loan Document and although such Obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or the Issuing Lender different from the branch or office holding such deposit or obligated on such Indebtedness.  The rights of each Lender, the Issuing Lender and their respective Affiliates and participants under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Lender or their respective Affiliates and participants may have.  Each Lender and the Issuing 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; and

 

9.2.4                                 Enforcement of Rights and Remedies.  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 this Section 9.2 for the benefit of all the Lenders and the Issuing Lender; provided that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the Issuing Lender or the Swing Loan Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as the Issuing Lender or Swing Loan Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 9.2.3 (subject to the terms of Section 5.3 [Sharing of Payments by Lenders]), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Insolvency Proceeding; 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 this Section 9.2.4, and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 5.3 [Sharing of Payments by Lenders]), 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; and

 

9.2.5                                 Application of Proceeds.  From and after the date on which the Administrative Agent has taken any action pursuant to this Section 9.2 and until Payment in Full, any and all proceeds received by the Administrative Agent from any sale or other disposition of the Collateral, or any part thereof, or the exercise of any other remedy by the Administrative Agent, shall be applied as follows:

 

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(i)                                     First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts, including attorney fees, payable to the Administrative Agent in its capacity as such, the Issuing Lender in its capacity as such and the Swing Loan Lender in its capacity as such, ratably among the Administrative Agent, the Issuing Lender and Swing Loan Lender in proportion to the respective amounts described in this clause First payable to them;

 

(ii)                                  Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders under the Loan Documents, including attorney fees, ratably among the Lenders in proportion to the respective amounts described in this clause Second payable to them;

 

(iii)                               Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and Reimbursement Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

 

(iv)                              Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, Reimbursement Obligations and payment obligations then owing under Lender Provided Interest Rate Hedges, Lender Provided Foreign Currency Hedges, and Other Lender Provided Financial Service Products, ratably among the Lenders, the Issuing Lender, and the Lenders or Affiliates of Lenders which provide Lender Provided Interest Rate Hedges, Lender Provided Foreign Currency Hedges, and Other Lender Provided Financial Service Products, in proportion to the respective amounts described in this clause Fourth held by them;

 

(v)                                 Fifth, to the Administrative Agent for the account of the Issuing Lender, to cash collateralize any undrawn amounts under outstanding Letters of Credit;

 

(vi)                              Sixth, to the payment of any other Obligations; and

 

(vii)                           Last, the balance, if any, to the Loan Parties or as required by Law.

 

Notwithstanding anything to the contrary in this Section 9.2.5, no Swap Obligations of any Non-Qualifying Party shall be paid with amounts received from such Non-Qualifying Party under its Guaranty Agreement (including sums received as a result of the exercise of remedies with respect to such Guaranty Agreement) or from the proceeds of such Non-Qualifying Party’s Collateral if such Swap Obligations would constitute Excluded Hedge Liabilities; provided, however, that to the extent possible appropriate adjustments shall be made with respect to payments and/or the proceeds of Collateral from other Loan Parties that are Eligible Contract Participants with respect to such Swap Obligations to preserve the allocation to Obligations otherwise set forth above in this Section 9.2.5.

 

10.                               THE ADMINISTRATIVE AGENT

 

10.1                        Appointment and Authority.  Each of the Lenders and the Issuing Lender hereby irrevocably appoints PNC 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

 

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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 Section 10 are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Lender, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.

 

10.2                        Rights as a Lender.  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, 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.

 

10.3                        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 Potential Default or Event of 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.

 

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.1 [Modifications, Amendments or Waivers] and 9.2 [Consequences of Event of Default]) or (ii) in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Potential Default or Event of Default unless and until notice describing such Potential Default or Event of Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Lender.

 

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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 Potential Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 7 [Conditions of Lending and Issuance of Letters of Credit] or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

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

 

10.5                        Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Section 10 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.

 

10.6                        Resignation of Administrative Agent.  The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Lender and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with approval from the Borrower (so long as no Event of Default has occurred and is continuing), to appoint a successor, such approval not to be unreasonably withheld or delayed.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Lender, appoint a

 

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successor Administrative Agent; 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 (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Lender 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 (ii) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section 10.6.  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 Section 10 and Section 11.3 [Expenses; Indemnity; Damage Waiver] 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.

 

If PNC resigns as Administrative Agent under this Section 10.6, PNC shall also resign as an Issuing Lender.  Upon the appointment of a successor Administrative Agent hereunder, such successor shall (i) succeed to all of the rights, powers, privileges and duties of PNC as the retiring Issuing Lender and Administrative Agent and PNC shall be discharged from all of its respective duties and obligations as Issuing Lender and Administrative Agent under the Loan Documents, and (ii) issue letters of credit in substitution for the Letters of Credit issued by PNC, if any, outstanding at the time of such succession or make other arrangement satisfactory to PNC to effectively assume the obligations of PNC with respect to such Letters of Credit.

 

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

 

10.8                        No Other Duties, etc.  Anything herein to the contrary notwithstanding, none of the lead arrangers or bookrunners listed on the cover page hereof shall have any powers, duties

 

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or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Lender hereunder.

 

10.9                        Administrative Agent’s Fee.  The Borrower shall pay to the Administrative Agent a nonrefundable fee (the “Administrative Agent’s Fee”) under the terms of a letter (the “Administrative Agent’s Letter”) between the Borrower and Administrative Agent, as amended from time to time.

 

10.10                 Authorization to Release Collateral and Guarantors.  The Lenders and Issuing Lenders authorize the Administrative Agent to release (i) any Collateral consisting of assets or equity interests sold or otherwise disposed of in a sale or other disposition or transfer permitted under Section 8.2.7 [Dispositions of Assets or Subsidiaries] or Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions], and (ii) any Guarantor from its obligations under the Guaranty Agreement if the ownership interests in such Guarantor are sold or otherwise disposed of or transferred to persons other than Loan Parties or Subsidiaries of the Loan Parties in a transaction permitted under Section 8.2.7 [Dispositions of Assets or Subsidiaries] or Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions].

 

10.11                 No Reliance on Administrative Agent’s Customer Identification Program.  Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby: (i) any identity verification procedures, (ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer notices or (v) other procedures required under the CIP Regulations or such other Laws.

 

10.12                 Certain ERISA Matters.

 

10.12.1                   Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, Administrative Agent and the Lead Arranger and their respective Affiliates, and for the benefit of Borrower or any other Loan Party, that at least one of the following is and will be true:

 

(i)                                     such Lender is not using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans or the Commitments,

 

(ii)                                  the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions

 

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involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement,

 

(iii)                               (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement, or

 

(iv)                              such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

 

10.12.2                   In addition, unless sub-clause (i) in the immediately preceding Section 10.12.1 is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding Section 10.12.1, such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Lead Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of Borrower, that:

 

(i)                                     none of the Administrative Agent or the Lead Arranger or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by Agent under this Agreement, any Loan Document or any documents related to hereto or thereto),

 

(ii)                                  the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Loans),

 

(iii)                               the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Loans),

 

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(iv)                              the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement is a fiduciary under ERISA or the Code, or both, with respect to the Loans, the Commitments and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder, and

 

(v)                                 no fee or other compensation is being paid directly to the Administrative Agent or Lead Arranger or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Loans, the Commitments or this Agreement.

 

10.12.3                   The Administrative Agent and the Lead Arranger hereby inform the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Commitments and this Agreement, (ii) may recognize a gain if it extended the Loans, or the Commitments for an amount less than the amount being paid for an interest in the Loans or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

 

11.                               MISCELLANEOUS

 

11.1                        Modifications, Amendments or Waivers.  With the written consent of the Required Lenders, the Administrative Agent, acting on behalf of all the Lenders, and the Borrower, on behalf of the Loan Parties, may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Lenders or the Loan Parties hereunder or thereunder, or may grant written waivers or consents hereunder or thereunder.  Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Lenders and the Loan Parties; provided, that no such agreement, waiver or consent may be made which will:

 

11.1.1                          Increase of Commitment.  Increase the amount of the Revolving Credit Commitment of any Lender hereunder without the consent of such Lender;

 

11.1.2                          Extension of Payment; Reduction of Principal, Interest or Fees; Modification of Terms of Payment.  Whether or not any Loans are outstanding, extend the Expiration Date or the time for payment of principal or interest of any Loan (excluding the due date of any mandatory prepayment of a Loan), the Commitment Fee or any other fee payable to any Lender, or reduce the principal amount of or the rate of interest borne by any Loan (other than as a result of waiving the applicability of any post-default increase in interest rates or any amendment or modification of defined terms used in the definition of Net Senior Secured

 

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Leverage Ratio) or reduce the Commitment Fee or any other fee payable to any Lender, without the consent of each Lender directly affected thereby;

 

11.1.3                          Release of Collateral or Guarantor.  Except for sales of assets permitted by Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] or  8.2.7 [Dispositions of Assets or Subsidiaries], release all or substantially all of the Collateral or any Guarantor from its Obligations under the Guaranty Agreement without the consent of all Lenders (other than Defaulting Lenders); or

 

11.1.4                          Miscellaneous.  Amend Section 5.2 [Pro Rata Treatment of Lenders], Section 10.3 [Exculpatory Provisions], Section 5.3 [Sharing of Payments by Lenders], Section 9.2.5 [Application of Payments] or this Section 11.1, alter any provision regarding the pro rata treatment of the Lenders or requiring all Lenders to authorize the taking of any action or reduce any percentage specified in the definition of Required Lenders, in each case without the consent of all of the Lenders;

 

provided that no agreement, waiver or consent which would modify the interests, rights or obligations of the Administrative Agent, the Issuing Lender, or the Swing Loan Lender may be made without the written consent of the Administrative Agent, the Issuing Lender or the Swing Loan Lender, as applicable, and provided, further that, if in connection with any proposed waiver, amendment or modification referred to in Sections 11.1.1 through 11.1.4 above, the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained (each a “Non-Consenting Lender”), then the Borrower shall have the right to replace any such Non-Consenting Lender with one or more replacement Lenders pursuant to Section 5.6.2 [Replacement of a Lender].  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 disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.

 

11.2                        No Implied Waivers; Cumulative Remedies.  No course of dealing and no delay or failure of the Administrative Agent or any Lender in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any further exercise thereof or of any other right, power, remedy or privilege.  The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise.  No reasonable delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a

 

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waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default.

 

11.3                        Expenses; Indemnity; Damage Waiver.

 

11.3.1                          Costs and Expenses.  The Loan Parties shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of one outside counsel for the Administrative Agent in each relevant jurisdiction), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Lender (including the fees, charges and disbursements of one outside counsel in each relevant jurisdiction for the Administrative Agent, any Lender or the Issuing 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 or Letters of Credit issued hereunder, including all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

 

11.3.2                          Indemnification by the Loan Parties.  The Loan Parties shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing 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 fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party 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 or nonperformance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) breach of representations, warranties or covenants of the Loan Parties under the Loan Documents, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or losses relating to or arising under Environmental Laws or pertaining to environmental matters, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee,

 

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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 Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  This Section 11.3.2 [Indemnification by the Loan Parties] shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.  Notwithstanding the foregoing, each Indemnified Person shall be obligated to refund or return any and all amounts paid by the Borrower under this paragraph to such Indemnified Person to the extent that there is a final judicial determination as a result of which such Indemnified Person is not entitled to indemnification rights with respect to such payment.

 

11.3.3                          Reimbursement by Lenders.  To the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required under Sections 11.3.1 [Costs and Expenses] or 11.3.2 [Indemnification by the Loan Parties] to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Lender or such Related Party, as the case may be, such Lender’s Ratable Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the Issuing Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or Issuing Lender in connection with such capacity.

 

11.3.4                          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 Letter of Credit or the use of the proceeds thereof.  No Indemnitee referred to in Section 11.3.2 [Indemnification by Borrower] shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

 

11.3.5                          Payments.  All amounts due under this Section shall be payable not later than ten (10) days after demand therefor.

 

11.4                        Holidays.  Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day (except as provided in Section 4.2 [Interest Periods]) and such extension of time shall be included in computing interest and fees, except that the Loans shall be due on the Business Day preceding the Expiration Date if the Expiration Date is not a Business Day.  Whenever any

 

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payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.

 

11.5                        Notices; Effectiveness; Electronic Communication.

 

11.5.1                          Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 11.5.2 [Electronic Communications]), 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 (i) if to a Lender, to it at its address set forth in its administrative questionnaire, or (ii) if to any other Person, to it at its address set forth on Schedule 1.1(B).

 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices 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 delivered through electronic communications to the extent provided in Section 11.5.2 [Electronic Communications], shall be effective as provided in such Section.

 

11.5.2                          Electronic Communications.  Notices and other communications to the Lenders and the Issuing Lender 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 or the Issuing Lender if such Lender or the Issuing Lender, as applicable, 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.

 

11.5.3                          Change of Address, Etc.  Any party hereto may change its address, e-mail address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.

 

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11.6                        Severability.  The provisions of this Agreement are intended to be severable.  If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

 

11.7                        Duration; Survival.  All representations and warranties of the Loan Parties contained herein or made in connection herewith shall survive the execution and delivery of this Agreement, the completion of the transactions hereunder and Payment In Full.  All covenants and agreements of the Borrower contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in the Notes, Section 5 [Payments] and Section 11.3 [Expenses; Indemnity; Damage Waiver], shall survive Payment In Full and termination of this Agreement.  All other covenants and agreements of the Loan Parties shall continue in full force and effect from and after the date hereof and until Payment In Full.

 

11.8                        Successors and Assigns.

 

11.8.1                          Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 11.8.2 [Assignments by Lenders], (ii) by way of participation in accordance with the provisions of Section 11.8.4 [Participations], or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 11.8.5 [Certain Pledges; Successors and Assigns Generally] (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 Section 11.8.4 [Participations] 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.

 

11.8.2                          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 clause (i)(A) of this Section 11.8.2, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable 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 Agreement with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be less than $5,000,000, in the case of any assignment in respect of the Revolving Credit Commitment of the assigning Lender, 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).

 

(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 Loan or the Commitment assigned.

 

(iii)                               Required Consents.  No consent shall be required for any assignment except for the consent of the Administrative Agent (which shall not be unreasonably withheld or delayed) and:

 

(A)                   the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) a Specified Event of Default has occurred and is continuing at the time of such assignment or (y) 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; and

 

(B)                   the consent of the Issuing Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding).

 

(iv)                              Assignment and Assumption Agreement.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption Agreement, together with a processing and recordation fee of $3,500, and the assignee, if it is not a Lender, shall deliver to the Administrative Agent an administrative questionnaire provided by the Administrative Agent.

 

(v)                                 No Assignment to Borrower.  No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

 

(vi)                              No Assignment to Natural Persons.  No such assignment shall be made to a natural person.

 

(vii)                           No Assignment to Defaulting Lenders.  No such assignment shall be made to a Defaulting Lender.

 

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Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 11.8.3 [Register], from and after the effective date specified in each Assignment and Assumption Agreement, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption Agreement, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption Agreement covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 4.4 [LIBOR Rate Unascertainable; Etc.], 5.8 [Increased Costs], and 11.3 [Expenses, Indemnity; Damage Waiver] with respect to facts and circumstances occurring prior to the effective date of such assignment.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 11.8.2 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 Section 11.8.4 [Participations].

 

11.8.3         Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain a record of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time.  Such register shall be conclusive, absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is in such register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  Such 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.

 

11.8.4         Participations.  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or 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, the Lenders, and the Issuing Lender 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 (other than as is already provided for herein) to any amendment, modification or waiver with respect to Sections 11.1.1 [Increase of Commitment], 11.1.2 [Extension of Payment, Etc.], or 11.1.3 [Release of Collateral or Guarantor]) that affects such Participant.  The Borrower agrees that each Participant shall be entitled to the benefits of Sections 4.4 [LIBOR Rate Unascertainable, Etc.], 5.8 [Increased Costs], 5.10 [Indemnity] and 5.9 [Taxes] (subject to the requirements and limitations therein, including the requirements under

 

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Section 5.9.7 [Status of Lenders] (it being understood that the documentation required under Section 5.9.7 [Status of Lenders] shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.8.2 [Assignments by Lenders]; provided that such Participant (A) agrees to be subject to the provisions of Section 5.6.2 [Replacement of a Lender] and Section 5.6.3 [Designation of a Different Lending Office] as if it were an assignee under Section 11.8.2 [Assignments by Lenders]; and (B) shall not be entitled to receive any greater payment under Sections 5.8 [Increased Costs] or 5.9 [Taxes], with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation.  Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 5.6.2 [Replacement of a Lender] and Section 5.6.3 [Designation of Different Lending Office] with respect to any Participant.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.2.3 [Set-off] as though it were a Lender; provided that such Participant agrees to be subject to Section 5.3 [Sharing of Payments by Lenders] as though it were a Lender.  Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

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

 

11.9        Confidentiality.

 

11.9.1         General.  Each of the Administrative Agent, the Lenders and the Issuing Lender agrees to maintain the confidentiality of the Information, except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives on a need-to-know basis (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential),

 

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(ii) 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), (iii) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, in which case, the Administrative Agent, such Lenders or the Issuing Lender, as applicable, except with respect to any audit or examination conducted by bank accountants or governmental bank regulatory authority conducting routine examinations, promptly notify the Borrower to the extent practicable and permitted by applicable law, (iv) to any other party hereto, (v) 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, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (vii) with the consent of the Borrower or (viii) to the extent such Information (Y) becomes publicly available other than as a result of a breach of this Section or (Z) becomes available to the Administrative Agent, any Lender, the Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower or the other Loan Parties.  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, but not less than reasonable care.

 

11.9.2         Sharing Information With Affiliates of the Lenders.  Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each of the Loan Parties hereby authorizes each Lender to share any information delivered to such Lender by such Loan Party and its Subsidiaries pursuant to this Agreement to any such Subsidiary or Affiliate subject to the provisions of Section 11.9.1 [General].

 

11.10      Counterparts; Integration; Effectiveness.

 

11.10.1      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, and any separate letter agreements with respect to fees payable to the Administrative Agent, 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 including any prior confidentiality agreements and commitments.  Except as provided in Section 7 [Conditions Of Lending And Issuance Of Letters Of Credit], 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 e-mail shall be effective as delivery of a manually executed counterpart of this Agreement.

 

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11.11      CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL.

 

11.11.1      Governing Law.  This Agreement shall be deemed to be a contract under the Laws of the State of New York without regard to its conflict of laws principles.  Each standby Letter of Credit issued under this Agreement shall be subject either to the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the “ICC”) at the time of issuance (“UCP”) or the rules of the International Standby Practices (ICC Publication Number 590) (“ISP98”), as determined by the Issuing Lender, and each trade Letter of Credit shall be subject to UCP, and in each case to the extent not inconsistent therewith, the Laws of the State of New York without regard to its conflict of laws principles.

 

11.11.2      SUBMISSION TO JURISDICTION.  EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES SOUTHERN DISTRICT COURT OF NEW YORK, 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 NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION 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, ANY LENDER OR THE ISSUING LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

11.11.3      WAIVER OF VENUE.  EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION 11.11.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.

 

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11.11.4      SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION].  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

11.11.5      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, ADMINISTRATIVE 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.

 

11.12      USA Patriot Act Notice.  Each Lender that is subject to the USA Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Loan Parties that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of Loan Parties and other information that will allow such Lender or Administrative Agent, as applicable, to identify the Loan Parties in accordance with the USA Patriot Act.

 

11.13      Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among the parties, each party hereto (including each Lender) acknowledges that, with respect to any Lender that is an EEA Financial Institution, any unsecured liability of such Lender arising under a Loan Document may be subject to the write-down and conversion powers of an EEA Resolution Authority, and each party hereto agrees and consents to, and acknowledges and agrees to be bound by, (a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liability which may be payable to it by such Lender; and (b) the effects of any Bail-in Action on any such liability, including (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent, or a bridge institution that may be issued to the party or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under any Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of any Write-Down and Conversion Powers.

 

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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.

 

	
ATTEST:
    	
BORROWER
    
	
 
    	
 
    
	
 
    	
PAYLOCITY   HOLDING CORPORATION
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Toby Williams
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Toby Williams
    
	
 
    	
 
    
	
 
    	
Title:   Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
PAYLOCITY   CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Toby Williams
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Toby Williams
    
	
 
    	
 
    
	
 
    	
Title:   Secretary and Treasurer
    
				

 

 

	
 
    	
PNC   BANK, NATIONAL ASSOCIATION, individually, as a Lender, and as Administrative Agent
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brandon Norder
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Brandon Norder
    
	
 
    	
 
    
	
 
    	
Title:   Senior Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KEYBANK NATIONAL ASSOCIATION,   as a Lender
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Geoff Smith
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Geoff Smith
    
	
 
    	
 
    
	
 
    	
Title:   Senior Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BMO HARRIS BANK N.A.,   as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kendal Cross
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Kendal Cross
    
	
 
    	
 
    
	
 
    	
Title:   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A.,   as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Edward R. Sleeper
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Edward R. Sleeper
    
	
 
    	
 
    
	
 
    	
Title:   Vice President
    

 

 

	
 
    	
JPMORGAN CHASE BANK N.A.,   as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Todd Schroeder
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Todd Schroeder
    
	
 
    	
 
    
	
 
    	
Title:   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SUNTRUST BANK,   as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Locksley Randle
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Locksley Randle
    
	
 
    	
 
    
	
 
    	
Title:   Vice President

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