Document:

Exhibit 10.11

 

DERMIRA, INC.

 

LOAN AND SECURITY AGREEMENT

 

Dermira, Inc. LSA Execution Version

 

 

This LOAN AND SECURITY AGREEMENT (the “Agreement”) is entered into as of December 11, 2013, by and between Square 1 Bank (“Bank”) and Dermira, Inc. (“Borrower”).

 

RECITALS

 

Borrower wishes to obtain credit from time to time from Bank, and Bank desires to extend credit to Borrower. This Agreement sets forth the terms on which Bank will advance credit to Borrower, and Borrower will repay the amounts owing to Bank.

 

AGREEMENT

 

The parties agree as follows:

 

1.                                      DEFINITIONS AND CONSTRUCTION.

 

1.1                               Definitions. As used in this Agreement, all capitalized terms shall have the definitions set forth on Exhibit A. Any term used in the Code and not defined herein shall have the meaning given to the term in the Code.

 

1.2                               Accounting Terms. Any accounting term not specifically defined on Exhibit A shall be construed in accordance with GAAP and all calculations shall be made in accordance with GAAP (except for non-compliance with FASB Accounting Standards Codification Topic 718, Compensation — Stock Compensation in monthly reporting). The term “financial statements” shall include the accompanying notes and schedules.

 

2.                                      LOAN AND TERMS OF PAYMENT.

 

2.1                               Credit Extensions.

 

(a)                                 Promise to Pay. Borrower promises to pay to Bank, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower, together with interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof.

 

(b)                                Term Loan A.

 

(i)                                     Subject to and upon the terms and conditions of this Agreement, Bank agrees to make one (1) term loan to Borrower in an aggregate principal amount equal to Two Million Dollars ($2,000,000) (the “Term Loan A”). Borrower hereby requests that Bank make the Term Loan A on or about the Closing Date. The proceeds of the Term Loan A shall be used for general working capital purposes and for capital expenditures.

 

(ii)                                Interest shall accrue from the date of the Term Loan A at the rate specified in Section 2.3(a), and prior to the Interest Only End Date shall be payable monthly beginning on the 11th day of the month next following such Term Loan A, and continuing on the same day of each month thereafter. Any Term Loan A that is outstanding on the Term Loan A Interest Only End Date shall be payable in 30 equal monthly installments of principal, plus all accrued interest, beginning on the last day of the month immediately following the Term Loan A

 

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Interest Only End Date, and continuing on the same day of each month thereafter through the Term Loan A Maturity Date, at which time all amounts due in connection with the Term Loan A and any other amounts due under this Agreement shall be immediately due and payable. The Term Loan A, once repaid, may not be reborrowed. Borrower may prepay the Term Loan A without penalty or premium.

 

(c)                                  Term Loan B.

 

(i)                           Subject to and upon the terms and conditions of this Agreement, Bank agrees to make one (1) term loan to Borrower in an aggregate principal amount not to exceed Five Million Five Hundred Thousand Dollars ($5,500,000) (the “Term Loan B”, and together with the Term Loan A, the “Term Loans”). Borrower may request the Term Loan B at any time from the Term Loan B Availability Start Date through the Term Loan B Availability End Date. The proceeds of the Term Loan B shall be used for general working capital purposes and for capital expenditures.

 

(ii)                        Interest shall accrue from the date of the Term Loan B at the rate specified in Section 2.3(a), and prior to the Term Loan B Interest Only End Date shall be payable monthly beginning on the 11th day of the month next following the Term Loan B, and continuing on the same day of each month thereafter. The Term Loan B that is outstanding on the Term Loan B Interest Only End Date shall be payable in equal monthly installments of principal, plus all accrued interest, beginning on the last day of the month immediately following the Term Loan B Interest Only End Date, and continuing on the same day of each month thereafter through the Term Loan B Maturity Date, at which time all amounts due in connection with the Term Loan B and any other amounts due under this Agreement shall be immediately due and payable. The Term Loan B, once repaid, may not be reborrowed. Borrower may prepay the Term Loan B without penalty or premium.

 

(iii)                   When Borrower desires to obtain the Term Loan B, Borrower shall notify Bank (which notice shall be irrevocable) by facsimile transmission to be received no later than 3:30 p.m. Eastern time on the day on which the Term Loan B is to be made. Such notice shall be substantially in the form of Exhibit C. The notice shall be signed by an Authorized Officer.

 

2.2                               Intentionally Left Blank.

 

2.3                               Interest Rates, Payments, and Calculations.

 

(a)                                 Interest Rates.

 

(i)                                    Term Loans. Except as set forth in Section 2.3(b), the Term Loans shall bear interest, on the outstanding daily balance thereof, at an annual rate equal to the greater of: (A) 5.10% above the Treasury Rate in effect on the date that a Term Loan is funded; or (B) 5.50%, which rate shall be fixed on the date of funding of such Term Loan.

 

(b)                                 Late Fee; Default Rate. If any payment is not made within 15 days after the date such payment is due, Borrower shall pay Bank a late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under

 

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applicable law. All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to 5 percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default.

 

(c)                                  Payments. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder.

 

(d)                                 Computation. In the event the Treasury Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased or decreased, effective as of the day the Treasury Rate is changed, by an amount equal to such change in the Treasury Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed.

 

2.4                               Crediting Payments. Prior to the occurrence of an Event of Default, Bank shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies. After the occurrence and during the continuance of an Event of Default, Bank shall have the right, in its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment Bank may receive to conditionally reduce Obligations, but such applications of funds shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 5:30 p.m. Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.

 

2.5                            Fees. Borrower shall pay to Bank the following:

 

(a)                                 Intentionally Omitted.

 

(b)                                 Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date, and, after the Closing Date, all Bank Expenses, as and when they become due.

 

(c)                                  Final Payment Fees. On the earlier of (i) the Term Loan A Maturity Date, or (ii) Borrower’s repayment in full of the Term Loan A, Borrower shall pay Bank a fee equal to 2.75% of the original principal amount borrowed under the Term Loan A. On the earlier of (i) the Term Loan B Maturity Date, or (ii) Borrower’s repayment in full of the Term Loan B, Borrower shall pay Bank a fee equal to 2.75% of the original principal amount borrowed under the Term Loan B. This Section 2.5(c) shall survive any termination of this Agreement.

 

2.6                               Term. This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect for so long as any Obligations remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Upon

 

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(a) indefeasible repayment of the Obligations and termination of this Agreement and Bank’s obligation to make Credit Extensions hereunder, and (b) Bank’s confirmation of such repayment and termination, all security interests granted pursuant to this Agreement shall terminate, and at such time Bank, at Borrower’s sole expense, shall promptly execute all documents and take all actions reasonably requested to terminate or more effectively evidence the termination of this Agreement and such security interests. Notwithstanding the foregoing, (a) Bank shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default, and (b) Borrower shall have the right to terminate the Bank’s obligation to make Credit Extensions hereunder by providing written notice to Bank in accordance with the terms hereof, which notice shall be irrevocable.

 

3.                                      CONDITIONS OF LOANS.

 

3.1                                 Conditions Precedent to Closing. The agreement of Bank to enter into this Agreement on the Closing Date is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, each the following items and completed each of the following requirements:

 

(a)                                 this Agreement;

 

(b)                                 an officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement;

 

(c)                                  a financing statement (Form UCC-1);

 

(d)                                 Borrower shall have opened and funded not less than $10,000 in deposit accounts held with Bank;

 

(e)                                  payment of the fees and Bank Expenses then due specified in Section 2.5, which may be debited from any of Borrower’s accounts with Bank;

 

(f)                                   current SOS Reports indicating that except for Permitted Liens, there are no other security interests or Liens of record in the Collateral;

 

(g)                                 current financial statements, including audited statements (or such other level required by the Investment Agreement) for Borrower’s most recently ended fiscal year, together with an unqualified opinion (or an opinion qualified only for going concern so long as Borrower’s investors provide additional equity as needed), company prepared consolidated and consolidating balance sheets, income statements, and statements of cash flows for the most recently ended month in accordance with Section 6.2, and such other updated financial information as Bank may reasonably request;

 

(h)                                  current Compliance Certificate in accordance with Section 6.2;

 

(i)                                    a Warrant in form and substance satisfactory to Bank;

 

(j)                                    a Borrower Information Certificate;

 

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(k)                                  a Guarantee and a General Security Agreement, in each case duly executed by Dermira Canada, together with an Officer’s Certificate authorizing the execution and delivery of the foregoing;

 

(l)                                    confirmation by Bank that, on or before October 31, 2013, Borrower initiated Phase 2 clinical trials for at least two separate treatment programs (excluding the Phase 2A clinical trial program for LTS (lemuteporfin)); and

 

(m)                             such other documents or certificates, and completion of such other matters, as Bank may reasonably request.

 

3.2                               Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension, including the initial Credit Extension, is contingent upon the Borrower’s compliance with Section 3.1 above, and is further subject to the following conditions:

 

(a)                                 timely receipt by Bank of the Loan Advance/Paydown Request Form as provided in Section 2.1;

 

(b)                                 Borrower shall be in compliance with Section 6.6 hereof; and

 

(c)                                  the representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Loan Advance/Paydown Request Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date). The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.

 

4.                                       CREATION OF SECURITY INTEREST.

 

4.1                                Grant of Security Interest. Borrower grants and pledges to Bank a continuing security interest in the Collateral to secure prompt repayment of any and all Obligations and to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except for Permitted Liens or as disclosed in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in later-acquired Collateral. Except for the granting of Permitted Liens and the making of Permitted Transfers, Borrower also hereby agrees not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its Intellectual Property. Notwithstanding any termination of this Agreement or of any filings undertaken related to Bank’s rights under the Code, Bank’s Lien on the Collateral shall remain in effect for so long as any Obligations are unpaid.

 

4.2                               Perfection of Security Interest. Borrower authorizes Bank to file at any time financing statements, continuation statements, and amendments thereto that (i) either specifically describe the Collateral or describe the Collateral as all assets of Borrower of the kind pledged hereunder, and (ii) contain any other information required by the Code for the sufficiency of

 

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filing office acceptance of any financing statement, continuation statement, or amendment, including whether Borrower is an organization, the type of organization and any organizational identification number issued to Borrower, if applicable. Borrower shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where Bank chooses to perfect its security interest by possession in addition to the filing of a financing statement. Where Collateral is in possession of a third party bailee (excluding materials and parts held by independent third parties in the normal course of development and testing, provided that the book value of such materials and parts do not exceed an aggregate amount of $2,000,000). Borrower shall take such steps as Bank reasonably requests for Bank to (i) subject to Section 7.10 below, obtain an acknowledgment, in form and substance satisfactory to Bank, of the bailee that the bailee holds such Collateral for the benefit of Bank, and (ii) obtain “control” of any Collateral consisting of investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such items and the term “control” are defined in Revised Article 9 of the Code) by causing the securities intermediary or depositary institution or issuing bank to execute a control agreement in form and substance satisfactory to Bank. Borrower will not create any chattel paper without placing a legend on the chattel paper acceptable to Bank indicating that Bank has a security interest in the chattel paper. Borrower from time to time may deposit with Bank specific cash collateral to secure specific Obligations. Borrower authorizes Bank to hold such specific cash balances in pledge and to decline to honor any drafts thereon or any request by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the specific Obligations are outstanding. Borrower shall take such other actions as Bank reasonably requests to perfect its security interests granted under this Agreement.

 

4.3                                Conflict with Security. If there is any conflict between the provisions of this Agreement and those of any security documents given by any guarantor of all or a portion of the Obligations, then the provisions of this Agreement shall prevail.

 

5.                                      REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants as follows:

 

5.1                               Due Organization and Qualification. Borrower and each Subsidiary is a corporation duly existing under the laws of the state in which it is organized and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.

 

5.2                               Due Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s Certificate of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement by which it is bound, except to the extent such default would not reasonably be expected to cause a Material Adverse Effect.

 

5.3                               Collateral. Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of Liens, adverse claims, and restrictions on transfer or

 

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pledge except for Permitted Liens. Other than movable items of personal property such as laptop computers, all Collateral having an aggregate book value not in excess of $100,000, is located solely in the Collateral States. All Inventory is in all material respects of good and merchantable quality, free from all material defects, except for Inventory for which adequate reserves have been made. Except as set forth in the Schedule, none of the Borrower’s Cash is maintained or invested with a Person other than Bank or Bank’s affiliates.

 

5.4                               Intellectual Property. Borrower is the sole owner of the intellectual property created or purchased by Borrower, except for licenses granted by Borrower to its customers in the ordinary course of business and Permitted Liens. To the best of Borrower’s knowledge, each of the Copyrights, Trademarks and Patents created or purchased by Borrower is valid and enforceable, and no part of the intellectual property created or purchased by Borrower has been judged invalid or unenforceable, in whole or in part, and no claim has been made to Borrower that any part of the intellectual property created or purchased by Borrower violates the rights of any third party except to the extent such claim would not reasonably be expected to cause a Material Adverse Effect.

 

5.5                               Name; Location of Chief Executive Office. Except as disclosed in the Schedule or following notice to Bank in compliance with Section 7.2 hereof, Borrower has not done business under any name other than that specified on the signature page hereof, and its exact legal name is as set forth in the first paragraph of this Agreement. Except following notice to Bank in compliance with Section 7.2 hereof, the principal offices of Borrower is located at the address indicated in Section 10 hereof.

 

5.6                               Litigation. Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency in which a likely adverse decision would reasonably be expected to have a Material Adverse Effect.

 

5.7                               No Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to Borrower and any Subsidiary that are delivered by Borrower to Bank fairly present in all material respects Borrower’s consolidated and consolidating financial condition as of the date thereof and Borrower’s consolidated and consolidating results of operations for the period then ended. There has not been a material adverse change in the consolidated or in the consolidating financial condition of Borrower since the date of the most recent of such financial statements of Borrower submitted to Bank (the “Recent Financial Statements”).

 

5.8                               Solvency, Payment of Debts. Borrower is able to pay its debts (including trade debts) as they mature; the fair saleable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement.

 

5.9                               Compliance with Laws and Regulations. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. No event has occurred resulting from Borrower’s failure to comply with ERISA that is reasonably likely to result in Borrower’s incurring any liability that could have a

 

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Material Adverse Effect. Borrower is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has not violated any statutes, laws, ordinances or rules applicable to it, the violation of which would reasonably be expected to have a Material Adverse Effect. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein except those being contested in good faith with adequate reserves under GAAP or where the failure to file such returns or pay such taxes would not reasonably be expected to have a Material Adverse Effect.

 

5.10                       Subsidiaries. Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted Investments.

 

5.11                        Government Consents. Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s business as currently conducted, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.

 

5.12                        Inbound Licenses. Except as disclosed on the Schedule or following notification to Bank in compliance with Section 6.8 hereof, Borrower is not a party to, nor is bound by, any material license or other agreement important for the conduct of Borrower’s business that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property important for the conduct of Borrower’s business, other than this Agreement or the other Loan Documents.

 

5.13                        Full Disclosure. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Bank taken together with all such certificates and written statements furnished to Bank contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading in light of the circumstances in which they were made, it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results.

 

6.                                      AFFIRMATIVE COVENANTS.

 

Borrower covenants that, until payment in full of all outstanding Obligations, and for so long as Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the following:

 

6.1                               Good Standing and Government Compliance. Borrower shall maintain its and each of its Subsidiaries’ corporate existence and good standing in the respective states of formation, shall maintain qualification and good standing in each other jurisdiction in which the

 

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failure to so qualify would reasonably be expected to have a Material Adverse Effect, and shall furnish to Bank the organizational identification number issued to Borrower by the authorities of the state in which Borrower is organized, if applicable. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, and shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which or failure to comply with which would reasonably be expected to have a Material Adverse Effect.

 

6.2                               Financial Statements, Reports, Certificates. Borrower shall deliver to Bank: (i) as soon as available, but in any event within 30 days after the end of each calendar month, a company prepared consolidated and consolidating balance sheet, statement of operations, and statement of cash flows covering Borrower’s operations during such period, in a form reasonably acceptable to Bank and certified by a Responsible Officer; (ii) as soon as available, but in any event within 180 days after the end of Borrower’s fiscal year, audited (or such other level as is required by the Investment Agreement) consolidated and consolidating financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with an opinion which is either unqualified, qualified only for going concern so long as Borrower’s investors provide additional equity as needed or otherwise consented to in writing by Bank on such financial statements of Ernst & Young LLP; (iii) annual budget promptly after approval by Borrower’s Board of Directors, but no later than January 31 of each year during the term of this Agreement; (iv) if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and, if applicable, all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (v) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any Subsidiary of $250,000 or more; (vi) promptly upon receipt, each management letter prepared by Borrower’s independent certified public accounting firm regarding Borrower’s management control systems; and (vii) such budgets, sales projections, operating plans or other financial information generally prepared by Borrower in the ordinary course of business as Bank may reasonably request in writing from time to time.

 

(a)                                  Within 30 days after the last day of each month, Borrower shall deliver to Bank with the monthly financial statements a Compliance Certificate certified as of the last day of the applicable month and signed by a Responsible Officer in substantially the form of Exhibit D hereto.

 

(b)                                 Within 3 calendar days after becoming aware of the occurrence or existence of an Event of Default hereunder, a written statement of a Responsible Officer setting forth details of the Event of Default, and the action which Borrower has taken or proposes to take with respect thereto.

 

(c)                                  Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual business hours but no more than twice a year (unless an Event of Default has occurred and is continuing), to inspect Borrower’s Books and to make copies thereof and to check, test, inspect, audit and appraise the

 

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Collateral at Borrower’s expense in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral.

 

Borrower may deliver to Bank on an electronic basis any certificates, reports or information required pursuant to this Section 6.2, and Bank shall be entitled to rely on the information contained in the electronic files, provided that Bank in good faith believes that the files were delivered by a Responsible Officer. Borrower shall include a submission date on any certificates and reports to be delivered electronically.

 

6.3                               Inventory and Equipment; Returns. Borrower shall keep all Inventory and Equipment in good and merchantable condition, free from all material defects except for Inventory and Equipment (i) sold in the ordinary course of business, and (ii) for which adequate reserves have been made, in all cases in the United States and such other locations as to which Borrower gives prior written notice. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower, as they exist on the Closing Date. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims involving inventory having a book value of more than $100,000.

 

6.4                               Taxes. Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Bank, on demand, proof satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower or such Subsidiary.

 

6.5                               Insurance. Borrower, at its expense, shall (i) keep the Collateral insured against loss or damage, and (ii) maintain liability and other insurance, in each case in as ordinarily insured against by other owners in businesses similar to Borrower’s. All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank. All policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee, and all liability insurance policies shall show Bank as an additional insured and specify that the insurer must give at least 10 days notice to Bank before cancelling its policy for any reason. Within 30 days of the Closing Date, Borrower shall cause to be furnished to Bank a copy of its certificate of insurance including any endorsements covering Bank or showing Bank as an additional insured. Upon Bank’s request, Borrower shall deliver to Bank certified copies of the policies of insurance and evidence of all premium payments. Proceeds payable under any property policy will, at Borrower’s option, be payable to Borrower to replace the property subject to the claim, provided that any such replacement property shall be deemed Collateral in which Bank has been granted a first priority security interest, provided that if an Event of Default has occurred and is continuing, all proceeds payable under any such policy shall, at Bank’s option, be payable to Bank to be applied on account of the Obligations.

 

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6.6                                   Primary Accounts. Subject to the provisions of Section 3.1(d) and 3.2(b), Borrower and its Subsidiaries within 60 days of the Closing Date shall maintain all its depository and operating accounts with Bank and its primary investment accounts with Bank or Bank’s affiliates, provided, however, that Dermira Canada shall be permitted to maintain one or more accounts in Canada (the “Canadian Accounts”), so long as the aggregate balance maintained in the Canadian Accounts does not exceed $800,000 at any time.

 

6.7                               Product Covenants. Borrower shall at all times maintain the following product covenants:

 

(a)                                 Maintenance of Active Drug Development Programs. Borrower shall, at all times, maintain at least two active and ongoing drug development programs.

 

6.8                                Notice of Inbound Licenses. Within ten (10) days after entering into or becoming bound by any material inbound license or agreement, Borrower shall provide written notice to Bank of the material terms of such license or agreement with a description of its likely impact on Borrower’s business or financial condition.

 

6.9                               Creation/Acquisition of Subsidiaries. In the event any Borrower or any Subsidiary of any Borrower creates or acquires any Subsidiary, Borrower or such Subsidiary shall promptly notify Bank of such creation or acquisition, and Borrower or such Subsidiary shall take all actions reasonably requested by Bank to achieve any of the following with respect to such “New Subsidiary” (defined as a Subsidiary formed after the date hereof during the Term of this Agreement): (i) to cause New Subsidiary to become a co-Borrower hereunder, if such New Subsidiary is organized under the laws of the United States, any State thereof or the District of Columbia (a “Domestic Subsidiary”), or, any new Subsidiary which is not a Domestic Subsidiary (a “Foreign Subsidiary”) to become a secured guarantor with respect to the Obligations; and (ii) to grant and pledge to Bank a perfected security interest in 100% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such Domestic Subsidiary, and 65% of the voting stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such Foreign Subsidiary.

 

6.10                        Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement.

 

7.                                      NEGATIVE COVENANTS.

 

Borrower covenants and agrees that, so long as any credit hereunder shall be available and until the outstanding Obligations are paid in full or for so long as Bank may have any commitment to make any Credit Extensions, Borrower will not do any of the following without Bank’s prior written consent, which shall not be unreasonably withheld:

 

7.1                               Dispositions. Convey, sell, lease, license, transfer or otherwise dispose of (collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, or move cash balances on deposit with Bank to accounts opened at another financial institution, other than Permitted Transfers.

 

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7.2                               Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control. (i) Change its name or the state of Borrower’s formation or relocate its chief executive office without delivering written notification to Bank at least 10 days prior to such event; (ii) replace or suffer the departure of its chief executive officer without delivering written notification to Bank within 10 days following such event; (iii) fail to appoint an interim replacement or fill a vacancy in the position of chief executive officer for more than 90 consecutive days following the departure of such officer; (iv) (a) suffer a change on its board of directors which results in the failure of at least one partner, managing director, or principal of Bay City Capital or its Affiliates to serve as a voting member, (b) suffer a change on its board of directors which results in the failure of at least one partner, managing director, or principal of Canaan Partners or its Affiliates to serve as a voting member, (c) suffer a change on its board of directors which results in the failure of at least one partner, managing director, or principal of New Enterprise Associates or its Affiliates to serve as a voting member, or (d) suffer the resignation of one or more directors from its board of directors resulting directly from such director’s anticipation of Borrower’s insolvency, in each case without the prior written consent of Bank which may be withheld in Bank’s sole discretion; (v) take action to liquidate, wind up, or otherwise cease to conduct business in the ordinary course; (vi) engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; (vii) change its fiscal year end; or (viii) have a Change in Control (provided that, for the sake of clarity, Borrower shall be permitted to have a Change in Control so long as, simultaneously with the Change in Control, the Obligations are repaid in full and Bank’s obligation to make any Credit Extensions hereunder is terminated).

 

7.3                               Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person except where (a) each of the following conditions is applicable: (i) Borrower’s equity issued in such transaction is solely Borrower’s common stock; (ii) the consideration (excluding Borrower’s common stock) paid in connection with such transaction (including assumption of liabilities) does not cause the aggregate consideration (excluding Borrower’s common stock) to exceed $750,000 during any fiscal year of Borrower, (iii) no Event of Default has occurred, is continuing or would exist after giving effect to such transaction, (iv) such transaction does not result in a Change in Control, and (v) Borrower is the surviving entity; or (b) the Obligations are repaid in full concurrently with the closing of any merger or consolidation of Borrower in which Borrower is not the surviving entity; provided, however, that Borrower may not enter into any binding contractual arrangement with any Person to attempt to facilitate a merger or acquisition of Borrower unless (x) no Event of Default exists when such agreement is entered into by Borrower, (y) such agreement does not give such Person the right to claim any fee, payment or damages from any parties, other than from Borrower or Borrower’s investors, in connection with a sale of Borrower’s stock or assets pursuant to or resulting from an assignment for the benefit of creditors, an asset turnover to Borrower’s creditors (including, without limitation, Bank), foreclosure, bankruptcy or similar liquidation, and (z) Borrower notifies Bank in advance of entering into such an agreement (provided the failure to give such notice shall not be deemed a violation of this Agreement).

 

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7.4                               Indebtedness. Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except Indebtedness to Bank.

 

7.5                               Encumbrances. Create, incur, assume or allow any Lien with respect to its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens, or covenant to any other Person (other than (i) the licensors of in-licensed property with respect to such property or (ii) the lessors of specific equipment or lenders financing specific equipment with respect to such leased or financed equipment) that Borrower in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property.

 

7.6                               Distributions. Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, except that Borrower may (i) repurchase the stock of former employees pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase, (ii) convert any of its convertible securities into other equity securities pursuant to the terms of such convertible securities or otherwise in exchange therefor, and (iii) repurchase the stock of former employees pursuant to stock repurchase agreements by the cancellation of indebtedness owed by such former employees to Borrower regardless of whether an Event of Default exists.

 

7.7                               Investments. Directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments, or maintain or invest any of its Investment Property with a Person other than Bank or Bank’s Affiliates or permit any Subsidiary to do so unless such Person has entered into a control agreement with Bank, in form and substance satisfactory to Bank, or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower.

 

7.8                               Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower (other than wholly-owned Subsidiaries) except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person.

 

7.9                               Subordinated Debt. Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision affecting Bank’s rights contained in any documentation relating to the Subordinated Debt without Bank’s prior written consent.

 

7.10                        Inventory and Equipment. Store the Inventory or the Equipment of a book value in excess of $100,000 with a bailee, warehouseman, collocation facility or similar third party unless the third party has been notified of Bank’s security interest and Bank (a) has received an acknowledgment from the third party that it is holding or will hold the Inventory or Equipment for Bank’s benefit or (b) is in possession of the warehouse receipt, where negotiable,

 

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covering such Inventory or Equipment. Except for Inventory sold in the ordinary course of business and for movable items of personal property having an aggregate book value not in excess of $100,000, and except for such other locations as Bank may approve in writing, Borrower shall keep the Inventory and Equipment only at the location set forth in Section 10 and such other locations of which Borrower gives Bank prior written notice and as to which Bank is able to take such actions as may be necessary to perfect its security interest or to obtain a bailee’s acknowledgment of Bank’s rights in the Collateral.

 

7.11                         No Investment Company; Margin Regulation. Become or be controlled by an “investment company,” within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose.

 

8.                                      EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:

 

8.1                               Payment Default. If Borrower fails to pay any of the Obligations when due;

 

8.2                               Covenant Default.

 

(a)                                 If Borrower fails to perform any obligation under Sections 6.2 (financial reporting), 6.4 (taxes), 6.5 (insurance), 6.6 (primary accounts) or 6.7 (product covenants), or violates any of the covenants contained in Article 7 of this Agreement; or

 

(b)                                 If Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within 10 days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the 10 day period or cannot after diligent attempts by Borrower be cured within such 10 day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made.

 

8.3                               Material Adverse Effect. If there occurs any circumstance or any circumstances which would reasonably be expected to have a Material Adverse Effect;

 

8.4                               Attachment. If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within 10 Business Days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a

 

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lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any material portion of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be made during such cure period);

 

8.5                                   Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within 30 days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding);

 

8.6                               Other Agreements. If there is a default or other failure to perform in any agreement to which Borrower is a party with a third party or parties (a) resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of $700,000 or (b) in connection with any lease of real property material to the conduct of the Borrower’s business resulting in a right by the landlord to terminate such lease, which default is not cured within 10 days, or (c) that would reasonably be expected to have a Material Adverse Effect;

 

8.7                               Judgments. If a final, uninsured judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least $700,000 shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of 10 days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the judgment); or

 

8.8                               Misrepresentations. Borrower or any Person acting for Borrower makes any material representation, warranty, or other statement, either now or later, in this Agreement, any Loan Document or in any writing delivered to Bank to induce Bank to enter into this Agreement or in any Loan Document, and such material representation, warranty, or other statement is incorrect in any material respect when made.

 

8.9                               Guaranty. If any guaranty of all or a portion of the Obligations (a “Guaranty”) ceases for any reason to be in full force and effect, or any guarantor fails to perform any material obligation under any Guaranty or a security agreement securing any Guaranty (collectively, the “Guaranty Documents”), or any event of default occurs under any Guaranty Document or any guarantor revokes or purports to revoke a Guaranty, or any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth in any Guaranty Document or in any certificate delivered to Bank in connection with any Guaranty Document, or if any of the circumstances described in Sections 8.3 through 8.8 occur with respect to any guarantor.

 

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9.                                      BANK’S RIGHTS AND REMEDIES.

 

9.1                               Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower:

 

(a)                                 Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5 (insolvency), all Obligations shall become immediately due and payable without any action by Bank);

 

(b)                                 Demand that Borrower (i) deposit cash with Bank in an amount equal to the amount of any Letters of Credit remaining undrawn, as collateral security for the repayment of any future drawings under such Letters of Credit, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the remaining term of the Letters of Credit, and Borrower shall promptly deposit and pay such amounts;

 

(c)                                  Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Bank;

 

(d)                                 Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable;

 

(e)                                  Make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Bank’s rights or remedies provided herein, at law, in equity, or otherwise;

 

(f)                                   Set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by Bank, and (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank;

 

(g)                                   Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to Bank’s benefit;

 

(h)                                 Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as Bank determines is commercially reasonable, and apply any

 

16

 

proceeds to the Obligations in whatever manner or order Bank deems appropriate. Bank may sell the Collateral without giving any warranties as to the Collateral. Bank may specifically disclaim any warranties of title or the like. This procedure will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. If Bank sells any of the Collateral upon credit, Borrower will be credited only with payments actually made by the purchaser, received by Bank, and applied to the indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, Bank may resell the Collateral and Borrower shall be credited with the proceeds of the sale;

 

(i)                                    Bank may credit bid and purchase at any public sale;

 

(j)                                    Apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to the adequacy of the security for the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of the Obligations; and

 

(k)                                 Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

 

Bank may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.

 

9.2                               Power of Attorney. Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated officers, or employees) as Borrower’s true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtors of Bank’s security interest in the Accounts; (b) endorse Borrower’s name on any checks or other forms of payment or security that may come into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; and (g) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral; provided Bank may exercise such power of attorney to sign the name of Borrower on any of the documents described in clause (g) above, regardless of whether an Event of Default has occurred. The appointment of Bank as Borrower’s attorney in fact, and each and every one of Bank’s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully repaid and performed and Bank’s obligation to provide advances hereunder is terminated.

 

9.3                               Accounts Collection. At any time after the occurrence and during the continuation of an Event of Default, Bank may notify any Person owing funds to Borrower of Bank’s security interest in such funds and verify the amount of such Account. Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank’s trustee,

 

17

 

and immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit.

 

9.4                               Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; and/or (b) obtain and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.

 

9.5                               Bank’s Liability for Collateral. Bank has no obligation to clean up or otherwise prepare the Collateral for sale. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

 

9.6                               No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy the Obligations by collecting them from any other person liable for them and Bank may release, modify or waive any collateral provided by any other Person to secure any of the Obligations, all without affecting Bank’s rights against Borrower. Borrower waives any right it may have to require Bank to pursue any other Person for any of the Obligations.

 

9.7                               Remedies Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given. Borrower expressly agrees that this Section 9.7 may not be waived or modified by Bank by course of performance, conduct, estoppel or otherwise.

 

9.8                               Demand; Protest. Except as otherwise provided in this Agreement, Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations.

 

10.                               NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses set forth below:

 

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If to Borrower:
    	
 
    	
Dermira, Inc.
    
	
 
    	
 
    	
2055 Woodside Road
    
	
 
    	
 
    	
Redwood City, CA 94061
    
	
 
    	
 
    	
Attn: Chief Executive Officer
    
	
 
    	
 
    	
EMAIL: info@dermira.com
    
	
 
    	
 
    	
 
    
	
with a copy (which shall   not constitute notice) to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fenwick & West LLP
    
	
 
    	
 
    	
Silicon Valley Center
    
	
 
    	
 
    	
555 California Street, 12th Floor
    
	
 
    	
 
    	
San Francisco, CA 94104
    
	
 
    	
 
    	
Attention: Douglas Cogen
    
	
 
    	
 
    	
 
    
	
If to Bank:
    	
 
    	
Square 1 Bank
    
	
 
    	
 
    	
406 Blackwell Street, Suite 240
    
	
 
    	
 
    	
Durham, North Carolina 27701
    
	
 
    	
 
    	
Attn: Loan Operations Manager
    
	
 
    	
 
    	
FAX: (919) 314-3080
    
	
 
    	
 
    	
 
    
	
with a copy to:
    	
 
    	
Square 1 Bank
    
	
 
    	
 
    	
2420 Sand Hill Rd.
    
	
 
    	
 
    	
Menlo Park, CA 94025
    
	
 
    	
 
    	
Attn: Monica Beam
    
	
 
    	
 
    	
FAX: (650) 243-2780
    

 

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

 

11.                               CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. Jurisdiction shall lie in the State of California. All disputes, controversies, claims, actions and similar proceedings arising with respect to Borrower’s account or any related agreement or transaction shall be brought in the Superior Court of San Mateo County, California or the United States District Court for the Northern District of California, except as provided below with respect to arbitration of such matters. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN

 

19

 

MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. If the jury waiver set forth in this Section 11 is not enforceable, then any dispute, controversy, claim, action or similar proceeding arising out of or relating to this Agreement, the Loan Documents or any of the transactions contemplated therein shall be settled by final and binding arbitration held in San Mateo County, California in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with those rules. The arbitrator shall apply California law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment upon any award resulting from arbitration may be entered into and enforced by any state or federal court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this Section. The costs and expenses of the arbitration, including without limitation, the arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees, incurred by the parties to the arbitration may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator decides that one party is to pay for all (or a share) of such costs and expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.

 

12.          GENERAL PROVISIONS.

 

12.1        Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties and shall bind all persons who become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Bank’s prior written consent, which consent may be granted or withheld in Bank’s sole discretion. Bank shall have the right without the consent of or notice to Borrower to sell, assign, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits hereunder.

 

12.2        Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank, its officers, employees and agents as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise (including without limitation reasonable attorneys fees and expenses), except for losses caused by Bank’s gross negligence or willful misconduct.

 

12.3        Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.

 

12.4        Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

20

 

12.5        Amendments in Writing, Integration. All amendments to or terminations of this Agreement or the other Loan Documents must be in writing. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and the Loan Documents.

 

12.6        Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Executed copies of the signature pages of this Agreement sent by facsimile or transmitted electronically in Portable Document Format (“PDF”), or any similar format, shall be treated as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have to object to such treatment.

 

12.7        Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding or Bank has any obligation to make any Credit Extension to Borrower. The obligations of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run.

 

12.8        Confidentiality. In handling any confidential information, Bank and Borrower and all employees and agents of such party shall exercise the same degree of care that such party exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure of such information may be made (i) in the case of Bank, to the subsidiaries or Affiliates of Bank or Borrower in connection with their present or prospective business relations with Borrower, (ii) in the case of Bank, to prospective transferees or purchasers of any interest in the Credit Extensions, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) in the case of Bank, as may be required in connection with the examination, audit or similar investigation of Bank and (v) as Bank may determine in connection with the enforcement of any remedies hereunder. Confidential information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of the receiving party when disclosed to such party, or becomes part of the public domain after disclosure to such receiving party through no fault of such receiving party; or (b) is disclosed to such receiving party by a third party, provided such receiving party does not have actual knowledge that such third party is prohibited from disclosing such information.

 

********

 

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

 

 

	
DERMIRA, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Tom Wiggans
    	
 
    
	
 
    	
 
    	
 
    
	
Name: 
    	
Tom Wiggans
    	
 
    
	
 
    	
 
    	
 
    
	
Title: 
    	
CEO
    	
 
    
	
 
    	
 
    
	
SQUARE 1 BANK
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:  
    	
[ILLEGIBLE]
    	
 
    
	
 
    	
 
    	
 
    
	
Name: 
    	
[ILLEGIBLE]
    	
 
    
	
 
    	
 
    	
 
    
	
Title: 
    	
AVP
    	
 
    
				

 

22

 

EXHIBIT A

 

DEFINITIONS

 

“Accounts” means all presently existing and hereafter arising accounts, contract rights, payment intangibles and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower and any and all credit insurance, guaranties, and other security therefore, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.

 

“Affiliate” means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors, and general partners.

 

“Authorized Officer” means someone designated as such in the corporate resolution provided by Borrower to Bank in which this Agreement and the transactions contemplated hereunder are authorized by Borrower’s board of directors. If Borrower provides subsequent corporate resolutions to Bank after the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the most-recently provided resolution shall be the only “Authorized Officers” for purposes of this Agreement.

 

“Bank Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses (whether generated in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.

 

“Borrower’s Books” means all of Borrower’s books and records including: ledgers; records concerning Borrower’s assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of North Carolina are authorized or required to close.

 

“Cash” means unrestricted cash and cash equivalents.

 

“Change in Control” shall mean a transaction other than a bona fide equity financing or series of financings on terms and from investors reasonably acceptable to Bank in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such

 

A-1

 

“person” or “group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction.

 

“Closing Date” means the date of this Agreement.

 

“Code” means the California Uniform Commercial Code as amended or supplemented from time to time.

 

“Collateral” means the property described on Exhibit B attached hereto and all Negotiable Collateral to the extent not described on Exhibit B, except to the extent any such property (i) is non-assignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, §9406 and §9408 of the Code), (ii) the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction or prohibition, such property shall automatically become part of the Collateral, (iii) constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporations entitled to vote, or (iv) property (including any attachments, accessions or replacements) that is subject to a Lien that is permitted pursuant to clause (c) of the definition of Permitted Liens, if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement creating such Permitted Lien or would otherwise constitute a default thereunder, provided, that such property will be deemed “Collateral” hereunder upon the termination and release of such Permitted Lien.

 

“Collateral State” means the state or states where the Collateral is located, which is California.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.

 

“Copyrights” means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published

 

A-2

 

or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held.

 

“Credit Extension” means the Term Loan A, the Term Loan B, or any other extension of credit, by Bank to or for the benefit of Borrower hereunder.

 

“Dermira Canada” means Dermira (Canada) Inc., a wholly owned subsidiary of Borrower organized under the laws of Canada.

 

“Equipment” means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.

 

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

 

“Event of Default” has the meaning assigned in Article 8.

 

“GAAP” means generally accepted accounting principles, consistently applied, as in effect in the United States.

 

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations, including but not limited to any sublimit contained herein.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 

“Inventory” means all present and future inventory in which Borrower has any interest.

 

“Investment” means any beneficial ownership of (including stock, partnership or limited liability company interest or other securities) any Person, or any loan, advance or capital contribution to any Person.

 

“Investment Agreement” means, collectively, Borrower’s stock purchase and other agreement(s) pursuant to which Borrower most recently issued its preferred stock.

 

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

 

“Letter of Credit” means a commercial or standby letter of credit or similar undertaking issued by Bank at Borrower’s request.

 

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other

 

A-3

 

encumbrance.

 

“Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower, and any other document, instrument or agreement entered into in connection with this Agreement, all as amended or extended from time to time.

 

“Material Adverse Effect” means a material adverse effect on: (i) the operations, business or financial condition of Borrower and its Subsidiaries taken as a whole; (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents; or (iii) Borrower’s interest in, or the value, perfection or priority of Bank’s security interest in the Collateral.

 

“Negotiable Collateral” means all of Borrower’s present and future letters of credit of which it is a beneficiary, drafts, instruments (including promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating to any of the foregoing.

 

“Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other agreement entered into in connection with this Agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from Borrower to others that Bank may have obtained by assignment or otherwise.

 

“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

 

“Periodic Payments” means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.

 

“Permitted Indebtedness” means:

 

(a)           Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document;

 

(b)           Indebtedness existing on the Closing Date and disclosed in the Schedule;

 

(c)           Indebtedness not to exceed $700,000 in the aggregate at any time secured by a lien described in clause (c) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed at the time it is incurred the lesser of the cost or fair market value of the property financed with such Indebtedness;

 

(d)           Subordinated Debt;

 

(e)           Indebtedness to trade creditors incurred in the ordinary course of business; and

 

A-4

 

(f)            Extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

 

“Permitted Investment” means:

 

(a)           Investments existing on the Closing Date disclosed in the Schedule;

 

(b)           (i) Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (iii) Bank’s certificates of deposit maturing no more than one year from the date of investment therein, and (iv) Bank’s money market accounts; (v) Investments in regular deposit or checking accounts held with Bank or subject to a control agreement in favor of Bank; and (vi) Investments consistent with any investment policy adopted by the Borrower’s board of directors;

 

(c)           Repurchases of stock from former employees or directors of Borrower under the terms of applicable repurchase agreements (i) in an aggregate amount not to exceed $700,000 in any fiscal year, provided that no Event of Default has occurred, is continuing or would exist after giving effect to the repurchases, or (ii) in any amount where the consideration for the repurchase is the cancellation of indebtedness owed by such former employees to Borrower regardless of whether an Event of Default exists;

 

(d)           Investments accepted in connection with Permitted Transfers;

 

(e)   (i) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries (other than Dermira Canada) not to exceed $700,000 in the aggregate in any fiscal year, and (ii) Investments by Borrower in Dermira Canada not to exceed $1,500,000 in the aggregate in any fiscal year;

 

(f)    Investments not to exceed $700,000 outstanding in the aggregate at any time consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s Board of Directors;

 

(g)   Investments in unfinanced capital expenditures in any fiscal year, not to exceed $700,000;

 

(h)   Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;

 

(i)    Investments consisting of notes receivable of, or prepaid royalties and other credit

 

A-5

 

extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, provided that this subparagraph (h) shall not apply to Investments of Borrower in any Subsidiary;

 

(j)    Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed $700,000 in the aggregate in any fiscal year; and

 

(k)   Investments permitted under Section 7.3.

 

“Permitted Liens” means the following:

 

(a)           Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the Credit Extensions) or arising under this Agreement, the other Loan Documents, or any other agreement in favor of Bank;

 

(b)           Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and for which Borrower maintains adequate reserves;

 

(c)           Liens not to exceed $700,000 in the aggregate at any time (i) upon or in any Equipment (other than Equipment financed by a Credit Extension) acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such Equipment at the time of its acquisition, in each case provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such Equipment;

 

(d)           Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase;

 

(e)           Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.4 (attachment) or 8.7 (judgments);

 

(f)            Liens securing Subordinated Debt; and

 

(g)           Liens of bailees, carriers, warehousemen, suppliers, or other similar Persons that are possessory in nature arising in the ordinary course of business securing liabilities in the aggregate amount not to exceed One Hundred Thousand Dollars ($100,000) and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto.

 

“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition by Borrower or

 

A-6

 

any Subsidiary of:

 

(a)           Inventory in the ordinary course of business;

 

(b)           licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business;

 

(c)           worn-out, surplus or obsolete Equipment not financed with the proceeds of Credit Extensions;

 

(d)           grants of security interests and other Liens that constitute Permitted Liens; and

 

(e)           other assets of Borrower or its Subsidiaries that do not in the aggregate exceed $700,000 during any fiscal year;

 

(f)            Cash in the ordinary course of business for the purpose of conducting Borrower’s day to day operations, so long as such transfer would not be prohibited by any other provision of this Agreement.

 

“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency.

 

“Prime Rate” means the variable rate of interest, per annum, most recently announced by Bank, as its “prime rate,” whether or not such announced rate is the lowest rate available from Bank.

 

“Responsible Officer” means each of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, Vice President of Finance and the Controller of Borrower, as well as any other officer or employee identified in as an Authorized Officer in the corporate resolution delivered by Borrower to Bank in connection with this Agreement.

 

“Schedule” means the schedule of exceptions attached hereto and approved by Bank, if any.

 

“SOS Reports” means the official reports from the Secretaries of State of each Collateral State, the state where Borrower’s chief executive office is located, the state of Borrower’s formation and other applicable federal, state or local government offices identifying all current security interests filed in the Collateral and Liens of record as of the date of such report.

 

“Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt owing by Borrower to Bank on terms reasonably acceptable to Bank (and identified as being such by Borrower and Bank).

 

“Subsidiary” means any corporation, partnership or limited liability company or joint venture in which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability company interest or joint venture of which by the terms thereof ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate.

 

A-7

 

“Term Loan A Interest Only End Date” means October 31, 2014.

 

“Term Loan A Maturity Date” means April 30, 2017.

 

“Term Loan B Availability End Date” means October 31, 2014.

 

“Term Loan B Availability Start Date” means the achievement by Borrower of positive top-line results from at least one Phase 2 program which shall be satisfactory to Borrower’s board of directors in their sole discretion, and verified by Bank through a written document signed by the Borrower’s board of directors.

 

“Term Loan B Interest Only End Date” means the earlier of (a) December 31, 2014, or (b) six (6) months following the making of the Term Loan B.

 

“Term Loan B Maturity Date” means June 30, 2017.

 

“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

 

“Treasury Rate” means the variable rate of interest, per annum, most recently announced by Bank, as its “3 year constant maturity treasury rate”.

 

A-8

 

	
DEBTOR:
    	
DERMIRA, INC.
    
	
 
    	
 
    
	
SECURED PARTY:
    	
SQUARE 1 BANK
    

 

EXHIBIT B

 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

 

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

 

(a)      all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles (including patents, trademarks, copyrights, goodwill, payment intangibles, domain names, and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;

 

(b)      any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions.

 

Notwithstanding the foregoing, the Collateral shall not include any of the intellectual property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by Borrower, or in which Borrower now holds or hereafter acquires or receives any right or interest (collectively, the “Intellectual Property”); provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”).

 

Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of December 11, 2013, include the Intellectual Property to the extent and only to the extent necessary to permit perfection of Bank’s security interest in the Rights to Payment, and further provided, however, that Bank’s enforcement rights with respect to any security interest in the Intellectual Property shall be absolutely limited to the Rights to

 

B-1

 

Payment only, and Bank shall have no recourse whatsoever with respect to the underlying Intellectual Property.

 

B-2

 

EXHIBIT C

 

LOAN ADVANCE/PAYDOWN REQUEST FORM

 

[Please refer to New Borrower Kit]

 

C-1

 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

[Please refer to New Borrower Kit]

 

D-1

 

SCHEDULE OF EXCEPTIONS

 

Permitted Indebtedness (Exhibit A) — Borrower owns 100% of the outstanding capital stock of Dermira (Canada), Inc.

 

Permitted Investments (Exhibit A) — None.

 

Permitted Liens (Exhibit A) — None.

 

Prior Names (Section 5.5) — Borrower did business as “Skintelligence, Inc.” from the date of incorporation on August 18, 2010 until Borrower changed its name to “Dermira, Inc.” pursuant to filing a Certificate of Amendment of Restated Certificate of Incorporation with the Secretary of State of the State of Delaware on September 9, 2011.

 

Litigation (Section 5.6) — None.

 

Inbound Licenses (Section 5.12) —

 

·                  Month-To-Month Lease Agreement by and between the Company and Woodside Road Holdings, LLC dated May 10, 2011, as amended by that certain First Amendment to Lease dated November 18, 2011.

 

D-1

 

CORPORATE RESOLUTION

 

The undersigned duly elected and qualified [Assistant] Secretary of Dermira, Inc. (the “Company”) do hereby certify that the following is a true and correct copy of certain resolutions adopted by the Company’s Board of Directors in accordance with applicable law and the Company’s bylaws, and that such resolutions are now unmodified and in full force and effect:

 

BE IT RESOLVED, that:

 

1)             Any one (1) of the following, duly elected officers of the Company (each, an “Authorized Officer”) whose genuine original signature appears next to his or her name is authorized to act for, on behalf of, and in the name of the Company in connection with the resolutions below:

 

	
Title
    	
 
    	
Name
    	
 
    	
Authorized Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
CEO
    	
 
    	
Tom   Wiggans
    	
 
    	
/s/   Tom Wiggans
    

 

2)             Any Authorized Officer may borrow money from time to time from Bank, and may negotiate and procure loans, letters of credit, foreign exchange contracts and other financial accommodations from Bank, including without limitation, that certain Loan and Security Agreement dated as of December 11, 2013, and also to execute and deliver to Bank one or more renewals, extensions, or modifications thereof;

 

a)             Give security for any liabilities of the Company to Bank by grant, security interest, assignment, lien, deed of trust or mortgage upon any real or personal property, tangible or intangible of the Company;

 

b)             Purchase, sell, exchange, assign, endorse for transfer and/or deliver certificates and/or instruments representing stocks, bonds, evidences of Indebtedness or other securities owned by the Company, whether or not registered in the name of the Company;

 

c)              Discount with the Bank, commercial or other business paper belonging to the Company made or drawn by or upon third parties, without limit as to amount;

 

d)             The Bank is authorized and directed to pay the proceeds of any such loans or discounts as directed by the persons so authorized to sign;

 

e)              Issue a warrant or warrants to purchase the Company’s capital stock; and

 

2

 

f)               Execute and deliver in Form and content as may be required by the Bank any and all notes, evidences of indebtedness, applications for letters of credit, guaranties, subordination agreements, loan and security agreements, financing statements, assignments, liens, deeds of trust, mortgages, trust receipts and other agreements, instruments or documents to carry out the purposes of these Resolutions, any or all of which may relate to all or to substantially all of the Company’s property and assets;

 

3)             The Authorized Officers may designate additional or alternate individuals as being authorized to request loan advances, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as he or she may in his or her discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions.

 

4)             Any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, and the authority conferred herein may be exercised singly by any such officer, and these resolutions shall continue in full force and effect until written notice of modification or revocation is received and accepted by Bank (such notice to have no effect on any action previously taken by the Bank in reliance on these Resolutions). Bank may rely upon any form of notice, which it in good faith believes to be genuine or what it purports to be.

 

5)             The Resolutions are in full force and effect as of the date of this Certificate and are intended to replace, as of this date, any Resolutions previously given by the Company to Bank in connection with the matters described herein; these Resolutions and any borrowings or financial accommodations under these Resolutions have been properly noted in the corporate books and records, and have not been rescinded, revoked or modified; neither the foregoing Resolutions nor any actions to be taken pursuant to them are or will be in contravention of any provision of the articles of incorporation or bylaws of the Company or of any agreement, indenture or other instrument to which the Company is a party or by which it is bound; and to the extent the articles of incorporation or bylaws of the Company or any agreement, indenture or other instrument to which the Company is a party or by which it is bound require the vote or consent of shareholders of the Company to authorize any act, matter or thing described in the foregoing Resolutions, such vote or consent has been obtained.

 

In Witness Whereof, I have affixed my name as [Assistant] Secretary and have caused the corporate seal (where available} of said Company to be affixed on December 11, 2013,

 

 

	
 
    	
/s/ Tom Wiggans
    
	
 
    	
[Assistant] Secretary*
    

 

*If the certifying officer is designated as the only signer in these resolution then another corporate officer must also sign.

 

	
 
    	
/s/ Eugene Bauer
    

 

3

 

USA PATRIOT ACT

NOTICE

OF

CUSTOMER IDENTIFICATION

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

 

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

 

WHAT THIS MEANS FOR YOU: when you open an account, we will ask your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

D-4

 

SQUARE 1 BANK

AUTOMATIC DEBIT AUTHORIZATION

Member FDIC

 

To: Square 1 Bank

 

Re: Loan #

 

You are hereby authorized and instructed to charge account No.       in the name of Dermira, Inc. for facility fees, principal, interest and other payments due on above referenced loan as set forth below and credit the loan referenced above.

 

o Debit the Facility Fee as it becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

x Debit each interest payment as it becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

x Debit each principal payment as it becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

x Debit each payment for Bank Expenses as it becomes due according to the terms of the Loan and Security Agreement and any renewals or amendments thereof.

 

This Authorization is to remain in full force and effect until revoked in writing.

 

	
Borrower Signature
    	
/s/ Tom Wiggans
    	
 
    	
Date
    	
12/11/13
    

 

5

 

We are excited to have you as a Square 1 Bank client and want to spread the word about your success!

 

From press releases to mentions on social media sites, and all points in between. Square 1’s marketing and communications team is constantly seeking new opportunities to promote our clients and to connect them to prospects, existing customers, and the larger entrepreneurial/venture capital community.

 

If you complete the authorization below and return it to us, you are authorizing us to reference and or include your company as part of our marketing and advertising efforts without further review or advance approval by you. Please select all areas that you approve.

 

o                 All items listed below

o                 List company as a Square 1 Bank customer on social media sites, including Twitter, Linkedln, Facebook, Square I Bank corporate blog, or any other social media site

o                 Press release including your company as a Square 1 Bank client (to include company name and description only; may appear alongside other clients)

o                 Press release including your company as a Square 1 Bank client (general press release not focused on your company, but referring to your company as a client, and including your company’s name, description, and editorial comments; may appear alongside other clients)

o                 Provide quote for inclusion in a Square 1 Bank press release

o                 Use of company name and logo in Square 1 Bank marketing materials including corporate marketing collateral, website, social media sites, and other advertising campaigns

o                 Provide quotes for inclusion in Square 1 Bank marketing materials including corporate marketing collateral, website, social media sites, and other advertising campaigns

o                 Customer case study/application brief (success story to be posted on website, included in press kits and/or pitched to publications as potential articles)

o                 Willing to participate in a video testimonial highlighting your banking relationship and experiences with Square 1 Bank

o                 Other (please describe):

None

 

If you have questions, please contact your Square I banker, or our Marketing Communications department at marketing@square1bank.com

 

Please acknowledge your authorization by signing below:

 

	
Company Name:
    	
Dermira, Inc.
    	
 
    
	
 
    	
 
    	
 
    
	
Authorized Signer:
    	
/s/ Tom Wiggans
    	
 
    
	
 
    	
 
    	
 
    
	
Name :
    	
Tom Wiggans
    	
 
    
	
 
    	
 
    	
 
    
	
Title :
    	
CEO
    	
 
    
	
 
    	
 
    	
 
    
	
Date :
    	
12/11/13
    	
 
    

 

6EX-10.1

 Exhibit 10.1 

 

			
	Citibank, N.A.	  	
	390 Greenwich Street	  	
	New York, New York 10013	  	

		  
		  

  

Execution Copy 
  

			
	Date:	  	June 26, 2014 (as amended and restated August 25, 2014)
		
	To:	  	Center City Funding LLC
		  	c/o FS Investment Corporation III
		  	Cira Centre
		  	2929 Arch Street, Suite 675
		  	Philadelphia, PA 19104
		  	Attention: Gerald F. Stahlecker
		  	Phone: 215-495-1169
		  	Fax: 215-222-4649
		  	Email: jerry.stahlecker@franklinsquare.com
		
	From:	  	Citibank, N.A.
		  	388 Greenwich Street
		  	11th Floor
		  	New York, New York 10013
		  	Attention: Director Derivative Operations
		  	Facsimile: 212-615-8594

 Transaction Reference Number:              

CONFIRMATION 
 Ladies and
Gentlemen: 
 The purpose of this letter agreement is to set forth the terms and conditions of the Transactions entered into
between Citibank, N.A. (“Citibank”) and Center City Funding LLC, a limited liability company formed under the laws of the State of Delaware (“Counterparty”), on the Trade Date specified below (each, a
“Transaction” and, collectively, the “Transactions”). This letter constitutes a “Confirmation” as referred to in the Master Agreement specified below. 

The definitions and provisions contained in the 2000 ISDA Definitions (the “Definitions”), as published by the International
Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Definitions and this Confirmation, this Confirmation shall govern. Capitalized terms used but not defined in this
Confirmation have the meanings assigned to them in Annex A. Capitalized terms used but not defined in this Confirmation or in Annex A have the meanings assigned to them in the Definitions. 

With effect from and after the Amendment Effective Date referred to below, this Confirmation amends and restates the prior Confirmation
dated June 26, 2014 between Citibank and Counterparty (the “Original Confirmation”) relating to the Transactions described herein, which Original Confirmation is hereby superseded and shall be of no further force or
effect. 

  
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	1.	AGREEMENT 

This Confirmation supplements, forms a part of and is subject to, the ISDA 2002 Master Agreement, dated as of June 26, 2014 (as
amended, supplemented and otherwise modified and in effect from time to time, the “Master Agreement”), between Citibank and Counterparty. All provisions contained in the Master Agreement govern this Confirmation except as
expressly modified below. 
  

	2.	TERMS OF TRANSACTIONS 

 The terms of the particular Transactions to which this Confirmation relates are as follows: 

General Terms: 
  

	 Trade Date: 
	June 26, 2014 

  

	 Effective Date: 
	June 26, 2014 

  

	 Amendment Effective Date: 
	August 25, 2014 

  

	 Scheduled Termination Date: 
	The latest date for the final scheduled payment (or, if there is only one scheduled payment, for the scheduled payment) of principal of any Reference Obligation at any time included in the
Reference Portfolio. 

  

	 Termination Date: 
	The final Scheduled Settlement Date (as defined in the Master Agreement) with respect to all Transactions (other than (i) any Citibank Fixed Amount Payer Payment Date that occurs after the
final Obligation Termination Date and (ii) any Counterparty Fourth Floating Rate Payer Payment Date). The obligations of the parties to make payments required to be made hereunder shall survive the Termination Date. 

 

	 Obligation Termination Date: 
	(a) In relation to any Repaid Obligation, the related Repayment Date; and 

  

	 	(b) In relation to any Terminated Obligation, the related Termination Settlement Date. 

 

	 Reference Portfolio: 
	As of any date of determination, all Reference Obligations with respect to all Transactions outstanding on such date. 

 

	 Reference Obligation: 
	 Each obligation listed on Annex I from time to time having a Reference Amount equal to the “Reference Amount” indicated on Annex I for such obligation (and, in the case
of a Committed Obligation, having an Outstanding Principal Amount equal to the “Outstanding Principal Amount” indicated on 

  
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Annex I for such Committed Obligation), in each case, subject to adjustment by the Calculation Agent in accordance with the terms of this Confirmation. 

 

	 	Counterparty may, by notice to Citibank on any Business Day on or after the Trade Date (each, an “Obligation Trade Date”), designate that any
obligation (each, a “Reference Obligation”) shall become the subject of a Transaction hereunder. Any such notice shall specify the proposed Reference Obligation and the proposed Reference Amount, Reference Entity and Initial
Price in relation to such Transaction. 

  

	 	Notwithstanding the foregoing, no such designation by Counterparty will be effective unless: 

 

	 	(a) Citibank consents on or prior to the Obligation Trade Date to the relevant Reference Obligation becoming the subject of a Transaction hereunder (having the proposed
Reference Amount and Initial Price in the notice of designation from Counterparty); 

  

	 	(b) on the Obligation Trade Date (i) the relevant Reference Obligation satisfies the Obligation Criteria set forth in Annex II and (ii) the Portfolio
Criteria set forth in Annex II are satisfied (or, if any Portfolio Criterion is not satisfied immediately prior to such designation, then the extent of compliance with such Portfolio Criterion is improved); and 

 

	 	(c) if the relevant Reference Obligation would be a Specified Reference Obligation, Counterparty gives notice of such fact to Citibank in such notice of designation
(provided that any failure to give such notice shall not affect the effectiveness of such designation). 

  

	 	Without limiting the generality of the foregoing clause (a), Citibank may withhold its consent to any such designation based on any legal, accounting, tax or other
similar issues that are adverse to Citibank in any material respect and that would or could reasonably be expected to arise as a result of the entry into such Transaction or any purchase by the Citibank Holder of such Reference Obligation as a hedge
for such Transaction. In the event that Citibank determines not to hold, or cause to be held, all or any portion of any such Reference Obligation as a hedge for such Transaction on the Obligation Settlement Date for such Transaction, Citibank shall
give prompt notice thereof to Counterparty. 

  
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	 	The “Obligation Settlement Date” for a Transaction shall be the date following the Obligation Trade Date for such Transaction that is customary
for settlement of the related Reference Obligation substantially in accordance with the then-current market practice in the principal market for the related Reference Obligation (as determined by the Calculation Agent). 

 

	 	On the Obligation Trade Date for a Transaction, the Reference Amount of such Transaction shall, for all purposes hereof (including the determination of the
“Maximum Portfolio Notional Amount”) other than calculating Rate Payments, be increased by the “Reference Amount” specified in such notice from Counterparty. On the Obligation Settlement Date for a Transaction, the Reference
Amount of such Transaction shall, solely for the purposes of calculating Rate Payments, be increased by the “Reference Amount” specified in such notice from Counterparty. 

 

	 	Once a Reference Obligation becomes the subject of a Transaction hereunder, Citibank shall promptly prepare and deliver to Counterparty a revised Annex I
reflecting the Reference Portfolio as of the related Obligation Trade Date. 

  

	 	If any payment of interest on a Reference Obligation that would otherwise be made during the period from and including the Obligation Trade Date to but excluding the
Termination Trade Date is not made but is capitalized as additional principal (without default), then the amount of interest so capitalized as principal shall become a new Transaction hereunder (a “PIK Transaction”) having
the same terms and conditions as the Transaction relating to the Reference Obligation in respect of which such interest is capitalized, except that (1) the Initial Price in relation to such PIK Transaction shall be zero, (2) the Obligation
Trade Date and Obligation Settlement Date for such PIK Transaction shall be the date on which such interest is capitalized and (3) the Reference Amount of such PIK Transaction will be the amount of interest so capitalized as principal. Citibank
shall give notice to Counterparty after a PIK Transaction becomes outstanding as provided above, which notice shall set forth the information in the foregoing clauses (2) and (3). 

  
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	 Reference Entity: 
	The borrower of the Reference Obligation identified as such in Annex I hereto. In addition, “Reference Entity”, unless the context otherwise requires, shall also refer to any
guarantor of or other obligor on the Reference Obligation. 

  

	 Ramp-Up Period: 
	The period from and including the Effective Date and ending on and including the date occurring 90 days after the Effective Date. 

 

	 Ramp-Down Period: 
	The period from and including the date 30 days prior to the Scheduled Termination Date and ending on and including the Scheduled Termination Date. 

 

	 Portfolio Notional Amount: 
	As of any date of determination, the sum of the Notional Amounts for all Reference Obligations as of such date. 

 

	 Notional Amount: 
	(a) In relation to any Transaction (other than with respect to any Terminated Obligation or Repaid Obligation), as of any date of determination, the Reference Amount of the related Reference
Obligation as of such date multiplied by the Initial Price in relation to such Reference Obligation; and 

  

	 	(b) In relation to any Transaction with respect to a Terminated Obligation or Repaid Obligation, the amount of the reduction in the Reference Amount of the related
Reference Obligation determined, in the case of a Terminated Obligation, pursuant to Clause 3 or, in the case of a Repaid Obligation, pursuant to Clause 5, in each case multiplied by the Initial Price in relation to the related
Reference Obligation. 

  

	 Outstanding Principal Amount: 
	 In relation to any Reference Obligation as of any date of determination, the outstanding principal amount of such obligation as shown in the then-current Annex I, as increased pursuant
to this Clause 2 (or, in the case of any Committed Obligation, pursuant to any borrowing in respect of such Committed Obligation after the Obligation Trade Date) and reduced pursuant to Clauses 3 and 5. Except as otherwise expressly
provided below with respect to Counterparty First Floating Amounts, the principal amount of any Committed Obligation outstanding on any date shall include the aggregate stated face amount of all letters of credit, bankers’ acceptances and other
similar instruments issued in respect of such Committed Obligation to the extent that the holder of such 

  
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Committed Obligation is obligated to extend credit in respect of any drawing or other similar payment thereunder. 

 

	 Commitment Amount: 
	In relation to any Reference Obligation that is a Committed Obligation (and the related Transaction) as of any date of determination, the maximum outstanding principal amount of such Reference
Obligation that a registered holder thereof would on such date be obligated to fund (including all amounts previously funded and outstanding, whether or not such amounts, if repaid, may be reborrowed). 

 

	 Notional Funded Amount: 
	In relation to any Reference Obligation that is a Committed Obligation (and to the related Transaction) as of any date of determination, the greater of (a) zero and (b) the sum of
(i) the Outstanding Principal Amount of such Reference Obligation as of the Obligation Trade Date multiplied by the Initial Price in relation to such Reference Obligation minus (ii) the product of (x) the excess, if any, of the
Commitment Amount of such Reference Obligation as of the Obligation Trade Date over the Outstanding Principal Amount of such Reference Obligation as of the Obligation Trade Date multiplied by (y) 100% minus the Initial Price in relation to such
Reference Obligation plus (iii) any increase in the Outstanding Principal Amount of such Reference Obligation during the period from but excluding the Obligation Trade Date to and including such date of determination minus (iv) any
decrease in the Outstanding Principal Amount of such Reference Obligation during the period from but excluding the Obligation Trade Date to and including such date of determination. 

 

	 	In relation to any Reference Obligation that is a Term Obligation (and the related Transaction) as of any date of determination, the Notional Amount of such Reference
Obligation. 

  

	 Portfolio Notional Funded Amount: 
	As of any date of determination, the aggregate of all Notional Funded Amounts with respect to all Reference Obligations in the Reference Portfolio on such date of determination.

  

	 Reference Amount: 
	In relation to (a) any Term Obligation, the Outstanding Principal Amount thereof and (b) any Committed Obligation, the Commitment Amount thereof. 

  
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	 Maximum Portfolio Notional Amount: 
	USD200,000,000 

  

	 Utilization Amount: 
	In relation to any Calculation Period, the daily average of the Portfolio Notional Funded Amount during such Calculation Period. 

 

	 Business Day: 
	New York 

  

	 Business Day Convention: 
	Following (which shall apply to any date specified herein for the making of any payment or determination or the taking of any action which falls on a day that is not a Business Day).

  

	 	If any anniversary date specified herein would fall on a day on which there is no corresponding day in the relevant calendar month, then such anniversary date shall be
the last day of such calendar month. 

  

	 Monthly Period: 
	Each period from but excluding the last day of any calendar month to and including the last day of the immediately succeeding calendar month. 

 

	 Calculation Agent: 
	Citibank; provided that, if an Event of Default described in Section 5(a)(i) or Section 5(a)(vii) occurs with respect to Citibank as Defaulting Party and no Event of Default has
occurred and is continuing with respect to Counterparty as Defaulting Party, then Counterparty may designate any of Bank of America, NA, The Bank of Montreal, Barclays Bank plc, Canadian Imperial Bank of Commerce, Credit Suisse, Deutsche Bank AG,
JPMorgan Chase Bank, N.A., UBS AG and Wells Fargo Bank, National Association as Calculation Agent, which designation shall be effective only (a) if such designated entity accepts such appointment and agrees to perform the duties of the
Calculation Agent hereunder and (b) so long as such Event of Default with respect to Citibank as Defaulting Party continues. Unless otherwise specified, the Calculation Agent shall make all determinations, calculations and adjustments required
pursuant to this Confirmation in good faith and on a commercially reasonable basis. 

  

	 Calculation Agent City: 
	New York 

  

	 Initial Price: 
	 In relation to any Reference Obligation (and the related Transaction), the Initial Price specified in Annex I. The Initial Price (a) will be expressed exclusive of accrued
interest, (b) will be expressed as a percentage of the Reference Amount, (c) will be determined exclusive of Costs of Assignment that 

  
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would be incurred by a buyer in connection with any purchase of the Reference Obligation and exclusive of any Delay Compensation and (d) will be, as of the related Obligation Trade Date, the
“Initial Price” specified by Counterparty to Citibank in the notice of designation referred to above and consented to by Citibank. 

 Payments by Counterparty 
 Counterparty First Floating Amounts: 

 

	 First Floating Amount Payer: 
	Counterparty 

  

	 First Floating Amount: 
	In relation to any First Floating Rate Payer Payment Date, the sum, for each Transaction, of the products of (a) the First Floating Rate Payer Calculation Amount for such Transaction for
the related First Floating Rate Payer Calculation Period multiplied by (b) the Floating Rate Option for such Transaction during the related First Floating Rate Payer Calculation Period plus the Spread multiplied by
(c) the Floating Rate Day Count Fraction; provided that, for purposes of the foregoing calculation, the percentage specified in the foregoing clause (b) shall be the Spread (and not the Floating Rate Option plus the Spread)
with respect to any portion of a First Floating Rate Payer Calculation Amount constituting the undrawn stated face amount of all letters of credit, bankers’ acceptances and other similar instruments issued in respect of a related Committed
Obligation. 

  

	 First Floating Rate Payer Calculation Amount: 
	In relation to any First Floating Rate Payer Calculation Period and any Transaction, the daily average of the Notional Funded Amount of such Transaction during such First Floating Rate Payer
Calculation Period. 

  

	 First Floating Rate Payer Calculation Period: 
	In relation to any Transaction, each Monthly Period, except that (a) the initial First Floating Rate Payer Calculation Period will commence on, and include, the related Obligation
Settlement Date and (b) the final First Floating Rate Payer Calculation Period will end on, but exclude, the related Obligation Termination Date. 

  
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	 First Floating Rate Payer Payment Date: 
	(a) In relation to any Transaction (other than with respect to any Terminated Obligation or Repaid Obligation), the tenth Business Day following the last day of any Monthly Period, commencing
with the first such date after the Obligation Settlement Date for such Transaction and ending with the last such date occurring prior to the related Obligation Termination Date; and 

 

	 	(b) In relation to any Terminated Obligation or Repaid Obligation, the related Total Return Payment Date. 

 

	 Floating Rate Option: 
	In relation to any Transaction, USD-LIBOR-BBA. 

  

	 Designated Maturity: 
	In relation to any Transaction, one month. 

  

	 Spread: 
	1.30% 

  

	 Floating Rate Day Count Fraction: 
	In relation to any Transaction, Actual/360. 

  

	 Reset Dates: 
	The first day of each First Floating Rate Payer Calculation Period. 

  

	 Compounding: 
	Inapplicable 

 Counterparty Second Floating Amounts: 

 

	 Second Floating Amount Payer: 
	Counterparty 

  

	 Second Floating Amount: 
	In relation to any Second Floating Rate Payer Payment Date, the product of (a) the Second Floating Rate Payer Calculation Amount for the related Second Floating Rate Payer Calculation
Period multiplied by (b) the Spread multiplied by (c) the Floating Rate Day Count Fraction. 

  

	 	 Notwithstanding the foregoing, no Second Floating Amount shall be payable on any Second Floating Rate Payer Payment Date, and no amount shall be payable under
Clause 4(c) on any date after the last day of the Ramp-Up Period, (a) on or following the Termination Date if the Termination Date results from the designation of an Early Termination Date pursuant to Section 6(a) of the Master
Agreement by reason of an Event of Default under Section 5(a)(i) or 5(a)(vii) of the Master Agreement in relation to Citibank as the Defaulting Party or (b) on or 

  
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following any date on which each of the following two conditions has been satisfied: (i) Counterparty has designated at least 20 Designated Reference Obligations to become the subject of
Transactions hereunder (as contemplated opposite the caption “Reference Obligation” above) and (ii) the aggregate Notional Amount of all Designated Reference Obligations as to which Citibank has not given its consent to such
Designated Reference Obligations becoming the subject of Transactions hereunder (as contemplated opposite the caption “Reference Obligation” above) exceeds 50% of the aggregate Notional Amount of all Designated Reference Obligations that
Counterparty has designated are to become the subject of Transactions hereunder (as contemplated opposite the caption “Reference Obligation” above). 

 

	 Second Floating Rate Payer Calculation Amount: 
	In relation to any Second Floating Rate Payer Calculation Period, the excess, if any, of (a) 80% of the Maximum Portfolio Notional Amount over (b) the Utilization Amount for such
Second Floating Rate Payer Calculation Period. 

  

	 Second Floating Rate Payer Calculation Period: 
	Each Monthly Period; provided that (a) the initial Second Floating Rate Payer Calculation Period shall begin on the first day following the last day of the Ramp-Up Period and
(b) the final Second Floating Rate Payer Calculation Period shall end on the last Second Floating Rate Payer Payment Date. 

  

	 Second Floating Rate Payer Payment Dates: 
	The tenth Business Day following the last day of each Monthly Period; provided that (a) the initial Second Floating Rate Payer Payment Date will be the first such Business Day after
the last day of the Ramp-Up Period and (b) the final Second Floating Rate Payer Payment Date will be the day preceding the first day of the Ramp-Down Period. 

 

	 Spread: 
	1.30%. 

  

	 Floating Rate Day Count Fraction: 
	Actual/360. 

  

	 Compounding: 
	Inapplicable 

  
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 Counterparty Third Floating Amounts: 

 

	 Third Floating Amount Payer: 
	Counterparty 

  

	 Third Floating Amount: 
	In relation to any Third Floating Rate Payer Payment Date, the product of (a) the Third Floating Rate Payer Calculation Amount for the related Third Floating Rate Payer Calculation Period
multiplied by (b) the Spread multiplied by (c) the Floating Rate Day Count Fraction. 

  

	 Third Floating Rate Payer Calculation Amount: 
	In relation to any Third Floating Rate Payer Calculation Period, the excess, if any, of (a) the Maximum Portfolio Notional Amount over (b) the greater of (i) 80% of the Maximum
Portfolio Notional Amount and (ii) the daily average Portfolio Notional Funded Amount for such Third Floating Rate Payer Calculation Period. 

  

	 Third Floating Rate Payer Calculation Period: 
	Each Monthly Period; provided that (a) the initial Third Floating Rate Payer Calculation Period shall begin on the first day following the last day of the Ramp-Up Period and
(b) the final Third Floating Rate Payer Calculation Period shall end on the last Third Floating Rate Payer Payment Date. 

  

	 Third Floating Rate Payer Payment Dates: 
	The tenth Business Day following the last day of each Monthly Period; provided that (a) the initial Third Floating Rate Payer Payment Date will be the first such Business Day after
the last day of the Ramp-Up Period and (b) the final Third Floating Rate Payer Payment Date will be the day preceding the first day of the Ramp-Down Period. 

 

	 Spread: 
	0.15%. 

  

	 Floating Rate Day Count Fraction: 
	Actual/360. 

  

	 Compounding: 
	Inapplicable 

 Counterparty Fourth Floating Amounts: 

 

	 Fourth Floating Amount Payer: 
	Counterparty 

  

	 Fourth Floating Amount: 
	Each Expense or Other Payment. 

  

	 Fourth Floating Rate Payer Payment Dates: 
	 In relation to any Transaction, (a) the tenth Business Day following the last day of each Monthly Period, beginning with the first such Business Day after the Obligation Settlement Date
for such Transaction, 

  
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(b) the related Obligation Termination Date and (c) after the related Obligation Termination Date, the tenth Business Day after notice of a Fourth Floating Amount from Citibank to
Counterparty; provided that, prior to the tenth Business Day after the related Obligation Termination Date, if Counterparty has received less than ten Business Days’ notice from Citibank that such Fourth Floating Amount is due and
payable, such Fourth Floating Rate Payer Payment Date shall be the tenth Business Day following the last day of the next succeeding Monthly Period The obligation of Counterparty to pay Fourth Floating Amounts in respect of any Transaction shall
survive the related Obligation Termination Date. 

 Counterparty Fifth Floating Amounts: 

 

	 Fifth Floating Amount Payer: 
	Counterparty 

  

	 Fifth Floating Amount: 
	In relation to any Terminated Obligation or Repaid Obligation, Capital Depreciation, if any. 

  

	 Fifth Floating Rate Payer Payment Dates: 
	Each Total Return Payment Date. 

 Payments by Citibank: 

Citibank Fixed Amounts: 
  

	 Fixed Amount Payer: 
	Citibank 

  

	 Fixed Amount: 
	In relation to any Transaction, the Interest and Fee Amount with respect to such Transaction for the related Fixed Amount Payer Payment Date. 

 

	 Fixed Amount Payer Calculation Periods: 
	In relation to each Reference Obligation in the Reference Portfolio, each period from and including any date upon which a payment of interest is made on such Reference Obligation to but
excluding the next such date; provided that (a) the initial Fixed Amount Payer Calculation Period shall commence on and include the Obligation Settlement Date for such Reference Obligation and (b) the final Fixed Amount Payer
Calculation Period shall end on, but exclude, the related Obligation Termination Date. 

  
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	 Fixed Amount Payer Payment Dates: 
	(a) In relation to any Transaction (other than with respect to any Terminated Obligation or Repaid Obligation), the tenth Business Day following the last day of any Monthly Period, commencing
with the first such date after the Obligation Settlement Date for such Transaction and ending with the last such date occurring prior to the related Obligation Termination Date; and 

 

	 	(b) In relation to any Transaction with respect to any Terminated Obligation or Repaid Obligation, the related Total Return Payment Date; provided that, if
interest on the Reference Obligation is actually paid on the scheduled interest payment date next succeeding the related Obligation Termination Date, then the final Fixed Amount Payer Payment Date shall be the tenth Business Day next succeeding the
last day of the Monthly Period during which such scheduled interest payment date occurs. 

 Citibank Floating Amounts:

  

	 Floating Amount Payer: 
	Citibank 

  

	 Floating Amount: 
	In relation to any Terminated Obligation or Repaid Obligation, Capital Appreciation, if any. 

  

	 Floating Rate Payer Payment Dates: 
	Each Total Return Payment Date. 

  

	3.	REFERENCE OBLIGATION REMOVAL; ACCELERATED TERMINATION. 

Reference Obligation Removal 

(a) A Transaction may be terminated in whole by either party (or in part by Counterparty) in accordance with this Clause 3 by the
giving of notice (an “Accelerated Termination Notice”) to the other party (each such termination, an “Accelerated Termination”). 

 

	(i)	 Counterparty shall be entitled to terminate any Transaction or any portion thereof by delivering an Accelerated Termination Notice to Citibank that is
given (i) no later than the proposed Termination Trade Date and (ii) no more than 30 days, and no less than 10 days, prior to the proposed Termination Settlement Date; provided that, except in the case of the termination of all
Transactions in connection with the occurrence of the Scheduled Termination Date, (x) the Portfolio Criteria set forth in Annex II would be satisfied on the proposed Termination Trade Date after giving effect to such termination (or, if
any Portfolio Criterion is not satisfied immediately prior to such termination, the extent of compliance therewith would be maintained or 

  
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improved after giving effect to such termination) and (y) the Net Collateral Value Percentage would be greater than or equal to the Termination Threshold (in each case, after giving effect
to such termination). The Accelerated Termination Notice shall specify the Reference Obligation that is the subject of such Accelerated Termination, the amount of the Terminated Obligation, the proposed Termination Trade Date and the proposed
Termination Settlement Date. 

  

	(ii)	Following the occurrence of a Credit Event (as determined by the Calculation Agent) with respect to the related Reference Entity (including any guarantor or other
obligor referred to in the definition thereof), Citibank will have the right, but not the obligation, to request that Counterparty agree to increase the Independent Amount Percentage with respect to the related Transaction to 100%. If Counterparty
does not agree to such request within one Business Day after notice of such request from Citibank, then Citibank will have the right, but not the obligation, to terminate the related Transaction by delivering an Accelerated Termination Notice to
Counterparty no less than 10 days prior to the proposed Termination Trade Date. The Accelerated Termination Notice shall specify the Reference Obligation that is the subject of such Accelerated Termination, the amount of the Terminated Obligation,
the proposed Termination Trade Date and the proposed Termination Settlement Date. 

 Elective Termination by Citibank due to
Certain Events 
  

	(b)	If: 

  

	 	(i)	any Reference Obligation (including any Exchange Consideration) fails to satisfy the Obligation Criteria at any time, 

 

	 	(ii)	the Portfolio Criteria are not satisfied at any time, 

  

	 	(iii)	Counterparty fails to perform when due any obligation to Transfer Eligible Collateral under Clause 9(a), or 

 

	 	(iv)	Counterparty does not, by the deadline specified therefor in Clause 9(e), effect the Transfer to Citibank as Secured Party of Eligible Collateral contemplated by
Clause 9(e), 

 then Citibank may notify Counterparty in writing of such event. In the case of the foregoing clause (i), if
such event continues for 30 days following the delivery of such notice, then Citibank will have the right but not the obligation to terminate the related Transaction. In the case of the foregoing clause (ii), if such event continues for 30 days
following the delivery of such notice, then Citibank will have the right but not the obligation to terminate each Transaction that is the subject of this Confirmation. In the case of the foregoing clause (iii) or (iv), Citibank will have the
immediate right but not the obligation to terminate each Transaction that is the subject of this Confirmation (so long as the relevant event is continuing on the date of the related Accelerated Termination Notice). Citibank may exercise this
termination right with respect to each Terminated Obligation by delivering an Accelerated Termination Notice to Counterparty that is given, as to any Terminated Obligation, (1) on the proposed Termination Trade Date and (2) no less than 10
days prior to the proposed Termination Settlement Date for the related Terminated Obligation. The Accelerated Termination Notice shall specify each Reference Obligation that is the subject of such Accelerated Termination and, with respect to each
such Reference Obligation, the amount of the Terminated Obligation, the proposed Termination Trade Date and the proposed Termination Settlement Date. 

  
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 Citibank Optional Termination Date 
 (c) Citibank will have the right, but not the obligation, to terminate each Transaction that is the subject of this Confirmation, effective on any Business Day occurring on or after the first anniversary
of the Effective Date (such anniversary date, the “Citibank Optional Termination Date”). Citibank can exercise this termination right by delivering an Accelerated Termination Notice to Counterparty that is given no less than
15 days prior to the first proposed Termination Trade Date specified in the related Accelerated Termination Notice. The Accelerated Termination Notice shall specify, as to each Reference Obligation, the amount of the Terminated Obligation, the
proposed Termination Trade Date and the proposed Termination Settlement Date. If Citibank does not exercise its right to terminate each Transaction that is the subject of this Confirmation on or before the date occurring 30 days prior to the
Citibank Optional Termination Date, then Citibank will have the right, but not the obligation, to propose, by notice to Counterparty, to amend and restate one or more material terms of the Transactions, including, without limitation, the Spread, the
Independent Amount Percentage and the application of the Obligation Criteria and Portfolio Criteria to the Transactions. If Citibank provides a notice to Counterparty proposing to amend and restate one or more material terms of the Transactions as
provided above and Counterparty does not agree in writing to such amended and restated terms within 10 Business Days after Citibank provides such notice to Counterparty, each Transaction shall terminate, and the Termination Trade Date shall be such
tenth Business Day. In the event of any such termination, Citibank shall deliver an Accelerated Termination Notice to Counterparty, which shall specify, as to each Reference Obligation, the amount of the Terminated Obligation, the proposed
Termination Trade Date and the proposed Termination Settlement Date. Even if a Termination Trade Date has been designated with respect to each Transaction pursuant to this Clause 3(c), such designation will not prevent Citibank or Counterparty
from subsequently designating an earlier Termination Trade Date in relation to any Transaction to the extent Citibank or Counterparty, as the case may be, is entitled to designate such earlier Termination Trade Date pursuant to this Confirmation.
Notwithstanding anything in this Confirmation to the contrary: 
  

	(i)	if Citibank elects to exercise its termination right under this Clause 3(c), then each reference to the term “Scheduled Termination Date” in
Clauses 4 (other than Clause 4(c)) and 5 and in the definitions of “Ramp-Down Period” and “Termination Trade Date” will instead be a reference to the date 30 days after the first proposed Termination Trade Date
specified in such notice; and 

  

	(ii)	whether or not Citibank elects to exercise its termination right under this Clause 3(c), and in the case of any termination pursuant to any of the paragraphs of
this Clause 3, each reference to the term “Scheduled Termination Date” in the provisions of Clause 4(c) dealing with the payment of Counterparty Second Floating Amounts (and the reference to the day preceding the first day of the
Ramp-Down Period in the definition of “Counterparty Second Floating Rate Payer Payment Date”) will be a reference to the earlier of (x) the Citibank Optional Termination Date and (y) the first anniversary of the Termination Date.

 Early Termination Date under Master Agreement 
 (d) If there is effectively designated an Early Termination Date under the Master Agreement, then (i) each Transaction will be terminated in its entirety (but without limiting
Clause 4(c)), (ii) notwithstanding any contrary or otherwise inconsistent provision of the Master Agreement, the provisions set forth in Section 6(e) of the Master Agreement shall not apply to any Transaction (except that amounts that
become due and payable on or prior to such Early Termination Date with respect to any Transaction as provided in this Confirmation will constitute Unpaid Amounts) and (iii) the Termination Trade Date for each Transaction will be the date
specified by the Calculation Agent occurring on or promptly after such Early Termination Date; provided that, if such Early Termination Date is designated by reason of an Event of Default as to which Citibank is the Defaulting Party,
Counterparty may specify  

  
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the Termination Trade Date with respect to any Transaction as to which the Calculation Agent has not specified the Termination Trade Date within 10 days after such Early Termination Date.
The Calculation Agent shall give notice (an “Accelerated Termination Notice”) to each party (such termination, an “Accelerated Termination”) on or prior to such Early Termination Date, which
Accelerated Termination Notice shall specify each Reference Obligation that is the subject of such Accelerated Termination and, with respect to each such Reference Obligation, the amount of the Terminated Obligation, the proposed Termination Trade
Date and the proposed Termination Settlement Date. The amount, if any, payable in respect of such Early Termination Date will be determined in accordance with Clause 4(b) of this Confirmation based upon the delivery of such Accelerated
Termination Notice. 
 Effect of Termination 
 (e) With respect to any Transaction terminated in whole pursuant to this Clause 3, (i) as of the relevant Termination Trade Date the Reference Amount shall, for all purposes hereof (including
the determination of the “Maximum Portfolio Notional Amount”) other than calculating Rate Payments, be reduced to zero (and, in the case of a Committed Obligation, the Outstanding Principal Amount thereof shall be reduced to zero) and
(ii) as of the relevant Termination Settlement Date the Reference Amount, for purposes of calculating Rate Payments, shall be reduced to zero (and, in the case of a Committed Obligation, the Outstanding Principal Amount thereof shall be reduced
to zero). With respect to any Transaction terminated in part pursuant to this Clause 3, (i) as of the relevant Termination Trade Date the Reference Amount shall, for all purposes hereof (including the determination of the “Maximum
Portfolio Notional Amount”) other than calculating Rate Payments, be reduced by the amount of the reduction of the Reference Amount specified in the Accelerated Termination Notice (and, in the case of a Committed Obligation, the Outstanding
Principal Amount shall be reduced by an amount equal to the product of the Outstanding Principal Amount in effect immediately prior to such reduction multiplied by the amount of the reduction of the Reference Amount divided by the Reference Amount
in effect immediately prior to such reduction) and (ii) as of the relevant Termination Settlement Date the Reference Amount shall, for purposes of calculating Rate Payments, be reduced by the amount of the reduction of the Reference Amount
specified in the Accelerated Termination Notice (and, in the case of a Committed Obligation, the Outstanding Principal Amount shall be reduced by an amount equal to the product of the Outstanding Principal Amount in effect immediately prior to such
reduction multiplied by the amount of the reduction of the Reference Amount divided by the Reference Amount in effect immediately prior to such reduction). Following any Termination Trade Date (other than the Termination Trade Date in respect of the
Termination Date), Citibank shall promptly prepare and deliver to Counterparty a revised Annex I. 
  

	4.	FINAL PRICE DETERMINATION 

 Following the termination of any Transaction in whole or in part pursuant to Clause 3 or by reason of the occurrence of the Scheduled Termination Date (other than in connection with a Repayment), the
Final Price for the relevant Terminated Obligation will be determined in accordance with this Clause 4. 
 Determination by Counterparty

 (a) In order to determine the Final Price for any Terminated Obligation then held by or on behalf of Citibank as a hedge for the
related Transaction if such determination is being made as the result of a termination pursuant to Clause 3(a), Counterparty may arrange for the sale of such Terminated Obligation by giving notice of such sale to Citibank; provided that
Counterparty shall have no right to arrange a sale of a Terminated Obligation pursuant to this Clause 4(a) if, as a result of such termination and the termination of all other Transactions as to which the Total Return Payment Date has not yet
occurred, (i) the aggregate Value (as defined in the Credit Support Annex) of all Posted Credit Support (as so defined) held by Citibank as Secured Party (as so defined) plus the aggregate of all Citibank Floating 

  
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Amounts payable in connection with such terminations would be less than (ii) the aggregate of all Counterparty Fifth Floating Amounts payable in connection with such terminations.
Such notice must be given at least three Business Days prior to the related Termination Settlement Date in the case of any Terminated Obligation and at least 10 days prior to the Scheduled Termination Date if all Transactions are to be terminated in
connection with the Scheduled Termination Date. Any sale (i) must be to an Approved Buyer or another buyer approved in advance by Citibank, such approval not to be unreasonably withheld or delayed, and (ii) must be scheduled to occur no
later than the date customary for settlement, substantially in accordance with the then-current market practice in the principal market for such Terminated Obligation (as determined by the Calculation Agent), following the Termination Trade Date and
prior to the Scheduled Termination Date if all Transactions are to be terminated in connection with the Scheduled Termination Date. If Counterparty so arranges any sale, the net cash proceeds received from the sale of any Terminated Obligation, net
of the related Costs of Assignment and adjusted by any Delay Compensation as provided in Clause 6(b), shall be the “Final Price” for that Terminated Obligation. 

Determination by Calculation Agent 
 (b)
If the Final Price for any Terminated Obligation is not determined according to Clause 4(a), the Calculation Agent shall attempt to obtain Firm Bids for such Terminated Obligation with respect to the applicable Termination Trade Date from two
or more Dealers. The Calculation Agent will give Counterparty notice of its intention to obtain Firm Bids pursuant to this Clause 4(b) (such notice to be given telephonically and via electronic mail) not later than two hours prior to the bid
submission deadline specified below. By notice to Citibank not later than the bid submission deadline specified below, Counterparty may, but shall not be obligated to, designate up to three Approved Buyers each of which shall provide a Firm Bid (and
the Calculation Agent will seek a Firm Bid from any such designee so designated by Counterparty on a timely basis). A “Firm Bid” shall be a good and irrevocable bid for value, to purchase all or a portion of the applicable
Terminated Obligation, expressed as a percentage of the Reference Amount of such Terminated Obligation and exclusive of accrued interest, for scheduled settlement substantially in accordance with the then-current market practice in the principal
market for such Terminated Obligation, as determined by the Calculation Agent, submitted as of 11 a.m. New York time or as soon as practicable thereafter. If there is more than one Terminated Obligation at any time, then the Calculation Agent shall
obtain Firm Bids solely with respect to each separate Terminated Obligation (but not with respect to any group or groups of such Terminated Obligations). Citibank may, but is not obligated to, sell or cause the sale of any portion of any Terminated
Obligation to any Dealer that provides a Firm Bid. 
 If the Calculation Agent is unable to obtain from Dealers at least one Firm Bid or
combination of Firm Bids for all of the Reference Amount of any Terminated Obligation with respect to the relevant Termination Trade Date, the Calculation Agent will attempt to obtain a Firm Bid or combination of Firm Bids for all of the Reference
Amount of such Terminated Obligation from two or more Dealers until the earlier of (i) the second Business Day (inclusive) following such Termination Trade Date and (ii) the date a Firm Bid or combination of Firm Bids is obtained for all
of the Reference Amount of such Terminated Obligation. 
 If the Calculation Agent is able to obtain at least one Firm Bid or combination of
Firm Bids for all or any portion of the Reference Amount of any Terminated Obligation, the Final Price for such Terminated Obligation or portion thereof shall be determined by reference to such Firm Bid or Firm Bids pursuant to the last paragraph of
this Clause 4(b). If no Firm Bids are obtained on or before such second Business Day for all or a portion of the applicable Terminated Obligation, the Final Price shall be deemed to be zero with respect to each portion of such Terminated
Obligation for which no Firm Bid was obtained. The Calculation Agent will conduct the bid process in accordance with the procedures set forth in this 

  
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Clause 4(b) and otherwise in good faith and in a commercially reasonable manner. Other than in the case of a termination pursuant to Clause 3(b) or 3(d), Citibank and Counterparty
will make commercially reasonable efforts to accomplish the assignment to Counterparty (free of payment by Counterparty) of the related Terminated Obligation or portion thereof held by or on behalf of Citibank as a hedge for the related Transaction
for which the Final Price is deemed to be zero (including as provided below); provided that Citibank shall not be liable for any losses related to any delay in or failure of such assignment beyond its control. Citibank and Counterparty will
make commercially reasonable efforts to accomplish the assignment to Counterparty of any related Terminated Obligation held by or on behalf of Citibank as a hedge for any Transaction as to which the Final Price is deemed to be zero (including as
provided below); provided that Citibank shall not be liable for any losses related to any delay in or failure of such assignment beyond its control. 
 Notwithstanding anything to the contrary herein, 
  

	(i)	the Calculation Agent shall be entitled to disregard any Firm Bid submitted by a Dealer if, in the Calculation Agent’s commercially reasonable judgment,
(x) such Dealer is ineligible to accept assignment or transfer of the related Terminated Obligation or portion thereof, as applicable, substantially in accordance with the then-current market practice in the principal market for the Terminated
Obligation, as determined by the Calculation Agent, or (y) as a result of the terms of any agreement or instrument governing the related Terminated Obligation or any order of a court of competent jurisdiction relating to such Terminated
Obligation, such Dealer is prohibited or restricted from obtaining any consent required for the assignment or transfer of the related Terminated Obligation or portion thereof, as applicable, to it; and 

 

	(ii)	if the Calculation Agent determines that the highest Firm Bid obtained in connection with any Termination Trade Date is not bona fide as a result of (x) the
occurrence of an Event of Default described in Section 5(a)(vii) with respect to the bidder, (y) the inability, failure or refusal of the bidder to settle the purchase of the related Terminated Obligation or portion thereof, as applicable,
or otherwise settle transactions in the relevant market or perform its obligations generally or (z) the Calculation Agent not having pre-approved trading lines with the bidder that would permit settlement of the purchase of the related
Terminated Obligation or portion thereof, as applicable, that Firm Bid shall be disregarded and the next highest Firm Bid that is not disregarded shall be used to determine the Final Price. 

If there is no such Firm Bid, then the Calculation Agent shall designate a new Termination Trade Date;
provided that the Calculation Agent shall designate a new Termination Trade Date pursuant to this paragraph only once. If the highest Firm Bid for any portion of the related Terminated Obligation determined in
connection with the second Termination Trade Date is disregarded pursuant to this paragraph, the Calculation Agent shall have no obligation to obtain further bids, and the applicable “Final Price” for the portion which was so
disregarded shall be deemed to be zero. 
 If Citibank transfers, or causes the transfer of, all or any portion of
the Terminated Obligation to the Dealer or Dealers providing the highest Firm Bid or highest combination of Firm Bids for such Terminated Obligation (or portion thereof) or to such other party as provided above, the net cash proceeds received from
the sale of such Terminated Obligation or portion thereof (which sale shall be scheduled to settle substantially in accordance with the then-current market practice in the principal market for the related Reference Obligation as determined by the
Calculation Agent), net of the related Costs of Assignment and adjusted by any Delay Compensation as provided in Clause 6(b), shall be the “Final Price” for that Terminated Obligation (or the portion thereof that is
sold). 

  
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 If Citibank has determined not to hold, or cause to be held, all or any portion of any
Terminated Obligation as a hedge for the related Transaction or otherwise determines, in its sole discretion, not to sell or cause the sale of any portion of any Terminated Obligation to a Dealer providing the highest Firm Bid or combination of Firm
Bids, the “Final Price” for such Terminated Obligation or portion thereof shall be equal to the highest Firm Bid (or highest combination of Firm Bids) for such Terminated Obligation (or portion thereof) multiplied by the
Reference Amount of such Terminated Obligation (or the respective portions of the Reference Amount to which such Firm Bids relate). The Calculation Agent may perform any of its duties under this Clause 4(b) through any Affiliate designated by
it, but no such designation shall relieve the Calculation Agent of its duties under this Clause 4(b). 
 Early Termination
of Facility 
 (c) For the avoidance of doubt (and subject to paragraph (ii) of the last sentence of Clause 3(c)), if the
Termination Date occurs prior to the Citibank Optional Termination Date, each Counterparty Second Floating Amount shall continue to be payable by Counterparty on each subsequent Second Floating Rate Payer Payment Date occurring on or prior to the
Scheduled Termination Date; provided that, if either party shall so specify in writing to the other party prior to any final Termination Trade Date, then on such final Termination Trade Date (i) the obligation of Counterparty to continue
to pay each Counterparty Second Floating Amount on each subsequent Second Floating Rate Payer Payment Date occurring on or prior to the Scheduled Termination Date shall terminate and be replaced by the obligation in the following clause and
(ii) Counterparty shall pay to Citibank an amount equal to the present value (as calculated by the Calculation Agent with discounting on a continuous basis) discounted to such final Termination Trade Date of each Counterparty Second Floating
Amount payable (without regard to the termination of such obligation under the foregoing clause) on each subsequent Second Floating Rate Payer Payment Date occurring on or prior to the Scheduled Termination Date, at a discount rate per annum equal
to the Discount Rate. For this purpose, the “Discount Rate” means the zero coupon swap rate (as determined by the Calculation Agent) implied by the fixed rate offered to be paid by Citibank under a fixed for floating interest
rate swap transaction with a remaining Term equal to the period from such final Termination Trade Date to the Scheduled Termination Date in exchange for the receipt of payments indexed to USD-LIBOR-BBA. 

 

	5.	REPAYMENT. 

If all or a portion of the Reference Amount of any Reference Obligation is repaid or otherwise reduced (in the case of a Committed
Obligation, only if the Reference Amount thereof is permanently reduced) (including, without limitation, through any exercise of any right of set-off, reduction, or counterclaim that results in the satisfaction of the obligations of such Reference
Entity to pay any principal owing in respect of such Reference Obligation) on or prior to the Scheduled Termination Date (the amount of such repayment or other reduction, a “Repayment”; the portion of the related Reference
Obligation so repaid or otherwise reduced, a “Repaid Obligation”; and the date of such Repayment, the “Repayment Date”): 

 

	(a)	the Total Return Payment Date with respect to the Repaid Obligation will be the tenth Business Day next succeeding the last day of the Monthly Period in which the
Repayment Date occurred; 

  

	(b)	as of the related Repayment Date, the Reference Amount of such Reference Obligation shall be decreased by an amount equal to the principal amount of the Repaid
Obligation; and 

  

	(c)	 the related Final Price in relation to the Repaid Obligation shall be (i) in the case of a Committed Obligation, the portion of the Reference
Amount that is permanently reduced (excluding any such reduction below the Outstanding Principal Amount thereof) on such Repayment Date and (ii) in the case of a Term Obligation, the amount of principal and premium in respect of principal paid

  
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by such Reference Entity on the Repaid Obligation to holders thereof (or the amount by which the Reference Obligation was otherwise reduced) on such Repayment Date. Following any Repayment Date,
Citibank shall promptly prepare and deliver to Counterparty a revised Annex I showing the revised Reference Amount for the related Reference Obligation. 

 

	6.	ADJUSTMENTS. 

(a) If any Reference Obligation or portion thereof is irreversibly converted or exchanged into or for any securities, obligations or other
assets or property (“Exchange Consideration”), thereafter such Exchange Consideration will constitute such Reference Obligation or portion thereof, and, unless Citibank shall otherwise agree in writing, (i) if such
Exchange Consideration fails to satisfy the Obligation Criteria, then Clause 3(b)(i) shall apply and (ii) if the Portfolio Criteria set forth in Annex II would not be satisfied after giving effect to such exchange, then
Clause 3(b)(ii) shall apply. 
 (b) Delay Compensation (as defined below) shall result in an adjustment (i) as
contemplated by the definition of “Interest and Fee Amount” in connection with the establishment by the Citibank Holder of a related hedge in respect of a Transaction, if the actual settlement of the purchase of the related hedge occurs
after the Obligation Settlement Date and (ii) of a Final Price with respect to a Terminated Obligation in connection with the termination by the Citibank Holder of a related hedge, if the actual settlement of the sale of the related hedge
occurs after the Termination Settlement Date. “Delay Compensation” shall accrue (x) in the case of clause (i) above, from and including the Obligation Settlement Date to but excluding the actual settlement of the
purchase effected to establish the related hedge (and, during such period, (A) the Counterparty First Floating Amount shall be calculated by reference to the Spread and not the Floating Rate Option and (B) Interest and Fee Amounts will be
determined without regard to payments in respect of the interest rate index, but will be determined inclusive of the applicable spread above such interest rate index, used in the Reference Obligation Credit Agreement to calculate interest payments
in respect of the related Reference Obligation and in effect during such period) and (y) in the case of clause (ii) above, from and including the Termination Settlement Date to but excluding the actual settlement of the sale effected to
terminate the related hedge (and, during such period, (A) the Counterparty First Floating Amount shall be calculated by reference to the Floating Rate Option and not the Spread and (B) Interest and Fee Amounts shall be reduced by interest
accrued during such period in excess of the interest rate index used in the Reference Obligation Credit Agreement to calculate interest payments in respect of the related Reference Obligation and in effect during such period). In connection with any
adjustment by reason of Delay Compensation, (i) any initial Payment Date in this Confirmation determined by reference to the “Obligation Settlement Date” shall be determined as if the Obligation Settlement Date were the actual
settlement of the purchase of the related hedge and (ii) any final Payment Date in this Confirmation determined by reference to the “Termination Settlement Date” shall be determined as if the Termination Settlement Date were the
actual settlement of the termination of the related hedge. 
 (c) If (i) Citibank elects to establish a hedge as a result of the addition
or increase in the Reference Amount of any Reference Obligation that is the subject of a Transaction and (ii) the Citibank Holder is unable after using commercially reasonable efforts to effect the settlement of such hedge, then, by notice to
Counterparty, Citibank may in its sole discretion, specify that such addition or increase in the Reference Amount of such Reference Obligation shall be of no force or effect (retroactive to the Obligation Trade Date or the Obligation Settlement
Date, as the case may be). 
  

	7.	REPRESENTATIONS, WARRANTIES AND AGREEMENTS. 

(a) Each party hereby agrees as follows, so long as either party has or may have any obligation under any Transaction. 

  
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	(i)	Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into such Transaction and as to whether such Transaction
is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to
enter into such Transaction; it being understood that information and explanations related to the terms and conditions of such Transaction shall not be considered investment advice or a recommendation to enter into such Transaction. It has not
received from the other party any assurance or guarantee as to the expected results of such Transaction; 

  

	(ii)	Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of such Transaction. It is also capable of assuming, and assumes, the financial and other risks of such Transaction; 

 

	(iii)	Status of Parties. The other party is not acting as a fiduciary or an advisor for it in respect of such Transaction; and 

 

	(iv)	Reliance on its Own Advisors. Without limiting the generality of the foregoing, in making its decision to enter into, and thereafter to maintain, administer or
terminate, such Transaction, it will not rely on any communication from the other party as, and it has not received any representation or other communication from the other party constituting, legal, accounting, business or tax advice, and it will
consult its own legal, accounting, business and tax advisors concerning the consequences of such Transaction. 

 (b) Each party
acknowledges and agrees that, so long as either party has or may have any obligation under any Transaction: 
  

	(i)	such Transaction does not create any direct or indirect obligation of any Reference Entity or any direct or indirect participation in any Reference Obligation or any
other obligation of any Reference Entity; 

  

	(ii)	each party and its Affiliates may deal in any Reference Obligation and may accept deposits from, make loans or otherwise extend credit to, and generally engage in any
kind of commercial or investment banking or other business with any Reference Entity, any Affiliate of any Reference Entity, any other person or entity having obligations relating to any Reference Entity and may act with respect to such business in
the same manner as if such Transaction did not exist and may originate, purchase, sell, hold or trade, and may exercise consensual or remedial rights in respect of, obligations, securities or other financial instruments of, issued by or linked to
any Reference Entity, regardless of whether any such action might have an adverse effect on such Reference Entity, the value of the related Reference Obligation or the position of the other party to such Transaction or otherwise;

  

	(iii)	except as provided in Clause 7(d)(iii), each party and its Affiliates and the Calculation Agent may, whether by virtue of the types of relationships described
herein or otherwise, at the date hereof or at any time hereafter, be in possession of information regarding any Reference Entity or any Affiliate of any Reference Entity that is or may be material in the context of such Transaction and that may or
may not be publicly available or known to the other party. In addition, except as provided in Clause 7(b)(vii), this Confirmation does not create any obligation on the part of such party and its Affiliates to disclose to the other
party any such relationship or information (whether or not confidential); 

  
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	(iv)	neither Citibank nor any of its Affiliates shall be under any obligation to hedge such Transaction or to own or hold any Reference Obligation as a result of such
Transaction, and Citibank and its Affiliates may establish, maintain, modify, terminate or re-establish any hedge position or any methodology for hedging at any time without regard to Counterparty. Counterparty acknowledges and agrees that it is not
relying on any representation, warranty or statement by Citibank or any of its Affiliates as to whether, at what times, in what manner or by what method Citibank or any of its Affiliates may engage in any hedging activities;

  

	(v)	notwithstanding any other provision in this Confirmation or any other document, Citibank and Counterparty (and each employee, representative, or other agent of Citibank
or Counterparty) may each disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to
them relating to such U.S. tax treatment and U.S. tax structure (as those terms are used in Treasury Regulations under Sections 6011, 6111 and 6112 of the U.S. Internal Revenue Code of 1986, as amended (the
“Code”)), other than any information for which nondisclosure is reasonably necessary in order to comply with applicable securities laws. To the extent not inconsistent with the previous sentence, Citibank and
Counterparty will each keep confidential (except as required by law) all information unless the other party has consented in writing to the disclosure of such information; 

 

	(vi)	if Citibank chooses to hold a Reference Obligation as a result of any Transaction, Citibank shall hold such Reference Obligation directly or through an Affiliate (the
“Citibank Holder”). The Citibank Holder may deal with such Reference Obligation as if the related Transaction did not exist, provided that, so long as the Citibank Holder remains the lender of record with respect to
such Reference Obligation, upon any occasion permitting the Citibank Holder to exercise any right in relation to such Reference Obligation to give or withhold consent (an “Election”) to an action proposed to be taken (or to
be refrained from being taken), the Citibank Holder shall, insofar as permitted under (x) applicable laws, rules and regulations and (y) each provision of any agreement or instrument evidencing or governing such Reference Obligation (and,
in the case of any participation interest, governing such participation interest), give its consent to the action proposed to be taken (or to be refrained from being taken), unless (A) Counterparty, by timely notice to Citibank, requests (a
“Counterparty Election Request”) that the Citibank Holder withhold such consent and (B) the Citibank Holder, in its sole discretion, elects to withhold such consent in accordance with the Counterparty Election Request.
Notwithstanding the foregoing: (1) the Citibank Holder shall have no obligation to respond to, or consult with Counterparty in relation to, a Counterparty Election Request (failure to respond to a Counterparty Election Request being deemed a
denial); (2) the Citibank Holder shall have no other duties or obligations to Counterparty of any nature with respect to any Election or any Counterparty Election Request; (3) the Citibank Holder shall not be liable to Counterparty or any
of its Affiliates for the consequences of any consent given or withheld by the Citibank Holder in connection with such Reference Obligation (whether or not pursuant to a Counterparty Election Request); and (4) if the Citibank Holder elects in
its sole discretion to withhold its consent in accordance with a Counterparty Election Request, the Citibank Holder may subsequently determine to give such consent at any time without notice to Counterparty; and 

 

	(vii)	 in connection with each Reference Obligation that is held by a Citibank Holder as a result of any Transaction, the Citibank Holder will promptly (and
in any event within one Business Day after receipt) deliver or cause to be delivered to Counterparty the following information and documentation, in each case, to the extent actually received by the Citibank Holder from the Reference Entity or its
agents under the related Reference Obligation Credit Agreement: all notices of any borrowings, prepayments and interest rate settings, all amendments, consents, 

  
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waivers and other modifications (whether final or proposed) in relation to the terms of the Reference Obligation; and all notices given by the Reference Entity to the lenders or their agent or by
the lenders or their agent to the Reference Entity in relation to the exercise of remedies. 

 (c) Each of the parties hereby
represents that, on each date on which a Transaction is entered into hereunder: 
  

	(i)	it is entering into such Transaction for investment, financial intermediation, hedging or other commercial purposes; and 

 

	(ii)	(x) it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended (the “CEA”),
(y) the Master Agreement and each Transaction are subject to individual negotiation by each party, and (z) neither the Master Agreement nor any Transaction will be executed or traded on a “trading facility” within the meaning of
Section 1a(51) of the CEA. 

  

	(d)	Counterparty hereby represents to Citibank that: 

  

	(i)	its financial condition is such that it has no need for liquidity with respect to its investment in any Transaction and no need to dispose of any portion thereof to
satisfy any existing or contemplated undertaking or indebtedness. Its investments in and liabilities in respect of any Transaction, which it understands is not readily marketable, is not disproportionate to its net worth, and it is able to bear any
loss in connection with any Transaction, including the loss of its entire investment in such Transaction; 

  

	(ii)	it understands no obligations of Citibank to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any
Affiliate of Citibank or any governmental agency; 

  

	(iii)	as of (x) the relevant Obligation Trade Date and (y) any date on which a sale is effected pursuant to Clause 4(a) or on which the Calculation Agent
solicits Firm Bids pursuant to Clause 4(b), neither Counterparty nor any of its Affiliates, whether by virtue of the types of relationships described herein or otherwise, is on such date in possession of information regarding any related
Reference Entity or any Affiliate of such Reference Entity that is or may be material in the context of such Transaction or the purchase or sale of any related Reference Obligation unless such information either (x) is publicly available or
(y) has been made available to each registered owner of such Reference Obligation on a basis that permits such registered owner to disclose such information to any assignee of or participant (whether on a funded or unfunded basis) in, or any
prospective assignee of or participant (whether on a funded or unfunded basis) in, any rights or obligations under the related Reference Obligation Credit Agreement; 

 

	(iv)	Counterparty is a wholly owned subsidiary of a United States person, within the meaning of Section 7701(a)(30) of the Code, and has elected to be treated as a
disregarded entity for U.S. Federal income tax purposes; 

  

	(v)	it has delivered to Citibank on or prior to the Trade Date (and it will, prior to any expiration of any such form previously so delivered, deliver to Citibank) a United
States Internal Revenue Service Form W-9 (or applicable successor form), properly completed and signed (which representation shall also be made for purposes of Section 3(f) of the Master Agreement); 

  
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	(vi)	it could have received all payments on the Reference Obligation without U.S. Federal or foreign withholding tax if it owned the Reference Obligation (which
representation shall also be made for purposes of Section 3(f) of the Master Agreement); 

  

	(vii)	it is not, for U.S. Federal income tax purposes, a tax-exempt organization; and 

 

	(viii)	it is not an Affiliate of the Reference Entity. 

(e) Except for any disclosure authorized pursuant to Clause 7(b)(v), Counterparty agrees to be bound by the confidentiality provisions of the
related Reference Obligation Credit Agreement with respect to all information and documentation in relation to a Reference Entity or a Reference Obligation delivered to Counterparty hereunder. Counterparty acknowledges that such information may
include material non-public information concerning the Reference Entity or its securities and agrees to use such information in accordance with applicable law, including Federal and State securities laws. 

(f) Multiple Transaction Payment Netting under Section 2(c) of the Master Agreement will apply to the Transactions to which this Confirmation
relates. 
 (g) Notwithstanding anything in the Master Agreement to the contrary, Citibank will not be required to pay any additional amount
under Section 2(d)(i) of the Master Agreement in respect of any deduction or withholding for or on account of any Tax in relation to any payment under any Transaction that is determined by reference to interest or fees payable with respect to
any Reference Obligation. If Citibank is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding for or on account of any Tax in relation to any payment under
any Transaction that is determined by reference to interest or fees payable with respect to any Reference Obligation and Citibank does not so deduct or withhold, then Section 2(d)(ii) of the Master Agreement shall be applicable. 

 

	8.	ADJUSTMENTS RELATING TO CERTAIN UNPAID OR RESCINDED
PAYMENTS. 

 (a) If (i) Citibank makes any payment to Counterparty as provided under Clause 2 and the
corresponding Interest and Fee Amount is not paid (in whole or in part) when due or (ii) any Interest and Fee Amount in respect of a Reference Obligation is required to be returned (in whole or in part) by a holder of such Reference Obligation
(including, without limitation, the Citibank Holder) to the applicable Reference Entity or paid to any other person or entity or is otherwise rescinded pursuant to any bankruptcy or insolvency law or any other applicable law, then Counterparty will
pay to Citibank, upon request by Citibank, such amount (or portion thereof) so not paid or so required to be returned, paid or otherwise rescinded. If such returned, paid or otherwise rescinded amount is subsequently paid, Citibank shall pay such
amount (subject to Clause 8(c)) to Counterparty within ten Business Days after the date of such subsequent payment. 
 (b) If, with respect
to any Repaid Obligation, the corresponding payment of principal of the Repaid Obligation is required to be returned (in whole or in part) by a holder thereof (including, without limitation, the Citibank Holder) to the applicable Reference Entity or
paid to any other person or entity or is otherwise rescinded pursuant to any bankruptcy or insolvency law or any other applicable law, then (i) the parties hereto shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and obligations of the parties hereunder shall continue as though no Repayment had occurred and (ii) without limiting the generality of the foregoing, if either party has made a payment to the other party in respect of
Capital Appreciation or Capital Depreciation related to such Repayment as provided under Clause 2, then the party that received the payment in respect of such Capital Appreciation or Capital Depreciation, as applicable, shall repay such amount
(subject to Clause 8(c)) to the other party. 

  
 Page 24

 If such returned, paid or otherwise rescinded amount is subsequently paid by the related Reference Entity or
any such other person or entity, then the relevant party shall pay the amount of such Capital Appreciation or Capital Depreciation, as applicable, within ten Business Days after the date of such subsequent payment. 

(c) Amounts payable pursuant to this Clause 8 shall be subject to adjustment by the Calculation Agent in good faith and on a commercially reasonable
basis, as agreed by Citibank and Counterparty, in order to preserve for the parties the intended economic risks and benefits of the relevant Transaction. 
 (d) The payment obligations of Citibank and Counterparty pursuant to this Clause 8 shall survive the termination of all Transactions. 

 

	9.	CREDIT SUPPORT. 

 Notwithstanding anything in the Credit Support Annex (the “Credit Support Annex”) to the Schedule to the Master Agreement to the contrary, the following
collateral terms shall apply to each Transaction to which this Confirmation relates (capitalized terms used in this Clause 9 but not otherwise defined in this Confirmation have the respective meanings given to such terms in the Credit Support
Annex): 
  

	(a)	With respect to each Transaction to which this Confirmation relates, a single “Independent Amount” shall be applicable to Counterparty in an amount equal to
the Notional Amount with respect to such Transaction (or, in the case of any increase of the Notional Amount under any Transaction, the amount of such increase) multiplied by the percentage set forth in Clause 9(b) under the caption
“Independent Amount Percentage”. Not later than the Effective Date, Counterparty as Pledgor will Transfer to Citibank as Secured Party Eligible Collateral having a Value as of the date of Transfer equal to the aggregate of all Independent
Amounts determined pursuant to this Clause 9(a). If the aggregate of all Independent Amounts on any date would increase as a result of an increase in the Portfolio Notional Amount on such date and the aggregate Value of Eligible Collateral
Transferred to Citibank pursuant to this Clause 9(a) prior to such date is less than the aggregate of all Independent Amounts as so increased, then Counterparty as Pledgor will Transfer to Citibank as Secured Party Eligible Collateral having a
Value as of the date of Transfer equal to the greater of (i) USD1,000,000 and (ii) the amount of such shortfall. 

  

	(b)	With respect to each Transaction to which this Confirmation relates, the “Independent Amount Percentage” applicable to such Transaction will be equal to:

  

			
	 Condition
	  	 Independent Amount Percentage

	(i) With respect to any Transaction not relating to a Specified Reference Obligation:	  	25%
		
	(ii) With respect to any Transaction relating to a Specified Reference Obligation	  	Such percentage as Citibank shall specify on or prior to the Obligation Trade Date for such Transaction

  

	(c)	In no event shall Citibank as Secured Party be obligated to Transfer Posted Credit Support in respect of a Return Amount to Counterparty as Pledgor if the Value as of
any Valuation Date of all Posted Credit Support held by Citibank as Secured Party would be less than the aggregate of all Independent Amounts determined pursuant to Clause 9(a). 

  
 Page 25

	(d)	Solely for the purpose of determining any Delivery Amount or Return Amount pursuant to the Credit Support Annex, (i) in no event shall Counterparty as a Secured
Party have any positive “Exposure” to Citibank with respect to the Transactions (in aggregate) to which this Confirmation relates or (ii) without limiting Clause 3(b) or 9(e), in no event shall Citibank as a Secured Party have
any positive “Exposure” to Counterparty with respect to the Transactions (in aggregate) to which this Confirmation relates. 

  

	(e)	If (i) the Net Collateral Value Percentage on any Valuation Date is less than the Termination Threshold on such Valuation Date and (ii) Citibank gives notice
thereof to Counterparty on any Business Day, Counterparty shall, no later than one Business Day after the date of such notice from Citibank, effect the Transfer to Citibank as Secured Party of Eligible Collateral such that the Net Collateral Value
Percentage after giving effect to such Transfer is at least equal to the Initial Margin Threshold. In addition, Counterparty may, on any Business Day, effect the Transfer to Citibank as Secured Party of any additional Eligible Collateral.

  

	(f)	If Counterparty enters into any Transaction under the Master Agreement other than the Transactions contemplated by this Confirmation (each, a “Separate
Transaction”), then the Credit Support Amount with respect to Counterparty as Pledgor shall never be less than the “Credit Support Amount” with respect to Counterparty as Pledgor calculated (i) solely with
reference to all Separate Transactions and (ii) without regard to the aggregate of all Independent Amounts applicable to Counterparty as Pledgor under this Confirmation. 

 

	(g)	Each Business Day shall be a Valuation Date. 

  

	(h)	The “Interest Rate” will be (i) the overnight ask rate in effect for such day, as set forth opposite the caption
“O/N” under the heading “USD” on Reuters Page LIBOR01 or any successor page thereto on or about 11:00 a.m., New York time, on such day, or (ii) if no successor page is quoted, the rate in effect for such day, as set forth in
H.15(519) for that day opposite the caption “Federal Funds (Effective)” and if the rate is not yet published in H.15(519), the rate for such day will be the rate set forth in Composite 3:30 p.m. Quotations for U.S. Government Securities
for that day under the caption “Federal Funds/Effective Rate”. If on any day the appropriate rate for such day is not published in either H.15(519) or Composite 3:30 p.m. Quotations for U.S. Government Securities, the rate for such day
will be the arithmetic mean of the rate for the last transaction in overnight U.S. Dollar Federal funds arranged by three leading brokers of U.S. Dollar federal funds transactions in New York City selected by Citibank in good faith prior
to 9:00 a.m., New York City time on such day. “H.15(519)” means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System.
“Composite 3:30 p.m. Quotations for U.S. Government Securities” means the daily statistical release designated as such, or any successor publication, published by the Federal Reserve Bank of New York, or (iii) if such
Federal funds rate is not available, any page agreed by the parties. Transfers of the Interest Amount will be made in arrears on the tenth Business Day following the last day of each Monthly Period. 

 

	(i)	Any Transfer required to be made pursuant to this Clause 9 shall be a Transfer made under the Credit Support Annex (and not a payment or delivery made under
Section 2(a)(i) of the Master Agreement). 

  
 Page 26

	10.	NOTICE AND ACCOUNT DETAILS. 

 

			
	Notices to Citibank:
		  	  
 Citibank, N.A., New York Branch

390 Greenwich Street, 4th Floor
 New York, New York 10013
 Tel: (212) 723-6181

Fax: (646) 291-5779
 Attn: Mitali Sohoni
  
 with a copy to:
  
 Office of the General Counsel
 Fixed Income and Derivatives Sales and
Trading
 Citibank, N.A., New York Branch
 388 Greenwich Street, 17th Floor
 New York, New York 10013

Tel: (212) 816-2121
 Fax: (646) 862-8431
 Attn: Craig Seledee

	
	Notices to Counterparty:
		
		  	 As set forth in Part 4 of the Schedule to the Master Agreement

	
	Payments to Citibank:
		  	  
 Citibank, N.A., New York

ABA No.: 021-000-089
 Account No.: 00167679
 Ref: Financial Futures

	
	Payments to Counterparty:
		
		  	 Any payment to be made to Counterparty shall be subject to the condition that Citibank shall have received notice of the account to which such
payment is to be made not less than three Local Business Days prior to the date of such payment.

  

	11.	OFFICES. 

  

	(a)	The Office of Citibank for each Transaction: 

 New York, NY 

  
 Page 27

	(b)	The Office of Counterparty for each Transaction: 

 Philadelphia, PA 
 Please confirm that the foregoing correctly sets forth the terms of our
agreement by having a duly authorized officer of Counterparty execute this Confirmation and return the same by facsimile to the attention of the individual at Citibank indicated on the first page hereof. 

 

			
	Very truly yours,
	
	CITIBANK, N.A.
		
	By:	 	 /s/ David Santos

		 	Name: David Santos
		 	Title: Authorized Signatory
	
	CONFIRMED AND AGREED
	AS OF THE DATE FIRST ABOVE WRITTEN:
	
	CENTER CITY FUNDING LLC
		
	By:	 	 /s/ Gerald F. Stahlecker

		 	Name: Gerald F. Stahlecker
		 	Title: Executive Vice President

  
 Page 28

 ANNEX A 
 ADDITIONAL DEFINITIONS 
 “Adjusted Notional Funded
Amount” means (A) in relation to any Reference Obligation that is a Committed Obligation (and the related Transaction) as of any date of determination, the greater of (a) zero and (b) the sum of (i) the Outstanding
Principal Amount of such Reference Obligation as of such date of determination multiplied by the Current Price minus (ii) the product of (x) the excess, if any, of the Commitment Amount of such Reference Obligation as of such
date over the Outstanding Principal Amount of such Reference Obligation as of such date multiplied by (y) 100% minus the Current Price; and (B) in relation to any Reference Obligation that is a Term Obligation (and the
related Transaction) as of any date of determination, the Reference Amount of the related Reference Obligation as of such date multiplied by the Current Price in relation to such Reference Obligation. 

“Affiliate”, for purposes of this Confirmation only, has the meaning given to such term in Rule 405 under the
Securities Act of 1933, as amended. 
 “Approved Buyer” means (a) any entity listed in
Annex III hereto (as such Annex may be amended by mutual written consent of the parties hereto from time to time) so long as its long-term unsecured and unsubordinated debt obligations on the “trade date” for the related purchase
or submission of a Firm Bid contemplated hereby are rated at least “A2” by Moody’s and at least “A” by S&P and (b) if an entity listed in Annex III hereto is not the principal banking or securities Affiliate
within a financial holding company group, the principal banking or securities Affiliate of such listed entity within such financial holding company group so long as such obligations of such Affiliate have the rating indicated in clause
(a) above. 
 “Capital Appreciation” and “Capital Depreciation” mean, for any
Total Return Payment Date, the amount determined according to the following formula for the applicable Terminated Obligation or Repaid Obligation: 
 Final Price – Applicable Notional Amount 
 where 

“Final Price” means (a) in the case of any Terminated Obligation, the amount determined
pursuant to Clause 4, and (b) in the case of any Repaid Obligation, the amount determined pursuant to Clause 5, and 
 “Applicable Notional Amount” means the Notional Funded Amount (determined immediately prior to the related Repayment Date or Termination Trade Date) for such Terminated Obligation
or Repaid Obligation, as applicable. 
 If such amount is positive, such amount is “Capital Appreciation” and if such
amount is negative, the absolute value of such amount is “Capital Depreciation”. 
 “Committed
Obligation” means (a) any Delayed Drawdown Reference Obligation and (b) any Revolving Reference Obligation. 

“Costs of Assignment” means, in the case of any Terminated Obligation, the sum of (a) any actual costs of transfer or
assignment paid by the seller under the terms of any Terminated Obligation or otherwise actually imposed on the seller by any applicable administrative agent, borrower or obligor incurred in connection with the sale of such Terminated Obligation and
(b) any reasonable expenses incurred by the 

  
 Page 29

 
seller in connection with such sale and, if transfers of the Terminated Obligation are subject to the Standard Terms and Conditions for Distressed Trade Confirmations, as published by the LSTA
and as in effect on the Obligation Trade Date, reasonable legal costs incurred by the seller in connection with such sale, in each case to the extent not already reflected in the Final Price. 
 “Credit Event” means the occurrence of a Bankruptcy or Failure to Pay. For purposes of the determination of whether a Credit Event has occurred, the Obligation
Category will be Borrowed Money, the Payment Requirement will be USD1,000,000 and no Obligation Characteristics will be specified. Capitalized terms used in this definition but not defined in this Confirmation shall have the meanings specified in
the 2003 ISDA Credit Derivatives Definitions. 
 “Current Price” means, with respect to any
Reference Obligation on any date of determination, the Calculation Agent’s determination of the net cash proceeds that would be received from the sale on such date of determination of such Reference Obligation, net of the related Costs of
Assignment. If Counterparty disputes the Calculation Agent’s determination of the Current Price of any Reference Obligation, then Counterparty may, no later than two hours after Counterparty is given notice of such determination,
(a) designate up to two entities, each of which shall be either (i) an Approved Buyer or (ii) a Dealer of credit standing acceptable to Citibank in the exercise of its reasonable discretion and (b) provide to Citibank within such
two-hour period with respect to each such Approved Buyer or Dealer a Firm Bid with respect to the entire Reference Amount of the Reference Obligation. The higher of such two Firm Bids will be the Current Price. The “Current Price” shall be
expressed as a percentage of par and will be determined exclusive of accrued interest. 

“Dealer” means (a) any nationally recognized independent dealer in the related Reference Obligation chosen by
the Calculation Agent or its designated Affiliate, (b) any Approved Buyer or other entity designated by the Calculation Agent and having a credit standing acceptable to Citibank and (c) any Approved Buyer designated by Counterparty
pursuant to Clause 4(b). 
 “Delayed Drawdown Reference Obligation” means a Reference
Obligation that (a) requires the holder thereof to make one or more future advances to the borrower under the instrument or agreement pursuant to which such Reference Obligation was issued or created, (b) specifies a maximum amount that
can be borrowed on one or more fixed borrowing dates and (c) does not permit the re-borrowing of any amount previously repaid; provided that, on any date on which all
commitments by the holder thereof to make advances to the borrower under such Delayed Drawdown Reference Obligation expire or are terminated or reduced to zero, such Reference Obligation shall cease to be a Delayed Drawdown Reference
Obligation. 
 “Designated Reference Obligation” means any Reference Obligation that
(a) is not a Specified Reference Obligation, (b) has as of the Obligation Trade Date a Moody’s Rating of at least B2 and an S&P Rating of at least B, (c) is on the Obligation Trade Date part of a fungible class of debt
obligations (as to issuance date and all economic terms) of at least USD500,000,000, (d) has an Initial Price as of the Obligation Trade Date of at least 90% and (e) is on the Obligation Trade Date the subject of at least five bid
quotations from nationally recognized independent dealers in the related obligation as reported on a nationally recognized pricing service. 
 “Expense or Other Payment” means the aggregate amount of any payments (other than extensions of credit) due from the lender(s) in respect of any Reference Obligation, including,
without limitation, (a) any expense associated with any amendment, modification or waiver of the provisions of a credit agreement, (b) any reimbursement of any agents under the provisions of a credit agreement, and (c) any indemnity
or other similar payment, including amounts owed on or after the related Obligation Termination Date in respect of amounts incurred or any event that occurred before the related Obligation Termination Date. 

  
 Page 30

 “Financial Sponsor” means any entity, including any subsidiary of another entity,
whose principal business activity is acquiring, holding and selling investments (including controlling interests) in otherwise unrelated companies that each are distinct legal entities with separate management, books and records and bank accounts,
whose operations are not integrated one with another and whose financial condition and creditworthiness are independent of the other companies so owned by such entity. 
 “Initial Margin Threshold” means, on any date of determination, (a) the sum, aggregated for all Transactions, of the product of (i) the Initial Margin Percentage
applicable to such Transaction multiplied by (ii) the Notional Amount of such Transaction on such date divided by (b) the Portfolio Notional Amount on such date. 
 “Interest and Fee Amount” means, for any Citibank Fixed Amount Payer Payment Date and any Transaction, the aggregate amount of interest (including interest breakage
costs), fees (including, without limitation, amendment, consent, tender, facility, letter of credit and other similar fees) and other amounts (other than in respect of principal and premium paid in respect of principal) paid with respect to the
related Reference Obligation (after deduction of any withholding taxes for which the Reference Entities are not obligated to reimburse holders of the related Reference Obligation, if applicable) during the relevant Citibank Fixed Amount Payer
Calculation Period; provided that Interest and Fee Amounts: 
  

	(a)	in the case of “Interest and Accruing Fees” (as defined in the “Standard Terms and Conditions for Par/Near Par Trade Confirmations” or
“Standard Terms and Conditions for Distressed Trade Confirmations”, as applicable to the relevant Reference Obligation, most recently published by the LSTA prior to the Trade Date), shall not include any amounts that accrue prior to the
Obligation Settlement Date for the related Reference Obligation or that accrue on or after the Obligation Termination Date for the related Reference Obligation or portion thereof; 

 

	(b)	in the case of “Non-Recurring Fees” (as so defined), shall not include any amounts that (i) accrue prior to the Obligation Trade Date for the related
Reference Obligation or that accrue on or after the Termination Trade Date for the related Reference Obligation or portion thereof or (ii) to the extent that such amounts are payable contingent upon whether a consent is given or withheld by the
record owner of the related Reference Obligation, accrue with respect to the related Reference Obligation that is not held by or on behalf of Citibank as a hedge for the related Transaction; 

 

	(c)	shall be determined after deducting any Costs of Assignment that would be incurred by a buyer in connection with any purchase of the Reference Obligation as a hedge for
such Transaction and, in connection with the establishment by the Citibank Holder of a related hedge in respect of such Transaction, shall be adjusted by any Delay Compensation as provided in Clause 6(b); 

 

	(d)	in the case of any Transaction as to which the related Reference Obligation is a Committed Obligation, shall include only 75% of fees that are stated to accrue on or in
respect of the unfunded portion of any Commitment Amount; and 

  

	(e)	with respect to any Terminated Transaction, if any interest on the Terminated Obligation accrued prior to the related Obligation Termination Date is actually paid on
the scheduled interest payment date next succeeding the Obligation Termination Date, then the Interest and Fee Amount shall include the portion of such interest so paid (as determined by the Calculation Agent) that accrued with respect to the period
ending on but excluding the Obligation Termination Date. 

  
 Page 31

 “Loan” means any obligation for the payment or repayment of borrowed money that is
documented by a term loan agreement, revolving loan agreement or other similar credit agreement. 
 “LSTA” means The
Loan Syndications and Trading Association, Inc. and any successor thereto. 
 “Moody’s” means Moody’s
Investors Service, Inc. or any successor thereto. 
 “Moody’s Rating” means, with respect to a Reference
Obligation, as of any date of determination: 
  

	(i)	if the Reference Obligation itself is rated by Moody’s (including pursuant to any credit estimate), such rating, 

 

	(ii)	if the foregoing paragraph is not applicable, then, if the Reference Obligation is a Loan and the related Reference Entity has a corporate family rating by
Moody’s, the rating specified in the applicable row of the table below under “Relevant Rating” opposite the row in the table below that describes such Loan: 

 

			
	 Loan
	  	 Relevant Rating

	The Loan is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	  	The rating by Moody’s that is one rating subcategory above such corporate family rating
		
	The Loan is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	  	The rating by Moody’s that is one rating subcategory below such corporate family rating
		
	The Loan is Subordinate	  	The rating by Moody’s that is two rating subcategories below such corporate family rating

  

	(iii)	if the foregoing paragraphs are not applicable, but there is a rating by Moody’s on a secured obligation of the Reference Entity that is not a Second Lien
Obligation and is not Subordinate (the “other obligation”), the rating specified in the applicable row of the table below under “Relevant Rating” opposite the row in the table below that describes such Reference Obligation:

  

			
	 Reference Obligation
	  	 Relevant Rating

	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	  	The rating assigned by Moody’s to the other obligation
		
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	  	The rating by Moody’s that is one rating subcategory below the rating assigned by Moody’s to the other obligation
		
	The Reference Obligation is Subordinate	  	The rating by Moody’s that is two rating subcategories below the rating assigned by Moody’s to the other obligation

  

	(iv)	 if the foregoing paragraphs are not applicable, but there is a rating by Moody’s on an unsecured obligation of the Reference Entity (or, failing
that, an obligation that is a Second Lien Obligation) 

  
 Page 32

	 	
but is not Subordinate (the “other obligation”), the rating specified in the applicable row of the table below under “Relevant Rating” opposite the row in the table below that
describes such Reference Obligation: 

  

			
	 Reference Obligation
	  	 Relevant Rating

	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	  	The rating by Moody’s that is one rating subcategory above the rating assigned by Moody’s to the other obligation
		
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	  	The rating assigned by Moody’s to the other obligation
		
	The Reference Obligation is Subordinate	  	The rating by Moody’s that is one rating subcategory below the rating assigned by Moody’s to the other obligation

  

	(v)	if the foregoing paragraphs are not applicable, but there is a rating by Moody’s on an obligation of the Reference Entity that is Subordinate (the “other
obligation”), the rating specified in the applicable row of the table below under “Relevant Rating” opposite the row in the table below that describes such Reference Obligation: 

 

			
	 Reference Obligation
	  	 Relevant Rating

	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	  	The rating by Moody’s that is two rating subcategories above the rating assigned by Moody’s to the other obligation
		
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	  	The rating by Moody’s that is one rating subcategory above the rating assigned by Moody’s to the other obligation
		
	The Reference Obligation is Subordinate	  	The rating assigned by Moody’s to the other obligation

  

	(vi)	if a rating cannot be assigned pursuant to clauses (i) through (v), the Moody’s Rating may be determined using any of the methods below:

  

	 	(A)	for up to 5% of the Portfolio Target Amount, Counterparty may apply to Moody’s for a shadow rating or public rating of such Reference Obligation, which shall then
be the Moody’s Rating (and Counterparty may deem the Moody’s Rating of such Reference Obligation to be “B3” pending receipt of such shadow rating or public rating, as the case may be); provided that (x) a Reference
Obligation will not be included in the 5% limit of the Portfolio Target Amount if Counterparty has assigned a rating to such Reference Obligation in accordance with clause (B) below and (y) upon receipt of a shadow rating or public rating,
as the case may be, such Reference Obligation will not be included in the 5% limit of the Portfolio Target Amount; 

  
 Page 33

	 	(B)	for up to 5% of the Portfolio Target Amount, if there is a private rating of an obligor that has been provided by Moody’s to Citibank and Counterparty,
Counterparty may impute a Moody’s Rating that corresponds to such private rating; provided that a Reference Obligation will not be included in the 5% limit of the Portfolio Target Amount if Counterparty has applied to Moody’s for a
shadow rating; or 

  

	 	(C)	for up to 10% of the Portfolio Target Amount, the Moody’s Rating may be determined in accordance with the methodologies for establishing the S&P Rating except
that the Moody’s Rating of such obligation will be (1) one sub-category below the Moody’s equivalent of the S&P Rating if such S&P Rating is “BBB-” or higher and (2) two
sub-categories below the Moody’s equivalent of the S&P Rating if such S&P Rating is “BB+” or lower. 

 For
purposes of the foregoing, a “private rating” shall refer to a rating obtained by Citibank, by Counterparty or by or on behalf of an obligor on a Reference Obligation that is not disseminated publicly; whereas a “shadow rating”
shall refer to a credit estimate obtained upon application of Counterparty or a holder of a Reference Obligation. Any private rating or shadow rating shall be required to be refreshed annually. If Counterparty applies to Moody’s for a shadow
rating or public rating of a Reference Obligation, Counterparty shall provide evidence to Citibank of such application and shall notify Citibank of the expected rating. Counterparty shall notify Citibank of the shadow rating or public rating
assigned by Moody’s to a Reference Obligation. 
 “Net Collateral Value” means, as of any date of determination, an
amount equal to (a) the aggregate Value (as defined in the Credit Support Annex) on such date of all Posted Credit Support (as so defined) held by Citibank as Secured Party (as so defined) plus (b) the aggregate of all Unrealized Capital
Gains on such date with respect to the Reference Portfolio minus (c) the aggregate of all Unrealized Capital Losses on such date with respect to the Reference Portfolio. 
 “Net Collateral Value Percentage” means, as of any date of determination, an amount (expressed as a percentage) equal to (a) the Net Collateral Value on such date divided by
(b) the Portfolio Notional Amount on such date. 
 “Portfolio Target Amount” means (a) during
the Ramp-Up Period and the Ramp-Down Period, the Maximum Portfolio Notional Amount and (b) at any other time, the Portfolio Notional Amount. 
 “Rate Payments” means Counterparty First Floating Amounts, Counterparty Second Floating Amounts, Counterparty Third Floating Amounts and Citibank Fixed Amounts.

 “Reference Obligation Credit Agreement” means any term loan agreement, revolving loan agreement
or other similar credit agreement governing a Reference Obligation. 
 “Revolving Reference
Obligation” means a Reference Obligation that (a) requires the holder thereof to make one or more future advances to the borrower under the instrument or agreement pursuant to which such Reference Obligation was issued or created,
(b) specifies a maximum aggregate amount that can be borrowed and (c) permits, during any period on or after the date on which the holder thereof acquires such Reference Obligation, the re-borrowing
of any amount previously repaid; provided that, on the date that all commitments by the holder thereof to make advances to the borrower under such Revolving Reference Obligation expire or are terminated or reduced
to zero, such Reference Obligation shall cease to be a Revolving Reference Obligation. 

  
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 “S&P” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, or any successor thereto. 
 “S&P Rating” means, with respect to a Reference
Obligation: 
  

	(i)	if the Reference Obligation itself is rated by S&P (including pursuant to any credit estimate), such rating, 

 

	(ii)	if the foregoing paragraph is not applicable, then, if the Reference Obligation is a Loan and the related Reference Entity has a corporate issuer rating by S&P, the
rating specified in the applicable row of the table below under “Relevant Rating” opposite the row in the table below that describes such Loan: 

  

			
	 Loan
	  	 Relevant Rating

	The Loan is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	  	The rating by S&P that is one rating subcategory above such corporate issuer rating
		
	The Loan is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	  	The rating by S&P that is one rating subcategory below such corporate issuer rating
		
	The Loan is Subordinate	  	The rating by S&P that is two rating subcategories below such corporate issuer rating

  

	(iii)	if the foregoing paragraphs are not applicable, but there is a rating by S&P on a secured obligation of the Reference Entity that is not a Second Lien Obligation
and is not Subordinate (the “other obligation”), the rating specified in the applicable row of the table below under “Relevant Rating” opposite the row in the table below that describes such Reference Obligation:

  

			
	 Reference Obligation
	  	 Relevant Rating

	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	  	The rating assigned by S&P to the other obligation
		
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	  	The rating by S&P that is one rating subcategory below the rating assigned by S&P to the other obligation
		
	The Reference Obligation is Subordinate	  	The rating by S&P that is two rating subcategories below the rating assigned by S&P to the other obligation

  

	(iv)	if the foregoing paragraphs are not applicable, but there is a rating by S&P on an unsecured obligation of the Reference Entity (or, failing that, an obligation
that is a Second Lien Obligation) but is not Subordinate (the “other obligation”), the rating specified in the applicable row of the table below under “Relevant Rating” opposite the row in the table below that describes such
Reference Obligation: 

  
 Page 35

			
	 Reference Obligation
	  	 Relevant Rating

	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	  	The rating by S&P that is one rating subcategory above the rating assigned by S&P to the other obligation
		
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	  	The rating assigned by S&P to the other obligation
		
	The Reference Obligation is Subordinate	  	The rating by S&P that is one rating subcategory below the rating assigned by S&P to the other obligation

  

	(v)	if the foregoing paragraphs are not applicable, but there is a rating by S&P on an obligation of the Reference Entity that is Subordinate (the “other
obligation”), the rating specified in the applicable row of the table below under “Relevant Rating” opposite the row in the table below that describes such Reference Obligation: 

 

			
	 Reference Obligation
	  	 Relevant Rating

	The Reference Obligation is a secured obligation, but is not a Second Lien Obligation and is not Subordinate	  	The rating by S&P that is two rating subcategories above the rating assigned by S&P to the other obligation
		
	The Reference Obligation is an unsecured obligation or is a Second Lien Obligation, but is not Subordinate	  	The rating by S&P that is one rating subcategory above the rating assigned by S&P to the other obligation
		
	The Reference Obligation is Subordinate	  	The rating assigned by S&P to the other obligation

  

	(vi)	if the foregoing paragraphs are not applicable, then the S&P Rating shall be “CC”; provided that: 

(A) if application has been made to S&P to rate a Reference Obligation and such Reference Obligation has a
Moody’s Rating, then the S&P Rating with respect to such Reference Obligation shall, pending the receipt of such rating from S&P, be equal to the S&P Rating that is equivalent to such Moody’s Rating and (y) Reference
Obligations in the Reference Portfolio constituting no more, by aggregate Notional Amount, than 10% of the Portfolio Target Amount may be given a S&P Rating based on a rating given by Moody’s as provided in clause (x) (after giving
effect to the addition of the relevant Reference Obligation, if applicable); and 
 (B) for up to 10% of the
Portfolio Target Amount, the S&P Rating may be determined in accordance with the methodologies for establishing the Moody’s Rating except that the S&P Rating of such obligation will be (1) one
sub-category below the S&P equivalent of the Moody’s Rating if such Moody’s Rating is “Baa3” or higher and (2) two sub-categories below the S&P equivalent of the Moody’s
Rating if such Moody’s Rating is “Ba1” or lower. 
 “Second Lien Obligation” means a Loan that is secured
by collateral, but as to which the beneficiary or beneficiaries of such collateral security agree for the benefit of the holder or holders of other indebtedness 

  
 Page 36

 
secured by the same collateral (“First Lien Debt”) as to one or more of the following: (1) to defer their right to enforce such collateral security either permanently
or for a specified period of time while First Lien Debt is outstanding, (2) to permit a holder or holders of First Lien Debt to sell such collateral free and clear of the security in favor of such beneficiary or beneficiaries, (3) not to
object to sales of assets by the obligor on such Loan following the commencement of a bankruptcy or other insolvency proceeding with respect to such obligor or to an application by the holder or holders of First Lien Debt to obtain adequate
protection in any such proceeding and (4) not to contest the creation, validity, perfection or priority of First Lien Debt. 

“Specified Reference Obligation” means any Reference Obligation whose inclusion in the Reference Portfolio (other than as a
“Specified Reference Obligation”) would not on the related Obligation Trade Date satisfy one or more of clauses (ix) through (xiii) of the Obligation Criteria. 
 “Subordinate” means, with respect to an obligation (the “Subordinated Obligation”) and another obligation of the obligor thereon to which such
obligation is being compared (the “Senior Obligation”), a contractual, trust or similar arrangement (without regard to the existence of preferred creditors arising by operation of law or to collateral, credit support, lien or
other credit enhancement arrangements or provisions regarding the application of proceeds of any of the foregoing) providing that (i) upon the liquidation, dissolution, reorganization or winding up of the obligor, claims of the holders of the
Senior Obligation will be satisfied prior to the claims of the holders of the Subordinated Obligation or (ii) the holders of the Subordinated Obligation will not be entitled to receive or retain payments in respect of their claims against the
obligor at any time that the obligor is in payment arrears or is otherwise in default under the Senior Obligation. 

“Term Obligation” means any Reference Obligation that is not a Committed Obligation. 

“Terminated Obligation” means any Reference Obligation or portion of any Reference Obligation that is terminated
pursuant to Clause 3. 
 “Termination Settlement Date” means, for any Terminated
Obligation, the date customary for settlement, substantially in accordance with the then-current market practice in the principal market for such Terminated Obligation (as determined by the Calculation Agent), of the sale of such Terminated
Obligation with the trade date for such sale occurring on the related Termination Trade Date. 

“Termination Threshold” means (a) the Initial Margin Threshold minus (b) 5%. 

“Termination Trade Date” means, with respect to any Terminated Obligation, the date so designated in the related
Accelerated Termination Notice; provided that: 
  

	(a)	except as provided in the following clause (b), if the related Final Price is not determined in accordance with Clause 4(a), the “Termination Trade
Date” will be the bid submission deadline for the Firm Bid or combination of Firm Bids for all of the Reference Amount of such Terminated Obligation that are to be the basis for determining the Final Price of such Terminated Obligation as
designated by the Calculation Agent in order to cause the related Total Return Payment Date to occur as promptly as practicable (in the discretion of the Calculation Agent) after the date originally designated as the “Termination Trade
Date” in the related Accelerated Termination Notice; and 

  

	(b)	 in respect of the Scheduled Termination Date, if the related Final Price is not determined in accordance with Clause 4(a), the “Termination
Trade Date” will be the date so designated by the Calculation Agent in its discretion, occurring during the 30 calendar days preceding the 

  
 Page 37

	 	
Scheduled Termination Date (or earlier in the case of any Terminated Obligation determined by the Calculation Agent in its sole discretion to be a distressed loan or other obligation) in a manner
reasonably likely to cause the final Total Return Payment Date to occur on the Scheduled Termination Date. 

 The Calculation
Agent shall notify the parties of any Termination Trade Date designated by it pursuant to the foregoing proviso. 

“Total Return Payment Date” means, with respect to any Terminated Obligation or Repaid Obligation, the tenth
Business Day next succeeding the last day of the Monthly Period during which the related Obligation Termination Date occurs. 

“Unrealized Capital Gain” means, with respect to any Reference Obligation on any date of determination, if (a) the Adjusted
Notional Funded Amount on such date of determination exceeds (b) the Notional Funded Amount on such date of determination, then an amount equal to such excess; and, otherwise, zero. For purposes of computing any Unrealized Capital Gain, a
Repaid Obligation or Terminated Obligation will be deemed to continue to be outstanding in an amount equal to its Reference Amount until (but excluding) the related Total Return Payment Date (and after the determination of the related Final Price
will have a Current Price equal to such Final Price, expressed as a percentage of the related Outstanding Principal Amount). 

“Unrealized Capital Loss” means, with respect to any Reference Obligation on any date of determination, if (a) the Notional
Funded Amount on such date of determination exceeds (b) the Adjusted Notional Funded Amount on such date of determination, then an amount equal to such excess; and, otherwise, zero. For purposes of computing any Unrealized Capital Loss, a
Repaid Obligation or Terminated Obligation will be deemed to continue to be outstanding in an amount equal to its Reference Amount until (but excluding) the related Total Return Payment Date (and after the determination of the related Final Price
will have a Current Price equal to such Final Price, expressed as a percentage of the related Outstanding Principal Amount). 

  
 Page 38

 ANNEX I 

 

													
	 Reference

Obligation
	  	 Reference

Entity
	  	 Reference

Amount
	  	 Outstanding
Principal

Amount
	  	 Initial

Price

(%)
	  	 Obligation

Trade Date
	  	 Obligation
Settlement

Date

		  		  		  		  		  		  	

  
 Page 39

 ANNEX II 
 OBLIGATION CRITERIA 
 The “Obligation Criteria” are as follows:

  

	(i)	The obligation is a Loan. 

  

	(ii)	The obligation is denominated in USD. 

  

	(iii)	The obligation is secured. 

  

	(iv)	The obligation is not Subordinate. 

  

	(v)	The obligation constitutes a legal, valid, binding and enforceable obligation of the applicable Reference Entity, enforceable against such person in accordance with its
terms. 

  

	(vi)	Except for any Delayed Drawdown Reference Obligation or Revolving Reference Obligation, the obligation does not require any future advances to be made to the related
issuer or obligor on or after the relevant Obligation Trade Date. 

  

	(vii)	On the relevant Obligation Trade Date for the Transaction relating to the obligation, the obligation is in the form of, and is treated as, indebtedness for U.S. Federal
income tax purposes. 

  

	(viii)	Transfers thereof on the Obligation Trade Date may be effected pursuant to the Standard Terms and Conditions for Par/Near Par Trade Confirmations and not the Standard
Terms and Conditions for Distressed Trade Confirmations, in each case as published by the LSTA and as in effect on the Obligation Trade Date. 

  

	(ix)	Except for any Specified Reference Obligation, the obligation is not a Second Lien Obligation. 

 

	(x)	Except for any Specified Reference Obligation, on the Obligation Trade Date the obligation is part of a fungible class of debt obligations (as to issuance date and all
economic terms) of at least USD125,000,000. 

  

	(xi)	Except for any Specified Reference Obligation, the obligation has as of the Obligation Trade Date a Moody’s Rating of at least B3 and an S&P Rating of at least
B-. 

  

	(xii)	Except for any Specified Reference Obligation, the obligation has an Initial Price as of the Obligation Trade Date of at least 80%. 

 

	(xiii)	Except for any Specified Reference Obligation, either (x) the obligation is on the Obligation Trade Date the subject of at least two bid quotations from nationally
recognized independent dealers in the related obligation as reported on a nationally recognized pricing service or (y) the obligation satisfies each of the following four conditions: (A) the obligation was originated not more than 30 days
prior to the Obligation Trade Date, (B) the obligation is on the Obligation Trade Date the subject of at least one bid quotation from a nationally recognized independent dealer in the related obligation as reported on a nationally recognized
pricing service, (C) on the Obligation Trade Date the obligation is part of a fungible class of debt obligations (as to issuance date and all economic terms) of at least USD150,000,000 and (D) the obligation has as of the Obligation Trade
Date a Moody’s Rating of at least B2 and an S&P Rating of at least B. 

  
 Page 40

 PORTFOLIO CRITERIA 
 The “Portfolio Criteria” are as follows: 
  

	(i)	The Portfolio Notional Amount does not exceed the Maximum Portfolio Notional Amount. 

 

	(ii)	The sum of the Notional Amounts for all Reference Obligations that are Specified Reference Obligations does not exceed 25% of the Portfolio Target Amount.

  

	(iii)	The sum of the Notional Amounts for all Reference Obligations that are Committed Obligations does not exceed 10% of the Portfolio Target Amount.

  

	(iv)	The sum of the Notional Amounts for Reference Obligations of any single Reference Entity or any of its Affiliates does not exceed 5% of the Portfolio Target Amount;
provided that sum of the Notional Amounts for Reference Obligations of up to three single Reference Entities or any of its Affiliates may be up to 7.5% of the Portfolio Target Amount. 

 

	(v)	The sum of the Notional Amounts for Reference Obligations of Reference Entities in any single Moody’s Industry Classification Group does not exceed 15% of the
Portfolio Target Amount. 

  

	(vi)	After the Ramp-Up Period and prior to the Ramp-Down Period, the Reference Portfolio has a Weighted Average Rating of at most 2,720. 

For purposes hereof: 
 “Moody’s
Industry Classification Groups” means each of the categories set forth in Table 1 below. 
 “Weighted Average
Rating” means, as of any date of determination, the number obtained by (a) multiplying the Notional Amount of each Reference Obligation by the applicable Rating Factor (as set forth in Table 2 below) for the related Reference
Entity; (b) summing the products obtained in clause (a) for all Reference Obligations; and (c) dividing the sum obtained in clause (b) by the aggregate of the Notional Amounts of all Reference Obligations. 

  
 Page 41

 TABLE 1 
 MOODY’S INDUSTRY CLASSIFICATION GROUPS 
 Aerospace & Defense 

Automotive 
 Banking, Finance, Insurance and Real
Estate 
 Beverage, Food, & Tobacco 
 Capital Equipment 
 Chemicals, Plastics, & Rubber 

Construction & Building 
 Consumer
goods: durable 
 Consumer goods: non-durable 
 Containers, Packaging, & Glass 
 Energy: Electricity 

Energy: Oil & Gas 
 Environmental
Industries 
 Forest Products & Paper 
 Healthcare & Pharmaceuticals 
 High Tech Industries 

Hotel, Gaming, & Leisure 
 Media:
Advertising, Printing & Publishing 
 Media: Broadcasting & Subscription 

Media: Diversified & Production 

Metals & Mining 
 Retail 

Services: Business 
 Services: Consumer

 Sovereign & Public Finance 

Telecommunications 
 Transportation: Cargo

 Transportation: Consumer 
 Utilities:
Electric 
 Utilities: Oil & Gas 
 Utilities: Water 
 Wholesale 

  
 Page 42

 TABLE 2 
 RATING FACTORS 
  

			
	Moody’s Rating	  	Rating Factor
	 Aaa
	  	1
	 Aa1
	  	10
	 Aa2
	  	20
	 Aa3
	  	40
	 A1
	  	70
	 A2
	  	120
	 A3
	  	180
	 Baa1
	  	260
	 Baa2
	  	360
	 Baa3
	  	610
	 Ba1
	  	940
	 Ba2
	  	1,350
	 Ba3
	  	1,766
	 B1
	  	2,220
	 B2
	  	2,720
	 B3
	  	3,490
	 Caa1
	  	4,770
	 Caa2
	  	6,500
	 Caa3 or below
	  	10,000

  
 Page 43

 ANNEX III 

APPROVED BUYERS 
 Bank of
America, NA 
 The Bank of Montreal 

The Bank of New York Mellon, N.A. 
 Barclays Bank
plc 
 BNP Paribas 
 Calyon 

Canadian Imperial Bank of Commerce 
 Citibank,
N.A. 
 Credit Agricole S.A. 
 Credit
Suisse 
 Deutsche Bank AG 
 Dresdner
Bank AG 
 Goldman Sachs & Co. 

HSBC Bank 
 JPMorgan Chase Bank, N.A. 

Merrill Lynch, Pierce, Fenner & Smith Incorporated 
 Morgan Stanley & Co. 
 Natixis 
 Northern Trust Company 
 Royal Bank of Canada 

The Royal Bank of Scotland plc 
 Societe Generale

 The Toronto-Dominion Bank 
 UBS AG

 U.S. Bank, National Association 

Wachovia Bank National Association 
 Wells Fargo
Bank, National Association 

  
 Page 44

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