Document:

Exhibit 10.3

 

FORM OF TAX MATTERS AGREEMENT

 

BY AND BETWEEN

 

ELI LILLY AND COMPANY

 

AND

 

ELANCO ANIMAL HEALTH INCORPORATED

 

Dated as of [·], 2018

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
Section 1.
    	
 
    	
Definition of Terms
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2.
    	
 
    	
Allocation of Tax   Liabilities
    	
10
    
	
Section 2.01
    	
 
    	
General Rule
    	
10
    
	
Section 2.02
    	
 
    	
Allocation of Taxes
    	
10
    
	
Section 2.03
    	
 
    	
Determination of Taxes   Attributable to the Animal Health Business
    	
11
    
	
Section 2.04
    	
 
    	
Certain Taxes Allocated   Under Other Transaction Documents
    	
12
    
	
Section 2.05
    	
 
    	
Company Liability
    	
12
    
	
Section 2.06
    	
 
    	
Lilly Liability
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.
    	
 
    	
Preparation and Filing   of Tax Returns
    	
12
    
	
Section 3.01
    	
 
    	
Lilly’s Responsibility
    	
12
    
	
Section 3.02
    	
 
    	
Company’s   Responsibility
    	
12
    
	
Section 3.03
    	
 
    	
Tax Returns for   Separation Taxes
    	
12
    
	
Section 3.04
    	
 
    	
Tax Reporting Practices
    	
13
    
	
Section 3.05
    	
 
    	
Consolidated or   Combined Tax Returns
    	
14
    
	
Section 3.06
    	
 
    	
Right to Review Tax   Returns
    	
14
    
	
Section 3.07
    	
 
    	
Company Carrybacks and   Claims for Refund
    	
15
    
	
Section 3.08
    	
 
    	
Apportionment of Tax   Attributes
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.
    	
 
    	
Tax Payments
    	
15
    
	
Section 4.01
    	
 
    	
Payment of Taxes With   Respect to Joint Returns
    	
15
    
	
Section 4.02
    	
 
    	
Payment of Taxes With   Respect to Separate Returns
    	
16
    
	
Section 4.03
    	
 
    	
Indemnification   Payments
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
Section 5.
    	
 
    	
Tax Refunds
    	
16
    
	
Section 5.01
    	
 
    	
Tax Refunds
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
Section 6.
    	
 
    	
Tax-Free Status
    	
17
    
	
Section 6.01
    	
 
    	
Restrictions on the   Company
    	
17
    
	
Section 6.02
    	
 
    	
Restrictions on Lilly
    	
19
    
	
Section 6.03
    	
 
    	
Procedures Regarding   Opinions and Rulings
    	
19
    
	
Section 6.04
    	
 
    	
Liability for   Tax-Related Losses
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
Section 7.
    	
 
    	
Assistance and   Cooperation
    	
22
    
	
Section 7.01
    	
 
    	
Assistance and   Cooperation
    	
22
    
	
Section 7.02
    	
 
    	
Income Tax Return   Information
    	
23
    
	
Section 7.03
    	
 
    	
Reliance by Lilly
    	
24
    
	
Section 7.04
    	
 
    	
Reliance by the Company
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
Section 8.
    	
 
    	
Tax Records
    	
24
    
	
Section 8.01
    	
 
    	
Retention of Tax   Records
    	
24
    
	
Section 8.02
    	
 
    	
Access to Tax Records
    	
24
    
	
Section 8.03
    	
 
    	
Preservation of   Privilege
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9.
    	
 
    	
Tax Contests
    	
25
    
																				

 

i

 

	
Section 9.01
    	
 
    	
Notice
    	
25
    
	
Section 9.02
    	
 
    	
Control of Tax Contests
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10.
    	
 
    	
Effective Date
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 11.
    	
 
    	
Treatment of Payments
    	
27
    
	
Section 11.01
    	
 
    	
Treatment of Tax Indemnity   Payments
    	
27
    
	
Section 11.02
    	
 
    	
Interest Under This   Agreement
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
Section 12.
    	
 
    	
Disagreements
    	
27
    
	
Section 12.01
    	
 
    	
Discussion
    	
27
    
	
Section 12.02
    	
 
    	
Escalation
    	
27
    
	
Section 12.03
    	
 
    	
Referral to Tax Advisor
    	
27
    
	
Section 12.04
    	
 
    	
Injunctive Relief
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
Section 13.
    	
 
    	
General Provisions
    	
28
    
	
Section 13.01
    	
 
    	
Counterparts; Entire   Agreement; Conflicting Agreements
    	
28
    
	
Section 13.02
    	
 
    	
No Construction Against   Drafter
    	
29
    
	
Section 13.03
    	
 
    	
Governing Law
    	
29
    
	
Section 13.04
    	
 
    	
Assignability
    	
29
    
	
Section 13.05
    	
 
    	
Third Party Beneficiaries
    	
29
    
	
Section 13.06
    	
 
    	
Notices
    	
29
    
	
Section 13.07
    	
 
    	
Severability
    	
30
    
	
Section 13.08
    	
 
    	
Force Majeure
    	
30
    
	
Section 13.09
    	
 
    	
Late Payments
    	
30
    
	
Section 13.10
    	
 
    	
Expenses
    	
30
    
	
Section 13.11
    	
 
    	
Further Action
    	
30
    
	
Section 13.12
    	
 
    	
Headings
    	
31
    
	
Section 13.13
    	
 
    	
Survival
    	
31
    
	
Section 13.14
    	
 
    	
Waivers of Default
    	
31
    
	
Section 13.15
    	
 
    	
Specific Performance
    	
31
    
	
Section 13.16
    	
 
    	
Amendments
    	
31
    
	
Section 13.17
    	
 
    	
Interpretation
    	
31
    
	
Section 13.18
    	
 
    	
Waiver of Jury Trial
    	
32
    
	
Section 13.19
    	
 
    	
Submission to   Jurisdiction; Waivers
    	
32
    
	
Section 13.20
    	
 
    	
The Company   Subsidiaries
    	
32
    
						

 

ii

 

FORM OF TAX MATTERS AGREEMENT

 

This TAX MATTERS AGREEMENT (this “Agreement”), dated as of [·], 2018, is by and between Eli Lilly and Company, an Indiana corporation (“Lilly”), and Elanco Animal Health Incorporated, an Indiana corporation (the “Company”) (Lilly and the Company are sometimes collectively referred to herein as the “Parties” and, as the context requires, individually referred to herein as a “Party”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in the Master Separation Agreement by and between Lilly and the Company, dated as of the date hereof (the “Separation Agreement”).

 

RECITALS

 

WHEREAS, the Company is a direct wholly-owned Subsidiary of Lilly;

 

WHEREAS, the Lilly Board has determined that it is appropriate and advisable to separate the Animal Health Business from the other businesses conducted by Lilly (the “Separation”);

 

WHEREAS, the Lilly Board and the Company Board have each approved the acquisition by the Company and its Subsidiaries of all Animal Health Assets, and the assumption by the Company and its Subsidiaries of the Animal Health Liabilities, all as more fully described in the Transaction Documents;

 

WHEREAS, the Lilly Board has further determined that it is appropriate and advisable, on the terms and conditions contemplated by the Separation Agreement, to cause the Company to offer and sell for its own account a number of shares of Company Common Stock in an initial public offering of the Company Common Stock, to be registered pursuant to a registration statement on Form S-1 (the “IPO”), immediately following the consummation of which Lilly will continue to own at least 80.1% of the outstanding shares of Company Common Stock;

 

WHEREAS, substantially simultaneously with the entry into this Agreement, pursuant to the Separation Agreement and the Corporate Reorganization, Lilly is contributing to the Company the outstanding Stock of the Specified Entities, which collectively own substantially all of the Animal Health Assets, and are responsible for substantially all of the Animal Health Liabilities (collectively, the “Contribution”);

 

WHEREAS, following the consummation of the IPO, Lilly intends at a time (or times) to be determined by Lilly, to transfer shares of Company Common Stock to holders of shares of Lilly Common Stock by means of (a) one or more dividend distributions by Lilly to holders of Lilly Common Stock of shares of Company Common Stock, (b) one or more offers to holders of Lilly Common Stock to exchange their shares of Lilly Common Stock for shares of Company Common Stock, or (c) any combination thereof (any such transaction, a “Distribution”);

 

WHEREAS, if Lilly determines not to effect a Distribution, Lilly may determine instead to effect a disposition of its Company Common Stock pursuant to one or more public or private offerings for sale or other similar transactions (any such transaction, an “Other Disposition”) or continue to hold its shares of Company Common Stock;

 

 

WHEREAS, for U.S. federal income Tax purposes, the Contribution and the Distribution, if effected, taken together, are intended to qualify as a tax-free spin-off under Section 355 and Section 368(a)(1)(D) of the Code;

 

WHEREAS, as of the date hereof, Lilly is the common parent of an affiliated group of corporations, including the Company, which has elected to file consolidated U.S. federal income Tax returns; and

 

WHEREAS, the Parties desire to provide for and agree upon the allocation between the Parties of liabilities for certain Taxes arising prior to, at the time of, and subsequent to the IPO, and to provide for and agree upon other matters relating to Taxes.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

Section 1.                                          Definition of Terms. For purposes of this Agreement (including the recitals hereof), the following terms shall have the following meanings:

 

“Active Trade or Business” means, with respect to the Company, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder) of the Animal Health Business as conducted immediately prior to the IPO, or, with respect to another Separation Transaction intended to qualify as tax-free pursuant to Section 355 of the Code or the analogous provisions of state or local Law, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder, or the analogous provisions of state or local Law) by the relevant Company Entity of the Animal Health Business relating to such Company Entity as conducted immediately prior to such Separation Transaction.

 

“Adjustment Request” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund, or credit of Taxes, including (i) any amended Tax Return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, (ii) any claim for equitable recoupment or other offset, and (iii) any claim for refund or credit of Taxes previously paid.

 

“Affiliate” of any Person means a Person that controls, is controlled by, or is under common control with such Person. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, or the power to appoint and remove a majority of the directors, managers or persons holding similar power in respect of such entity, whether through ownership of voting securities or other interests, by contract or otherwise. It is expressly agreed that, from and after the date of the closing of the IPO, solely for purposes of this Agreement, (i) no member of the Company Group shall be deemed to be an Affiliate of any member of the Lilly Group and (ii) no member of the Lilly Group shall be deemed to be an Affiliate of any member of the Company Group.

 

“Agreement” means this Tax Matters Agreement.

 

“Animal Health Assets” has the meaning set forth in the Separation Agreement.

 

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“Animal Health Business” has the meaning set forth in the Separation Agreement.

 

“Animal Health Liabilities” has the meaning set forth in the Separation Agreement.

 

“Board Certificate” has the meaning set forth in Section 6.01(d).

 

“Business Day” has the meaning set forth in the Separation Agreement.

 

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

 

“Company” has the meaning set forth in the preamble hereto.

 

“Company Capital Stock” means all classes or series of capital stock of the Company, including (i) the Company Common Stock, (ii) all options, warrants and other rights to acquire such capital stock and (iii) all instruments properly treated as stock in the Company for U.S. federal income Tax purposes.

 

“Company Carryback” means any net operating loss, net capital loss, excess Tax credit, or other similar Tax Item of any member of the Company Group which may or must be carried from one Tax Period to another prior Tax Period under the Code or other applicable Tax Law.

 

“Company Common Stock” has the meaning set forth in the Separation Agreement.

 

“Company Entity” means an entity which will be a member of the Company Group immediately after the IPO.

 

“Company Group” means (i) the Company and its Affiliates, as determined immediately after the IPO, (ii) the Transferred Entities, and (iii) any entity which (A) was an Affiliate of Lilly or an Affiliate of a member of the Company Group, (B) conducted solely or predominantly the Animal Health Business, and (C) is no longer an Affiliate of Lilly as of the IPO.

 

“Company Separate Return” means any Tax Return of or including any member of the Company Group (including any consolidated, combined or unitary return) that does not include any member of the Lilly Group.

 

“Company Tax Notice” has the meaning set forth in Section 4.01(b).

 

“Contribution” has the meaning set forth in the recitals hereto.

 

“Controlling Party” has the meaning set forth in Section 9.02(c).

 

“Corporate Reorganization” has the meaning set forth in the Separation Agreement.

 

“Deconsolidation Date” means the last date on which the Company qualifies as a member of the affiliated group (as defined in Section 1504 of the Code) of which Lilly is the common parent.

 

“Dispute” has the meaning set forth in Section 12.

 

3

 

“Distribution” has the meaning set forth in the recitals hereto.

 

“Distribution Date” means the date or dates on which the Distribution occurs.

 

“Effective Date” has the meaning set forth in the Separation Agreement.

 

“Fifty-Percent or Greater Interest” has the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

 

“Filing Date” has the meaning set forth in Section 6.04(d).

 

“Final Determination” means the final resolution of liability for any Tax, which resolution may be for a specific issue or adjustment or for a Tax Period, (i) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the Laws of a state, local, or foreign taxing jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such Tax Period (as the case may be); (ii) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (iii) by a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of a state, local, or foreign taxing jurisdiction; (iv) by any allowance of a refund or credit in respect of an overpayment of a Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; (v) by a final settlement resulting from a treaty-based competent authority determination; or (vi) by any other final disposition, including by reason of the expiration of the applicable statute of limitations or by mutual agreement of the Parties.

 

“Gain Recognition Agreement” means a gain recognition agreement as described in Treasury Regulations Section 1.367(a)-8 or any successor provision thereto.

 

“Group” means the Lilly Group or the Company Group, or both, as the context requires.

 

“Income Tax” means all Taxes based upon, measured by, or calculated with respect to (i) net income or profits (including any capital gains, minimum Tax or any Tax on items of tax preference, but not including sales, use, real or personal property, gross or net receipts, value added, excise, leasing, transfer or similar Taxes), or (ii) multiple bases (including corporate franchise, doing business and occupation Taxes) if one or more bases upon which such Tax is determined is described in clause (i) of this definition, together with any interest, penalty, additions to tax, or additional amounts in respect of the foregoing.

 

“Indemnitee” has the meaning set forth in Section 11.02.

 

“Indemnitor” has the meaning set forth in Section 11.02.

 

“Internal Distribution” means any Separation Transaction or series of Separation Transactions (other than the Contribution and the Distribution) that is intended to qualify as a

 

4

 

tax-free transaction under Section 355 and/or Section 368(a)(1)(D) of the Code, as described in the Tax Opinions.

 

“Internal Restructuring” has the meaning set forth in Section 6.01(e).

 

“IPO” has the meaning set forth in the recitals hereto.

 

“IRS” means the U.S. Internal Revenue Service, or any successor agency.

 

“Joint Return” means any Tax Return that actually includes, by election or otherwise, one or more members of the Lilly Group together with one or more members of the Company Group.

 

“Lilly” has the meaning set forth in the preamble hereto.

 

“Lilly Affiliated Group” means the affiliated group (as that term is defined in Section 1504 of the Code and the Treasury Regulations thereunder) of which Lilly is the common parent.

 

“Lilly Business” has the meaning set forth in the Separation Agreement.

 

“Lilly Federal Consolidated Income Tax Return” means any U.S. federal Income Tax Return for the Lilly Affiliated Group.

 

“Lilly Group” means Lilly and its Affiliates, excluding any entity that is a member of the Company Group, as determined immediately after the IPO.

 

“Lilly Separate Return” means any Tax Return of or including any member of the Lilly Group (including any consolidated, combined or unitary return) that does not include any member of the Company Group.

 

“Lilly Services” has the meaning set forth in the Transitional Services Agreement.

 

“Local Transfer Agreements” has the meaning set forth in the Separation Agreement.

 

“Non-Controlling Party” has the meaning set forth in Section 9.02(c).

 

“Notified Action” has the meaning set forth in Section 6.03(a).

 

“Other Disposition” has the meaning set forth in the recitals hereto.

 

“Parties” and “Party” have the meaning set forth in the preamble hereto.

 

“Past Practices” has the meaning set forth in Section 3.04(b).

 

“Payment Date” means (i) with respect to any Lilly Federal Consolidated Income Tax Return, (A) the due date for any required installment of estimated Taxes determined under Section 6655 of the Code, (B) the due date (determined without regard to extensions) for filing the return determined under Section 6072 of the Code, or (C) the date the return is filed, as the case may be, and (ii) with respect to any other Tax Return, the corresponding dates determined under the applicable Tax Law.

 

“Payor” has the meaning set forth in Section 4.03.

 

5

 

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof, without regard to whether any entity is treated as disregarded for U.S. federal income Tax purposes.

 

“Post-Deconsolidation Period” means any Tax Period beginning after the Deconsolidation Date and, in the case of any Tax Period beginning before the Deconsolidation Date and ending after the Deconsolidation Date, the portion of such Tax Period beginning on the day after the Deconsolidation Date.

 

“Post-IPO Period” means any Tax Period beginning after the Effective Date and, in the case of any Straddle Period, the portion of such Straddle Period beginning on the day after the Effective Date.

 

“Pre-Deconsolidation Period” means any Tax Period ending on or before the Deconsolidation Date and, in the case of any Tax Period beginning before the Deconsolidation Date and ending after the Deconsolidation Date, the portion of such Tax Period ending on the Deconsolidation Date.

 

“Pre-IPO Period” means any Tax Period ending on or before the Effective Date and, in the case of any Straddle Period, the portion of such Straddle Period ending on the Effective Date.

 

“Preliminary Tax Advisor” has the meaning set forth in Section 12.03.

 

“Prime Rate” has the meaning set forth in the Separation Agreement.

 

“Privilege” means any privilege that may be asserted under applicable Law, including any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.

 

“Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulations Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by the Company management or shareholders, is a hostile acquisition, or otherwise, as a result of which the Company would merge or consolidate with any other Person or as a result of which any Person or any group of related Persons would (directly or indirectly) acquire, or have the right to acquire, from the Company and/or one or more holders of outstanding shares of Company Capital Stock, a number of shares of Company Capital Stock that would, when combined with any other changes in ownership of Company Capital Stock pertinent for purposes of Section 355(e) of the Code, comprise 40% or more of (i) the value of all outstanding shares of stock of the Company as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (ii) the total combined voting power of all outstanding shares of voting stock of the Company as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (i) the adoption by the Company of a shareholder rights plan or (ii) issuances by the Company that satisfy Safe Harbor VIII (relating to

 

6

 

acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation. Solely for purposes of this definition, the “Company” shall include any member of the Company Group that was a “controlled corporation” within the meaning of Section 355(a)(1) of the Code in any of the Internal Distributions.

 

“Representation Letters” means the statements of facts and representations, officer’s certificates, representation letters and any other materials delivered or deliverable by Lilly, the Company, or any Affiliates or representatives thereof in connection with the rendering by Tax Advisors of the Tax Opinions.

 

“Required Party” has the meaning set forth in Section 4.03.

 

“Responsible Party” means, with respect to any Tax Return, the Party having responsibility for preparing and filing such Tax Return under this Agreement.

 

“Retention Date” has the meaning set forth in Section 8.01.

 

“Ruling” means a private letter ruling issued by the IRS to Lilly to the effect that a transaction will not affect the Tax-Free Status. Any such ruling must assume that the Contribution and the Distribution would have qualified for the Tax-Free Status if the transaction in question did not occur.

 

“Ruling Request” means any letter filed by Lilly with the IRS requesting a Ruling (including all attachments, exhibits, and other materials submitted with such ruling request letter) and any amendment or supplement to such ruling request letter.

 

“Section 336(e) Election” has the meaning set forth in Section 3.04(d).

 

“Section 336(e) Tax Basis” has the meaning set forth in Section 3.04(d).

 

“Section 6.01(d) Acquisition Transaction” means any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 25% instead of 40%.

 

“Separate Return” means a Lilly Separate Return or a Company Separate Return, as the case may be.

 

“Separation” has the meaning set forth in the recitals hereto.

 

“Separation Agreement” has the meaning set forth in the preamble hereto.

 

7

 

“Separation Taxes” means any Taxes (including, for the avoidance of doubt, Income Taxes and Transfer Taxes) imposed on any member of the Lilly Group or the Company Group arising from, or attributable to, any transfer of assets or liabilities pursuant to the Separation Transactions, other than any Taxes which are Tax-Related Losses.

 

“Separation Transactions” means those transactions undertaken by the Parties and their Affiliates pursuant to the Corporate Reorganization to separate ownership of the Animal Health Business from ownership of the Lilly Business.

 

“Straddle Period” means any Tax Period that begins on or before, and ends after, the Effective Date.

 

“Tax” or “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, value added, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, alternative minimum, estimated or other tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax), imposed by any governmental entity or political subdivision thereof, and any interest, penalty, additions to tax, or additional amounts in respect of the foregoing.

 

“Tax Advisor” means a Tax counsel or accountant of recognized national standing.

 

“Tax Attribute” means a net operating loss, net capital loss, unused investment credit, unused foreign Tax credit, excess charitable contribution, general business credit, research and development credit or any other Tax Item that could reduce a Tax or create a Tax Benefit.

 

“Tax Authority” means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

 

“Tax Benefit” means any refund, credit, or other reduction in otherwise required liability for Taxes.

 

“Tax Contest” means an audit, review, examination, or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund).

 

“Tax-Free Status” means the qualification of (i) the Contribution and the Distribution, taken together, as (A) a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code, (B) a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(d), 355(e) and 361(c) of the Code, and (C) a transaction in which Lilly, the Company and the shareholders of the Company recognize no income or gain for U.S. federal income Tax purposes pursuant to Sections 355, 361 and 1032 of the Code, other than, in the case of Lilly and the Company, intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated under Section 1502 of the Code, and (ii) each Internal Distribution as a tax-free transaction under Section 355 and/or Section 368(a)(1)(D) of the Code, as described in the Tax Opinions.

 

8

 

“Tax Item” means any item of income, gain, loss, deduction, or credit, or any other item which increases or decreases Taxes paid or payable in any Tax Period.

 

“Tax Law” means the Law of any governmental entity or political subdivision thereof relating to any Tax.

 

“Tax Opinions” means the opinions of Tax Advisors deliverable to Lilly in connection with the Contribution and the Distribution or otherwise with respect to the Separation Transactions.

 

“Tax Period” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

 

“Tax Records” means any (i) Tax Returns, (ii) Tax Return workpapers, (iii) documentation relating to any Tax Contests, and (iv) any other books of account or records (whether or not in written, electronic or other tangible or intangible forms and whether or not stored on electronic or any other medium) required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority, in each case filed with respect to or otherwise relating to Taxes.

 

“Tax-Related Losses” means (i) all Taxes (including interest and penalties thereon) imposed pursuant to any settlement, Final Determination, judgment or otherwise; (ii) all accounting, legal and other professional fees, and court costs incurred in connection with such Taxes, as well as any other out-of-pocket costs incurred in connection with such Taxes; and (iii) all costs, expenses and damages associated with stockholder litigation or controversies and any amount paid by Lilly (or any Lilly Affiliate) or the Company (or any Affiliate of the Company) in respect of the liability of shareholders, whether paid to shareholders or to the IRS or any other Tax Authority, in each case, resulting from the failure of the Contribution and the Distribution, or any Internal Distribution, to qualify for the Tax-Free Status.

 

“Tax Return” means any report of Taxes due, any claim for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document required to be filed under the Code or other Tax Law with respect to Taxes, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

 

“Transfer Pricing Adjustment” means any proposed or actual allocation by a Tax Authority of any Tax Item between or among any member of the Lilly Group and any member of the Company Group with respect to any Tax Period ending prior to or including the final Distribution Date or the date of any Other Disposition, as the case may be.

 

“Transfer Taxes” means all transfer, sales, use, excise, stock, stamp, stamp duty, stamp duty reserve, stamp duty land, documentary, filing, recording, registration, value-added and other similar Taxes (excluding, for the avoidance of doubt, any income, gains, profit or similar Taxes, however assessed), together with any interest, penalty, additions to tax, or additional amounts in respect of the foregoing.

 

“Transferred Entities” has the meaning set forth in the Separation Agreement.

 

“Transition Services BEAT Amount” means the amount of any Taxes imposed under Section 59A of the Code which are or become payable as a result of “base erosion payments” paid or accrued by any member of the Lilly Group to a foreign Person which is “related” to such member of the Lilly Group (in each case within the meaning of Section 59A(d) of the Code) in respect of Lilly Services supplied to a member of the Company Group pursuant to the Transitional Services Agreement, which amount shall be calculated for a given taxable year by comparing (x) the amount of Taxes imposed on the Lilly Group under Section 59A of the Code for such taxable year without regard to any amounts paid or accrued to any foreign Person in respect of such Lilly Services and (y) the amount of Taxes imposed on the Lilly Group under Section 59A of the Code for such taxable year, in each case as determined by Lilly.

 

“Transitional Services Agreement” has the meaning set forth in the Separation Agreement.

 

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“Treasury Regulations” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.

 

“Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor, which Tax Advisor is acceptable to Lilly and upon which Lilly may rely, to the effect that a transaction will not affect the Tax-Free Status. Any such opinion must assume that the Contribution and the Distribution would have qualified for the Tax-Free Status if the transaction in question did not occur.

 

Section 2.                                          Allocation of Tax Liabilities.

 

Section 2.01                            General Rule.

 

(a)                                 Lilly Liability. Lilly shall be liable for, and shall indemnify and hold harmless the Company Group from and against any liability for, Taxes which are allocated to Lilly under this Section 2.

 

(b)                                 Company Liability. The Company shall be liable for, and shall indemnify and hold harmless the Lilly Group from and against any liability for, Taxes which are allocated to the Company under this Section 2.

 

Section 2.02                            Allocation of Taxes Except as provided in Section 2.04, Section 2.05 or Section 2.06, Taxes shall be allocated as follows:

 

(a)                                 Allocation of Taxes Relating to Joint Returns.

 

(i)                                     Allocation for Pre-IPO Periods. With respect to any Joint Return, Lilly shall be responsible for any and all Taxes due with respect to or required to be reported on any such Tax Return (including any increase in such Tax as a result of a Final Determination) for all Pre-IPO Periods;

 

(ii)                                  Allocation to the Company for Post-IPO Periods. The Company shall be responsible for any and all Taxes attributable to the Animal Health Business that are due with respect to or required to be reported on any Joint Return (including any increase in such Tax as a result of a Final Determination) for all Post-IPO Periods.

 

(iii)                               Allocation to Lilly for Post-IPO Periods. Lilly shall be responsible for any and all Taxes due with respect to or required to be reported on any Joint Return (including any increase in such Tax as a result of a Final Determination) other than those Taxes described in Section 2.02(a)(ii) for all Post-IPO Periods.

 

(b)                                 Allocation of Taxes Relating to Separate Returns.

 

(i)                                     Lilly shall be responsible for any and all Taxes due with respect to or required to be reported on any Lilly Separate Return (including any increase in such Tax as a result of a Final Determination) for all Tax Periods.

 

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(ii)                                  The Company shall be responsible for any and all Taxes due with respect to or required to be reported on any Company Separate Return (including any increase in such Tax as a result of a Final Determination) for all Tax Periods.

 

Section 2.03                            Determination of Taxes Attributable to the Animal Health Business. For purposes of Section 2.02(a)(ii):

 

(a)                                 The amount of U.S. federal Income Taxes attributable to the Animal Health Business shall be as determined by Lilly on a pro forma basis using the following conventions:

 

(i)                                     assuming that the members of the Company Group were not included in the Lilly Affiliated Group;

 

(ii)                                  including only Tax Items of members of the Company Group that were included in the relevant Lilly Federal Consolidated Income Tax Return;

 

(iii)                               except as provided in Section 2.03(a)(v), using all elections, accounting methods and conventions used on the Lilly Federal Consolidated Income Tax Return for such Tax Period;

 

(iv)                              applying the highest statutory marginal corporate income Tax rate in effect for such Tax Period;

 

(v)                                 assuming that the Company Group elects not to carry back any net operating losses; and

 

(vi)                              assuming that the Company Group’s utilization of any Tax Attribute carryforward or carryback is limited to the Tax Attributes of the Company Group that would be available if the U.S. federal Income Tax of the Company Group for each taxable year ending after December 31, 2017 were determined in accordance with this Section 2.03(a).

 

(b)                                 The amount of Income Taxes attributable to the Animal Health Business with respect to any Joint Return other than a Lilly Federal Consolidated Income Tax Return shall be as determined by Lilly in a manner consistent with the principles set forth in Section 2.03(a).

 

(c)                                  The amount of Taxes attributable to the Animal Health Business with respect to any Joint Return not described in Section 2.03(a) or (b) shall be as determined by Lilly on a pro forma basis taking into account only the assets and operations of the Animal Health Business reflected on such Joint Return and in a manner consistent with the past return filing practices of the Lilly Group with respect to such Joint Return (including any past accounting methods, elections and conventions), except as otherwise required by applicable Law.

 

(d)                                 In the case of any Joint Return for any Straddle Period, the allocation of any Tax Items required to determine any Taxes or other amounts attributable to the Pre-IPO Period and the Post-IPO Period shall be as determined by Lilly in a manner consistent with the past return filing practices of the Lilly Group with respect to such Joint Return (including any past

 

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accounting methods, elections and conventions), except as otherwise required by applicable Law; provided, that property Taxes and other similar periodic Taxes shall be apportioned on a per diem basis.

 

(e)                                  The amount of Taxes attributable to the Animal Health Business with respect to any Joint Return for any Tax Period shall not be less than zero.

 

The Company shall reimburse Lilly for all reasonable costs and expenses paid or incurred by the Lilly Group in connection with determining the amount of Taxes attributable to the Animal Health Business with respect to any Joint Return.

 

Section 2.04                            Certain Taxes Allocated Under Other Transaction Documents. The Parties acknowledge and agree that, notwithstanding anything contained herein to the contrary, this Agreement, including Section 2 hereof, shall not (i) apply with respect to any and all Taxes that are expressly allocated pursuant to any Transaction Document (other than this Agreement), for which such other Transaction Document shall govern, or (ii) in any way affect or modify the Parties’ rights and obligations under Section 2.04(c) of the Separation Agreement.

 

Section 2.05                            Company Liability. The Company shall be liable for, and shall indemnify and hold harmless the Lilly Group from and against, any liability for:

 

(a)                                 any Transition Services BEAT Amount;

 

(b)                                 any Tax resulting from a breach by the Company of any covenant in this Agreement, the Separation Agreement or any Ancillary Agreement; and

 

(c)                                  any Tax-Related Losses for which the Company is responsible pursuant to Section 6.04.

 

Section 2.06                            Lilly Liability. Lilly shall be liable for, and shall indemnify and hold harmless the Company Group from and against, any liability for:

 

(a)                                 any Separation Tax;

 

(b)                                 any Tax resulting from a breach by Lilly of any covenant in this Agreement, the Separation Agreement or any Transaction Document; and

 

(c)                                  any Tax-Related Losses for which Lilly is responsible pursuant to Section 6.04.

 

Section 3.                                          Preparation and Filing of Tax Returns.

 

Section 3.01                            Lilly’s Responsibility. Lilly has the exclusive obligation and right to prepare and file, or to cause to be prepared and filed:

 

(a)                                 All Joint Returns; and

 

(b)                                 Lilly Separate Returns.

 

Section 3.02                            Company’s Responsibility. The Company shall prepare and file, or shall cause to be prepared and filed, all Tax Returns required to be filed by or with respect to members

 

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of the Company Group other than those Tax Returns which Lilly is required to prepare and file under Section 3.01 or Section 3.03. The Tax Returns required to be prepared and filed by the Company under this Section 3.02 shall include any Company Separate Returns.

 

Section 3.03                            Tax Returns for Separation Taxes. Tax Returns relating to Separation Taxes shall be prepared and filed when due (including extensions) by Lilly. The Company shall provide, and shall cause its Affiliates to provide, assistance and cooperation to Lilly and its Affiliates in accordance with Section 7 with respect to the preparation and filing of Tax Returns, including providing information required to be provided in Section 7 and, where required by applicable Law and at Lilly’s request, filing any such Tax Returns as prepared by Lilly.

 

Section 3.04                            Tax Reporting Practices.

 

(a)                                 Lilly General Rule. Except as provided in Section 3.04(c), Lilly shall prepare any Tax Return which it has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 3.01, in accordance with reasonable Tax accounting practices selected by Lilly.

 

(b)                                 Company General Rule. Except as provided in Section 3.04(c), with respect to any Tax Return for a Tax Period that begins on or before the date that is two (2) years following the Distribution Date that the Company has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 3.02, such Tax Return shall be prepared in accordance with past practices, accounting methods, elections or conventions (“Past Practices”) used with respect to the Tax Returns in question (unless (i) the Company reasonably determines, upon advice from counsel, that there is no reasonable basis for the use of such Past Practices or (ii) there is no adverse effect to Lilly, as determined in Lilly’s reasonable discretion), and to the extent any items are not covered by Past Practices (or in the event that (i) the Company reasonably determines, upon advice from counsel, that there is no reasonable basis for the use of such Past Practices or (ii) there is no adverse effect to Lilly, as determined in Lilly’s reasonable discretion), in accordance with reasonable Tax accounting practices selected by the Company.

 

(c)                                  Reporting of Separation Transactions. The Tax treatment of the Separation Transactions reported on any Tax Return shall be consistent with the treatment thereof in the Tax Opinions, taking into account the jurisdiction in which such Tax Returns are filed, unless the Responsible Party reasonably determines, upon advice from counsel, that there is no reasonable basis for such Tax treatment. Such treatment reported on any Tax Return for which the Company is the Responsible Party shall be consistent with that on any Tax Return filed or to be filed by Lilly or any member of the Lilly Group or caused or to be caused to be filed by Lilly, unless the Company reasonably determines, upon advice from counsel, that there is no reasonable basis for such Tax treatment. In the event that a Party shall reasonably determine, upon advice from counsel, that there is no reasonable basis for the Tax treatment described in either of the preceding two sentences, such Party shall notify the other Party 20 Business Days prior to filing the relevant Tax Return and the Parties shall attempt in good faith to agree on the manner in which the relevant portion of the Separation Transactions shall be reported.

 

(d)                                 Protective Section 336(e) Election. After the date hereof, Lilly shall determine, in its sole and absolute discretion, whether to make a protective election under Section 336(e) of the Code and the Treasury Regulations thereunder (and any corresponding or analogous provisions

 

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of state and local Law) in connection with the Distribution with respect to the Company and each other member of the Company Group that is a domestic corporation for U.S. federal Income Tax purposes (a “Section 336(e) Election”). If Lilly determines that a Section 336(e) Election would be beneficial:

 

(i)                                     Lilly, the Company and their respective Affiliates shall cooperate in making the Section 336(e) Election, including by filing any statements, amending any Tax Returns or taking such other actions reasonably necessary to carry out the Section 336(e) Election;

 

(ii)                                  if the Distribution fails to qualify (in whole or in part) for the Tax-Free Status and the Company or any member of the Company Group realizes an increase in Tax basis as a result of the Section 336(e) Election (the “Section 336(e) Tax Basis”), then the cash Tax savings realized by the Company and each member of the Company Group as a result of the Section 336(e) Tax Basis shall be shared between Lilly and the Company in the same proportion as the Taxes giving rise to the Section 336(e) Tax Basis were borne by Lilly and the Company (after giving effect to the indemnification obligations in this Agreement); and

 

(iii)                               to the extent the Section 336(e) Election becomes effective, each Party agrees not to take any position (and to cause each of its Affiliates not to take any position) that is inconsistent with the Section 336(e) Election on any Tax Return, in connection with any Tax Contest or otherwise, except as may be required by a Final Determination.

 

(e)                                  Exception Where Required by a Final Determination. Notwithstanding any provision herein to the contrary, this Section 3.04 shall not require any Party to file a Tax Return reflecting a particular treatment or in accordance with a particular Past Practice where such treatment or Past Practice, as applicable, is proscribed by a Final Determination.

 

Section 3.05                            Consolidated or Combined Tax Returns. The Company will elect and join, and will cause its respective Affiliates to elect and join, in filing any Joint Returns that Lilly determines are required to be filed or that Lilly chooses to file pursuant to Section 3.01(a).

 

Section 3.06                            Right to Review Tax Returns.

 

(a)                                 General. The Responsible Party with respect to any material Tax Return shall make the portion of such Tax Return and related workpapers which are relevant to the determination of the other Party’s rights or obligations under this Agreement available for review by the other Party, if requested, to the extent (i) such Tax Return relates to Taxes for which the requesting Party would reasonably be expected to be liable, (ii) the requesting Party would reasonably be expected to be liable in whole or in part for any additional Taxes owing as a result of adjustments to the amount of the Taxes reported on such Tax Return, (iii) such Tax Return relates to Taxes for which the requesting Party would reasonably be expected to have a claim for Tax Benefits under this Agreement, or (iv) the requesting Party reasonably determines that it must inspect such Tax Return to confirm compliance with the terms of this Agreement. The Responsible Party shall (i) use its reasonable best efforts to make such portion of such Tax

 

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Return available for review as required under this paragraph sufficiently in advance of the due date for filing of such Tax Return to provide the requesting Party with a meaningful opportunity to analyze and comment on such Tax Return and (ii) use reasonable efforts to have such Tax Return modified before filing to reflect reasonable comments of the requesting Party, taking into account the person responsible for payment of the Tax (if any) reported on such Tax Return and whether the amount of Tax liability allocable to the requesting Party with respect to such Tax Return is material. The Parties shall attempt in good faith to resolve any issues arising out of the review of such Tax Return.

 

(b)                                 Material Tax Returns. For purposes of Section 3.06(a), a Tax Return is “material” if it could reasonably be expected to reflect (A) Tax liability equal to or in excess of $1 million, (B) a credit or credits equal to or in excess of $1 million or (C) a loss or losses equal to or in excess of $3 million, in each case with respect to the requesting Party.

 

Section 3.07                            Company Carrybacks and Claims for Refund. The Company hereby agrees that, unless Lilly consents in writing, (i) no Adjustment Request with respect to any Joint Return shall be filed, and (ii) any available elections to waive the right to claim in any Pre-Deconsolidation Period with respect to any Joint Return any Company Carryback arising in a Post-Deconsolidation Period shall be made, and no affirmative election shall be made to claim any such Company Carryback.

 

Section 3.08                            Apportionment of Tax Attributes. Lilly may in good faith advise the Company in writing of the amount, if any, of any Tax Attributes which Lilly determines, in its sole and absolute discretion, shall be allocated or apportioned to the Company Group under applicable Law; provided, that this Section 3.08 shall not be construed as obligating Lilly to undertake any such determination. The Company and all members of the Company Group shall prepare all Tax Returns in accordance with such written notice. The Company agrees that it shall not dispute Lilly’s allocation or apportionment of Tax Attributes. The Company may request that Lilly undertake a determination of the portion, if any, of any particular Tax Attribute to be allocated or apportioned to the Company Group under applicable Law; to the extent that Lilly determines, in its sole and absolute discretion, not to undertake such determination, or does not otherwise advise the Company of its intention to undertake such determination within 20 Business Days of the receipt of such request, the Company shall be permitted to undertake such determination at its own cost and expense and shall notify Lilly of its determination, which determination shall not be binding upon Lilly.

 

Section 4.                                          Tax Payments.

 

Section 4.01                            Payment of Taxes With Respect to Joint Returns. In the case of any Joint Return:

 

(a)                                 Computation and Payment of Tax Due. At least three Business Days prior to any Payment Date for any such Tax Return, Lilly shall compute the amount of Tax required to be paid to the applicable Tax Authority (taking into account the requirements of Section 3.04 relating to consistent accounting practices, as applicable) with respect to such Tax Return on such Payment Date. Lilly shall pay such amount to such Tax Authority on or before such Payment Date (and provide notice and proof of payment to the Company).

 

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(b)                                 Computation and Payment of Liability With Respect To Tax Due. Within 20 Business Days following the earlier of (i) the due date (including extensions) for filing any Joint Return (excluding any Joint Return with respect to payment of estimated Taxes or Taxes due with a request for extension of time to file) or (ii) the date on which such Joint Return is filed, Lilly shall provide the Company with a written notice setting forth the amount of Taxes shown on such Joint Return that are allocable to the Company Group under the provisions of Section 2 (the “Company Tax Notice”). The Company shall pay to Lilly the amount of Taxes set forth on the Company Tax Notice, plus interest computed at the Prime Rate on the amount of the payment based on the number of days from the earlier of (i) the due date of the Tax Return (including extensions) or (ii) the date on which such Tax Return is filed, to the date of payment.

 

(c)                                  Adjustments Resulting in Underpayments. In the case of any adjustment pursuant to a Final Determination with respect to any Joint Return, Lilly shall pay to the applicable Tax Authority when due any additional Tax due with respect to such Joint Return required to be paid as a result of such adjustment pursuant to a Final Determination. Lilly shall compute the amount attributable to the Company Group in accordance with Section 2 and the Company shall pay to Lilly any amount due Lilly (or Lilly shall pay the Company any amount due the Company) under Section 2 within 20 Business Days from the later of (i) the date the additional Tax was paid by the Responsible Party or (ii) the date of receipt of a written notice and demand from the Responsible Party for payment of the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. Any payments required under this Section 4.01(c) shall include interest computed at the Prime Rate based on the number of days from the date the additional Tax was paid by the Responsible Party to the date of the payment under this Section 4.01(c).

 

Section 4.02                            Payment of Taxes With Respect to Separate Returns. Each Party shall pay, or shall cause to be paid, to the applicable Tax Authority when due all Taxes owed by such Party or a member of such Party’s Group with respect to a Separate Return.

 

Section 4.03                            Indemnification Payments.

 

(a)                                 If any Party (the “Payor”) is required under applicable Tax Law to pay to a Tax Authority a Tax that another Party (the “Required Party”) is liable for under this Agreement, the Required Party shall reimburse the Payor within 20 Business Days of delivery by the Payor to the Required Party of an invoice for the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. The reimbursement shall include interest on the Tax payment computed at the Prime Rate based on the number of days from the date of the payment to the Tax Authority to the date of reimbursement under this Section 4.03.

 

(b)                                 All indemnification payments under this Agreement shall be made by Lilly directly to the Company or by the Company directly to Lilly, as applicable; provided, however, that if the Parties mutually agree with respect to any such indemnification payment, any member of the Lilly Group, on the one hand, may make such indemnification payment to any member of the Company Group, on the other hand, and vice versa. All indemnification payments shall be treated in the manner described in Section 11.01.

 

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Section 5.                                          Tax Refunds.

 

Section 5.01                            Tax Refunds. Lilly shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which Lilly is liable hereunder, and the Company shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which the Company is liable hereunder. A Party receiving a refund to which another Party is entitled hereunder shall pay over such refund to such other Party within 20 Business Days after such refund is received (together with interest computed at the Prime Rate based on the number of days from the date the refund was received to the date the refund was paid over).

 

Section 6.                                          Tax-Free Status.

 

Section 6.01                            Restrictions on the Company.

 

(a)                                 The Company agrees that it will not take or fail to take, or permit any Affiliate of the Company, as the case may be, to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in any Representation Letters or the Tax Opinions. The Company agrees that it will not take or fail to take, or permit any Affiliate of the Company, as the case may be, to take or fail to take, any action which adversely affects or could reasonably be expected to adversely affect the Tax-Free Status.

 

(b)                                 The Company agrees that, from the date hereof until the first Business Day after the two-year anniversary of the final Distribution Date, it will (i) maintain its status as a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (ii) not engage in any transaction that would result in it ceasing to be a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (iii) cause each Affiliate of the Company whose Active Trade or Business is relied upon in the Tax Opinions for purposes of qualifying a transaction as tax-free pursuant to Section 355 of the Code or other Tax Law to maintain its status as a company engaged in such Active Trade or Business for purposes of Section 355(b)(2) of the Code and any such other applicable Tax Law, (iv) not engage in any transaction or permit an Affiliate of the Company to engage in any transaction that would result in an Affiliate of the Company described in clause (iii) hereof ceasing to be a company engaged in the relevant Active Trade or Business for purposes of Section 355(b)(2) or such other applicable Tax Law, taking into account Section 355(b)(3) of the Code for purposes of clauses (i) through (iv) hereof, and (v) not dispose of or permit an Affiliate of the Company to dispose of, directly or indirectly, any interest in an Affiliate of the Company described in clause (iii) hereof or permit any such Affiliate of the Company to make or revoke any election under Treasury Regulations Section 301.7701-3.

 

(c)                                  The Company agrees that, from the date hereof until the first Business Day after the two-year anniversary of the final Distribution Date, it will not and will not permit any Affiliate of the Company described in clause (iii) of Section 6.01(b) to (i) enter into any Proposed Acquisition Transaction or, to the extent the Company has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur (whether by (A) redeeming rights under a shareholder rights plan, (B) finding a tender offer to be

 

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a “permitted offer” under any such plan or otherwise causing any such plan to be inapplicable or neutralized with respect to any Proposed Acquisition Transaction, (C) approving any Proposed Acquisition Transaction, whether for purposes of Section 203 of the Delaware General Corporation Law or any similar corporate statute, any “fair price” or other provision of the Company’s charter or bylaws, (D) amending its certificate of incorporation to declassify its Board of Directors or approving any such amendment, or (E) otherwise); (ii) merge or consolidate with any other Person or liquidate or partially liquidate; (iii) in a single transaction or series of transactions sell or transfer (other than sales or transfers of inventory in the ordinary course of business) all or substantially all of the assets that were transferred to the Company pursuant to the Contribution or sell or transfer 25% or more of the gross assets of any Active Trade or Business or 25% or more of the consolidated gross assets of the Company and its Affiliates (such percentages to be measured based on fair market value as of the initial Distribution Date); (iv) redeem or otherwise repurchase (directly or through an Affiliate of the Company) any Company stock, or rights to acquire stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48); (v) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of the Company Capital Stock (including, without limitation, through the conversion of one class of Company Capital Stock into another class of Company Capital Stock); or (vi) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Representation Letters or the Tax Opinions) which in the aggregate (and taking into account any other transactions described in this subparagraph (d)) would be reasonably likely to have the effect of causing or permitting one or more persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in the Company or otherwise jeopardize the Tax-Free Status, unless prior to taking any such action set forth in the foregoing clauses (i) through (vi), (x) the Company shall have requested that Lilly obtain a Ruling in accordance with Section 6.03(a) and Section 6.03(b) to the effect that such transaction will not affect the Tax-Free Status and Lilly shall have received such Ruling in form and substance satisfactory to Lilly in its sole and absolute discretion, (y) the Company shall have provided to Lilly an Unqualified Tax Opinion in form and substance satisfactory to Lilly in its sole and absolute discretion (and in determining whether an opinion is satisfactory, Lilly may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations if used as a basis for the opinion and Lilly may determine that no opinion would be acceptable to Lilly) to the effect that such transaction will not affect the Tax-Free Status or (z) Lilly shall have waived the requirement to obtain such Ruling or Unqualified Tax Opinion.

 

(d)                                 Certain Issuances of Company Capital Stock. If the Company proposes to enter into any Section 6.01(d) Acquisition Transaction or, to the extent the Company has the right to prohibit any Section 6.01(d) Acquisition Transaction, proposes to permit any Section 6.01(d) Acquisition Transaction to occur, in each case, during the period from the date hereof until the first Business Day after the two-year anniversary of the final Distribution Date, the Company shall provide Lilly, no later than ten Business Days following the signing of any written agreement with respect to the Section 6.01(d) Acquisition Transaction, with a written description of such transaction (including the type and amount of any stock to be issued in such transaction) and a certificate of the Board of Directors of the Company to the effect that such Section 6.01(d)

 

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Acquisition Transaction is not a Proposed Acquisition Transaction or any other transaction to which the requirements of Section 6.01(c) apply (a “Board Certificate”).

 

(e)                                  Company Internal Restructuring. The Company shall not engage in, cause or permit any internal restructuring (including by making or revoking any election under Treasury Regulations Section 301.7701-3) involving a member of the Company Group or any contribution, sale or other transfer to the Company or any of its Affiliates of any of the assets directly or indirectly contributed to the Company as described in the Separation Agreement, apart from sales in the ordinary course of business or transactions described in the Corporate Reorganization (any such action, an “Internal Restructuring”), during or with respect to any Tax Period (or portion thereof) ending on or prior to the final Distribution Date without obtaining the prior written consent of Lilly. The Company shall provide written notice to Lilly describing any Internal Restructuring proposed to be taken during or with respect to any Tax Period (or portion thereof) beginning after the final Distribution Date and ending on or prior to the two-year anniversary of such Distribution Date, and shall consult with Lilly regarding any such proposed actions reasonably in advance of taking any such proposed actions and shall consider in good faith any comments from Lilly relating thereto.

 

(f)                                    Gain Recognition Agreements. The Company shall not (i) take any action (including, but not limited to, the sale or disposition of any stock, securities, or other assets), (ii) permit any member of the Company Group to take any such action, (iii) fail to take any action, or (iv) permit any member of the Company Group to fail to take any action, in each case that would cause Lilly or any member of the Lilly Group to recognize gain under any Gain Recognition Agreement. In addition, the Company shall file, and shall cause any member of the Company Group to file, any Gain Recognition Agreement reasonably requested by Lilly which Gain Recognition Agreement is determined by Lilly to be necessary so as to (i) allow for or preserve the tax-free or tax-deferred nature, in whole or part, of any Separation Transaction, or (ii) avoid Lilly or any member of the Lilly Group recognizing gain under any Gain Recognition Agreement.

 

Section 6.02                            Restrictions on Lilly. Lilly agrees that it will not take or fail to take, or permit any Lilly Affiliate, as the case may be, to take or fail to take, any action (i) where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in any Representation Letters or the Tax Opinions, or (ii) which adversely affects or could reasonably be expected to adversely affect the Tax-Free Status; provided, however, that this Section 6.02 shall not be construed as obligating Lilly to consummate the Distribution nor shall it be construed as preventing Lilly from terminating the Separation Agreement pursuant to Section 10.1 thereof.

 

Section 6.03                            Procedures Regarding Opinions and Rulings.

 

(a)                                 If the Company notifies Lilly that it desires to take one of the actions described in clauses (i) through (vi) of Section 6.01(c) (a “Notified Action”), Lilly and the Company shall reasonably cooperate to attempt to obtain the Ruling or Unqualified Tax Opinion referred to in Section 6.01(c), unless Lilly shall have waived the requirement to obtain such Ruling or Unqualified Tax Opinion.

 

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(b)                                 Rulings or Unqualified Tax Opinions at the Company’s Request. Lilly agrees that at the reasonable request of the Company pursuant to Section 6.01(c), Lilly shall cooperate with the Company and use its reasonable best efforts to seek to obtain, as expeditiously as possible, a Ruling from the IRS or an Unqualified Tax Opinion for the purpose of permitting the Company to take the Notified Action. Further, in no event shall Lilly be required to file any Ruling Request under this Section 6.03(b) unless the Company represents that (i) it has read the Ruling Request, and (ii) all information and representations, if any, relating to any member of the Company Group, contained in the Ruling Request documents are (subject to any qualifications therein) true, correct and complete. The Company shall reimburse Lilly for all reasonable costs and expenses, including expenses relating to the utilization of Lilly personnel, incurred by the Lilly Group in obtaining a Ruling or Unqualified Tax Opinion requested by the Company within ten Business Days after receiving an invoice from Lilly therefor.

 

(c)                                  Rulings or Unqualified Tax Opinions at Lilly’s Request. Lilly shall have the right to obtain a Ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion. If Lilly determines to obtain a Ruling or an Unqualified Tax Opinion, the Company shall (and shall cause each Affiliate of the Company to) cooperate with Lilly and take any and all actions reasonably requested by Lilly in connection with obtaining the Ruling or Unqualified Tax Opinion (including, without limitation, by making any representation or covenant or providing any materials or information requested by the IRS or Tax Advisor; provided, that the Company shall not be required to make (or cause any Affiliate of the Company to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control). Lilly shall reimburse the Company for all reasonable costs and expenses, including expenses relating to the utilization of the Company personnel, incurred by the Company Group in connection with such cooperation within ten Business Days after receiving an invoice from the Company therefor.

 

(d)                                 The Company hereby agrees that Lilly shall have sole and exclusive control over the process of obtaining any Ruling, and that only Lilly shall apply for a Ruling. In connection with obtaining a Ruling pursuant to Section 6.03(b), (i) Lilly shall keep the Company informed in a timely manner of all material actions taken or proposed to be taken by Lilly in connection therewith; (ii) Lilly shall (A) reasonably in advance of the submission of any Ruling Request documents provide the Company with a draft copy thereof, (B) reasonably consider the Company’s comments on such draft copy, and (C) provide the Company with a final copy; and (iii) Lilly shall provide the Company with notice reasonably in advance of, and the Company shall have the right to attend, any formally scheduled meetings with the IRS (subject to the approval of the IRS) that relate to such Ruling. Neither the Company nor any Affiliate of the Company directly or indirectly controlled by the Company shall seek any guidance from the IRS or any other Tax Authority (whether written, verbal or otherwise) at any time concerning the Contribution or the Distribution (including the impact of any transaction on the Contribution or the Distribution).

 

Section 6.04                            Liability for Tax-Related Losses.

 

(a)                                 Notwithstanding anything in this Agreement or the Separation Agreement to the contrary (and in each case regardless of whether any Ruling, Unqualified Tax Opinion or waiver referred to in Section 6.01(c) may have been provided), subject to Section 6.04(c), the Company

 

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shall be responsible for, and shall indemnify and hold harmless Lilly and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses that are attributable to or result from any one or more of the following: (i) the acquisition (other than pursuant to the Contribution, the IPO, or the Distribution) of all or a portion of the Company’s stock and/or its or its Subsidiaries’ assets by any means whatsoever by any Person; (ii) any negotiations, understandings, agreements or arrangements by the Company with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of the Company representing a Fifty-Percent or Greater Interest therein; (iii) any action or failure to act by the Company after the Distribution (including, without limitation, any amendment to the Company’s certificate of incorporation (or other organizational documents), whether through a stockholder vote or otherwise) affecting the voting rights of the Company stock (including, without limitation, through the conversion of one class of Company Capital Stock into another class of Company Capital Stock); (iv) any act or failure to act by the Company or any Affiliate of the Company described in Section 6.01 (regardless whether such act or failure to act may be covered by a Ruling, Unqualified Tax Opinion or waiver described in Section 6.01(c), a Board Certificate described in Section 6.01(d), or a consent described in Section 6.01(e)); or (v) any breach by the Company of its agreement and representation set forth in Section 6.01(a).

 

(b)                                 Notwithstanding anything in this Agreement or the Separation Agreement to the contrary, subject to Section 6.04(c), Lilly shall be responsible for, and shall indemnify and hold harmless the Company and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses that are attributable to, or result from any one or more of the following: (i) the acquisition (other than pursuant to the Contribution, the IPO, or the Distribution) of all or a portion of Lilly’s stock and/or its assets by any means whatsoever by any Person; (ii) any negotiations, agreements or arrangements by Lilly with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of Lilly representing a Fifty-Percent or Greater Interest therein; (iii) any act or failure to act by Lilly or a member of the Lilly Group described in Section 6.02; or (iv) any breach by Lilly of its agreement and representation set forth in Section 6.02.

 

(c)

 

(i)                                     To the extent that any Tax-Related Loss is subject to indemnity under both Section 6.04(a) and Section 6.04(b), responsibility for such Tax-Related Loss shall be shared by Lilly and the Company according to relative fault.

 

(ii)                                  Notwithstanding anything in Section 6.04(b) or Section 6.04(c)(i) or any other provision of this Agreement or the Separation Agreement to the contrary:

 

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(A)                               with respect to (I) any Tax-Related Loss resulting from Section 355(e) of the Code (other than as a result of an acquisition of a Fifty-Percent or Greater Interest in Lilly) and (II) any other Tax-Related Loss resulting (for the absence of doubt, in whole or in part) from an acquisition after the Distribution of any stock or assets of the Company (or any Affiliate of the Company) by any means whatsoever by any Person or any action or failure to act by the Company affecting the voting rights of the Company stock, the Company shall be responsible for, and shall indemnify and hold harmless Lilly and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of such Tax-Related Loss; and

 

(B)                               for purposes of calculating the amount and timing of any Tax-Related Loss for which the Company is responsible under this Section 6.04, Tax-Related Losses shall be calculated by assuming that Lilly, the Lilly Affiliated Group and each member of the Lilly Group (I) pay Tax at the highest marginal corporate Tax rates in effect in each relevant taxable year and (II) have no Tax Attributes in any relevant taxable year.

 

(iii)                               Notwithstanding anything in Section 6.04(a) or Section 6.04(c)(i) or any other provision of this Agreement or the Separation Agreement to the contrary, with respect to (A) any Tax-Related Loss resulting from Section 355(e) of the Code (other than as a result of an acquisition of a Fifty-Percent or Greater Interest in the Company) and (B) any other Tax-Related Loss resulting (for the absence of doubt, in whole or in part) from an acquisition after the Distribution of any stock or assets of Lilly (or any Lilly Affiliate) by any means whatsoever by any Person, Lilly shall be responsible for, and shall indemnify and hold harmless the Company and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of such Tax-Related Loss.

 

(d)                                 The Company shall pay Lilly the amount of any Tax-Related Losses for which the Company is responsible under this Section 6.04: (A) in the case of Tax-Related Losses described in clause (i) of the definition of Tax-Related Losses no later than two Business Days prior to the date Lilly files, or causes to be filed, the applicable Tax Return for the year of the Contribution or Distribution, as applicable (the “Filing Date”) (provided, that if such Tax-Related Losses arise pursuant to a Final Determination described in clause (i), (ii) or (iii) of the definition of Final Determination, then the Company shall pay Lilly no later than two Business Days after the date of such Final Determination with interest calculated at the Prime Rate plus two percent, compounded semiannually, from the date that is two Business Days prior to the Filing Date through the date of such Final Determination) and (B) in the case of Tax-Related Losses described in clause (ii) or (iii) of the definition of Tax-Related Losses, no later than two Business Days after the date Lilly pays such Tax-Related Losses. Lilly shall pay the Company the amount of any Tax-Related Losses (described in clause (ii) or (iii) of the definition of Tax-Related Loss) for which Lilly is responsible under this Section 6.04 no later than two Business Days after the date the Company pays such Tax-Related Losses.

 

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Section 7.                                          Assistance and Cooperation.

 

Section 7.01                            Assistance and Cooperation.

 

(a)                                 The Parties shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Parties and their Affiliates including (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making all information and documents in their possession relating to the other Party and its Affiliates available to such other Party as provided in Section 8. Each of the Parties shall also make available to the other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Parties or their respective Affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes. The Parties shall cooperate pursuant to this Section 7 to seek any competent authority relief that may be available with respect to any Tax detriment that would be suffered by a member of the Lilly Group, on the one hand, or a member of the Company Group, on the other hand, absent such competent authority relief. The Company shall cooperate with Lilly and take any and all actions reasonably requested by Lilly in connection with obtaining the Tax Opinions (including, without limitation, by making any new representation or covenant, confirming any previously made representation or covenant or providing any materials or information requested by any Tax Advisor or Tax Authority; provided, that the Company shall not be required to make or confirm any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control).

 

(b)                                 Any information or documents provided under this Section 7 shall be kept confidential by the Party receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. Notwithstanding any other provision of this Agreement or any other agreement, (i) neither Lilly nor any Lilly Affiliate shall be required to provide the Company or any Affiliate of the Company or any other Person access to or copies of any information, documents or procedures (including the proceedings of any Tax Contest) other than information, documents or procedures that relate to the Company, the business or assets of the Company or any Affiliate of the Company and (ii) in no event shall Lilly or any Lilly Affiliate be required to provide the Company, any Affiliate of the Company or any other Person access to or copies of any information or documents if such action could reasonably be expected to result in the waiver of any Privilege. In addition, in the event that Lilly determines that the provision of any information or documents to the Company or any Affiliate of the Company could be commercially detrimental, violate any Law or agreement or waive any Privilege, the Parties shall use reasonable best efforts to permit compliance with its obligations under this Section 7 in a manner that avoids any such harm or consequence.

 

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Section 7.02                            Income Tax Return Information. The Company and Lilly acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by Lilly or the Company pursuant to Section 7.01 or this Section 7.02. The Company and Lilly acknowledge that failure to conform to the reasonable deadlines set by Lilly or the Company could cause irreparable harm. Each Party shall provide to the other Party information and documents relating to its Group required by the other Party to prepare Tax Returns, including, but not limited to, any pro forma returns required by the Responsible Party for purposes of preparing such Tax Returns. Any information or documents the Responsible Party requires to prepare such Tax Returns shall be provided in such form as the Responsible Party reasonably requests and at or prior to the time reasonably specified by the Responsible Party so as to enable the Responsible Party to file such Tax Returns on a timely basis.

 

Section 7.03                            Reliance by Lilly. If any member of the Company Group supplies information to a member of the Lilly Group in connection with a Tax liability and an officer of a member of the Lilly Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Lilly Group identifying the information being so relied upon, the chief financial officer of the Company (or any officer of the Company as designated by the chief financial officer of the Company) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete.

 

Section 7.04                            Reliance by the Company. If any member of the Lilly Group supplies information to a member of the Company Group in connection with a Tax liability and an officer of a member of the Company Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Company Group identifying the information being so relied upon, the chief financial officer of Lilly (or any officer of Lilly as designated by the chief financial officer of Lilly) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete.

 

Section 8.                                          Tax Records.

 

Section 8.01                            Retention of Tax Records. Each Party shall preserve and keep all Tax Records exclusively relating to the assets and activities of its Group for Pre-Deconsolidation Periods, and Lilly shall preserve and keep all other Tax Records relating to Taxes of the Groups for Pre-Deconsolidation Tax Periods, for so long as the contents thereof may become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (i) the expiration of any applicable statutes of limitations, or (ii) seven years after the Deconsolidation Date (such later date, the “Retention Date”). After the Retention Date, each Party may dispose of such Tax Records upon 60 Business Days’ prior written notice to the other Party. If, prior to the Retention Date, a Party reasonably determines that any Tax Records which it would otherwise be required to preserve and keep under this Section 8 are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Party agrees, then such first Party may dispose of such Tax Records upon 60 Business Days’ prior notice to the other Party. Any notice of an intent to dispose given pursuant to this Section 8.01 shall include a list of the Tax Records to be disposed of describing in reasonable detail each file, book, or other record accumulation being disposed. The notified Party shall have

 

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the opportunity, at its cost and expense, to copy or remove, within such 60 Business Day period, all or any part of such Tax Records.

 

Section 8.02                            Access to Tax Records. The Parties and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records (and, for the avoidance of doubt, any pertinent underlying data accessed or stored on any computer program or information technology system) in their possession and shall permit the other Party and its Affiliates, authorized agents and representatives and any representative of a Taxing Authority or other Tax auditor direct access, at the cost and expense of such other Party, during normal business hours upon reasonable notice to any computer program or information technology system used to access or store any Tax Records, in each case to the extent reasonably required by the other Party in connection with the preparation of Tax Returns or financial accounting statements, audits, litigation, or the resolution of items under this Agreement.

 

Section 8.03                            Preservation of Privilege. No member of the Company Group shall provide access to, copies of, or otherwise disclose to any Person any documentation relating to Taxes existing prior to the final Distribution Date to which Privilege may reasonably be asserted without the prior written consent of Lilly, such consent not to be unreasonably withheld.

 

Section 9.                                          Tax Contests.

 

Section 9.01                            Notice. Each of the Parties shall provide prompt notice to the other Party of any written communication from a Tax Authority regarding any pending Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware related to Taxes for Tax Periods for which it is indemnified by the other Party hereunder or for which it may be required to indemnify the other Party hereunder. Such notice shall attach copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. If an indemnified Party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder and such Party fails to give the indemnifying Party prompt notice of such asserted Tax liability and the indemnifying Party is entitled under this Agreement to contest the asserted Tax liability, then (i) if the indemnifying Party is precluded from contesting the asserted Tax liability in any forum as a result of the failure to give prompt notice, the indemnifying Party shall have no obligation to indemnify the indemnified Party for any Taxes arising out of such asserted Tax liability, and (ii) if the indemnifying Party is not precluded from contesting the asserted Tax liability in any forum, but such failure to give prompt notice results in a material monetary detriment to the indemnifying Party, then any amount which the indemnifying Party is otherwise required to pay the indemnified Party pursuant to this Agreement shall be reduced by the amount of such detriment.

 

Section 9.02                            Control of Tax Contests.

 

(a)                                 Separate Returns. In the case of any Tax Contest with respect to any Separate Return, the Party having liability for the Tax pursuant to Section 2 hereof shall have exclusive

 

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control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability, subject to Section 9.02(c) and Section 9.02(d) below.

 

(b)                                 Joint Return. In the case of any Tax Contest with respect to any Joint Return, Lilly shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability, subject to Section 9.02(c) and Section 9.02(d) below.

 

(c)                                  Settlement Rights. The Controlling Party shall have the sole right to contest, litigate, compromise and settle any Tax Contest without obtaining the prior consent of the Non-Controlling Party. Unless waived by the Parties in writing, in connection with any potential adjustment in a Tax Contest as a result of which adjustment the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment to the Controlling Party under this Agreement: (i) the Controlling Party shall keep the Non-Controlling Party informed in a timely manner of all actions taken or proposed to be taken by the Controlling Party with respect to such potential adjustment in such Tax Contest; (ii) the Controlling Party shall timely provide the Non-Controlling Party copies of any written materials relating to such potential adjustment in such Tax Contest received from any Tax Authority; (iii) the Controlling Party shall timely provide the Non-Controlling Party with copies of any correspondence or filings submitted to any Tax Authority or judicial authority in connection with such potential adjustment in such Tax Contest; (iv) the Controlling Party shall consult with the Non-Controlling Party and offer the Non-Controlling Party a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such potential adjustment in such Tax Contest; and (v) the Controlling Party shall defend such Tax Contest diligently and in good faith. The failure of the Controlling Party to take any action specified in the preceding sentence with respect to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party. In the case of any Tax Contest described in Section 9.02(a) or Section 9.02(b), “Controlling Party” means the Party entitled to control the Tax Contest under such Section and “Non-Controlling Party” means the other Party.

 

(d)                                 Tax Contest Participation. Unless waived by the Parties in writing, the Controlling Party shall provide the Non-Controlling Party with written notice reasonably in advance of, and the Non-Controlling Party shall have the right to attend, any formally scheduled meetings with Tax Authorities or hearings or proceedings before any judicial authorities in connection with any potential adjustment in a Tax Contest pursuant to which the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment to the Controlling Party under this Agreement. The failure of the Controlling Party to provide any notice specified in this Section 9.02(d) to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party.

 

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(e)                                  Power of Attorney. Each member of the Company Group shall execute and deliver to Lilly (or such member of the Lilly Group as Lilly shall designate) any power of attorney or other similar document reasonably requested by Lilly (or such designee) in connection with any Tax Contest (as to which Lilly is the Controlling Party) described in this Section 9. Each member of the Lilly Group shall execute and deliver to the Company (or such member of the Company Group as the Company shall designate) any power of attorney or other similar document requested by the Company (or such designee) in connection with any Tax Contest (as to which the Company is the Controlling Party) described in this Section 9.

 

Section 10.                                   Effective Date. This Agreement shall be effective as of the date hereof.

 

Section 11.                                   Treatment of Payments.

 

Section 11.01                     Treatment of Tax Indemnity Payments. In the absence of any change in Tax treatment under the Code or except as otherwise required by other applicable Tax Law, any Tax indemnity payments made by a Party under this Agreement shall be reported for Tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Deconsolidation (but only to the extent the payment does not relate to a Tax allocated to the payor in accordance with Section 1552 of the Code or the Treasury Regulations thereunder or Treasury Regulations Section 1.1502-33(d) (or under corresponding principles of other applicable Tax Laws)) or as payments of an assumed or retained liability. Except to the extent provided in Section 11.02, any Tax indemnity payment made by a Party under this Agreement shall be increased as necessary so that after making all payments in respect of Taxes imposed on or attributable to such indemnity payment, the recipient Party receives an amount equal to the sum it would have received had no such Taxes been imposed.

 

Section 11.02                     Interest Under This Agreement. Notwithstanding anything herein to the contrary, to the extent one Party (“Indemnitor”) makes a payment of interest to another Party (“Indemnitee”) under this Agreement with respect to the period from the date that the Indemnitee made a payment of Tax to a Tax Authority to the date that the Indemnitor reimbursed the Indemnitee for such Tax payment, the interest payment shall be treated as interest expense to the Indemnitor (deductible to the extent provided by Law) and as interest income by the Indemnitee (includible in income to the extent provided by Law). The amount of the payment shall not be adjusted to take into account any associated Tax Benefit to the Indemnitor or increase in Tax to the Indemnitee.

 

Section 12.                                   Disagreements.

 

Section 12.01                     Discussion. The Parties mutually desire that friendly collaboration will continue between them. Accordingly, they will use good faith efforts, and they will cause their respective Group members to use good faith efforts, to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement, including any amendments hereto. In furtherance thereof, in the event of any dispute or disagreement (a “Dispute”) between any member of the Lilly Group and any member of the Company Group as to the interpretation of any provision of this Agreement or the

 

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performance of obligations hereunder, the Tax departments of the Parties shall negotiate in good faith to resolve the Dispute.

 

Section 12.02                     Escalation. If such good faith negotiations do not resolve the Dispute, then the matter, upon written request of either Party, will be referred for resolution to representatives of the Parties at a senior level of management of the Parties pursuant to the procedures set forth in Section 8.02(a) of the Separation Agreement.

 

Section 12.03                     Referral to Tax Advisor. If the Parties are not able to resolve the Dispute through the escalation process referred to above, then the matter will be referred to a Tax Advisor acceptable to each of the Parties to act as an arbitrator in order to resolve the Dispute. In the event that the Parties are unable to agree upon a Tax Advisor within 15 Business Days following the completion of the escalation process, the Parties shall each separately retain an independent, nationally recognized law or accounting firm (each, a “Preliminary Tax Advisor”), which Preliminary Tax Advisors shall jointly select a Tax Advisor on behalf of the Parties to act as an arbitrator in order to resolve the Dispute. The Tax Advisor may, in its discretion, obtain the services of any third-party appraiser, accounting firm or consultant that the Tax Advisor deems necessary to assist it in resolving such disagreement. The Tax Advisor shall furnish written notice to the Parties of its resolution of any such Dispute as soon as practical, but in any event no later than 30 Business Days after its acceptance of the matter for resolution. Any such resolution by the Tax Advisor will be conclusive and binding on the Parties. Following receipt of the Tax Advisor’s written notice to the Parties of its resolution of the Dispute, the Parties shall each take or cause to be taken any action necessary to implement such resolution of the Tax Advisor. Each Party shall pay its own fees and expenses (including the fees and expenses of its representatives) incurred in connection with the referral of the matter to the Tax Advisor (and the Preliminary Tax Advisors, if any). All fees and expenses of the Tax Advisor (and the Preliminary Tax Advisors, if any) in connection with such referral shall be shared equally by the Parties.

 

Section 12.04                     Injunctive Relief. Nothing in this Section 12 will prevent either Party from seeking injunctive relief if any delay resulting from the efforts to resolve the Dispute through the process set forth above could result in serious and irreparable injury to either Party. Notwithstanding anything to the contrary in this Agreement, Lilly and the Company are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, and each of Lilly and the Company will cause its respective Group members not to commence any dispute resolution procedure other than through such Party as provided in this Section 12.

 

Section 13.                                   General Provisions.

 

Section 13.01                     Counterparts; Entire Agreement; Conflicting Agreements.

 

(a)                                 This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party. Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as being, executed by an original signature.

 

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(b)                                 The Transaction Documents and the exhibits, the schedules and appendices thereto contain the entire agreement between the Parties with respect to Taxes, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein. All such other agreements shall be of no further effect between the Parties and any rights or obligations existing thereunder shall be fully and finally settled, calculated as of the date hereof.

 

(c)                                  In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of any other Ancillary Agreement or a Local Transfer Agreement with respect to Taxes, this Agreement shall control.

 

Section 13.02                     No Construction Against Drafter. The Parties acknowledge that this Agreement and all the terms and conditions contained herein have been fully reviewed and negotiated by the Parties. Having acknowledged the foregoing, the Parties agree that any principle of construction or rule of Law that provides that, in the event of any inconsistency or ambiguity, an agreement shall be construed against the drafter of the agreement shall have no application to the terms and conditions of this Agreement.

 

Section 13.03                     Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Indiana, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Laws of the State of Indiana.

 

Section 13.04                     Assignability. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that no Party may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party; provided, further, that this Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to either of the Parties (including but not limited to any successor of Lilly or the Company succeeding to any Tax Attributes of either Party under Section 381 of the Code), to the same extent as if such successor had been an original party to this Agreement.

 

Section 13.05                     Third Party Beneficiaries. Except for the indemnification rights under this Agreement of any Affiliate of Lilly or the Company in their respective capacities as such, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including employees of the Parties) except the Parties any rights or remedies hereunder, and (b) there are no third party beneficiaries of this Agreement and this Agreement shall not provide any third person (including employees of the Parties) with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

 

Section 13.06                     Notices. All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

 

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If to Lilly, to:

 

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention:                                         General Counsel

 

If to the Company to:

 

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention:                                         General Counsel

 

Any Party may, by notice to the other Party, change the address to which such notices are to be given.

 

Section 13.07                     Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.

 

Section 13.08                     Force Majeure. No party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.

 

Section 13.09                     Late Payments. Except as expressly provided to the contrary in this Agreement, any amount not paid when due pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within thirty (30) days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 5%.

 

Section 13.10                     Expenses. Except as otherwise specified in this Agreement and except as otherwise agreed in writing between Lilly and the Company, Lilly and the Company shall each be responsible for its own fees, costs and expenses paid or incurred in connection with

 

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preparation of Tax Returns, Tax Contests, and other matters related to Taxes under the provisions of this Agreement.

 

Section 13.11                     Further Action. The Parties shall execute and deliver all documents, provide all information, and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement, including the execution and delivery to the other Parties and their Affiliates and representatives of such powers of attorney or other authorizing documentation as is reasonably necessary or appropriate in connection with Tax Contests (or portions thereof) under the control of such other Parties in accordance with Section 9.

 

Section 13.12                     Headings. The table of contents and article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 13.13                     Survival. The covenants and other agreements contained herein and the indemnification obligations and liability for the breach of any obligations contained herein, shall survive the Separation and the IPO, and shall remain in full force and effect.

 

Section 13.14                     Waivers of Default. Waiver by either Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party.

 

Section 13.15                     Specific Performance. In the event of any actual or threatened default or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are or are to be thereby aggrieved shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in each case (a) without the requirement of posting any bond or other indemnity and (b) in addition to any other remedy to which it or they may be entitled, at Law or in equity. Such remedies shall be cumulative with and not exclusive of and shall be in addition to any other remedies which any party may have under this Agreement, or at Law or in equity or otherwise, and the exercise by a party hereto of any one remedy shall not preclude the exercise of any other remedy.

 

Section 13.16                     Amendments. No provision of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

 

Section 13.17                     Interpretation. Interpretation of this Agreement (except as specifically provided in this Agreement, in which case such specified rules of construction shall govern with respect to this Agreement) shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph and Exhibit are references to the Articles, Sections, paragraphs and Exhibits to this Agreement unless otherwise specified; (c) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and

 

31

 

words of similar import shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) a reference to any Person includes such Person’s permitted successors and permitted assigns; (j) any reference to “days” means calendar days unless Business Days are expressly specified; and (k) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

 

Section 13.18                     Waiver of Jury Trial. SUBJECT TO ARTICLE VIII AND SECTIONS 11.15 AND 11.19 OF THE SEPARATION AGREEMENT, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.18.

 

Section 13.19                     Submission to Jurisdiction; Waivers. With respect to any Action relating to or arising out of this Agreement, subject to the provisions of Section 12, each Party irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the State of Indiana and any court of the United States located in the State of Indiana; (b) waives any objection which such Party may have at any time to the laying of venue of any Action brought in any such court, waives any claim that such Action has been brought in an inconvenient forum and further waives the right to object, with respect to such Action, that such court does not have jurisdiction over such Party; and (c) consents to the service of process at the address set forth for notices in Section 13.06 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable Law.

 

Section 13.20                     The Company Subsidiaries. If, at any time, the Company acquires or creates one or more Subsidiaries that are includable in the Company Group, they shall be subject to this Agreement and all references to the Company Group herein shall thereafter include a reference to such Subsidiaries.

 

32

 

IN WITNESS WHEREOF, each Party has caused this Agreement to be executed on its behalf by a duly authorized officer on the date first set forth above.

 

	
 
    	
ELI LILLY AND COMPANY
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
ELANCO ANIMAL HEALTH INCORPORATED
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Tax Matters Agreement]Exhibit 10.24

 

 

 

REVOLVING LOAN CREDIT AGREEMENT

 

among

 

ELANCO ANIMAL HEALTH INCORPORATED,

 

as the “Borrower”

 

THE LENDERS NAMED HEREIN,

 

and

 

JPMORGAN CHASE BANK, N.A., as Administrative Agent,

 

Dated as of September 5, 2018

 

 

 

Goldman Sachs Bank USA,

JPMorgan Chase Bank, N.A.

 

as Joint Lead Arrangers and Joint Bookrunners

 

Goldman Sachs Bank USA,

as Syndication Agent

 

 

 

TABLE OF CONTENTS

 

	
ARTICLE I DEFINITIONS
    	
1
    
	
 
    	
 
    
	
Section 1.01.   Defined Terms
    	
1
    
	
Section 1.02.   Classification of Loans and Borrowings
    	
23
    
	
Section 1.03.   Terms Generally
    	
24
    
	
Section 1.04.   Accounting Terms, GAAP
    	
24
    
	
 
    	
 
    
	
ARTICLE II AMOUNT   AND TERMS OF THE REVOLVING COMMITMENTS AND COMPETITIVE BID PROCEDURE
    	
25
    
	
 
    	
 
    
	
Section 2.01.   Commitments
    	
25
    
	
Section 2.02.   Loans and Borrowings
    	
25
    
	
Section 2.03.   Requests for Borrowings
    	
26
    
	
Section 2.04.   Extension of Revolving Maturity Date
    	
26
    
	
Section 2.05.   Competitive Bid Procedure
    	
27
    
	
 
    	
 
    
	
ARTICLE III   LETTERS OF CREDIT
    	
30
    
	
 
    	
 
    
	
Section 3.01.   Letters of Credit
    	
30
    
	
 
    	
 
    
	
ARTICLE IV GENERAL   PROVISIONS APPLICABLE TO LOANS
    	
35
    
	
 
    	
 
    
	
Section 4.01.   Funding of Borrowings
    	
35
    
	
Section 4.02.   Interest Elections
    	
35
    
	
Section 4.03.   Termination and Reduction of Revolving Commitments
    	
36
    
	
Section 4.04.   Repayment of Loans; Evidence of Debt
    	
37
    
	
Section 4.05.   Incremental Commitments
    	
38
    
	
Section 4.06.   Prepayment of Loans
    	
39
    
	
Section 4.07. Fees
    	
40
    
	
Section 4.08.   Interest
    	
41
    
	
Section 4.09.   Alternate Rate of Interest
    	
42
    
	
Section 4.10. Increased   Costs
    	
43
    
	
Section 4.11.   Break Funding Payments
    	
45
    
	
Section 4.12.   Taxes
    	
45
    
	
Section 4.13.   Payments Generally; Pro Rata Treatment; Sharing of Setoffs
    	
49
    
	
Section 4.14.   Mitigation Obligations; Replacement of Lenders
    	
51
    
	
Section 4.15.   Defaulting Lenders
    	
52
    
	
 
    	
 
    
	
ARTICLE V   REPRESENTATIONS AND WARRANTIES
    	
53
    
	
 
    	
 
    
	
Section 5.01.   Organization; Powers
    	
53
    
	
Section 5.02.   Authorization
    	
54
    
	
Section 5.03.   Enforceability
    	
54
    
	
Section 5.04.   Governmental Approvals
    	
54
    
	
Section 5.05.   Financial Statements; No Material Adverse Effect
    	
54
    
	
Section 5.06.   Litigation, Compliance with Laws
    	
55
    

 

i

 

	
Section 5.07.   Federal Reserve Regulations
    	
55
    
	
Section 5.08.   Taxes
    	
56
    
	
Section 5.09.   Employee Benefit Plans
    	
56
    
	
Section 5.10.   Environmental and Safety Matters
    	
56
    
	
Section 5.11.   Properties
    	
57
    
	
Section 5.12.   Investment Company Status
    	
57
    
	
Section 5.13.   Solvency
    	
57
    
	
Section 5.14.   Anti-Corruption Laws and Sanctions
    	
57
    
	
Section 5.15. Full   Disclosure
    	
57
    
	
 
    	
 
    
	
ARTICLE VI CONDITIONS
    	
58
    
	
 
    	
 
    
	
Section 6.01.   Conditions Precedent to Closing Date
    	
58
    
	
Section 6.02.   Conditions Precedent to Effective Date
    	
59
    
	
Section 6.03.   Conditions Precedent to all Borrowings or Issuance of Letter of Credit
    	
60
    
	
 
    	
 
    
	
ARTICLE VII   AFFIRMATIVE COVENANTS
    	
60
    
	
 
    	
 
    
	
Section 7.01.   Existence
    	
61
    
	
Section 7.02.   Business and Properties
    	
61
    
	
Section 7.03.   Financial Statements, Reports, Etc
    	
61
    
	
Section 7.04.   Insurance
    	
62
    
	
Section 7.05.   Obligations and Taxes
    	
62
    
	
Section 7.06.   Litigation and Other Notices
    	
62
    
	
Section 7.07.   Inspection of Property; Books and Records
    	
63
    
	
Section 7.08. Use   of Proceeds
    	
63
    
	
 
    	
 
    
	
ARTICLE VIII   NEGATIVE COVENANTS
    	
64
    
	
 
    	
 
    
	
Section 8.01.   Consolidations, Mergers, and Sales of Assets
    	
64
    
	
Section 8.02.   Liens
    	
64
    
	
Section 8.03.   Limitation on Sale and Leaseback Transactions
    	
66
    
	
Section 8.04.   Financial Condition Covenants
    	
66
    
	
Section 8.05.   Priority Indebtedness
    	
67
    
	
Section 8.06.   Transactions with Affiliates
    	
67
    
	
 
    	
 
    
	
ARTICLE IX EVENTS   OF DEFAULT
    	
68
    
	
 
    	
 
    
	
ARTICLE X THE   ADMINISTRATIVE AGENT
    	
71
    
	
 
    	
 
    
	
Section 10.01.   Administrative Agent
    	
71
    
	
Section 10.02.   ERISA Matters
    	
73
    
	
 
    	
 
    
	
ARTICLE XI   MISCELLANEOUS
    	
75
    
	
 
    	
 
    
	
Section 11.01.   Notices
    	
75
    
	
Section 11.02.   Survival of Agreement
    	
76
    
	
Section 11.03.   Binding Effect
    	
76
    

 

ii

 

	
Section 11.04.   Successors and Assigns
    	
77
    
	
Section 11.05.   Expenses, Indemnity
    	
80
    
	
Section 11.06.   Applicable Law
    	
81
    
	
Section 11.07.   Waivers, Amendment
    	
81
    
	
Section 11.08.   Entire Agreement
    	
82
    
	
Section 11.09.   Severability
    	
83
    
	
Section 11.10.   Counterparts
    	
83
    
	
Section 11.11.   Headings
    	
83
    
	
Section 11.12.   Right of Setoff
    	
83
    
	
Section 11.13.   Jurisdiction: Consent to Service of Process
    	
83
    
	
Section 11.14.   WAIVER OF JURY TRIAL
    	
84
    
	
Section 11.15.   [Reserved]
    	
84
    
	
Section 11.16. Confidentiality
    	
84
    
	
Section 11.17. USA   PATRIOT Act Notice
    	
85
    
	
Section 11.18. No   Fiduciary Relationship
    	
86
    
	
Section 11.19.   Acknowledgement and Consent to Bail-In of EEA Financial Institutions
    	
86
    
	
Section 11.20.   Interest Rate Limitation
    	
86
    

 

SCHEDULES:

 

	
Schedule 1
    	
Issuing Lenders
    
	
Schedule 2.01
    	
Revolving Commitments
    
	
Schedule 8.02(a)
    	
Existing Liens
    
	
Schedule 8.03
    	
Sale and Leaseback Transactions
    
	
Schedule 8.06
    	
Transactions with Affiliates
    

 

EXHIBITS:

 

	
Exhibit A-1
    	
Form of   Competitive Bid Request
    
	
Exhibit A-2
    	
Form of Notice of   Competitive Bid Request
    
	
Exhibit A-3
    	
Form of   Competitive Bid
    
	
Exhibit A-4
    	
Form of   Competitive Bid Accept/Reject Letter
    
	
Exhibit A-5
    	
Form of Borrowing   Request
    
	
Exhibit B
    	
Form of Assignment   and Acceptance
    
	
Exhibit C
    	
[Reserved]
    
	
Exhibit D
    	
Form of   Administrative Questionnaire
    
	
Exhibit E
    	
Form of Revolving   Maturity Date Extension Request
    
	
Exhibit F-1
    	
Form of U.S. Tax   Compliance Certificate for Foreign Lenders that are not Partnerships for U.S.   Federal Income Tax Purposes
    
	
Exhibit F-2
    	
Form of U.S. Tax   Compliance Certificate for Non-U.S. Participants that are not Partnerships   for U.S. Federal Income Tax Purposes
    
	
Exhibit F-3
    	
Form of U.S. Tax   Compliance Certificate for Non-U.S. Participants that are Partnerships for   U.S. Federal Income Tax Purposes
    
	
Exhibit F-4
    	
Form of U.S. Tax   Compliance Certificate for Foreign Lenders that are Partnerships for U.S.   Federal Income Tax Purposes
    
	
Exhibit G
    	
Form of   Solvency Certificate
    

 

iii

 

REVOLVING LOAN CREDIT AGREEMENT (as amended and in effect from time to time, the “Agreement”) dated as of September 5, 2018, among ELANCO ANIMAL HEALTH INCORPORATED, an Indiana corporation (the “Borrower”), the LENDERS (as defined herein), JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).

 

The Borrower has requested that the Lenders, on the terms and subject to the conditions herein set forth, extend credit to the Borrower in the form of Revolving Loans or Competitive Loans at any time and from time to time prior to the Revolving Maturity Date in an aggregate principal amount of up to $750,000,000 at any time outstanding.

 

The proceeds of the Loans made to the Borrower shall be used for general corporate purposes.

 

Accordingly, the parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

Section 1.01.  Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

 

“ABR” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“Adjusted Eurocurrency Rate” shall mean, with respect to any Eurocurrency Borrowing in Dollars for any Interest Period (or, solely for purposes of clause (c) of the defined term “Alternate Base Rate”, for purposes of determining the Alternate Base Rate as of any date), an interest rate per annum equal to (a) the applicable Eurocurrency Rate for Dollars in effect for such Interest Period divided by (b) one minus the Statutory Reserve Rate.

 

“Administrative Agent” shall have the meaning assigned to that term in the preamble.

 

“Administrative Agent Fee Letter” shall mean, that certain Administrative Agent Fee Letter dated as of September 5, 2018 entered into by the Borrower and the Administrative Agent pursuant to which Administrative Fees are payable.

 

“Administrative Fees” shall have the meaning assigned to such term in Section 4.07(b).

 

“Administrative Questionnaire” shall mean an administrative questionnaire delivered by a Lender pursuant to Section 11.04 in the form of Exhibit D.

 

1

 

“Advance Agent” shall mean JPMCB, as competitive advance facility agent.

 

“Affiliate” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly, Controls or is Controlled by or is under common Control with the Person specified.

 

“Agreement” shall have the meaning set forth in the preamble.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus 1⁄2 of 1% per annum and (c) the Adjusted Eurocurrency Rate on such day (or if such day is not a Business Day, the immediately preceding Business Day) for a deposit in Dollars with a maturity of one month plus 1% per annum.  For purposes of clause (c) above, the Adjusted Eurocurrency Rate on any day shall be based on the rate per annum appearing on the applicable Reuters screen page (currently page LIBOR01) displaying interest rates for Dollar deposits in the London interbank market (or, in the event such rate does not appear on a page of the Reuters screen, on the appropriate page of such other information service that publishes such rate as shall be selected by the Administrative Agent from time to time in its reasonable discretion) at approximately 11:00 a.m., London time, on such day for deposits in dollars with a maturity of one month.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted Eurocurrency Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted Eurocurrency Rate, respectively.

 

“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Affiliates from time to time concerning or relating to bribery, corruption or money laundering, including, without limitation, the United States Foreign Corrupt Practices Act of 1977 and the UK Bribery Act of 2010 (and any regulations promulgated thereunder).

 

“Applicable Margin” shall mean, for each Revolving Loan, the applicable rate per annum determined pursuant to the Pricing Grid.

 

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

 

“Arrangers” shall mean Goldman Sachs Bank USA and JPMorgan Chase Bank, N.A.

 

“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an Eligible Assignee in the form of Exhibit B, or such other form as shall be approved by the Administrative Agent.

 

2

 

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

 

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

 

“Bankruptcy Event” shall mean, with respect to any Person, that such Person has become, other than via an Undisclosed Administration, the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in, any such proceeding or appointment; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority so long as such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States of America or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

 

“Basis Point” shall mean 1/100th of 1%.

 

“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

 

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

“Board of Directors” shall mean either the board of directors of the Borrower or any duly authorized committee thereof or any committee of officers of the Borrower acting pursuant to authority granted by the board of directors of the Borrower or any committee of such board.

 

“Borrower” shall have the meaning assigned to that term in the preamble.

 

“Borrower SEC Documents” shall mean all registration statements, prospectuses, forms, reports, definitive proxy statements, schedules, exhibits, statements and documents filed by the Borrower under the Securities Act or the Exchange Act, as the case may be, and publicly available on the website of the SEC at www.sec.gov, together with all certifications required pursuant to the Sarbanes-Oxley Act.

 

“Borrowing” shall mean (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurocurrency Loans, as to which a single Interest

 

3

 

Period is in effect or (b) a Competitive Loan or group of Competitive Loans of the same Type made on the same date and as to which a single Interest Period is in effect.

 

“Borrowing Request” shall mean a request by the Borrower for a Borrowing in accordance with Section 2.03.

 

“Business Day” shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; provided, however, that, when used in connection with a Eurocurrency Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market.

 

“Capital Lease Obligations” of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.  Notwithstanding the foregoing, all leases of any Person (including leases entered into after the Closing Date) that are or would be treated as operating leases in accordance with GAAP as in effect on the Closing Date, shall continue to be accounted for as operating leases (and none of the obligations of the lessee thereunder shall constitute Capital Lease Obligations) for purposes of this Agreement regardless of any change in GAAP after such date that would otherwise require any of the obligations of the lessee thereunder to be treated as Capital Lease Obligations.

 

“Capital Stock” shall mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any Person, and any option, warrant or other right entitling the holder thereof to purchase or otherwise acquire any such equity interest.

 

“Cash Equivalents” shall mean (a) marketable direct obligations issued by, or unconditionally guaranteed or insured by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits, bankers’ acceptances or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof whose short-term commercial paper rating at the time of acquisition is at least B or the equivalent thereof by Fitch IBCA, A-3 or the equivalent thereof by S&P, or P-3 or the equivalent thereof by Moody’s; (c) commercial paper of an issuer rated at least A-2 or the equivalent thereof at the time of acquisition by S&P or at least P-2 or the equivalent thereof at the time of acquisition by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities

 

4

 

issued or fully guaranteed or insured by the United States government; (e) securities or marketable direct obligations with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; provided, however, that, in case of any investment by a Foreign Subsidiary, “Cash Equivalents” shall also include: (i) certificates of deposit, time deposits, Eurodollar time deposits, bankers’ acceptances or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any commercial bank located in the same jurisdiction as such Foreign Subsidiary whose short-term commercial paper rating at the time of acquisition would meet or exceed those ratings applicable to a Lender set forth in clause (b) hereof, (ii) direct obligations of the sovereign nation (or any agency thereof) in which such Foreign Subsidiary is organized or is conducting business or in obligations fully and unconditionally guaranteed by such sovereign nation (or any agency thereof), in each case maturing within one year from the date of acquisition, (iii) investments of the type and maturity described in clauses (c) through (f) above of obligors located in the same jurisdiction as such Foreign Subsidiary, which Investments or obligors (or the parent of any such obligor) have ratings described in clauses (c) through (f) or equivalent ratings from comparable foreign rating agencies and (iv) shares of money market mutual or similar funds which invest exclusively in assets otherwise satisfying the requirements of this proviso.

 

A “Change in Control” shall be deemed to have occurred if (a) any Person or group of Persons (other than (i) the Borrower and its Subsidiaries, (ii) the Parent or (iii) any employee or director benefit plan or stock plan of the Borrower or a Subsidiary or any trustee or fiduciary with respect to any such plan when acting in that capacity or any trust related to any such plan) shall have acquired beneficial ownership of shares representing more than 35% of the combined voting power represented by the outstanding Voting Stock of the Borrower (within the meaning of Section 13(d) or 14(d) of the Exchange Act and the applicable rules and regulations thereunder), (b) during any period of 12 consecutive months, commencing before and ending after, or commencing after, the Closing Date, individuals who on the first day of such period were directors of the Borrower (together with any replacement or additional directors who were nominated or elected by a majority of directors then in office or approved prior to their election by a majority of directors then in office) cease to constitute a majority of the Board of Directors of the Borrower or (c) a “change of control” (or similar event) occurs under any document relating to Material Debt.

 

“Change in Law” shall mean (a) the adoption or taking effect of any law, rule, regulation or treaty after the Closing Date, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender (or, for purposes of Section 4.10, by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental

 

5

 

Authority made or issued after the Closing Date; provided that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States of America or foreign regulatory authorities, in each case pursuant to Basel III, in each case shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, promulgated or issued.

 

“Closing Date” shall have the meaning assigned to that term in Section 6.01.

 

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

 

“Competitive Bids” shall mean an offer by a Lender to make a Competitive Loan pursuant to Section 2.05.

 

“Competitive Bid Accept/Reject Letter” shall mean a notification made by the Borrower pursuant to Section 2.05(d) in the form of Exhibit A-4.

 

“Competitive Bid Rate” shall mean, as to any Competitive Bid, the Competitive Loan Margin or the Fixed Rate, as applicable, offered by the Lender making such Competitive Bid.

 

“Competitive Bid Request” shall mean a request made pursuant to Section 2.05 in the form of Exhibit A-1.

 

“Competitive Borrowing” shall mean a Borrowing consisting of a Competitive Loan or concurrent Competitive Loans from the Lender or Lenders whose Competitive Bids for such Borrowing have been accepted under the bidding procedure described in Section 2.05.

 

“Competitive Loan” shall mean a Loan made pursuant to Section 2.05. Each Competitive Loan shall be a Eurocurrency Loan or a Fixed Rate Loan.

 

“Competitive Loan Exposure” shall mean, with respect to any Lender at any time, the aggregate principal amount of the outstanding Competitive Loans of such Lender.

 

“Competitive Loan Margin” shall mean, with respect to any Competitive Loan bearing interest at a rate based on the Eurocurrency Rate, the marginal rate of interest, if any, to be added to or subtracted from the Eurocurrency Rate in order to determine the interest rate applicable to such Competitive Loan, as specified by the Lender making such Competitive Loan in its related Competitive Bid.

 

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

 

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“Consenting Lender” shall have the meaning assigned to such term in Section 2.04.

 

“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period plus, without duplication and, other than in the case of clause (i) below, to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of: (a)  income tax expense, (b) interest expense (including imputed interest on Capital Lease Obligations), amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Debt (including the Loans), and commissions, discounts and other fees and charges with respect to letters of credit, bankers’ acceptance financing and receivables financings, (c) depreciation and amortization expense (plus, to the extent GAAP then includes amounts as such expense, amounts of such expenses (calculated under the current GAAP) for any prior portion of such period if not otherwise so included), (d) amortization of intangibles (including goodwill) and organization costs, (e) any extraordinary, unusual or non-recurring expenses or losses (including start-up costs, and whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on sales of assets outside of the ordinary course of business), (f) any non-cash expenses relating to stock option exercises (if applicable accounting rules so require), (g) any other non-cash charges, (h) [reserved], (i) [reserved], (j) (x) any charges, costs, expenses, accruals or reserves incurred pursuant to any management equity plan, profits interest or stock option plan, any equity-based compensation or equity-based incentive plan, or any other management or employee benefit plan, agreement or pension plan and (y) any charges, costs, expenses, accruals or reserves in connection with the rollover, acceleration or payout of Capital Stock of the Borrower held by management of the Borrower or any of its Subsidiaries, and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of: (a) interest income, (b) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (c) any other non-cash income, all as determined on a consolidated basis.  For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any determination of the Consolidated Leverage Ratio or Consolidated Interest Coverage Ratio, (x) if at any time during such Reference Period the Borrower or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (y) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. Notwithstanding the foregoing, for purposes of determining Consolidated EBITDA for any period that includes any of the fiscal quarters ending September 30, 2017, December 31, 2017, March 31, 2018 and June 30, 2018, Consolidated EBITDA for such fiscal quarters shall be $99.0 million, $134.0 million, $158.3 million and $161.2 million respectively.

 

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“Consolidated Interest Charges” shall mean, for any period, the sum, without duplication, of (a) all interest, premium payments, debt discount, fees, charges and related  expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP and (b) the portion of rent expense under capitalized leases that is treated as interest in accordance with GAAP, in each case, of or by the Borrower and its Subsidiaries on a consolidated basis for the most recently completed four fiscal quarter; provided that (i) for purposes of determining Consolidated Interest Charges for the four fiscal quarter period ending December 31, 2018, such amount for the four fiscal quarters then ended shall equal such item for such fiscal quarter multiplied by four; (ii) for purposes of determining Consolidated Interest Charges for the fiscal quarter period ending March 31, 2019, such amount for the four fiscal quarters then ended shall equal such item for the two fiscal quarters then most recently ended multiplied by two; and (iii) for purposes of determining Consolidated Interest Charges for the four fiscal quarter period ending June 30, 2019, such amount for the four fiscal quarters then ended shall equal such item for the three fiscal quarters then most recently ended multiplied by 4/3.

 

“Consolidated Interest Coverage Ratio” shall mean, as at the last day of any four fiscal quarter period, the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Charges, in each case, for the most recently completed four fiscal quarters of the Borrower then ended.

 

“Consolidated Leverage Ratio” shall mean, as at the last day of any four fiscal quarter period, the ratio of (a) Consolidated Total Debt as of such date to (b) Consolidated EBITDA for such period.

 

“Consolidated Net Income” shall mean, for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded, without duplication: (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation.

 

“Consolidated Net Tangible Assets” shall mean, with respect to the Borrower, the total amount of its assets (less applicable reserves and other properly deductible items) after deducting (i) all current liabilities (excluding the amount of those which are by their terms extendable or renewable at the option of the obligor to a date more than 12 months after the date as of which the amount is being determined) and (ii) all goodwill, tradenames, trademarks, patents, unamortized debt discount and expense and other like intangible assets, all as set forth on the most recent balance sheet of the Borrower and its consolidated subsidiaries and determined on a consolidated basis in accordance with GAAP.

 

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“Consolidated Total Debt” shall mean, at any date, the aggregate principal amount of all third-party Debt for borrowed money (including purchase money Debt), unreimbursed drawings under letters of credit, Capital Lease Obligations and third-party Debt obligations evidenced by notes or similar instruments, in each case of the Borrower and its Subsidiaries outstanding as of such date that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP (except as otherwise provided in the definition of Capital Lease Obligations) plus the aggregate Value of all Sale and Leaseback Transactions minus up to $200,000,000 of cash and Cash Equivalents held in the United States by the Borrower and its Domestic Wholly Owned Subsidiaries; provided that such cash and Cash Equivalents are free of any Liens.

 

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

 

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

 

“Credit Party” shall mean the Administrative Agent, each Issuing Lender and each other Lender.

 

“Debt” of any Person, shall mean, without duplication, (i) all obligations of such Person represented by notes, bonds, debentures or similar evidences of indebtedness; (ii) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services other than, in the case of any such deferred purchase price, on normal trade terms, (iii) all rental obligations of such Person as lessee under leases that are Capital Lease Obligations, (iv) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (v) all obligations, contingent or otherwise, of such Person as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (vi) the liquidation value of all preferred capital stock of such Person which is redeemable at the option of the holder thereof or which may become (by scheduled or mandatory redemption) due within one year of the Revolving Maturity Date, (vii) all Guarantees of such Person in respect of obligations of the kind referred to in clauses (i) through (vi) above, (viii) all obligations of the kind referred to in clauses (i) through (vii) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by the applicable Person, whether or not such Person has assumed or become liable for the payment of such obligation and (ix) for the purposes of paragraph (f) of Article IX only, all obligations in respect of Hedge Agreements.  The Debt of any Person shall include Debt of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s

 

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ownership interest in or other relationship with such entity, except to the extent the terms of such Debt expressly provide that such Person is not liable therefor.

 

“Declining Lender” shall have the meaning assigned to such term in Section 2.04.

 

“Default” shall mean any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Defaulting Lender” shall mean any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified in such writing, including, if applicable, by reference to a specific Default) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent to funding (specifically identified in such writing, including, if applicable, by reference to a specific Default) cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after a written request by the Administrative Agent or an Issuing Lender, made in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations to fund prospective Loans and participations in then outstanding Letters of Credit; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt by the Administrative Agent or such Issuing Lender of such certification in form and substance reasonably satisfactory to it, or (d) has become the subject of a Bankruptcy Event or (e) has become, or has a Lender Parent that has become, the subject of a Bail-In Action.

 

“Dollars” or “$” shall mean lawful money of the United States of America.

 

“Domestic Subsidiary” shall mean a Subsidiary that is incorporated or organized under the laws of the United States, any state thereof or the District of Columbia.

 

“Domestic Wholly Owned Subsidiary” shall mean a Wholly Owned Subsidiary that is a Domestic Subsidiary.

 

“EEA Financial Institution” shall mean (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

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

 

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

 

“Effective Date” shall have the meaning assigned to that term in Section 6.02.

 

“Eligible Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person, other than, in each case, a natural person, a Defaulting Lender or the Borrower or any Subsidiary.

 

“Environmental and Safety Laws” shall mean any and all applicable current and future treaties, laws (including without limitation common law), regulations, legally enforceable requirements, legally binding determinations, orders, decrees, judgments, injunctions, permits, approvals, authorizations, licenses, permissions, or binding agreements issued, promulgated or entered by any Governmental Authority, relating to protection of the environment, to employee health or safety as it pertains to the use or handling of, or exposure to, any Hazardous Substance, to preservation or reclamation of natural resources or to the management, release or threatened release of any Hazardous Substance.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 or ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

 

“ERISA Termination Event” shall mean (i) a “Reportable Event” described in Section 4043 of ERISA and the regulations issued thereunder (other than a “Reportable Event” not subject to the provision for 30-day notice to the PBGC under such regulations), or (ii) the withdrawal of the Borrower or any of its ERISA Affiliates from a “single employer” Plan during a plan year in which it was a “substantial employer”, both of such terms as defined in Section 4001(a) of ERISA, or (iii) the incurrence of liability under Title IV of ERISA with respect to the termination of a Plan, or (iv) the institution of proceedings to terminate a Plan by the PBGC, or (v) the receipt by the Borrower or any ERISA Affiliate of any notice (whether or not written) from the PBGC of any event or condition which the PBGC asserts is reasonably likely to constitute grounds under Section 4042 of ERISA to terminate, or to appoint a trustee to administer, any Plan or (vi) the partial or complete withdrawal of the Borrower or any ERISA Affiliate of the Borrower from, or the Insolvency or Reorganization of, a Multiemployer Plan.

 

“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

 

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“Eurocurrency” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to a Eurocurrency Rate.

 

“Eurocurrency Rate” shall mean with respect to any Eurocurrency Borrowing for any Interest Period, the rate determined by the Administrative Agent by reference to the London interbank offered rate as administered by the ICE Benchmark Administration (or any other Person that takes over the administration of such rate) (the “LIBOR Screen Rate”) for deposits in the currency of such Borrowing (as reflected on the applicable Reuters screen page) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for deposits in Dollars with a maturity comparable to such Interest Period.  In the event that any such rate is not available at such time for the applicable Interest Period for any reason, then the “Eurocurrency Rate” with respect to such Eurocurrency Borrowing for such Interest Period (the “Impacted Interest Period”) shall be the Interpolated Rate; provided, that if at the time that the Administrative Agent shall seek to determine the relevant LIBOR Screen Rate for any Interest Period for a Eurocurrency Borrowing the applicable LIBOR Screen Rate shall not be available for such Interest Period with respect to such Eurocurrency Borrowing for any reason and the Administrative Agent shall determine that it is not possible to determine the Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error), then the “Eurocurrency Rate” with respect to such Eurocurrency Borrowing for the Impacted Interest Period shall be the rate per annum (rounded upwards, if necessary, to the next Basis Point) equal to the arithmetic average of the rates at which deposits in Dollars and for a maturity comparable to such Interest Period are offered with respect to any Eurocurrency Borrowing, to the principal London offices of the Reference Lenders (or, if either Reference Lender does not at the time maintain a London office, the principal London office of any Affiliate of such Reference Lender) in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.  It is understood and agreed that the Administrative Agent will not disclose to any party hereto the rates quoted by the individual Reference Lenders. Notwithstanding the foregoing, in the event that any “Eurocurrency Rate”, determined as provided above, would be less than zero, the Eurocurrency Rate shall be deemed to be zero for all purposes of this Agreement.

 

“Event of Default” shall have the meaning assigned to such term in Article IX.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, any U.S. federal withholding Taxes described in Section 4.12(k)(i), or Section 4.12(k)(ii) imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Revolving Commitment, (c)

 

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Taxes attributable to such Recipient’s failure to comply with Section 4.12(h), Section 4.12(i), Section 4.12(j), and (d) any withholding Taxes imposed under FATCA.

 

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

 

“Federal Funds Effective Rate” shall mean, for any day, the rate calculated by the New York Federal Reserve Bank based on such day’s federal funds transactions by depository institutions (as determined in such manner as the New York Federal Reserve Bank shall set forth on its public website from time to time) and published on the next succeeding business day as the federal funds effective rate; provided that such rate shall in no event be less than zero.

 

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

 

“Fee Letter” shall mean, that certain Fee Letter dated as of August 7, 2018 entered into by the Borrower and the Arrangers.

 

“Financial Officer” of any corporation shall mean the chief financial officer, principal accounting officer, vice president of finance, controller or treasurer of such corporation.

 

“Fitch” shall mean Fitch Ratings Inc., or any successor rating agency.

 

“Fixed Rate” shall mean, with respect to any Competitive Loan (other than a Eurocurrency Competitive Loan), the fixed rate of interest per annum specified by the Lender making such Competitive Loan in its related Competitive Bid.

 

“Fixed Rate Loan” shall mean a Competitive Loan bearing interest at a Fixed Rate.

 

“Foreign Subsidiary” shall mean any Subsidiary that is not organized under the laws of the United States, any state thereof or the District of Columbia.

 

“GAAP” shall mean generally accepted accounting principles in the United States of America.

 

“Governmental Authority” shall mean the government of any nation, including, but not limited to, the United States of America, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

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“Guarantee” of or by any Person (the “guarantor”) shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Debt or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Debt or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Debt or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

 

“Hazardous Substances” shall mean any toxic, radioactive, mutagenic, carcinogenic, noxious, caustic or otherwise hazardous substance, material or waste, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics, including, without limitation, polychlorinated biphenyls, asbestos or asbestos-containing material, and any substance, waste or material regulated under Environmental and Safety Laws.

 

“Hedge Agreements” shall mean all interest rate swaps, caps or collar agreements, foreign exchange transactions or other arrangements dealing with interest rates or currency exchange rates or the exchange of nominal interest obligations or foreign currencies, either generally or under specific contingencies.

 

“Incremental Assumption Agreement” shall mean an Incremental Assumption Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, among the Borrower, the Administrative Agent and each existing or additional Lender party thereto.

 

“Incremental Facility Amount” shall mean, at any time the excess, if any, of (a) $250,000,000 over (b) the aggregate increase in the Revolving Commitments established under this Agreement or establishment of any Incremental Term Loan, in each case, prior to such time, pursuant to Section 4.05.

 

“Incremental Term Loans” shall have the meaning assigned to such term in Section 4.05(a).

 

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

 

“Insolvency” shall mean with respect to any Multiemployer Plan, the condition that such plan is insolvent within the meaning of Section 4245 of ERISA.

 

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“Interest Election Request” shall mean a request by the Borrower to convert or continue a Borrowing in accordance with Section 4.02.

 

“Interest Payment Date” shall mean (a) with respect to any ABR Loan, the last day of each March, June, September and December, (b) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and (c) with respect to any Fixed Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Fixed Rate Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest Period of more than 90 days’ duration (unless otherwise specified in the applicable Competitive Bid Request), each day prior to the last day of such Interest Period that occurs at intervals of 90 days’ duration after the first day of such Interest Period, and any other dates that are specified in the applicable Competitive Bid Request as Interest Payment Dates with respect to such Borrowing.

 

“Interest Period” shall mean (a) as to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is 1, 2, 3 or 6 (or, with the consent of all Lenders making Loans as part of such Borrowing, 12) months thereafter (or such shorter interest period as may be agreed to by all Lenders making Loans as part of such Borrowing), in each case as the applicable Borrower may elect and (b) as to any Fixed Rate Borrowing, the period (which shall not be less than seven days or more than 360 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive Bid Request; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period referred to above that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

“Interpolated Rate” shall mean, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the relevant LIBOR Screen Rates) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the applicable LIBOR Screen Rate for the longest period (for which the applicable LIBOR Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the applicable LIBOR Screen Rate for the shortest period (for which such LIBOR Screen Rate is available) that exceeds the Impacted Interest Period, in each case, as of approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. When determining the rate for a period which is less than the shortest period for which the relevant LIBOR Screen Rate is available, the applicable LIBOR Screen Rate for purposes of clause (a)

 

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above shall be deemed to be the overnight screen rate where “overnight screen rate” means, in relation to any currency, the overnight rate for such currency determined by the Administrative Agent from such service as the Administrative Agent may select.

 

“IRS” shall mean the U.S. Internal Revenue Service.

 

“Issuing Lender” shall mean each of the entities listed on Schedule 1 attached hereto. Each Issuing Lender may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Lender, in which case the term “Issuing Lender” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

 

“JPMCB” shall mean JPMorgan Chase Bank, N.A.

 

“LC Commitment” shall mean, as to each Issuing Lender, the amount set forth next to the name of such Issuing Lender on Schedule 1 hereto or such greater amount as such Issuing Lender and the Borrower may agree upon in writing.

 

“LC Disbursement” shall mean a payment made by the Issuing Lenders pursuant to a Letter of Credit.

 

“LC Exposure” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Lender at any time shall be its Revolving Commitment Percentage of the total LC Exposure at such time.

 

“Lender Parent” shall mean, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

 

“Lenders” shall mean (a) the financial institutions listed on Schedule 2.01 (other than any such financial institution that has ceased to be a party hereto, pursuant to an Assignment and Acceptance) and (b) any financial institution that has become a party hereto pursuant to an Assignment and Acceptance or an Incremental Assumption Agreement.

 

“Letter of Credit” shall mean any Letter of Credit issued (or deemed issued) pursuant to Article III.

 

“Lien” shall mean any mortgage, lien, pledge, encumbrance, charge or security interest.

 

“Loans” shall mean the loans made by the Lenders to the Borrower pursuant to this Agreement.

 

“Loan Documents” shall mean this Agreement, each Incremental Assumption Agreement, each promissory note held by a Lender pursuant to Section 4.04(e) and any other agreement, instrument or document designated by its terms as a Loan Document.

 

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“Margin Regulations” shall mean Regulations T, U and X of the Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof.

 

“Material Acquisition” shall mean any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the Capital Stock of a Person and (b) involves the payment of consideration by the Borrower and its Subsidiaries in excess of $250,000,000.

 

“Material Adverse Effect” shall mean a material adverse effect on the business, operations, properties or financial condition of the Borrower and its consolidated Subsidiaries, taken as a whole.

 

“Material Debt” shall mean any Debt of the Borrower or its Subsidiaries with an outstanding principal amount in excess of $200,000,000.

 

“Material Disposition” shall mean any disposition of property or series of related dispositions of property that yields gross proceeds to the Borrower and/or any of its Subsidiaries, in the aggregate, in excess of $250,000,000.

 

“Moody’s” shall mean Moody’s Investors Service, Inc. or any successor thereto.

 

“Notice of Competitive Bid Request” shall mean a notification made pursuant to Section 2.05 in the form of Exhibit A-2.

 

“NYFRB Rate” shall mean, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day; or if both such rates are not published for any day that is a Business Day, the rate quoted for such day for a federal funds transaction at 11:00 a.m., New York City time, on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided that NYFRB Rate shall in no event be less than zero.

 

“Obligations” shall mean the due and punctual payment of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on any Loans made by the Lenders to the Borrower pursuant to this Agreement, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations, including fees, reimbursements, costs, expenses and indemnities of the Borrower to the Lenders and the Issuing Lenders under this Agreement and the other Loan Documents (including any of the foregoing incurred or accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).

 

“OFAC” shall mean the United States Treasury Department Office of Foreign Assets Control.

 

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“Other Connection Taxes” shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan Document).

 

“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 4.14(b)).

 

“Overnight Bank Funding Rate” shall mean, for any day, the rate comprised of both overnight federal funds and overnight Eurocurrency borrowings by U.S.-managed banking offices of depository institutions (as such composite rate shall be determined by the New York Federal Reserve Bank as set forth on its public website from time to time) and published on the next succeeding business day as an Overnight Bank Funding Rate (from and after such date as the New York Federal Reserve Bank shall commence to publish such composite rate).

 

“Parent” shall mean Eli Lilly and Company, an Indiana corporation.

 

“Participant” shall have the meaning set forth in Section 11.04(f).

 

“Participant Register” shall have the meaning set forth in Section 11.04(g).

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

“Permitted Debt” shall mean (i) Debt of any Subsidiary of the Borrower to the Borrower or another Subsidiary, (ii) Debt of the Borrower to any Subsidiary, (iii) Debt of the Borrower or any Subsidiary as an account party in respect of trade letters of credit, to the extent that such letters of credit are not drawn upon, (iv) Debt consisting of guarantees of loans made to officers, directors or employees of any Subsidiary, (v) unsecured trade accounts payable and other unsecured current Debt incurred in the ordinary course of business and not more than 120 days past due (but excluding any Debt for borrowed money), (vi) Debt with respect to surety, appeal and performance bonds obtained by any Subsidiary in the ordinary course of business, (vii) Debt owed in respect of any netting services, overdrafts and related liabilities arising from treasury, depository and cash management services or in connection with any automated clearing-house transfers of funds and (viii) any replacement, renewal, refinancing or extension of any Debt referenced above that does not exceed the aggregate principal amount (plus associated fees and expenses) of the Debt being replaced, renewed, refinanced or extended (except that accrued and unpaid interest not delinquent in accordance with its terms may be part of any refinancing pursuant to this clause) and that otherwise complies with this Agreement.

 

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

 

“Plan” shall mean any “employee pension benefit plan”, as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), subject to the provisions of Title IV or Section 302 of ERISA or Section 412 of the Code that is maintained by the Borrower or any ERISA Affiliate for current or former employees, or any beneficiary thereof, of the Borrower or any ERISA Affiliate.

 

“Pricing Grid” shall mean the Facility Fee and Applicable Margin Grid set forth in Annex I.

 

“Prime Rate”  shall mean the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.

 

“Principal Property” shall mean any building, structure or other facility together with the underlying land and its fixtures, used primarily for manufacturing, processing or production, owned in the United States and the net book value of such building, structure or other facility exceeds 2% of the Consolidated Net Tangible Assets; provided that no building, structure or other facility will be a Principal Property if, in the good faith opinion of the Board of Directors (or a committee thereof), such building, structure or other facility is not of material importance to the business of the Borrower and its Subsidiaries taken as a whole.

 

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

 

“Qualified IPO” shall mean the closing of a firmly underwritten public offering pursuant to an effective registration statement under the Securities Act, covering the offer and sale of Capital Stock of the Borrower in the United States on the New York Stock Exchange or the Nasdaq Global Market.

 

“Rating Agencies” shall mean Moody’s, S&P and Fitch.

 

“Ratings” shall have the meaning assigned to such term in Annex I.

 

“Recipient” shall mean the Administrative Agent, any Lender and any Issuing Lender, or any combination thereof (as the context requires).

 

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“Reference Lenders” shall mean at least two Lenders as selected by the Borrower; provided that such Lenders agree in their sole discretion to act as Reference Lenders hereunder and the selection of such Lenders is reasonably acceptable to the Administrative Agent.

 

“Register” shall have the meaning set forth in Section 11.04(d).

 

“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, partners, members, trustees, employees, agents, administrators, managers, representatives and advisors of such Person and of such Person’s Affiliates.

 

“Reorganization” shall mean with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

“Required Lenders” shall mean, at any time, Lenders having Revolving Credit Exposures, and unused Revolving Commitments representing a majority of the sum of the Revolving Credit Exposures and unused Revolving Commitments at such time; provided that, for purposes of declaring the Revolving Loans to be due and payable pursuant to Article IX, and for all purposes after the loans become due and payable pursuant to Article IX or the Revolving Commitments shall have expired or terminated, the Competitive Loan Exposures of the Lenders shall be included in their respective Revolving Credit Exposures in determining the Required Lenders.

 

“Revolving Availability Period” shall mean the period from and including the Effective Date to (but excluding) the earlier of the Revolving Maturity Date and the date of termination of the Revolving Commitments in accordance with the terms hereof.

 

“Revolving Commitments” shall mean, as to any Lender at any time, its obligation to make Revolving Loans to, and/or participate in Letters of Credit issued for the account of, the Borrower in an aggregate amount not to exceed at any time outstanding the Dollar amount set forth opposite such Lender’s name in Schedule 2.01 under the heading “Revolving Commitment”, as such amount may be reduced from time to time pursuant to Section 4.03 and the other applicable provisions hereof, or increased from time to time pursuant to Section 4.05.  The initial aggregate amount of the Revolving Commitments is $750,000,000.

 

“Revolving Commitment Percentage” shall mean, as to any Lender at any time, the percentage which such Lender’s Revolving Commitment then constitutes of the aggregate Revolving Commitments of all Lenders.

 

“Revolving Credit Exposure” shall mean, as at any date of determination with respect to any Lender, an amount in Dollars equal to the sum of (a) the aggregate unpaid principal amount of such Lender’s Revolving Loans on such date and (b) such Lender’s LC Exposure.

 

“Revolving Loans” shall have the meaning set forth in Section 2.01.

 

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“Revolving Maturity Date” shall mean the fifth anniversary of the Closing Date, as such date may be extended pursuant to Section 2.04.

 

“Revolving Maturity Date Extension Request” shall mean a request by the Borrower, substantially in the form of Exhibit E or such other form as shall be approved by the Administrative Agent, for the extension of the Revolving Maturity Date pursuant to Section 2.04.

 

“Sale and Leaseback Transaction” shall mean any arrangement with any Person pursuant to which the Borrower or any Subsidiary leases any Principal Property that has been or is to be sold or transferred by the Borrower or the Subsidiary to such Person, other than (1) temporary leases for a term, including renewals at the option of the lessee, of not more than three years, (2) leases between the Borrower and a Subsidiary or between Subsidiaries and (3) leases of a Principal Property executed by the time of, or within 90 days after the latest of, the acquisition, the completion of construction or improvement, or the commencement of commercial operation of the Principal Property.

 

“Sanctioned Country” shall mean, at any time, a country, region or territory that is itself the subject or target of any Sanctions.

 

“Sanctioned Person” shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC or the U.S. Department of State or by the United Nations Security Council, the European Union or any European Union member state or Her Majesty’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any Person or Persons described in the preceding clauses (a) and (b).

 

“Sanctions” shall mean all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom.

 

“SEC” shall mean the Securities and Exchange Commission.

 

“S&P” shall mean Standard & Poor’s Ratings Services, or any successor rating agency.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Solvent” shall mean, with respect to any Person, that as of the date of determination (i) the fair value of the assets of such Person at a fair valuation will exceed its debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the property of such Person will be greater than the amount that will be required to pay the probable liabilities on its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) such Person will be able to pay its debts and

 

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liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) such Person will not have an unreasonably small capital with which to conduct the businesses in which it is engaged as such businesses are now conducted and proposed to be conducted following the determination date. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“Statutory Reserve Rate” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves), expressed as a decimal, established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Eurocurrency Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

“subsidiary” shall mean, with respect to any Person (the “parent”) at any date, (a) for purposes of Section 8.03 and Section 8.06 only, any Person the majority of the outstanding Voting Stock (or equivalent voting securities of any Person which is not a corporation) of which is owned, directly or indirectly, by the parent or one or more subsidiaries of the parent of such Person and (b) for all other purposes under this Agreement, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held.

 

“Subsidiary” shall mean a subsidiary of the Borrower.

 

“Syndication Agent” means Goldman Sachs Bank USA.

 

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

 

“Term Loan Credit Agreement” shall mean that certain term loan credit agreement dated as of the date hereof among the Borrower, the lenders named therein and JPMCB, as administrative agent.

 

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“Transactions” shall mean the execution and delivery by the Borrower of this Agreement, the performance by the Borrower of its obligations hereunder, the borrowings made or to be made hereunder and the use of the proceeds thereof.

 

“Type” when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined.  For purposes hereof, “Rate” shall include the Eurocurrency Rate, the Alternate Base Rate and the Fixed Rate.

 

“Undisclosed Administration” shall mean, in relation to a Lender or a Lender Parent, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.

 

“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

 

“Value” shall mean, with respect to a Sale and Leaseback Transaction, an amount equal to the present value of the lease payments with respect to the term of the lease (reduced by the amount of rental obligations of any sublessee of all or part of the same property) remaining on the date as of which the amount is being determined, without regard to any renewal or extension options contained in the lease, discounted at an interest rate determined by the Borrower at the time of the consummation of such Sale and Leaseback Transaction as long as such interest rate is customary for leases of such type.

 

“Voting Stock” shall mean, as applied to the stock of any corporation, stock of any class or classes (however designated) having by the terms thereof ordinary voting power to elect a majority of the members of the board of directors (or other governing body) of such corporation other than stock having such power only by reason of the happening of a contingency.

 

“Wholly Owned Subsidiary” of any Person, shall mean a subsidiary of such Person of which securities (except for directors’ qualifying shares) or other ownership interests representing 100% of the equity are, at the time any determination is being made, owned by such Person or one or more wholly owned subsidiaries of such Person or by such Person and one or more wholly owned subsidiaries of such Person.

 

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

 

Section 1.02.  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Type (e.g. “Eurocurrency Loan”).  Borrowings also may be classified by Type (e.g. Eurocurrency Borrowing”).

 

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Section 1.03.  Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any definition of or reference to any statute, rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwise modified (including by succession of comparable successor laws), unless otherwise expressly stated to the contrary, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

Section 1.04.  Accounting Terms, GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article VIII or any related definition or other financial term used herein to eliminate the effect of any change in GAAP occurring after the Closing Date on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Article VIII or any related definition or other financial term used herein for such purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB ASC Topic 825 “Financial Instruments” (or any other financial accounting standard having a similar result or effect) to value any Debt of the Borrower or any Subsidiary at “fair value”, as defined therein.  For purposes of determining the amount of Debt outstanding hereunder, no effect shall be given to (a) any election by the Borrower to measure an item of Debt using fair value (as permitted by Financial Accounting Standards Board Accounting Standards Codification 825-10-25 (formerly known as FASB 159) or any similar accounting standard) or (b) any change in accounting for leases pursuant to GAAP resulting from the implementation of Financial Accounting Standards Board ASU No. 2016-02, Leases (Topic 842), to the extent such adoption would require recognition of a lease liability where such lease (or similar arrangement) would not have required a lease liability under GAAP as in effect on December 31, 2017.

 

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ARTICLE II

 

Amount and Terms of the Revolving Commitments and Competitive Bid Procedure

 

Section 2.01.  Commitments.  Subject to the terms and conditions set forth herein, each Lender agrees to make revolving loans (“Revolving Loans”) to the Borrower from time to time during the Revolving Availability Period in Dollars in an aggregate principal amount that will not result in (i) such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving Commitment or (ii) the sum of the total Revolving Credit Exposures plus the total Competitive Loan Exposures exceeding the total Revolving Commitments.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

 

Section 2.02.  Loans and Borrowings.  (a)  Each Revolving Loan shall be made as part of a Borrowing consisting of the same Type made by the Lenders ratably in accordance with their respective Revolving Commitments.  Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.05.

 

(b)                                 The failure of any Lender to make any Revolving Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Revolving Commitments and Competitive Bids of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make such Revolving Loans or Competitive Loans as required.

 

(c)                                  Subject to Section 4.09, (i) each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurocurrency Loans as the Borrower may request in accordance herewith and (ii) each Competitive Borrowing shall be comprised entirely of Eurocurrency Loans or Fixed Rate Loans as the Borrower may request in accordance herewith.  Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.  Each Competitive Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000.

 

(d)                                 At the commencement of each Interest Period for any Eurocurrency Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000.  At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $3,000,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Revolving Commitments.  There shall not at any time be more than a total of 10 Eurocurrency Borrowings outstanding.

 

(e)                                  Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date.

 

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Section 2.03.  Requests for Borrowings.  To request a Revolving Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurocurrency Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 1:00 p.m., New York City time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by fax or email to the Administrative Agent of a written Borrowing Request in the form of Exhibit A-5.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

 

(i)                                     the aggregate amount of the requested Borrowing;

 

(ii)                                  the date of such Borrowing, which shall be a Business Day;

 

(iii)                               whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;

 

(iv)                              in the case of a Eurocurrency Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

 

(v)                                 the location and number of the account of the Borrower to which funds are to be disbursed, which shall comply with the requirements of Section 4.01.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurocurrency Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each applicable Lender of the details thereof and of the amount of such Lender’s Revolving Loan to be made as part of the requested Borrowing.

 

Section 2.04.  Extension of Revolving Maturity Date.  The Borrower may, by delivery of a Revolving Maturity Date Extension Request to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders), request that the Lenders extend the Revolving Maturity Date for an additional period of one year; provided that there shall be no more than two extensions of the Revolving Maturity Date pursuant to this Section and in no event shall the extended Revolving Maturity Date be more than five (5) years after the effective date of such extension.  Each Lender shall, by notice to the Borrower and the Administrative Agent given not later than the 20th day after the date of the Administrative Agent’s receipt of the Borrower’s Revolving Maturity Date Extension Request, advise the Borrower whether or not it agrees to the requested extension (each Lender agreeing to a requested extension being called a “Consenting Lender”, and each Lender declining to agree to a requested extension being called a “Declining Lender”). Any Defaulting Lender and any Lender that has not so advised the Borrower and the Administrative Agent by such day shall be deemed to have declined to agree to such extension and shall be a Declining Lender; provided that a Declining Lender (other than a Defaulting Lender)

 

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may, with the written consent of the Borrower, elect to become a Consenting Lender by providing written notice of such election to the Borrower and the Administrative Agent at any time prior to the Existing Maturity Date (as defined below).  If Lenders constituting the Required Lenders shall have agreed to a Revolving Maturity Date Extension Request within the 20-day period described above, then the Revolving Maturity Date shall, as to the Consenting Lenders, be extended to the first anniversary of the Revolving Maturity Date theretofore in effect (such Revolving Maturity Date theretofore in effect being called the “Existing Maturity Date”).  The decision to agree or withhold agreement to any Revolving Maturity Date Extension Request shall be at the sole discretion of each Lender.  The Revolving Commitment of any Declining Lender shall terminate on the Existing Maturity Date.  The principal amount of any outstanding Revolving Loans made by Declining Lenders, together with any accrued interest thereon and any accrued fees and other amounts payable to or for the account of such Declining Lenders hereunder, shall be due and payable on the Existing Maturity Date, and on the Existing Maturity Date the Borrower shall also make such other prepayments of their Revolving Loans pursuant to Section 4.06 as shall be required in order that, after giving effect to the termination of the Revolving Commitments of, and all payments to, Declining Lenders pursuant to this sentence, the aggregate Revolving Credit Exposures would not exceed the aggregate Revolving Commitments.  Notwithstanding the foregoing provisions of this paragraph, the Borrower shall have the right, pursuant to Section 4.14(b), at any time on or prior to the Existing Maturity Date, to replace a Declining Lender with one or more Lenders or other financial institutions (subject, in the case of any such other financial institution, to the consent of the Administrative Agent and each Issuing Lender, such consent not to be unreasonably withheld or delayed) that will agree to the applicable Revolving Maturity Date Extension Request, and each such replacement Lender or financial institution shall for all purposes constitute a Consenting Lender.  Notwithstanding the foregoing, (a) no extension of the Revolving Maturity Date pursuant to this paragraph shall become effective unless on the date on which the Borrower delivers the applicable Revolving Maturity Date Extension Request, the conditions set forth in Section 6.03(c) (with Section 5.05   being deemed for this purpose to refer to the most recent financial statements delivered pursuant to Section 7.03(a)) shall be satisfied and no Default shall have occurred and be continuing and the Administrative Agent shall have received a certificate executed by a Financial Officer of the Borrower certifying the same and dated as of the date of Revolving Maturity Date Extension Request and (b) the Revolving Availability Period and the Revolving Maturity Date, as such terms are used in reference to Letters of Credit issued or to be issued by any Issuing Lender, will not be extended without the prior written consent of such Issuing Lender.

 

Section 2.05.  Competitive Bid Procedure.

 

(a)                                 Subject to the terms and conditions set forth herein, from time to time during the Revolving Availability Period the Borrower may request Competitive Bids and the Borrower may (but shall not have any obligation to) accept Competitive Bids and borrow Competitive Loans; provided that (i) the sum of the total Revolving Credit Exposures plus the total Competitive Loan Exposures shall not exceed the total Revolving Commitments and (ii) in the event the Revolving Maturity Date shall have been extended as provided in Section 2.04, the sum of the LC Exposures attributable to Letters of Credit expiring after any Existing Maturity Date and the Competitive Loans maturing after such Existing Maturity Date shall not exceed the aggregate Revolving

 

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Commitments of the Consenting Lenders.  To request Competitive Bids, the Borrower shall hand deliver or telecopy or other electronic communication to the Advance Agent a duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to be received by the Advance Agent, in the case of a Eurocurrency Borrowing, not later than 10:00 a.m., New York City time, four Business Days before the date of the proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, two Business Days before the date of the proposed Borrowing.  A Competitive Bid Request that does not conform substantially to Exhibit A-1 may be rejected in the Advance Agent’s sole discretion, and the Advance Agent shall promptly notify the Borrower of such rejection by telecopy or other electronic communication.  Each Competitive Bid Request shall specify the following information in compliance with Section 2.02:

 

(i)                                     the aggregate amount of the requested Borrowing;

 

(ii)                                  the date of such Borrowing, which shall be a Business Day;

 

(iii)                               whether such Borrowing is to be a Eurocurrency Borrowing or a Fixed Rate Borrowing;

 

(iv)                              the Interest Period to be applicable to such Borrowing, which shall be a period contemplated by the definition of the term “Interest Period”; and

 

(v)                                 the location and number of the account of the Borrower to which funds are to be disbursed, which shall comply with the requirements of Section 4.01.

 

Promptly following receipt of a Competitive Bid Request in accordance with this Section, the Advance Agent shall deliver to the Lenders a Notice of Competitive Bid Request, inviting the Lenders to submit Competitive Bids.

 

(b)                                 Each Lender may (but shall not have any obligation to) make one or more Competitive Bids to the Borrower in response to a Competitive Bid Request.  Each Competitive Bid by a Lender must be received by the Advance Agent by telecopy or other electronic communication, in the form of Exhibit A-3 hereto, in the case of a Eurocurrency Competitive Borrowing, not later than 9:30 a.m., New York City time, three Business Days before the proposed date of such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 11:30 a.m., New York City time, one Business Day before the proposed date of such Competitive Borrowing.  Competitive Bids that do not conform substantially to the format of Exhibit A-3 may be rejected by the Advance Agent, and the Advance Agent shall notify the applicable Lender as promptly as practicable.  Each Competitive Bid shall specify (i) the principal amount of the Competitive Loan that the Lender is willing to make (which shall be a minimum of $5,000,000 and an integral multiple of $1,000,000, and which may equal the entire principal amount of the Competitive Borrowing Request by the Borrower), (ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make such Competitive Loan (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) and (iii) the Interest Period applicable to each such Competitive Loan and the last day thereof.

 

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(c)                                  The Advance Agent shall promptly notify the Borrower by telecopy or other electronic communication of the Competitive Bid Rate and the principal amount specified in each Competitive Bid and the identity of the Lender that shall have made such Competitive Bid.

 

(d)                                 Subject only to the provisions of this paragraph, the Borrower may accept or reject any Competitive Bid.  The Borrower shall notify the Advance Agent by telephone, confirmed by telecopy or other electronic communication in the form of a Competitive Bid Accept/Reject Letter, whether and to what extent it has decided to accept or reject each Competitive Bid, in the case of a Eurocurrency Competitive Borrowing, not later than 2:00 p.m., New York City time, three Business Days before the date of the proposed Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 2:00 p.m., New York City time, on the proposed date of the Competitive Borrowing; provided that (i) the failure of the Borrower to give such notice shall be deemed to be a rejection of each Competitive Bid, (ii) the aggregate amount of the Competitive Bids accepted by the Borrower shall not exceed the aggregate amount of the requested Competitive Borrowing specified in the related Competitive Bid Request, (iii) to the extent necessary to comply with clause (ii) above, the Borrower may accept Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive Bid and (iv) except pursuant to clause (iii) above, no Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of $5,000,000 and an integral multiple of $1,000,000; provided further that if a Competitive Loan must be in an amount less than $5,000,000 because of the provisions of clause (iii) above, such Competitive Loan may be for a minimum of $1,000,000 or any integral multiple of $100,000 thereof, and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to clause (iii) the amounts shall be rounded to integral multiples of $100,000 in a manner which shall be in the discretion of the Borrower.  A notice given by the Borrower pursuant to this paragraph (d) shall be irrevocable.

 

(e)                                  The Advance Agent shall promptly notify each bidding Lender by telecopy or other electronic communication, whether or not its Competitive Bid has been accepted (and, if so, the amount and Competitive Bid Rate so accepted), and each successful bidder will thereupon become bound, subject to the terms and conditions hereof, to make the Competitive Loan in respect of which its Competitive Bid has been accepted.

 

(f)                                   If the Advance Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such Competitive Bid directly to the Borrower at least one quarter of an hour earlier than the time by which the other Lenders are required to submit their Competitive Bids to the Advance Agent pursuant to paragraph (b) of this Section 2.05.

 

(g)                                  All notices required by this Section 2.05 shall be given in accordance with Section 11.01.

 

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ARTICLE III

 

Letters of Credit

 

Section 3.01.  Letters of Credit.

 

(a)                                 General.  Subject to the terms and conditions set forth herein, the Borrower may request the issuance under the Revolving Commitments of Letters of Credit for its own account or for the account of any Subsidiary, in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Lender, at any time and from time to time during the Revolving Availability Period.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower (on behalf of itself or its Subsidiary) with, the applicable Issuing Lender relating to any Letter of Credit, the terms and conditions of this Agreement shall control.  At the request of the Borrower (on behalf of itself or its Subsidiary), any Letter of Credit may be issued for the joint and several account of the Borrower and any of its Subsidiary.

 

(b)                                 Notice of Issuance; Amendment; Renewal; Extension; Certain Conditions.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower (on behalf of itself or its Subsidiary) shall hand deliver or telecopy or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Lender) to the Issuing Lender and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension, the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section 3.01), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the applicable Issuing Lender, the Borrower (on behalf of itself or its Subsidiary) shall also submit a letter of credit application on such Issuing Lender’s standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit, the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $75,000,000, (ii) the sum of the total Revolving Credit Exposures plus the total Competitive Loan Exposures shall not exceed the total Revolving Commitments, (iii) the portion of the LC Exposure attributable to Letters of Credit issued by each Issuing Lender shall not exceed the LC Commitment of such Issuing Lender and (iv) in the event the Revolving Maturity Date shall have been extended as provided in Section 2.04, the sum of the LC Exposures attributable to Letters of Credit expiring after any Existing Maturity Date and the Competitive Loans maturing after such Existing Maturity Date shall not exceed the total Revolving Commitments of the Consenting Lenders.  The issuance of any Letter of Credit shall be subject to the customary procedures of the applicable Issuing Lender, and no Issuing Lender shall be required to issue any Letter of Credit of a type not approved for issuance by it.  Notwithstanding anything in the contrary in this Agreement, no Issuing Lender

 

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shall be under any obligation to issue, renew, amend or extend any Letter of Credit if: (a) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender from issuing, renewing, amending or extending the Letter of Credit, or any law, rule, regulation or treaty applicable to the Issuing Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing Lender refrain from, the issuance, renewal, amendment or extension of letters of credit generally or the Letter of Credit in particular or shall impose upon the Issuing Lender with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Lender is not otherwise compensated hereunder) not in effect on the Closing Date; or (b) the issuance, renewal, amendment or extension of the Letter of Credit would violate one or more policies of the Issuing Lender.

 

(c)                                  Expiration Date.  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after the then-current expiration date of such Letter of Credit at the time of such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving Maturity Date.

 

(d)                                 Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof), and effective upon the date of such issuance or amendment, and without any further action on the part of the applicable Issuing Lender or the Lenders, the applicable Issuing Lender hereby grants to each Lender, and each Lender hereby acquires from such Issuing Lender, a participation in such Letter of Credit equal to such Lender’s Revolving Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of such Issuing Lender, such Lender’s Revolving Commitment Percentage of each LC Disbursement made by such Issuing Lender and not reimbursed on or before the date due as provided in paragraph (e) of this Section 3.01, or of any reimbursement payment required to be refunded to the Borrower for any reason.  Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Commitments, or any force majeure or other event that under any rule of law or uniform practices to which any Letter of Credit is subject (including Section 3.14 of ISP 98 or any successor publication of the International Chamber of Commerce) permits a drawing to be made under such Letter of Credit after the expiration thereof or of the Revolving Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)                                  Reimbursement.  If the Issuing Lender shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 2:00 p.m., New York City time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date,

 

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or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 2:00 p.m., New York City time, on the Business Day immediately following the day that the Borrower receives such notice; provided that the Borrower (on behalf of itself or its Subsidiary) may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with a Revolving Loan in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Revolving Loan.  If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Revolving Commitment Percentage thereof.  Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Revolving Commitment Percentage of the payment then due from the Borrower, in the same manner as provided in Section 4.01 with respect to Revolving Loans made by such Lender (and Section 4.01 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to such Issuing Lender the amounts so received by it from the Lenders.  Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to such Issuing Lender or, to the extent that the Lenders have made payments pursuant to this paragraph to reimburse such Issuing Lender, then to such Lenders and the Issuing Lenders as their interests may appear.  Any payment made by a Lender pursuant to this paragraph to reimburse such Issuing Lender for any LC Disbursement (other than the funding of Revolving Loans as contemplated above) shall not constitute a Revolving Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

 

(f)                                   Obligations Absolute.  The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section 3.01 shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of:

 

(i)                                     any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein;

 

(ii)                                  any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or this Agreement;

 

(iii)                               the existence of any claim, setoff, defense or other right that the Borrower, any other party guaranteeing, or otherwise obligated with, the Borrower, any Subsidiary or other Affiliate thereof or any other Person may at any time have against the beneficiary under any Letter of Credit, the Issuing Lenders, the Administrative Agent or any Lender or any other Person, whether in connection with this Agreement or any other related or unrelated agreement or transaction;

 

(iv)                              any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect;

 

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(v)                                 payment by the Issuing Lenders under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit;

 

(vi)                              any force majeure or other event that under any rule of law or uniform practices to which any Letter of Credit is subject (including Section 3.14 of ISP 98 or any successor publication of the International Chamber of Commerce) permits a drawing to be made under a Letter of Credit after the expiration thereof or of the Revolving Commitments; and

 

(vii)                           any other act or omission to act or delay of any kind of the Issuing Lenders, the Lenders, the Administrative Agent or any other Person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 3.01, constitute a legal or equitable discharge of the Borrower’s obligations hereunder.

 

None of the Administrative Agent, the Lenders or the Issuing Lenders or any of their Affiliates, directors, officers, employees and agents, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances specified in clauses (i) through (vi) above), or for any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Lenders; provided that the foregoing shall not be construed to excuse an Issuing Lender from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Lender’s failure to exercise the agreed standard of care (as set forth below) in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that the Issuing Lenders shall have exercised the agreed standard of care in the absence of gross negligence or willful misconduct on the part of an Issuing Lender.  Without limiting the generality of the foregoing, it is understood that an Issuing Lender may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit, without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit; provided that such Issuing Lender shall have the right, in its sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(g)                                  Disbursement Procedures.  The applicable Issuing Lender shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The Issuing Lender shall promptly notify the Administrative Agent and the Borrower for whose account such Letter of Credit was issued by telephone (confirmed by telecopy or by electronic communication) of such demand for payment and whether the Issuing Lender has made or will make an LC Disbursement thereunder; provided that any failure to give

 

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or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Lender and the Lenders with respect to any such LC Disbursement.

 

(h)                                 Interim Interest.  If an Issuing Lender shall make any LC Disbursement, unless the Borrower shall reimburse (including with the proceeds of Revolving Loans as provided in Section 3.01(e)) such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement at the rate per annum specified in Section 4.08(a); provided that, if the Borrower fails to reimburse (including with the proceeds of Revolving Loans as provided in Section 3.01(e)) such LC Disbursement when due pursuant to paragraph (e) of this Section 3.01, then Section 4.08(d) shall apply.  Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Lender, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section 3.01 to reimburse such Issuing Lender shall be for the account of such Lender to the extent of such payment.

 

(i)                                     Resignation or Removal of the Issuing Lenders.  An Issuing Lender may resign at any time by giving at least 30 days’ prior written notice to the Administrative Agent and the Borrower, and may be removed at any time by the Borrower by notice to the Issuing Lenders and the Administrative Agent.  Upon the acceptance of any appointment as an Issuing Lender hereunder by a Lender that shall agree to serve as successor Issuing Lender, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Issuing Lender and the retiring Issuing Lender shall be discharged from its obligations to issue additional Letters of Credit hereunder.  At the time such removal or resignation shall become effective, the Borrower shall pay all accrued and unpaid fees pursuant to Section 4.07(c)(ii).  The acceptance of any appointment as an Issuing Lender hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Borrower and the Administrative Agent, and, from and after the effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of the previous Issuing Lender under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the term “Issuing Lender” shall be deemed to refer to such successor or to any previous Issuing Lender, or to such successor and all previous Issuing Lenders, as the context shall require.  After the resignation or removal of the Issuing Lender hereunder, the retiring Issuing Lender shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Lender under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation or removal, but shall not be required to issue additional Letters of Credit.

 

(j)                                    LC Exposure Determination.  For all purposes of this Agreement, the amount of a Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at the time of determination.

 

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ARTICLE IV

 

General Provisions Applicable to Loans

 

Section 4.01.  Funding of Borrowings.  (a)  Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds in Dollars to the account of the Administrative Agent or an Affiliate thereof, most recently designated by it for such purpose by notice to the Lenders, (x) by 2:00 p.m., New York City time in the case of Eurocurrency Loans and (y) by 3:00 p.m., New York city time in the case of ABR Loans.  The Administrative Agent will make Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent (or such other account as may be designated by the Borrower).  If a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, the Administrative Agent shall return the amounts so received to the respective Lenders.

 

(b)                                 Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section 4.01 and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, or (ii) in the case of the Borrower, the interest rate on the applicable Borrowing; provided that no repayment by the Borrower pursuant to this sentence shall be deemed to be a prepayment for purposes of Section 4.11.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

 

Section 4.02.  Interest Elections.  (a)  Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Borrowing, may elect Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.  This Section shall not apply to Competitive Borrowings, which may not be converted or continued.

 

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(b)                                 To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.

 

(c)                                  Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.03:

 

(i)                                     the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

(ii)                                  the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)                               whether the resulting Borrowing is to be an ABR Borrowing or Eurocurrency Borrowing; and

 

(iv)                              if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

 

(d)                                 Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each applicable Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)                                  If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurocurrency Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing.

 

Section 4.03.  Termination and Reduction of Revolving Commitments.  (a)  Unless previously terminated, the Revolving Commitments shall terminate on the Revolving Maturity Date; provided that if the Qualified IPO has not been consummated on or prior to June 30, 2019, the Revolving Commitments shall automatically terminate on such date.

 

(b)                                 The Borrower may at any time terminate, or from time to time reduce, the Revolving Commitments; provided that (i) each reduction of the Revolving Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $10,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any

 

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concurrent prepayment of the Loans, (i) the outstanding Revolving Credit Exposure would exceed the aggregate Revolving Commitments or (ii) the sum of the Revolving Credit Exposures plus the Competitive Loan Exposures would exceed the total Revolving Commitments.

 

(c)                                  The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Revolving Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent or an affiliate thereof shall advise the applicable Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of any Revolving Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other financing arrangements, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of the Revolving Commitments shall be permanent.  Each reduction of the Revolving Commitments shall be made ratably among the applicable Lenders in accordance with their respective Revolving Commitments.

 

Section 4.04.  Repayment of Loans; Evidence of Debt.  (a)  The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender, on the Revolving Maturity Date, (i) the then unpaid principal amount of the Revolving Loans of such Lender and (ii) the then unpaid principal amount of each Competitive Loan of such Lender.

 

(b)                                 Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(c)                                  The Administrative Agent shall maintain a Register pursuant to Section 11.04(d) and an account for each applicable Lender in which it shall record (i) the amount of each Loan made hereunder and any promissory note evidencing such Loan, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

 

(d)                                 The entries made in the Register and the accounts of each Lender maintained pursuant to paragraphs (b) and (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein absent manifest error of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or make any entry therein or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.  In the event of any conflict between the records maintained by any Lender and the records maintained by the Administrative Agent in such matters, the records of the Administrative Agent shall control in the absence of manifest error. In the event of any

 

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conflict between the Register and any other records maintained the Administrative Agent in such matters, the Register shall control in the absence of manifest error.

 

(e)                                  Any Lender may request that Loans made by it be evidenced by a promissory note.  In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent.

 

Section 4.05.  Incremental Commitments.

 

(a)                                 The Borrower may, by written notice to the Administrative Agent, (x) request additional Revolving Commitments and/or (y) request an establishment of a new term loan (the “Incremental Term Loans”), as applicable, in an aggregate amount not to exceed the Incremental Facility Amount at such time, from one or more Persons who will become Lenders (which may include any existing Lender willing to provide the same, in its own sole and absolute discretion, provided that any Lender that does not respond to such request shall be deemed to have declined to provide the same); provided that (i) each such Person, if not already a Lender hereunder, shall be subject to the approval of the Administrative Agent and, in the case of additional Revolving Commitments, the Issuing Lenders (which approvals shall not be unreasonably withheld), (ii) in the case of additional Revolving Commitments, such Revolving Commitments shall be subject to the same terms as the other Revolving Commitments in effect under this Agreement and (iii) in the case of any Incremental Term Loans, (A) the scheduled final maturity date of such Incremental Term Loans shall be no earlier than the Revolving Maturity Date and (B) such Incremental Term Loans shall be on terms (other than pricing and letters of credit and other revolving credit related terms not generally applicable to term loans) substantially similar to the Revolving Loans.  Such notice shall set forth (i) the amount of the additional Revolving Commitments and/or the Incremental Term Loans, as applicable, being requested (which shall be in minimum increments of $1,000,000 and a minimum amount of $25,000,000 or equal to the remaining Incremental Facility Amount), and (ii) the date on which such additional Revolving Commitments and/or Incremental Term Loan, as applicable, are requested to become effective (which shall not be less than 10 Business Days or more than 60 days after the date of such notice, unless otherwise agreed to by the Administrative Agent).

 

(b)                                 The Borrower and each additional Lender, shall execute and deliver to the Administrative Agent an Incremental Assumption Agreement and such other documentation as the Administrative Agent shall reasonably specify to evidence the Revolving Commitment and/or Incremental Term Loans of such Lender. The Lenders hereby irrevocably authorize the Administrative Agent to enter into any Incremental Assumption Agreement and/or any amendment to any other Loan Document as may be reasonably necessary in order to establish the new Incremental Term Loans pursuant to this Section 4.05 and such technical amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and the Borrower in connection with the establishment of such Incremental Term Loans, in each case consistent with this Section 4.05.

 

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(c)                                  Each of the parties hereto hereby agrees that the Administrative Agent may take any and all actions as may be reasonably necessary to ensure that, after giving effect to any increase in the Revolving Commitments pursuant to Section 4.05(a), the outstanding Revolving Loans are held by the Lenders in accordance with their new Revolving Commitment Percentages.  This may be accomplished at the discretion of the Administrative Agent by (i) requiring the outstanding Revolving Loans to be prepaid with the proceeds of a new Revolving Borrowing, (ii) causing non-increasing Lenders to assign (at par, with accrued interest and fees) portions of their outstanding Revolving Loans to Persons who are becoming Lenders (or increasing their Revolving Commitments), or (iii) any combination of the foregoing.  Any prepayment or assignment described in this paragraph (b) shall be subject to Section 4.11, but shall otherwise be without premium or penalty.

 

(d)                                 Notwithstanding the foregoing, no increase in any Revolving Commitment and/or the establishment of the Incremental Term Loans, as applicable, shall become effective under this Section 4.05 unless, (i) on the date thereof, the conditions set forth in paragraphs (b) and (e) of Section 6.02 shall be satisfied and the Administrative Agent shall have received a certificate to that effect dated such date and executed by the President, a Vice President or a Financial Officer of the Borrower, and (ii) the Administrative Agent shall have received (with sufficient copies for each of the Lenders) legal opinions, board resolutions and certificates consistent with those delivered on the Effective Date under paragraphs (b) and (f) of Section 6.01.

 

(e)                                  Notwithstanding anything to the contrary, this Section 4.05 shall supersede any provisions in Section 4.13 or Section 11.07 to the contrary.

 

Section 4.06.  Prepayment of Loans.  (a)  The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section;  provided that no Borrower shall have the right to prepay any Competitive Loan without the prior consent of the Lender thereof.

 

(b)                                 The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Loans in whole or in part without premium or penalty; provided that (i) such notice must be in a form reasonably acceptable to the Administrative Agent and be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of any Eurocurrency Borrowing and (B) on the date of prepayment of any ABR Borrowing; (ii) any prepayment of Eurocurrency Loan shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; (iii) any prepayment of ABR Borrowing shall be in a principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding; provided that in the event such notice is given in connection with a conditional termination of the Revolving Commitments as contemplated by Section 4.03, then such notice of prepayment may be revoked in accordance with Section 4.03 (subject to, for the avoidance of doubt, payments required under Section 4.11). Each such notice shall specify the date and amount of such prepayment and the Type(s) of the Revolving Loans to be prepaid and, if Eurocurrency Loans are to be prepaid, the Interest Period(s) of such Revolving Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such

 

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Lender’s pro rata share of such prepayment (based on such Lender’s pro rata share in respect of the relevant Borrowing). The prepayment amount specified in such notice shall be due and payable on the date specified therein. Prepayments shall be accompanied by accrued interest to the extent required by Section 4.08. Any prepayment of a Eurocurrency Loan shall be accompanied by any additional amounts required pursuant to Section 4.11. Subject to Section 4.15, each prepayment of Revolving Loans shall be applied to the Revolving Loans of the Lenders in accordance with their respective pro rata shares in respect of each of the relevant Borrowing.

 

(c)                                  If at any time, (i) the aggregate Revolving Credit Exposure exceeds the aggregate Revolving Commitments, or (ii) the sum of the Revolving Credit Exposure plus the Competitive Loan Exposure exceeds the aggregate Revolving Commitments, the Borrower shall immediately repay the Revolving Loans, and/or the Competitive Loans, and/or cash collateralize any outstanding Letters of Credit in an aggregate principal amount sufficient to cause the remaining outstanding Loans and the LC Exposure not to exceed the aggregate Revolving Commitments.

 

Section 4.07.  Fees.  (a)  The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at the facility fee rate set forth in the Pricing Grid from time to time, on the daily amount of the Revolving Commitments of such Lender (whether used or unused) during the period from and including the Closing Date to but excluding the date on which such Revolving Commitments terminate; provided, that if such Lender continues to have any Revolving Credit Exposure after its Revolving Commitments terminate, then such facility fee shall continue to accrue on the daily amount of such Lender’s Revolving Credit Exposure from and including the date on which its Revolving Commitments terminate to but excluding the date on which such Lender ceases to have any Revolving Credit Exposure.  Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the Closing Date; provided that any facility fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand.  All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

(b)                                 The Borrower agrees to pay to the Administrative Agent, for its own account, the administrative, auction and other fees separately agreed upon between the Borrower and the Administrative Agent (collectively, the “Administrative Fees”) pursuant to the Administrative Agent Fee Letter.

 

(c)                                  The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender (including the Issuing Lenders) a participation fee with respect to its participations in Letters of Credit, which shall accrue at a rate per annum equal to the Applicable Margin applicable to interest on Eurocurrency Revolving Loans on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which the Revolving Commitments terminate and the date on which such Lender

 

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ceases to have any LC Exposure and (ii) to each Issuing Lender a fronting fee, which shall accrue at the rate per annum mutually agreed by such Issuing Lender and the Borrower on the average daily amount of the portion of the LC Exposure attributable to Letters of Credit issued by such Issuing Lender (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which the Revolving Commitments terminate and the date on which there ceases to be any LC Exposure, as well as each of the Issuing Lender’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder; provided that if Goldman Sachs Bank USA or JPMCB is the Issuing Lender, the fronting fee shall be payable by the Borrower at the rate set forth in the Fee Letter.  Participation fees and the fronting fees shall be payable on the last day of March, June, September and December of each year, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Lenders pursuant to this paragraph shall be payable promptly after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

(d)                                 All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of facility fees and participation fees, to the Lenders.  Fees paid shall not be refundable under any circumstances.

 

Section 4.08.  Interest.  (a)  The Revolving Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin.

 

(b)                                 (i) The Revolving Loans comprising each Eurocurrency Borrowing shall bear interest at the Adjusted Eurocurrency Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin and (ii) the Eurocurrency Competitive Loans shall bear interest at the Adjusted Eurocurrency Rate for the Interest Period in effect for such Borrowing plus (or minus, as applicable) the applicable Competitive Loan Margin.

 

(c)                                  Each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to such Fixed Rate Loan.

 

(d)                                 Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.0% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2.0% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

 

(e)                                  Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, upon termination of the Revolving Commitments; provided that

 

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(i) interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

(f)                                   All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at a time when the Alternate Base Rate is based on clause (a) of the first sentence of the definition of Alternate Base Rate shall be computed on the basis of a year of 365 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or Eurocurrency Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

Section 4.09.  Alternate Rate of Interest.

 

(a)                                 If prior to the commencement of any Interest Period for a Eurocurrency Borrowing:

 

(i)                                     the Administrative Agent shall have determined (which determination shall be made in good faith and shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Eurocurrency Rate for such Interest Period; or

 

(ii)                                  the Administrative Agent is advised by the Required Lenders (or, in the case of a Eurocurrency Competitive Loan, the Lender that is required to make such Eurocurrency Competitive Loan) that the Eurocurrency Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy or by other electronic communication as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurocurrency Borrowing shall be ineffective, (ii) if any Borrowing Request requests a Eurocurrency Borrowing, such Borrowing shall be made as an ABR Borrowing and (iii) any request by the Borrower for a Eurocurrency Competitive Borrowing shall be ineffective; provided that (x) if the circumstances giving rise to such notice do not affect all the Lenders, then requests by the Borrower for Eurocurrency Competitive Borrowings may be made to Lenders that are not affected thereby and (y) if the circumstances giving rise to such notice affect only one Type of Borrowing, then the other Types of Borrowings shall be permitted.

 

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(b)                                 If at any time the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (i) the circumstances set forth in clause (a)(i) have arisen and such circumstances are unlikely to be temporary or (ii) the circumstances set forth in clause (a)(i) have not arisen but either (w) the supervisor for the administrator of the Eurocurrency Rate has made a public statement that the administrator of the Eurocurrency Rate is insolvent (and there is no successor administrator that will continue publication of the Eurocurrency Rate), (x) the administrator of the Eurocurrency Rate has made a public statement identifying a specific date after which the Eurocurrency Rate will permanently or indefinitely cease to be published by it (and there is no successor administrator that will continue publication of the Eurocurrency Rate), (y) the supervisor for the administrator of the Eurocurrency Rate has made a public statement identifying a specific date after which the Eurocurrency Rate will permanently or indefinitely cease to be published or (z) the supervisor for the administrator of the Eurocurrency Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the Eurocurrency Rate may no longer be used for determining interest rates for loans, then the Administrative Agent and the Borrower shall endeavor to establish an alternate rate of interest to the Eurocurrency Rate that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable (but for the avoidance of doubt, such related changes shall not include a reduction of the Applicable Margin); provided that, if such alternate rate of interest as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.  Notwithstanding anything to the contrary in Section 11.07, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Administrative Agent shall not have received, within five Business Days of the date notice of such alternate rate of interest is provided to the Lenders, a written notice from the Required Lenders stating that such Required Lenders object to such amendment.  Until an alternate rate of interest shall be determined in accordance with this clause (b) (but, in the case of the circumstances described in clause (ii) of the first sentence of this Section 4.09(b), only to the extent the Eurocurrency Rate for the applicable currency and such Interest Period is not available or published at such time on a current basis), (x) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective and (y) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

 

Section 4.10.  Increased Costs.  (a)  If any Change in Law shall:

 

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

 

(ii)                                  impose on any Lender or Issuing Lender, the London interbank market, any other condition, cost or expense (other than Taxes) affecting this Agreement or

 

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Eurocurrency Loans or Fixed Rate Loans made by such Lender or any Letter of Credit or participations therein; or

 

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

 

and the result of any of the foregoing shall be to increase the cost to such Lender or other Recipient of making, continuing, converting to or maintaining any Eurocurrency Loan or Fixed Rate Loan or issuing or participating in Letters of Credit by an amount deemed by such Lender or other Recipient to be material or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender or other Recipient to be material, then the Borrower will pay to such Lender or other Recipient such additional amount or amounts as will compensate such Lender or other Recipient for such additional costs actually incurred or reduction actually suffered.

 

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

 

(c)                                  A certificate of a Lender or Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or Issuing Lender or its holding company as specified in paragraph (a) or (b) of this Section, and setting forth in reasonable detail the manner in which such amount or amounts shall have been determined, shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or Issuing Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

 

(d)                                 Failure or delay on the part of any Lender or Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or Issuing Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or Issuing Lender pursuant to this Section for any increased costs or reductions incurred more than 90 days prior to the date that such Lender or Issuing Lender notifies

 

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the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Lender’s intention to claim compensation therefor; provided further, that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 90-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

(e)                                  Notwithstanding the foregoing provisions of this Section, a Lender shall not be entitled to compensation pursuant to this Section in respect of any Competitive Loan if the Change in Law that would otherwise entitle it to such compensation shall have been publicly announced prior to submission of the Competitive Bid pursuant to which such Competitive Loan was made.

 

(f)                                   The obligations of the Borrower under this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

Section 4.11.  Break Funding Payments.  In the event of (a) the payment or prepayment of any principal of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 4.06(b) and is revoked in accordance therewith), (d) the failure to borrow any Competitive Loan after accepting the Competitive Bid to make such Competitive Loan or (e)  the assignment of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 4.14, then, in any such event, the Borrower shall compensate each Lender for the out-of-pocket loss, cost and expense attributable to such event.  In the case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the present value of the excess, if any, of (i) its cost of obtaining the funds for the Loan being paid, prepaid, refinanced or not borrowed (assumed to be the Eurocurrency Rate applicable thereto) for the period from the date of such payment, prepayment, refinancing or failure to borrow or refinance to the last day of the Interest Period for such Loan (or, in the case of a failure to borrow or refinance, the Interest Period for such Loan which would have commenced on the date of such failure) over (ii) the amount of interest (as reasonably determined by such Lender) that would be realized by such Lender in reemploying the funds so paid, prepaid or not borrowed or refinanced for such period or Interest Period, as the case may be.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section and setting forth in reasonable detail the manner in which such amount or amounts shall have been determined shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.  The obligations of the Borrower under this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

Section 4.12.  Taxes.  (a)  Any and all payments to the Lenders or the Administrative Agent hereunder or under any Loan Document by the Borrower or on behalf of the

 

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Borrower (including as guarantor of the obligations of the Borrower) shall be made free and clear of and without deduction or withholding for any and all current or future Taxes, except as required by applicable law.  If under any applicable law (as determined in the good faith discretion of the Borrower or the Administrative Agent) the Borrower shall be required to deduct or withhold any Indemnified Tax from any such payment, (i) the sum payable shall be increased by the amount (an “Additional Amount”) necessary so that after making all required deductions or withholdings (including deductions and withholdings applicable to Additional Amounts payable under this Section 4.12) such Recipient shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions or withholdings and (iii) the Borrower shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law.

 

(b)                                 In addition, the Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

(c)                                  The Borrower shall indemnify each Recipient for the full amount of Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 4.12) paid or payable by, or required to be withheld or deducted from a payment to, such Recipient and any liability (including penalties, interest and expenses (including reasonable attorney’s fees and expenses)) arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability prepared by a Lender, or by an Administrative Agent on its own behalf or on behalf of a Lender, and setting forth in reasonable detail the manner in which such amount shall have been determined, absent manifest error, shall be final, conclusive and binding for all purposes. Such indemnification shall be made within 30 days after the date such Lender or Administrative Agent, as the case may be, makes written demand therefor, which written demand shall be made within 60 days of the date such Lender or Administrative Agent receives written demand for payment of such Indemnified Taxes from the relevant Governmental Authority.

 

(d)                                 Each Lender shall severally, but not jointly, indemnify the Administrative Agent, within 30 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.04(g) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent, absent manifest error, shall be final, conclusive and binding for all purposes.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or

 

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otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (d).

 

(e)                                  If a Recipient receives a refund, which in its sole discretion exercised in good faith is in respect of any Indemnified Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid Additional Amounts pursuant to this Section 4.12, it shall within 30 days from the date of such receipt pay over such refund to the Borrower (but only to the extent of indemnity payments made, or Additional Amounts paid, by the Borrower under this Section 4.12 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such Recipient and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund); provided, however, that the Borrower, upon the request of such Recipient, agrees to repay the amount paid over to the Borrower pursuant to this Section 4.12(e) (plus penalties, interest or other charges) to such Recipient in the event such Recipient is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this Section 4.12(e), in no event will such Recipient be required to pay any amount to the Borrower pursuant to this Section 4.12(e) the payment of which would place such Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.

 

(f)                                   As soon as practicable after the date of any payment of Indemnified Taxes by the Borrower to the relevant Governmental Authority, the Borrower will deliver to the Administrative Agent at its address referred to in Section 11.01, the original or a certified copy of a receipt issued by such Governmental Authority evidencing payment thereof, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(g)                                  Without prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in this Section 4.12 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Revolving Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

(h)                                 Each Lender  that is not a United States person as defined in Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, two copies of (i) in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under this Agreement or any other Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under this Agreement or any other Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax

 

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treaty, (ii) executed copies of IRS Form W-8ECI, (iii) in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest,” (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Non-U.S. Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10-percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (iv) to the extent a Non-U.S. Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-9 and/or another certification documents from each beneficial owner, as applicable; provided that if the Non-U.S. Lender is a partnership and one or more direct or indirect partners of such Non-U.S. Lender are claiming the portfolio interest exemption, such Non-U.S. Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner, in each case of (i)-(iv), properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S. federal withholding tax on payments by the Borrower under this Agreement.  Each Lender that is a U.S. person as defined in Section 7701(a)(30) of the Code shall deliver to the Borrower and the Administrative Agent two copies of IRS Form W-9, or any subsequent or substitute versions thereof or successors thereto, certifying that such Lender  is entitled to a complete exemption from U.S. federal backup withholding tax on payments made pursuant to this Agreement.  Such forms shall be delivered by each Lender on or before the date it becomes a party to this Agreement  and on or before the date, if any, such Lender changes its applicable lending office by designating a different lending office (a “New Lending Office”), unless each of the applicable lending office prior to such designation and the New Lending Office are located within the United States.  In addition, each Lender shall deliver such forms promptly upon the obsolescence, inaccuracy or invalidity of any form previously delivered by such Lender or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.  Notwithstanding any other provision of this Section 4.12(h), a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 4.12(h) that such Lender is not legally able to deliver.

 

(i)                                     A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement or any other Loan Document, shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate, provided that such Lender is legally entitled to complete, execute and deliver such documentation that in such Lender’s reasonable judgment such completion, execution or submission would not materially prejudice the legal position of such Lender  or subject such Lender to any material unreimbursed cost or expense.

 

(j)                                    If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with

 

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

 

(k)                                 The Borrower shall not be required to indemnify any Lender, or to pay any Additional Amounts to any Lender, in respect of any withholding Tax pursuant to paragraph (a) or (c) above to the extent that (i) the obligation to withhold amounts with respect to such withholding tax was in effect and would apply to amounts payable to such Lender on the date such Lender became a party to this Agreement  or, with respect to payments to a New Lending Office, the date such Lender designated such New Lending Office with respect to a Loan; provided, however, that this clause (i) shall not apply to any Lender if the assignment, participation, transfer or designation of a New Lending Office was made at the request of the Borrower; and provided further, however, that this clause (i) shall not apply (x) to the extent the indemnity payment or Additional Amounts any Lender  would be entitled to receive (without regard to this clause (i)) do not exceed the indemnity payment or Additional Amounts that the Lender  making the assignment, participation, transfer or designation of such New Lending Office would have been entitled to receive in the absence of such assignment, participation, transfer or designation or (y) to the extent the obligation to withhold such amounts is an obligation of, or an obligation in respect of payments made by any Affiliate of the Borrower other than the Borrower, or (ii) the obligation to pay such Additional Amounts would not have arisen but for a failure by such Lender  to comply with the provisions of paragraph (h), (i) or (j) of this Section 4.12.

 

(l)                                     Nothing contained in this Section 4.12 shall require any Lender (or Participant) or the Administrative Agent to make available any of its Tax returns (or any other information that it deems to be confidential or proprietary).

 

(m)                             For the purposes of this Section 4.12, the term “Lender” shall include any Issuing Lender.

 

Section 4.13.  Payments Generally; Pro Rata Treatment; Sharing of Setoffs.  (a)  The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees, or of amounts payable under Section 4.10, 4.11 or 4.12, or otherwise) prior to 3:00 p.m., New York City time, on the date when due, in immediately available funds, without setoff or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its offices referred to in Section 11.01, or such other location as such

 

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Administrative Agent shall designate from time to time, except that payments pursuant to Sections 4.10, 4.11 or 4.12 and 11.05 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in Dollars.

 

(b)                                 If at any time insufficient funds are received by and available to the Administrative Agents to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal (including reimbursement of LC Disbursements) then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

 

(c)                                  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or in respect of its participations in any Letters of Credit resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, and accrued interest thereon or its participations in Letters of Credit than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, and Letters of Credit of such other Lenders to the extent necessary so that the benefit of all such payments shall be shared by such Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, and participations in Letters of Credit; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or its Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

 

(d)                                 Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of any Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to such Lenders the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the

 

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applicable Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lenders with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent,  at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

(e)                                  If any Lender shall fail to make any payment required to be made by it pursuant to Section 4.01(b), 4.12(d) or 4.12(e), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

 

Section 4.14.  Mitigation Obligations; Replacement of Lenders.  (a)  If any Lender requests compensation under Section 4.10, or if the Borrower is required to pay any Additional Amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 4.12, then such Lender shall use reasonable efforts to file any certificate or document requested by the Borrower (consistent with legal and regulatory restrictions), to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such filing, designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 4.10 or 4.12, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)                                 If (i) any Lender requests compensation under Section 4.10, (ii) the Borrower is required to pay any Additional Amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 4.12, (iii) any Lender becomes a Defaulting Lender, (iv) any Lender becomes a Declining Lender or (v) any Lender refuses to consent to any amendment, waiver or other modification of this Agreement requested by the Borrower that requires the consent of a greater percentage of the Lenders than the Required Lenders and such amendment, waiver or other modification is consented to by the Required Lenders, then, in each case, the Borrower may, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.04), all its interests, rights and obligations under this Agreement (other than any outstanding Competitive Loans held by it and any and all rights and interests related thereto) to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment and, in the case of clause (v) above, provides its consent to such requested amendment, waiver, or other modification of this Agreement); provided that (1) the Borrower shall have received the prior written consent of the Administrative Agent which consent shall not unreasonably be withheld or delayed, (2) such Lender shall have received payment of an amount equal to the outstanding principal of its Revolving Loans (other than Competitive Loans), accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including any amounts under Section 4.11), from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other

 

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amounts), (3) in the case of any such assignment resulting from a claim for compensation under Section 4.10 or payments required to be made pursuant to Section 4.12, such Lender has declined or is unable to designate a different lending office in accordance with Section 4.14(a) and such assignment will result in a reduction in such compensation or payments and (4) in the case of any such assignment resulting from a Lender being a Declining Lender, the assignee shall have agreed to the applicable Revolving Maturity Date Extension Request.

 

Section 4.15.  Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a)                                 facility fees shall cease to accrue on the unfunded portion of the Revolving Commitment of such Defaulting Lender pursuant to Section 4.07(a);

 

(b)                                 the Revolving Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders or any other requisite Lenders have taken or may take any action hereunder or under any other Loan Document (including any consent to any amendment, waiver or other modification pursuant to Section 11.07); provided that any amendment, waiver or other modification requiring the consent of all Lenders or all Lenders affected thereby shall, except as otherwise provided in Section 11.07, require the consent of such Defaulting Lender in accordance with the terms hereof;

 

(c)                                  if any LC Exposure exists at the time any Lender becomes a Defaulting Lender, then:

 

(i)                                     all or any part of the LC Exposure (other than any portion thereof attributable to unreimbursed LC Disbursements with respect to which such Defaulting Lender shall have funded its participation as contemplated by Sections 3.01(e) and 3.01(f)) of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Revolving Commitment Percentages but only to the extent that the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s LC Exposure does not exceed the sum of all non-Defaulting Lenders’ Revolving Commitments;

 

(ii)                                  if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent cash collateralize for the benefit of the applicable Issuing Lenders the portion of such Defaulting Lender’s LC Exposure that has not been reallocated for so long as such LC Exposure is outstanding;

 

(iii)                               if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not be required to pay participation fees to such Defaulting Lender pursuant to Section 4.07(c) with respect to such portion of such Defaulting Lender’s LC Exposure for so long as such Defaulting Lender’s LC Exposure is cash collateralized;

 

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(iv)                              if any portion of the LC Exposure of such Defaulting Lender is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Sections 4.07(a) and 4.07(c) shall be adjusted to give effect to such reallocation; and

 

(v)                                 if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of the Issuing Lenders or any other Lender hereunder, all participation fees payable under Section 4.07(c) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Lenders until and to the extent that such LC Exposure is reallocated and/or cash collateralized; and

 

(d)                                 so long as such Lender is a Defaulting Lender, no Issuing Lender shall be required to issue, amend, renew or extend any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding LC Exposure will be fully covered by the Revolving Commitments of the non-Defaulting Lenders and/or cash collateralized by the Borrower in accordance with Section 4.15(c), and participating interests in any such issued, amended, renewed or extended Letter of Credit will be allocated among the non-Defaulting Lenders in a manner consistent with Section 4.15(c)(i) (and such Defaulting Lender shall not participate therein).

 

In the event that (i) a Bankruptcy Event with respect to a Lender Parent shall occur following the date hereof and for so long as such Bankruptcy Event shall continue or (ii) any Issuing Lender has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, such Issuing Lender shall not be required to issue, amend, renew or extend any Letter of Credit, unless such Issuing Lender shall have entered into arrangements with the Borrower or the applicable Lender satisfactory to such Issuing Lender to defease any risk to it in respect of such Lender hereunder.

 

In the event that the Administrative Agent, the Borrower and the Issuing Lenders each agree that a Defaulting Lender has adequately remedied all matters that caused the applicable Lender to be a Defaulting Lender, then the LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Revolving Commitment and on such date such Lender shall purchase at par such of the Revolving Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Revolving Loans in accordance with its Revolving Commitment Percentage.

 

ARTICLE V

 

Representations and Warranties

 

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

 

Section 5.01.  Organization; Powers.  The Borrower (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all

 

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requisite corporate power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted and (c) is qualified to do business in every jurisdiction where such qualification is required, except where the failure so to qualify would not result in a Material Adverse Effect.  The Borrower has the corporate power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement and, to borrow hereunder.

 

Section 5.02.  Authorization.  The Transactions (a) are within the Borrower’s corporate powers and have been duly authorized by all requisite corporate action and (b) do not (i) violate (A) any provision of any law, statute, rule or regulation (including, without limitation, the Margin Regulations), (B) any provision of the certificate of incorporation or other constitutive documents or by-laws of the Borrower, (C) any order of any Governmental Authority or (D) any provision of any indenture, agreement or other instrument to which the Borrower is a party or by which it or any of its property is or may be bound, (ii) conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under (A) any such indenture, agreement or other instrument or (B) any document relating to Material Debt, or (iii) result in the creation or imposition of any lien upon any property or assets of the Borrower or any Subsidiary other than, in the case of clauses (i)(A), (i)(C), (i)(D), (ii)(A) and (iii), any such violations, conflicts, breaches, defaults or liens that, individually or in the aggregate, would not have a Material Adverse Effect or, in the case of clause (i)(A), result in a violation of law by any Administrative Agent or Lender.

 

Section 5.03.  Enforceability.  This Agreement has been duly executed and delivered by the Borrower and constitutes, and each other Loan Document constitutes or, when executed and delivered, will constitute, a legal, valid and binding obligation of the Borrower party hereto or thereto, enforceable in accordance with its terms (subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity)).

 

Section 5.04.  Governmental Approvals.  No action, consent or approval of, registration or filing with or other action by any Governmental Authority is required in connection with the Transactions except such as have, or on or prior to the Closing Date will have, been obtained or made and are in full force and effect and except for those the failure to obtain which could not reasonably be expected to have a Material Adverse Effect.

 

Section 5.05.  Financial Statements; No Material Adverse Effect.  (a)  The Borrower has heretofore furnished to the Administrative Agent and the Lenders (i) its consolidated balance sheet and statements of income, stockholders’ equity and cash flows as of and for the fiscal year ended December 31, 2017, reported on by Ernst & Young LLP, independent public accountants, and (ii) its unaudited consolidated balance sheets and statements of income, stockholders’ equity and cash flows as of and for the fiscal quarters ended March 31, 2018 and June 30, 2018 and the portions of the fiscal year then ended.  Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance

 

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with GAAP, subject, in the case of such quarterly financial statements, to normal year-end adjustments and the absence of certain footnotes.

 

(b)                                 Except as disclosed in the Borrower SEC Documents as filed prior to or on the Closing Date (but excluding any risk factor disclosures contained under the heading “Risk Factors”, any disclosure of risks included in any “forward looking statements” disclaimer or any other statements that are similarly non-specific, predictive or forward looking in nature, but in each case, other than any specific factual information contained therein), there has been no material adverse effect on the business, operation, properties or financial condition of the Borrower and its Subsidiaries taken as a whole since December 31, 2017.

 

Section 5.06.  Litigation, Compliance with Laws.  (a) Except as disclosed in the Borrower SEC Documents as filed  prior to or on the Closing Date (but excluding any risk factor disclosures contained under the heading “Risk Factors”, any disclosure of risks included in any “forward looking statements” disclaimer or any other statements that are similarly non-specific, predictive or forward looking in nature, but other than any specific factual information contained therein), there are no actions, proceedings or investigations filed or (to the knowledge of the Borrower) threatened against the Borrower or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal which question the validity or legality of this Agreement, the Transactions or any action taken or to be taken pursuant to this Agreement and no order or judgment has been issued or entered restraining or enjoining the Borrower from the execution, delivery or performance of this Agreement nor is there any other action, proceeding or investigation filed or (to the knowledge of the Borrower) threatened against the Borrower or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal as to which there is a reasonable likelihood of an adverse determination and that, if adversely determined, would be reasonably likely to result in a Material Adverse Effect.

 

(b)                                 Except as disclosed in the Borrower SEC Documents as filed prior to or on the Closing Date (but excluding any risk factor disclosures contained under the heading “Risk Factors”, any disclosure of risks included in any “forward looking statement” disclaimer or any statements that are similarly non-specific, predictive or forward looking in nature, but in each case, other than any specific factual information contained therein), neither the Borrower nor any Subsidiary is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default would be reasonably likely to result in a Material Adverse Effect.

 

Section 5.07.  Federal Reserve Regulations.

 

(a)                                 Neither the Borrower nor any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying margin stock (as defined in Regulation U).

 

(b)                                 No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose which entails a violation of, or which is inconsistent with, the provisions of the Margin Regulations.

 

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Section 5.08.  Taxes.  The Borrower and the Subsidiaries have filed or caused to be filed all U.S. federal and state, local and foreign Tax returns which are required to be filed by them, and have paid or caused to be paid all Taxes required to have been paid by them, other than (i) any Taxes or assessments the validity of which is being contested in good faith by appropriate proceedings, and with respect to which appropriate accounting reserves have, to the extent required by GAAP, been set aside or (ii) where such failure to file or pay would not reasonably be expected to result in a Material Adverse Effect.

 

Section 5.09.  Employee Benefit Plans.  The present aggregate value of accumulated benefit obligations of each Plan and each foreign employee pension benefit plan required to be funded (based on those assumptions used for disclosure of such obligations in corporate financial statements in accordance with GAAP) did not, as of the most recent statements available, exceed the aggregate value of the assets for each plan by an amount in the aggregate for all such plans that would reasonably be expected to have a Material Adverse Effect.  Except as would not individually or in the aggregate be reasonably expected to have a Material Adverse Effect, (a) no ERISA Termination Event has occurred and (b) each Plan has been established and administered in accordance with its terms and in compliance with the applicable provisions of ERISA, the Code and other applicable laws, rules and regulations.

 

Section 5.10.  Environmental and Safety Matters.  Except as disclosed in the Borrower SEC Documents as filed prior to or on the Closing Date (but excluding any risk factor disclosures contained under the heading “Risk Factors”, any disclosure of risks included in any “forward looking statement” disclaimer or any statements that are similarly non-specific, predictive or forward looking in nature, but in each case, other than any specific factual information contained therein), and other than exceptions to any of the following that would not in the aggregate have a Material Adverse Effect: (a) the Borrower and the Subsidiaries comply and have complied with all applicable Environmental and Safety Laws; (b) there are and have been no Hazardous Substances at any property owned, leased or operated by the Borrower now or in the past, or at any other location, that could reasonably be expected to result in the Borrower or any Subsidiary incurring costs or liabilities under any Environmental and Safety Law, (c) there are no past, present, or, to the knowledge of the Borrower and the Subsidiaries, anticipated future facts, events or conditions, that would reasonably be expected to prevent the Borrower or any of the Subsidiaries from, or increase the costs to the Borrower or any of the Subsidiaries of, complying with applicable Environmental and Safety Laws or obtaining or renewing all material permits, approvals, authorizations, licenses or permissions required of any of them pursuant to any such law, (d) the Borrower and the Subsidiaries have not received notice of any actual or potential liability under or relating to, or actual or potential violation of, any Environmental and Safety Law, including liability for the investigation or remediation of any release or threat of release of Hazardous Substances, and have no knowledge of any event or condition that would reasonably be expected to result in any such notice and (e) the Borrower and the Subsidiaries are not conducting or paying for, in whole or in part, any investigation, response, remediation or other corrective action pursuant to any Environmental and Safety Law at any site or facility, nor is it a party to any order, decree or agreement that imposes any obligation or liability under any Environmental and Safety Law.

 

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Section 5.11.  Properties. (a) Each of the Borrower and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal properties that are material to the business of the Borrower and its Subsidiaries taken as a whole, except where the failure to have such title or interests, as applicable, could not reasonably be expected to result in a Material Adverse Effect.

 

(b) Each of the Borrower and its Subsidiaries owns, is licensed to use, or otherwise has the right to use, all trademarks, tradenames, copyrights, patents and other intellectual properties that are material to the business of the Borrower and its Subsidiaries taken as a whole, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

Section 5.12.  Investment Company Status.  Neither the Borrower nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.

 

Section 5.13.  Solvency. The Borrower and its Subsidiaries, on a consolidated basis, are and, upon the initial Borrowing of any Loans, will be Solvent.

 

Section 5.14.  Anti-Corruption Laws and Sanctions.  The Borrower has implemented and maintains in effect policies and procedures reasonably designed to promote compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and except as disclosed in the Borrower SEC Documents as filed prior to or on the Closing Date (but excluding any risk factor disclosures contained under the heading “Risk Factors”, any disclosure of risks included in any “forward looking statement” disclaimer or any statements that are similarly non-specific, predictive or forward looking in nature, but in each case, other than any specific factual information contained therein), the Borrower, its Subsidiaries and, to the knowledge of the Borrower, its officers, directors, employees and agents (with respect to such directors and agents, to the extent they are acting in their capacity as such), are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.  None of (a) the Borrower or any Subsidiary, or (b) to the knowledge of the Borrower or any Subsidiary, any of their respective directors, officers, employees or agents that will act in any capacity in connection with or benefit from the credit facilities established hereby, is a Sanctioned Person.  No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

 

Section 5.15.  Full Disclosure. All written information (other than financial projections, forward-looking statements or any other statements that are similarly non-specific, predictive or forward looking in nature and information of a general economic nature or general industry nature), as modified or supplemented by any information provided to the Administrative Agent or any Lender, by the Borrower in connection with the Transactions contemplated hereby, is and will be complete and correct in all material respects (after giving effect to all amendments and supplements thereto), when taken as a whole together with all such filings of the Borrower

 

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with the SEC, and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statements were or are made (after giving effect to all amendment sand supplements thereto). As of the Closing Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.

 

ARTICLE VI

 

Conditions

 

Section 6.01.  Conditions Precedent to Closing Date.  The closing of this Agreement shall occur on the date (the “Closing Date”) on which the following conditions are satisfied:

 

(a)                                 The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission or other electronic communication) of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

 

(b)                                 The Administrative Agent shall have received, with a counterpart or copy for each Lender, such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, the authorization of the Transactions and other legal matters relating to the Borrower, the Loan Documents or the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent.

 

(c)                                  The representations and warranties of the Borrower set forth in the Loan Documents shall be true and correct in all material respects on and as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date; provided that to the extent such representations and warranties are qualified by materiality or “Material Adverse Effect”, such representations and warranties shall be true and correct in all respects.

 

(d)                                 The Administrative Agent shall have received a certificate dated the Closing Date signed by a Vice President, President, Chief Executive Officer or  Financial Officer of the Borrower confirming compliance with the condition set forth in Section 6.01(c) above.

 

(e)                                  The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Closing Date pursuant to the Fee Letter, the Administrative Agent Fee Letter and any other fee letter or letter agreement executed in connection with the Transactions, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any Loan Document.

 

(f)                                   The Administrative Agent (or its counsel) shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Closing

 

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Date) from Weil, Gotshal & Manges LLP and Barnes & Thornburg LLP counsel for the Borrower, and covering such customary matters relating to the Borrower and the Loan Documents as the Administrative Agent or the Lenders shall reasonably request. The Borrower hereby requests such counsel to deliver such opinion.

 

(g)                                  KYC Information:

 

(i)                                     Upon the reasonable request of any Lender made at least ten days prior to the Closing Date, the Borrower shall have provided to such Lender the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including the USA PATRIOT Act, in each case at least three days prior to the Closing Date.

 

(ii)                                  At least five days prior to the Closing Date, any Borrower that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall deliver a Beneficial Ownership Certification in relation to such Borrower.

 

Section 6.02.  Conditions Precedent to Effective Date.  The Revolving Commitments shall become effective and available for drawing hereunder on the date (the “Effective Date”) the following conditions precedent shall have been satisfied:

 

(a)                                 The Closing Date shall have occurred;

 

(b)                                 The representations and warranties of the Borrower set forth in the Loan Documents shall be true and correct in all material respects on and as of the Effective Date; provided that, (i) to the extent such representations and warranties expressly relate to an earlier date, they shall be true and correct in all material respects as of such earlier date and (ii) to the extent such representations and warranties are qualified by materiality or “Material Adverse Effect”, such representations and warranties shall be true and correct in all respects.

 

(c)                                  The Administrative Agent shall have received a certificate dated the Effective Date signed by a Vice President, President, Chief Executive Officer or  Financial Officer of the Borrower confirming compliance with the condition set forth in Section 6.02(b) above.

 

(d)                                 The Administrative Agent shall have received a certificate dated the Effective Date signed by a Financial Officer of the Borrower, substantially in the form of Exhibit G, with respect to the solvency on such date of the Borrower and the Subsidiaries, on a consolidated basis, after giving effect to the transactions to be consummated on the Effective Date.

 

(e)                                  No Default shall have occurred and be continuing as of the Effective Date.

 

(f)                                   The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date pursuant to the Fee Letter, the Administrative Agent Fee Letter and any other fee letter or letter agreement executed in connection with the

 

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Transactions, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any Loan Document.

 

(g)                                  The Qualified IPO of the Borrower shall have been completed.

 

Section 6.03.  Conditions Precedent to all Borrowings or Issuance of Letter of Credit.  The obligation of each Lender to make a Loan hereunder on the occasion of any Borrowing (other than a Borrowing made solely to refinance outstanding Borrowings that does not increase the aggregate principal amount of the Loans of any Lender outstanding), and of the Issuing Lenders to issue, amend, renew or extend any Letter of Credit is subject to the satisfaction of the following conditions:

 

(a)                                 The Administrative Agent shall have received a Borrowing Request in accordance with Section 2.03 or a notice requesting the issuance, amendment, renewal or extension of a Letter of Credit under Section 3.01(b), as the case may be.

 

(b)                                 The Effective Date shall have occurred.

 

(c)                                  The representations and warranties of the Borrower set forth in the Loan Documents (other than the representation and warranty set forth in Section 5.05(b)) shall be true and correct in all material respects on and as of the date of any such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable; provided that, (i) to the extent such representations and warranties expressly relate to an earlier date, they shall be true and correct in all material respects as of such earlier date and (ii) to the extent such representations and warranties are qualified by materiality or “Material Adverse Effect”, such representations and warranties shall be true and correct in all respects.

 

(d)                                 At the time of and immediately after giving effect to such Borrowing, or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.

 

Each Borrowing and the issuance, amendment, renewal or extension of each Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (c) and (d) of this Section 6.03.

 

ARTICLE VII

 

Affirmative Covenants

 

The Borrower covenants and agrees with each Lender and the Administrative Agent that so long as this Agreement shall remain in effect or the principal of or interest on any Loan, any fees or any other amounts payable hereunder shall be unpaid or any Letter of Credit shall remain outstanding, unless the Required Lenders shall otherwise consent in writing, it will, and will cause each of the Subsidiaries to, on and after the Closing Date:

 

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Section 7.01.  Existence.  Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights and franchises that are material to the business of the Borrower and its Subsidiaries as a whole, except as expressly permitted under Section 8.01 and Section 8.06 and except, in the case of any Subsidiary, where the failure to do so would not result in a Material Adverse Effect.

 

Section 7.02.  Business and Properties.  Comply in all respects with all applicable laws, rules, regulations and orders of any Governmental Authority (including Environmental and Safety Laws and ERISA), whether now in effect or hereafter enacted except instances that could not, in the aggregate, reasonably be expected to result in a Material Adverse Effect; and at all times maintain and preserve all property material to the conduct of the business of the Borrower and its Subsidiaries as a whole and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted consistent with past practice, except where the failure to do so would not result in a Material Adverse Effect.  The Borrower will maintain in effect and enforce policies and procedures reasonably designed to promote compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

 

Section 7.03.  Financial Statements, Reports, Etc.  In the case of the Borrower, furnish to the Administrative Agent for distribution to each Lender:

 

(a)                                 on or before the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) or, if such financial statements are not required to be filed with the SEC, on or before the date that is 95 days after the end of each such fiscal year of the Borrower, its audited consolidated balance sheet and related statements of income, cash flows, shareholders’ equity and footnotes as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Ernst & Young LLP or other independent registered public accounting firm of recognized national standing to the effect that such consolidated financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP;

 

(b)                                 on or before the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) with respect to each of the first three quarterly accounting periods in each fiscal year of the Borrower or, if such financial statements are not required to be filed with the SEC, on or before the date that is 50 days after the end of each such quarterly accounting period, its consolidated balance sheet and related statements of income, cash flows and footnotes as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by its Financial Officer as presenting fairly, in all material respects, the condensed financial position and results of operations and cash flows of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP;

 

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(c)                                  simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of a Financial Officer of the Borrower (i) setting forth in reasonable detail the calculations necessary to demonstrate compliance with the requirements of Section 8.04 on the date of such financial statements and (ii) stating whether any Event of Default or Default exists on the date of such certificate and, if any Event of Default or Default then exists, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto;

 

(d)                                 promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 8-K which the Borrower shall have filed with the SEC, and copies of all reports distributed to its shareholders;

 

(e)                                  promptly following any request therefor, information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” requirements under the USA PATRIOT Act, the Beneficial Ownership Regulation or other applicable anti-money laundering laws; and

 

(f)                                   from time to time such additional information regarding the financial position or business of the Borrower and its Subsidiaries as the Administrative Agent or any Lender may reasonably request.

 

Information required to be delivered pursuant to this Section shall be deemed to have been delivered on the date on which the Borrower provides notice (reasonably identifying where the applicable disclosure may be obtained) to the Administrative Agent that such information has been posted on the Borrower’s website on the internet at www.elanco.com, or on the SEC’s website on the internet at www.sec.gov or at another website identified in such notice and accessible by the Lenders without charge.

 

Section 7.04.  Insurance.  Keep its insurable properties adequately insured at all times by financially sound and reputable insurers (which may include captive insurers), and maintain such other insurance or self insurance (including product liability insurance), to such extent and against such risks, including fire and other risks insured against by extended coverage, as are customary with companies similarly situated and in the same or similar businesses.

 

Section 7.05.  Obligations and Taxes.  Pay, and discharge promptly when due, all material Taxes, assessments and governmental charges imposed upon it or upon its income or profits or in respect of its property, in each case before the same shall become delinquent or in default and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings and adequate reserves with respect thereto shall, to the extent required by GAAP, have been set aside.

 

Section 7.06.  Litigation and Other Notices.  Promptly give the Administrative Agent written notice of the following after any executive officer of the Borrower obtains knowledge thereof:

 

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(a)                                 the filing or commencement of any action, suit or proceeding which the Borrower reasonably expects to result in a Material Adverse Effect;

 

(b)                                 any Event of Default or Default, specifying the nature and extent thereof and the action (if any) which is proposed to be taken with respect thereto;

 

(c)                                  except for matters which could not reasonably be expected to have a Material Adverse Effect, an ERISA Event, setting forth details as to such occurrence and the action, if any, which the Borrower or applicable ERISA Affiliate is required or proposes to take; and

 

(d)                                 any change in any of the Ratings.

 

provided, that in each case the Borrower shall not be required to provide separate notice of any event disclosed in any report promptly filed with the SEC if the Borrower has provided notice to the Administrative Agent in accordance with the last paragraph of Section 7.03 to the effect that such information has been posted and reasonably identifying where the applicable disclosure may be obtained.

 

Section 7.07.  Inspection of Property; Books and Records. (a) Keep proper books of record and account in which full, true and correct entries are made of all material dealings and transactions in relation to its business and activities and (b) permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and (in the presence of officers of the Borrower, whether by phone or in person) its independent accountants (in each case subject to the Borrower’s obligations under applicable confidentiality provisions), all at such reasonable times and as often as reasonably requested, all at the expense of the applicable Lenders; provided that during the continuation of any Default (x) any expense of the Lenders in connection with the foregoing shall be for the account of the Borrower and (y) Lenders shall be permitted to discuss the affairs, finances and condition of the Borrower and its Subsidiaries without officers of the Borrower being present.

 

Section 7.08.  Use of Proceeds.  The proceeds of the Loans and the Letters of Credit will be used only for general corporate purposes. No part of the proceeds of any Loan will be used, directly or indirectly, for any purpose that entails a violation of any of the regulations of the Board, including the Margin Regulations. The Borrower shall not request any Borrowing or Letter of Credit, or use the proceeds of any Borrowing or any Letter of Credit, and shall procure that its subsidiaries and its and their respective directors, officers, employees and agents shall not use the proceeds of any Borrowing or any Letter of Credit, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, businesses or transaction would be prohibited by Sanctions

 

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if conducted by a corporation incorporated in the United States, or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

 

ARTICLE VIII

 

Negative Covenants

 

The Borrower covenants and agrees with each Lender and the Administrative Agent that so long as this Agreement shall remain in effect or the principal of or interest on any Loan, any fees or any other amounts payable hereunder shall be unpaid or any Letter of Credit shall remain outstanding, unless the Required Lenders shall otherwise consent in writing, it will not, and will not permit any of the Subsidiaries to, on and after the Closing Date:

 

Section 8.01.  Consolidations, Mergers, and Sales of Assets. (a) Consolidate with, merge with or into, or sell, convey transfer, lease or otherwise dispose of all or substantially all of the Borrower’s and its Subsidiaries’ property and assets taken as a whole (in one transaction or a series of related transactions) to, any Person or permit any Person to merge with or into the Borrower unless (a) the Borrower shall be the continuing Person, or the Person (if other than the Borrower) formed by such consolidation or into which the Borrower is merged or that acquired or leased such property and assets (the “Surviving Person”), shall be an entity organized and validly existing under the laws of the United States of America or any jurisdiction thereof, and shall expressly assume, all of the Borrower’s payment and performance obligations under the Loan Documents, (b) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing and (c) the Borrower delivers to the Administrative Agent a certificate of a Financial Officer of the Borrower stating that such consolidation, merger or transfer complies with this Section 8.01 and that all conditions precedent provided for herein relating to such transaction have been complied with; provided, however, that the foregoing restrictions of this Section 8.01 shall not apply to transactions permitted by Section 8.06.  The Surviving Person will succeed to, and except in the case of a lease, be substituted for the Borrower under the Loan Documents.

 

Section 8.02.  Liens.  Create, assume or suffer to exist any Lien upon any property, except that the foregoing shall not prevent the Borrower or any Subsidiary from creating, assuming or suffering to exist any of the following Liens:

 

(a)                                 Liens existing on the Closing Date and, in the case of the Borrower, listed on Schedule 8.02(a) attached hereto;

 

(b)                                 any Lien existing on property owned or leased by any Person at the time it becomes a Subsidiary; provided that such Lien was not created in anticipation of such person becoming a Subsidiary;

 

(c)                                  any Lien existing on property at the time of the acquisition thereof by the Borrower or any Subsidiary; provided that such Lien was not created in anticipation of such acquisition;

 

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(d)                                 Liens on any asset or improvement to any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring or improving (including constructing) such asset, if such Lien attaches to such asset concurrently with or within 12 months after its acquisition or improvement (including the completion of construction) and the principal amount of the Debt secured by such Lien, together with all other debt secured by a Lien on such property, does not exceed the purchase price of such property or the cost of such improvement;

 

(e)                                  Liens evidenced by the filing of UCC financing statements relating to factoring or similar arrangements entered into in the ordinary course of business;

 

(f)                                   any Liens securing Debt of a Subsidiary owing to the Borrower or to another Subsidiary;

 

(g)                                  Liens for taxes, assessments or governmental charges or levies not yet due or that are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;

 

(h)                                 carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business that are not more than 60 days delinquent in accordance with their terms or that are being contested in good faith by appropriate proceedings;

 

(i)                                     pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements;

 

(j)                                    deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business or any Liens securing industrial development, pollution control or similar revenue bonds;

 

(k)                                 easements, rights-of-way, restrictions, licenses, reservations, utility easements and other similar encumbrances imposed by law or incurred in the ordinary course of business that do not materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries, considered as a whole;

 

(l)                                     any interest or title of a lessor under any lease entered into by the Borrower or any Subsidiary in the ordinary course of its business and covering only the assets so leased;

 

(m)                             attachment or judgment Liens in respect of judgments or decrees that have been vacated, discharged or stayed within 30 days from the entry thereof; and attachment or judgment Liens in respect of judgments or decrees that have been bonded pending appeal within 30 days from the entry thereof;

 

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(n)                                 Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by the Borrower or any Subsidiary in the ordinary course of business;

 

(o)                                 customary Liens in favor of a banking institution arising by operation of law encumbering deposits (including the right of set-off) held by such banking institutions incurred in the ordinary course of business and that are within the general parameters customary in the banking industry;

 

(p)                                 Liens arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation;

 

(q)                                 any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any Lien referred to in clauses (a) through (p) above, so long as the principal amount of the Debt or other obligations secured thereby does not exceed the principal amount of Debt or obligations so secured at the time of such extension, renewal or replacement (except that, where an additional principal amount of Debt is incurred to provide funds for the completion of a specific project, the additional principal amount, and any related financing costs, may be secured by the Lien as well) and such Lien is limited to the same property subject to the Lien so extended, renewed or replaced (and improvements on such property); and

 

(r)                                    Liens securing Debt permitted to be incurred under Section 8.05.

 

Section 8.03.  Limitation on Sale and Leaseback Transactions.  Other than the Sale and Leaseback Transactions listed on Schedule 8.03 attached hereto, enter into any Sale and Leaseback Transaction, or permit any Subsidiary to do so, unless (a) the Borrower or such Subsidiary would be entitled to incur Debt, in a principal amount equal to the Value of such Sale and Leaseback Transaction, secured by Liens on the property to be leased (with such property being assumed to be owned by the Borrower or such Subsidiary for purposes of this paragraph) without violating Section 8.05 or (b) the Borrower or such Subsidiary, during the 270 days following the effective date of such Sale and Leaseback Transaction applies an amount equal to the Value of such Sale and Leaseback Transaction to the voluntary retirement of long-term Debt of the Borrower or any Subsidiary (and, in the case of any long-term revolving debt, with a corresponding reduction in revolving commitments thereof) or to the acquisition of one or more Principal Properties.

 

Section 8.04.  Financial Condition Covenants.

 

(a)                                 Permit the Consolidated Leverage Ratio as of the end of any fiscal quarter of the Borrower (i) commencing with the fiscal quarters ending December 31, 2018 through September 30, 2019 to exceed 4.75:1.00, (ii) commencing with the fiscal quarters ending December 31, 2019 through September 30, 2020 to exceed 4.5:1.00, (iii) commencing with the fiscal quarters ending December 31, 2020 through September 30, 2021 to exceed 4.00:1.00 and

 

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(iv) commencing with the fiscal quarters ending December 31, 2021 and thereafter to exceed 3.50:1.00.

 

(b)                                 Permit the Consolidated Interest Coverage Ratio as of the end of any fiscal quarter of the Borrower commencing with the fiscal quarter ending December 31, 2018 to be less than 3.50:1.00.

 

Section 8.05.  Priority Indebtedness. Permit (a) the aggregate outstanding principal amount of Debt of the Borrower secured by Liens (other than Debt of the Borrower secured by Liens permitted under Section 8.02(a) through (q)), plus (b) the aggregate outstanding principal amount of Debt of all Subsidiaries (other than Permitted Debt), plus (c) the aggregate Value of all Sale and Leaseback Transactions (other than the Sale and Leaseback Transactions listed on Schedule 8.03), without duplication, to exceed at any time 15% of Consolidated Net Tangible Assets.

 

Section 8.06.  Transactions with Affiliates. Enter into or be a party to any transaction or arrangement, including any purchase, sale, lease or exchange of property, the rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate in excess of $50,000,000, except (a) any such transaction or arrangements otherwise permitted under this Agreement, in the ordinary course of business and upon fair and reasonable terms no less favorable to the Borrower or the relevant Subsidiary than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate, (b) any such transaction or arrangements entered into prior to the Closing Date or contemplated by any agreement identified on Schedule 8.06 hereof and any amendment or replacement thereto, (c) between or among the Borrower or any Subsidiary or between or among one or more Subsidiaries, (d) any such transaction or arrangements with officers, directors, representatives or other employees of the Borrower or any Subsidiary relating specifically to employment as such, (e) the Transactions, the Loans and this Agreement, (f) any dividend or other distribution (whether in cash, securities or other property) with respect to any equity interest in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation, or termination of any such equity interests in the Borrower, (g) any other transactions contemplated by this Agreement (including any distribution of proceeds from the Borrower to the Parent), (h) the Master Separation Agreement to be dated on or about the closing of the Qualified IPO, between the Borrower and the Parent (the “Master Separation Agreement”), and any amendment or replacement thereto and any related or ancillary or other agreements related thereto or arising thereunder (including (A) the related or ancillary agreements identified on Schedule 8.06 hereof, to be entered into contemporaneously with the Master Separation Agreement, (B) any Additional Transfer Agreements (as defined in the Master Separation Agreement) and (C) any Local Transfer Agreements (as defined in the Master Separation Agreement), whether entered into before or after the date of the Master Separation Agreement), and all the transactions contemplated by the agreements described in this clause (h), (i) the transactions described in the “Project Stallion Macro Step Plan,” dated as of the date of the Master Separation Agreement, or any agreements, deeds, certificates, filings and instruments needed to effectuate such transactions, (j) any other agreements, arrangements, instruments or other documents entered into or transactions effected to

 

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transfer, contribute, assign, convey, distribute or deliver any Animal Health Asset (as defined in the Master Separation Agreement) to the Borrower or any of its Subsidiaries, or to have the Borrower or any of its Subsidiaries accept or assume any of the Animal Health Liabilities (as defined in the Master Separation Agreement) and (k) any other agreements, arrangements, instruments or other documents entered into or transactions effected to transfer, contribute, assign, convey, distribute or deliver any Excluded Asset (as defined in the Master Separation Agreement) from the Borrower or any of its Subsidiaries to the Parent (or its designees), or to have the Parent (or its designees) accept or assume any of Excluded Liabilities (as defined in the Master Separation Agreement) from the Borrower or any of its Subsidiaries.

 

ARTICLE IX

 

Events of Default

 

In case of the happening of any of the following events (each an “Event of Default”):

 

(a)                                 any representation or warranty made or deemed made in or in connection with the execution and delivery of this Agreement or the Borrowings or other extensions of credit hereunder shall prove to have been false or misleading in any material respect when so made, deemed made or furnished;

 

(b)                                 default shall be made in the payment of any principal of any Loan or LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

 

(c)                                  default shall be made in the payment of any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (b) above) due hereunder, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five Business Days;

 

(d)                                 default shall be made in the due observance or performance of any covenant, condition or agreement contained in Section 7.01 (in the case of the Borrower), Section 7.06(b) and Section 7.08 or Article VIII;

 

(e)                                  default shall be made in the due observance or performance of any covenant, condition or agreement contained herein (other than those specified in (b), (c) or (d) above) or in any other Loan Document and such default shall continue unremedied for a period of 30 days after notice thereof from any Administrative Agent or any Lender to the Borrower;

 

(f)                                   the Borrower or any Subsidiary shall (i) fail to pay any principal or interest, regardless of amount, due in respect of one or more items of Debt in an aggregate principal amount greater than or equal to $100,000,000, when and as the same shall become due and payable (giving effect to any applicable grace period) or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any

 

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such Debt if the effect of any failure referred to in this clause (ii) is to cause such Debt to become due prior to its stated maturity;

 

(g)                                  an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Borrower or any Subsidiary, or of a substantial part of the property or assets of the Borrower or any Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of the property or assets of the Borrower or any Subsidiary or (iii) the winding up or liquidation of the Borrower or any Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

 

(h)                                 the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of the property or assets of the Borrower or any Subsidiary, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing;

 

(i)                                     one or more judgments for the payment of money in an aggregate amount equal to or greater than $100,000,000 (exclusive of any amount thereof reasonably expected to be covered by insurance) shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor (whose liquidated judgment, along with those of any other judgment creditors, exceeds $100,000,000) to levy upon assets or properties of the Borrower or any Subsidiary to enforce any such judgment;

 

(j)                                    (i) a Plan of the Borrower shall fail to maintain the minimum funding standard required by Section 412 of the Code or Section 302 of ERISA for any plan year or a waiver of such standard is sought or granted under Section 412(c) of the Code or Section 302(c) of ERISA or (ii) an ERISA Termination Event shall have occurred with respect to the Borrower or an ERISA Affiliate has incurred, or in the reasonable opinion of the Required Lenders is reasonably likely to incur, a liability to or on account of a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA or (iii) any Person shall engage in any prohibited transaction described in Sections 406 of ERISA or 4975 of the Code for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the United States Department of Labor or (iv) the Borrower or any ERISA Affiliate shall fail to pay any required

 

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installment or any other payment required to be paid by such entity under Section 412 of the Code or Section 302 of ERISA on or before the due date for such installment or other payment (taking into account any extensions granted) or (v) the Borrower or any ERISA Affiliate shall fail to make any contribution or payment to any Multiemployer Plan which the Borrower or any ERISA Affiliate is required to make under any agreement relating to such Multiemployer Plan or any law pertaining thereto (taking into account any extensions granted), and, in the event of the occurrence of any of the events described in clauses (i) through (v) above, there shall result from any such event or events either a liability or a material risk of incurring a liability which is reasonably expected to have a Material Adverse Effect;

 

(k)                                 a Change in Control shall occur; or

 

(l)                                     an Event of Default (as defined in the Term Loan Credit Agreement) shall occur and be continuing;

 

then, and in every such event (other than an event with respect to the Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may and, at the request of the Required Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times:  (i) terminate forthwith the Revolving Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Borrower accrued hereunder (including all amounts of LC Exposure, whether or not the beneficiary of the then outstanding Letters of Credit shall have presented the documents required therein), shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived anything contained herein to the contrary notwithstanding; and, if any event with respect to the Borrower described in paragraph (g) or (h) above shall have occurred and be continuing, the Revolving Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Borrower accrued hereunder (including all amounts of LC Exposure, whether or not the beneficiary of the then outstanding Letters of Credit shall have presented the documents required therein) shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding.  With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit.  Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s

 

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risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  After all such Letters of Credit shall have expired or been fully drawn upon, all reimbursement obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto).

 

ARTICLE X

 

The Administrative Agent

 

Section 10.01.  Administrative Agent.  In order to expedite the transactions contemplated by this Agreement, JPMorgan Chase Bank, N.A. is hereby appointed to act as the Administrative Agent on behalf of the Lenders.  Each of the Lenders hereby irrevocably authorizes the Administrative Agent to take such actions on behalf of such Lender or holder and to exercise such powers as are specifically delegated to the Administrative Agent by the terms and provisions hereof, together with such actions and powers as are reasonably incidental thereto.  The Administrative Agent is hereby expressly authorized by the Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders all payments of principal of and interest on the Loans, payments in respect of the Letters of Credit and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Borrower of any Event of Default of which the Administrative Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Borrower pursuant to this Agreement as received by the Administrative Agent.  Notwithstanding anything herein to the contrary, none of the Arrangers, Syndication Agent, documentation agents or bookrunners listed on the cover page hereof shall have any duties or obligations under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, an Issuing Lender or a Lender under this Agreement, but all such Persons shall have the benefit of the indemnities provided for hereunder.

 

Neither the Administrative Agent nor any of its respective directors, officers, employees or agents shall be liable as such for any action taken or omitted by any of them except for its or his or her own gross negligence or willful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by the Borrower of any of the terms, conditions, covenants or agreements contained in this Agreement.  The Administrative Agent shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or other instruments or agreements.  The Administrative Agent may deem and treat the Lender which makes any Loan or issues or participates in any Letter of Credit as the holder of the indebtedness resulting therefrom for all purposes hereof until it shall have received notice from such Lender, given as provided herein, of the transfer thereof.  The Administrative Agent shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders and, except as otherwise specifically provided herein, such instructions

 

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and any action or inaction pursuant thereto shall be binding on all the Lenders.  The Administrative Agent shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper Person or Persons. Neither the Administrative Agent nor any of its respective directors, officers, employees or agents shall have any responsibility to the Borrower on account of the failure of or delay in performance or breach by any Lender of any of its obligations hereunder or to any Lender on account of the failure of or delay in performance or breach by any other Lender or the Borrower of any of their respective obligations hereunder or in connection herewith.  The Administrative Agent may execute any and all duties hereunder by or through their respective branches, Affiliates, agents or employees and shall be entitled to rely upon the advice of legal counsel selected by them with due care with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by them in accordance with the advice of such counsel.  Without limiting the foregoing, the Administrative Agent may, by notice to the Borrower, designate any of its branches or Affiliates as the Person to receive any or all notices (including Borrowing Requests and Interest Election Requests) to be delivered to the Administrative Agent pursuant to this Agreement.

 

The Lenders hereby acknowledge that the Administrative Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless it shall be requested in writing to do so by the Required Lenders.

 

Subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by notifying the Lenders and the Borrower.  Upon any such resignation of the Administrative Agent, the Required Lenders shall have the right to appoint a successor Administrative Agent acceptable to the Borrower; provided that upon the occurrence and during the continuance of an Event of Default, such successor Administrative Agent shall not be required to be acceptable to the Borrower.  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank having a combined capital and surplus of at least $500,000,000 (or any Affiliate of such bank), with an office in the United States.  Upon the acceptance of any appointment as Administrative Agent hereunder by a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed by the Borrower and such successor.  After such Administrative Agent’s resignation hereunder, the provisions of this Article X and Section 11.05 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent.

 

With respect to the Loans made or Letters of Credit issued or participated in by it hereunder, the Administrative Agent in its individual capacity and not as the Administrative Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not an Administrative Agent, and such Administrative Agent and its Affiliates may accept

 

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deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Administrative Agent.

 

Each Lender agrees (i) to reimburse the Administrative Agent, on demand, in the amount of its a pro rata share of any expenses incurred for the benefit of the Lenders by the Administrative Agent, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, which shall not have been reimbursed by the Borrower and (ii) to indemnify and hold harmless the Administrative Agent and any of its respective directors, officers, employees or agents, on demand, in the amount of such pro rata share, from and against any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, incurred by or asserted against any of them in its capacity as an Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by any of them under this Agreement to the extent the same shall not have been reimbursed by the Borrower; provided that no Lender shall be liable to the Administrative Agent for any portion of such losses, claims, damages, liabilities or related expenses resulting from the gross negligence or willful misconduct of such Administrative Agent or any of its directors, officers, employees or agents. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the aggregate Revolving Credit Exposure and unused Revolving Commitments at the time.

 

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

 

It is agreed that the Joint Lead Arrangers, Joint Bookrunner and the Syndication Agent shall, in their capacities as such, have no duties or responsibilities under this Agreement or any other Loan Document. No Joint Lead Arranger, Joint Bookrunner or the Syndication Agent shall have or be deemed to have any fiduciary relationship with any Lender.  Each Lender acknowledges that it has not relied, and will not rely, on the Joint Lead Arrangers, Joint Bookrunners and the Syndication Agent, in deciding to enter into this Agreement or any other Loan Document or in taking or not taking any action hereunder or thereunder.

 

Section 10.02.  ERISA Matters.

 

(a)                                 Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any of its Subsidiary, that at least one of the following is and will be true:

 

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(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments or this Agreement,

 

(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement,

 

(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Revolving Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement, or

 

(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

 

(b)           In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any of its Subsidiaries, that none of the Administrative Agent, the Arrangers, the Syndication Agent or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Revolving Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).

 

(c)           The Administrative Agent and the Arrangers hereby informs the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice

 

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in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Revolving Commitments and this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Revolving Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Revolving Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, dealaway or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

 

ARTICLE XI

 

Miscellaneous

 

Section 11.01.  Notices.  (a) General.  Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed or sent by telecopy or other electronic communication, as follows:

 

(i)            if to the Borrower, to Treasurer’s Office, 2500 Innovation Way, Greenfield, IN 46140, Attention of Dave Pugh—Treasurer, (Telecopy No.: 1-317-276-1867) (email: pugh_david_r@elanco.com);

 

(ii)           if to the Administrative Agent, 383 Madison Avenue, 24th Floor, New York, NY 10179, Nick Fattori, (Telecopy No.: 302-634-1417) (email: Nicholas.fattori@chase.com); with a copy to Mary Crews, email: mary.crews@jpmorgan.com;

 

(iii)          if to any Issuing Bank, to it at its address (or fax number) most recently specified by it in a notice delivered to the Administrative Agent and the Borrower (or, in the absence of any such notice, to the address (or fax number) set forth in the Administrative Questionnaire of the Lender that is serving as such Issuing Lender or is an Affiliate thereof); and

 

(iv)          if to a Lender, to it at its address (or telecopy number or email address) set forth in Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender became a party hereto.

 

All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or other electronic communication, to such party as provided in this Section or in accordance with the latest unrevoked direction from such party

 

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given in accordance with this Section; provided that any notice or other communication received by the recipient (i) on or before 5:00 P.M., New York City time, shall be deemed to have been given on the date of receipt or (ii) after 5:00 P.M., New York City time, shall be deemed to have been given on the Business Day following the date of receipt.

 

(b)           Electronic Communications.  Notices and other communications to the Lenders and the Issuing Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet and intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices under Article II or Article III to any Lender or any Issuing Lender if such Lender or such Issuing Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Articles by electronic communication.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications or may be rescinded by any such Person by notice to each other such Person; provided further that any notice or other communication received by the recipient (i) on or before 5:00 P.M., New York City time, shall be deemed to have been given on the date of receipt or (ii) after 5:00 P.M., New York City time, shall be deemed to have been given on the Business Day following the date of receipt.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment) and (ii) notices and other communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor.

 

Section 11.02.  Survival of Agreement.  All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or the Revolving Commitments have not been terminated.

 

Section 11.03.  Binding Effect.  This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent has received copies hereof (by electronic “pdf” or otherwise) which, when taken together, bear the signatures of each Lender, and thereafter shall be binding upon and inure to the benefit of the parties hereto and the Lenders and their respective successors and assigns, except that the Borrower shall not have the right to assign any rights hereunder or any interest herein, except in accordance with Section 8.01, without the prior consent of all the Lenders.

 

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Section 11.04.  Successors and Assigns.  (a)  Whenever in this Agreement any of the parties is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any party that are contained in this Agreement shall bind and inure to the benefit of its successors and assigns (including any Affiliate of an Issuing Lender that issues any Letter of Credit).

 

(b)           Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Revolving Commitments and the Loans at the time owing to it); provided, however, that (i) except (1) in the case of an assignment of a Revolving Commitment or a Loan to another Lender, an Affiliate of a Lender or an Approved Fund and (2) in the case of any assignments between Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC, (A) each of the Borrower (so long as no Event of Default shall have occurred and be continuing) and the Administrative Agent, and, in the case of any assignment and delegation of all or a portion of a Revolving Commitment or any Lender’s obligations in respect of its LC Exposure, each Issuing Lender must give its prior written consent to such assignment (which consent in each case shall not be unreasonably withheld, delayed or conditioned) and (B) the amount of the Revolving Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless it shall be the entire amount of such Lender’s Revolving Commitments or Loans, as applicable, or unless such assignment is an assignment by a Declining Lender to an assignee which is or will become a Consenting Lender, (ii) an assignment by a Lender of its  Revolving Commitments shall include an assignment by such Lender of its proportionate interest in its LC Exposure; provided further that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within fifteen Business Days after having received notice thereof. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, and a processing and recordation fee of $3,500; provided that such recordation fee shall not be payable for any assignment by or to Goldman Sachs Bank USA or any of its Affiliates. Upon acceptance and recording pursuant to paragraph (e) of this Section 11.04, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five Business Days after the execution thereof, (x) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (y) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto (but shall (i) continue to be entitled to the benefits of Sections 4.10, 4.11 4.12 and 11.05 with respect to facts and circumstances occurring prior to the effective date of such assignment, as well as to any fees accrued for its account hereunder and not yet paid and (ii) continue to be subject to the confidentiality provisions hereof). Notwithstanding the foregoing, any Lender assigning its rights and obligations under this Agreement may retain any Competitive Loans made by it outstanding at such time, and in such case shall retain its rights hereunder in respect of any Competitive Loans

 

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so retained until such Competitive Loans have been repaid in full in accordance with this Agreement.

 

(c)           By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim; (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto or the financial condition of the Borrower or the performance or observance by the Borrower of any obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is an Eligible Assignee and is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Section 7.03 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon any Administrative Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent, to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

 

(d)           The Administrative Agent shall maintain at one of its offices in the United States a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Revolving Commitments of, and the principal amount (and stated interest) of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time and any promissory notes evidencing such Loans (the “Register”).  The entries in the Register shall be conclusive in the absence of manifest error and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of the Loan Documents.  No assignment or transfer of any Loan (or portion thereof) or any Note evidencing such Loan shall be effected unless and until it has been recorded in the Register as provided in this Section 11.04(d).  Notwithstanding any other provision of this Agreement, any assignment or transfer of all or part of a promissory note shall be registered on the Register only upon surrender for registration of assignment or transfer of the promissory note (and each promissory note shall expressly so provide), accompanied by a duly executed Assignment and Acceptance, and thereupon one or more new promissory notes in the same aggregate principal amount shall be issued to the designated assignee and the old promissory notes shall be marked “cancelled”.  The Register shall be available for inspection by the Borrower and any Lender (as to

 

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its own interests hereunder), at any reasonable time and from time to time upon reasonable prior notice.

 

(e)           Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee together with an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above, if applicable, and, if required, the written consent of the Borrower to such assignment, the Administrative Agent shall (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register.

 

(f)            Each Lender may sell participations to one or more Eligible Assignees (each, a “Participant”), without the consent of any other Person, in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Commitments and the Loans owing to it); provided, however, that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto or thereto for the performance of such obligations, (iii) each Participant shall be entitled to the benefit of the cost protection provisions contained in Sections 4.10, 4.11 and 4.12 to the same extent as if it was the selling Lender (subject to the requirements and limitations therein, including the requirements under Sections 4.12(h), 4.12(i) and 4.12(j) (it being understood that the documentation required under such Sections shall be delivered to the participating Lender); provided that such Participant agrees to the provisions of Section 4.14 as if it were an assignee under paragraph (c) of this Section and shall not be entitled to receive any greater payment than the amount that could have been claimed by the selling Lender had it continued to hold the interest of such participating bank or other entity, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation, except that all claims made pursuant to such Sections shall be made through such participating Lender and (iv) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such participating Lender in connection with such Lender’s rights and obligations under this Agreement, and such participating Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable hereunder or thereunder or the amount of principal of or the rate at which interest is payable on the Loans, extending the final scheduled maturity of the Loans or any date scheduled for the payment of interest on the Loans or extending the Revolving Commitments).

 

(g)           Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement or any other Loan Document (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Revolving Commitments, Loans, Letters of Credit or its other obligations under this Agreement or any other Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Revolving Commitment, Loan, Letter of

 

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Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent shall not have any responsibility for maintaining a Participant Register.

 

(h)           Any Lender or Participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 11.04, disclose to the assignee or Participant or proposed assignee or Participant any information relating to the Borrower furnished to such Lender; provided that, prior to any such disclosure, each such assignee or Participant or proposed assignee or Participant shall be subject to confidentiality provisions at least as restrictive as those contained herein.

 

(i)            The Borrower shall not assign or delegate any rights and duties hereunder, except in accordance with Section 8.01, without the prior written consent of all Lenders.

 

(j)            Any Lender may at any time pledge or otherwise assign all or any portion of its rights under this Agreement to a Federal Reserve Bank or other central banking authority; provided that no such pledge shall release any Lender from its obligations hereunder.  In order to facilitate such an assignment to a Federal Reserve Bank, the Borrower shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note or notes evidencing the Loans made by the assigning Lender hereunder.

 

Section 11.05.  Expenses, Indemnity.  (a)  The Borrower agrees to pay all reasonable out-of-pocket expenses incurred by (i) the Administrative Agent and the Arrangers in connection with entering into this Agreement or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (including the reasonable fees, disbursements and other charges of a single counsel), (ii) the Issuing Lenders in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder or (iii) the Administrative Agent, the Arrangers, the Issuing Lenders or any Lender in connection with the enforcement of their rights in connection with this Agreement and any other Loan Document or in connection with the Loans made or Letters of Credit issued hereunder or thereunder, including the fees and disbursements of counsel for the Administrative Agent, the Arrangers and the Issuing Lenders and, in the case of enforcement, each Lender.

 

(b)           The Borrower agrees to indemnify the Administrative Agent, the Arrangers, the Syndication Agent, the Issuing Lenders, each Lender and each of the Related Parties of the foregoing (each such Person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees (limited, in the case of counsel fees, to the reasonable fees, disbursements and other charges of a single counsel for all Indemnitees), incurred by or asserted against any Indemnitee arising out of or in connection with (i) the consummation of the transactions contemplated by this Agreement (including the syndication of the credit facilities provided for herein), (ii) any Loan or Letter of Credit or the use of the proceeds therefrom or (iii) any actual or

 

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prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and whether initiated against or by any party to this Agreement, any Affiliate of any of the foregoing or any third party (and regardless of whether any Indemnitee is a party thereto); provided that (x) such indemnity shall not, as to any Indemnitee, be available to the extent that a court of competent jurisdiction has determined by a final non-appealable judgment that such losses, claims, damages, liabilities or related expenses result from the gross negligence or willful misconduct of such Indemnitee and (y) such indemnity shall not apply to losses, claims, damages, liabilities or related expenses that result from disputes solely between Lenders except if such disputes arise as a result of or in connection with any act or omission of the Borrower or any of its Affiliates.  Paragraph (b) of this Section shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

 

(c)           To the fullest extent permitted by applicable law, the Borrower shall not assert, or shall not permit any of their respective Affiliates or Related Parties to assert, and each hereby waives, any claim against any Indemnitee (i) for any damages arising from the use by others of information or other materials obtained through telecommunications, electronic or other information transmission systems (including the Internet) or (ii) on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

 

(d)           The provisions of this Section 11.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the invalidity or unenforceability of any term or provision of this Agreement or any investigation made by or on behalf of the Administrative Agent, the Arrangers or any Lender.  All amounts due under this Section 11.05 shall be payable on written demand therefor.

 

Section 11.06.  Applicable Law.  This Agreement and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby shall be governed by, and construed in accordance with, the law of the State of New York.

 

Section 11.07.  Waivers, Amendment.  (a)  No failure or delay of the Administrative Agent or any Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have.  No waiver of any provision of this Agreement or consent to any departure therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice or demand on the Borrower in

 

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any case shall entitle such party to any other or further notice or demand in similar or other circumstances.

 

(b)           Except as provided in Section 4.05 with respect to any Incremental Term Loans, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower, the Administrative Agent and the Required Lenders; provided, however, that no such agreement shall (i) decrease the principal amount of, or extend the maturity of any scheduled principal payment date or date for the payment of any interest on, any Loan or reimbursement obligation with respect to an LC Disbursement (other than any extension of the Revolving Maturity Date pursuant to Section 2.04), or waive or excuse any such payment or any part thereof, or decrease any fee or the rate of interest on any Loan,  without the prior written consent of each Lender directly affected thereby, (ii) increase or extend the availability of the Revolving Commitments or decrease or extend the date for payment of the facility fees or fees in respect of Letters of Credit of any Lender (with the exception of fronting fees payable to the Issuing Lenders, which shall require the consent of the Issuing Lenders) without the prior written consent of such Lender, (iii) amend or modify the provisions of Section 4.13 or Section 11.04(i), the provisions of this Section 11.07 or the definition of the “Required Lenders”, without the prior written consent of each Lender or (iv) change the requirement that disbursements made by any Lender be made ratably with respect to its applicable Revolving Commitment without the prior written consent of each Lender directly affected thereby; provided further, however, that no such agreement shall amend, modify or otherwise affect the rights or duties of (w) the Administrative Agent hereunder without the prior written consent of the Administrative Agent, (x) any Issuing Lender without the prior written consent of such Issuing Lender or (y) an Arranger under Section 11.04(b) without the prior written consent of such Arranger.  Each Lender shall be bound by any waiver, amendment or modification authorized by this Section 11.07 and any consent by any Lender pursuant to this Section 11.07 shall bind any assignee of its rights and interests hereunder.  Notwithstanding any of the foregoing, any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by the Borrower and the Administrative Agent to cure any ambiguity, omission, mistake, defect or inconsistency so long as, in each case, the Lenders shall have received at least five Business Days prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from (A) the Required Lenders stating that the Required Lenders object to such amendment or (B) if affected by such amendment, any Issuing Lender stating that it objects to such amendment.

 

Section 11.08.  Entire Agreement.  This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the syndication of the Loans and Revolving Commitments constitute the entire contract among the parties relative to the subject matter hereof.  Any previous agreement among the parties not referred to in the immediately preceding sentence with respect to the subject matter hereof is superseded by this Agreement.  Nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

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Section 11.09.  Severability.  In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

Section 11.10.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 11.03.

 

Section 11.11.  Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

Section 11.12.  Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or any of its Affiliates to or for the credit or obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured.  Each Lender agrees promptly to notify the Borrower and the Administrative Agent after such setoff and application made by such Lender, but the failure to give such notice shall not affect the validity of such setoff and application.  The rights of each Lender under this Section 11.12 are in addition to other rights and remedies (including, without limitation, other rights of setoff) which such Lender may have.

 

Section 11.13.  Jurisdiction: Consent to Service of Process.  (a)  The Borrower irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, any Issuing Lender or any Related Party of any of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of such courts and agrees that all claims in respect of any action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such Federal court.  Each party hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that the Administrative Agent, any Lender or any Issuing Lender may otherwise have to bring any action, litigation or proceeding relating to this Agreement or any other Loan Document against the Borrower or any of its properties in the courts of any jurisdiction.

 

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(b)                                 Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (a) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(c)                                  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 11.01.  Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

(d)                                 The Borrower hereby agrees that service of process in any proceeding may be made by mailing or delivering a copy thereof to its address for notice set forth in Section 11.01.

 

Section 11.14.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.14.

 

Section 11.15.  [Reserved]

 

Section 11.16.  Confidentiality.  Each of the Administrative Agent and the Lenders expressly agrees, for the benefit of the Borrower and the Subsidiaries, to maintain the confidentiality of the Confidential Information (as defined below), except that Confidential Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an express agreement for

 

84

 

the benefit of the Borrower and the Subsidiaries containing provisions substantially the same as those of this Section, to any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or to any direct or indirect counterparty to a Hedge Agreement or to any credit insurance provider relating to the Borrower or its Subsidiaries and their obligations, (g) with the consent of the Borrower and the Subsidiaries, (h) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized ratings agency, or (i) to the extent such Confidential Information (1) becomes publicly available other than as a result of a breach of this Section or (2) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower and the Subsidiaries.  For the purposes of this Section, “Confidential Information” shall mean all information, including material nonpublic information within the meaning of Regulation FD promulgated by the SEC (“Regulation FD”), received from the Borrower and the Subsidiaries relating to such entities or their respective businesses, other than (x) any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by such entities and (y) information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Confidential Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person customarily accords to its own confidential information; provided, however, that with respect to disclosures pursuant to clause (b) (other than any such disclosure in connection with any routine compliance examination or examination of the financial condition of such Lender by such regulatory authority) and clause (c) of this Section, unless prohibited by law or applicable court order, each Lender and the Administrative Agent shall attempt to notify the Borrower and the Subsidiaries of any request by any governmental agency or representative thereof or other Person for disclosure of Confidential Information after receipt of such request, and if reasonable, practicable and permissible, before disclosure of such Confidential Information.  It is understood and agreed that the Borrower and the Subsidiaries and their respective Affiliates may rely upon this Section 11.16 for any purpose, including without limitation to comply with Regulation FD.  Notwithstanding anything herein to the contrary, any Party to this Agreement (and any employee, representative or other agent of such Party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure.  The preceding sentence is intended to cause the transactions contemplated hereby not to be treated as having been offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) and 301.6111-2(a)(2)(ii) (or any successor provisions) of the Treasury Regulations promulgated under the Code, and shall be construed in a manner consistent with such purpose.

 

Section 11.17.  USA PATRIOT Act Notice.  Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the names and addresses of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to

 

85

 

identify the Borrower in accordance with the USA PATRIOT Act, and the Borrower agrees to provide such information from time to time to such Lender and the Administrative Agent, as applicable.

 

Section 11.18.  No Fiduciary Relationship.  The Borrower, on behalf of itself and its Affiliates, agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Borrower and their Affiliates, on the one hand, and the Credit Parties and their Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Credit Parties or their Affiliates, and no such duty will be deemed to have arisen in connection with any such transactions or communications.  The Credit Parties and their Affiliates may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from those of the Borrower and their Affiliates, and none of the Credit Parties or their Affiliates has any obligation to disclose any of such interests to the Borrower or any of their Affiliates.

 

Section 11.19.  Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any of the parties hereto, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

(a)                                 the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

 

(b)                                 the effects of any Bail-in Action on any such liability, including, if applicable:

 

(i)                                     a reduction in full or in part or cancellation of any such liability;

 

(ii)                                  a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

 

(iii)                               the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

 

Section 11.20.  Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts that are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with

 

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applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall, to the extent lawful, be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon to the date of repayment at the rate or rates applicable to such Loan, shall have been received by such Lender.

 

[Rest of page left intentionally blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

	
 
    	
ELANCO ANIMAL HEALTH INCORPORATED
    
	
 
    	
 
    
	
 
    	
by
    	
/s/ Jeffrey N. Simmons
    
	
 
    	
 
    	
Name:   Jeffrey N. Simmons
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
JPMORGAN CHASE BANK, N.A.
    
	
 
    	
individually   and as Administrative Agent,
    
	
 
    	
 
    
	
 
    	
by
    	
/s/ Vanessa Chiu
    
	
 
    	
 
    	
Name:   Vanessa Chiu
    
	
 
    	
 
    	
Title:   Executive Director
    

 

 

	
 
    	
COUNTERPART SIGNATURE   PAGE TO ELANCO ANIMAL HEALTH INCORPORATED REVOLVING LOAN CREDIT AGREEMENT
    

 

Name of Lender: Goldman Sachs Bank USA

 

	
To execute this Agreement as a Lender:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Charles D. Johnston
    	
 
    
	
 
    	
Name:   Charles D. Johnston
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    
	
 
    	
 
    
	
For   any Lender requiring a second signature line:
    	
 
    
	
 
    	
 
    
	
by
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

	
 
    	
COUNTERPART SIGNATURE   PAGE TO ELANCO ANIMAL HEALTH INCORPORATED REVOLVING LOAN CREDIT AGREEMENT
    

 

Name of Lender: JPMorgan Chase Bank, N.A.

 

	
To execute this Agreement as a Lender:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Vanessa Chiu
    	
 
    
	
 
    	
Name:   Vanessa Chiu
    	
 
    
	
 
    	
Title:   Executive Director
    	
 
    
	
 
    	
 
    
	
For   any Lender requiring a second signature line:
    	
 
    
	
 
    	
 
    
	
by
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

	
 
    	
COUNTERPART SIGNATURE   PAGE TO ELANCO ANIMAL HEALTH INCORPORATED REVOLVING LOAN CREDIT AGREEMENT
    

 

Name of Lender: Morgan Stanley Bank, N.A.

 

	
To execute this Agreement as a Lender:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Michael King
    	
 
    
	
 
    	
Name:   Michael King
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    
	
 
    	
 
    
	
For   any Lender requiring a second signature line:
    	
 
    
	
 
    	
 
    
	
by
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

	
 
    	
COUNTERPART SIGNATURE   PAGE TO ELANCO ANIMAL HEALTH INCORPORATED REVOLVING LOAN CREDIT AGREEMENT
    

 

Name of Lender: CITIBANK, N.A.

 

	
To execute this Agreement as a Lender:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Stanislav Andreev
    	
 
    
	
 
    	
Name:   Stanislav Andreev
    	
 
    
	
 
    	
Title:   Vice President
    	
 
    
	
 
    	
 
    
	
For   any Lender requiring a second signature line:
    	
 
    
	
 
    	
 
    
	
by
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

	
 
    	
COUNTERPART SIGNATURE   PAGE TO ELANCO ANIMAL HEALTH INCORPORATED REVOLVING LOAN CREDIT AGREEMENT
    

 

Name of Lender: Bank of America, N.A.

 

	
To execute this Agreement as a Lender:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Darren Merten
    	
 
    
	
 
    	
Name:   Darren Merten
    	
 
    
	
 
    	
Title:   Vice President
    	
 
    
	
 
    	
 
    
	
For   any Lender requiring a second signature line:
    	
 
    
	
 
    	
 
    
	
by
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

	
 
    	
COUNTERPART SIGNATURE   PAGE TO ELANCO ANIMAL HEALTH INCORPORATED REVOLVING LOAN CREDIT AGREEMENT
    

 

Name of Lender: BARCLAYS BANK PLC

 

	
To execute this Agreement as a Lender:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Ronnie Glenn
    	
 
    
	
 
    	
Name:   Ronnie Glenn
    	
 
    
	
 
    	
Title:   Director
    	
 
    
	
 
    	
 
    
	
For   any Lender requiring a second signature line:
    	
 
    
	
 
    	
 
    
	
by
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

	
 
    	
COUNTERPART SIGNATURE   PAGE TO ELANCO ANIMAL HEALTH INCORPORATED REVOLVING LOAN CREDIT AGREEMENT
    

 

Name of Lender: BNP PARIBAS

 

	
To execute this Agreement as a Lender:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Michael R. Hoffman
    	
 
    
	
 
    	
Name:   Michael R. Hoffman
    	
 
    
	
 
    	
Title:   Director
    	
 
    
	
 
    	
 
    
	
For   any Lender requiring a second signature line:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Mike Shryock
    	
 
    
	
 
    	
Name:   Mike Shryock
    	
 
    
	
 
    	
Title:   Managing Director
    	
 
    

 

 

	
 
    	
COUNTERPART SIGNATURE   PAGE TO ELANCO ANIMAL HEALTH INCORPORATED REVOLVING LOAN CREDIT AGREEMENT
    

 

Name of Lender: CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

 

	
To execute this Agreement as a Lender:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   John Toronto
    	
 
    
	
 
    	
Name:   John Toronto
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    
	
 
    	
 
    
	
For   any Lender requiring a second signature line:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Sophie Bulliard
    	
 
    
	
 
    	
Name:   Sophie Bulliard
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    

 

 

	
 
    	
COUNTERPART SIGNATURE   PAGE TO ELANCO ANIMAL HEALTH INCORPORATED REVOLVING LOAN CREDIT AGREEMENT
    

 

Name of Lender: DEUTSCHE BANK AG NEW YORK BRANCH

 

	
To execute this Agreement as a Lender:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Ming K. Chu
    	
 
    
	
 
    	
Name:   Ming K. Chu
    	
 
    
	
 
    	
Title:   Director
    	
 
    
	
 
    	
 
    
	
For   any Lender requiring a second signature line:
    	
 
    
	
 
    	
 
    
	
by
    	
/s/   Virginia Cosenza
    	
 
    
	
 
    	
Name:   Virginia Cosenza
    	
 
    
	
 
    	
Title:   Vice President
    	
 
    

 

 

ANNEX I

 

FACILITY FEE AND APPLICABLE MARGIN GRID

 

Revolving Loans

 

	
Pricing
   Category
    	
 
    	
Ratings
   (Moody’s/S&P)
    	
 
    	
Facility Fee
   (in Basis Points)
    	
 
    	
Applicable Margin
   for Eurocurrency
   Revolving Loans
   (in Basis Points)
    	
 
    	
Applicable Margin
   for ABR Revolving
   Loans (in Basis
   Points)
    	
 
    
	
Category 1
    	
 
    	
Baa1/BBB+
    	
 
    	
9.5
    	
 
    	
90.5
    	
 
    	
0.0
    	
 
    
	
Category 2
    	
 
    	
Baa2/BBB
    	
 
    	
11.0
    	
 
    	
101.5
    	
 
    	
1.5
    	
 
    
	
Category 3
    	
 
    	
Baa3/BBB-
    	
 
    	
15.0
    	
 
    	
110.0
    	
 
    	
10.0
    	
 
    
	
Category 4
    	
 
    	
Ba1/BB+
    	
 
    	
20.0
    	
 
    	
130.0
    	
 
    	
30.0
    	
 
    
	
Category 5
    	
 
    	
Ba2/BB or lower
    	
 
    	
30.0
    	
 
    	
145.0
    	
 
    	
45.0
    	
 
    

 

The ratings to be utilized for purposes of this Annex I are the senior unsecured non-credit enhanced rating of the Borrower assigned by Moody’s and Standard & Poor’s (“Ratings”).  The Ratings in effect at any date are those in effect at the close of business on such date.

 

For so long as the Borrower has a Rating from only one Rating Agency, the pricing in Category 5 shall apply.

 

The Borrower shall, at all times, maintain a rating from at least two Rating Agencies.  If the Ratings from the two Rating Agencies are the same, then the pricing in the Category for such Ratings shall apply.

 

In the event the Borrower has a split Rating, then the following applies:

 

(a) if the Ratings established by the two Rating Agencies differ by one level, the pricing shall be based upon the Category for higher Rating of the two (e.g., if it is Baa1 and BBB, the pricing in Category 1 shall apply); and

 

(b) if the Ratings established by the two Rating Agencies differ by more than one level, the pricing shall be based upon a Rating that would be one level below than the higher Rating (e.g., if it is Baa1 and BB+, then the pricing in Category 2 shall apply).

 

Capitalized terms used but not otherwise defined in this Annex I have the meanings given to them in the Revolving Loan Credit Agreement to which this Annex I is attached.

 

 

Schedule 1

 

Issuing Lenders

 

JPMorgan Chase Bank, N.A.

 

Goldman Sachs Bank USA

 

 

Schedule 8.02(a)

 

Liens

 

	
Entity
    	
 
    	
Jurisdiction
    	
 
    	
File Date
    	
 
    	
File #
    	
 
    	
File Type
    	
 
    	
Secured
   Party
    	
 
    	
Collateral
   Description
    
	
Elanco Animal Health
    	
 
    	
Indiana
    	
 
    	
1/17/2013
    	
 
    	
201300000656861
    	
 
    	
UCC-1
    	
 
    	
MANUFACTURERS AND   TRADES TRUST COMPANY
    	
 
    	
Funds deposited into an   Escrow Account per Escrow Agreement dated October 25, 2012
    

 

 

Schedule 8.03

 

Sale and Leaseback Transactions

 

Elanco US Inc. has sold land/facilities/equipment for $6,000,000 to Avach Iowa Holdings, LLC (the “Larchwood Transaction”).  Elanco US Inc. will lease two buildings and the equipment located within the buildings involved in the Larchwood Transaction through 2019 and will pay rent of $140,000 per month.

 

 

Schedule 8.06

 

Transaction with Affiliates

 

Transitional Services Agreement by and between the Borrower and the Parent, entered into contemporaneously with the Master Separation Agreement.

 

Tax Matters Agreement by and between the Borrower and the Parent, entered into contemporaneously with the Master Separation Agreement.

 

Employee Matters Agreement by and between the Borrower and the Parent, entered into contemporaneously with the Master Separation Agreement.

 

Toll Manufacturing and Supply Agreement by and between Eli Lilly Export S.A. and Elanco UK AH Limited, entered into contemporaneously with the Master Separation Agreement.

 

Intellectual Property and Technology License Agreement by and between the Borrower and the Parent, entered into contemporaneously with the Master Separation Agreement.

 

Transitional Trademark License Agreement by and between the Borrower and the Parent, entered into contemporaneously with the Master Separation Agreement.

 

Registration Rights Agreement by and between the Borrower and the Parent, entered into contemporaneously with the Master Separation Agreement.

 

 

EXHIBIT A-1

 

FORM OF COMPETITIVE BID REQUEST

 

JPMorgan Chase Bank, N.A., as Administrative Agent

for the Lenders referred to below,

c/o JPMorgan Chase Bank, N.A.

383 Madison Avenue, 24th Floor

New York, NY 10179

Attention: [  ]

 

JPMorgan Chase Bank, N.A., as Advance Agent

for the Lenders referred to below,

c/o JPMorgan Chase Bank, N.A.

383 Madison Avenue, 24th Floor

New York, NY 10179

Attention: [   ]

 

	
 
    	
[Date]
    

 

Ladies and Gentlemen:

 

The undersigned, Elanco Animal Health Incorporated, an Indiana Corporation (the “Borrower”), refers to the Revolving Loan Credit Agreement, dated as of September 5, 2018 (as amended, modified, extended or restated from time to time, the “Agreement”), among the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

 

The Borrower hereby gives you notice pursuant to Section 2.05(a) of the Agreement to request a Competitive Borrowing under the Agreement, and in that connection sets forth below the terms on which such Competitive Borrowing is requested to be made:

 

	
(a)
    	
Date of Competitive Borrowing
    	
 
    	
 
    
	
 
    	
(which is a Business Day)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
Principal amount of Competitive Borrowing(1)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
Interest rate basis(2)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
Interest Period and the last day thereof
    	
 
    	
 
    

 

(1)  Not less than $5,000,000 (and in integral multiples of $1,000,000) and not more than the total Revolving Commitments then available.

 

(2)  Eurocurrency Loan or Fixed Rate Loan.

 

 

Upon acceptance of any or all of the Competitive Loans offered by the Lenders in response to this request by any Borrower, the Borrower shall be deemed to have represented and warranted that the conditions to lending specified in Section 6.03(c) and (d) of the Agreement have been satisfied. Any amounts borrowed shall be deposited in JPMorgan Chase Bank, N.A. account number [    ].

 

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
ELANCO ANIMAL HEALTH INCORPORATED
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

 

EXHIBIT A-2

 

FORM OF NOTICE OF COMPETITIVE BID REQUEST

 

[Name of Lender]

[Address]

 

	
 
    	
[Date]
    

 

Attention: [    ]

 

Ladies and Gentlemen:

 

Reference is made to the Revolving Loan Credit Agreement, dated as of September 5, 2018 (as amended, modified, extended or restated from time to time, the “Agreement”), among Elanco Animal Health Incorporated, an Indiana Corporation (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

 

The Borrower made a Competitive Bid Request on [   ], 201[   ], pursuant to Section 2.05(a) of the Agreement, and in that connection you are invited to submit a Competitive Bid by [Date]/[Time].(1) Your Competitive Bid must comply with Section 2.05 of the Agreement and the terms set forth below on which the Competitive Bid Request was made(2):

 

(a)                                 Date of Competitive Borrowing

(which is a Business Day)

 

(b)                                 Principal amount of Competitive Borrowing(3)

 

(c)                                  Interest rate basis(4)

 

(1)  The Competitive Bid must be received by the Advance Agent (i) in the case of Eurocurrency Competitive Borrowing, not later than 10:00 a.m., New York City time, four Business Days before the proposed date of such Competitive Borrowing, and (ii) in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, two Business Day before the proposed date of such Competitive Borrowing.

 

(2)  Please note that the Borrower shall not be required to indemnify any Lender in respect of any withholding taxes that are in effect and would apply as of the date the Borrower accepts a Competitive Bid pursuant to Section 2.05(d) of the Agreement. Please note further that each Lender shall be solely responsible for obtaining and properly completing all forms or other documentation relating to current and future withholding taxes that apply at any point to payments from the Borrower to such Lender.

 

(3)  Not less than $5,000,000 (and in integral multiples of $1,000,000) and not more than the total Revolving Commitments then available.

 

(4)  Eurocurrency Loan or Fixed Rate Loan.

 

 

(d)                                 Interest Period and the last day thereof(5)

 

(5)  Which shall be subject to the definition of “Interest Period” and end not later than the Revolving Maturity Date.

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
JPMorgan   Chase Bank, N.A., as
    
	
 
    	
Advance   Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

EXHIBIT A-3

 

FORM OF COMPETITIVE BID

 

JPMorgan Chase Bank, N.A., as Administrative Agent

for the Lenders referred to below,

c/o JPMorgan Chase Bank, N.A.

383 Madison Avenue, 24th Floor

New York, NY 10179

Attention: [  ]

 

JPMorgan Chase Bank, N.A., as Advance Agent

for the Lenders referred to below,

c/o JPMorgan Chase Bank, N.A.

383 Madison Avenue, 24th Floor

New York, NY 10179

Attention: [   ]

 

	
 
    	
[Date]
    

 

Ladies and Gentlemen:

 

The undersigned, [Name of Lender], refers to the Revolving Loan Credit Agreement, dated as of September 5, 2018 (as amended, modified, extended or restated from time to time, the “Agreement”), among Elanco Animal Health Incorporated, an Indiana Corporation (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

 

The undersigned hereby makes a Competitive Bid pursuant to Section 2.05(b) of the Agreement, in response to the Competitive Bid Request made by the Borrower on [    ], 201[   ], and in that connection sets forth below the terms on which such Competitive Bid is made:

 

Principal Amount(1)

 

Competitive Bid Rate(2)

 

(1)  Not less than $5,000,000 (and in integral multiples of $1,000,000) and not more than the total Revolving Commitments then available. Multiple bids will be accepted by the Advance Agent.

 

(2)  i.e., Eurocurrency Rate + or - [ ]%, in the case of Eurocurrency Competitive Loans, or [ ]%, in the case of Fixed Rate Loans.

 

 

Interest Period and last day thereof(3)

 

The undersigned hereby confirms that it is prepared, subject to the conditions set forth in the Agreement, to extend credit upon acceptance by the Borrower of this bid in accordance with Section 2.05(d) of the Agreement.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
[NAME   OF LENDER]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

(3)  Which shall be subject to the definition of “Interest Period” and end not later than the Revolving Maturity Date.

 

2

 

EXHIBIT A-4

 

FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER

 

JPMorgan Chase Bank, N.A., as Administrative Agent

for the Lenders referred to below,

c/o JPMorgan Chase Bank, N.A.

383 Madison Avenue, 24th Floor

New York, NY 10179

Attention: [  ]

 

JPMorgan Chase Bank, N.A., as Advance Agent

for the Lenders referred to below,

c/o JPMorgan Chase Bank, N.A.

383 Madison Avenue, 24th Floor

New York, NY 10179

Attention: [   ]

 

	
 
    	
[Date]
    

 

Ladies and Gentlemen:

 

The undersigned, Elanco Animal Health Incorporated, an Indiana Corporation (the “Borrower”), refers to the Revolving Loan Credit Agreement, dated as of September 5, 2018 (as amended, modified, extended or restated from time to time, the “Agreement”), among the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

 

In accordance with Section 2.05(c) of the Agreement, we have received a summary of bids in connection with our Competitive Bid Request dated [   ], 201[   ], and in accordance with Section 2.05(d) of the Agreement, we hereby accept the following bids for maturity on [date]:

 

	
Principal Amount
    	
 
    	
Fixed Rate/Margin
    	
 
    	
Lender
    
	
$
    	
 
    	
[%]/[+/-[    ]%]
    	
 
    	
 
    
	
$
    	
 
    	
[%]/[+/-[    ]%]
    	
 
    	
 
    

 

We hereby reject the following bids:

 

	
Principal Amount
    	
 
    	
Fixed Rate/Margin
    	
 
    	
Lender
    
	
$
    	
 
    	
[%]/[+/-[    ]%]
    	
 
    	
 
    
	
$
    	
 
    	
[%]/[+/-[    ]%]
    	
 
    	
 
    

 

The $[    ] should be deposited in JPMorgan Chase Bank, N.A. account number [    ] on [date].

 

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
ELANCO ANIMAL HEALTH INCORPORATED
    
	
 
    	
 
    
	
 
    	
By:     
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

2

 

 

EXHIBIT A-5

 

FORM OF BORROWING REQUEST

 

JPMorgan Chase Bank, N.A., as Administrative Agent

for the Lenders referred to below,

c/o JPMorgan Chase Bank, N.A.

383 Madison Avenue, 24th Floor

New York, NY 10179

Attention: [  ]

 

	
 
    	
[Date]
    

 

Ladies and Gentlemen:

 

The undersigned, Elanco Animal Health Incorporated, an Indiana Corporation (the “Borrower”), refers to the Revolving Loan Credit Agreement, dated as of September 5, 2018 (as amended, modified, extended or restated from time to time, the “Agreement”), among the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

 

The Borrower hereby [gives you] [confirms its prior oral] notice to you pursuant to Section 2.03 of the Agreement that it [requests] [has requested] a Revolver Borrowing under the Agreement, and in that connection sets forth below the terms on which such Revolving Loan [is] [has been] requested to be made:

 

(a)                                 Date of Revolver Borrowing

(which is a Business Day)

 

(b)                                 Principal amount of Revolver Borrowing(1)

 

(c)                                  ABR Borrowing or Eurocurrency Borrowing

 

(d)                                 Interest Period and the last day thereof(2)

 

(1)  In the case of (a) a Eurocurrency Borrowing denominated in Dollars, not less than $5,000,000 (and in integral multiples of $1,000,000) or greater than the total applicable Revolving Commitments then available and (b) an ABR Borrowing, not less than $3,000,000 (and in integral multiples of $1,000,000) or greater than the total applicable Revolving Commitments then available.

 

(2)  Which shall be subject to the definition of “Interest Period”.

 

 

(e)                                  Location and account number of the Borrower

where the funds are to be disbursed

 

Upon acceptance of any or all of the Revolving Loans made by the Lenders in response to this request, the Borrower shall be deemed to have represented and warranted that the conditions to lending specified in Sections 6.03(c) and (d) of the Agreement have been satisfied.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
ELANCO ANIMAL HEALTH INCORPORATED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:    
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

2

 

EXHIBIT B

 

FORM OF ASSIGMENT AND ASSUMPTION

 

Dated: [    ], 201[    ]

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below  (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

This Assignment and Assumption is being delivered to JPMorgan Chase Bank, N.A. together with (a) if the Assignee is organized under the laws of a jurisdiction outside the United States, the forms specified in Section 4.12(h) of the Credit Agreement, duly completed and executed by such Assignee, (b) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire in the form of Exhibit D to the Credit Agreement and (c) a processing and recordation fee of $3,500; provided that such recordation fee shall not be payable for any assignment by or to Goldman Sachs Bank USA or any of its Affiliates including Goldman Sachs Lending Partners LLC. Notwithstanding anything to the contrary, no consent is required from any third party in the case of assignments between Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC.

 

	
1.
    	
Assignor:
    

 

1

 

	
2.
    	
Assignee:
    	
 
    
	
 
    	
 
    	
[and is an Affiliate/Approved Fund of [identify Lender](13) ]
    
	
 
    	
 
    	
 
    
	
3.
    	
Borrower:
    	
Elanco Animal Health Incorporated
    
	
 
    	
 
    	
 
    
	
4.
    	
Administrative Agent:
    	
JPMorgan Chase Bank, N.A., as the administrative   agent under the Credit Agreement
    
	
 
    	
 
    	
 
    
	
5.
    	
Credit Agreement:
    	
The $750,000,000 Revolving Credit Agreement dated as   of September 5, 2018 among Elanco Animal Health Incorporated, the Lenders   parties thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
    
	
 
    	
 
    	
 
    
	
6.
    	
Assigned Interest:
    	
 
    

 

	
Facility Assigned(14)
    	
 
    	
Aggregate Amount of
   Revolving
   Commitment/Loans
   for all Lenders
    	
 
    	
Amount of Revolving
   Commitment/Loans
   Assigned
    	
 
    	
Percentage Assigned
   of Revolving
   Commitment/Loans(15)
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
 
    	
%
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
 
    	
%
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
 
    	
%
    

 

Effective Date:                   , 20    [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The Assignee agrees to deliver to the Administrative Agent a completed Administrative Questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information  (which may contain material non-public information about the Borrower and its Related Parties or their respective securities) will be made available and who may receive such information in accordance with the Assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

	
 
    	
ASSIGNOR
    
	
 
    	
 
    
	
 
    	
[NAME OF ASSIGNOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
 
    	
Title:
    

 

(13)  Select as applicable.

 

(14)  No less than $5,000,000 to be assigned unless it represents the entire amount of such assignor.

 

(15)  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

 

	
 
    	
ASSIGNEE
    
	
 
    	
 
    
	
 
    	
[NAME OF ASSIGNEE]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
 
    	
Title:
    

 

 

	
Consented to and   Accepted:
    	
 
    
	
 
    	
 
    
	
JPMORGAN CHASE BANK,   N.A., as
    	
 
    
	
Administrative Agent
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[Consented to:](16)
    	
 
    
	
 
    	
 
    
	
ELANCO ANIMAL HEALTH INCORPORATED
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

(16)  Consent of Borrower not required if there exists an Event of Default, or if assignment is to another Lender, or Affiliate of a Lender or an Approved Fund.

 

 

STANDARD TERMS AND CONDITIONS FOR
 ASSIGNMENT AND ASSUMPTION

 

1.  Representations and Warranties.

 

1.1  Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement, (iv) any requirements under applicable law for the Assignee to become a lender under the Credit Agreement or to charge interest at the rate set forth therein from time to time or (v) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement.

 

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement and under applicable law that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 7.03 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent, any Arranger or any other Lender and their respective Related Parties, and (v) attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, any Arranger, the Assignor or any other Lender and their respective Related Parties, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

 

2.  Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

 

3.  General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This

 

 

Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Acceptance and adoption of the terms of this Assignment and Assumption by the Assignee and the Assignor by Electronic Signature or delivery of an executed counterpart of a signature page of this Assignment and Assumption by any Approved Electronic Platform shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 

2

 

 

EXHIBIT D

 

FORM OF ADMINISTRATIVE QUESTIONNAIRE

 

[LOGO] JPMorgan

 

JPMorgan Chase Bank, N.A.

500 Stanton Christian Rd.

Newark, DE 19713

Attention: Nick Fattori

Email: nicholas.fattori@chase.com

Tel: 302-552-0588

 

CUSTOMER’S NAME
 ADMINISTRATIVE QUESTIONNAIRE

 

Please accurately complete the following information and return via FAX to the attention of Nick Fattori. It is very important that all of the requested information is accurately completed and returned promptly.

 

TELEPHONE: 302-552-0588

FAX: 302-634-1417

E-MAIL: NICHOLAS.FATTORI@CHASE.COM

 

LEGAL NAME OF LENDING INSTITUTION TO APPEAR IN DOCUMENTATION:

 

NUMBER OF SIGNATURE LINES NEEDED FOR SIGNATURE PAGE:

 

GENERAL INFORMATION - DOMESTIC LENDING OFFICE:

 

	
Institution Name:
    	
 
    
	
 
    	
 
    
	
Street Address:
    	
 
    
	
 
    	
 
    
	
City, State, Zip Code:
    	
 
    

 

CONTACTS/NOTIFICATION METHODS:

 

CREDIT CONTACT:

 

	
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E-Mail Address:
    	
 
    

 

 

WEB SITE ADDRESS:

 

 

 

TAX STATUS:

 

Is your institution a non-Resident Alien, foreign corporation or partnership?

 

Yes o  No o

 

If yes:

 

What is the country of incorporation or organization?

 

Tax Form W-8BEN, W-8BEN-E, W-8ECI and/or W-8IMY should be enclosed as per the Tax Section of the referenced Revolving Loan Credit Agreement.

 

Failure to properly complete and return the applicable form will subject your institution to withholding tax.

 

If no:

 

Please submit Tax Form W-9

 

Lender’s Tax Identification Number:

 

CONTACTS/NOTIFICATION METHODS:

 

ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST, FEES, ETC.

 

	
Contact Name:
    	
 
    
	
 
    	
 
    
	
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E-Mail Address:
    	
 
    

 

FINANCIAL MAILING CONTACT (IF DIFFERENT FROM CREDIT CONTACT ABOVE):

 

	
Contact Name:
    	
 
    
	
 
    	
 
    
	
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E-Mail Address:
    	
 
    

 

PAYMENT INSTRUCTIONS:

 

Name of Bank where funds are to be transferred:

 

 

 

Routing Transit/ABA Number of Bank where funds are to be transferred:

 

2

 

	
Name of Account, if applicable:
    	
 
    
	
 
    	
 
    
	
Account Number:
    	
 
    
	
 
    	
 
    
	
Additional Information:
    	
 
    

 

3

 

EXHIBIT E

 

FORM OF REVOLVING MATURITY DATE EXTENSION REQUEST

 

JPMorgan Chase Bank, N.A., as Administrative Agent

for the Lenders referred to below,

c/o JPMorgan Chase Bank, N.A.

383 Madison Avenue, 24th Floor

New York, NY 10179

Attention: [    ]

 

	
 
    	
[Date]
    

 

Ladies and Gentlemen:

 

The undersigned, Elanco Animal Health Incorporated, an Indiana Corporation (the “Borrower”), refers to the Revolving Loan Credit Agreement, dated as of September 5, 2018 (as amended, modified, extended or restated from time to time, the “Agreement”), among the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

 

The Borrower hereby gives you notice pursuant to Section 2.04 of the Agreement that it requests an extension of Revolving Maturity Date under the Agreement, and in that connection sets forth below the terms on which such extension of Revolving Maturity Date is requested:(1)

 

(a)                                 Current Revolving Maturity Date 

 

 

(b)                                 Extension of Revolving Maturity Date of additional one year

 

As of the date of this request, the conditions set forth in Section 6.03(c) have been satisfied and no Default shall have occurred and be continuing.

 

[Signature page follows]

 

(1)  [Note: There shall be no more than two extensions of the Revolving Maturity Date and in no event shall the extended Revolving Maturity Date be more than five (5) years from the effective date of such extension.]

 

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
ELANCO ANIMAL HEALTH INCORPORATED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:    
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

 

EXHIBIT F-1

 

[FORM OF]

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Lenders That Are Not Partnerships
 For U.S. Federal Income Tax Purposes)

 

Reference is made to the Revolving Loan Credit Agreement, dated as of September 5, 2018 as amended, modified, extended or restated from time to time, the “Agreement”), Elanco Animal Health Incorporated, an Indiana corporation (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.

 

Pursuant to the provisions of Section 4.12 of the Revolving Loan Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a United States trade or business.

 

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W- 8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Revolving Loan Credit Agreement and used herein shall have the meanings given to them in the Revolving Loan Credit Agreement.

 

	
[NAME OF LENDER]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
Date:            , 20[ ]
    	
 
    

 

 

EXHIBIT F-2

 

[FORM OF]

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Participants That Are Not Partnerships
 For U.S. Federal Income Tax Purposes)

 

Reference is made to the Revolving Loan Credit Agreement, dated as of September 5, 2018 (as amended, modified, extended or restated from time to time, the “Agreement”), Elanco Animal Health Incorporated, an Indiana corporation (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.

 

Pursuant to the provisions of Section 4.12 of the Revolving Loan Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a United States trade or business.

 

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Revolving Loan Credit Agreement and used herein shall have the meanings given to them in the Revolving Loan Credit Agreement.

 

	
[NAME OF PARTICIPANT]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
Date:            , 20[ ]
    	
 
    

 

 

EXHIBIT F-3

 

[FORM OF]

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Participants That Are Partnerships
 For U.S. Federal Income Tax Purposes)

 

Reference is made to the Revolving Loan Credit Agreement, dated as of September 5, 2018  (as amended, modified, extended or restated from time to time, the “Agreement”), among Elanco Animal Health Incorporated, an Indiana corporation (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.

 

Pursuant to the provisions of Section 4.12 of the Revolving Loan Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code and (vi) the interest payments in question are not effectively connected with the undersigned’s or its direct or indirect partners’/members’ conduct of a United States trade or business.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E, as applicable or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Revolving Loan Credit Agreement and used herein shall have the meanings given to them in the Revolving Loan Credit Agreement.

 

 

	
[NAME OF PARTICIPANT]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
Date:        , 20[   ]
    	
 
    

 

 

EXHIBIT F-4

 

[FORM OF]

 

U.S. TAX COMPLIANCE CERTIFICATE

(For Non-U.S. Lenders That Are Partnerships
 For U.S. Federal Income Tax Purposes)

 

Reference is made to the Revolving Loan Credit Agreement, dated as of September 5, 2018 as amended, modified, extended or restated from time to time, the “Agreement”), among Elanco Animal Health Incorporated, an Indiana corporation (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.

 

Pursuant to the provisions of Section 4.12 of the Revolving Loan Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Revolving Loan Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code and (vi) the interest payments in question are not effectively connected with the undersigned’s or its direct or indirect partners’/members’ conduct of a United States trade or business.

 

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E, as applicable or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Revolving Loan Credit Agreement and used herein shall have the meanings given to them in the Revolving Loan Credit Agreement.

 

	
[NAME OF LENDER]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
Date:        , 20[   ]
    	
 
    

 

 

Exhibit G

 

FORM OF SOLVENCY CERTIFICATE

 

This Solvency Certificate (this “Certificate”) is furnished to the Administrative Agent pursuant to Section 6.02(d) of the Revolving Loan Credit Agreement, dated as of September 5, 2018 (the “Agreement”), among the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

 

I, [  ], [Financial Officer] of the Borrower, in that capacity only and not in my individual capacity (and without personal liability), DO HEREBY CERTIFY that as of the date hereof, after giving effect to the consummation of the Transactions, including the making of the Loans under the Agreement on the date hereof, and after giving effect to the application of the proceeds of such Loans, that:

 

(a) the fair value of the assets of the Borrower at a fair valuation will exceed its debts and liabilities, subordinated, contingent or otherwise;

 

(b) the present fair saleable value of the property of the Borrower will be greater than the amount that will be required to pay the probable liabilities on its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured;

 

(c) the Borrower will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured;

 

(d) the Borrower will not have an unreasonably small capital with which to conduct the businesses in which it is engaged as such businesses are now conducted and proposed to be conducted following the determination date;

 

(e) for purposes of this Certificate, the amount of contingent liabilities has been computed as the amount that, in light of all the facts and circumstances existing as of the date hereof, represents the amount that can reasonably be expected to become an actual or matured liability; and

 

(f) I am generally familiar with the businesses and assets of the Borrower and am duly authorized to execute this Solvency Certificate on behalf of the Borrower pursuant to the Agreement.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate in such undersigned’s capacity as [Financial Officer] of the Borrower, and not individually, as of the date first written above.

 

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
ELANCO ANIMAL HEALTH INCORPORATED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:    
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:

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