Document:

Exhibit 10.5

 

THERAVANCE RESPIRATORY COMPANY, LLC

 

LIMITED LIABILITY COMPANY AGREEMENT

 

May 31, 2014

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I DEFINITIONS
    	
 
    	
2
    
	
 
    	
1.1
    	
Definitions
    	
 
    	
2
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II FORMATION OF LIMITED LIABILITY COMPANY
    	
 
    	
16
    
	
 
    	
2.1
    	
Formation
    	
 
    	
16
    
	
 
    	
2.2
    	
Name and Principal Place   of Business
    	
 
    	
16
    
	
 
    	
2.3
    	
Agreement
    	
 
    	
16
    
	
 
    	
2.4
    	
Business
    	
 
    	
17
    
	
 
    	
2.5
    	
Definitions
    	
 
    	
17
    
	
 
    	
2.6
    	
Term
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III MEMBERS AND INTERESTS
    	
 
    	
17
    
	
 
    	
3.1
    	
Units Generally
    	
 
    	
17
    
	
 
    	
3.2
    	
Classes of Units
    	
 
    	
17
    
	
 
    	
3.3
    	
Members
    	
 
    	
18
    
	
 
    	
3.4
    	
Representations and   Warranties
    	
 
    	
18
    
	
 
    	
3.5
    	
Resignation or Withdrawal   of a Member
    	
 
    	
19
    
	
 
    	
3.6
    	
Limited Liability of   Members
    	
 
    	
19
    
	
 
    	
3.7
    	
General Voting Rights
    	
 
    	
20
    
	
 
    	
3.8
    	
Fiduciary Duties of   Theravance Biopharma
    	
 
    	
20
    
	
 
    	
3.9
    	
Related Party Transactions
    	
 
    	
21
    
	
 
    	
3.10
    	
Relationship of Members
    	
 
    	
21
    
	
 
    	
3.11
    	
Cancellation of Units
    	
 
    	
21
    
	
 
    	
3.12
    	
Compliance with GSK   Agreements by Theravance and the LLC
    	
 
    	
22
    
	
 
    	
3.13
    	
Performance of Obligations   by Manager
    	
 
    	
22
    
	
 
    	
3.14
    	
Theravance Triggering   Event
    	
 
    	
22
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV CONTRIBUTIONS TO CAPITAL; WITHDRAWALS; ADVANCES
    	
 
    	
23
    
	
 
    	
4.1
    	
Initial Capital   Contribution by Theravance
    	
 
    	
23
    
	
 
    	
4.2
    	
Additional Capital   Contributions
    	
 
    	
25
    
	
 
    	
4.3
    	
Interest
    	
 
    	
26
    
	
 
    	
4.4
    	
No Right of Withdrawal
    	
 
    	
26
    
	
 
    	
4.5
    	
Advances
    	
 
    	
26
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V MANAGEMENT, EXPENSES AND RESTRICTIONS
    	
 
    	
26
    
	
 
    	
5.1
    	
Management by Manager;   Manager
    	
 
    	
26
    
	
 
    	
5.2
    	
Fiduciary Duties of   Theravance and the Manager
    	
 
    	
27
    
	
 
    	
5.3
    	
Duties of the Manager
    	
 
    	
27
    
	
 
    	
5.4
    	
Limitation of Authority of   Manager
    	
 
    	
29
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VI NOTICES
    	
 
    	
30
    
	
 
    	
6.1
    	
Notices
    	
 
    	
30
    
	
 
    	
6.2
    	
Waiver of Notice
    	
 
    	
30
    

 

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ARTICLE VII OFFICERS
    	
 
    	
30
    
	
 
    	
7.1
    	
Officers
    	
 
    	
30
    
	
 
    	
7.2
    	
Reliance by Third Parties
    	
 
    	
31
    
	
 
    	
7.3
    	
Actions and Determinations   of the LLC
    	
 
    	
31
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VIII ACCOUNTING AND RECORDS
    	
 
    	
32
    
	
 
    	
8.1
    	
Financial and Tax   Reporting
    	
 
    	
32
    
	
 
    	
8.2
    	
Members Access to Certain   Information
    	
 
    	
32
    
	
 
    	
8.3
    	
Books and Records
    	
 
    	
32
    
	
 
    	
8.4
    	
Tax Returns
    	
 
    	
32
    
	
 
    	
8.5
    	
Tax Matters Partner
    	
 
    	
32
    
	
 
    	
8.6
    	
Confidentiality
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IX CAPITAL ACCOUNTS AND ALLOCATIONS OF NET INCOME AND   NET LOSS
    	
 
    	
34
    
	
 
    	
9.1
    	
Capital Accounts
    	
 
    	
34
    
	
 
    	
9.2
    	
Allocations of Net Income   and Net Loss
    	
 
    	
34
    
	
 
    	
9.3
    	
Special Allocation   Provisions
    	
 
    	
35
    
	
 
    	
9.4
    	
Curative Allocations
    	
 
    	
36
    
	
 
    	
9.5
    	
Tax Allocations
    	
 
    	
36
    
	
 
    	
9.6
    	
Compliance with   Section 704(b) of the Code
    	
 
    	
37
    
	
 
    	
9.7
    	
Section 754 Election
    	
 
    	
37
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE X EXPENSES
    	
 
    	
37
    
	
 
    	
10.1
    	
Expenses
    	
 
    	
37
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XI DISTRIBUTIONS
    	
 
    	
37
    
	
 
    	
11.1
    	
Distributions
    	
 
    	
37
    
	
 
    	
11.2
    	
Tax Distributions
    	
 
    	
37
    
	
 
    	
11.3
    	
No Other Withdrawals
    	
 
    	
38
    
	
 
    	
11.4
    	
Distribution Limitations
    	
 
    	
38
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XII TRANSFER OF MEMBERSHIP; OTHER MATTERS
    	
 
    	
38
    
	
 
    	
12.1
    	
Transfer
    	
 
    	
38
    
	
 
    	
12.2
    	
Transfer Void
    	
 
    	
39
    
	
 
    	
12.3
    	
Effect of Assignment
    	
 
    	
39
    
	
 
    	
12.4
    	
Legends
    	
 
    	
39
    
	
 
    	
12.5
    	
Publicly Traded   Partnership Limitations
    	
 
    	
40
    
	
 
    	
12.6
    	
Effective Date
    	
 
    	
40
    
	
 
    	
12.7
    	
Redemption
    	
 
    	
40
    
	
 
    	
12.8
    	
Assignment of Reverted   Drug Programs
    	
 
    	
40
    
	
 
    	
12.9
    	
Admission of Permitted   Assignee as a Member
    	
 
    	
41
    
	
 
    	
12.10
    	
Transfer to Theravance   Biopharma at Effective Time; Admission of Theravance Biopharma at Effective   Time
    	
 
    	
41
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XIII INDEMNIFICATION AND LIMITATION OF LIABILITY
    	
 
    	
41
    
	
 
    	
13.1
    	
Indemnification
    	
 
    	
41
    

 

ii

 

	
 
    	
13.2
    	
Exculpation
    	
 
    	
42
    
	
 
    	
13.3
    	
Limitation of Liability
    	
 
    	
43
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XIV DISSOLUTION AND TERMINATION
    	
 
    	
43
    
	
 
    	
14.1
    	
Dissolution
    	
 
    	
43
    
	
 
    	
14.2
    	
Authority to Wind Up
    	
 
    	
44
    
	
 
    	
14.3
    	
Winding Up and Certificate   of Cancellation
    	
 
    	
44
    
	
 
    	
14.4
    	
Distribution of Assets
    	
 
    	
44
    
	
 
    	
14.5
    	
Contingent Distribution
    	
 
    	
44
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XV   MISCELLANEOUS
    	
 
    	
45
    
	
 
    	
15.1
    	
Amendment
    	
 
    	
45
    
	
 
    	
15.2
    	
Power of Attorney
    	
 
    	
46
    
	
 
    	
15.3
    	
Withholding
    	
 
    	
47
    
	
 
    	
15.4
    	
Apportionment of Amounts   Withheld at the Source or Paid by the LLC
    	
 
    	
47
    
	
 
    	
15.5
    	
Notice to and Consent of   Members
    	
 
    	
48
    
	
 
    	
15.6
    	
Further Assurances
    	
 
    	
48
    
	
 
    	
15.7
    	
Binding Effect
    	
 
    	
48
    
	
 
    	
15.8
    	
Governing Law
    	
 
    	
48
    
	
 
    	
15.9
    	
Title to LLC Property
    	
 
    	
48
    
	
 
    	
15.10
    	
Dispute Resolution
    	
 
    	
48
    
	
 
    	
15.11
    	
Entire Agreement
    	
 
    	
52
    
	
 
    	
15.12
    	
Counterparts
    	
 
    	
52
    
	
 
    	
15.13
    	
No State-law Partnership
    	
 
    	
52
    
	
 
    	
15.14
    	
Tax Classification
    	
 
    	
52
    
	
 
    	
15.15
    	
Severability
    	
 
    	
53
    
	
 
    	
15.16
    	
No Third Party Beneficiary
    	
 
    	
53
    
	
 
    	
15.17
    	
Interpretation
    	
 
    	
53
    
	
 
    	
15.18
    	
Aggregation of Units
    	
 
    	
53
    

 

	
EXHIBIT A
    	
Members;   Units
    
	
EXHIBIT B
    	
Manager;   Officers; Tax Matters Member
    
	
EXHIBIT C
    	
Assigned   Rights and Benefits and Assumed Liabilities
    

 

	
ATTACHMENT   A
    	
Assigned   Assets — Patents
    
	
ATTACHMENT   B
    	
Assigned   Assets — Trademarks
    
	
ATTACHMENT   C
    	
Assigned   Assets — Domain Names
    
	
ATTACHMENT   D
    	
Assigned   Assets — Registrations
    
	
ATTACHMENT   E
    	
Assumed   Liabilities
    
	
ATTACHMENT   F
    	
FF   Chemical Structure
    
	
ATTACHMENT   G
    	
UMEC   Chemical Structure
    
	
ATTACHMENT   H
    	
VI   Chemical Structure
    

 

iii

 

THERAVANCE RESPIRATORY COMPANY, LLC

 

LIMITED LIABILITY COMPANY AGREEMENT

 

This Limited Liability Company Agreement (the “Agreement”) of Theravance Respiratory Company, LLC (the “LLC”) is entered into pursuant to the Delaware Limited Liability Company Act, Delaware Code Ann. Title 6, §§18-101, et seq., as amended from time to time (the “Act”), effective as of May 31, 2014, by and among (i) each Member (as hereinafter defined) set forth on Exhibit A hereto, each having duly executed this Agreement or a counterpart to this Agreement intending to be legally bound by the following terms and conditions, (ii) Theravance, Inc., a Delaware corporation, as Manager, having duly executed this Agreement or a counterpart to this Agreement intending to be legally bound by the following terms and conditions, and (iii) such other Persons who may hereafter be admitted from time to time as Members (as hereinafter defined) in accordance with the provisions hereof.

 

RECITALS

 

WHEREAS, Theravance has announced its plan to spin off its drug discovery and development business into Theravance Biopharma, which will be a separate publicly traded company;

 

WHEREAS, at the Contribution Time, Theravance will assign to the LLC its Strategic Alliance Agreement with GSK and all of its rights and obligations under its Collaboration Agreement with GSK, other than with respect to the Retained Products, and certain other related assets and liabilities;

 

WHEREAS, immediately after the Contribution Time, Theravance’s Class A Units, Class B Units and Class C Units of the LLC will entitle it to 100% of the economic interest in all future payments made by GSK to the LLC under the GSK Agreements relating to the Assigned Products;

 

WHEREAS, at the Effective Time, Theravance shall transfer all of its Class B Units in the LLC and six thousand three hundred seventy-five (6,375) of its Class C Units in the LLC to Theravance Biopharma and Theravance Biopharma shall be admitted as a Member; and

 

WHEREAS, the LLC shall be controlled by Theravance who shall, among other things, appoint the Manager which shall manage the business and affairs of the LLC:

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members hereby agree as follows:

 

 

ARTICLE I

 

DEFINITIONS

 

1.1                               Definitions.  The following terms shall have the meanings set forth for purposes of this Agreement:

 

“Accounting Period” shall mean for each Fiscal Year the period beginning on the 1st of January and ending on the 31st of December; provided, however, that the first Accounting Period commenced on the date of formation of the LLC and shall end on December 31 of the year of formation of the LLC; and provided, further, that, at the election of the Manager, a new Accounting Period shall commence on any date on which an additional Member is admitted to the LLC or a Member ceases to be a Member for any reason.

 

“Act” shall have the meaning ascribed to it in the Preamble.

 

“Action” shall mean any demand, action, cause of action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any federal, state, local, foreign or international Governmental Entity or any arbitration or mediation tribunal.

 

“Affiliates” shall mean, with respect to any specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, the Person specified.  For the avoidance of doubt, as of the Effective Time, GSK is not an Affiliate of Theravance or Theravance Biopharma.

 

“Agreement” shall mean this Limited Liability Company Agreement of the LLC as the same shall be amended from time to time.

 

“Alliance Product” shall mean that term as defined in the Strategic Alliance Agreement.

 

“ANOROTM” shall mean the Collaboration Product consisting of (a) the combination medicine comprising UMEC with VI, with no other therapeutically active component, and explicitly excluding either component as a monotherapy, and which is proposed, as of the date hereof, to be sold under the brand name “ANOROTM ELLIPTATM”, and (b) any and all product improvements, additional claims, line extensions, dosage changes and alternate delivery systems and formulations, in each case, with respect to only such combination medicine set forth in subsection (a) comprising UMEC with VI, with no other therapeutically active component (and explicitly excluding either component as a monotherapy).

 

“Assigned Assets” shall mean:

 

(a)                                 All of Theravance’s rights, title and interest in and to the patents and patent applications listed in Attachment A, and any patents of addition, re-examinations, reissues, extensions, granted supplementary protection certifications, substitutions, confirmations, registrations, revalidations, revisions, additions and the like, of or to said patents and any and all divisionals, continuations and continuations-in-part, and any patents issuing

 

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therefrom, as well as any patent applications related thereto and all Actions against past, present, and future infringement, misappropriation, or other violation of the foregoing.

 

(b)                                 All of Theravance’s rights, title and interest in and to the Trademarks listed on Attachment B, together with (i) all common law rights to such Trademarks, (ii) the goodwill of the LLC Business symbolized by such Trademarks, (iii) all Actions for, or arising from any infringement, dilution, unfair competition, or other violation, including past infringement, dilution, unfair competition, or other violation, of such Trademarks, and (iv) all rights corresponding thereto throughout the world.

 

(c)                                  All of Theravance’s rights, title and interest in and to the domain names listed in Attachment C and all Actions against past, present, and future infringement, misappropriation, or other violation of the foregoing.

 

(d)                                 All U.S. and foreign copyrights and copyrightable subject matter related to the LLC Business (and not to the Theravance Business), whether registered or unregistered, published or unpublished, statutory or common law, including all related registrations, applications and common law rights, in any labels, product marketing materials or other copyrighted works related to the LLC Business and all Actions against past, present, and future infringement, misappropriation, or other violation of the foregoing (“LLC Copyrights”).

 

(e)                                  All of Theravance’s rights, title and interest in and to any Intellectual Property, including trade secrets, not heretofore described in the definition of Assigned Assets that is reasonably likely to be used in the LLC Business  (and not in the Theravance Business) and that Theravance in its sole discretion determines to assign to the LLC.

 

(f)                                   With respect to the Assigned Products, all (i) regulatory filings and approvals, registrations and governmental authorizations, (ii) each NDA, (iii) each IND or equivalent, (iv) all compliance notices, licenses and permits, (v) all applications to the FDA or the comparable foreign law or bodies in effect or pending at the Effective Time, and (vi) all materials and information relating to the FDA and other Governmental Approvals for the LLC Business, all as set forth on Attachment D, and all information contained therein (collectively, the “Registrations”).

 

(g)                                  All Books and Records.

 

(h)                                 All pre-clinical and clinical data related to the LLC Business (and not to the Theravance Business) and which is contained in Theravance’s databases or otherwise in Theravance’s possession or control.

 

(i)                                     All of Theravance’s rights, title and interest in and to the Clinical Trial Materials to the extent not related to the Theravance Business.

 

(j)                                    All of Theravance’s rights, title and interest in and to the Clinical Trial Study Reports to the extent not related to the Theravance Business.

 

(k)                                 All of Theravance’s rights, title and interest in and to any and all other assets that primarily relate to the Assigned Drug Programs or Assigned Products (and not to the

 

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Theravance Business) or that otherwise are expressly contemplated by this Agreement (or the Attachments and Schedules hereto) to be transferred by Theravance to the LLC.

 

“Assigned Collaboration Product” shall mean each Collaboration Product and any other compound that has been, is currently or may in the future be developed or commercialized under the Collaboration Agreement other than Retained Products.

 

“Assigned Drug Programs” shall mean (i) the rights and obligations of Theravance under the GSK Agreements relating to the Assigned Products, (ii) the Liabilities of Theravance under the GSK Agreements relating to the Assigned Products and (iii) the Assigned Assets and Assumed Liabilities.

 

“Assigned Products” shall mean, individually and collectively, each Assigned Collaboration Product and each Assigned Strategic Alliance Product.

 

“Assigned Strategic Alliance Product” shall mean each Alliance Product and any other compound that has been, is currently or may in the future be developed or commercialized under the Strategic Alliance Agreement.

 

“Assignment” shall mean that term as defined in Section 4.1(a).

 

“Assumed Liabilities” shall mean:

 

(a)                                 All Liabilities under the Registrations arising after the Effective Time.

 

(b)                                 All other Liabilities primarily arising out of the Assigned Drug Programs or Assigned Products or otherwise arising out of the conduct of Theravance’s business solely to the extent relating to of the conduct of the LLC Business or the Assigned Assets.

 

(c)                                  Any and all Liabilities expressly set forth on Attachment E.

 

(d)                                 Any and all other Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Attachments and Schedules hereto or thereto) to be transferred to and assumed by the LLC.

 

“Assumption” shall mean that term as defined in Section 4.1(c).

 

“Books and Records” shall mean books and records of the business, operations and accounts of an Assigned Product or the LLC to the extent not related to the Theravance Business.

 

“BREO®/RELVAR®” means (a) the combination medicine comprising FF and VI, with no other therapeutically active component, and explicitly excluding either component as a monotherapy, and which is proposed, as of the date hereof, to be sold under the brand name “BREO® ELLIPTA®” in the United States and “RELVAR® ELLIPTA®” in the European Union and Japan, and (b) any and all product improvements, additional claims, line extensions, dosage changes and alternate delivery systems and formulations, in each case, with respect only to such

 

4

 

combination medicine set forth in subsection (a) comprising FF and VI, with no other therapeutically active component (and explicitly excluding either component as a monotherapy).

 

“Business Day” shall mean any day on which banks located in New York, New York are not required or authorized by law to remain closed.

 

“Capital Account” shall mean, with respect to any Member, the account maintained for such Member in accordance with the provisions of Section 9.1(a) hereof.

 

“Capital Contribution” shall mean, with respect to any Member, any contribution to the LLC by such Member of cash or other property.  Any reference in this Agreement to the Capital Contribution of a Member shall include the Capital Contribution made by any predecessor holder of the Interest of that Member.

 

“Carrying Value” shall mean:

 

(a)                                 with respect to any LLC asset, the asset’s adjusted basis for U.S. federal income tax purposes, except as follows:

 

(i)                                     the Carrying Value of any asset contributed or deemed contributed by a Member to the LLC shall be the fair market value of such asset at the time of contribution as determined by agreement of the Members;

 

(ii)                                  the Carrying Value of any asset distributed or deemed distributed by the LLC to any Member shall be adjusted immediately prior to such distribution to equal its fair market value at such time;

 

(iii)                               the Carrying Values of all LLC assets shall be adjusted to equal their respective fair market values as of the following times:

 

(1)                                 immediately prior to the date of the acquisition of any additional Interest by any new or existing Member, other than in exchange for a de minimis Capital Contribution;

 

(2)                                 immediately prior to the date of the distribution of more than a de minimis amount of LLC property to a Member;

 

(3)                                 the liquidation of the LLC within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); and

 

(4)                                 in connection with the grant of an Interest (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the LLC or a subsidiary of the LLC by an existing Member acting in a partner capacity, or by a new Member acting in a partner capacity in anticipation of becoming a Member; provided that an adjustment described in subclauses (1), (2) and (4) of this clause (iii) shall be made only if the Manager reasonably determines that such adjustment is necessary to reflect the collective economic interests of the Members in the LLC.

 

5

 

In the case of any asset that has a Carrying Value determined pursuant to subclause (1), (2) or (4) above, depreciation or deductions shall be computed based on the asset’s Carrying Value as so determined, and not on the asset’s adjusted tax basis, as more fully described under the definition of Net Income and Net Loss below.

 

(b)                                 with respect to any liability, at a given time, the amount of such liability to the extent:

 

(i)                                     reflected in the basis of any asset;

 

(ii)                                  previously or currently deductible in computing Net Income or Net Loss or otherwise for Capital Account maintenance purposes; or

 

(iii)                               otherwise previously taken into account for Capital Account maintenance purposes.

 

“Certificate” shall have the meaning ascribed to it in Section 2.1.

 

“Class” shall mean the group of Members owning all of the outstanding Units of a particular class of Units as set forth in Section 3.2(a) hereof.

 

“Class A Members” shall mean Members holding Class A Units, their permitted successors and assigns who may be admitted to the LLC as Class A Members, in accordance with the terms hereof and any other Person who may be admitted to the LLC as a Class A Member in accordance with the terms of this Agreement.

 

“Class A Units” shall have the meaning ascribed to it in Section 3.2(a).

 

“Class B Members” shall mean Members holding Class B Units, their permitted successors and assigns who may be admitted to the LLC as Class B Members, in accordance with the terms hereof and any other Person who may be admitted to the LLC as a Class B Member in accordance with the terms of this Agreement.

 

“Class B Units” shall have the meaning ascribed to it in Section 3.2(a).

 

“Class C Members” shall mean Members holding Class C Units, their permitted successors and assigns who may be admitted to the LLC as Class C Members, in accordance with the terms hereof and any other Person who may be admitted to the LLC as a Class C Member in accordance with the terms of this Agreement.

 

“Class C Units” shall have the meaning ascribed to it in Section 3.2(a).

 

“Clinical Trial” shall mean a pre-clinical or clinical trial related to the Assigned Products.

 

“Clinical Trial Materials” shall mean the Assigned Products and the placebo for each of these products for use in Clinical Trials, whether in bulk, formulated or finished form and whether in existence at the Effective Time.

 

6

 

“Clinical Trial Study Reports” shall mean all reports or summaries of all data, records and documents resulting from the Clinical Trials.

 

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

 

“Collaboration Agreement” means that certain Collaboration Agreement, dated as of November 14, 2002, by and between Theravance and GSK, including all amendments and supplements thereto (including the Theravance Collaboration Agreement Amendment dated March 3, 2014 (the “Collaboration Amendment Agreement”)).

 

“Collaboration Product” shall mean that term as defined in the Collaboration Agreement.

 

“Consents” shall mean any and all consents, waivers or approvals from, or notification requirements to, any Third Parties.

 

“Contingent Distribution” shall have the meaning ascribed to it in Section 14.5.

 

“Contribution Time” shall mean 11:59 p.m. Pacific Daylight Time on May 31, 2014.

 

“Costs” shall mean LLC Costs and Management Costs.

 

“Defined Covenants” shall mean any covenant:

 

(a)                                 requiring Theravance Biopharma and its permitted transferees, successors and permitted assigns (as applicable) to fully perform and comply with the Master Agreement and this Agreement and prohibiting any of them from taking any action, or failing to take any action, that breaches, violates or could reasonably be expected to breach or violate the Master Agreement or this Agreement;

 

(b)                                 (A) requiring Theravance Biopharma and its permitted transferees, successors and permitted assigns (as applicable) to enforce the Master Agreement and this Agreement and their rights thereunder and hereunder, in each case to the extent that the failure to do so under this clause (A) would be reasonably expected to have a direct or indirect material and adverse effect on Theravance Biopharma’s or its permitted transferees’, successors’ and permitted assigns’ (as applicable) rights or obligations under the Master Agreement or this Agreement, and (B) prohibiting Theravance Biopharma and its permitted transferees, successors and permitted assigns (as applicable) from amending, modifying, supplementing, waiving, canceling, terminating or granting any consent thereunder or hereunder, or taking any other action or failing to take any action having the effect of the foregoing, or agreeing to do any of the foregoing directly or indirectly, in whole or in part, to the Master Agreement or this Agreement or any rights thereunder or hereunder, in each case to the extent that such action or inaction referred to in clause (B) would be reasonably expected to have a direct or indirect material and adverse effect on Theravance Biopharma’s or its permitted transferees’, successors’ and permitted assigns’ (as applicable) rights or obligations under the Master Agreement or this Agreement;

 

7

 

(c)                                  prohibiting Theravance Biopharma and its permitted transferees, successors and permitted assigns (as applicable) from taking any action to, directly or indirectly, adversely impact, delay, forgive, release or compromise any amount owed to or becoming owing to them under this Agreement; and

 

(d)                                 requiring a holder to maintain its separate existence from any other entity and to operate in a manner so as to establish or maintain a bankruptcy remote status, including by restricting incurrence of debt, grant of liens, employment of employees and consultants, ownership or lease of real or personal property, guarantees, incurrence of liabilities, issuance of securities, lines of business, and initiation of bankruptcy or insolvency proceedings and other similar customary covenants regarding bankruptcy remote status.

 

“DGCL” shall mean the General Corporation Law of the State of Delaware, 8 Del. Code § 101 et seq., as amended from time to time.

 

“Designated Jurisdiction” shall mean California.

 

“Distribution Date” shall mean that term as defined in the Separation and Distribution Agreement.

 

“Effective Time” shall mean 12:01 a.m. Pacific Daylight Time on June 1, 2014.

 

“Electronic Signature” shall have the meaning ascribed to it in Section 15.12.

 

“Estimated Tax Period” shall mean, for each Fiscal Year, the periods of January 1 through March 31, April 1 through May 31, June 1 through August 31, and September 1 through December 31 (each a “Fiscal Quarter”).

 

“FF” shall mean the inhaled corticosteroid known as Fluticasone Furorate (with the chemical structure as set forth in Attachment F) or an ester, salt or other noncovalent derivative thereof.

 

“Financial Plan” shall have the meaning ascribed to it in Section 5.3(e).

 

“Fiscal Year” shall mean the taxable year of the LLC, which shall be the period from January 1 to December 31 of each year, except as otherwise required by the Code.

 

“GAAP” shall mean United States generally accepted accounting principles.

 

“Governmental Approvals” shall mean any notices, reports or other filings to be made, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Entity.

 

“Governmental Entity” shall mean any federal, state, local, foreign or international court government department, commission, board, bureau, agency, official or other regulatory, administrative or governmental entity.

 

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“GSK” shall mean Glaxo Group Limited, a private company limited by shares registered under the laws of England and Wales.

 

“GSK Agreements” shall mean the Collaboration Agreement and the Strategic Alliance Agreement, individually or collectively.

 

“IND” shall mean an investigational new drug application, including any amendments and supplements thereto, and all reports, correspondence and other submissions related thereto.

 

“Indebtedness” shall mean as to any Person: (a) all obligations, whether or not contingent, of such Person for borrowed money (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers’ acceptances, whether or not matured); (b) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments; (c) all obligations of such Person under leases which have been or should be, in accordance with GAAP, recorded as capital leases; (d) all liabilities and obligations secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person; and (e) all Indebtedness of any other Person referred to in clauses (a) through (e) above, guaranteed, directly or indirectly, by that Person; but excluding all obligations of such Person for deferred rent.

 

“Intellectual Property” shall mean all intellectual property and industrial property rights of any kind or nature, including all United States and foreign (a) patents, patent applications, patent disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof, (b) Trademarks and all goodwill associated therewith, (c) copyrights and copyrightable subject matter, whether statutory or common law, registered or unregistered and published or unpublished, (d) rights of publicity, (e) moral rights and rights of attribution and integrity, (f) rights in Software, (g) trade secrets and all other confidential and proprietary information, know-how, inventions, improvements, processes, formulae, models and methodologies, (h) rights to domain names, (i) rights to personal information, (j) telephone numbers and internet protocol addresses, (k) applications and registrations for the foregoing, and (l) Actions against past, present, and future infringement, misappropriation, or other violation of the foregoing (and rights to bring such Actions).

 

“Interest” shall mean the interest of a Member (or a permitted assignee of a Member) in the LLC, which is represented by the Units held by such Member (or permitted assignee), and includes all of the respective rights and responsibilities appurtenant thereto hereunder, including (i) with respect to a Member (but not an assignee), the right, if any, to vote, (ii) the right to have a Capital Account maintained for such Member (or assignee), (iii) the right to receive allocations of Net Income and Net Losses pursuant to Article IX, (iv) the right to receive distributions of cash or property of the LLC, (v) the right to appoint the Manager, if applicable and (vi) the right to approve the actions prohibited by Section 5.4, if applicable.

 

“Interim Period” shall mean, upon the Transfer of a Member’s Interest (other than the Theravance Biopharma Transfer or the R&D Transfer), a change in the LLC Percentage of any Member, the resignation of a Member from the LLC or the admission of a new Member

 

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to the LLC (other than the admission of Theravance Biopharma as a Member pursuant to Section 12.10 or the R&D Transfer), in each case, other than on the first day of any Fiscal Year, or, upon the election of the Manager, the period beginning on the date of such event or election and ending on the last day of the Fiscal Year in which such Interim Period began or on the day immediately preceding the beginning of a new Interim Period, whichever is earlier.

 

“Law” shall mean any constitutional provision, law, statute, rule, regulation (including any stock exchange rule or regulation), ordinance, treaty, order, decree, license, permit, policy, guideline, consent, approval, certificate, judgment or decision of any governmental authority or any judgment, decree, injunction, writ, order or like action of any court or other judicial or quasi-judicial tribunal.

 

“Liabilities” shall mean any and all debts, liabilities, and obligations, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured, reserved or unreserved, or determined or determinable of any kind or nature whatsoever, including those arising under any Law or Action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any governmental entity, and those arising under any Contract or any fines, damages or equitable relief which may be imposed in connection with any of the foregoing and including all costs and expenses related thereto.

 

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other) or other security interest of any kind or nature whatsoever, including, without limitation, those created by, arising under or evidenced by any conditional sale or other title retention contract, the interest of a lessor under a lease which in accordance with GAAP should be recorded as a capital lease, or any financing lease having substantially the same economic effect as any of the foregoing.

 

“LLC” shall have the meaning ascribed to it in the Preamble.

 

“LLC Business” shall mean exercising all of the rights and benefits and performing and discharging all of the liabilities and obligations under (i) the Strategic Alliance Agreement and (ii) the Collaboration Agreement relating to the Assigned Collaboration Products.

 

“LLC Costs” shall mean all costs and expenses incurred by or on behalf of the LLC relating to the operation of the LLC, whether recurring or non-recurring, including, without limitation, (i) occupancy costs, (ii) personnel costs of the LLC, (iii) general administrative costs of the LLC, including service costs (if any) from Theravance for services provided to the LLC, and (iv) costs of indemnifying the Manager.

 

“LLC Percentage” shall mean, as of any date, the LLC Percentage for each Member (or assignee of such Member), which shall be determined by dividing the number of Units of such Member (or assignee) in the LLC as of such date by the sum of total issued and outstanding Units in the LLC as of such date (including, for the avoidance of doubt, all Class A Units, all Class B Units and all Class C Units).  The sum of the Members’ (and assignees of Members’) LLC Percentages shall be one hundred percent (100%).

 

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“Majority in Interest of the Class A Members” shall mean, as of any date, unless otherwise expressly set forth herein, the Member(s) holding at least a majority of the outstanding Class A Units as of such date.

 

“Majority in Interest of the Class B Members” shall mean, as of any date, unless otherwise expressly set forth herein, the Member(s) holding at least a majority of the outstanding Class B Units as of such date.

 

“Majority in Interest of the Class C Members” shall mean, as of any date, unless otherwise expressly set forth herein, the Member(s) holding at least a majority of the outstanding Class C Units as of such date.

 

“Management Fee” shall mean the management fee payable to the Manager on a quarterly basis pursuant to Section 5.5.

 

“Manager” means the Person appointed pursuant to Section 5.1 to manage the business and affairs of the LLC or, if no Person is appointed as Manager pursuant to Section 5.1, a Majority in Interest of the Class A Members.

 

“Master Agreement” means that certain Master Agreement, dated March 3, 2014, by and among GSK, Theravance and Theravance Biopharma, as amended from time to time.

 

“Members” and “Member” means the Persons listed as members on Exhibit A (as may be amended from time to time) and any other Person that both acquires an Interest and is admitted to the LLC as a Member in accordance with the terms of this Agreement, in such Person’s capacity as a member of the LLC.

 

“NDA” shall mean a new drug application, including any amendments or supplements thereto, and all reports, correspondence and other submissions related thereto.

 

“Net Cash” shall mean an amount of cash at the end of each Fiscal Quarter (and Interim Period, if applicable) equal to (i) the amount of cash and cash equivalents held by the LLC as of the end of such Fiscal Quarter (or Interim Period, if applicable) minus (ii) the cash, if any, expected to be used in the LLC over the next four Fiscal Quarters.

 

“Net Income” and “Net Loss” shall mean, for each Accounting Period, an amount equal to the LLC’s net taxable income or loss, as applicable, for such Accounting Period, determined in accordance with Code Section 703(a) (it being understood that for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in such taxable income or loss) and determined in accordance with the accounting method used by the LLC for U.S. Federal income tax purposes with the following adjustments (without duplication):

 

(a)                                 all items of income, gain, loss or deduction specifically allocated pursuant to Section 9.3 shall not be taken into account in computing such taxable income or loss;

 

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(b)                                 any income of the LLC that is exempt from U.S. Federal income taxation and not otherwise taken into account in computing Net Income and Net Loss shall be added to such taxable income or loss;

 

(c)                                  if the Carrying Value of any asset differs from its adjusted tax basis for U.S. Federal income tax purposes, any gain or loss resulting from a disposition of such asset shall be calculated with reference to such Carrying Value;

 

(d)                                 upon an adjustment to the Carrying Value of any asset pursuant to clauses (ii) or (iii) of subsection (a) of the definition of Carrying Value (other than an adjustment in respect of depreciation), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss;

 

(e)                                  if the Carrying Value of any asset differs from its adjusted tax basis for U.S. Federal income tax purposes the amount of depreciation, amortization or cost recovery deductions with respect to such asset for purposes of determining Net Income and Net Loss shall be an amount which bears the same ratio to such Carrying Value as the U.S. Federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided that if the U.S. Federal income tax depreciation, amortization or other cost recovery deduction is zero, the Manager may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Net Income and Net Loss; and

 

(f)                                   except for items set forth in clauses (a) through (e) above, any expenditures of the LLC not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing Net Income and Net Loss pursuant to this definition shall be treated as deductible items.

 

For the avoidance of doubt, costs and expenses of the LLC shall not include Management Costs that are borne by the Manager.

 

“Non-Contributing Member” shall have the meaning ascribed to it in Section 4.2.

 

“Nonrecourse Deductions” shall be as defined in Treasury Regulations Section 1.704-2(b).  The amount of Partner Nonrecourse Deductions for a Fiscal Year equals the net increase, if any, in the amount of Partnership Minimum Gain during that Fiscal Year, determined according to the provisions of Treasury Regulations Section 1.704-2(c).

 

“Officer” shall have the meaning ascribed to it in Section 7.1.

 

“Partner Nonrecourse Debt Minimum Gain” shall mean an amount with respect to each partner nonrecourse debt (as defined in Treasury Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations Section 1.704-2(i)(3).

 

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“Partner Nonrecourse Deductions” shall be as defined in U.S. Treasury Regulations Section 1.704-2(i)(2).

 

“Partnership Minimum Gain” shall be as defined in Treasury Regulations Section 1.704-2(b)(2) and 1.704-2(d).

 

“Permitted Consultants” shall have the meaning ascribed to it in the Master Agreement.

 

“Person” shall mean a natural person, partnership (whether general or limited and whether domestic or foreign), limited liability company, foreign limited liability company, trust, estate, association, corporation, government entity, custodian, nominee or any other individual or entity in its own or representative capacity.

 

“Projected Capital Contribution” for the LLC shall mean an amount calculated each Fiscal Quarter equal to the forecast negative net cash flow of the LLC for that Fiscal Quarter, as set forth in the Operating Plan then in effect for such Fiscal Quarter.

 

“Proprietary Information” shall have the meaning ascribed to it in Section 8.6.

 

“R&D Transfer” shall mean the contemplated Transfer on or about June 1, 2014 of Theravance Biopharma’s Interests to Theravance Biopharma R&D, Inc., a wholly-owned subsidiary of Theravance Biopharma.

 

“Restricted Party” means any of Almirall, AstraZeneca, Boehringer Ingelheim, Chiesi, Forest Laboratories, Merck, Mylan, Novartis, Sandoz, Teva, Theravance Biopharma and any other pharmaceutical or biotechnology company with a product either being developed or commercialized for the treatment of respiratory disease, and their respective Restricted Party Affiliates.

 

“Restricted Party Affiliate” with respect to any person means any other person, whether de jure or de facto, which directly or indirectly controls, is controlled by, or is under common control with such person for so long as such control exists, where “control” means the decision-making authority as to such other person and, further, where such control shall be presumed to exist where such other person owns more than fifty percent (50%) of the equity (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) having the power to vote on or direct the affairs of the entity.

 

“Retained Product” means each of ANOROTM, BREO®/RELVAR® and VI Monotherapy.

 

“SEC” shall mean the U.S. Securities and Exchange Commission.

 

“Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations thereunder.

 

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“Securities Exchange Act” shall mean the United States Securities Exchange Act of 1934, as then in effect and as thereafter amended from time to time, or any successor statute, including the rules and regulations promulgated thereunder.

 

“Separation and Distribution Agreement” shall mean the Separation and Distribution Agreement between Theravance and Theravance Biopharma dated as of June 1, 2014.

 

“Strategic Alliance Agreement” shall mean that certain Strategic Alliance Agreement, dated as of March 30, 2004, by and between Theravance and GSK, including all amendments and supplements thereto (including the Theravance Strategic Alliance Agreement Amendment dated March 3, 2014 (the “Strategic Alliance Amendment Agreement”).

 

“Tax Matters Partner” shall have the meaning ascribed to it in Section 8.5.

 

“Theravance” shall mean Theravance, Inc., a Delaware corporation, its successors and/or permitted assigns.

 

“Theravance Affiliate” shall mean an “Affiliate” (as such term is defined in the GSK Agreements) of Theravance.

 

“Theravance Biopharma” shall mean Theravance Biopharma, Inc., a Cayman Islands exempted company, its successors and/or permitted assigns.

 

“Theravance Biopharma Transfer” shall mean the Transfer of all Class B Units and six thousand three hundred seventy-five (6,375) Class C Units to Theravance Biopharma pursuant to Section 12.10.

 

“Theravance Biopharma Triggering Event” shall mean the Transfer to GSK and/or its Affiliates, in one or more transactions, of a Majority in Interest of the Class B Units, which, for the avoidance of doubt, shall include (a) any transaction or series of related transactions (including mergers, consolidations and other forms of business consolidations) following which GSK and/or its Affiliates own at least 50% of the outstanding equity securities of Theravance Biopharma, the entity surviving such transaction or any direct or indirect parent entity of such continuing or surviving entity at a time when Theravance Biopharma or such entity surviving such transaction or any such direct or indirect parent entity of such continuing or surviving entity or any of its subsidiaries holds a Majority in Interest of the Class B Units; or (b) the sale, lease, license, transfer or disposal of all or substantially all of the business or assets  of Theravance Biopharma to GSK and/or its Affiliates provided that following such transaction GSK and/or its Affiliates hold a Majority in Interest of the Class B Units.

 

“Theravance Business” shall mean any business within (i) the “ParentCo Business” as defined in the Separation and Distribution Agreement (other than the portion thereof that is specific to the Assigned Products) or (ii) the “SpinCo Business” as defined in the Separation and Distribution Agreement.

 

“Theravance Triggering Event” shall mean: (a) any transaction or series of related transactions (including mergers, consolidations and other forms of business

 

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consolidations) following which GSK and/or its Affiliates own at least 50% of the outstanding equity securities of Theravance, the entity surviving such transaction or any direct or indirect parent entity of such continuing or surviving entity; (b) the sale, lease, license, transfer or other disposal of all or substantially all of the business or assets of Theravance to GSK and/or its Affiliates; (c) the assignment by Theravance or its Affiliate to GSK or its Affiliate of all or substantially all of its rights and obligations under the Collaboration Agreement or the Strategic Alliance Agreement; (d) the Transfer to GSK and/or its Affiliates of a Majority in Interest of the Class A Units; or (e) the occurrence of (1) the breach or violation by Theravance of the GSK Agreements or the taking of other action by Theravance, in each case, that gives GSK the right to terminate or invalidate the GSK Agreements or the terms thereof relating to the Assigned Drug Programs and (2) the termination or invalidation of the GSK Agreements or the terms thereof relating to the Assigned Drug Programs by GSK.

 

“Theravance Triggering Event Date Agreements” shall have the meaning ascribed to it in Section 3.14.

 

“Third Party” shall mean any Person other than Theravance, any Theravance Affiliate, the LLC and any LLC Affiliate.

 

“Transfer” shall mean transfer, sell, mortgage, pledge, assign or otherwise dispose of, either directly or indirectly, by operation of law or otherwise.  For the avoidance of doubt, (i) the grant of Defined Covenants by Theravance Biopharma and its permitted transferees, successors and permitted assigns (as applicable) with respect to the Master Agreement, this Agreement or the Class B Units or Class C Units in connection with any monetization of any Interest in its Class B Units or Class C Units, and the grant of “Pre-Agreed Covenants” (as defined in the Master Agreement) in compliance with the Master Agreement shall not constitute a Transfer under this Agreement; and (ii) the parties expressly agree that no inference shall be drawn as to whether any other grant of any covenants constitutes an assignment under any GSK Agreement or a Transfer under this Agreement from the fact of the agreements with respect to Defined Covenants and Pre-Agreed Covenants.  Notwithstanding the foregoing, Theravance Biopharma (on behalf of itself and its permitted transferees, successors and permitted assigns) agrees that, as a condition to the granting of any Defined Covenants:  (i)  Theravance Biopharma and/or its permitted transferees, successors or permitted assigns (as applicable) shall obtain a certification from the original third party recipient of such Defined Covenants, as applicable, that it is not a Restricted Party (as defined above); and (ii) any notes, securities or other instruments subject to such covenants shall provide that (a) they may not be held by a Restricted Party and if, notwithstanding such prohibition, such notes, securities or other instruments come to be held by a Restricted Party, such Restricted Party shall not be entitled to enforce or vote to enforce such Defined Covenants, (b) any holder of such notes, securities or other instruments seeking to enforce or to vote to enforce such Defined Covenants must provide a certificate for the benefit of the issuer that such holder is not a Restricted Party, and (c) the restriction set forth in the preceding sections (a) and (b) and this section (c) may not be waived or amended.  Any notes, securities or other instruments subject to such Defined Covenants issued in physical form shall bear a legend referencing the provisions set forth in (a), (b) and (c) of the foregoing sentence.

 

“Treasury Regulations” shall mean regulations issued pursuant to the Code.

 

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“UMEC” shall mean the long-acting muscarinic antagonist umeclidinium bromide (with the chemical structure as set forth in Attachment G) or an ester, salt or other non-covalent derivative thereof.

 

“Units” shall mean the Class A Units, the Class B Units and the Class C Units.

 

“VI” shall mean the long-acting beta2 agonist vilanterol (with the chemical structure as set forth in Attachment H) or an ester, salt or other noncovalent derivative thereof.

 

“VI Monotherapy” shall mean (a) VI, solely as a monotherapy (i.e., excluding VI in combination with any one or more other therapeutically active component(s)), and (b) any and all product improvements, additional claims, line extensions, dosage changes and alternate delivery systems, in each case, with respect to only VI solely as a monotherapy (i.e., excluding VI in combination with any one or more other therapeutically active component(s)).

 

ARTICLE II

 

FORMATION OF LIMITED LIABILITY COMPANY

 

2.1                               Formation.  The LLC has been formed as a Delaware limited liability company by the execution and filing with the Secretary of State of the State of Delaware of a Certificate of Formation (as the same may be amended from time to time, the “Certificate”).  Upon such filing, the powers of such authorized person ceased.  The rights, powers, duties, obligations and liabilities of the Members (in their respective capacities as such) shall be determined pursuant to the Act and this Agreement.  To the extent that the rights, powers, duties, obligations and liabilities of any Member (in its capacity as such) are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control.  The Members hereby ratify the actions of the authorized person of the LLC in executing and filing the Certificate with the Secretary of State of the State of Delaware.  Other than actions relative to its formation, the LLC has not engaged in any business or conducted any other activities prior to the date of this Agreement.

 

2.2                               Name and Principal Place of Business.  Unless and until amended in accordance with this Agreement and the Act, the name of the LLC will be “Theravance Respiratory Company, LLC.”  The principal place of business of the LLC shall initially be located at 901 Gateway Blvd., South San Francisco, CA 94080, or such other location as the Manager may, from time to time, designate.  The address of the LLC’s registered office in the State of Delaware, and the name of the registered agent for service of process, shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, or such other place or person in the State of Delaware as the Manager shall designate.

 

2.3                               Agreement.  For and in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Members executing this Agreement hereby agree to the terms and conditions of this Agreement, as it may from time to time be amended in accordance with this Agreement.  It is the express intention of the parties hereto that this Agreement shall be the sole statement of agreement among them, and, except to the extent a provision of this Agreement expressly

 

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incorporates federal income tax rules by reference to sections of the Code or Treasury Regulations or is expressly prohibited or ineffective under the Act, this Agreement shall govern even when inconsistent with or different from the provisions of the Act or any other law or rule.  To the extent any provision of this Agreement is prohibited or ineffective under the Act or other applicable law, this Agreement shall be considered amended to the smallest degree possible in order to make this Agreement effective under the Act or such other applicable law.  In the event the Act is subsequently amended or interpreted in such a way to make valid any provision of this Agreement that was formerly invalid, such provision shall be considered to be a part of this Agreement from and after the date of such interpretation or amendment.

 

2.4                               Business.  The purpose of the LLC is to (i) engage in the LLC Business, (ii) enter into, make, and perform all contracts and other undertakings relating thereto or arising therefrom, (iii) carry on any other business or activity relating thereto or arising therefrom and (iv) carry on anything incidental, convenient or necessary to the foregoing.  Notwithstanding the foregoing, the LLC may engage in any lawful business permitted under the Act or the laws of any jurisdiction in which the LLC may do business.

 

2.5                               Definitions.  Terms not otherwise defined in this Agreement shall have the meanings set forth in Article I.

 

2.6                               Term.  The term of the LLC commenced on the date the Certificate was filed with the Secretary of State of the State of Delaware in accordance with the Act and shall continue until the LLC is dissolved pursuant to Article XIV of this Agreement.

 

ARTICLE III

 

MEMBERS AND INTERESTS

 

3.1                               Units Generally.

 

(a)                                 Generally.  The Interest of each of the Members in the LLC shall consist of a number of “Units.”  Except as otherwise provided in this Agreement or the Act, the holders of each class of Units shall be entitled to the rights, subject to the obligations set forth herein, ascribed to such class of Units.  The Units shall be uncertificated unless the Manager determines that the Units shall be represented by certificates in such form as shall be determined by the Manager from time to time.  If applicable, the LLC may issue a new certificate in place of any certificate therefore issued by it, alleged to have been lost, stolen or destroyed, and the LLC may require the owner of the lost, stolen or destroyed certificate, or his or her legal representative to give the LLC a bond sufficient to indemnify it against any claim that may be made against it on account of that alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

 

3.2                               Classes of Units. There are three classes of Units designated “Class A Units” (the “Class A Units”), “Class B Units” (the “Class B Units”) and “Class C Units” (the “Class C Units”).  Subject to the terms and conditions of Articles III and IV hereof, the LLC is authorized to issue up to ten thousand (10,000) Units in the aggregate, divided as follows:  (i) seven hundred fifty (750) Units shall be Class A Units, of which seven hundred fifty (750) Class A Units shall

 

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be issued and outstanding and owned by the Class A Members as of the Contribution Time, (ii) two thousand one hundred twenty-five (2,125) Units shall be Class B Units, of which two thousand one hundred twenty-five (2,125) Class B Units shall be issued and outstanding and owned by the Class B Members as of the Contribution Time, and (iii) seven thousand one hundred twenty-five (7,125) Units shall be Class C Units, of which seven thousand one hundred twenty-five (7,125) Class C Units shall be issued and outstanding and owned by the Class C Members as of the Contribution Time.  The parties hereto agree that, notwithstanding anything to the contrary in this Agreement, the LLC is not and shall not be authorized to issue additional classes of Units or additional Class A, Class B or Class C Units, other than those authorized and issued pursuant to the preceding sentence.  Each Class A Member shall hold an Interest in the LLC represented by the Class A Units set forth opposite the Member’s name on Exhibit A, as amended from time to time pursuant to Section 15.1(c), each Class B Member shall hold an Interest in the LLC represented by the Class B Units set forth opposite the Member’s name on Exhibit A (after giving effect to the Theravance Biopharma Transfer pursuant to Section 12.10), as amended from time to time pursuant to Section 15.1(c), and each Class C Member shall hold an Interest in the LLC represented by the Class C Units set forth opposite the Member’s name on Exhibit A (after giving effect to the Theravance Biopharma Transfer pursuant to Section 12.10), as amended from time to time pursuant to Section 15.1(c).  For the avoidance of doubt each Member may hold more than one class of Units.  Each Member holding Units shall have (a) the right to share in the Net Income and Net Loss of the LLC as provided in this Agreement, (b) a right to the Capital Account maintained for such Member according to Article IX hereof, (c) the right to receive distributions from the LLC as provided in this Agreement, and (d) such other relative rights, powers and duties as are set forth in this Agreement.

 

3.3                               Members.  The Members of the LLC are set forth on Exhibit A attached hereto, each of whom is (or, in the case of Theravance Biopharma, will be as of the Effective Time) admitted to the LLC as a Member as of the Contribution Time, in the case of Theravance, and as of the Effective Time, in the case of Theravance Biopharma.  The name and place of residence of each Member is as set forth on Exhibit A attached hereto (after giving effect to the Theravance Biopharma Transfer pursuant to Section 12.10), as amended from time to time pursuant to Section 15.1(c).  Each Member shall be entitled to review Exhibit A.

 

3.4                               Representations and Warranties.  Each Member hereby represents and warrants to the LLC and each other Member as follows:

 

(a)                                 Good Standing; Due Organization.  If such Member is a Person who is not an individual, such Member is duly organized, validly existing, and in good standing under the law of its state of organization and has full organizational power to execute and deliver this Agreement and to perform its obligations hereunder.

 

(b)                                 Accredited Investor.  (i) Such Member is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of the Securities Act, or (ii) such Member is acquiring the respective Interest in compliance with Federal, state, local or foreign laws.

 

(c)                                  Purchase Entirely for Own Account.  Except, with respect to Theravance Biopharma, for the R&D Transfer, the Member is acquiring its Interest for the Member’s own account for investment purposes only and not with a view to or for the resale, distribution,

 

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subdivision or fractionalization thereof, and has no contract, understanding, undertaking, agreement or arrangement of any kind with any Person to Transfer to any Person its Interest or any part thereof, nor does such Member have any plans to enter into any such agreement.

 

(d)                                 Investment Experience.  By reason of the Member’s business or financial experience, the Member has the knowledge, experience and capacity to evaluate and protect its own interests in connection with the transactions contemplated hereunder, is able to bear the economic and financial risks of an investment in the LLC for an indefinite period of time, and at the present time could afford a complete loss of such investment.

 

(e)                                  Disclosure of Information.  The Member is aware of the LLC’s business affairs and financial condition and has acquired sufficient information about the LLC to reach an informed and knowledgeable decision to acquire an Interest.

 

(f)                                   Federal and State Securities Laws.  Assuming federal and state securities laws apply to the interests described herein, the Member acknowledges that the Units have not been registered under the Securities Act or any state securities laws, inasmuch as they are being acquired in a transaction not involving a public offering, and, under such laws, may not be resold or transferred by the Member without appropriate registration or the availability of an exemption from such requirements.  In this connection, the Member represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(g)                                  DISCLAIMER. THE ASSIGNED ASSETS AND ANY LICENSES ARE PROVIDED “AS IS” WITH NO WARRANTY EXPRESS OR IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, NONINFRINGEMENT, TITLE, VALIDITY OR OTHERWISE.

 

3.5                               Resignation or Withdrawal of a Member.  Except as specifically provided herein, and subject to the provisions for Transfers contained in Article XII, no Member shall have the right to resign or withdraw from membership in the LLC or withdraw its Interest.

 

3.6                               Limited Liability of Members.

 

(a)                                 General.  Except as expressly provided in the Act, (i) no Member or any of its Affiliates shall have any liability for the debts, obligations or liabilities of the LLC, any other Member or their respective Affiliates solely by reason of being a Member or an Affiliate of a Member, (ii) the debts, obligations and liabilities of the LLC, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the LLC, and (iii) no Member or former Member shall be obligated personally for any such debt, obligation or liability of the LLC solely by reason of being a Member or former Member.

 

(b)                                 Deficit Capital Accounts.  Notwithstanding anything to the contrary contained in this Agreement, and notwithstanding any custom or rule of law to the contrary, to the extent that there exists a deficit in the Capital Account of any Member, upon dissolution of the LLC such deficit shall not be an asset of the LLC and such Members shall not be obligated to

 

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contribute such amount to the LLC to bring the balance of such Member’s Capital Account to zero.

 

3.7                               General Voting Rights.  The Class A Members shall, and the Class B Members and the Class C Members shall not, be entitled to vote, approve, consent or authorize on all matters for which the vote, approval, consent or authorization of the Members is required or permitted under this Agreement or the Act.  Each Class A Member shall have one (1) vote for each Class A Unit held by it. For the avoidance of doubt, Class B Members and Class C Members shall not be entitled to vote, approve, consent or authorize any matter whatsoever (including with respect to the merger, consolidation or conversion of the LLC and any other matters that may otherwise require consent of members or any class of members under the Act) except as set forth in the next sentence.  Notwithstanding the forgoing, the affirmative consent of (i) the Class B Members shall be required to the extent specifically set forth in Sections 3.11, 5.4, 14.1 and 15.1, (ii) the Class C Members shall be required to the extent specifically set forth in Sections 3.11, 14.1 and 15.1(d) and (iii) the Non-Contributing Member shall be required to the extent required pursuant to Section 4.2.  A Member who has assigned some, but not all, of its Units shall be treated as a Member and entitled to a vote on all matters such Member would otherwise be entitled to vote on pursuant to the terms of this Agreement to the extent of its retained Units.  For the avoidance of doubt, the assignee of Units shall not be entitled to vote on any matters with respect to the assigned Units unless and until admitted as a substitute Member pursuant to Section 12.9.

 

3.8                               Fiduciary Duties of Theravance Biopharma.  To the fullest extent permitted by law (including Section 18-1101 of the Act) and notwithstanding any duty otherwise existing at law or in equity, none of Theravance Biopharma, its Affiliates or any of its or their respective directors, officers, employees or shareholders shall have any fiduciary or similar duty, at law or in equity, or any liability relating thereto, to the LLC, or any other Member or Affiliate of a Member bound by this Agreement, with respect to or in connection with the LLC or its business or affairs; and, without limitation, Theravance Biopharma, its Affiliates and its or their respective directors, officers, employees or shareholders, when approving or disapproving any action, shall be entitled to consider only such interests and factors as such Person desires and may consider its own interests and shall have no other duty or obligation, fiduciary or otherwise, to give any consideration to any interest of or factors affecting the LLC, or any other Member or Affiliate of any other Member.  For the avoidance of doubt, Theravance Biopharma, its Affiliates and its and their respective directors, officers, employees and shareholders may engage in or possess an interest in other profit-seeking or business ventures of any kind, nature or description, independently or with others, whether or not such ventures are competitive or in conflict with the LLC, any other Member, any Affiliate of any other Member or any other Person bound by this Agreement, and notwithstanding any duty otherwise existing at law or in equity, the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to Theravance Biopharma, its Affiliates or their respective directors, officers, employees or shareholders.

 

To the extent that Theravance Biopharma, its Affiliates or its or their respective directors, officers, employees or shareholders acquires knowledge of a potential transaction, agreement, arrangement or other matter that may be an opportunity for the LLC, Theravance Biopharma, its Affiliates and its or their respective directors, officers, employees and shareholders shall have no duty to communicate or offer such opportunity to any such Person.

 

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Theravance Biopharma, its Affiliates and its or their respective directors, officers, employees and shareholders shall not be liable to the LLC, any Member, any Affiliate of any other Member or any other Person bound by this Agreement for breach of any fiduciary or other duty by reason of the fact that Theravance Biopharma, its Affiliates or their respective directors, officers, employees or shareholders pursues or acquires for, or directs such opportunity to, another Person or does not communicate such opportunity or information to the LLC, any Member, any Affiliate of any other Member or any other person bound by this Agreement.  Neither the LLC, any Member, any Affiliate of any other Member nor any other Person bound by this Agreement shall have any rights or obligations by virtue of this Agreement or the relationship created hereby in or to such independent ventures of Theravance Biopharma, its Affiliates, or their respective directors, officers, employees or shareholders or the income or profits or losses derived therefrom, and the pursuit of such ventures, even if competitive or in conflict with the activities of the LLC, shall not be deemed wrongful or improper.  Notwithstanding the foregoing, this paragraph shall not apply to any such opportunity that Theravance Biopharma, its Affiliates or its or their respective directors, officers, employees or shareholders acquires knowledge of solely by virtue of Theravance Biopharma being a member of the LLC, provided that any Person asserting that Theravance Biopharma, its Affiliates or its or their respective directors, officers, employees or shareholders acquired knowledge of such an opportunity solely by virtue of Theravance Biopharma being a member of the LLC shall bear the burden of proving such assertion.

 

Nothing in this Section 3.8 shall modify, restrict or eliminate (i) any duty or obligation of the Manager or Theravance expressly provided in Section 5.2 or in any other section of this Agreement, (ii) any express obligation or restriction contained in any other written contract or (iii) the implied contractual covenant of good faith and fair dealing.

 

3.9                               Related Party Transactions.  Except as specifically provided in this Agreement (but without limiting the application of Section 5.2), the LLC may not enter into any transaction or contract with Theravance, the Manager or any of their respective Affiliates, and the LLC may not pay Theravance, the Manager or any of their Affiliates fees, compensation or remuneration in connection with such transactions and contracts, unless the terms, conditions, fees, compensation and other remuneration shall be no less favorable to the LLC than those generally being provided to or available from unaffiliated third parties.  Theravance, the Manager or any of their Affiliates entering into any such transaction or contract or receiving such fees, compensation or remuneration shall bear the burden of proving compliance with this Section 3.9, but shall not be required to prove that any transaction or contract is “entirely fair” or that the transaction or contract was the result of a “fair process,” as such terms are interpreted and defined by decisions of Delaware state and federal courts.

 

3.10                        Relationship of Members.  The Members and the Manager intend and agree that the LLC is and shall be an “Affiliate” of Theravance within the meaning of the GSK Agreements, and this Agreement shall be interpreted accordingly.

 

3.11                        Cancellation of Units.  The Class A Units may not be cancelled without the consent of a Majority in Interest of the Class A Members.  The Class B Units may not be cancelled without the affirmative vote of a Majority in Interest of the Class B Members.  The Class C Units may not be cancelled without the affirmative vote of a Majority in Interest of the Class C Members.

 

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3.12                        Compliance with GSK Agreements by Theravance and the LLC.  Notwithstanding any other provision contained herein, Theravance, with respect to the rights and obligations under the GSK Agreements not assigned to the LLC pursuant to this Agreement, shall not, and, with respect to the rights and obligations assigned to the LLC pursuant to this Agreement, shall cause the Manager not to, and the Manager shall not, take (or omit to take) any action (including, without limitation, the disclosure of any information to any Member), that is or would be reasonably expected to result in a breach or violation of, or be in conflict with, any term or condition of the GSK Agreements or otherwise is or would be reasonably expected to give GSK the right to terminate or invalidate any GSK Agreement or any term and condition thereof.  Theravance agrees and understands that monetary damages would not adequately compensate the holders of Class B Units and Class C Units for the breach of this Section 3.12 by Theravance, that this Section 3.12 shall, to the fullest extent permitted by law, be specifically enforceable, and that any breach or threatened breach of this Section 3.12 shall be the proper subject of a temporary or permanent injunction or restraining order.  Further, Theravance waives, to the fullest extent permitted by law, any claim or defense that there is an adequate remedy at law for such breach or threatened breach.  Notwithstanding anything else to the contrary, in the event of any conflict between Section 3.12, or any covenant, agreement, obligation or duty of Theravance or its Affiliates under this Section 3.12, on the one hand, and any other provision of this Agreement or any Exhibit or Attachment hereto, or any covenant, agreement, obligation or duty of Theravance or its Affiliates thereunder, on the other hand, Section 3.12 shall govern and supersede such other provision, Exhibit, Attachment, covenant, agreement, obligation or duty.

 

3.13                        Performance of Obligations by Manager.  Theravance (i) shall cause the Manager to at all times and in good faith perform fully it duties and obligations set forth in this Agreement and (ii) shall be liable to the Members to the extent the Manager fails to do so.

 

3.14                        Theravance Triggering Event.  Without limiting the rights, including, without limitation, rights to pursue remedies for breaches, of any Member under this Agreement, including, without limitation, Section 5.4(c) hereof, upon the occurrence of a Theravance Triggering Event, Theravance shall pay or cause to be paid to the LLC when due all payments that Theravance would otherwise be entitled to receive from GSK pursuant to Sections 6.1, 6.2 and 6.3 of the Collaboration Agreement and of the Strategic Alliance Agreement relating directly or indirectly to the Assigned Products, as such agreements are in effect as of immediately prior to the Theravance Trigger Event (the “Theravance Triggering Event Date GSK Agreements”), had such Theravance Triggering Event not occurred and regardless of whether Theravance actually receives any such payments from GSK.  For the avoidance of doubt, the obligation of Theravance to pay or cause to be paid payments under the Theravance Triggering Event Date GSK Agreements pursuant to the immediately preceding sentence shall not accelerate or change if or when such payments would otherwise be due under such agreements.

 

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ARTICLE IV

 

CONTRIBUTIONS TO CAPITAL; WITHDRAWALS; ADVANCES

 

4.1                               Initial Capital Contribution by Theravance.

 

(a)                                 At the Contribution Time, Theravance shall (and, effective automatically upon the Contribution Time, hereby does) transfer, contribute, assign, distribute and convey, or cause to be transferred, contributed, assigned, distributed and conveyed, to the LLC all of Theravance’s right, title and interest in and to (i) all of the rights and benefits of Theravance under the Strategic Alliance Agreement, (ii) all of the rights and benefits of Theravance under the Collaboration Agreement relating to the Assigned Collaboration Products, including the rights and benefits specified on Exhibit C, and (iii) the Assigned Assets (collectively, the “Assignment”).

 

(b)                                 At the Contribution Time, the LLC shall, and, effective automatically upon the Contribution Time, hereby does, accept the Assignment from Theravance.

 

(c)                                  Except as otherwise specifically set forth in this Agreement, (i) at the Contribution Time, Theravance shall (and, effective automatically upon the Contribution Time, hereby does) assign and delegate to the LLC, and the LLC shall (and, effective automatically upon the Contribution Time, hereby does) accept, assume or, as applicable, retain (A) all Liabilities under the Strategic Alliance Agreement, (B) all of the Liabilities under the Collaboration Agreement relating to the Assigned Collaboration Products, including the Liabilities specified on Exhibit C attached hereto, and (C) the Assumed Liabilities and (ii) after the Contribution Time, the LLC shall perform, discharge and fulfill, in accordance with their respective terms, all such Liabilities, in each case, unless specified otherwise in the definition of the Assumed Liabilities, regardless of (A) when or where such Liabilities arose or arise, (B) where or against whom such Liabilities are asserted or determined, (C) which entity is named in any action associated with any Liability, and (D) whether the facts on which they are based occurred prior to, on or after the Contribution Time (the “Assumption”).  Notwithstanding the foregoing, the LLC shall not assume any Liability attributable to (i) the failure of Theravance and/or the Manager or their respective officers, directors, employees, agents or Affiliates to perform Theravance’s obligations to the LLC pursuant to this Agreement or the Ancillary Agreements or (ii) any breach of this Agreement, the Ancillary Agreements or any other agreement with any Person, including the GSK Agreements, occurring on or after the Contribution Time, nor any matter to the extent that Theravance and/or the Manager or their respective officers, directors, employees, agents or Affiliates has engaged in any violation of Law, any gross negligence, willful misconduct or fraud.

 

(d)                                 If at any time after the Contribution Time, the parties hereto agree that Theravance possesses any assets and/or liabilities related to the LLC Business (and not to the Theravance Business) that constitute Assigned Assets, Theravance shall as promptly as practicable transfer or cause to be transferred to the LLC, at the expense of the LLC, and the LLC shall accept such transfer and/or assume, for no consideration, such asset and/or liability, including any and all economic benefits generated from such asset and/or liability after the Contribution Time, to the LLC.  Each such transferred asset and/or liability shall be deemed a

 

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LLC Asset or a LLC Liability, respectively, and shall be subject to the terms and conditions of this Agreement applicable thereto.

 

(e)                                  If at any time, after the Contribution Time, the parties hereto agree that the LLC possesses any assets or liabilities solely related to the Theravance Business (and not to the LLC Business) the rights to which were obtained from Theravance in connection with this Agreement, the LLC shall as promptly as practicable transfer or cause to be transferred, at Theravance’s expense, and Theravance shall accept such transfer and/or assume, for no consideration, such asset and/or liability, including any and all economic benefits generated from such asset and/or liabilities after the Contribution Time, to Theravance.

 

(f)                                   At the Contribution Time (or thereafter upon reasonable request and at the requesting party’s expense), (i) Theravance shall execute and deliver such bills of sale, stock powers, certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the Assignment, and (ii) the LLC shall execute and deliver to Theravance such bills of sale, stock powers, certificates of title, assumptions of contracts, indemnity agreements and other instruments of assumption as and to the extent necessary to evidence the valid and effective Assumption.

 

(g)                                  To the extent that any part of the Assignment or Assumption requires any Governmental Approvals, the parties hereto shall use commercially reasonable efforts to obtain any such Governmental Approvals.  If and to the extent that such part of the Assignment or Assumption would be a violation of applicable laws or require any Governmental Approval, then, unless Theravance shall otherwise determine, such part of the Assignment to or Assumption by the LLC, shall be automatically deemed deferred and any such purported Assignment or Assumption shall be null and void until such time as all legal impediments are removed and/or each of such Governmental Approval has been obtained.

 

(h)                                 The Members shall use commercially reasonable efforts to obtain any Consents required in connection with the transactions contemplated by this Agreement.  Notwithstanding the foregoing, no Member shall be obligated to pay any consideration therefor to any Third Party from whom any such Consent, substitution or amendment is requested.

 

(i)                                     If any Assignment or Assumption intended to be Transferred and assumed hereunder is not consummated as of the Contribution Time, whether as a result of the provisions of Section 4.1(g) or otherwise, then Theravance shall thereafter hold such LLC Asset for the use and benefit of the LLC if permitted by Law.  If and when the Consents and/or Governmental Approvals, or any other impediments to Assignment or Assumption, the absence of which caused the deferral of Assignment of any LLC Asset or Assumption pursuant to Section 4.1(g) or otherwise, are obtained or removed (as appropriate), the Assignment of the applicable LLC Asset or Assumption of the applicable LLC Liability shall be effected in accordance with the terms of this Agreement.  With respect to any LLC Asset retained by Theravance due to the deferral of the Assignment of such LLC Asset, Theravance shall take such actions with respect to such LLC Asset as may be reasonably requested by the LLC.

 

(j)                                    If the Members are unable to obtain, or to cause to be obtained, any such required Governmental Approvals, Consents, release, substitution or amendment pursuant to

 

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Section 4.1(h) or otherwise, Theravance shall (i) continue to be bound by such Contract, license or other obligation, which shall not constitute a Liability of Theravance (unless not permitted by Law or the terms thereof), (ii) as agent or subcontractor for the LLC, pay, perform and discharge fully all the obligations or other Assumed Liabilities thereunder after the Contribution Time, and (iii) deliver to the LLC any payments, benefits or other consideration received by Theravance under such Contract, license or other obligation; provided, however, that Theravance shall not be obligated to extend, renew or otherwise cause such Contract, license or other obligation to remain in effect beyond the term in effect as of the Contribution Time.  At the request of the Manager, Theravance shall exercise its rights under such Contract, license or other obligation for the benefit of the LLC.  The LLC shall fully indemnify Theravance and its Affiliates, officers, directors, employees and agents for, and hold each of them harmless against, any and all obligations or Assumed Liabilities arising in connection therewith and also for any actions requested by the Manager pursuant to this Section 4.1(j), provided, however, that the LLC shall have no obligation to indemnify Theravance or its Affiliates, officers, directors, employees or agents with respect to any matter to the extent that Theravance, the Manager or their respective Affiliates, officers, directors, employees or agents has (i) engaged in any violation of Law, (ii) committed gross negligence or fraud or (iii) breached this Agreement, the Ancillary Agreements or any other agreement with any Person, including the GSK Agreements.  Theravance shall, without further consideration, promptly pay and remit, or cause to be promptly paid or remitted, to the LLC, all money, rights and other consideration received by it or any of its Affiliates in respect of such performance on behalf of the LLC.  If and when any such Governmental Approval, Consent, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or capable of novation, Theravance shall promptly assign, or cause to be assigned, all rights, obligations and other Assumed Liabilities thereunder of Theravance’s to the LLC without payment of any further consideration and the LLC, without the payment of any further consideration, shall assume such rights and obligations and other Assumed Liabilities.

 

(k)                                 If any Intellectual Property owned by Theravance (or Theravance Biopharma) as of the Contribution Time that is relevant to the LLC Business, Assigned Assets, or Assigned Products is not assigned to the LLC hereunder (or if it is assigned back to Theravance under Section 3.1(e)), the LLC will have and is hereby granted a nonexclusive, worldwide, perpetual, irrevocable, sublicensable, transferable license to exercise such Intellectual Property only with respect to the LLC Business, Assigned Assets and/or Assigned Products.

 

(l)                                     If any Intellectual Property assigned to the LLC hereunder (other than Intellectual Property referred to in clause (a), (b) or (c) of the definition of “Assigned Assets”) is relevant to the Theravance Business or Retained Products, Theravance will have and is hereby granted a nonexclusive, worldwide, perpetual, irrevocable, sublicensable, transferable license to exercise such Intellectual Property only with respect to the Theravance Business and/or Retained Products.

 

4.2                               Additional Capital Contributions.  Except as otherwise provided pursuant to this Section 4.2, no Member shall be permitted or required to make any additional Capital Contribution without the consent of the Manager and such Member.  Notwithstanding the foregoing, the Manager shall request each Member to make a Capital Contribution on the first

 

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Business Day of each Fiscal Quarter equal to its LLC Percentage of the Projected Capital Contribution for that Fiscal Quarter.  If a Member fails to make a requested Capital Contribution pursuant to this Section 4.2 (a “Non-Contributing Member”) within ten (10) Business Days after receiving such request, any other Member shall be permitted, but not required, to advance any shortfall in the Capital Contribution of such Non-Contributing Member in accordance with Section 4.5 below but only with the prior written consent of the Non-Contributing Member if, and only if, such Non-Contributing Member holds at least a majority of the then outstanding Units.

 

4.3                               Interest.  No Member shall be entitled to any interest or compensation with respect to such Member’s Capital Contribution or share of the capital of the LLC, except as expressly provided herein.  No Member shall have any liability for the repayment of the Capital Contribution of any other Member and each Member shall look only to the assets of the LLC for return of such Member’s Capital Contributions to the extent permitted herein.

 

4.4                               No Right of Withdrawal.  No Member shall have the right to withdraw or receive any return of, or interest on, any portion of such Member’s contributions to the capital of, or to receive any distributions from, the LLC, except as provided in Articles XI and XIV.

 

4.5                               Advances.  If any Member shall advance any funds to the LLC in excess of its Capital Contributions pursuant to Sections 4.1 and 4.2, the amount of such advance shall neither increase its Capital Account nor entitle that Member to any increase in its share of the distributions of the LLC.  The amount of any such advance shall be a debt obligation of the LLC to such Member and shall be repaid to it by the LLC with interest at a rate and upon such other terms and conditions which the Manager reasonably determines in good faith are, taken as a whole, generally consistent with the interest rate and other terms and conditions that would be available to the LLC from an unrelated commercial lender, as shall be agreed by the Manager and such Member.  Any such advance shall be payable and collectible only out of the assets of the LLC and the other Members shall not be personally obligated to repay any part thereof.  No Person that makes any advance to the LLC pursuant to this Section 4.5 shall have or acquire, as a result of making such loan, any direct or indirect interest in the profits, capital or property of the LLC, other than as a creditor.

 

ARTICLE V

 

MANAGEMENT, EXPENSES AND RESTRICTIONS

 

5.1                               Management by Manager; Manager.

 

(a)                                 Management by Manager.  Subject to and in accordance with this Agreement, the Manager shall have decision-making authority as to the LLC, including the authority to (i) manage the business and affairs of the LLC, (ii) exercise all powers of the LLC, and (iii) do all lawful acts on behalf of the LLC.  The Manager may act by one or more committees designated by the Manager in accordance with Section 5.1(c).  The Manager shall be a “manager” within the meaning of Section 18-101(10) and Section 18-402 of the Act.  No Member shall have the right, power or authority to act on behalf of or bind the LLC, except that a Member who is also a Manager or an Officer of the LLC may act on behalf of or bind the LLC

 

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in its capacity as a Manager or an Officer of the LLC to the extent that he or she is authorized to do so.

 

(b)                                 Appointment of the Manager.  The Manager shall be appointed by a Majority in Interest of the Class A Members and must be Theravance or a Theravance Affiliate.  The initial Manager shall be as set forth on Exhibit B.  Any Manager may be removed at any time by a Majority in Interest of the Class A Members, provided that they simultaneously appoint a successor Manager that must be Theravance or a Theravance Affiliate.  Upon appointment of any Manager, the Manager shall, and Theravance shall cause such Manager to, execute and deliver to the LLC a counterpart of this Agreement, which execution and delivery shall evidence such Manager’s express agreement to be a party to, and be bound by, this Agreement.  When the Majority in Interest of the Class A Members act as Manager since no Person is then appointed as Manager pursuant to this Section 5.1, the other holders of Class A Units agree to be bound by the actions of the Majority in Interest of the Class A Members.

 

(c)                                  Committees, General.  The Manager may, by resolution passed by the Manager, designate one or more committees of the LLC.  Any such committee, to the extent provided in the resolution of the Manager, shall have and may exercise all the powers and authority of the Manager.  Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Manager.  Each committee shall keep regular minutes of its meetings and report the same to the Manager when required.  No employees, consultants or representatives of Theravance Biopharma shall be members of any such committee, except for Permitted Consultants.

 

5.2                               Fiduciary Duties of Theravance and the Manager.  Notwithstanding any duty otherwise existing at law or in equity, to the fullest extent permitted by law (including Section 18-1101 of the Act), the Manager shall have the fiduciary duties of directors of a board of directors, provided that following a Theravance Biopharma Triggering Event, the Manager shall be entitled to the benefit of the business judgment rule in all circumstances other than those in which the Manager has acted in bad faith, and, prior to a Theravance Biopharma Triggering Event, Theravance (for so long as it is the direct or indirect holder of a Majority in Interest of the Class A Units) and any other holder of Class A Units (for so long as such holder, together with its Affiliates, is the direct or indirect holder of a Majority in Interest of the Class A Units) shall have the fiduciary duties of a controlling stockholder, in each case of a for-profit stock corporation organized and existing under the DGCL to which provisions of Subchapter XIV of the DGCL, 8 Del. Ch. §§ 341 ff., are not applicable, as such duties and responsibilities are interpreted and defined by decisions of state and federal courts having jurisdiction to interpret and define the same.  The provisions of this Agreement (including, without limitation, Section 3.8 and this Section 5.2), to the extent that they expand, restrict or eliminate the duties and liabilities of a Member, the Manager or an Affiliate of a Member or the Manager otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Person.

 

5.3                               Duties of the Manager.  Without limiting the generality of Section 5.1 but subject to Section 10.1, at the expense of the Manager, the responsibilities of the Manager shall include the following:

 

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(a)                                 Subject to Section 3.12, prepare, and maintain at the principal place of business of the LLC the Books and Records of the LLC, including, without limitation, the following:

 

(i)                                     Proper and complete records and books of account, including without limitation Capital Accounts in which shall be entered fully and accurately all transactions relating to the LLC Business in such detail and completeness as is customary and usual for businesses of the type engaged in by the LLC.

 

(ii)                                  A copy of the Certificate of Formation of the LLC and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any amendment has been executed.

 

(iii)                               Copies of the federal, state, and local income tax returns and reports of the LLC for the seven (7) most recent years.

 

(iv)                              Copies of the LLC’s currently effective written operating agreement.

 

(v)                                 Copies of financial statements of the LLC for the seven (7) most recent years.  For the avoidance of doubt, the financial statements of the LLC shall at a minimum include a balance sheet, statement of operations (including, without limitation, the Net Income, Net Loss and items thereof of the LLC for the applicable accounting period) and cash flow statement.

 

(vi)                              Minutes of every annual, special meeting and court-ordered meeting.

 

(vii)                           Any written consents obtained from Members for actions taken by Members without a meeting.

 

(b)                                 Prior to a Theravance Biopharma Triggering Event, be responsible for the day-to-day management of the Assigned Products in accordance with the terms and conditions of the GSK Agreements;

 

(c)                                  Prior to a Theravance Biopharma Triggering Event, use all commercially reasonable efforts to maximize the commercial value of the Assigned Products in accordance with and subject to the terms of the GSK Agreements; provided, however, that, for the avoidance of doubt, the Manager shall not be required to cause GSK to take any actions or inactions except to the extent such actions or inactions are required to be performed by GSK pursuant to the GSK Agreements;

 

(d)                                 Prior to a Theravance Biopharma Triggering Event, exercise the rights and perform the obligations of the LLC as assignee under the GSK Agreements, including the appointment of representatives to any Joint Steering Committee or Joint Product Committee to the extent permitted under any GSK Agreement;

 

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(e)                                  Subject to Section 3.12, prepare a quarterly financial plan for the LLC (a “Financial Plan”), consisting of (i) a balance sheet, (ii) capital expenditures (if any), (iii) Management Costs, (iv) LLC Costs and (v) Projected Capital Contributions.  Subject to Section 3.12, the Manager shall (A) distribute to each Member a draft of each Financial Plan and any amendment or modification thereto at least thirty (30) days prior to the first day of the Fiscal Quarter and a draft of each amendment or other modification to a Financial Plan at least fifteen (15) days before it is effective, (B) provide each Member with a reasonable opportunity to comment on such Financial Plan or amendment or other modification thereto within such timeframe and (C) consider in good faith any and all comments received from the Members.  Notwithstanding anything else in this clause (e) to the contrary, in no event will the Financial Plan or any amendment or other modification thereto include or be based on any sales forecast provided or delivered by GSK under the GSK Agreements (or other Confidential Information (as defined in the GSK Agreements)) but shall only be based on publicly available information, including analysts’ consensus estimates.

 

(f)                                   Notify each Member at least thirty (30) days before the start of each Fiscal Quarter of such Member’s requested Capital Contribution to the LLC for that Fiscal Quarter pursuant to Section 4.2; and

 

(g)                                  Take all actions necessary to ensure that the formation, structure and operation of the LLC comply with this Agreement, applicable law and the GSK Agreements.

 

5.4                               Limitation of Authority of Manager.  The Manager shall obtain the approval of a Majority in Interest of the Class A Members and a Majority in Interest of the Class B Members before the Manager shall take any of the following actions:

 

(a)                                 Except for advances pursuant to Section 4.6, borrow on behalf of the LLC;

 

(b)                                 Issue an Interest, or the right to acquire an Interest, in the LLC or any other debt or equity security therein;

 

(c)                                  Take any action or omit to take any action that would be reasonably expected to have a direct or indirect material and adverse effect on (i) the rights, preferences, privileges of or obligations relating to the Class B Units or Class C Units or (ii) the economic interest represented by the Class B Units or Class C Units, in each case, whether by merger, reorganization, transfer of assets, consolidation, dissolution, issuance or sale of securities, amendment, failure to perform or waiver of rights or obligations under this Agreement or the GSK Agreements or otherwise; provided, however, that the Manager’s actions or failure to act with regard to Development and Commercialization (as each such term is defined in the applicable GSK Agreement) matters under the GSK Agreements that are based on the Manager’s good faith determination that GSK is complying with its respective diligent efforts obligations under the GSK Agreements shall not require approval under clause (ii) of this Section 5.4(c); and provided, further however, that (x) following the Transfer of all or any portion of the Interests with respect to any Class B Units to any Person other than Theravance Biopharma, its direct or indirect wholly-owned subsidiaries, or the successors to all or substantially all of the assets of Theravance Biopharma, whether by merger, sale of stock, sale of assets or other similar transaction, or its or their successors or direct or indirect wholly-owned subsidiaries, and

 

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(y) pursuant to the dissolution and winding up of the affairs of the LLC in accordance with Article XIV, to the extent the Manager’s actions are consistent with a plan of dissolution and winding up of the affairs of the LLC approved pursuant to Section 14.1(a), the approval by the Class B Members of the actions described in this clause (c) shall not be required (and for the avoidance of doubt shall not be required regardless of whether such other Person continues to hold Class B Units);

 

(d)                                 Take any action or omit to take any action that would cause the LLC to be treated as engaged in a trade or business (either directly or through an investment in another partnership or limited liability company) within the United States for purposes of Sections 875, 882, 884 and 1446 of the Code; and

 

(e)                                  Invest in United States real property interests as that term is defined in Section 897 of the Code.

 

ARTICLE VI

 

NOTICES

 

6.1                               Notices.  Any notice, payment, demand or other communication required or permitted to be given by any provision of this Agreement shall be deemed to have been delivered and given for all purposes (i) if delivered personally to the party or to an officer of the party to whom the same is directed, when received by such party, (ii) if delivered by confirmed telecopy transmission, when received if received on a Business Day during normal business hours of the recipient, and if not, on the next Business Day, (iii) by a nationally recognized overnight courier service or (iv) whether or not the same is actually received, if sent by registered or certified mail, return receipt requested, postage and charges prepaid, addressed as follows:  If to the LLC, at its principal place of business the address of which is set forth in Section 2.2; if to a Member, at such Member’s address set forth on Exhibit A hereto, or to such other address as such Member may from time to time specify by written notice to the Members and the LLC; such notice shall be deemed to be given five (5) days after the date on which the same was deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and sent as aforesaid.  Any party may by written notice to the other parties specify a different address or facsimile number for notice purposes by sending notice thereof in the foregoing manner.

 

6.2                               Waiver of Notice.  Whenever any notice is required to be given under the provisions of the Act, the Certificate or this Agreement, a waiver thereof in writing, signed by the Person or Persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

 

ARTICLE VII

 

OFFICERS

 

7.1                               Officers.

 

(a)                                 The Manager may, from time to time, designate one or more Persons to be officers of the LLC (each such person an “Officer”).  Any Officers designated by the Manager

 

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shall have such authority and perform such duties as the Manager may, from time to time, delegate to them.  The Manager may assign titles to particular Officers.  Any number of offices may be held by the same person.  No Officer need be a resident of the State of Delaware or of the United States of America.  No Officer shall be an employee, consultant or representative of Theravance Biopharma, except for Permitted Consultants.

 

(b)                                 Each Officer shall hold office until his or her successor shall be duly designated and qualified or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided.

 

(c)                                  Any Officer may resign as such at any time.  Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the Manager.  The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.

 

(d)                                 Any Officer may be removed as such, either with or without cause, by the Manager whenever in its judgment the best interests of the LLC will be served thereby.  Any vacancy occurring in any office of the LLC may be filled by the Manager.

 

(e)                                  To the fullest extent permitted by law, and in all instances solely to the extent not inconsistent with the specific provisions of this Agreement, it is the intention of the parties that those Officers with titles expressly referenced in the DGCL or customarily used in corporations organized under the DGCL, in their respective capacities as such, shall, unless otherwise provided herein or determined by the Manager, have the statutory and customary rights, powers, authority, duties and responsibilities of officers with similar titles of a for-profit stock corporation organized and existing under the DGCL.  Notwithstanding the foregoing, no Officer shall have any right, power or authority to cause the LLC to enter into any transaction or to take or fail to take any other action that requires any consent, approval or waiver (i) of the Managers or any Members (including a Majority in Interest of the Class A Members or a Majority in Interest of the Class B Members), (ii) pursuant to the terms of this Agreement or (iii) under applicable law, in each case without obtaining in advance such consent, approval or waiver.  Each Officer is hereby delegated such rights, powers and authority with respect to the management of the business and affairs of the LLC as may be necessary or advisable to effect the provisions of this Section 7.1(e).

 

(f)                                   The initial Officers of the LLC shall be those individuals designated as the Officers on Exhibit B.

 

7.2                               Reliance by Third Parties.  In dealing with the LLC and its duly appointed agents, no Person shall be required to inquire as to the LLC’s or such agents’ authority to bind the LLC.

 

7.3                               Actions and Determinations of the LLC.  Except as otherwise expressly provided herein, whenever this Agreement provides that a determination shall be made or an action shall be taken by the LLC, such determination or act shall be made or taken by the Manager or, pursuant to this Agreement or with the authorization of the Manager (which may be

 

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a general authorization and need not be specific as to any named person, Officer or particular transaction), by any Officer.

 

ARTICLE VIII

 

ACCOUNTING AND RECORDS

 

8.1                               Financial and Tax Reporting.  The Manager shall prepare financial statements for the LLC and the income tax information returns for the LLC using such methods of accounting and tax year as the Manager deems necessary or appropriate as permitted by the Code and Treasury Regulations.

 

8.2                               Members Access to Certain Information.  Subject to Section 8.6 and the obligation of Theravance and the Manager to withhold information pursuant to Section 3.12, the Manager shall make available, upon at least three (3) Business Days’ prior written notice to the Manager, for inspection at reasonable times during business hours by a Member, for any reason or no reason, the Books and Records of the LLC, in each case including, without limitation, the information, documents and other materials identified in Sections 18-305(a)(1)-(6) of the Act).

 

8.3                               Books and Records.  Proper and complete books and records of the LLC (including those books and records identified in the Act) shall be kept at the LLC’s principal office and at any other place as designated by the Manager.

 

8.4                               Tax Returns.  The LLC shall cause appropriate tax reports and returns (including an IRS Form 1065, Schedule K-1) to be prepared and delivered in a timely manner to each of the Members and to any relevant tax authority within ninety (90) days after the close of each Fiscal Year (subject to reasonable delays in the event of the late receipt of any necessary financial information necessary to prepare tax returns of the LLC, but in no event later than one hundred twenty (120) days after the close of each Fiscal Year).

 

8.5                               Tax Matters Partner.  The Member identified on Exhibit B as the Tax Matters Member is hereby designated as the LLC’s “Tax Matters Partner” for purposes of the Code.

 

8.6                               Confidentiality.

 

(a)                                 Each Member hereby acknowledges that by virtue of such Member’s Interests, such Member, its Affiliates and its and their respective officers, directors, employees, agents and representatives may have access, or the LLC may allow such Member, its Affiliates and its and their officers, directors, employees, agents and representatives access, to business, technical, other information, materials and/or ideas or this Agreement (“Proprietary Information,” which term shall include, without limitation, anything such Member learns or discovers as a result of exposure to or analysis of any Proprietary Information).  Therefore, each Member hereby agrees that such Member will, and shall cause its Affiliates and its and their officers, directors, employees, agents and representatives to hold in confidence and will not, and will cause its officers, directors, employees, agents, representatives and Affiliates not to, possess or use (except as required to exercise rights or perform obligations under this Agreement or to enforce its obligations under this Agreement) or disclose any Proprietary Information without the prior written consent of the Manager, except such information that (i) was in the public domain

 

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prior to the time it was furnished to such Member, (ii) is or becomes (through no willful improper action or inaction by such Member) generally available to the public, (iii) was in its possession or known by such Member, its Affiliates or its and their respective officers, directors, employees, agents and representatives without restriction prior to receipt from the LLC, (iv) was rightfully disclosed to such Member, its Affiliates or its and their respective officers, directors, employees, agents and representatives by a third party without restriction, (v) was independently developed without any use of Proprietary Information, (vi) legal counsel, accountants or representatives for such Member, its Affiliates or its and their respective officers, directors, employees, agents and representatives who are bound by a duty of confidentiality request to see, or (vii) subject to the last sentence of clause (b)  below, is required to be disclosed by law or the rules of any national securities exchange, association or marketplace, provided that, the Member shall notify the LLC of any such disclosure requirement as soon as practicable and reasonably cooperate with the LLC (at the LLC’s cost) if the LLC seeks a protective order or other remedy in respect of any such disclosure; and furnish only that portion of the Proprietary Information which the Member is legally required to disclose.  Each Member agrees that is will not reverse engineer or attempt to derive the composition or underlying information, structure or ideas of any Proprietary Information.  The foregoing does not grant any Member a license in or to any of the Proprietary Information.  In accordance herewith, each Member also acknowledges and agrees that due to the unique nature of the Proprietary Information, any breach of this Section 8.6 would cause irreparable harm to the LLC for which damages are not an adequate remedy, and that the LLC shall therefore be entitled to seek equitable relief in addition to all other remedies available at law.

 

(b)                                 To the maximum extent permitted by the Act, subject to the provisions of this Agreement (including, without limitation, the obligation of Theravance and the Manager to withhold information pursuant to Section 3.12), the Manager shall have the right to keep confidential from the Members or other Persons, for such period of time as the Manager deems reasonable, any information (including, to the extent permitted by the Act, any information for which a member or manager of a limited liability company may otherwise be entitled to obtain or examine pursuant to Section 18-305 of the Act) which the Manager reasonably in good faith believes to be in the nature of trade secrets or other information the disclosure of which the Manager reasonably in good faith believes is not in the best interest of the LLC or could damage the LLC or its business or which the LLC is required by law or by agreement with a third party (including the GSK Agreements) to keep confidential.  Notwithstanding any other provision of this Agreement, but without limiting any rights of Theravance to disclosure pursuant to Article 10 of the Collaboration Agreement and Strategic Alliance Agreement, no Member shall disclose Confidential Information (as defined in the GSK Agreements) of GSK that would otherwise be permitted to be disclosed solely pursuant to clause (vii) in Section 8.6(a); provided that a Member may disclose such information to its outside counsel and outside accountants on a need-to-know basis provided they are subject to customary confidentiality obligations.

 

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ARTICLE IX

 

CAPITAL ACCOUNTS AND 
 ALLOCATIONS OF NET INCOME AND NET LOSS

 

9.1                               Capital Accounts.

 

(a)                                 A separate capital account (the “Capital Account”) shall be established and maintained for each Member.  The Capital Account of each Member shall be credited with such Member’s Capital Contributions to the LLC (net of any liabilities secured by any contributed property that the LLC is considered to assume or take subject to), all Net Income allocated to such Member pursuant to Section 9.2 and any items of income or gain which are specially allocated pursuant to Section 9.3; and shall be debited with all Net Losses allocated to such Member pursuant to Section 9.2, any items of loss or deduction specially allocated to such Member pursuant to Section 9.3, and all cash and the Carrying Value of any property (net of liabilities assumed by such Member and the liabilities to which such property is subject) distributed to such Member.  To the extent not provided for in the preceding sentence, the Capital Accounts of the Members shall be adjusted and maintained in accordance with the rules of Treasury Regulations Section 1.704-1(b)(2)(iv), as the same may be amended or revised.  Any references in any section of this Agreement to the Capital Account of a Member shall be deemed to refer to such Capital Account as the same may be credited or debited from time to time as set forth above.  In the event of any Transfer of any Interest in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Interest.  Whenever the LLC would be permitted to adjust the Capital Accounts of the Members pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect revaluations of the property of the LLC, the Manager may adjust the Capital Accounts of the Members if it determines that doing so would be appropriate.  If Code Section 704(c) applies to LLC property, the Capital Accounts of the Members shall be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain and loss, as computed for book purposes, with respect to such property.  The Capital Accounts shall be maintained for the sole purpose of determining the allocation of items of income, gain, loss and deduction among the Members for tax purposes and shall have no effect on the amount of any distributions to any Members in liquidation or otherwise.

 

(b)                                 No Member shall be required to pay to the LLC or to any other Member the amount of any negative balance which may exist from time to time in such Member’s Capital Account.

 

9.2                               Allocations of Net Income and Net Loss.  Net Income, Net Loss and items thereof of the LLC for each Fiscal Year (or other Accounting Period) shall be allocated to the Members in such manner that:

 

(a)                                 Net Income for each Fiscal Quarter or Interim Period shall be allocated to the Capital Accounts of the Members in proportion to their respective LLC Percentages as of the end of such Fiscal Quarter or Interim Period.

 

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(b)                                 Net Loss for each Fiscal Quarter or Interim Period shall be allocated to the Capital Accounts of the Members in proportion to their respective LLC Percentages as of the end of such Fiscal Quarter or Interim Period.

 

9.3                               Special Allocation Provisions.  Notwithstanding any other provision in this Agreement:

 

(a)                                 Minimum Gain Chargeback.  If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined in accordance with the principles of Treasury Regulations Sections 1.704-2(d) and 1.704-2(i)) during any Fiscal Year or other Accounting Period taxable year, the Members shall be specially allocated items of LLC income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5).  The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f).  This Section 9.3(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulations Sections and shall be interpreted consistently therewith; including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulations Sections 1.704-2(f) and 1.704-2(i)(4).

 

(b)                                 Qualified Income Offset.  In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of LLC income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate the deficit balance in its Capital Account (in excess of the amounts described in clauses (i) and (ii) of Section 9.3(c) below) created by such adjustments, allocations or distributions as promptly as possible.  This Section 9.3(b) is intended to constitute a “qualified income offset” within the meaning of Treasury Regulation Section 1.704-1(b)(ii)(d).

 

(c)                                  Limitation on Net Losses.  If any allocation of Net Loss or an item of deduction, expenditure or loss to be made pursuant to Section 9.2 or this Section 9.3 for any Fiscal Year or other Accounting Period would cause a deficit in any Member’s Capital Account (or would increase the amount of any such deficit) after (i) crediting to that Capital Account the amount that such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), and (ii) debiting to such Capital Account the items described in Treasury Regulations 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6), then such Net Loss or item of deduction, expenditure or loss shall be allocated to the Members that have positive Capital Account balances (in excess of the amounts described in clauses (i) and (ii) of this section for such Member) in proportion to the respective amounts of such positive balances until all such positive balances have been reduced to zero.

 

(d)                                 Gross Income Allocation.  In the event any Member has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of (i) the amount such Member is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be

 

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specially allocated items of LLC income and gain in the amount of such excess as quickly as possible; provided that an allocation pursuant to this Section 9.3(d) shall be made only if and to the extent that a Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article IX have been tentatively made as if Section 9.3(c) and this Section 9.3(d) were not in this Agreement.

 

(e)                                  Nonrecourse Deductions.  Nonrecourse Deductions shall be allocated in accordance with the number of Units held by each Member and in the same manner as if such Nonrecourse Deductions were taken into account in determining Net Income and Net Loss for such Accounting Period or fiscal year.

 

(f)                                   Partner Nonrecourse Deductions.  Partner Nonrecourse Deductions for any taxable period shall be allocated to the Member who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(j).

 

(g)                                  Change in Interests.  If there is a change in any Member’s Interest during any Fiscal Year, the principles of Section 706(d) of the Code shall apply in allocating Net Income and Net Loss and items thereof for such Fiscal Year to account for the variation.  For purposes of applying Section 706(d), the Manager may adopt any method or convention permitted under applicable Treasury Regulations.  If there is a change in the Interest of any Member, then for purposes of applying Section 9.2 with respect to the Fiscal Period ending on the date of change, the hypothetical liquidating distributions under Section 9.2 shall be made on the basis of the Interests of each Member as applied before giving effect to such change.

 

9.4                               Curative Allocations.  If the Manager determines, after consultation with counsel experienced in income tax matters, that the allocation of any item of LLC income, gain, loss, deduction or credit is not specified in this Article IX (an “unallocated item”), or that the allocation of any item of LLC income, gain, loss, deduction or credit hereunder is clearly inconsistent with the Members’ economic interests in the LLC (determined by reference to the general principles of Treasury Regulation Section 1.704-1(b) and the factors set forth in Treasury Regulation Section 1.704-1(b)(3)(ii)) (a “misallocated item”), then the Manager may allocate such unallocated items, or reallocate such misallocated items, to reflect such economic interests; provided that no such allocation shall have any effect on the amounts distributable to any Member (other than tax distributions), including the amounts to be distributed upon the complete liquidation of the LLC.

 

9.5                               Tax Allocations.  For income tax purposes only, each item of income, gain, loss and deduction of the LLC shall be allocated in the same manner as the corresponding items of Net Income and Net Loss and specially allocated items are allocated for Capital Account purposes; provided that in the case of any asset of the LLC the Carrying Value of which differs from its adjusted tax basis for U.S. federal income tax purposes, income, gain, loss and deduction with respect to such asset shall be allocated solely for income tax purposes in accordance with the principles of Section 704(c) of the Code so as to take account of the difference between the Carrying Value and adjusted tax basis of such asset.  Unless otherwise agreed by the Manager, for purposes of applying the principles of Section 704(c), the LLC shall use the “traditional method” of Treasury Regulation Section 1.704-3(b).

 

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9.6                               Compliance with Section 704(b) of the Code.  The allocation provisions contained in this Article IX are intended to comply with Section 704(b) of the Code and the Treasury Regulations promulgated thereunder, and shall be interpreted and applied in a manner consistent therewith.

 

9.7                               Section 754 Election.  The Manager shall cause the LLC to make an election under Section 754 of the Code effective for the taxable year in which the Effective Time occurs upon the timely request of Theravance Biopharma.  In the event of an adjustment to the adjusted tax basis of any LLC asset under Code Section 734(b) or Code Section 743(b) pursuant to a Section 754 election by the LLC, subsequent allocations of tax items shall reflect such adjustment consistent with the Treasury Regulations promulgated under Sections 704, 734 and 743 of the Code.

 

ARTICLE X

 

EXPENSES

 

10.1                        Expenses.  All LLC Costs shall be borne by the LLC.  For the avoidance of doubt, the Capital Contributions paid by the Members pursuant to Section 4.3, together with the existing cash balance of the LLC, are intended to provide the LLC with a sufficient cash balance to pay the LLC Costs.

 

ARTICLE XI

 

DISTRIBUTIONS

 

11.1                        Distributions.

 

(a)                                 Except as provided in Section 11.2, the Net Cash of the LLC as of the end of each Fiscal Quarter (or Interim Period) shall be distributed to the Members as of the end of such Fiscal Quarter (or Interim Period).  No Member shall be entitled to any distribution or payment with respect to such Member’s Interest, except as set forth in this Agreement.

 

(b)                                 Other than distributions pursuant to Section 11.2 and distributions pursuant to Section 14.4, any distribution of cash or other assets to the Members pursuant to this Section 11.1 shall be made in proportion to the Member’s respective LLC Percentage.

 

(c)                                  Except as otherwise provided by law, no Member shall be required to restore or repay to the LLC any funds properly distributed to it pursuant to Section 11.1.

 

11.2                        Tax Distributions.  Notwithstanding Section 11.1, within ninety (90) days of the end of each Fiscal Year, the LLC shall make a distribution to each Member of any available cash of the LLC (as determined by the Manager) of an amount equal to the excess of (A) the sum of (i) the product of (x) the amount of net income and gain taxable at ordinary tax rates allocated to such Member with respect to its Interest (as shown on Schedule K-1 to the LLC’s IRS Form 1065) for such Fiscal Year and all prior Fiscal Years and (y) the maximum marginal rate of federal, state and local income tax applicable to a corporation subject to tax in the Designated Jurisdiction with respect to such income or gain, (ii) the product of (x) the amount of net income

 

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and gain taxable at long-term capital gains rates allocated to such Member with respect to its Interest (as shown on Schedule K-1 to the LLC’s IRS Form 1065) for such Fiscal Year and all prior Fiscal Years and (y) the maximum marginal rate of federal, state and local income tax applicable to a corporation subject to tax in the Designated Jurisdiction with respect to such income or gain and, (iii) in the event of allocation by the LLC of net income or gain taxable at a rate other than the ordinary or long-term capital gains rates contemplated in clauses (i) and (ii) above, the product of (x) the amount of such net income and gain taxable at such other rate allocated to such Member with respect to its Interest (as shown on Schedule K-1 to the LLC’s IRS Form 1065) for such Fiscal Year and all prior Fiscal Years and (y) the maximum marginal rate of federal, state and local income tax applicable to a corporation subject to tax in the Designated Jurisdiction with respect to such income or gain, over (B) the cumulative cash distributions previously made to such Member with respect to its Interest pursuant to this Section 11.2 and Section 11.1(b) during such Fiscal Year and all prior Fiscal Years.  The determination of the tax rates to be used for purposes of the preceding sentence shall be made by the Manager in its good faith discretion after consulting with the LLC’s tax advisors, taking into account among other things changes in applicable tax rates over the relevant period, the deductibility of state and local taxes and any limitations on the ability of an individual to deduct any items of expense or loss under United States federal income tax principles.  For the avoidance of doubt, the references to “net income and gain” in clauses (A)(i)(x), (A)(ii)(x), and (A)(iii)(x) above shall mean that amount of such gross income and gain of the LLC allocated to such Member with respect to its Interest for all such Fiscal Years reduced by the gross amount of loss and deduction allocated to such Member with respect to its Interest for all such Fiscal Years that is available as an offset to such income and gain.  Without prejudice to the foregoing, the LLC may make a distribution out of any available cash of the LLC (as determined by the Manager) to each Member as soon as practicable following the close of each Estimated Tax Period of each Fiscal Year in amounts equal to the estimated tax liability of each Member relating to such Estimated Tax Period (as estimated by the Manager in its good faith discretion after consulting with the LLC’s tax advisors and based on the results of such quarter and using the methodology and assumptions described in the preceding sentences).

 

11.3                        No Other Withdrawals.  Except as expressly provided in this Agreement, no withdrawals or distributions shall be required or permitted.

 

11.4                        Distribution Limitations.  Notwithstanding any provision to the contrary contained in this Agreement, the LLC shall not make a distribution to any Member on account of its Interest if such distribution would violate the Act or other applicable law or breach any contract or agreement to which the LLC is a party.

 

ARTICLE XII

 

TRANSFER OF MEMBERSHIP; OTHER MATTERS

 

12.1                        Transfer.

 

(a)                                 Transfer of Class A Units.  No holder of Class A Units may Transfer all or any portion of its Interest with respect to the Class A Units other than to (x) GSK or its Affiliates or (y) such holder’s direct or indirect wholly-owned subsidiaries or successors to all or

 

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substantially all of the assets of such holder whether by merger, sale of stock, sale of assets or other similar transaction, provided that such transfer (i) does not result in a violation of the Securities Act or the Securities Exchange Act, and (ii) is in accordance with the other applicable provisions of this Article XII.

 

(b)                                 Transfer of Class C Units and Class B Units.  A holder of Class B Units or Class C Units may freely Transfer all or any portion of its Interest with respect to the Class B Units or Class C Units, respectively, provided that such Transfer (i) does not result in a violation of the Securities Act or the Securities Exchange Act, and (ii) is in accordance with the other applicable provisions of this Article XII.  For the avoidance of doubt, this Section 12.1(b) shall not limit the effect of the second proviso clause beginning “provided, further however,” of Section 5.4(c).

 

12.2                        Transfer Void.  Any Transfer or attempted Transfer of an Interest in contravention of this Agreement shall, to the fullest extent permitted by law, be absolutely null and void ab initio and of no force or effect, on or against the LLC, any Member, any creditor of the LLC or any claimant against the LLC and may be enjoined, and shall not be recorded or otherwise registered on the books and records of the LLC.  No distributions of cash or property of the LLC shall be made to any transferee of any Interest Transferred in violation hereof.  The Transfer or attempted Transfer of any Interest in violation hereof shall not affect the beneficial ownership of such Interest, and, notwithstanding such Transfer or attempted Transfer, the Member making such prohibited Transfer or attempted Transfer shall retain the right to vote, if any, and the right to receive distributions with respect to such Interest.

 

12.3                        Effect of Assignment.  Following a Transfer of an Interest that is permitted under this Article XII, the assignee of such Interest (i) shall be a mere assignee, holding only the economic interest of the transferring Member and shall have no other rights (including, without limitation, voting or information rights) unless and until such assignee is admitted to the LLC as a member of the LLC in accordance with Section 12.9, (ii) shall be treated as having made all of the Capital Contributions in respect of, and received all of the distributions received in respect of, such Interest, (iii) shall succeed to the Capital Account associated with such Interest and (iv) shall receive allocations and distributions under Articles IX and XI in respect of such Interest as if such transferee were a Member.  For the avoidance of doubt, with respect to the Theravance Biopharma Transfer, Theravance Biopharma shall be treated as having made all of the Capital Contributions in respect of such Interest and shall succeed to the Capital Account associated with such Interest.  The Manager shall cause Exhibit A to be appropriately amended to reflect any Transfer of an Interest.

 

12.4                        Legends.

 

(a)                                 In the event the Units become certificated Units, any certificate representing Units shall be endorsed with the following legend, as well as with any legends as may be required by applicable federal and state securities laws:

 

“THE SALE, PLEDGE, HYPOTHECATION, ASSIGNMENT OR TRANSFER OF THE UNITS REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN WRITTEN AGREEMENT

 

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BETWEEN THE REGISTERED HOLDERS OF THE UNITS OF THE LLC (OR THE PREDECESSOR IN INTEREST TO THE UNITS).  SUCH AGREEMENT RESTRICTS THE TRANSFER OF UNITS.  SUCH AGREEMENT CONTAINS PROVISIONS REGARDING THE VOTING OF THE UNITS REPRESENTED BY THIS CERTIFICATE.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED FROM THE ISSUER UPON WRITTEN REQUEST.  BY ACCEPTING ANY INTEREST IN SUCH UNITS THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SUCH AGREEMENT.”

 

(b)           Any certificate issued at any time in exchange or substitution for any certificate bearing such legends shall also bear such legends, unless the Units represented thereby are no longer subject to the provisions of this Agreement or, in the opinion of the LLC (with advice from counsel to the LLC, as the LLC may deem appropriate), the restrictions imposed under the Securities Act or state securities laws are no longer applicable, in which case the applicable legend (or legends) may be removed.

 

12.5        Publicly Traded Partnership Limitations.  Notwithstanding any other provision of this Agreement, no Transfer shall be permitted if (i) the Manager determines in its sole discretion that such transaction will either cause the LLC to be characterized as a “publicly traded partnership” or will materially increase the risk that the LLC will be so characterized or (ii) such Transfer would occur in a transaction registered or required to be registered under the Securities Act.  For purposes of this Section 12.5, the phrase “publicly traded partnership” shall have the meanings set forth in Section 7704(b) and 469(k) of the Code.  In particular and without limiting the foregoing, no Transfer shall be permitted, given effect or otherwise recognized, and such Transfer (or purported Transfer) shall, to the fullest extent permitted by law, be void ab initio, if at the time of such Transfer (or as a result of such Transfer) Units are (or would become) traded on an “established securities market” (within the meaning of Treasury Regulation Section 1.7704-1(b)) or are (or would become) “readily tradable on a secondary market or the equivalent thereof” (within the meaning of Treasury Regulation Section 1.7704-1(c)).

 

12.6        Effective Date.  Any Transfer in compliance with this Article XII shall be deemed effective on the first date as of which the relevant requirements of this Agreement have been satisfied.

 

12.7        Redemption.  The Units shall not be redeemable at the option of the holder thereof or otherwise.

 

12.8        Assignment of Reverted Drug Programs.  Theravance and the LLC shall assign to Theravance Biopharma all rights to any Assigned Product reverted to Theravance or the LLC pursuant to the GSK Agreements, and following such assignment Theravance Biopharma shall be free to pursue the development of any such Assigned Product to the extent permitted under the GSK Agreements and without any obligations to the LLC, to any Member or to any other Person bound by this Agreement except as otherwise provided in the GSK Agreement.

 

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12.9        Admission of Permitted Assignee as a Member.  Any assignee of an Interest permitted in accordance with the terms and conditions of this Agreement shall, upon its request, be admitted as a substitute Member by the Manager. If a Member assigns its entire Interest pursuant to this Article XII in accordance with the requirements of this Agreement, such admission shall be deemed effective immediately prior to such assignment, and immediately following such admission, such assignor Member shall cease to be a member of the LLC. The Manager shall cause Exhibit A to be appropriately amended to reflect any admission of a new Member and cessation of an existing Member.

 

12.10      Transfer to Theravance Biopharma at Effective Time; Admission of Theravance Biopharma at Effective Time.  Notwithstanding any other provision of this Agreement, at the Effective Time:

 

(a)           Theravance shall (and, effective automatically upon the Effective Time, hereby does) Transfer to Theravance Biopharma all two thousand one hundred twenty-five (2,125) Class B Units, six thousand three hundred seventy-five (6,375) Class C Units and all of the respective rights and responsibilities appurtenant thereto hereunder, including (i) with respect to a Member (but not an assignee), the right, if any, to vote to the extent set forth herein, (ii) the right to have a Capital Account maintained for such Member (or assignee), (iii) the right to receive allocations of Net Income and Net Losses pursuant to Article IX, and (iv) the right to receive distributions of cash or property from the LLC;

 

(b)           Theravance Biopharma shall be admitted as a Member pursuant to Section 12.9; and

 

(c)           Theravance Biopharma shall execute and deliver such instruments of transfer as shall be necessary to evidence and effect such Transfer.

 

ARTICLE XIII

 

INDEMNIFICATION AND LIMITATION OF LIABILITY

 

13.1        Indemnification.

 

(a)           For purposes of this Section 13.1(a), (i) “agent” means the Manager, any former Manager, Officer, any former Officer, any direct or indirect subsidiary of the LLC or any Affiliate, officer, director or employee of the foregoing; (ii) “proceeding” means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative, legislative or investigative; (iii) “Member” means each Member and any former Member, any direct or indirect subsidiary of such Member or any Affiliate, officer, director or employee of the foregoing and (iv) “expenses” include, without limitation, reasonable attorneys’ fees and other expenses of establishing a right of indemnification under this Section 13.1(a).  The LLC shall, (i) to the fullest extent permitted under the DGCL (as if the LLC were a Delaware corporation and agent was a director or officer of a Delaware corporation), indemnify and hold harmless each agent (and his heirs and legal and personal representatives) and (ii) to the fullest extent permitted under the Act, indemnify and hold harmless each Member (and its successors and permitted assigns), in each case against losses and damages arising out of liabilities or expenses incurred

 

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by him as a result of serving in the capacity by reason of which such Person is deemed to be an “agent” or Member pursuant to this subsection (a), regardless of whether the agent or Member is or continues to serve in such capacity at the time any such liability or expense is paid.  Without limiting the generality of the foregoing, the LLC hereby agrees (i) to the fullest extent permitted under the DGCL (as if the LLC were a Delaware corporation and the agent was a director or officer of a Delaware corporation) to indemnify each agent (and his heirs and legal and personal representatives) and (ii) to the fullest extent permitted under the Act, indemnify and hold harmless each Member (and its successors and permitted assigns), and to save and hold such Person harmless, from and in respect of all (1) fees, costs and expenses reasonably incurred in connection with or resulting from any demand, claim, action or proceeding against such agent (and his heirs and legal and personal representatives) or such Member (and its successors and permitted assigns) or the LLC that arises out of or in any way relates to the agent’s or Member’s service in the capacity by reason of which such Person is deemed to be an “agent” or “Member” pursuant to this subsection (a), and (2) such demands, claims, actions and proceedings and any losses or damages resulting therefrom, including judgments, fines and amounts paid in settlement or compromise of any such demand, claim, action or proceeding.  Notwithstanding the foregoing, the LLC shall not indemnify any agent (or his heirs or legal or personal representatives) or Member (or its successors or permitted assigns) for (i) losses, damages or expenses incurred with respect to any demand, claim, action or proceeding if such Person’s conduct was undertaken in bad faith, recklessly or with gross negligence or if such Person’s conduct or its acts or omissions constituted fraud, intentional wrongdoing, or breach of this Agreement (including, in the case of Theravance or the Manager, the failure of Theravance or the Manager to comply with its fiduciary duties under Section 5.2) or any other agreement, including the GSK Agreements, as determined by a court of competent jurisdiction pursuant to Section 15.10, or (ii) any liability arising by reason of any act or omission of an agent or Member subsequent to his ceasing to be an agent or Member, as applicable, subsequent to the termination of the LLC.  The termination of any proceeding by a judgment, order, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that the agent’s or Member’s conduct was undertaken in bad faith, recklessly or with gross negligence or that such Person’s conduct or its acts or omissions constituted fraud, intentional wrongdoing or breach of this Agreement (including, in the case of Theravance or the Manager, the failure of Theravance or the Manager to comply with its fiduciary duties under Section 5.2) or any other agreement, including the GSK Agreements.  The LLC shall be required to advance the expenses incurred by any Person indemnified hereunder in connection with any proceeding in advance of the final disposition or other termination of such proceeding upon receipt of an undertaking by or on behalf of such Person to repay such payment if there shall be an adjudication or determination that such agent is not entitled to indemnification as provided herein.

 

(b)           The indemnification accorded to an agent (or his heirs or legal or personal representatives) under Section 13.1(a) shall be made solely out of the assets of the LLC, and no Member, Manager or Officer shall have any personal liability or other obligation therefor.  Nothing in Section 13.1(a) shall be deemed to require any Member to make any additional Capital Contribution.

 

13.2        Exculpation.  For purposes of this Section 13.2, the terms “Member” and “agent” shall have the meanings assigned to such terms in Section 13.1(a).  No agent shall be liable to the LLC or any Member or any other Person who is bound by this Agreement for (a) honest

 

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mistakes in judgment, or for action or inaction, taken reasonably and in good faith and for a purpose that was reasonably believed to be in the best interests of the LLC or (b) losses sustained or liabilities incurred as a result of any act or omission of such agent if such agent’s conduct were not undertaken in bad faith, recklessly or with gross negligence or if such agent’s conduct and its acts or omissions did not constitute fraud, intentional wrongdoing or breach of this Agreement (including, in the case of Theravance or the Manager, the failure of Theravance or the Manager to comply with its fiduciary duties under Section 5.2) or any other agreement, including the GSK Agreements.  To the fullest extent permitted under the Act, no Member shall be liable to the LLC or any Member or any other Person who is bound by this Agreement for any action or inaction taken by such Member or for any losses sustained or liabilities incurred as a result of any act or omission of such Member.  Each agent and Member may consult with counsel, accountants and other professionals in respect of LLC affairs and shall be fully protected and justified in acting, or failing to act, if such action or failure to act is in accordance with the reasonable advice or opinion of such counsel, accountant or other professional and if such counsel, accountant or other professional shall have been selected with reasonable care.  Notwithstanding the foregoing, the provisions of this Section 13.2 shall not relieve any Person of liability arising by reason of such Person’s acting in bad faith, recklessly or with gross negligence, or if such Person’s conduct in the performance of its duties hereunder, or its acts or omissions, constitute fraud, intentional wrongdoing, or breach of this Agreement (including, in the case of Theravance or the Manager, the failure of Theravance or the Manager to comply with its fiduciary duties under Section 5.2) or any other agreement, including the GSK Agreements.  This Agreement shall be construed to give effect to the provisions of this Section 13.2 to the fullest extent permitted by law.

 

13.3        Limitation of Liability.  Notwithstanding anything to the contrary herein contained, the debts, obligations and liabilities of the LLC shall be solely the debts, obligations and liabilities of the LLC and no Member, Manager or Officer shall be obligated personally for any such debt, obligation or liability of the LLC solely by reason of being a Member, Manager or Officer.

 

ARTICLE XIV

 

DISSOLUTION AND TERMINATION

 

14.1        Dissolution.  The LLC shall be dissolved, its assets disposed of and its affairs wound up upon the first to occur of the following:

 

(a)           the consent of a Majority in Interest of the Class A Members, a Majority in Interest of the Class B Members and a Majority in Interest of the Class C Members; or

 

(b)           the entry of a decree of judicial dissolution under the Act; or

 

(c)           at any time there are no members of the LLC, unless the LLC is continued without dissolution in accordance with this Agreement or the Act.

 

Except as otherwise provided herein, the death, bankruptcy, incompetency, retirement, resignation, expulsion or dissolution of a Member, or the occurrence of any event that terminates

 

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the continued membership of a Member in the LLC, shall not, in and of itself, dissolve or terminate the LLC.  Notwithstanding any other provision of this Agreement, the bankruptcy (as defined in Sections 18-101(1) and 18-304 of the Act) of a Member will not cause that Member to cease to be a member of the LLC, and upon the occurrence of such an event, the business of the LLC shall continue without dissolution.

 

14.2        Authority to Wind Up.  Upon the dissolution of the LLC as set forth in Section 14.1, the Manager shall have all necessary power and authority required to marshal the assets of the LLC, to satisfy the LLC’s creditors, to distribute assets and otherwise wind up the business and affairs of the LLC.  In particular, the Manager shall have the authority to continue to conduct the business and affairs of the LLC insofar as such continued operation remains consistent, in the reasonably judgment of the Manager, with the orderly winding up of the LLC.

 

14.3        Winding Up and Certificate of Cancellation.  The winding up of the LLC shall be completed when all debts, liabilities and obligations of the LLC have been paid and discharged or reasonably adequate provision therefor has been made, and all of the remaining property and assets of the LLC have been distributed to the Members.

 

14.4        Distribution of Assets.  Upon dissolution of the LLC, the affairs of the LLC shall be wound up and the LLC shall be liquidated by the Manager.  The assets of the LLC shall be distributed as follows in accordance with the Act:

 

(a)           To creditors of the LLC, including to the payment of the expenses of the dissolution, winding up and liquidation of the LLC and, in accordance with the terms agreed among them or otherwise on a pro rata basis (based on amounts owed to them), Members who are creditors (other than in respect of distributions owing to them or to former Members hereunder), to the extent otherwise permitted by law, in satisfaction of the liabilities of the LLC (whether by payment or the making of reasonable provision for payment thereof, including by establishing reserves, in amounts established by the Manager to meet other liabilities of the LLC, including contingent, conditional and unmatured liabilities (other than liabilities to the Members or former Members in respect of distributions owing to them hereunder));

 

(b)           The remaining assets of the LLC shall be applied and distributed to the Members in proportion to their respective LLC Percentages.

 

(c)           The distribution of cash, securities and other property to a Member in accordance with the provisions of this Section 14.4 shall constitute a complete return to the Member of its Capital Contributions and a complete distribution to the Member of its Interest and all the LLC’s property, and shall constitute a compromise to which all Members have consented within the meaning of the Act.  If such cash, securities and other property are insufficient to return such Member’s Capital Contributions or returns thereon, the Member shall have no recourse against the Manager, other Members or Officers.  If any amounts distributable to the Members are other than cash, their value shall be deemed to be the fair market value as determined in good faith by the Manager.

 

14.5        Contingent Distribution.  For the avoidance of doubt, if any portion of the amount distributable to the Members pursuant to Section 14.4(b) is placed into escrow and/or is

 

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payable to such holders subject to contingencies, such dissolution or termination shall be effected such that the portion of such amount that is placed in escrow and/or subject to any contingencies (the “Contingent Distribution”) shall be allocated to the Members in accordance with this Section 14.5 as if all of consideration ultimately payable in the transaction, including the Contingent Distribution, is paid without restrictions at the time of closing of such dissolution or termination (so that the Contingent Distribution shall be allocated among the Members pro rata based on the amount of such consideration otherwise payable to each Member pursuant to this Section 14.5).  Each Member agrees to take such actions as may be required, necessary or advisable to effect the intent of this Section 14.5.

 

ARTICLE XV

 

MISCELLANEOUS

 

15.1        Amendment.

 

(a)           Except as expressly set forth herein (including without limitation, Section 5.4), this Agreement may be amended, revised and modified and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively), including any amendment, revision, modification or waiver of or to this Agreement by merger, reorganization, transfer of assets, consolidation, dissolution, issuance or sale of securities or otherwise, only with the consent of a Majority in Interest of the Class A Members, provided, however, that any amendment, revision, modification or waiver of or to this Agreement, including any amendment, revision, modification or waiver of or to this Agreement by merger, reorganization, transfer of assets, consolidation, dissolution, issuance or sale of securities or otherwise, directly or indirectly adversely affecting the interest of the Class B Members or the Class C Members in the Assigned Drug Programs or Assigned Products (including, for the avoidance of doubt, any amendment to the rights, preferences, privileges and obligations of Theravance, the LLC, the Manager or the Class A Units under this Agreement having such an effect) or directly or indirectly adversely affecting the rights, preferences, privileges or obligations of the Class B Units under this Agreement may be made only with the consent of a Majority in Interest of the Class B Members.  Any amendment, revision, modification or waiver so effected shall be binding upon all the Parties hereto.

 

(b)           No Party shall, without a Majority in Interest of the Class A Members and a Majority in Interests of the Class B Members:

 

(i)            by amendment of this Agreement or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid, or consummate or agree to consummate any such action that has the effect of avoiding, the observance or performance of any of the terms to be observed or performed under this Agreement by the LLC, but will at all times in good faith assist in the carrying out of all the provisions of this Agreement; or

 

(ii)           amend, alter or repeal this Section 15.1 of this Agreement (or any other provision of this Agreement having the effect of amending, altering or repealing this Section 15.1).

 

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(c)           Notwithstanding the foregoing provisions, the Manager may amend and modify the provisions of this Agreement (including Article IX) and Exhibits A and B hereto to the extent necessary to reflect the admission, substitution or removal of any Member permitted under this Agreement and the election, designation, removal, vacancy or resignation of any Manager (in each case subject to the approval of any such action by the requisite vote of Members entitled to vote pursuant to this Agreement).  Furthermore, the Manager may amend this Agreement, without the consent of the Members, (i) to make a change that is reasonably necessary to cure any ambiguity or inconsistency and to make changes to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling, regulation or statute of any governmental body which will not be inconsistent with this Agreement, in both cases, subject to the requirement that no Member be materially and adversely affected; or (ii) to prevent any material and adverse effect to the LLC or any Member arising from the application of legal restrictions to any Member, subject to the requirement that no Member be adversely affected without its consent.

 

(d)           No Party shall amend, revise, modify or waive this Agreement, including by merger, reorganization, transfer of assets, consolidation, dissolution, issuance or sale of securities or otherwise, in a manner that, directly or indirectly, has an adverse effect on the rights, preferences, privileges of or obligations of the Class C Units under this Agreement or applicable law without the consent of a Majority in Interest of the Class C Members.

 

(e)           Promptly after entering into any amendment pursuant to this Section 15.1, the Manager shall provide the Members a copy of such amendment.

 

(f)            Section 3.8 of this Agreement may not be amended without the consent of Theravance Biopharma.

 

15.2        Power of Attorney.

 

(a)           By signing this Agreement, each Member hereby makes, constitutes and appoints the Manager with full power of substitution and resubstitution, its true and lawful agent or agents and attorney- or attorneys-in-fact for it and in its name, place and stead, to sign, execute, certify, acknowledge, file and record (i) the Certificate, (ii) all instruments amending, restating or canceling the Certificate, as the same may hereafter be amended or restated, pursuant to the Act or this Agreement, and (iii) such other agreements, instruments, elections or documents (a) that may be necessary to reflect the exercise by a Member of any of the powers granted to it under this Agreement, and (b) that may be required of the LLC or of the Members by the laws of Delaware or any other jurisdiction.  Each Member authorizes such agent or attorney-in-fact to take any further action that such agent or attorney-in-fact shall consider necessary in connection with any of the foregoing, hereby giving such agent or attorney-in-fact full power and authority to do and perform each and every act or thing whatsoever requisite or advisable to be done in and about the foregoing as fully as such Member might or could do if personally present, and hereby ratifying and confirming all that such agent or attorney-in-fact shall lawfully do or cause to be done by virtue hereof.  The Manager shall provide to each Member copies of all documents executed pursuant to the power of attorney contained in this Section 15.2.

 

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(b)           The power of attorney granted pursuant to this Section 15.2:

 

(i)            is a special power of attorney coupled with an interest and is irrevocable;

 

(ii)           may be exercised by such attorney-in-fact by listing all of the Members executing any agreement, certificate, instrument or document with the single signature of such attorney-in-fact acting as attorney-in-fact for all of them; and

 

(iii)          shall survive the assignment by a Member of its Interest, except that where the assignee thereof is admitted as a Member, the power of attorney shall survive such assignment as to the assignor Member for the sole purpose of enabling such attorney-in-fact to execute, acknowledge and file any such agreement, certificate, instrument or document as is necessary to effect such admission.

 

15.3        Withholding.  The LLC shall at all times be entitled to make payments with respect to any Member in amounts required to discharge any obligation of the LLC to withhold or make payments to any governmental authority with respect to any federal, state, local, or other jurisdictional tax liability of such Member arising as a result of such Member’s Interest.  To the extent each such payment satisfies an obligation of the LLC to withhold, with respect to any distribution to a Member on which the LLC did not withhold or with respect to any Member’s allocable share of the income of the LLC, each such payment shall be deemed to be a loan by the LLC to such Member (which loan shall be deemed to be immediately due and payable) and shall not be deemed a distribution to such Member.  The amount of such payments made with respect to such Member, plus interest, on each such amount from the date of each such payment until such amount is repaid to the LLC at an interest rate per annum equal to the prime rate published in the Wall Street Journal on the date of such payment by the LLC with respect to such Member, shall be repaid to the LLC by (a) deduction from any cash distributions made to such Member pursuant to this Agreement, or (b) earlier payment by such Member to the LLC, in each case as determined by the LLC in its discretion.  The LLC may, in its discretion, defer making distributions to any Member owing amounts to the LLC pursuant to this Section 15.3 until such amounts are paid to the LLC and shall in addition exercise any other rights of a creditor with respect to such amounts.  Each Member agrees to indemnify and hold harmless the LLC and each of the Members, from and against liability for taxes, interest, or penalties which may be asserted by reason of the failure to deduct and withhold tax on amounts distributable or allocable to said Member.  Any amount payable as indemnity hereunder by a Member shall be paid promptly to the LLC upon request for such payment from the LLC, and if not so paid, the LLC shall be entitled to claim against and deduct from the Capital Account of, or from any distribution due to, the affected Member for all such amounts.

 

15.4        Apportionment of Amounts Withheld at the Source or Paid by the LLC.

 

(a)           If the LLC receives securities disposition proceeds or other income with respect to which taxes have been withheld at the source or with respect to which the LLC makes payments to any taxing authority, the aggregate amount of such taxes so withheld or paid shall be deemed for all purposes of this Agreement to have been received by the LLC and then distributed by the LLC to and among the Members based on the amount of such withholding or

 

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other taxes attributable to each Member, as determined by the Manager after consulting with the LLC’s accountants or other advisers, taking into account any differences in the amount of such withholding or other taxes attributable to each Member because of such Member’s status, nationality or other characteristics.  The intent of the preceding sentence is to have the burden of taxes withheld at the source or paid or reimbursed by the LLC borne by those Members to which such withholding or other taxes are attributable to the maximum extent possible.  If the amounts deemed distributed to the Members in accordance with such sentence do not comport with the provisions of this Agreement relating to the apportionment of distributions among the Members, then, notwithstanding such distribution provisions, subsequent distributions to the Members shall be adjusted in an equitable manner by the Manager to reflect the intent of such sentence.

 

(b)           If the LLC is required to remit cash to a governmental agency in respect of a withholding obligation arising from an in-kind distribution by the LLC or the LLC’s receipt of an in-kind payment, the Manager may cause the LLC to sell an appropriate portion of the property at issue and, to the extent permitted by applicable law (as determined by the Manager), any resulting income or gain shall be allocated solely for income tax purposes entirely to the Member or Members in respect of which such withholding obligation arises (in such proportion as the Manager shall determine in its reasonable discretion).

 

15.5        Notice to and Consent of Members.  By executing this Agreement, each of the parties hereto acknowledges that it has actual notice of and consents to (a) all of the provisions hereof (including the restrictions on Transfer), and (b) all of the provisions of the Certificate.

 

15.6        Further Assurances.  The parties agree to execute and deliver any further instruments or documents and perform any additional acts which are or may become necessary to effectuate and carry on the LLC created by this Agreement.

 

15.7        Binding Effect.  Subject to the restrictions on Transfer set forth in this Agreement, this Agreement shall be binding on and inure to the benefit of the Members and their respective transferees, successors, permitted assigns and legal representatives.  If Theravance or the Manager or any of their respective successors or assigns shall (i) consolidate with or merge into any other Person and shall not be the continuing or surviving Person of such consolidation or merger or (ii) sell, lease, license, transfer or otherwise dispose of all or substantially all of its business or assets to any Person, then, in each case, proper provision shall be made so that such Persons assume the obligations of Theravance and the Manager hereunder.

 

15.8        Governing Law.  This Agreement shall be governed by and construed under the laws of the State of Delaware as applied to agreements among Delaware residents entered into and to be performed entirely within Delaware.

 

15.9        Title to LLC Property.  Legal title to all property of the LLC will be held and conveyed in the name of the LLC.

 

15.10      Dispute Resolution.

 

(a)           In the event of any dispute, controversy or claim arising under or relating to this Agreement (a “Claim”), the party asserting the Claim (the “Claimant”) shall give written notice (a “Claim Notice”) to the other parties to this Agreement (the “Respondents”).

 

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(b)           The Claim Notice shall specify in reasonable detail the basis of the Claim, including (i) the provisions of this Agreement that it alleges have been breached and (ii) to the extent known to it, the factual basis of such alleged breach.  The Claim Notice need not specify the factual basis of such alleged breach to the extent such facts are not available to Claimant due to confidentiality or other restrictions applicable to the Assigned Drug Programs or Assigned Products or to the extent any Respondent has or could reasonably obtain access to such facts, but has withheld them from Claimant (without regard to any confidentiality obligation or other restriction on disclosure).

 

(c)           The parties to the dispute (i.e., the Claimant and the Respondents) shall negotiate in good faith to seek to achieve a mutually agreeable resolution of the Claim for fifteen (15) business days after receipt of such Claim by Respondents, or such longer period as they shall mutually agree.  Any such resolution shall be set forth in a written agreement signed by all parties to the dispute.

 

(d)           If the parties to the dispute do not achieve a mutually agreeable resolution within such time period, the sole recourse of the Claimant to resolve the Claim shall be through binding arbitration in accordance with this Agreement (“Arbitration”).  To initiate such arbitration, the Claimant shall furnish the Respondents written notice (“Arbitration Notice”) of its intent to pursue arbitration within fifteen (15) business days after the end of such time period.

 

(e)           Each party to the dispute shall (i) take all reasonable steps necessary or advisable in order to properly submit the Claim to Arbitration; (ii) raise no objection to the submission of the Claim to Arbitration; (iii) irrevocably waive, to the fullest extent permitted by law, any objection such party has, or may have, to the submission of the Claim to Arbitration; (iv) irrevocably waive, to the fullest extent permitted by law, any right to have the Claim submitted for resolution in any jurisdiction or venue other than the Arbitration; (v) irrevocably waive, to the fullest extent permitted by law, any and all rights to have the Claim decided by a jury; and (vi) irrevocably waive, to the fullest extent permitted by law, any and all rights to any appeal of the ruling or award of the Arbitrator(s).

 

(f)            The scope of the arbitration shall be limited solely to the Claim in accordance with this Agreement (including this dispute resolution process).  No other matter may be brought before the Arbitration.

 

(g)           The Arbitration shall be conducted before a former member of the Delaware Court of Chancery or the Delaware Supreme Court selected in good faith by mutual agreement of the Parties within fifteen (15) business days after the date the Arbitration Notice is delivered by the Claimant, provided that if the Parties cannot reach such mutual agreement within such period, then any party may petition the Delaware Court of Chancery to appoint an arbitrator who shall be a former member of the Delaware Court of Chancery or the Delaware Supreme Court.  If no former member of the Court is willing or able to serve in such capacity, then within ten (10) business days of learning of such unwillingness or unavailability, each party shall select one person to act as arbitrator from a list of arbitrator candidates provided by JAMS, and, within five (5) business days after their selection, the two so selected shall select a third arbitrator (all three collectively, the “Arbitrators”). If the Arbitrators selected by the parties are unable or fail to agree upon the third Arbitrator within the allotted time, the third Arbitrator shall

 

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be appointed by JAMS. All Arbitrators shall serve as neutral, independent and impartial arbitrators.

 

(h)           Subject to the availability of the Arbitrator(s), the parties shall use their commercially reasonable best efforts to complete the Arbitration within ninety (90) days after the Arbitrator(s) is/are appointed (or as promptly thereafter as possible), on a schedule to be negotiated in good faith among the Parties.

 

(i)            This arbitration provision (including the validity and applicability of the agreement to arbitrate, the conduct of any arbitration, the enforcement of any arbitration award made hereunder and any other questions of arbitration law or procedure arising hereunder) and its interpretation, and any Claim, shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of Delaware.  The location of any arbitration shall be Wilmington, Delaware or such other location as mutually agreed to by the parties.

 

(j)            The Parties agree that, except as otherwise provided herein, the Arbitration shall proceed in accordance with the JAMS Streamlined Arbitration Rules and Procedures (“JAMS Rules”) effective July 15, 2009, unless the Parties mutually agree to proceed under different rules and procedures.  For the avoidance of doubt, to the extent any rule or procedure set forth in the JAMS Rules conflicts with this Agreement, this Agreement supersedes and trumps any such conflict.  Unless the Parties mutually agree, the following Jams Rules shall not apply to the Arbitration:  Rule 3 and Rule 19(f).  Rule 15(a)(3) shall be limited to exclude exhibits intended to be used solely on cross examination.  Rule 16 shall be further limited such that any subpoena shall be issued only upon prior order of the Arbitrator(s) and upon good cause shown.

 

(k)           The Claimant shall have the burden of proving any Claim by a preponderance of the evidence, provided that if evidence is not available to Claimants (or any of its parent entities or other Affiliates) due to confidentiality or other restrictions applicable to the Assigned Drug Programs or Assigned Products or the Respondents have obtained or reasonably could obtain access to facts that are relevant to the Arbitration, but have not disclosed them to the Claimant (without regard to any confidentiality obligation or other restriction on disclosure), then the allegations set forth in the Claim Notice shall be taken as true by the Arbitrator and Respondents shall have the burden of refuting such Claim by a preponderance of the evidence.

 

(l)            The Arbitrator(s) shall be entitled to award any legal and equitable remedies he, she or they deem appropriate in resolving any Claim, provided that no remedy shall violate or give rise to a right to terminate the GSK Agreements.

 

(m)          A party to a dispute liable to pay a damage remedy shall pay such amount within ten (10) business days after the ruling by the Arbitrator(s).  If any such party (other than the LLC) is liable to pay a damage remedy to another party, it shall pay such amount directly to the party entitled to receive such payment and not to the LLC as a capital contribution.

 

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Theravance shall be required to pay on behalf of the Manager any damage remedy to which the Manager is found liable.

 

(n)           An Arbitration award, if any, (i) shall be the sole and exclusive remedy with respect to a Claim by a party to a dispute, and (ii) shall be final, non-appealable and binding on the parties to the dispute and may be entered as a judgment in any court of competent jurisdiction as described more fully below.  The parties to this Agreement further agree that any claim, cause of action or proceeding relating to any arbitration sought, compelled or performed hereunder will be brought and pursued only in the U.S. District Court for the District of Delaware or, solely in the case that such federal court does not have jurisdiction, in any Delaware State court (collectively, the “Delaware Courts”).  The parties to this Agreement submit to the exclusive jurisdiction and venue of the Delaware Courts for such purposes, except that any confirmed arbitration award may be enforced in any court having jurisdiction over a party or, to the extent of any in rem action, any of its assets.  The parties to this Agreement further irrevocably waive any objection to the laying of the venue of any such proceeding in the Delaware Courts, any claim that any such proceeding has been brought in an inconvenient or inappropriate forum and any right to a jury trial with regard to any such proceeding.  The relationship between the parties to any dispute arising under this Agreement shall be deemed commercial in nature, and the Claim shall be deemed commercial.

 

(o)           The parties to this Agreement agree that, subject to any non-waivable disclosure obligations under applicable law, the Arbitration, and all matters relating thereto or arising thereunder, including, without limitation, the existence of any Claim, the proceeding and all of its elements (including any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions, any third-party discovery proceedings, including any discovery obtained pursuant thereto, and any decision of the Arbitrator(s) or award), shall be kept strictly confidential, and each party hereby agrees that such information shall not be disclosed beyond:  (i) the Arbitrator(s); (ii) the participants in the Arbitration and their respective legal counsel; (iii) those agents assisting the Parties in the preparation or presentation of the Arbitration; provided such agents are contractually or legally required to preserve the confidentiality of such information as contemplated by this Agreement; (iv) other employees or agents of the Parties with a need to know such information who are contractually required to preserve the confidentiality of such information as contemplated by this Agreement.  The parties to this Agreement further agree that they will, to the fullest extent permitted by law, file under seal any claim, cause of action or proceeding relating to any arbitration sought, compelled or performed hereunder or any arbitration ruling or award issued.  Disclosure under this Section 15.10, including any authorized disclosure by the disclosing party, does not relieve the receiving party of its obligations of confidentiality generally under this Agreement.  In no event will the receiving party or its officers, directors, employees, attorneys, accountants, financial advisors, contractors or agents oppose an action by the disclosing party to obtain a protective order, order sealing documents, or other relief requiring that confidential information to be disclosed shall be treated confidentially in connection with any claim, action or proceeding.

 

(p)           Each party to a dispute shall pay its own costs and expenses in any Arbitration, except that the Arbitrator(s) at his, her or their sole discretion may require the non-prevailing party to the Arbitration to pay the costs and expenses of the prevailing party.

 

51

 

15.11      Entire Agreement.  This Agreement, the Exhibits and Attachments hereto, and the portions of the Master Agreement that relate to the LLC (collectively, the “Entire Agreements”) constitute the entire agreement among the parties with respect to the subject matter herein.  The Entire Agreements replace and supersede all prior agreements by and among the Members or any of them with respect to the subject matter herein.  The Entire Agreements supersede all prior written and oral statements with respect to the subject matter herein; and no representation, statement, condition or warranty not contained in the Entire Agreements with respect to the subject matter herein will be binding on the Members or the LLC or have any force or effect whatsoever.

 

15.12      Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  For the avoidance of doubt, affirmation or signature of this Agreement or Unit purchase or issuance agreement by electronic means (an “Electronic Signature”) shall, to the extent permitted by law, constitute the execution and delivery of a counterpart of this Agreement or a Unit purchase or issuance agreement by or on behalf of such Person intending to be bound by the terms of this Agreement.  The parties hereto agree that this Agreement, each Unit purchase or issuance agreement and any additional information incidental thereto may be maintained as electronic records.  Any Person providing an Electronic Signature further agrees to take any and all additional actions, if any, evidencing their intent to be bound by the terms of this Agreement, as may be reasonably requested by the Manager.

 

15.13      No State-law Partnership.  The Members intend that the LLC not be a partnership (including a limited partnership) or joint venture, and that no Member be a partner or joint venturer of any other Member by virtue of this Agreement, for any purposes other than for U.S. federal income tax purposes as set forth in Section 15.14, and neither this Agreement nor any other document entered into by the LLC or any Member relating to the subject matter hereof shall be construed to suggest otherwise.

 

15.14      Tax Classification.  It is the intent of the Members that, prior to any conversion of the LLC to a corporate legal entity in compliance with the provisions of this Agreement, the LLC shall always be operated in a manner consistent with its treatment as a “partnership” for federal, state and local income and franchise tax purposes at all times that it has two (2) or more Members and as a disregarded entity for federal, state and local income and franchise tax purposes at all times that it has one (1) Member.  In accordance therewith, (a) no Member or Manager shall file any election with any taxing authority to have the LLC treated otherwise, and (b) each Member and Manager hereby represents, covenants, and warrants that it shall not maintain a position inconsistent with such treatment.  The Members and Manager agree that at all times that the LLC has two (2) or more Members, except as otherwise required by applicable law, they (i) will not cause or permit the LLC to elect (A) to be excluded from the provisions of Subchapter K of the Code, or (B) to be treated as a corporation or an association taxable as a corporation for any tax purposes; (ii) will cause the LLC to make any election reasonably determined by the Tax Matters Member to be necessary or appropriate in order to ensure the treatment of the LLC as a partnership for all tax purposes; (iii) will cause the LLC to file any required tax returns in a manner consistent with its treatment as a partnership for tax purposes; and (iv) have not taken, and will not take, any action that would be inconsistent with the treatment of the LLC as a partnership for such purposes.

 

52

 

15.15      Severability.  If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any present or future laws applicable to the LLC effective during the term of this Agreement, or in conflict with or prohibited by Section 3.12: (i) such provision will be fully severable; (ii) this Agreement will be construed and enforced as if such illegal, invalid, unenforceable or conflicting provision had never comprised a part of this Agreement and to give effect to Section 3.12 to the maximum extent possible to reflect the intention of the parties; and (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid, unenforceable or conflicting provision or by its severance from this Agreement.

 

15.16      No Third Party Beneficiary. This Agreement is made solely and specifically among and for the benefit of the parties hereto and their respective successors and permitted assigns, and no other Person will have any rights, interest, or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third party beneficiary or otherwise.  Notwithstanding the foregoing, any Person that is entitled to be indemnified by the LLC pursuant to Section 13.1 shall be entitled to enforce its right to indemnification therein.

 

15.17      Interpretation.  The titles and section headings set forth in this Agreement are for convenience only and shall not be considered as part of agreement of the parties.  When the context requires, the plural shall include the singular and the singular the plural, and any gender shall include all other genders.  The parties intend that no provision of this Agreement shall be interpreted or construed against any party because such party or its counsel was the drafter thereof.

 

15.18      Aggregation of Units.  All Units held or acquired by Affiliates of Members shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

 

53

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

 

	
 
    	
MEMBERS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THERAVANCE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael W. Aguiar
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   
    	
Michael   W. Aguiar
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THERAVANCE   BIOPHARMA, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Rick E Winningham
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Rick   E Winningham
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
MANAGER:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THERAVANCE, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael W. Aguiar
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   
    	
Michael   W. Aguiar
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
Chief   Financial Officer
    

 

SIGNATURE PAGE TO THERAVANCE RESPIRATORY COMPANY, LLC

LIMITED LIABILITY COMPANY AGREEMENT

 

 

	
 
    	
LLC:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THERAVANCE   RESPIRATORY COMPANY, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Rick E Winningham
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Rick   E Winningham
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Chief   Executive Officer and President
    

 

SIGNATURE PAGE TO THERAVANCE RESPIRATORY COMPANY, LLC

LIMITED LIABILITY COMPANY AGREEMENT

 

 

EXHIBIT A

 

MEMBERS; UNITS

 

	
Class A Members
    	
 
    	
Number of Class A Units
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Theravance, Inc.
    	
 
    	
750
    	
 
    
	
901 Gateway Boulevard
    	
 
    	
 
    	
 
    
	
South San Francisco, CA 94080
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Class A Units
    	
 
    	
750
    	
 
    

 

	
Class B Members(1)
    	
 
    	
Number of Class B Units(1)
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Theravance Biopharma, Inc.
    	
 
    	
2,125
    	
 
    
	
Ugland House, South Church Street
    	
 
    	
 
    	
 
    
	
George Town
    	
 
    	
 
    	
 
    
	
Grand Cayman, Cayman Islands
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Class B Units
    	
 
    	
2,125
    	
 
    

 

	
Class C Members(1)
    	
 
    	
Number of Class C Units(1)
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Theravance, Inc.
    	
 
    	
750
    	
 
    
	
901 Gateway Boulevard
    	
 
    	
 
    	
 
    
	
South San Francisco, CA 94080
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Theravance Biopharma, Inc.
    	
 
    	
6,375
    	
 
    
	
Ugland House, South Church Street
    	
 
    	
 
    	
 
    
	
George Town
    	
 
    	
 
    	
 
    
	
Grand Cayman, Cayman Islands
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Class C Units
    	
 
    	
7,125
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
TOTAL UNITS
    	
 
    	
10,000
    	
 
    

 

(1)  After giving effect to the Theravance Biopharma Transfer.

 

A-1

 

EXHIBIT B

 

MANAGER; OFFICERS; TAX MATTERS MEMBER

 

Manager:

 

Theravance, Inc.

 

Officers:

 

Rick E Winningham, Chief Executive Officer and President

Michael W. Aguiar, Chief Financial Officer, Treasurer and Secretary

 

Tax Matters Member:

 

Theravance, Inc.

 

B-1

 

EXHIBIT C

 

ASSIGNED RIGHTS AND BENEFITS AND ASSUMED LIABILITIES

 

The Assignment of rights and benefits of Theravance under the Collaboration Agreement relating to Assigned Collaboration Products and the Assumption of Liabilities of Theravance under the Collaboration Agreement relating to Assigned Collaboration Products shall include, without limitation, the following rights, benefits and Liabilities (capitalized terms not otherwise defined shall have the meaning given them in the Collaboration Agreement):

 

1.                                      The obligation of the LLC pursuant to Section 2.1 of the Collaboration Agreement to license to GSK any Theravance Patents, Theravance Know-How and Theravance’s rights in the Joint Inventions to the extent such any such assets are included in the Assigned Assets assigned to the LLC pursuant to this Agreement.

 

2.                                      The right to grant the prior written consent to any sublicense or subcontract relating to the development or manufacture of any Assigned Collaboration Product pursuant to Section 2.2 of the Collaboration Agreement, and to require GSK to secure all appropriate covenants, obligations and rights from any such sublicensee or subcontractor relating to such sublicense or subcontract.

 

3.                                     The right to enforce the obligations of GSK with respect to trademark and housemarks under Section 2.3 of the Collaboration Agreement to the extent such obligations relate to any Assigned Collaboration Product and the obligation to perform the obligations of Theravance under Section 2.3 of the Collaboration Agreement to the extent relating to the Assigned Collaboration Products.  For the avoidance of doubt, the LLC shall own all Theravance Inventions invented after the Contribution Date that relate primarily to the Assigned Collaboration Products and shall have a non-exclusive license to all Joint Inventions invented after the Contribution Date to the extent useful in the development and commercialization of the Assigned Collaboration Products.

 

4.                                      The right to enforce GSK’s obligations to use Diligent Efforts, as modified pursuant to Section 3.1 of the Collaboration Amendment Agreement (as defined in the Agreement), to the extent relating to any Assigned Collaboration Product.

 

5.                                      The right to require GSK to bear costs and expenses pursuant to Section 4.2.2 of the Collaboration Agreement to the extent such costs and expenses relate to Assigned Collaboration Products.

 

6.                                      The right to receive update reports pursuant to Section 4.2.3(c) of the Collaboration Agreement to the extent such reports relate to Assigned Collaboration Products.

 

7.                                      The right to enforce GSK’s obligations pursuant to Section 4.2.4 of the Collaboration Agreement to the extent relating to the Development of Assigned Collaboration Products.

 

 

8.                                      The right to enforce GSK’s obligations pursuant to Section 4.5.2. of the Collaboration Agreement to the extent relating to any GSK Discontinued Compound to the extent such compound is an Assigned Collaboration Product.

 

9.                                      The right to receive a Theravance Discontinued Compound that is reverted pursuant to Section 4.5.3 of the Collaboration Agreement to the extent such compound is an Assigned Collaboration Product, provided that the LLC shall comply with the obligations with respect to such reverted compound set forth in such section.

 

10.                               The right to enforce GSK’s obligations pursuant to, and the obligation to comply with Section 4.5.4 of the Collaboration Agreement to the extent there is an Assigned Collaboration Product being Developed under the Collaboration Agreement.

 

11.                               The right to require GSK to Commercialize Assigned Collaboration Products pursuant to Article 5 of the Collaboration Agreement, including the right to enforce GSK’s obligation to bears costs and expenses pursuant to Section 5.3.1 of the Collaboration Agreement to the extent related to Assigned Collaboration Products and to receive any reports relating thereto pursuant to Article 5, as modified by the Collaboration Amendment Agreement.

 

12.                               The obligation to comply with Section 5.3.3 of the Collaboration Agreement to the extent it applies to Assigned Collaboration Products.

 

13.                               The right to receive all milestone payments payable by GSK pursuant to Section 6.2.2 of the Collaboration Agreement relating to Assigned Collaboration Products.

 

14.                               The obligation to make all milestone payments payable pursuant to Section 6.2.3 of the Collaboration Agreement relating to Assigned Collaboration Products.

 

15.                               The right to receive and the obligation to deliver notices of Development Milestones pursuant to Section 6.2.4 of the Collaboration Agreement relating to Assigned Collaboration Products.

 

16.                               The right to receive all royalties payable by GSK pursuant to Section 6.3 of the Collaboration Agreement relating to Assigned Collaboration Products.

 

17.                               The right to enforce the obligations of GSK pursuant to Section 6.4 through 6.10 of the Collaboration Agreement with respect to royalties payable by GSK relating to Assigned Collaboration Products.

 

18.                               The right to enforce the obligations of GSK, and the obligation to perform the obligations of Theravance, pursuant to Article 7 of the Collaboration Agreement with respect to promotional materials and samples relating to the Assigned Collaboration Products.

 

19.                               The right to enforce the obligations of GSK, and the obligation to perform the obligations of Theravance, pursuant to Article 8 of the Collaboration Agreement with respect to regulatory matters relating to the Assigned Collaboration Products.

 

 

20.                               The right to enforce the obligations of GSK pursuant to Article 9 of the Collaboration Agreement with respect to orders, supply and returns relating to the Assigned Collaboration Products.

 

21.                               The right to enforce the obligations of GSK pursuant to Article 10 of the Collaboration Agreement to the extent applicable to the Assigned Collaboration Products, and the obligation to comply with the confidentiality and use restrictions applicable to Confidential Information in Section 10.1 of the Collaboration Agreement (including Section 10.5 thereof) to the extent relating to Confidential Information received by the LLC, subject to the permitted disclosure and use restriction set forth in Section 10.2 of the Collaboration Agreement.

 

22.                               The obligation to comply with the restrictions on publications and public announcements in Sections 10.3 and 10.4 of the Collaboration Agreement, respectively, to the extent relating to Confidential Information received by the LLC.

 

23.                               The obligation to comply with Section 11.4 of the Collaboration Agreement and the right to enforce the obligations of GSK pursuant to Section 11.4 of the Collaboration Agreement, in each case  to the extent applicable to the rights and obligations under the Collaboration Agreement assigned to the LLC pursuant to Section 4.1(a)(ii) hereof.

 

24.                               The right to be indemnified by GSK pursuant to Section 12.1 of the Collaboration Agreement, subject to the limitations and conditions contained therein, relating to the rights and benefits assigned to it pursuant to Section 4.1(a)(ii) hereof.

 

25.                               The obligation to indemnify GSK and others  pursuant to Section 12.2 of the Collaboration Agreement, subject to the limitations and conditions contained therein, for Losses relating to the Liabilities assumed by the LLC pursuant to the first sentence of Section 4.1(c)(ii) hereof.

 

26.                               The obligations pursuant to Section 13.1.1 of the Collaboration Agreement to prosecute and maintain Theravance Patents and related applications to the extent they primarily relate to the Assigned Collaboration Products and the right to enforce GSK’s obligations to pay out-of-pocket costs and expenses pursuant to such section.

 

27.                               The right to enforce the obligations of GSK, and perform the obligations of Theravance, pursuant to Section 13.1.2 of the Collaboration Agreement to prosecute and maintain Patents covering Joint Inventions, to the extent primarily related to Assigned Collaboration Products.

 

28.                               The right to enforce the obligations of GSK pursuant to Section 13.1.3 of the Collaboration Agreement to prosecute and maintain GSK Patents and related applications to the extent  primarily related to an Assigned Collaboration Product.

 

29.                               The right to (i) exercise the step-in rights pursuant to Section 13.1.5 of the Collaboration Agreement, to the extent such GSK Patents or claims primarily relate to an Assigned Collaboration Product, and (ii) require GSK to perform, and the obligation to perform,

 

 

the rights and obligations of the Parties set forth in Sections 13.1.6 and 13.1.7, to the extent they relate to the Assigned Collaboration Products.

 

30.                               The obligation to assist and cooperate, and the right to require GSK to assist or cooperate, with respect to Patent Infringement Claims pursuant to Section 13.2.1 of the Collaboration Agreement to the extent such claims primarily relate to an Assigned Collaboration Product.

 

31.                               The rights to defend the infringement of a Theravance Patents pursuant to Section 13.2.2 of the Collaboration Agreement to the extent primarily related to an Assigned Collaboration Product.

 

32.                               The right to join GSK as a party-plaintiff in an infringement action pursuant to Section 13.2.3 of the Collaboration Agreement to the extent that such action primarily relates to an Assigned Collaboration Product.

 

33.                               The right to receive, and the obligation to give, a Hatch-Waxman Certification under Section 13.3 of the Collaboration Agreement to the extent the GSK Patent or Theravance Patent which is the subject of such notice primarily relates to an Assigned Collaboration Product.

 

34.                               The right to receive and the obligation to give assistance pursuant to Section 13.4 of the Collaboration Agreement with respect to a legal action covered by Article 13 of the Collaboration Agreement to the extent such legal action primarily relates to an Assigned Collaboration Product.

 

35.                               The right and obligation to give written consent with respect to a suit pursuant to Section 13.5 of the Collaboration Agreement to the extent such suit primarily relates to an Assigned Collaboration Product.

 

36.                               The right to terminate the Collaboration Agreement pursuant to Section 14.2 of the Collaboration Agreement if GSK materially breaches or defaults in the performance of any obligations under the Collaboration Agreement, subject to the cure rights specified therein, if such breach or default relates to an Assigned Collaboration Product; provided that such right may only be exercised with the consent of Theravance (so long as it retains a portion of the Collaboration Agreement) and all assignees to which portions of the Collaboration Agreement have been assigned; and provided, further, that such condition on the right to terminate will not limit any other available rights or remedies.

 

37.                               The right to dispute GSK’s termination of a Terminated Development Collaboration Product pursuant to Section 14.3 of the Collaboration Agreement, if such product is an Assigned Collaboration Product.

 

38.                               The right to dispute GSK’s termination of a Terminated Commercialized Collaboration Product pursuant to Section 14.4 of the Collaboration Agreement, if such product is an Assigned Collaboration Product.

 

 

39.                               Upon termination of the Collaboration Agreement to which Section 14.6.1(a) of the Collaboration Agreement applies, the obligation to transfer data and materials related to specified Collaboration Products to the extent such products are Assigned Collaboration Products.

 

40.                               Upon termination of the Collaboration Agreement to which Section 14.6.1(b) of the Collaboration Agreement applies, the right to receive (i) data and materials related to Theravance Compounds, (ii) regulatory filings, (iii) access rights, and (iv) rights to bring an action against GSK, in each case to the extent such compounds are Assigned Collaboration Products.

 

41.                               Upon termination of the Collaboration Agreement to which Section 14.6.2 of the Collaboration Agreement applies, if the Collaboration Product terminated after initiation of the first Phase III Study with respect to such product is an Assigned Collaboration Product, the rights set forth in Sections 14.6.2(a) through (d) thereof, subject to Section 14.6.2(e) thereof.

 

42.                               Upon termination of the Collaboration Agreement to which Section 14.6.3 of the Collaboration Agreement applies, if the Terminated Commercialized Collaboration Product is an Assigned Collaboration Product, the rights set forth in Sections 14.6.3(a) through (d) and (f) thereof, subject to Sections 14.6.3(e) thereof.

 

43.                               Upon termination of the Collaboration Agreement to which Section 14.6.4 of the Collaboration Agreement applies, the right receive the (i) materials, (ii) regulatory filings, (iii) license filings and (iv) stock, as specified therein, and the right to limit further Development work by GSK, as specified therein, in each case to the extent such rights relate to an Assigned Collaboration Product.

 

44.                               The right to receive royalties payable by GSK pursuant to Section 14.9, and the obligation to pay royalties to GSK after termination of the Collaboration Agreement pursuant to Section 14.9 thereof to the extent that the product giving rise to such payment obligation is developed and commercialized by the LLC.Exhibit 10.1

 

Execution Version

 

	
 
    	
 
    	
 
    

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of August 2, 2012,

(as amended and restated as of May 30, 2014)

 

among

 

PHH CORPORATION,
 as Borrower,

 

THE LENDERS REFERRED TO HEREIN,

 

BANK OF AMERICA, N.A.,
 CITIBANK, N.A.
 MANUFACTURERS AND TRADERS TRUST COMPANY,
 THE ROYAL BANK OF SCOTLAND PLC,
 and
 WELLS FARGO BANK, NATIONAL ASSOCIATION
 as Syndication Agents,

 

BARCLAYS BANK PLC

 

as Documentation Agent

 

And

 

JPMORGAN CHASE BANK, N.A. 
 as Administrative Agent

 

	
 
    	
 
    	
 
    

 

	
J.P. MORGAN SECURITIES LLC
    	
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
    	
CITIGROUP GLOBAL MARKETS INC.
    
	
 
    	
 
    	
 
    
	
MANUFACTURERS AND TRADERS TRUST COMPANY
    	
RBS SECURITIES INC.
    	
WELLS FARGO SECURITIES, LLC
    

 

as Joint Lead Arrangers and Joint Bookrunners

 

 

Table of Contents

 

	
1.
    	
DEFINITIONS
    	
1
    
	
2.
    	
THE LOANS
    	
22
    
	
 
    	
SECTION 2.1.    Commitments
    	
22
    
	
 
    	
SECTION 2.2.    Loans
    	
22
    
	
 
    	
SECTION 2.3.    Use of Proceeds
    	
23
    
	
 
    	
SECTION 2.4.    [Reserved]
    	
23
    
	
 
    	
SECTION 2.5.    Borrowing Procedure
    	
23
    
	
 
    	
SECTION 2.6.    [Reserved]
    	
24
    
	
 
    	
SECTION 2.7.    Refinancings
    	
24
    
	
 
    	
SECTION 2.8.    Fees
    	
24
    
	
 
    	
SECTION 2.9.    Repayment of Loans;   Evidence of Debt
    	
25
    
	
 
    	
SECTION 2.10.    Interest on Loans
    	
25
    
	
 
    	
SECTION 2.11.    Interest on Overdue   Amounts
    	
26
    
	
 
    	
SECTION 2.12.    Alternate Rate of   Interest
    	
26
    
	
 
    	
SECTION 2.13.    Termination and   Reduction of Commitments
    	
26
    
	
 
    	
SECTION 2.14.    Prepayment of Loans
    	
27
    
	
 
    	
SECTION 2.15.    Eurocurrency Reserve   Costs
    	
28
    
	
 
    	
SECTION 2.16.    Reserve Requirements;   Change in Circumstances
    	
28
    
	
 
    	
SECTION 2.17.    Change in Legality
    	
30
    
	
 
    	
SECTION 2.18.    Reimbursement of   Lenders
    	
30
    
	
 
    	
SECTION 2.19.    Pro Rata Treatment
    	
31
    
	
 
    	
SECTION 2.20.    Right of Setoff
    	
31
    
	
 
    	
SECTION 2.21.    Manner of Payments;   Special Application of Payments
    	
31
    
	
 
    	
SECTION 2.22.    Taxes
    	
32
    
	
 
    	
SECTION 2.23.    Certain Pricing   Adjustments
    	
36
    
	
 
    	
SECTION 2.24.    Letters of Credit
    	
37
    
	
 
    	
SECTION 2.25.    Investment Grade   Suspension
    	
41
    
	
 
    	
SECTION 2.26.    [Reserved]
    	
41
    
	
 
    	
SECTION 2.27.    [Reserved]
    	
41
    
	
 
    	
SECTION 2.28.    Defaulting Lenders
    	
41
    
	
 
    	
SECTION 2.29.    Replacement of Lenders
    	
43
    
	
3.
    	
REPRESENTATIONS AND WARRANTIES OF BORROWER
    	
44
    
	
 
    	
SECTION 3.1.    Corporate Existence and   Power
    	
44
    
	
 
    	
SECTION 3.2.    Corporate Authority and   No Violation
    	
44
    
	
 
    	
SECTION 3.3.    Governmental and Other   Approval and Consents
    	
44
    

 

i

 

	
 
    	
SECTION 3.4.    Financial Statements of   the Borrower
    	
44
    
	
 
    	
SECTION 3.5.    No Material Adverse   Change
    	
45
    
	
 
    	
SECTION 3.6.    Copyrights, Patents and   Other Rights
    	
45
    
	
 
    	
SECTION 3.7.    Title to Properties
    	
45
    
	
 
    	
SECTION 3.8.    Litigation
    	
45
    
	
 
    	
SECTION 3.9.    Federal Reserve   Regulations
    	
45
    
	
 
    	
SECTION 3.10.    Investment Company Act
    	
45
    
	
 
    	
SECTION 3.11.    Enforceability
    	
45
    
	
 
    	
SECTION 3.12.    Taxes
    	
46
    
	
 
    	
SECTION 3.13.    Compliance with ERISA
    	
46
    
	
 
    	
SECTION 3.14.    Disclosure
    	
46
    
	
 
    	
SECTION 3.15.    Environmental   Liabilities
    	
46
    
	
 
    	
SECTION 3.16.    Borrowing Base
    	
47
    
	
 
    	
SECTION 3.17.    No Default or Event of   Default
    	
47
    
	
 
    	
SECTION 3.18.    [Reserved]
    	
47
    
	
 
    	
SECTION 3.19.    Covenant Availability
    	
47
    
	
 
    	
SECTION 3.20.    Solvency
    	
47
    
	
 
    	
SECTION 3.21.    Foreign Assets Control   Regulations and Anti-Money Laundering
    	
47
    
	
 
    	
SECTION 3.22.    Anti-Money Laundering,   Patriot Act and Foreign Corrupt Practices Act
    	
48
    
	
4.
    	
CONDITIONS OF LENDING
    	
48
    
	
 
    	
SECTION 4.1.    Conditions Precedent to   Effectiveness
    	
48
    
	
 
    	
SECTION 4.2.    Conditions Precedent to   Each Loan and Letter of Credit
    	
49
    
	
5.
    	
AFFIRMATIVE COVENANTS
    	
50
    
	
 
    	
SECTION 5.1.    Financial Statements,   Reports, etc.
    	
50
    
	
 
    	
SECTION 5.2.    Corporate Existence;   Compliance with Statutes
    	
52
    
	
 
    	
SECTION 5.3.    Insurance
    	
52
    
	
 
    	
SECTION 5.4.    Taxes and Charges
    	
52
    
	
 
    	
SECTION 5.5.    ERISA Compliance and   Reports
    	
52
    
	
 
    	
SECTION 5.6.    Maintenance of and   Access to Books and Records; Examinations
    	
53
    
	
 
    	
SECTION 5.7.    Maintenance of   Properties
    	
53
    
	
 
    	
SECTION 5.8.    Guarantors
    	
53
    
	
 
    	
SECTION 5.9.    Compliance with   Anti-Corruption Laws
    	
53
    
	
6.
    	
NEGATIVE COVENANTS
    	
53
    
	
 
    	
SECTION 6.1.    Limitation on   Subsidiary Indebtedness and Borrower Indebtedness
    	
53
    
	
 
    	
SECTION 6.2.    Limitation on   Transactions with Affiliates
    	
56
    
	
 
    	
SECTION 6.3.    Consolidation, Merger,   Sale of Assets
    	
56
    

 

ii

 

	
 
    	
SECTION 6.4.    Limitations on Liens
    	
57
    
	
 
    	
SECTION 6.5.    Sale and Leaseback
    	
59
    
	
 
    	
SECTION 6.6.    Consolidated Net Worth
    	
59
    
	
 
    	
SECTION 6.7.    Ratio of Indebtedness   To Tangible Net Worth
    	
59
    
	
 
    	
SECTION 6.8.    Accounting Practices
    	
59
    
	
 
    	
SECTION 6.9.    Restrictions Affecting   Subsidiaries
    	
59
    
	
 
    	
SECTION 6.10.    Maintenance of   Available Borrowing Capacity and Third Party Fleet Financing Capacity
    	
60
    
	
 
    	
SECTION 6.11.    Limitation on Negative   Pledge Clauses
    	
60
    
	
 
    	
SECTION 6.12.    Limitation on Certain   Payments and Restricted Payments
    	
61
    
	
 
    	
SECTION 6.13.    Acquisitions
    	
63
    
	
 
    	
SECTION 6.14.    Line of Business
    	
63
    
	
 
    	
SECTION 6.15.    [Reserved]
    	
63
    
	
 
    	
SECTION 6.16.    2014 Convertible Notes   Escrow Account
    	
63
    
	
 
    	
SECTION 6.17.    Use of Proceeds
    	
63
    
	
7.
    	
EVENTS OF DEFAULT
    	
63
    
	
8.
    	
THE ADMINISTRATIVE AGENT AND EACH ISSUING LENDER
    	
65
    
	
 
    	
SECTION 8.1.    Administration by   Administrative Agent
    	
65
    
	
 
    	
SECTION 8.2.    Advances and Payments
    	
66
    
	
 
    	
SECTION 8.3.    Sharing of Setoffs and   Cash Collateral
    	
66
    
	
 
    	
SECTION 8.4.    Notice to the Lenders;   Notice of Default
    	
67
    
	
 
    	
SECTION 8.5.    Liability of the   Administrative Agent
    	
67
    
	
 
    	
SECTION 8.6.    Reimbursement and   Indemnification
    	
68
    
	
 
    	
SECTION 8.7.    Agents in Its   Individual Capacity
    	
68
    
	
 
    	
SECTION 8.8.    Independent   Investigation by Lenders
    	
69
    
	
 
    	
SECTION 8.9.    Notice of Transfer
    	
69
    
	
 
    	
SECTION 8.10.    Successor   Administrative Agent
    	
69
    
	
 
    	
SECTION 8.11.    Resignation of an   Issuing Lender; Duties of Issuing Lender
    	
70
    
	
 
    	
SECTION 8.12.    Syndication Agents and   Documentation Agent
    	
70
    
	
9.
    	
[RESERVED]
    	
70
    
	
10.
    	
MISCELLANEOUS
    	
70
    
	
 
    	
SECTION 10.1.    Notices
    	
70
    
	
 
    	
SECTION 10.2.    Survival of Agreement,   Representations and Warranties, etc.
    	
71
    
	
 
    	
SECTION 10.3.    Successors and   Assigns; Syndications; Loan Sales; Participations
    	
71
    
	
 
    	
SECTION 10.4.    Expenses
    	
74
    
	
 
    	
SECTION 10.5.    Indemnity
    	
74
    
	
 
    	
SECTION 10.6.    CHOICE OF LAW
    	
75
    

 

iii

 

	
 
    	
SECTION 10.7.    No Waiver
    	
75
    
	
 
    	
SECTION 10.8.    Extension of Maturity
    	
75
    
	
 
    	
SECTION 10.9.    Amendments, etc.
    	
75
    
	
 
    	
SECTION 10.10.    Severability
    	
76
    
	
 
    	
SECTION 10.11.    SERVICE OF PROCESS;   WAIVER OF JURY TRIAL
    	
76
    
	
 
    	
SECTION 10.12.    Headings
    	
77
    
	
 
    	
SECTION 10.13.    Execution in   Counterparts
    	
77
    
	
 
    	
SECTION 10.14.    Entire Agreement
    	
77
    
	
 
    	
SECTION 10.15.    Language
    	
77
    
	
 
    	
SECTION 10.16.    Confidentiality
    	
77
    
	
 
    	
SECTION 10.17.    USA PATRIOT Act
    	
78
    
	
 
    	
SECTION 10.18.    No Fiduciary Duty
    	
78
    
	
 
    	
SECTION 10.19.    Release of Subsidiary   Guarantors
    	
79
    
	
 
    	
SECTION 10.20.    Excluded Subsidiaries
    	
79
    
	
 
    	
SECTION 10.21.    Reaffirmation
    	
80
    

 

SCHEDULES

 

1.1A                      Commitments

1.1B                      Excluded Subsidiaries

2.24                        Existing Letters of Credit

5.1(c)                 Existing Mortgage Warehouse Facilities and Servicing Advance Facilities

6.1                               Existing Indebtedness of Material Subsidiaries and Subsidiary Guarantors

6.4                               Existing Liens

6.13                        Potential Acquisitions

 

EXHIBITS

 

A                                       Form of Assignment and Assumption

B                                       Form of Compliance Certificate

C                                       Form of Borrowing Request

D                                       Form of U.S. Tax Compliance Certificate

E                                        Form of Borrowing Base Certificate

F                                         Form of Subsidiary Guarantee

G                                       Form of Amendment and Reaffirmation of Guarantee

 

iv

 

 

AMENDED AND RESTATED CREDIT AGREEMENT (the “Agreement”), dated as of August 2, 2012 (as amended and restated as of May 30, 2014), among PHH CORPORATION, a Maryland corporation (the “Borrower”), the Lenders referred to herein, BANK OF AMERICA, N.A., CITIBANK, N.A., MANUFACTURERS AND TRADERS TRUST COMPANY, THE ROYAL BANK OF SCOTLAND PLC and WELLS FARGO BANK, NATIONAL ASSOCIATION, as syndication agents, BARCLAYS BANK PLC, as documentation agent, and JPMORGAN CHASE BANK, N.A., as administrative agent (the “Administrative Agent”) for the Lenders.

 

INTRODUCTORY STATEMENT

 

The Borrower, certain of the Lenders, certain other parties and the Administrative Agent are parties to the Amended and Restated Credit Agreement, dated as of August 2, 2012, as amended prior to the Restatement Date (the “Existing Credit Agreement”), pursuant to which, among other things, the Borrower obtained a revolving Tranche A Facility (as defined therein) in an aggregate principal amount of $250,000,000 and a revolving Tranche B Facility (as defined therein) in an aggregate principal amount of $50,000,000.  Capitalized terms used in this Introductory Statement shall have the meanings set forth in this Agreement unless the context otherwise requires.

 

The Borrower has requested that the Tranche B Facility be terminated, the Commitment of each Tranche A Lender be increased by the amount of its Tranche B Commitment resulting in a Tranche A Facility in an aggregate principal amount of $300,000,000 and certain other amendments to the Existing Credit Agreement be made.

 

The Borrower, the Lenders and the Administrative Agent desire to amend and restate the Existing Credit Agreement pursuant to this Agreement and to continue the Borrower’s payment and performance obligations under the Existing Credit Agreement, as amended and restated hereby.

 

1.              DEFINITIONS

 

For the purposes hereof unless the context otherwise requires, the following terms shall have the meanings indicated, all accounting terms not otherwise defined herein shall have the respective meanings accorded to them under GAAP and all terms defined in the New York Uniform Commercial Code and not otherwise defined herein shall have the respective meanings accorded to them therein:

 

“ABR Borrowing” shall mean a Borrowing comprised of ABR Loans.

 

“ABR Loan” shall mean any Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article 2.

 

“ABR Spread” shall mean, at any date or for any period of determination, the ABR Spread that would be in effect on such date pursuant to the chart set forth in Section 2.23 based on the rating of the Index Debt.

 

“Act” shall have the meaning assigned to such term in Section 10.17.

 

“Acquisition” shall have the meaning assigned to such term in Section 6.13.

 

“Adjusted LIBOR” shall mean, with respect to any LIBOR Borrowing for any Interest Period, an interest rate per annum (rounded upwards to the nearest 1/16 of 1% if not already an integral multiple of 1/16 of 1%) equal to (a) LIBOR for such Interest Period multiplied by (b) the Statutory Reserves.

 

 

“Affiliate” shall mean as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, a Person shall be deemed to be “controlled by” another if such latter Person possesses, directly or indirectly, power either to (i) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such controlled Person or (ii) direct or cause the direction of the management and policies of such controlled Person whether by contract or otherwise.

 

“Agents” shall mean the collective reference to the Administrative Agent, the Syndication Agents and the Documentation Agent.

 

“Aggregate Exposure” shall mean, with respect to any Lender at any time, an amount equal to (a) until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and (b) thereafter, the amount of such Lender’s Commitments then in effect or, if the Commitments have been terminated, the amount of such Lender’s Extensions of Credit then outstanding.

 

“Aggregate Exposure Percentage” shall mean, with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.

 

“Alternate Base Rate” shall mean for any day, a rate per annum (rounded upwards to the nearest 1/16 of 1% if not already an integral multiple of 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect for such day, (b) the Federal Funds Effective Rate in effect for such day plus 1⁄2 of 1% and (c) the Adjusted LIBOR that would be calculated as of such day (or if such day is not a Business Day, the immediately preceding Business Day) in respect of a proposed LIBOR Loan with a one month Interest Period plus 1%.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBOR shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBOR, respectively.

 

“Amendment and Reaffirmation of Guarantee” shall be in the form of Exhibit G hereto.

 

“Anti-Corruption Laws” shall mean all laws, rules and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.

 

“Applicable Law” shall mean all provisions of statutes, rules, regulations and orders of governmental bodies or regulatory agencies applicable to a Person, and all orders and decrees of all courts and arbitrators in proceedings or actions in which the Person in question is a party.

 

“Asset Securitization Subsidiary” shall mean (i) any Subsidiary engaged solely or substantially in the business of effecting asset securitization transactions permitted by this Agreement and activities incidental thereto or (ii) any Subsidiary whose primary purpose is to hold title or ownership interests in vehicles, equipment, leases, mortgages, relocation assets, financial assets and related assets under management and mortgage servicing advances.  For the avoidance of doubt, the entities listed on Schedule 1.1B hereto under the heading “Asset Securitization Subsidiaries” are Asset Securitization Subsidiaries.

 

2

 

“Assignment and Assumption” shall mean an agreement substantially in the form of Exhibit A hereto, executed by the assignor, the assignee and the other parties as contemplated thereby.

 

“Available Borrowing Capacity” shall mean committed borrowing capacity which may be drawn (taking into account required reserves and discounts) upon or has been drawn upon by the Borrower or any of its Subsidiaries under committed Mortgage Warehouse Facilities (other than (i) uncommitted warehouse facilities provided by Government-Sponsored Enterprises and (ii) facilities whose sole purpose is for gestation financing).

 

“Bankruptcy Event” shall mean, with respect to any Person, that such Person becomes 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, the acquisition of any ownership interest, or the exercise of control, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person to reject, repudiate, disavow or disaffirm any obligations such as those under this Agreement or other agreements to extend credit.

 

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

 

“Board” shall mean the Board of Governors of the Federal Reserve System.

 

“Borrowing” shall mean a group of Loans of a single Interest Rate Type made by certain Lenders on a single date and as to which a single Interest Period is in effect.

 

“Borrowing Base” shall mean, at any time, the sum of (a) the book value of all unencumbered and unrestricted tangible assets (which, for the avoidance of doubt, shall exclude goodwill) of the Borrower and its Consolidated Subsidiaries other than mortgage servicing rights; plus (b) the product of (x) the book value of the Borrower’s and the Subsidiary Guarantors’ Unencumbered Mortgage Servicing Rights and (y) 75%; provided that cash, Cash Equivalents and accounts receivable will be excluded in calculating the Borrowing Base.  For purposes of determining the Borrowing Base, Unencumbered Mortgage Servicing Rights will be marked-to-market on a daily basis.  For the avoidance of doubt, assets and mortgage servicing rights will not be included in the Borrowing Base if there are legal or contractual restrictions impairing or preventing the pledge of such assets or mortgage servicing rights in whole or in part (other than, in the case of mortgage servicing rights, restrictions imposed by guidelines of Government-Sponsored Enterprises).

 

“Borrowing Base Compliance” shall mean, at any date of determination, the ratio of the Borrowing Base to Unsecured Indebtedness (less the balance in the 2014 Convertible Notes Escrow Account at such time) is at least 1.20 to 1.00.

 

“Borrowing Request” shall mean a request made pursuant to Section 2.5 substantially in the form of Exhibit C.

 

3

 

“Business Day” shall mean, with respect to any Loan, any day other than a Saturday, Sunday or other day on which banks in New York City are permitted or required by law to close; provided that when used in connection with a LIBOR Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits in Dollars on the London Interbank Market (or such other interbank eurocurrency market where the foreign currency and exchange operations in respect of Dollars are then being conducted for delivery on the first day of such Interest Period).

 

“Canadian Credit Facility” shall mean any revolving credit facility between or among PHH Vehicle Management Services Inc., a Canadian subsidiary of the Borrower, The Bank of Nova Scotia, the other lenders party thereto and any other parties thereto, as approved by the Lenders and whose assets are excluded from the Borrowing Base.

 

“Capital Lease” shall mean, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which, in accordance with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

 

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

 

“Cash Collateral Account” shall mean a collateral account established with the Administrative Agent, in the name of the Administrative Agent and under its sole dominion and control, into which the Borrower shall from time to time deposit Dollars pursuant to the express provisions of this Agreement requiring such deposit.

 

“Cash Equivalents” shall mean (i) investments in commercial paper maturing in not more than 270 days from the date of issuance which at the time of acquisition is rated at least A—1 or the equivalent thereof by S&P, or P—1 or the equivalent thereof by Moody’s, (ii) investments in direct obligations or obligations which are guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having a maturity of not more than three years from the date of acquisition, (iii) investments in certificates of deposit maturing not more than one year from the date of origin issued by a Lender or a bank or trust company organized or licensed under the laws of the United States or any state or territory thereof having capital, surplus and undivided profits aggregating at least $500,000,000 and in each case A rated or better by S&P or Moody’s, (iv) money market mutual funds having assets in excess of $2,000,000,000, (v) investments in asset-backed or mortgage-backed securities, including investments in collateralized, adjustable rate mortgage securities and those mortgage-backed securities which are rated at least AA by S&P or Aa by Moody’s or are of comparable quality at the time of investment, and (vi) banker’s acceptances maturing not more than one year from the date of origin issued by a bank or trust company organized or licensed under the laws of the United States or any state or territory thereof and having capital, surplus and undivided profits aggregating at least $500,000,000, and rated A or better by S&P or Moody’s.

 

“CFC” shall mean a Foreign Subsidiary that is a “controlled foreign corporation” within the meaning of Section 957 of the Code.

 

4

 

“CFC Holdco” shall mean any Domestic Subsidiary substantially all the assets of which consist of Capital Stock of one or more CFCs.

 

“Change in Control” shall mean (i) the acquisition by any Person or group (within the meaning of the Securities Exchange Act of 1934, as amended, and the rules of the Securities and Exchange Commission thereunder as in effect on the Closing Date), directly or indirectly, beneficially or of record, of ownership or control of in excess of 35% of the voting common stock of the Borrower on a fully diluted basis at any time, (ii) if at any time, individuals who at the Closing Date constituted the Board of Directors the Borrower (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Borrower, as the case may be, was approved by a vote of the majority of the directors then still in office who were either directors at the Closing Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Borrower then in office, (iii) any “change in control” of the Borrower or similar event (however denominated) under any agreement referred to in Section 6.12(a)(v) or (iv) the Borrower is required by the holders of any Indebtedness of the Borrower to repay or redeem such Indebtedness as a result of a Delisting if the conditions in Section 6.12(c) (excluding clause (i)(y) thereof) would not be satisfied.

 

“Closing Date” shall mean August 2, 2012.

 

“Code” shall mean the Internal Revenue Code of 1986 and the rules and regulations issued thereunder, as now and hereafter in effect, or any successor provision thereto.

 

“Commitments” shall mean the aggregate Tranche A Commitments.

 

“Commitment Period” shall mean for any Lender the period from and including the Closing Date to but not including the Termination Date or such earlier date on which the Commitments shall have been terminated in accordance with the terms hereof.

 

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

 

“Confidential Information Memorandum” shall mean the Confidential Information Memorandum dated June 22, 2012.

 

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

 

“Consolidated Assets” shall mean, at any date of determination, the total assets of the Borrower and its Consolidated Subsidiaries determined in accordance with GAAP.

 

“Consolidated Net Worth” shall mean, at any date of determination, all amounts which would be included on a balance sheet of the Borrower and its Consolidated Subsidiaries under stockholders’ equity as of such date in accordance with GAAP.

 

“Consolidated Subsidiaries” shall mean all Subsidiaries of the Borrower that are required to be consolidated with the Borrower for financial reporting purposes in accordance with GAAP.

 

5

 

“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.

 

“Convertible Notes” shall mean any convertible notes issued by the Borrower and outstanding on the Closing Date and any other convertible notes issued by the Borrower after the Closing Date having terms customary for convertible notes, as determined by the Borrower.

 

“Credit Party” shall mean the Administrative Agent, the Issuing Lenders or any other Lender.

 

“Default” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute 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) has not been satisfied, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (a) upon the funding or payment by such Lender of such portion or amount, (b) has notified the Borrower or any Credit Party in writing that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing indicates that such position is based on such Lender’s good faith determination that a condition precedent to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after written request by the Administrative Agent or an Issuing Lender, acting 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 under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Person’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event; provided that a Lender shall not be a Defaulting Lender solely by virtue of any ownership interest, the acquisition of any ownership interest, or the exercise of control, in such Person by a Governmental Authority or instrumentality thereof.

 

“Delisting” shall have occurred at any time that the shares of common stock of the Borrower are not listed for trading on any United States national securities exchange.

 

“Disqualified Stock” shall mean that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof, in any case, on or prior to the 91st day after the Tranche A Termination Date.

 

“Documentation Agent” shall mean Barclays Bank PLC.

 

“Dollars” and “$” and “US$” shall mean lawful currency of the United States.

 

6

 

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

 

“Environmental Laws” shall mean any and all federal, provincial, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any Governmental Authority regulating, relating to or imposing liability or standards of conduct concerning, any Hazardous Material or environmental protection or health and safety, as now or at any time hereafter in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq., the Clean Air Act, 42 U.S.C. §§ 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq., the Surface Mining Control and Reclamation Act, 30 U.S.C. §§ 1201 et seq., the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., the Superfund Amendment and Reauthorization Act of 1986, Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act, 42 U.S.C. §§ 11001 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., the Occupational Safety and Health Act as amended, 29 U.S.C. § 655 and § 657, together, in each case, with any amendment thereto, and the regulations adopted and publications promulgated thereunder and all substitutions thereof.

 

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

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as such may be amended, and the regulations promulgated thereunder.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414 of the Code.

 

“ERISA Event” shall mean (a) the failure of any Plan to comply with any material provisions of ERISA and/or the Code (and applicable regulations under either) or with the material terms of such Plan; (b) the existence with respect to any Plan of a non-exempt Prohibited Transaction; (c) any Reportable Event; (d) the failure of any Loan Party or ERISA Affiliate to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan or any failure by any Pension Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Pension Plan, whether or not waived; (e) a determination that any Pension Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA); (f) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan; (g) the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or the incurrence by any Loan Party or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Pension Plan; (h) the receipt by any Loan Party or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to an intention to 

 

7

 

terminate any Pension Plan or to appoint a trustee to administer any Pension Plan under Section 4042 of ERISA; (i) the failure by any Loan Party or any of its ERISA Affiliates to make any required contribution to a Multiemployer Plan pursuant to Sections 431 or 432 of the Code; (j) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (k) the receipt by any Loan Party or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from a Loan Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in Reorganization, in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA), or terminated (within the meaning of Section 4041A of ERISA); or (l) the failure by any Loan Party or any of its ERISA Affiliates to pay when due (after expiration of any applicable grace period) any installment payment with respect to Withdrawal Liability under Section 4201 of ERISA; and (m) any Foreign Plan Event.

 

“Event of Default” shall have the meaning assigned to such term in Article 7.

 

“Exposure” shall mean, at any time, the sum of (i) the principal amount of the Loans and (ii) the L/C Exposure.

 

“Excluded Subsidiary” shall mean any (i) Asset Securitization Subsidiary, (ii) Subsidiary of which the Borrower and its wholly-owned Subsidiaries collectively do not own Capital Stock representing at least 90% of the voting interests of such Subsidiary, (iii) CFC, (iv) CFC Holdco, (v) Subsidiary with less than $1,000,000 of consolidated assets as determined in accordance with GAAP and (vi) Subsidiary that has been designated as an “Additional Excluded Subsidiary” on Schedule 1.1B and any Subsidiary which has been designated by a financial officer of the Borrower as an Excluded Subsidiary after the Closing Date pursuant to Section 10.20.  Schedule 1.1B hereto lists all Excluded Subsidiaries as of the Closing Date.

 

“Excluded Swap Obligation” shall mean, with respect to any Subsidiary Guarantor, any Swap Obligation if, and to the extent that, and only for so long as, all or a portion of the guarantee of such Subsidiary Guarantor of such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any such rule, regulation or order) by virtue of such Subsidiary Guarantor’s failure to constitute an “eligible contract participant,” as defined in the Commodity Exchange Act and the regulations thereunder, at the time the guarantee of such Subsidiary Guarantor becomes or would otherwise have become effective with respect to such Swap Obligation.  If a Swap Obligation arises under a master agreement governing more than one Swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to the Swap for which such guarantee is or becomes illegal.

 

“Excluded Taxes” shall mean with respect to any Credit Party (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes (imposed in lieu of net income Taxes), and branch profits Taxes, in each case, (a) imposed as a result of such Credit Party being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (b) that are Other Connection Taxes, (ii) United States federal withholding Taxes to the extent attributable to such Credit Party’s failure to comply with Section 2.22(a), (iii) in the case of a Lender, United States federal withholding Taxes that could be properly imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (a) such Lender acquires such interest in the Loan or Commitment or (b) such Lender changes its lending office, except in 

 

8

 

each case to the extent that (x) such Lender’s assignor (if any) was entitled at the time of assignment (or such Lender was entitled at the time it changed its lending office) to receive additional amounts with respect to such Taxes pursuant to Section 2.22, or (y) such Taxes are imposed as a result of the assignment, designation of a new lending office, acquisition or the appointment of a successor Agent at the request of the Borrower and (iv) United States federal withholding Taxes imposed pursuant to FATCA.

 

“Existing Credit Agreement” shall have the meaning assigned to such term in the Introductory Statement to this Agreement.

 

“Existing Letters of Credit” shall mean all letters of credit outstanding under the Existing Credit Agreement immediately prior to the Closing Date.

 

“Existing Mortgage Warehouse Facilities” shall mean the mortgage warehouse facilities and mortgage warehouse conduits listed on Schedule 5.1(c) as of the Closing Date (which shall include, without limitation, the PHH Home Loans Mortgage Warehouse Facilities).

 

“Extensions of Credit” shall mean, as to any Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Loans held by such Lender then outstanding and (b) such Lender’s Percentage of the aggregate L/C Exposure then outstanding.

 

“Facility” shall mean the Tranche A Facility.

 

“Facility Fee” shall have the meaning assigned to such term in Section 2.8.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

 

“Federal Funds Effective Rate” shall mean, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.  If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate, for any reason, including, without limitation, the inability or failure of the Administrative Agent to obtain sufficient bids or publications in accordance with the terms hereof, the Alternate Base Rate shall be determined without regard to clause (b) of such defined term until the circumstances giving rise to such inability no longer exist.  Any change in the Alternate Base Rate due to a change in the Federal Funds Effective Rate shall be effective on the effective date of such change in the Federal Funds Effective Rate.

 

“Fitch” shall mean Fitch Investors Service, Inc. and any successor thereto.

 

“FLRT Transaction” shall mean the series of transactions under which PHH Vehicle Management Services Inc. (“PHH VMS”) securitizes leases through the transfer of leased equipment, including related leases and lease rights (the “Securitized Assets”), from PHH VMS 

 

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to various Canadian Asset Securitization Subsidiaries, which then, directly or indirectly, transfer the Securitized Assets (or portions thereof) to Fleet Leasing Receivables Trust.

 

“Foreign Plan” shall mean each employee pension benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) that is not subject to US law and is maintained or contributed to by any Loan Party or any ERISA Affiliate.

 

“Foreign Plan Event” shall mean, with respect to any Foreign Plan, (A) the failure to make or, if applicable, accrue in accordance with normal accounting practices, any employer or employee contributions required by applicable law or by the terms of such Foreign Plan; (B) the failure to register or loss of good standing with applicable regulatory authorities of any such Foreign Plan required to be registered; or (C) the failure of any Foreign Plan to comply with any material provisions of applicable law and regulations or with the material terms of such Foreign Plan.

 

“Foreign Subsidiary” shall mean any Subsidiary of the Borrower that is not a Domestic Subsidiary.

 

“Fundamental Documents” shall mean this Agreement, the Subsidiary Guarantee and any other ancillary documentation which is required to be, or is otherwise, executed by the Borrower or any Subsidiary and delivered to the Administrative Agent in connection with this Agreement.

 

“Funding Office” shall mean the office of the Administrative Agent specified in Section 10.1 or such other office as may be specified from time to time by the Administrative Agent or the respective Affiliate of the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.

 

“GAAP” shall mean generally accepted accounting principles consistently applied (except for accounting changes in response to FASB releases or other authoritative pronouncements); provided, however, that all calculations made pursuant to Sections 6.6 and 6.7 and the related definitions shall have been computed based on such generally accepted accounting principles as are in effect on the last day of the most recently completed fiscal quarter for which financial statements were available prior to the Closing Date.  In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of the Borrowing Base or financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, the Borrowing Base and all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by FASB or, if applicable, the SEC.  For the purposes of determining compliance with any provision of this Agreement or any other Fundamental Document and any related definitions, the determination of whether a lease is to be treated as an operating lease or a Capital Lease shall be made without giving effect to any change in GAAP that becomes effective on or after the Closing Date that would require operating leases to be treated similarly to Capital Leases.

 

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“Governmental Authority” shall mean any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, or any court, in each case, whether of the United States or foreign (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Government-Sponsored Enterprise” shall mean (i) Fannie Mae, (ii) Freddie Mac, (iii) Ginnie Mae or (iv) any other U.S. Department of Housing and Urban Development entity.

 

“Guarantee” shall mean, as to any Person, any direct or indirect obligation of such Person guaranteeing or intended to guarantee any Indebtedness, Capital Lease, dividend or other monetary obligation (“primary obligation”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services, in each case, primarily for the purpose of assuring the owner of any such primary obligation of the repayment of such primary obligation or (d) as a general partner of a partnership or a joint venturer of a joint venture in respect of indebtedness of such partnership or such joint venture which is treated as a general partnership for purposes of Applicable Law.  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount (or portion thereof) of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder as determined by the Borrower in good faith); provided that the amount of any Guarantee shall be limited to the extent necessary so that such amount does not exceed the value of the assets of such Person (as reflected on a consolidated balance sheet of such Person prepared in accordance with GAAP) to which any creditor or beneficiary of such Guarantee would have recourse.  Notwithstanding the foregoing definition, the term “Guarantee” shall not include any direct or indirect obligation of a Person as a general partner of a general partnership or a joint venturer of a joint venture in respect of Indebtedness of such general partnership or joint venture, to the extent such Indebtedness is contractually non-recourse to the assets of such Person as a general partner or joint venturer (other than assets comprising the capital of such general partnership or joint venture).

 

“Hazardous Materials” shall mean any flammable materials, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or similar materials defined as such in any Environmental Law.

 

“Impacted Interest Period” shall have the meaning assigned to such term in the definition of LIBOR.

 

“Indebtedness” shall mean (i) all indebtedness, obligations and other liabilities of the Borrower and its Subsidiaries which are, at the date as of which Indebtedness is to be determined, includable as liabilities in a consolidated balance sheet of the Borrower and its Subsidiaries, other than (v) accounts payable, accrued expenses and derivatives transactions entered into in the ordinary course of business pursuant to hedging programs (provided that such hedging programs are for non-speculative purposes), (w) advances from clients obtained in the ordinary course of the relocation management services business of the Borrower and its Subsidiaries, (x) current and deferred income taxes and other similar liabilities, (y) minority interest and (z) liabilities attributable to the conversion option in any Convertible Notes, plus (ii) without duplicating any items included in Indebtedness pursuant to the foregoing clause (i) (but excluding reinsurance

 

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obligations of Atrium Insurance Corporation and its successors and assigns), the maximum aggregate amount of all liabilities of the Borrower or any of its Subsidiaries under any Guarantee, indemnity or similar undertaking given or assumed of, or in respect of, the indebtedness, obligations or other liabilities, assets, revenues, income or dividends of any Person other than the Borrower or one of its Subsidiaries and (iii) all other obligations or liabilities of the Borrower or any of its Subsidiaries in relation to the discharge of the obligations of any Person other than the Borrower or one of its Subsidiaries.

 

“Indemnified Taxes” shall mean all Taxes and Other Taxes, but excluding any Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under this Agreement or any other Fundamental Document.

 

“Index Debt” shall have the meaning assigned to such term in Section 2.23.

 

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

 

“Interest Payment Date” shall mean, with respect to any Borrowing, the last day of the Interest Period applicable thereto and, in the case of a LIBOR Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing, and, in addition, the date of any refinancing or conversion of a Borrowing with, or to, a Borrowing of a different Interest Rate Type.

 

“Interest Period” shall mean (a) as to any LIBOR Borrowing (i) the period commencing on the date of such Borrowing, and ending one week after the date of such Borrowing or (ii) the period commencing on the date of such Borrowing, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3, 6 or, subject to each Lender’s approval, 12 months thereafter, as the Borrower may elect and (b) as to any ABR Borrowing, the period commencing on the date of such Borrowing and ending on the earliest of (i) the next succeeding March 31, June 30, September 30 or December 31, (ii) the Tranche A Termination Date and (iii) the date such Borrowing is refinanced with a Borrowing of a different Interest Rate Type in accordance with Section 2.7 or is prepaid in accordance with Section 2.14; 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 LIBOR Loans 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) no Interest Period with respect to any LIBOR Borrowing may be selected which would result in the aggregate amount of LIBOR Loans having Interest Periods ending after any day on which a Commitment reduction is scheduled to occur being in excess of the Total Tranche A Commitment scheduled to be in effect after such date.  Interest shall accrue from, and including, the first day of an Interest Period to, but excluding, the last day of such Interest Period.

 

“Interest Rate Protection Agreement” shall mean any interest rate swap agreement, interest rate cap agreement or other similar financial agreement or arrangement.

 

“Interest Rate 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.

 

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“Interpolated Rate” shall have the meaning assigned to such term in the definition of LIBOR.

 

“IRS” shall mean the United States Internal Revenue Service.

 

“Issuing Lender” shall mean JPMorgan Chase Bank and/or such other of the Lenders as may be designated in writing by the Borrower and which agrees in writing to act as such in accordance with the terms hereof.

 

“Joint Lead Arrangers” shall mean the collective reference to J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Manufacturers, Traders Trust Company and RBS Securities Inc. and Wells Fargo Securities, LLC.

 

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

 

“L/C Exposure” shall mean, at any time, the amount expressed in Dollars of the aggregate face amount of all drafts which may then or thereafter be presented by beneficiaries under all Letters of Credit then outstanding plus (without duplication) the face amount of all drafts which have been presented under Letters of Credit but have not yet been paid or have been paid but not reimbursed.  Each Lender shall be deemed to hold its Percentage of the aggregate L/C Exposure.

 

“Lender” shall mean each Tranche A Lender.

 

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

 

“Lending Office” shall mean, with respect to any of the Lenders, the branch or branches (or affiliate or affiliates) from which any such Lender’s LIBOR Loans or ABR Loans, as the case may be, are made or maintained and for the account of which all payments of principal of, and interest on, such Lender’s LIBOR Loans or ABR Loans are made, as notified to the Administrative Agent from time to time.

 

“Letter of Credit Agreement” shall mean a letter of credit agreement referenced in Section 2.24(g).

 

“Letters of Credit” shall mean the letters of credit issued pursuant to Section 2.24.

 

“LIBOR” shall mean, with respect to any LIBOR Loan for any Interest Period, the London interbank offered rate as administered by the ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for Dollars for a period equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters Screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion; in each case, the “Screen Rate”) at approximately 11:00 A.M., London time, two Business Days prior to the commencement of such Interest Period; provided, that, if the Screen Rate is not available at such time for such Interest Period (an “Impacted Interest Period”) with respect to Dollars, then LIBOR shall be the Interpolated Rate at such time.  “Interpolated Rate” means, at any time, the rate per annum

 

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determined by the Administrative Agent (which determination will be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the Screen Rate for the longest period (for which such Screen Rate is available in Dollars) that is shorter than the Impacted Interest Period and (b) the Screen Rate for the shortest period (for which such Screen Rate is available for Dollars) that exceeds the Impacted Interest Period, in each case, at such time.

 

“LIBOR Borrowing” shall mean a Borrowing comprised of LIBOR Loans.

 

“LIBOR Loan” shall mean any Loan bearing interest at a rate determined by reference to LIBOR in accordance with the provisions of Article 2 (other than ABR Loans).

 

“LIBOR Spread” shall mean, at any date or for any period of determination, the LIBOR Spread that would be in effect on such date or during such period pursuant to the chart set forth in Section 2.23 based on the rating of the Index Debt.

 

“Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind whatsoever (including any conditional sale or other title retention agreement, any lease in the nature thereof or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction).

 

“Loans” shall mean the Tranche A Loans.

 

“Loan Parties” shall mean the Borrower and each Subsidiary Guarantor (and each, a “Loan Party”).

 

“Majority Facility Lenders” shall mean the holders of more than 50% of the aggregate unpaid principal amount of the Exposure outstanding under the Tranche A Facility (or, prior to any termination of the Tranche A Commitments, the holders of more than 50% of the Total Tranche A Commitments).

 

“Margin Stock” shall be as defined in Regulation U of the Board.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any other Fundamental Document or the rights and remedies of the Administrative Agent and the Lenders hereunder or thereunder.

 

“Material Disposition” shall mean the sale, spinoff, carve-out or similar disposition of or with respect to all or any material portion of the fleet business or the mortgage business of the Borrower and its Subsidiaries.

 

“Material Subsidiary” shall mean any Domestic Subsidiary of the Borrower or any Subsidiary of the Borrower which principally transacts business in the United States, in each case, which together with its Subsidiaries at the time of determination had assets constituting 10% or more of Consolidated Assets, accounts for 10% or more of Consolidated Net Worth, or accounts for 10% or more of the revenues of the Borrower and its Consolidated Subsidiaries for the Rolling Period immediately preceding the date of determination.

 

“Moody’s” shall mean Moody’s Investors Service Inc.

 

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“Mortgage Warehouse Facilities” shall mean (i) the Existing Mortgage Warehouse Facilities and (ii) each other credit facility or conduit for the warehousing or gestation of mortgages that provides financing to the Borrower or any of its Subsidiaries.

 

“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Net Cash Proceeds” shall mean, in connection with any sale or disposition, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by way of deferred payment or principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received), net of attorneys’ fees, accountants’ fees, investment banking fees and other professional and transactional fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such sale or disposition and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and amounts provided as a reserve in accordance with GAAP against any liability associated with such sale or disposition (including, without limitation, pension or other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligation of such sale or disposition); provided that such amounts shall be considered Net Cash Proceeds upon release of such reserve.

 

“Non-U.S. Lender” shall mean a Lender that is not a U.S. Person.

 

“Obligations” shall mean (i) the obligation of the Borrower to make due and punctual payment of principal of, and interest on (including post-petition interest, whether or not allowed), the Loans, the Facility Fee, reimbursement obligations in respect of Letters of Credit, and all other monetary obligations of the Borrower to the Administrative Agent, any Issuing Lender or any Lender under this Agreement or the other Fundamental Documents or with respect to any Interest Rate Protection Agreements entered into between the Borrower or any of its Subsidiaries and any Lender and (ii) the obligations of each Subsidiary Guarantor under the Subsidiary Guarantee.

 

“OFAC” shall have the meaning assigned to such term in Section 3.21.

 

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

 

“Other Taxes” shall mean any and all present or future stamp, court, documentary, intangible, recording, filing, or similar Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery, performance, enforcement, or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement or any other Fundamental Document, excluding, however, such Taxes imposed as a result of a transfer or assignment (other than a transfer or assignment that occurs at the request of the Borrower).

 

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“Participant” shall have the meaning assigned to such term in Section 10.3(g).

 

“Participant Register” shall have the meaning assigned to such term in Section 10.3(g).

 

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

 

“Pension Plan” shall mean any Plan subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA.

 

“Percentage” shall mean the Tranche A Percentage; provided that in the case of Section 2.28 when a Defaulting Lender shall exist, “Percentage” shall be computed disregarding any Defaulting Lender’s Commitments, Loans and L/C Exposure.

 

“Permitted Encumbrances” shall mean Liens permitted under Section 6.4.

 

“Person” shall mean any natural person, corporation, division of a corporation, partnership, limited liability company, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof.

 

“PHH Home Loans Intercompany Credit Agreement” shall mean the intercompany loan agreement and the promissory note related thereto between PHH Corporation and PHH Home Loans, LLC, as borrower, providing for working capital to PHH Home Loans, LLC, dated as of December 11, 2009, as modified, supplemented, amended or restated from time to time.

 

“PHH Home Loans Mortgage Warehouse Facilities” shall mean the agreements listed on Schedule 5.1(c) hereto and any amendments, modifications, refinancing, replacements or additions thereto, whether in the same facility or a different Mortgage Warehouse Facility, from time to time.

 

“Plan” shall mean an employee pension benefit plan described in Section 3(2) of ERISA, other than a Multiemployer Plan, in respect of which any Loan Party or any ERISA Affiliate is (or, if such Plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) a “contributing sponsor” as defined in Section 4001(a)(13) of ERISA.

 

“Prime Rate” shall mean the rate per annum publicly announced by the entity which is the Administrative Agent from time to time as its prime rate in effect at its principal office in New York City.  For purposes of this Agreement, any change in the Alternate Base Rate due to a change in the Prime Rate shall be effective on the date such change in the Prime Rate is announced as effective.

 

“Pro Forma Basis” shall mean, in connection with any transaction for which a determination on a Pro Forma Basis is required to be made hereunder, that such determination shall be made (i) after giving effect to any issuance of Indebtedness, any acquisition, any disposition or any other transaction (as applicable) and (ii) assuming that the issuance of Indebtedness, acquisition, disposition or other transaction and, if applicable, the application of any proceeds therefrom, occurred at the beginning of the most recent Rolling Period ending at least thirty (30) days prior to the date on which such issuance of Indebtedness, acquisition, disposition or other transaction occurred.

 

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“Prohibited Transaction” shall have the meaning assigned to such term in Section 406 of ERISA and Section 4975(c) of the Code.

 

“Rating Agency” and “Rating Agencies” shall have the meaning assigned to such term in Section 2.23.

 

“Register” shall have the meaning assigned to such term in Section 10.3(e).

 

“REO Assets” of a Person shall mean a real estate asset owned by such Person and acquired as a result of the foreclosure or other enforcement of a lien on such asset securing a Servicing Advance or loans and other mortgage-related receivables purchased or originated by the Borrower or any of its Subsidiaries in the ordinary course of business.

 

“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.

 

“Reportable Event” shall mean any reportable event as defined in Section 4043(c) of ERISA, with respect to a Pension Plan, other than those events as to which notice is waived pursuant to PBGC Reg. § 4043 as in effect on the date hereof (no matter how such notice requirement may be changed in the future).

 

“Required Lenders” shall mean Lenders holding Commitments representing more than 50% of the aggregate Commitments or at any time after the Commitments have expired or terminated in full, Lenders holding more than 50% of the aggregate principal amount of the Loans and L/C Exposure at such time, except that for purposes of determining the Lenders entitled to declare the principal of and the interest on the Loans and all other amounts payable hereunder or thereunder to be forthwith due and payable pursuant to Article 7, “Required Lenders” shall mean Lenders holding more than 50% of the aggregate principal amount of the Loans and L/C Exposure at the time.

 

“Restatement Date” shall mean May 30, 2014.

 

“Rolling Period” shall mean with respect to any fiscal quarter, such fiscal quarter and the three immediately preceding fiscal quarters considered as a single accounting period.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.

 

“Sanctioned Country” shall mean at any time, a country or territory that is 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 the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or, if applicable to the Borrower and its Subsidiaries, by the United Nations Security Council, the European Union or any EU member state, (b) any Person located, operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person.

 

“Sanctions” shall mean 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 the Office of Foreign Assets Control of the U.S. Department of the Treasury or

 

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the U.S. Department of State, or (b) if applicable to the Borrower and its Subsidiaries, the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

 

“Screen Rate” shall have the meaning assigned to such term in the definition of LIBOR.

 

“SDN List” shall have the meaning assigned to such term in Section 3.21.

 

“Securitization Indebtedness” shall mean Indebtedness incurred by any structured bankruptcy-remote Subsidiary of the Borrower which does not permit or provide for recourse to the Borrower or any Subsidiary of the Borrower (other than such structured bankruptcy-remote Subsidiary) or any property or asset of the Borrower or any Subsidiary of the Borrower (other than the property or assets of such structured bankruptcy-remote Subsidiary).

 

“Servicing” shall mean loan servicing, sub-servicing rights and master servicing rights and obligations including, without limitation, one or more of the following functions (or a portion thereof): (a) the administration and collection of payments for the reduction of principal and/or the application of interest on a loan; (b) the collection of payments on account of Taxes and insurance; (c) the remittance of appropriate portions of collected payments; (d) the provision of full escrow administration; (e) the right to receive fees and other compensation and any ancillary fees arising from or connected to the assets serviced, earnings and other benefits of the related accounts and, in each case, all rights, powers and privileges incident to any of the foregoing, and expressly includes the right to enter into arrangements with third Persons that generate ancillary fees and benefits with respect to the serviced assets; (f) the realization on the security for a loan; and (g) any other obligation imposed on a servicer pursuant to a Servicing Agreement.

 

“Servicing Advances” shall mean advances made by the Borrower or any of its Subsidiaries in its capacity as servicer of any mortgage-related receivables to fund principal, interest, escrow, foreclosure, insurance, tax or other payments or advances when the borrower on the underlying receivable is delinquent in making payments on such receivable; to enforce remedies, manage and liquidate REO Assets; or that the Borrower or any of its Subsidiaries otherwise advances in its capacity as servicer pursuant to any Servicing Agreement.

 

“Servicing Advance Facility” shall mean any funding arrangement with lenders, any Government-Sponsored Enterprise or any other counterparty based in whole or in part upon Servicing Advances under which funding is provided to the Borrower or any of its Subsidiaries.

 

“Servicing Agreements” shall mean any agreement between one or more Persons pursuant to which the Borrower or any of its Subsidiaries effects a Servicing, including pooling and servicing agreements, sale and servicing agreements, transfer and servicing agreements and agreements with third parties, in each case, however denominated.

 

“Solvent” shall mean with respect to any Person, that, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature.  For purposes of this

 

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definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

 

“Special Purpose Vehicle Subsidiary” shall mean PHH Caribbean Leasing, Inc. and any Subsidiary engaged in the fleet-leasing management business that (i) is, at any time, a party to one or more lease agreements with only one lessee, and (ii) finances, at any one time, its investments in lease agreements or vehicles with only one lender (which lender may be the Borrower if and to the extent that such loans and/or advances by the Borrower are not prohibited hereby).

 

“Specified Senior Notes” shall mean the Borrower’s 7.125% Senior Notes due March 1, 2013.

 

“Statutory Reserves” 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 and any other banking authority to which the Administrative Agent or any Lender is subject, for Eurocurrency Liabilities (as defined in Regulation D of the Board) (or, at any time when such Lender may be required by the Board or by any other Governmental Authority, whether within the United States or in another relevant jurisdiction, to maintain reserves against any other category of liabilities which includes deposits by reference to which LIBOR is determined as provided in this Agreement or against any category of extensions of credit or other assets of such Lender which includes any such LIBOR Loans).  Such reserve percentages shall include those imposed under Regulation D of the Board.  LIBOR Loans shall be deemed to constitute Eurocurrency Liabilities and as such shall be deemed to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D of the Board.  Statutory Reserves 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, any corporation, association, joint venture, partnership or other business entity (whether now existing or hereafter organized) of which at least a majority of the voting stock or other ownership interests having ordinary voting power for the election of directors (or the equivalent) is, at the time as of which any determination is being made, owned or controlled by such Person or one or more subsidiaries of such Person or by such Person and one or more subsidiaries of such Person.  Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.  For the avoidance of doubt, Fleet Leasing Receivables Trust is not a “Subsidiary”.

 

“Subsidiary Guarantee” shall mean the unconditional and irrevocable guarantee of the Borrower’s Obligations provided by the Subsidiary Guarantors pursuant to the Subsidiary Guarantee dated as of August 2, 2012 substantially in the form of Exhibit F hereto, as in effect from time to time and as amended and reaffirmed by the Amendment and Reaffirmation of Guarantee.

 

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“Subsidiary Guarantors” shall mean each of the Borrower’s direct, indirect, existing and future Domestic Subsidiaries other than Excluded Subsidiaries.

 

“Supermajority Lenders” shall mean Lenders which have Commitments representing at least 66-2/3% of the aggregate Commitments or, at any time after the Commitments have expired or terminated in full, Lenders holding 66-2/3% of the aggregate principal Dollar Equivalent Amount of the Loans and L/C Exposure at such time.

 

“Suspension Period” shall mean any period that the ratings of the Borrower’s Index Debt are equal to or better than at least two of the following: Baa3 from Moody’s, BBB- from S&P and BBB- from Fitch (in each case with a stable or positive outlook).

 

“Swap” shall mean any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act and any regulations related thereto.

 

“Swap Obligation” shall mean, with respect to any Person, any obligation to pay or perform under any Swap.

 

“Syndication Agents” shall mean Bank of America, N.A., Citibank, N.A., Manufacturers and Traders Trust Company, The Royal Bank of Scotland plc and Wells Fargo Bank, National Association.

 

“Tangible Net Worth” shall mean, at any date of determination, Consolidated Net Worth minus the aggregate book value of all intangible assets of the Borrower and its Consolidated Subsidiaries as of such date in accordance with GAAP.

 

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

 

“Termination Date” shall mean the Tranche A Termination Date.

 

“Total Tranche A Commitment” shall mean, at any time, the aggregate amount of the Lenders’ Tranche A Commitments as in effect at such time.

 

“Tranche A Commitment” shall mean, with respect to each Tranche A Lender, its commitment to make Tranche A Loans to the Borrower hereunder and to participate in Letters of Credit, in an aggregate principal and/or face amount not to exceed at any time the amount set forth opposite such Lender’s name under the heading “Tranche A Commitment” on Schedule 1.1A, as the same may be changed from time to time pursuant to the terms hereof.

 

“Tranche A Facility” shall mean the credit facility constituted by the Tranche A Commitments, the Tranche A Loans and the Letters of Credit.

 

“Tranche A Lender” shall mean each financial institution whose name appears on Schedule 1.1A under the heading “Lenders” with a Tranche A Commitment and any assignee of a Tranche A Lender pursuant to Section 10.3(b).

 

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“Tranche A Loans” shall mean the Loans made by the Tranche A Lenders to the Borrower pursuant to a notice given by the Borrower under Section 2.5.  Each Tranche A Loan shall be a LIBOR Loan or an ABR Loan.

 

“Tranche A Percentage” shall mean, with respect to each Tranche A Lender, the percentage which such Tranche A Lender’s Tranche A Commitment then constitutes of the Total Tranche A Commitment, or at any time after the Tranche A Commitments have expired or terminated in full, the percentage which such Tranche A Lender’s Tranche A Loans and L/C Exposure then constitute of the total Tranche A Loans and L/C Exposure.

 

“Tranche A Termination Date” shall mean August 2, 2015.

 

“Tranche B Facility” shall have the meaning assigned to such term in the Existing Credit Agreement.

 

“Tranche B Commitments” shall have the meaning assigned to such term in the Existing Credit Agreement.

 

“Transferee” shall mean any (i) assignee of a Lender or (ii) Participant.

 

“2010 Indenture” shall mean the Indenture dated as of August 11, 2010 among PHH Corporation and The Bank of New York Mellon Trust Company, N.A. (as modified, supplemented, amended or restated from time to time).

 

“2014 Convertible Notes” shall mean the Borrower’s 4.0% Convertible Senior Notes due 2014.

 

“2014 Convertible Notes Escrow Account” shall mean the escrow account to be established by the Borrower with any Lender whom the Borrower elects in its sole discretion from time to time. The terms of the escrow arrangements shall provide that the Borrower may deposit up to $150,000,000 in the 2014 Convertible Notes Escrow Account and may withdraw amounts from the 2014 Convertible Notes Escrow Account solely to pay, redeem or purchase the 2014 Convertible Notes and pay related interest and premiums (it being understood and agreed that the Borrower may transfer all or any portion of such deposit from an escrow account with one Lender to an escrow account with another Lender at any time).

 

“2016 Notes” shall mean the Borrower’s 9.25% Senior Notes due 2016.

 

“2017 Convertible Notes” shall mean the Borrower’s 6.00% Convertible Senior Notes due 2017.

 

“Unencumbered Mortgage Servicing Rights” of a Person shall mean mortgage servicing rights owned by such Person free and clear of any Liens and for which no payment obligations are owed by such Person, or are required to be distributed, to any third parties.

 

“United States” shall mean the United States of America.

 

“Unsecured Indebtedness” shall mean, without duplication, (i) the aggregate principal amount of all unsecured Indebtedness for borrowed money of the Borrower and its Subsidiaries, including the Facilities, (ii) the face amount of all letters of credit issued for the account of the Borrower or any Subsidiary, if the reimbursement obligation is unsecured, whether or not drawn,

 

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(iii) the aggregate principal amount of any unsecured notes and debt securities issued by the Borrower or any Subsidiary, including, without limitation, the Convertible Notes and (iv) the aggregate principal amount of any unsecured Guarantee by the Borrower or any of its Subsidiaries of obligations of third Persons of the type described in clauses (i) through (iii).

 

“U.S. Person” shall mean a “United States person” within the meaning of Section 7701(a)(30) of the Code.

 

“U.S. Tax Compliance Certificate” shall have the meaning assigned to such term in Section 2.22(a)(ii)(B)(3).

 

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Title IV of ERISA.

 

“Working Day” shall mean any Business Day on which dealings in foreign currencies and exchange between banks may be carried on in London and New York City.

 

2.              THE LOANS

 

SECTION 2.1.    Commitments.  ·  Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Tranche A Lender agrees, severally and not jointly, to make Tranche A Loans to the Borrower in Dollars, at any time and from time to time on and after the Closing Date and until the Tranche A Termination Date, in an aggregate principal amount at any time outstanding not to exceed such Lender’s Tranche A Commitment minus the sum of such Lender’s Tranche A Percentage of the current L/C Exposure, subject, however, to the condition that at no time shall (i) the sum of (A) the outstanding aggregate principal amount of all Tranche A Loans plus (B) the then current L/C Exposure exceed (ii) the Total Tranche A Commitment.  During the Tranche A Commitment Period, the Borrower may use the Tranche A Commitments of the Lenders by borrowing, prepaying the Tranche A Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.  All Borrowings of Tranche A Loans shall be made ratably based on the then applicable Tranche A Percentages.

 

(a)         On the Restatement Date, the Tranche B Facility and the Tranche B Commitments shall be terminated and the amount of each Lender’s Tranche A Commitment shall be increased by the amount of its Tranche B Commitment under the Existing Credit Agreement.  Any Loans outstanding under the Tranche B Facility on the Restatement Date shall be deemed to be advanced under the Tranche A Facility.

 

(b)         [Reserved].

 

(c)          The Commitments of the Lenders may be terminated or reduced from time to time pursuant to Section 2.13 or Article 7.

 

SECTION 2.2.    Loans.

 

(a)         Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Tranche A Commitments in accordance with the procedures set forth in Section 2.5.  The failure of any Lender to make any Loan required to be made by it shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan

 

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required to be made by such other Lender).  The Loans comprising any Borrowing shall be (i) in the case of LIBOR Loans, in an aggregate principal amount that is an integral multiple of $5,000,000 and not less than $10,000,000 and (ii) in the case of ABR Loans, in an aggregate principal amount that is an integral multiple of $500,000 and not less than $5,000,000 (or if less, an aggregate principal amount equal to the remaining balance of the available Total Tranche A Commitment).

 

(b)         Each Borrowing shall be comprised entirely of LIBOR Loans or ABR Loans, as the Borrower may request pursuant to Section 2.5.  Each Lender may at its option make any LIBOR 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.  Borrowings of more than one Interest Rate Type may be outstanding at the same time; provided that the Borrower shall not be entitled to request any Borrowing that, if made, would result in an aggregate of more than seven (or a higher number if approved by the Administrative Agent) separate Loans of any Lender being outstanding hereunder at any one time.  For purposes of the calculation required by the immediately preceding sentence, LIBOR Loans having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Loans and all Loans of a single Interest Rate Type made on a single date shall be considered a single Loan if such Loans have a common Interest Period.

 

(c)          Subject to Section 2.7, each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by making funds available at the Funding Office no later than 1:00 P.M. New York City time in the case of LIBOR Loans and 3:00 P.M. New York City time in the case of ABR Loans in each case in immediately available funds.  Upon receipt of the funds to be made available by the Lenders to fund any Borrowing hereunder, the Administrative Agent shall disburse such funds by depositing them into an account of the Borrower maintained with the Administrative Agent.  Loans shall be made by all the Lenders pro rata in accordance with Section 2.1 and this Section 2.2.

 

(d)         All Loans shall be denominated in Dollars.

 

(e)          Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request any Borrowing if the Interest Period requested with respect thereto would end after the Tranche A Termination Date.

 

SECTION 2.3.    Use of Proceeds.

 

The proceeds of the Loans shall be used for working capital and general corporate purposes.  After application of the proceeds of any Loan, not more than 25% of the assets of the Borrower that are subject to a restriction on sale, pledge, or disposal under this Agreement will be represented by Margin Stock.

 

SECTION 2.4.    [Reserved].

 

SECTION 2.5.    Borrowing Procedure.

 

In order to effect a Borrowing, the Borrower shall hand deliver or telecopy (or transmit by electronic communications pursuant to procedures approved by the Administrative Agent) to the Administrative Agent a Borrowing Request (a) in the case of a LIBOR Borrowing, not later than 11:00 a.m., New York City time, three Working Days before a proposed Borrowing and (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the day of a proposed Borrowing.  Such notice shall be irrevocable and shall in each case specify (A) whether the Borrowing then being requested is to be a LIBOR Borrowing or an ABR Borrowing, (B) the date of such Borrowing (which

 

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shall be a Working Day) and the amount thereof and (C) if such Borrowing is to be a LIBOR Borrowing, the Interest Period with respect thereto.  If no election as to the Interest Rate Type of a Borrowing is specified in any such Borrowing Request, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period with respect to any LIBOR Borrowing is specified in any such Borrowing Request, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  If the Borrower shall not have given notice in accordance with this Section 2.5 of its election to refinance a Borrowing prior to the end of the Interest Period in effect for such Borrowing, then the Borrower shall (unless such Borrowing is repaid at the end of such Interest Period) be deemed to have given notice of an election to refinance such Borrowing with an ABR Borrowing.  The Administrative Agent shall promptly advise the applicable Lenders of any notice given pursuant to this Section 2.5 and of each such Lender’s portion of the requested Borrowing.

 

SECTION 2.6.    [Reserved].

 

SECTION 2.7.    Refinancings.

 

(a)         The Borrower may elect from time to time to convert LIBOR Loans to ABR Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 11:00 a.m., New York City time, on the proposed conversion date, provided that any such conversion of LIBOR Loans may only be made on the last day of an Interest Period with respect thereto.  The Borrower may elect from time to time to convert ABR Loans to LIBOR Loans by giving the Administrative Agent prior irrevocable notice of such election no later than 11:00 a.m., New York City time, on the third Working Day preceding the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor), provided that no ABR Loan may be converted into a LIBOR Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the Majority Facility Lenders have determined in its or their sole discretion not to permit such conversions.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

(b)         Any LIBOR Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no LIBOR Loan under a particular Facility may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Majority Facility Lenders have determined in its or their sole discretion not to permit such continuations, and provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.

 

SECTION 2.8.    Fees.

 

(a)         The Borrower agrees to pay to each Lender, through the Administrative Agent, on each March 31, June 30, September 30 and December 31, and on the date on which the Commitments of such Lender shall be terminated as provided herein, a facility fee (a “Facility Fee”) at the rate per annum from time to time in effect in accordance with Section 2.23, on the amount of the Commitments of such Lender, whether used or unused, during the preceding quarter (or shorter period commencing with the Closing Date, or ending with the Termination Date or any date on which the Commitments of such Lender shall be terminated).  All Facility Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.  The Facility Fee due to each Lender shall commence to accrue on the Closing Date, shall be payable in arrears and shall cease to accrue on the earlier of the Termination Date

 

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and the termination of the Commitments of such Lender as provided herein; provided, that if any Lender continues to have any outstanding Exposure after its Commitment terminates, then the Facility Fee shall continue to accrue on the daily aggregate principal amount of such Lender’s Exposure for each day from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any outstanding Exposure.

 

(b)         The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set forth in any fee agreements with the Administrative Agent and to perform any other obligations contained therein.

 

(c)          All fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders.  Once paid, none of the fees shall be refundable under any circumstances.

 

SECTION 2.9.    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 Termination Date, the then unpaid principal amount of each Loan made to it.  The Borrower hereby further agrees to pay to the Administrative Agent, for the account of each Lender, interest on the unpaid principal amount of the Loans made to it from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.10.

 

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

 

(c)          The Administrative Agent shall maintain the Register pursuant to Section 10.3(e), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder, the Interest Rate Type thereof and each Interest Period, if any, 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) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

 

(d)         The entries made in the Register and the accounts of each Lender maintained pursuant to Section 2.9(c) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement.

 

SECTION 2.10.    Interest on Loans.

 

(a)         Subject to the provisions of Section 2.11 (i) the Tranche A Loans comprising a LIBOR Borrowing shall bear interest at a rate per annum equal to Adjusted LIBOR for the Interest Period in effect for such Borrowing plus the applicable LIBOR Spread from time to time in effect and (ii) the Tranche A Loans comprising an ABR Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be when determined by reference to the Prime Rate and over a year of 360 days at all other times) at a rate per annum equal to Alternate Base Rate plus the applicable ABR Spread from time to time in effect.

 

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(b)         [Reserved].

 

(c)          Interest on each Loan shall be payable in arrears on each Interest Payment Date applicable to such Loan.  The LIBOR or Alternate Base Rate for each Interest Period or day within an Interest Period shall be determined by the Administrative Agent and such determination shall be conclusive absent manifest error.

 

(d)         Interest and fees payable pursuant to this Agreement shall be computed on the basis of a 360-day year for the actual days elapsed except as provided in Section 2.10(a).

 

SECTION 2.11.    Interest on Overdue Amounts.

 

If the Borrower or shall default in the payment of the principal of, or interest on, any Loan or any other amount becoming due hereunder, the Borrower shall upon demand by the Administrative Agent or Required Lenders from time to time pay interest, to the extent permitted by Applicable Law, on such defaulted amount up to (but not including) the date of actual payment (after as well as before judgment) at a rate per annum computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as applicable, in the case of amounts bearing interest determined by reference to the Prime Rate and a year of 360 days in all other cases, equal to (a) in the case of the remainder of the then current Interest Period for any LIBOR Loan, the rate applicable to such Loan under Section 2.10 plus 2% per annum, (b) in the case of any ABR Loan, the rate applicable to such Loan under Section 2.10 plus 2% per annum and (c) in the case of amounts that do not relate to a particular Loan, the rate then applicable to ABR Loans under Section 2.10 plus 2% per annum.

 

SECTION 2.12.    Alternate Rate of Interest.

 

In the event the Administrative Agent shall have determined that deposits in Dollars in the amount of the requested principal amount of any LIBOR Loan are not generally available in the London Interbank Market (or such other interbank eurocurrency market where the foreign currency and exchange operations in respect of Dollars are then being conducted for delivery on the first day of such Interest Period), or, in the case of LIBOR Loans, that the rate at which such deposits are being offered will not adequately and fairly reflect the cost to any Lender of making or maintaining its portion of such LIBOR Loans during such Interest Period, or that reasonable means do not exist for ascertaining LIBOR, the Administrative Agent shall, as soon as practicable thereafter, give written or telecopier notice of such determination to the Borrower and the Lenders.  In the event of any such determination, until the Administrative Agent shall have determined that circumstances giving rise to such notice no longer exist, (a) any request by the Borrower for a LIBOR Borrowing pursuant to Section 2.5 shall be deemed to be a request for an ABR Loan, (b) any Loans that were to have been converted to LIBOR Loans shall be continued as ABR Loans and (c) any outstanding LIBOR Loans shall be converted, on the last day of the then-current Interest Period, to ABR Loans.  Each determination by the Administrative Agent hereunder shall be conclusive absent manifest error.

 

SECTION 2.13.    Termination and Reduction of Commitments.

 

(a)         The Tranche A Commitments of each Lender shall be automatically terminated on the Tranche A Termination Date.

 

(b)         Subject to Sections 2.14(b) and (c), upon at least three Business Days’ prior irrevocable written or telecopy notice to the Administrative Agent (which shall promptly notify each Lender), the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Total Tranche A Commitment; provided that a notice of termination or reduction

 

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of the Commitments delivered by the Borrower may (i) state that such notice is conditioned upon the effectiveness of one or more events specified therein, in which case 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 or (ii) be revoked if otherwise approved by the Administrative Agent; provided further that (i) each partial reduction shall be in an integral multiple of $1,000,000 and in a minimum principal amount of $10,000,000 and (ii) the Borrower shall not be entitled to make any such termination or reduction that would reduce the Total Tranche A Commitment to an amount less than the aggregate Exposure.

 

(c)          If on any date the Borrower or any of its Subsidiaries shall receive Net Cash Proceeds from any sale or disposition permitted by Section 6.3(d), the Total Tranche A Commitment shall be permanently reduced by 50% of such amount.

 

(d)         Each reduction in the Total Tranche A Commitment hereunder shall be made ratably among the Lenders in accordance with their respective Tranche A Commitments.  The Borrower shall pay to the Administrative Agent for the account of the Lenders on the date of each termination or reduction in the Tranche A Commitment, the Facility Fees on the amount of the Tranche A Commitments so terminated or reduced accrued to the date of such termination or reduction.

 

SECTION 2.14.    Prepayment of Loans.

 

(a)         Prior to the Termination Date, 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 the requirements of Section 2.18 but otherwise without premium or penalty, upon prior written or telecopy notice to the Administrative Agent (which shall promptly notify each applicable Lender) before 2:00 p.m. New York City time of at least one Business Day in the case of an ABR Loan, and of at least three Working Days in the case of a LIBOR Loan; provided that each such partial prepayment shall be in a minimum aggregate principal amount of $1,000,000 or a whole multiple in excess thereof.

 

(b)         On any date when the sum of the amount of the Exposure (after giving effect to any Borrowings effected on such date) exceeds the Total Tranche A Commitment, the Borrower shall make a mandatory prepayment of the Loans in such amount as may be necessary so that the aggregate Exposure after giving effect to such prepayment does not exceed the Total Tranche A Commitment then in effect.  Any prepayments required by this paragraph shall be applied to outstanding ABR Loans up to the full amount thereof before they are applied to outstanding LIBOR Loans.

 

(c)          From and after the Closing Date, the Borrower shall prepay the Loans within 15 Business Days following any date on which the Borrower is not in Borrowing Base Compliance to the extent necessary to cause Borrowing Base Compliance.  If the Borrower is not in Borrowing Base Compliance after giving effect to the prepayment of the Loans as described in the prior sentence, the Borrower shall cash collateralize the outstanding Letters of Credit in the manner contemplated by Section 2.24(h) to the extent necessary to cause Borrowing Base Compliance.

 

(d)         Each notice of prepayment pursuant to this Section 2.14 shall specify the specific Borrowing(s), the prepayment date and the aggregate principal amount of each Borrowing to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such Borrowing(s) by the amount stated therein; provided that if a notice of optional prepayment is given in connection with a conditional notice of reduction or termination of the Tranche A Commitment, as contemplated by Section 2.13, then such notice of prepayment may be revoked if such reduction or termination is revoked in accordance with Section 2.13.  All prepayments under this Section 2.14 shall be accompanied by accrued interest on the principal amount being prepaid to the date of prepayment and any amounts due pursuant to Section 2.18.

 

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SECTION 2.15.    Eurocurrency Reserve Costs.

 

The Borrower shall pay to the Administrative Agent for the account of each Lender, so long as such Lender shall be required under regulations of the Board to maintain reserves with respect to liabilities or assets consisting of, or including, Eurocurrency Liabilities (as defined in Regulation D of the Board) (or, at any time when such Lender may be required by the Board or by any other Governmental Authority, whether within the United States or in another relevant jurisdiction, to maintain reserves against any other category of liabilities which includes deposits by reference to which LIBOR is determined as provided in this Agreement or against any category of extensions of credit or other assets of such Lender which includes any such LIBOR Loans), additional interest on the unpaid principal amount of each LIBOR Loan made to the Borrower by such Lender, from the date of such Loan until such Loan is paid in full, at an interest rate per annum equal at all times during the Interest Period for such Loan to the remainder obtained by subtracting (i) LIBOR for such Interest Period from (ii) the rate obtained by multiplying LIBOR as referred to in clause (i) above by the Statutory Reserves of such Lender for such Interest Period.  Such additional interest shall be determined by such Lender and notified to the Borrower (with a copy to the Administrative Agent) not later than five Business Days before the next Interest Payment Date for such Loan, and such additional interest so notified to the Borrower by any Lender shall be payable to the Administrative Agent for the account of such Lender on each Interest Payment Date for such Loan.

 

SECTION 2.16.    Reserve Requirements; Change in Circumstances.

 

(a)         If the adoption of or any change in any Applicable Law or in the interpretation or application thereof or compliance by any Credit Party with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the Closing Date:

 

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

 

(ii)                                  shall impose, modify or hold applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit (or participations therein) by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the LIBOR Spread; or

 

(iii)                               shall impose on such Credit Party any other condition (other than Taxes);

 

and the result of any of the foregoing is to increase the cost to such Credit Party, by an amount that such Credit Party deems to be material, of making, converting into, continuing or maintaining Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Credit Party, upon its demand, any additional amounts necessary to compensate such Credit Party for such increased cost or reduced amount receivable.  If any Credit Party becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.

 

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(b)         If, after the Closing Date, any Lender shall have determined in good faith that the adoption after the date hereof of or any change after the date hereof in any applicable law, rule, regulation or guideline regarding capital adequacy or liquidity or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any Lending Office of such Lender) with any request or directive regarding capital adequacy or liquidity (in each case, whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of its obligations hereunder to a level below that which such Lender (or its holding company) could have achieved but for such applicability, adoption, change or compliance (taking into consideration such Lender’s policies or the policies of its holding company, as the case may be, with respect to capital adequacy or liquidity) by an amount deemed by such Lender to be material, then, from time to time, the Borrower shall pay to the Administrative Agent for the account of such Lender (or its holding company) such additional amount or amounts as will compensate such Lender or such holding company for such reduction upon demand by such Lender.

 

(c)          A certificate of a Lender setting forth in reasonable detail (i) such amount or amounts as shall be necessary to compensate such Lender as specified in paragraph (a) or (b) above, as the case may be, and (ii) the calculation of such amount or amounts referred to in the preceding clause (i), shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay the Administrative Agent for the account of such Lender the amount shown as due on any such certificate within 20 Business Days after its receipt of the same.

 

(d)         Failure on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any Interest Period shall not constitute a waiver of such Lender’s rights to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to such Interest Period or any other Interest Period; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased cost or reduction incurred more than six months prior to the date that such Lender notifies the Borrower of such change in law and that such Lender intends to demand compensation therefor; provided, further, that if such increased cost is retroactive in nature, then the six month period referred to in the previous proviso shall be extended to include the period of retroactive effect thereof.  The protection of this Section 2.16 shall be available to each Lender regardless of any possible contention of invalidity or inapplicability of the law, regulation or condition which shall have been imposed.

 

(e)          Each Lender agrees that, as promptly as practicable after it becomes aware of the occurrence of an event or the existence of a condition that (i) would cause it to incur any increased cost under this Section 2.16, Section 2.17, Section 2.22 or Section 2.24(g) or (ii) would require the Borrower to pay an increased amount under this Section 2.16, Section 2.17, Section 2.22(d) or Section 2.24(g), it will, if requested by the Borrower, use its reasonable efforts (subject to the overall policy considerations of such Lender) to make, fund or maintain the affected Loans of such Lender, or, if applicable to participate in Letters of Credit, through another Lending Office of such Lender if as a result thereof the additional monies which would otherwise be required to be paid or the reduction of amounts receivable by such Lender thereunder in respect of such Loans or Letters of Credit would be materially reduced, or any inability to perform would cease to exist, or the increased costs which would otherwise be required to be paid in respect of such Loans or Letters of Credit pursuant to this Section 2.16, Section 2.17, Section 2.22 or Section 2.24(g) would be materially reduced or the Taxes or other amounts otherwise payable under this Section 2.16, Section 2.17 or Section 2.22(d) would be materially reduced, and if, as determined by such Lender, in its sole reasonable discretion, the making, funding or maintaining of such Loans or Letters of Credit through such other Lending Office would not otherwise materially adversely

 

29

 

affect such Loans or Letters of Credit; provided that nothing in Section 2.29 shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 2.16 or 2.22.

 

(f)           Notwithstanding anything herein to the contrary, (i) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or by United States or foreign regulatory authorities, in each case pursuant to Basel III, and (ii) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder or issued in connection therewith or in implementation thereof, shall in each case be deemed to be a change in law, regardless of the date enacted, adopted, issued or implemented.

 

SECTION 2.17.  Change in Legality.

 

(a)         Notwithstanding anything to the contrary herein contained, if any change in any law or regulation or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof shall make it unlawful for any Lender to make or maintain any LIBOR Loan or to give effect to its obligations as contemplated hereby, then, by written notice to the Borrower and to the Administrative Agent, such Lender may:

 

(i)                                     declare that LIBOR Loans will not thereafter be made by such Lender hereunder, whereupon the Borrower shall otherwise be prohibited from requesting LIBOR Loans from, and instead shall borrow ABR Loans from, such Lender hereunder unless such declaration is subsequently withdrawn; and

 

(ii)                                  require that all outstanding LIBOR Loans made by it be converted to ABR Loans in which event (A) all such LIBOR Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in Section 2.17(b) and (B) all payments and prepayments of principal which would otherwise have been applied to repay the converted LIBOR Loans shall instead be applied to repay the ABR Loan resulting from the conversion of such LIBOR Loans.

 

(b)         For purposes of this Section 2.17, a notice to the Borrower by any Lender pursuant to Section 2.17(a) shall be effective on the date of receipt thereof by the Borrower.

 

SECTION 2.18.  Reimbursement of Lenders.

 

The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of LIBOR Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from LIBOR Loans after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of LIBOR Loans on a day that is not the last day of an Interest Period with respect thereto.  Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the applicable margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market.  Each Lender shall deliver to the Borrower from time to time one or more

 

30

 

certificates setting forth the amount of such loss (and in reasonable detail the manner of computation thereof) as determined by such Lender, which certificates shall be conclusive absent manifest error.  The Borrower shall pay to the Administrative Agent for the account of each Lender the amount shown as due on any certificate within thirty (30) days after its receipt of the same.

 

SECTION 2.19.  Pro Rata Treatment.

 

Except as permitted under Sections 2.1, 2.13, 2.15, 2.16(c), 2.17, 2.18 and 2.29, each Borrowing under the Tranche A Commitments and each reduction of the Total Tranche A Commitment shall be allocated pro rata among the Lenders in accordance with their respective Tranche A Commitments (or, if the Tranche A Commitments shall have expired or been terminated, in accordance with the respective principal amount of their Loans) and each payment or prepayment of principal of any Borrowing and each payment of interest on the Loans shall be allocated pro rata in accordance with the respective principal amount of the Loans then held by the Lenders.  Each Lender agrees that in computing such Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing computed in accordance with Section 2.1, to the next higher or lower whole Dollar amount.

 

SECTION 2.20.  Right of Setoff.

 

If any 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 Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by such Lender and any other indebtedness at any time owing by such Lender to, or for the credit or the account of, the Borrower, against any of and all the Obligations now or hereafter existing under this Agreement and the Loans and participations in Letters of Credit held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such Loans and although such Obligations may be unmatured; provided, however, that to the extent prohibited by applicable law as described in the definition of “Excluded Swap Obligation,” no amounts received from, or setoff with respect to, any Subsidiary Guarantor shall be applied to any Excluded Swap Obligations of such Subsidiary Guarantor.  Each Lender agrees promptly to notify the Borrower after any 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 2.20 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have and are subject to the provisions of Section 8.2.

 

SECTION 2.21.  Manner of Payments; Special Application of Payments.

 

(a)         All payments by the Borrower hereunder shall be made in immediately available funds, without setoffs, deductions or counterclaims, at the Funding Office no later than 4:00 p.m., New York City time, on the date on which such payment shall be due.  Interest in respect of any Loan hereunder shall accrue from and including the date of such Loan to, but excluding, the date on which such Loan is paid or refinanced with a Loan of a different Interest Rate Type.  All interest and principal payments in respect of any Loan shall be made in Dollars.  All other payments shall also be made in Dollars.

 

(b)         If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.21(d) or (e), 2.24(d) or (e) or 8.6, then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent in connection with this Agreement for the account of such Lender for the benefit of the Administrative Agent or the Issuing Lender to satisfy such Lender’s obligations to it under such

 

31

 

Section until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

 

(c)          If LIBOR Loans become due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day.  If any payment on a LIBOR Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day.  In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

 

(d)         Unless the Administrative Agent shall have been notified in writing by any Lender prior to a Borrowing that such Lender will not make the amount that would constitute its share of such Borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  If such amount is not made available to the Administrative Agent by the required time on the date of such Borrowing, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to the Administrative Agent.  A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error.  If such Lender’s share of such Borrowing is not made available to the Administrative Agent by such Lender with three Business Days after the date of such Borrowing, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans under the relevant Facility, on demand, from the Borrower.

 

(e)          Unless the Administrative Agent shall have been notified in writing by the Borrower prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount.  If such payment is not made to the Administrative Agent by the Borrower within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Borrower.

 

SECTION 2.22.  Taxes.

 

(a)         Forms.

 

(i)                                     Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under this Agreement or any other Fundamental Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the

 

32

 

Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.22(a)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would materially prejudice the legal or commercial position of such Lender.

 

(ii)                                  Without limiting the generality of the foregoing,

 

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

 

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

 

(1)                                 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 Fundamental Document, properly completed and executed originals of the applicable IRS Form W-8BEN 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 Fundamental Document, properly completed and executed originals of the applicable IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(2)                                 properly completed and executed originals of IRS Form W-8ECI;

 

(3)                                 in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit D-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

 

33

 

881(c)(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) properly completed and executed originals of the applicable IRS Form W-8BEN;

 

(4)                                 to the extent a Non-U.S. Lender is not the beneficial owner, properly completed and executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, the applicable IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-2 or Exhibit D-3, IRS Form W-9, and/or other 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 D-4 on behalf of each such direct and indirect partner;

 

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

 

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

 

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

 

34

 

(b)         The Borrower and the Administrative Agent shall be entitled to deduct and withhold any and all present or future Taxes from payments hereunder, if and to the extent that the Borrower or the Administrative Agent in good faith determines that such deduction or withholding is required by Applicable Law, including, without limitation, any applicable treaty.  In the event the Borrower or the Administrative Agent shall so deduct or withhold Taxes from amounts payable hereunder or under any other Fundamental Document, it (i) shall pay to or deposit with the appropriate taxing authority in a timely manner the full amount of Taxes it has deducted or withheld and (ii) as soon as practicable after any payment of Taxes to a Governmental Authority pursuant to this Section 2.22, shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(c)          Each assignee of a Lender’s interest in this Agreement in conformity with Section 10.3 shall be bound by this Section 2.22, so that such assignee will have all of the obligations and provide all of the forms and statements and all indemnities, representations and warranties required to be given under this Section 2.22.

 

(d)         In the event that any (a) withholding Taxes imposed by any jurisdiction outside the United States shall become payable for any reason or (b) United States withholding Taxes shall become payable that are Indemnified Taxes, in respect of any sum payable hereunder or under any other Fundamental Document to any Lender or the Administrative Agent (i) the sum payable by the Borrower shall be increased as may be necessary so that after making all required withholdings or deductions (including withholdings or deductions applicable to additional sums payable under this Section 2.22) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such withholdings or deductions been made, (ii) the Borrower, such Lender or the Administrative Agent (as the case may be) shall make such withholdings or deductions and (iii) the Borrower, such Lender or the Administrative Agent (as the case may be) shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with Applicable Law.  In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law (or, at the option of the Administrative Agent, timely reimburse it for Other Taxes).  The Borrower shall indemnify each Credit Party, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.22) payable or paid by such Credit Party or required to be withheld or deducted from a payment to such Credit Party and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability, which shall include the original or a copy of a receipt, if any, issued by such Governmental Authority evidencing payment, delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

(e)          Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so) and (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.3(g) relating to the maintenance of a Participant Register, in either case, that are payable or paid by the Administrative Agent in connection with this Agreement or any other Fundamental Document, and any reasonable out-of-pocket 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 shall be conclusive absent manifest error.  Each Lender hereby

 

35

 

authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Fundamental Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 2.22(e).

 

(f)           Each party’s obligations under this Section 2.22 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 Commitments and the repayment, satisfaction or discharge of all obligations under this Agreement and any other Fundamental Document.

 

(g)          If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.22 (including by the payment of additional amounts pursuant to this Section 2.22), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

(h)         For purposes of this Section 2.22, the term “Lender” includes the Issuing Lender.

 

SECTION 2.23.  Certain Pricing Adjustments.

 

(a)         The Facility Fee, the applicable LIBOR Spread and the applicable ABR Spread in respect of the Tranche A Commitments in effect from time to time shall be determined in accordance with the following table:

 

	
S&P/Moody’s/Fitch Rating
   Equivalent of the
   Index Debt
    	
 
    	
Facility Fee
   (in Basis Points)
    	
 
    	
Applicable LIBOR
   Spread
    (in Basis Points)
    	
 
    	
Applicable
   ABR Spread
   (in Basis Points)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BB+/Ba1/BB+ or better
    	
 
    	
40.0
    	
 
    	
350.0
    	
 
    	
250.0
    	
 
    
	
BB/Ba2/BB
    	
 
    	
50.0
    	
 
    	
375.0
    	
 
    	
275.0
    	
 
    
	
BB-/Ba3/BB- or worse
    	
 
    	
60.0
    	
 
    	
400.0
    	
 
    	
300.0
    	
 
    

 

(b)         [Reserved].

 

(c)          In the event the S&P, Moody’s and Fitch (collectively referred to as the “Rating Agencies”, and each, a “Rating Agency”) ratings on the Borrower’s senior non-credit enhanced unsecured long-term debt (“Index Debt”) are not equivalent to each other, the second highest rating among S&P, Moody’s and Fitch will determine the Facility Fee, the applicable LIBOR Spread and the applicable ABR

 

36

 

Spread; provided that, in the event that any two of the Rating Agencies have equivalent ratings on the Index Debt, but the third Rating Agency’s rating of the Index Debt differs, the Facility Fee, the applicable LIBOR Spread and the applicable ABR Spread shall be determined by the ratings which are equivalent.  In the event that (a) the Index Debt is rated by (i) Fitch and only one of S&P or Moody’s, or (ii) only one of S&P or Moody’s (for any reason, including if S&P or Moody’s shall cease to be in the business of rating corporate debt obligations), and not by Fitch, or (b) if the rating system of any Rating Agency shall change, then an amendment shall be negotiated in good faith (and shall be effective only upon approval by the Borrower and the Supermajority Lenders) to the references to specific ratings in the table above to reflect such changed rating system or the unavailability of ratings from such Rating Agency (including an amendment to provide for the substitution of an equivalent or successor ratings agency).  In the event that the Index Debt is (i) not rated by any Rating Agency or (ii) rated only by Fitch, then the Facility Fee, the applicable LIBOR Spread and the applicable ABR Spread shall be deemed to be calculated as if the lowest rating category set forth above applied.  Any increase in the Facility Fee, the applicable LIBOR Spread and the applicable ABR Spread determined in accordance with the foregoing table shall become effective on the date of announcement or publication by the Borrower or the applicable Rating Agency of a reduction in such rating or, in the absence of such announcement or publication, on the effective date of such decreased rating, or on the date of any request by the Borrower to the applicable Rating Agency not to rate its Index Debt or on the date any of such Rating Agencies announces it shall no longer rate the Index Debt.  Any decrease in the Facility Fee, the applicable LIBOR Spread and the applicable ABR Spread shall be effective on the date of announcement or publication by any of such Rating Agencies of an increase in rating or in the absence of announcement or publication on the effective date of such increase in rating.

 

SECTION 2.24.  Letters of Credit.  ·  · Upon the terms and subject to the conditions hereof, each Issuing Lender agrees to issue Letters of Credit payable in Dollars from time to time after the Closing Date and prior to the earlier of the Tranche A Termination Date and the termination of the Tranche A Commitments, upon the request of the Borrower, provided that (A) the Borrower shall not request that any Letter of Credit be issued if, after giving effect thereto, the sum of the then current L/C Exposure plus the aggregate principal amount of the Tranche A Loans then outstanding would exceed the Total Tranche A Commitment, (B) in no event shall any Issuing Lender issue (x) any Letter of Credit having an expiration date later than five Business Days before the Tranche A Termination Date or (y) any Letter of Credit having an expiration date more than one year after its date of issuance, provided, further, that any Letter of Credit with a 365-day duration may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (x) above), (C) the Borrower shall not request that an Issuing Lender issue any Letter of Credit if, after giving effect to such issuance, the L/C Exposure would exceed $35,000,000, and (D) no Issuing Lender shall be obligated to issue Letters of Credit if its L/C Exposure would exceed an amount separately agreed upon by the Borrower and such Issuing Lender.  Existing Letters of Credit listed on Schedule 2.24 hereto shall be deemed to be issued on the Closing Date as Letters of Credit under this Agreement.  Letters of Credit will be issued under the Tranche A Facility.

 

(i)                                     Immediately upon the issuance of each Letter of Credit, each Tranche A Lender shall be deemed to, and hereby agrees to, have irrevocably purchased from the applicable Issuing Lender a participation in such Letter of Credit in accordance with its Tranche A Percentage.

 

(ii)                                  Each Letter of Credit may, at the option of the applicable Issuing Lender, provide that such Issuing Lender may (but shall not be required to) pay all or any part of the maximum amount which may at any time be available for drawing thereunder to the beneficiary thereof upon the occurrence of an Event of Default and the acceleration of the maturity of the Loans, provided that, if payment is not then due to such beneficiary, such

 

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Issuing Lender shall deposit the funds in question in an account with such Issuing Lender to secure payment to such beneficiary and any funds so deposited shall be paid to such beneficiary of such Letter of Credit if conditions to such payment are satisfied or returned to the Administrative Agent for distribution to the Lenders (or, if all Obligations shall have been paid in full in cash, to the Borrower) if no payment to such beneficiary has been made and the final date available for drawings under such Letter of Credit has passed.  Each payment or deposit of funds by an Issuing Lender as provided in this paragraph shall be treated for all purposes of this Agreement as a drawing duly honored by such Issuing Lender under the related Letter of Credit.

 

(iii)                               The Issuing Lender shall not at any time be obligated to issue any Letter of Credit if such issuance would conflict with, or cause the Issuing Lender or any Lender participating in such Letter of Credit to exceed any limits imposed by, any Applicable Law.

 

(b)         Whenever the Borrower desires the issuance of a Letter of Credit, it shall deliver to the Administrative Agent and the applicable Issuing Lender a written notice no later than 1:00 p.m. (New York City time) at least five Business Days prior to the proposed date of issuance provided, however, that the Borrower and the Administrative Agent and such Issuing Lender may agree to a shorter time period.  That notice shall specify (i) the Issuing Lender for such Letter of Credit, (ii) the proposed date of issuance (which shall be a Business Day), (iii) the face amount of such Letter of Credit, (iv) the expiration date of such Letter of Credit and (v) the name and address of the beneficiary.  Such notice shall be accompanied by a brief description of the underlying transaction and upon the request of the applicable Issuing Lender, the Borrower shall provide additional details regarding the underlying transaction.  Concurrently with the giving of written notice of a request for the issuance of a Letter of Credit, the Borrower shall specify a precise description of the documents and the verbatim text of any certificate to be presented by the beneficiary of such Letter of Credit which, if presented by such beneficiary prior to the expiration date of such Letter of Credit, would require the applicable Issuing Lender to make payment under such Letter of Credit; provided that the applicable Issuing Lender, in its reasonable discretion, may require customary changes in any such documents and certificates.  Upon issuance of any Letter of Credit, the applicable Issuing Lender shall notify the Administrative Agent of the issuance of such Letter of Credit.  Promptly after receipt of such notice, the Administrative Agent shall notify each Tranche A Lender of the issuance and the amount of each such Tranche A Lender’s respective participation therein.

 

(c)          The payment of drafts under any Letter of Credit shall be made in accordance with the terms of such Letter of Credit and, in that connection, any Issuing Lender shall be entitled to honor any drafts and accept any documents presented to it by the beneficiary of such Letter of Credit in accordance with the terms of such Letter of Credit and believed by such Issuing Lender in good faith, and in the absence of gross negligence or willful misconduct, to be genuine.  No Issuing Lender shall have any duty to inquire as to the accuracy or authenticity of any draft or other drawing documents which may be presented to it, but shall be responsible only to determine in accordance with customary commercial practices, and in the absence of gross negligence or willful misconduct, that the documents which are required to be presented before payment or acceptance of a draft under any Letter of Credit have been delivered and that they comply on their face with the requirements of that Letter of Credit.  The obligations of the Borrower under this Section 2.24 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person.

 

(d)         Each Tranche A Lender agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower in accordance

 

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with the terms of this Agreement (or in the event that any reimbursement received by the Issuing Lender shall be required to be returned by it at any time), such Tranche A Lender shall pay to the Issuing Lender upon demand at the Issuing Lender’s address for notices specified herein an amount equal to such Tranche A Lender’s Tranche A Percentage of the amount that is not so reimbursed (or is so returned).  Each Tranche A Lender’s obligation to pay such amount (and to fund any amounts required to be funded pursuant to Section 2.24(e)) shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment, defense or other right that such Tranche A Lender may have against the Issuing lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 4, (iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Fundamental Document by the Borrower, any other Loan Party or any other Lender or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.  If such reimbursement is not made by any Lender in immediately available funds on the same day on which such Issuing Lender shall have made payment on any such draft, such Lender shall pay interest thereon to such Issuing Lender at a rate per annum equal to the Issuing Lender’s cost of obtaining overnight funds in the New York Federal Funds Market.  If any such amount required to be paid by any Tranche A Lender pursuant to this paragraph (d) is not made available to the Issuing Lender by such Tranche A Lender within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such Tranche A Lender, on demand, such amount with interest thereon calculated from such third Business Day at the rate per annum applicable to ABR Loans.  A certificate of the Issuing Lender submitted to any Tranche A Lender with respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest error.

 

(e)          In the case of any draft presented under a Letter of Credit which is required to be paid at any time on or before the Tranche A Termination Date and provided that the conditions specified in Section 4.2 are then satisfied, such payment shall constitute an ABR Loan hereunder, each Tranche A Lender shall fund its portion (and the Administrative Agent shall forward such funded amounts to the applicable Issuing Lender) of such payment based on its Tranche A Percentage and interest shall accrue from the date the applicable Issuing Lender makes payment of a draft under the Letter of Credit.  If any draft is presented under a Letter of Credit and (i) the conditions specified in Section 4.2 are not satisfied or (ii) if the Tranche A Commitments have been terminated, then the Borrower will, upon demand by the Administrative Agent, pay to the applicable Issuing Lender, in immediately available funds, the full amount of such draft (or the portion thereof not funded by the Tranche A Lenders).  The Borrower’s obligations under this Section 2.24 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaims or defense to payment that the Borrower may have or have had against the Issuing Lender, any beneficiary of a Letter of Credit or any other Person.  The Borrower also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower’s reimbursement obligations under Section 2.24(e) shall not be affected by, among other things, the validity of genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee.  The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Issuing Lender.  The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender to the Borrower.

 

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(f)           · The Borrower agrees to pay the following amount to each Issuing Lender with respect to Letters of Credit issued by it hereunder:

 

(A)                               with respect to drawings made under any Letter of Credit, interest, payable on demand, on the amount paid by such Issuing Lender in respect of each such drawing from the date of the drawing to, but excluding, the date such amount is reimbursed by the Borrower at a rate which is at all times equal to 2% per annum in excess of the Alternate Base Rate plus the applicable ABR Spread for the Tranche A Facility; provided that no such overdue interest shall be payable if such reimbursement is made from the proceeds of Loans pursuant to Section 2.24(e);

 

(B)                               with respect to the issuance, amendment or transfer of each Letter of Credit and each drawing made thereunder, documentary and processing charges in accordance with such Issuing Lender’s standard schedule for such charges in effect at the time of such issuance, amendment, transfer or drawing, as the case may be; and

 

(C)                               a fronting fee computed at the rate agreed to by the Borrower and the applicable Issuing Lender, on the daily average face amount of each outstanding Letter of Credit issued by such Issuing Lender, such fee to be due and payable in arrears on and through the last day of each fiscal quarter of the Borrower, on the Tranche A Termination Date and on the expiration of the last outstanding Letter of Credit.

 

(ii)                                  The Borrower agrees to pay to the Administrative Agent for distribution to each Tranche A Lender in respect of all Letters of Credit outstanding, such Tranche A Lender’s share of a commission on the maximum amount available from time to time to be drawn under such outstanding Letters of Credit calculated at a rate per annum equal to the applicable LIBOR Spread for such Lender from time to time in effect hereunder.  Such commission shall be payable in arrears on and through the last day of each fiscal quarter of the Borrower and on the later of the Tranche A Termination Date and the expiration of the last outstanding Letter of Credit.

 

(iii)                               Promptly upon receipt by any Issuing Lender or the Administrative Agent (as applicable) of any amount described in clause (i)(A) or (ii) of this Section 2.24(f), or any amount described in Section 2.24(e) previously reimbursed to the applicable Issuing Lender by the Lenders, such Issuing Lender or the Administrative Agent (as applicable) shall distribute to each Lender its share of such amount (for the appropriate period).  Amounts payable under clauses (i)(B) and (i)(C) of this Section 2.24(f) shall be paid directly to the Issuing Lender and shall be for its exclusive use.

 

(g)          Each Issuing Lender may, at its discretion, require that the Borrower enter into a separate letter of credit agreement by and between the Borrower and such Issuing Lender (with respect to each Issuing Lender, a “Letter of Credit Agreement”), which will more closely describe the procedures for obtaining Letters of Credit, as well as describing the convention and protocols by which Letters of Credit will be governed.  Each letter of credit issued under a Letter of Credit Agreement will be deemed to be a Letter of Credit under this Agreement.  To the extent there is a conflict between this Agreement and a Letter of Credit Agreement, this Agreement shall control.

 

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(h)         If at any time when an Event of Default shall have occurred and be continuing, any Letters of Credit shall remain outstanding, then either the applicable Issuing Lender(s) or the Majority Facility Lenders may, at their option, require the Borrower to deposit cash or Cash Equivalents in a Cash Collateral Account in an amount equal to 103% of the L/C Exposure as of such date or to furnish other security acceptable to the Administrative Agent and the applicable Issuing Lender(s).  Any amounts so delivered pursuant to the preceding sentence shall be applied to reimburse the applicable Issuing Lender(s) for the amount of any drawings honored under Letters of Credit issued by it; provided, however, that if prior to the Tranche A Termination Date, no Event of Default is then continuing, the Administrative Agent shall return all of such collateral relating to such deposit to the Borrower if requested by it.

 

(i)             If, at any time, the sum of the L/C Exposure and the aggregate amount of Tranche A Loans exceeds the Total Tranche A Commitment, then the Majority Facility Lenders may, at their option, require the Borrower to deposit cash or Cash Equivalents in a Cash Collateral Account in an amount sufficient to eliminate such excess or to furnish other security for such excess acceptable to the Administrative Agent and the Issuing Lender(s).  Any amounts so delivered pursuant to the preceding sentence shall be applied to reimburse the applicable Issuing Lender(s) for the amount of any drawings honored under Letters of Credit and to repay all funded participations therein of Tranche A Lenders; provided that if subsequent to any such deposit such excess is reduced to an amount less than the portion of such deposited amounts and no Default or Event of Default is then continuing, the Borrower shall be entitled to receive such excess collateral if requested by it.

 

(j)            Upon the request of the Administrative Agent, each Issuing Lender shall furnish to the Administrative Agent copies of any Letter of Credit issued by such Issuing Lender and such related documentation as may be reasonably requested by the Administrative Agent.

 

Notwithstanding the termination of the Commitments and the payment of the Loans, the obligations of the Borrower under this Section 2.24 shall remain in full force and effect until the Administrative Agent, each Issuing Lender and the Tranche A Lenders shall have been irrevocably released from their obligations with regard to any and all Letters of Credit.  To the extent that any provision of any application related to any Letter of Credit is inconsistent with the provisions of this Section 2.24, the provisions of this Section 2.24 shall apply.

 

SECTION 2.25.  Investment Grade Suspension.  Notwithstanding any provision of this Agreement to the contrary, during any Suspension Period (i) Section 2.14(c) and Section 3.16 shall be suspended and (ii) the requirement that the Subsidiary Guarantors provide guarantees of the Borrower’s Obligations shall be suspended.

 

SECTION 2.26.  [Reserved].

 

SECTION 2.27.  [Reserved].

 

SECTION 2.28.  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 pursuant to Section 2.23 shall cease to accrue on the unfunded Commitments of such Defaulting Lender;

 

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(b)         the Commitments (and the Loans and L/C Exposure) of such Defaulting Lender shall not be included in determining whether all Lenders, the Supermajority Lenders, the Majority Facility Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 10.9), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender; and provided further, that no waiver, amendment or modification of this Agreement shall increase or extend the Commitments of any Defaulting Lender or decrease the interest rate or fees payable to any Defaulting Lender without the consent of such Defaulting Lender.

 

(c)          if any L/C Exposure exists at the time a Lender is a Defaulting Lender then:

 

(i)                                     if no Default or Event of Default then exists, all or any part of the L/C Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Tranche A Percentages but only to the extent the sum of all non-Defaulting Lenders’ Exposures plus such Defaulting Lender’s L/C Exposure does not exceed the total of all non-Defaulting Lenders’ Tranche A 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 Issuing Lender only its obligations corresponding to such Defaulting Lender’s L/C Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.24(h) for so long as such L/C Exposure is outstanding;

 

(iii)                               if the Borrower cash collateralizes any portion of such Defaulting Lender’s L/C Exposure pursuant to clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.24(f)(ii) with respect to such Defaulting Lender’s L/C Exposure during the period such Defaulting Lender’s L/C Exposure is cash collateralized;

 

(iv)                              if the L/C Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the commissions payable to the Lenders pursuant to Section 2.24(f)(ii) shall be adjusted in accordance with such non-Defaulting Lenders’ Tranche A Percentages; and

 

(v)                                 if all or any portion of such Defaulting Lender’s L/C 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 Lender or any other Lender hereunder, all Facility Fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Tranche A Commitment that was utilized by such L/C Exposure) and letter of credit fees payable under Section 2.24(f)(ii) with respect to such Defaulting Lender’s L/C Exposure shall be payable to the Issuing Lender until such L/C Exposure is reallocated and/or cash collateralized; and

 

(d)         so long as such Lender is a Defaulting Lender, the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding L/C Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.24(c), and participating interests in any newly issued or increased Letter of Credit shall be

 

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allocated among non-Defaulting Lenders in a manner consistent with Section 2.28(c)(i) (and such Defaulting Lender shall not participate therein).

 

If (i) a Bankruptcy Event with respect to a Lender Parent of any Tranche A Lender shall occur following the date hereof and for so long as such event shall continue or (ii) the Issuing Lender has a good faith belief that any Tranche A Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless the Issuing Lender shall have entered into arrangements with the Borrower or such Lender, satisfactory to the 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 Lender each reasonably determines that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the L/C Exposure of the Tranche A Lenders shall be readjusted to reflect the inclusion of such Lender’s Tranche A Commitment, if applicable, and on such date such Lender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Tranche A Percentage.

 

SECTION 2.29.  Replacement of Lenders.

 

If any Lender (a) notifies the Administrative Agent that LIBOR Loans are no longer available from such Lender pursuant to Section 2.17, (b) requests compensation under Section 2.16 or 2.22(d), (c) becomes a Defaulting Lender or (d) does not consent to any proposed amendment, supplement, modification, consent or waiver of any provisions of this Agreement or any other Fundamental Document that requires the consent of each of the Lenders or each of the Lenders affected thereby (so long as the consent of the Required Lenders, the Majority Facility Lenders or the Supermajority Lenders (if applicable) has been obtained), then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 10.3, provided the Borrower shall be obligated to pay the processing and recordation fee referred to therein), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and if a participating interest in any Letters of Credit is being assigned, the Issuing Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in unreimbursed payments under Letters of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts, including amounts owed pursuant to Sections 2.18, 10.4 and 10.5), (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.16 or 2.22(d), such assignment will result in a reduction in such compensation or payments, (iv) until such time as such assignment shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Sections 2.16 or 2.22(d), as the case may be, (v) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender and (vi) in the case of any Lender replaced pursuant to clause (d) above, such replacement Lender shall consent to the applicable amendment, supplement, modification, consent or waiver.  A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

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3.              REPRESENTATIONS AND WARRANTIES OF BORROWER

 

In order to induce the Lenders to enter into this Agreement and to make the Loans and participate in the Letters of Credit provided for herein, the Borrower makes the following representations and warranties to the Administrative Agent and the Lenders, all of which shall survive the execution and delivery of this Agreement and the making of the Loans and issuance of the Letters of Credit:

 

SECTION 3.1.  Corporate Existence and Power.

 

The Borrower and its Subsidiaries have been duly organized and are validly existing in good standing under the laws of their respective jurisdictions of incorporation and are in good standing or have applied for authority to operate as a foreign corporation or other organizational form in all jurisdictions where the nature of their properties or business so requires it, in each case (except for any Loan Party), where the failure to be in good standing or have the authority to operate as a foreign corporation or other organizational form would have a Material Adverse Effect.  Each Loan Party has the corporate power to execute, deliver and perform its obligations under this Agreement and the other Fundamental Documents and other documents contemplated hereby and to borrow and obtain other extensions of credit hereunder.

 

SECTION 3.2.  Corporate Authority and No Violation.

 

The execution, delivery and performance of this Agreement and the other Fundamental Documents and the borrowings and making of other extensions of credit hereunder (a) have been duly authorized by all necessary corporate action on the part of each Loan Party, (b) will not violate any provision of any Applicable Law applicable to the Borrower or any of its Subsidiaries or any of their properties or assets, (c) will not violate any provision of the Certificate of Incorporation or By-Laws or other organizational documents of the Borrower or any of its Subsidiaries, or any material Contractual Obligation of the Borrower or any of its Subsidiaries, (d) will not be in conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under, any material indenture, agreement, bond, note or instrument and (e) will not result in the creation or imposition of any Lien upon any property or assets of the Borrower or any of its Subsidiaries other than pursuant to this Agreement or any other Fundamental Document.

 

SECTION 3.3.  Governmental and Other Approval and Consents.

 

No action, consent or approval of, or registration or filing with, or any other action by, any governmental agency, bureau, commission or court is required in connection with the execution, delivery and performance (including the borrowings and making of other extensions of credit hereunder) by each Loan Party of this Agreement or the other Fundamental Documents.

 

SECTION 3.4.  Financial Statements of the Borrower.

 

The (a) audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries as of and for the fiscal year ended December 31, 2013, (b) unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of March 31, 2014, together with the related unaudited statements of income, shareholders’ equity and cash flows for the three-month period then ended and (c) unaudited consolidating balance sheets and income statements for each of the periods described in clauses (a) and (b) above, in each case, fairly present in all material respects the consolidated (or, in the case of clause (c) above, the consolidating) financial position of the Borrower and its Consolidated Subsidiaries as at the dates indicated and the results of operations and cash flows for the

 

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periods indicated in conformity with GAAP subject to normal year-end adjustments in the case of such quarterly financial statements.

 

SECTION 3.5.  No Material Adverse Change.

 

Since December 31, 2013, there has been no event or circumstance which has had or could reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.6.  Copyrights, Patents and Other Rights.

 

Each of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, service marks, copyrights, patents and other intellectual property material to its business, 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 3.7.  Title to Properties.

 

Each of the Borrower and its Subsidiaries has good title or valid leasehold interests to each of the properties and assets reflected on the balance sheets referred to in Section 3.4, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes, and all such properties and assets will be free and clear of Liens, except Permitted Encumbrances.

 

SECTION 3.8.  Litigation.  There are no lawsuits or other proceedings pending (including, but not limited to, matters relating to environmental liability), or, to the knowledge of the Borrower, threatened, against or affecting the Borrower or any of its Subsidiaries or any of their respective properties, by or before any Governmental Authority or arbitrator, which could reasonably be expected to have a Material Adverse Effect.  Neither the Borrower nor any of its Subsidiaries is in default with respect to any order, writ, injunction, decree, rule or regulation of any Governmental Authority, which default would have a Material Adverse Effect.

 

SECTION 3.9.  Federal Reserve Regulations.

 

Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock.  No part of the proceeds of the Loans, and no Letter of Credit, will be used, whether immediately, incidentally or ultimately, for any purpose violative of or inconsistent with any of the provisions of Regulation T, U or X of the Board.  Not more than 25% of the value of the assets of the Borrower and its Subsidiaries on a consolidated basis is represented by Margin Stock.

 

SECTION 3.10.  Investment Company Act.

 

Neither the Borrower nor any of its Subsidiaries is, and will not during the term of this Agreement be an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

 

SECTION 3.11.  Enforceability.

 

This Agreement and the other Fundamental Documents when executed will constitute legal, valid and enforceable obligations (as applicable) of each Loan Party (subject, as to enforcement, to

 

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applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and to general principles of equity).

 

SECTION 3.12.  Taxes.

 

The Borrower and each of its Subsidiaries have filed or caused to be filed all material federal, provincial, state, local and other Tax returns which are required to be filed, and have paid or have caused to be paid all material Taxes as shown on said returns or on any assessment made against it or any of its property, and all other material Taxes, fees, or other charges imposed on it or on any of its property by any Governmental Authority, to the extent that such Taxes have become due, except as permitted by Section 5.4.  No material Tax Lien has been filed, and to the knowledge of the Borrower, no material claim is being asserted, with respect to any such Tax, fee or other charge.

 

SECTION 3.13.  Compliance with ERISA.

 

Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (i) each of the Borrower and its Subsidiaries and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and the provisions of the Code relating to Plans and the regulations and published interpretations thereunder; and (ii) no ERISA Event or Foreign Plan Event has occurred or is reasonably expected to occur; and (iii) all amounts required by applicable law with respect to, or by the terms of, any retiree welfare benefit arrangement maintained by the Borrower or any of its Subsidiaries or any ERISA Affiliate or to which the Borrower or any of its Subsidiaries or any ERISA Affiliate has an obligation to contribute have been accrued in accordance with Statement of Financial Accounting Standards No. 106.  The present value of all accumulated benefit obligations under each Pension Plan (based on the assumptions used for purposes of Accounting Standards Codification No. 715: Compensation-Retirement Benefits) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Pension Plan allocable to such accrued benefits by more than an amount that could reasonably be expected to have a Material Adverse Effect.  Neither the Borrower nor any of its Subsidiaries is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. § 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code) which is subject to Section 4975 of the Code.

 

SECTION 3.14.  Disclosure.

 

As of the Closing Date, neither this Agreement nor the Confidential Information Memorandum, at the time it was furnished and when taken as a whole with all written information delivered (other than projections and information of a general economic or industry-specific nature) and after giving effect to any written supplements thereto, contained any untrue statement of a material fact or omitted to state a material fact, under the circumstances under which it was made, necessary in order to make the statements contained herein or therein not misleading.  The Confidential Information Memorandum contains certain projections relating to the Borrower and its Consolidated Subsidiaries. Such projections are based on good faith estimates and assumptions believed by the preparer to be reasonable at the time made, provided, however, that the Borrower makes no representation or warranty that such assumptions will prove in the future to be accurate or that the Borrower and its Consolidated Subsidiaries will achieve the financial results reflected in such projections.  As of the Closing Date, there is no fact known to the Borrower which, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

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SECTION 3.15.  Environmental Liabilities.

 

Except with respect to any matters, that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

 

SECTION 3.16.  Borrowing Base.

 

The Borrower will be in Borrowing Base Compliance on the date each Loan is made and each Letter of Credit is issued or increased, after giving effect to the making of such Loan and the issuance or increase of such Letter of Credit.

 

SECTION 3.17.  No Default or Event of Default.

 

No Default or Event of Default has occurred and is continuing.

 

SECTION 3.18.  [Reserved].

 

SECTION 3.19.  Covenant Availability.

 

There is sufficient availability under Sections 4.06(b)(xi) and 4.08(a)(xxiii) of the 2010 Indenture to allow for the Subsidiary Guarantee without triggering an obligation to provide a guarantee pursuant to the “equal and ratable” clauses therein.

 

SECTION 3.20.  Solvency.

 

The Borrower and its Consolidated Subsidiaries, taken as a whole, are, and after giving effect to the incurrence of all Indebtedness and obligations being incurred in connection herewith will be, Solvent.

 

SECTION 3.21.  Foreign Assets Control Regulations and Anti-Money Laundering.

 

Each Loan Party and each Subsidiary of a Loan Party are, to their knowledge, in compliance and will remain in compliance in all material respects with all applicable U.S. economic sanctions laws, Executive Orders and implementing regulations as promulgated by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act and all regulations issued pursuant to it.  To each Loan Party’s knowledge, no Loan Party and no Subsidiary (i) is a Person designated by the U.S. government on the list of the Specially Designated Nationals and Blocked Persons (the “SDN List”) with which a U.S. Person cannot deal with or otherwise engage in business transactions, (ii) is a Person who is otherwise the target of U.S. economic sanctions laws such that a U.S. Person cannot deal or otherwise engage in business transactions with such Person or (iii) is controlled by, or acts, directly or indirectly, for or on behalf of, any person or entity on the SDN List or a foreign government that is the target of U.S. economic sanctions prohibitions such that the entry into, or performance under, this Agreement or any other Fundamental Document would be prohibited under U.S. law.

 

The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and employees, and to the knowledge of the Borrower its directors and agents, are

 

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in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.  None of (a) the Borrower, any Subsidiary or any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.  No Loan or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.

 

SECTION 3.22.  Anti-Money Laundering, Patriot Act and Foreign Corrupt Practices Act.

 

Each Loan Party and each Subsidiary of a Loan Party are, to their knowledge, in compliance with the applicable provisions of (a) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department and any other enabling legislation or executive order relating thereto, (b) the Patriot Act, (c) the anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act, (d) the Anti-Money Laundering Act of 1986, and (e) other federal or state laws relating to anti-money laundering rules and regulations.  To the Loan Parties’ knowledge, no part of the proceeds of any Loan will be used directly or indirectly for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.

 

4.              CONDITIONS OF LENDING

 

SECTION 4.1.  Conditions Precedent to Effectiveness.

 

The effectiveness of the amendment and restatement of the Existing Credit Agreement pursuant to this Agreement is subject to the following conditions precedent:

 

(a)         This Agreement.  The Administrative Agent shall have received this Agreement, executed and delivered by a duly authorized officer of the Borrower.

 

(b)         Corporate Documents for each Loan Party.  The Administrative Agent shall have received a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Restatement Date and certifying (A) that attached thereto is a true and complete copy of its certificate of incorporation and by-laws (or the equivalent thereof) as in effect on the date of such certification; (B) that attached thereto is a true and complete copy of resolutions adopted by its Board of Directors (or the equivalent thereof) authorizing the borrowings and other extensions of credit hereunder and the execution, delivery and performance in accordance with their respective terms of this Agreement and any other documents required or contemplated hereunder; and (C) as to the incumbency and specimen signature of each of its officers executing this Agreement or any other document delivered by it in connection herewith (such certificate to contain a certification by another of its officers as to the incumbency and signature of the officer signing the certificate referred to in this paragraph (b)).

 

(c)          [Reserved].

 

(d)         Opinions of Counsel.  The Administrative Agent shall have received the favorable written opinions, dated as of the Restatement Date and addressed to the Administrative Agent and the Lenders, of (i) internal counsel of PHH Corporation and (ii) Skadden, Arps, Slate, Meagher & Flom LLP.

 

(e)          Tranche B Interest and Facility Fees.  The Borrower shall have paid to the Administrative Agent, for the account of the respective Tranche B Lenders under the Existing Credit

 

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Agreement, all unpaid interest on the Tranche B Loans and all unpaid Facility Fees accrued under the Existing Credit Agreement, in each case to the Restatement Date.

 

(f)           No Material Adverse Change.  The Administrative Agent and the Lenders shall be satisfied that since December 31, 2013, there has been no event or circumstance which has had or could reasonably be expected to have a Material Adverse Effect.

 

(g)          Payment of Fees.  The Administrative Agent shall be satisfied that all amounts payable to the Administrative Agent and the other Lenders pursuant hereto or with regard to the transactions contemplated hereby have been or are simultaneously being paid.

 

(h)         Litigation.  No litigation shall be pending or, to any Loan Party’s knowledge, threatened which would be reasonably likely to have a Material Adverse Effect, or which could reasonably be expected to materially adversely affect the ability of any Loan Party to fulfill its obligations hereunder or to otherwise materially impair the interests of the Lenders.

 

(i)             Officer’s Certificate.  The Administrative Agent shall have received a certificate of the chief executive officer, chief financial officer or chief accounting officer of the Borrower certifying, as of the Closing Date, (i) compliance with the conditions set forth in Sections 4.1(f), 4.1(h), 4.2(b), 4.2(c) and 4.2(d) hereof, (ii) pro forma compliance with Sections 6.6, 6.7 and 6.10 hereof and (iii) that, except in connection with the Subsidiary Guarantee and the Amendment and Reaffirmation of Guarantee, none of the $300,000,000 basket amounts under Sections 4.06 and 4.08 of the 2010 Indenture have been utilized.

 

(j)            Amendment and Reaffirmation of Guarantee.  The Administrative Agent shall have received the Amendment and Reaffirmation of Guarantee substantially in the form of Exhibit G hereto executed by each Subsidiary Guarantor.  The Lenders hereby authorize the Administrative Agent to amend the Subsidiary Guarantee in accordance with the terms set forth in the Amendment and Reaffirmation of Guarantee.

 

SECTION 4.2.  Conditions Precedent to Each Loan and Letter of Credit.  The obligation of the Lenders to make each Loan and of any Issuing Lender to issue or amend a Letter of Credit, including the initial Loan hereunder, is subject to the following conditions precedent:

 

(a)         Notice.  The Administrative Agent shall have received a notice with respect to such Borrowing or Letter of Credit as required by Article 2 hereof.

 

(b)         Representations and Warranties.  The representations and warranties set forth in Article 3 and in the other Fundamental Documents shall be true and correct in all material respects (except to the extent any representations are qualified by materiality, in which case, such representations shall be true in all respects) on and as of the date of each Borrowing or the issuance of a Letter of Credit hereunder (except to the extent that such representations and warranties expressly relate to an earlier date) with the same effect as if made on and as of such date; provided that this condition shall not apply to a Borrowing which is solely refinancing outstanding Loans and which, after giving effect thereto, has not increased the aggregate amount of outstanding Loans.

 

(c)          No Event of Default.  On the date of each Borrowing or the issuance or amendment of a Letter of Credit hereunder, no Event of Default or Default shall have occurred and be continuing on such date or after giving effect to the Borrowing to be made on such date; provided that this condition shall not apply to a Borrowing (other than a LIBOR Borrowing) which is solely refinancing outstanding Loans and which, after giving effect thereto, has not increased the aggregate amount of outstanding Loans.

 

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(d)   Borrowing Base Compliance.  The Borrower shall be in Borrowing Base Compliance after giving effect to the making of such Loans and the issuance or amendment of such Letters of Credit and shall deliver a certificate with supporting calculations in reasonable detail establishing such compliance.

 

Each Borrowing or issuance or amendment of a Letter of Credit shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing or issuance or amendment of a Letter of Credit as to the matters specified in paragraphs (b) and (c) of this Section 4.2.

 

5.     AFFIRMATIVE COVENANTS

 

For so long as the Commitments shall be in effect or any amount shall remain outstanding or unpaid under this Agreement or there shall be any outstanding L/C Exposure, the Borrower agrees that, unless the Required Lenders shall otherwise consent in writing, it will, and will cause each of its Subsidiaries to:

 

SECTION 5.1.                  Financial Statements, Reports, etc.

 

Deliver to each Lender:

 

(a)   As soon as is practicable, but in any event within 90 days after the end of each fiscal year of the Borrower, (i) (A) consolidated and consolidating statements of income (or operations) and consolidated and consolidating statements of cash flows and changes in stockholders’ equity of the Borrower and its Consolidated Subsidiaries for such year and the related consolidated and consolidating balance sheets as at the end of such year, or (B) the Form 10-K filed by the Borrower with the Securities and Exchange Commission (which shall contain the consolidating financial statements described in the preceding clause (A)) and (ii) if not included in such Form 10-K, an opinion of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present in all material respects the consolidated financial position and results of operations of the Borrower and its Consolidated Subsidiaries as at the end of, and for, such fiscal year and that such financial statements were prepared in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods and reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit;

 

(b)   As soon as is practicable, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year, either (i) the Form 10-Q filed by the Borrower with the Securities and Exchange Commission (which shall contain the consolidating financial statements described in the following clause (ii)) or (ii) the unaudited consolidated and consolidating balance sheets of the Borrower and its Consolidated Subsidiaries, as at the end of such fiscal quarter, and the related unaudited consolidated statements of income and cash flows and consolidating statements of income for such quarter and for the period from the beginning of the then current fiscal year to the end of such fiscal quarter and the corresponding figures as of the end of the preceding fiscal year, and for the corresponding period in the preceding fiscal year, in each case, together with a certificate (substantially in the form of Exhibit B) signed by the chief financial officer, the chief accounting officer, treasurer or a vice president responsible for financial administration of the Borrower to the effect that such financial statements, while not examined by independent public accountants, reflect, in his opinion and in the opinion of the Borrower, all adjustments necessary to present fairly in all material respects the financial position of the Borrower and its Consolidated Subsidiaries, as the case may be, as at the end of the fiscal quarter and the results of their operations for the quarter then ended in conformity with GAAP consistently applied, subject only to year-end and audit adjustments and to the absence of footnote disclosure;

 

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(c)   Together with the delivery of the statements referred to in paragraphs (a) and (b) of this Section 5.1, a certificate of the chief financial officer, chief accounting officer or a vice president responsible for financial administration of the Borrower, substantially in the form of Exhibit B hereto (i) stating whether or not the signer has knowledge of any Default or Event of Default and, if so, specifying each such Default or Event of Default of which the signer has knowledge and the nature thereof, (ii) demonstrating in reasonable detail compliance with the provisions of Sections 6.6, 6.7, 6.10 and 6.15, (iii) setting forth in a schedule (in the form of Schedule 5.1(c) attached hereto) a description of the Mortgage Warehouse Facilities and Servicing Advance Facilities in effect on the last day of the most recently ended fiscal quarter and (iv) setting forth in reasonable detail a description of repurchased mortgage loans, repurchase requests (existing and new), indemnification requests and payments made for such quarter and year to date periods, and comparisons to comparable periods for the prior year;

 

(d)   As soon as practicable, but in any event within 90 days after the end of each fiscal year of the Borrower, detailed projections of the Borrower and its Consolidated Subsidiaries for the following two fiscal years;

 

(e)   Promptly upon any executive officer of the Borrower or any of its Subsidiaries obtaining knowledge of the occurrence of any Default or Event of Default, a certificate of the president, chief financial officer or chief accounting officer of the Borrower specifying the nature and period of existence of such Default or Event of Default and what action the Borrower has taken, is taking and proposes to take with respect thereto;

 

(f)    Promptly upon any executive officer of the Borrower or any of its Subsidiaries obtaining knowledge of (i) the institution of any action, suit, proceeding, investigation or arbitration by any Governmental Authority or other Person against or affecting the Borrower or any of its Subsidiaries or any of their assets, or (ii) any material development in any such action, suit, proceeding, investigation or arbitration (whether or not previously disclosed to the Lenders), which, in each case might reasonably be expected to have a Material Adverse Effect or which relates to any Fundamental Document, prompt notice thereof and such other information as may be reasonably available to it (without waiver of any applicable evidentiary privilege) to enable the Lenders to evaluate such matters;

 

(g)   Promptly upon any executive officer of the Borrower or any of its Subsidiaries obtaining knowledge of the failure to maintain Borrowing Base Compliance, prompt notice thereof specifying the period of such non-compliance, the extent of such non-compliance and what actions the Borrower has taken, is taking and proposes to take with respect thereto;

 

(h)   (i) On the Closing Date, and (ii) within ten Business Days following the end of each calendar month thereafter, other than in the case of each calendar month that is also the end of a fiscal quarter, in which case, within fifteen Business Days following the end of such calendar month (or at such other times as the Administrative Agent may reasonably request), a borrowing base certificate setting forth the Borrowing Base (in each case with supporting calculations in reasonably detail) substantially in the form of Exhibit E (each, a “Borrowing Base Certificate”), which shall be prepared as of the last Business Day of such month (or, in the case of the Borrowing Base Certificate delivered on the Closing Date, as of June 29, 2012, or if any such Borrowing Base Certificate is delivered more frequently than monthly, as of the last Business Day of the week preceding such delivery). Each such Borrowing Base Certificate shall include all such supporting information as may be reasonably requested from time to time by the Administrative Agent; and

 

(i)    promptly, such additional financial and other information as the Administrative Agent or any Lender may from time to time reasonably request.

 

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Any financial statement or filing with the Securities and Exchange Commission required to be delivered under this Agreement shall be deemed to have been delivered on the date on which the Borrower notifies the Lenders it has posted such financial statement or filing on its website on the internet at www.phh.com or that such financial statement or filing is posted on the website of the Securities and Exchange Commission at www.sec.gov.

 

SECTION 5.2.                  Corporate Existence; Compliance with Statutes.

 

Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its corporate existence, rights, licenses, permits and franchises, except (other than with respect to the Borrower or any Subsidiary Guarantor), where the failure to do so, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, and comply, except where failure to comply, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, with all provisions of Applicable Law, and all applicable restrictions imposed by any Governmental Authority, and all state and provincial laws and regulations of similar import; provided that mergers, dissolutions and liquidations permitted under Section 6.3 shall be permitted.

 

SECTION 5.3.                  Insurance.

 

Maintain with good and reputable insurers insurance in such amounts and against such risks as are customarily insured against by companies in similar businesses; provided however, that (a) workmen’s compensation insurance or similar coverage may be effected with respect to its operations in any particular state or other jurisdiction through an insurance fund operated by such state or jurisdiction and (b) such insurance may contain self-insurance retention and deductible levels consistent with such insurance is usually carried by companies of established reputation and comparable size.

 

SECTION 5.4.                  Taxes and Charges.

 

Duly pay and discharge, or cause to be paid and discharged, before the same shall become delinquent, all material federal, provincial, state, local and other Taxes, assessments, levies and other governmental charges, imposed upon the Borrower or any of its Subsidiaries or their respective properties, sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials, or supplies; provided that any such Tax, assessment, charge, levy or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings and if the Borrower or its applicable Subsidiary shall have set aside on its books reserves in conformity with GAAP adequate with respect thereto; and provided, further, that the Borrower will pay all such Taxes, assessments, levies or other governmental charges forthwith upon the commencement of proceedings to foreclose any Lien which may have attached as security therefor (unless the same is fully bonded or otherwise effectively stayed).

 

SECTION 5.5.                  ERISA Compliance and Reports.

 

Furnish to the Administrative Agent as soon as reasonably practicable following receipt thereof, copies of any documents described in (i) Sections 101(f) or 101(j) of ERISA that any Loan Party or any ERISA Affiliate may receive with respect to a Pension Plan and/or (ii) Sections 101(f), 101(k) or 101(l) of ERISA request with respect to any Multiemployer Plan; provided, that if the Borrower or any of its Subsidiaries or any of their ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the Borrower and/or any of its Subsidiaries and/or their ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and the

 

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Borrower shall provide copies of such documents and notices to the Administrative Agent as soon as reasonably practical after receipt thereof.

 

SECTION 5.6.                  Maintenance of and Access to Books and Records; Examinations.

 

Maintain or cause to be maintained at all times proper books and records of its financial operations (in accordance with GAAP) and provide the Administrative Agent and each Lender and their respective representatives (in the case of a Lender, coordinated through the Administrative Agent) reasonable access upon reasonable prior notice to all such books and records and to any of their properties or assets during regular business hours (provided that unless an Event of Default has occurred and is continuing, only two such visits (by the Administrative Agent and any Lenders, collectively) shall be permitted in any fiscal year, provided that reasonable access to such books and records and to any of the Borrower’s properties or assets shall be made available to the Lenders if an Event of Default has occurred and is continuing), in order that the Administrative Agent and/or such Lenders may make such audits and examinations and make abstracts from such books, accounts and records and may discuss the affairs, finances and accounts with, and be advised as to the same by, officers and independent accountants, all as the Administrative Agent and/or such Lenders may deem appropriate, in their reasonable business judgment, for the purpose of verifying the various reports delivered pursuant to this Agreement or for otherwise ascertaining compliance with this Agreement.

 

SECTION 5.7.                  Maintenance of Properties.

 

Keep its properties which are material to its business in good repair, working order and condition consistent with companies of established reputation and comparable size.

 

SECTION 5.8.                  Guarantors.

 

With respect to any new Domestic Subsidiary created or acquired after the Closing Date (other than Excluded Subsidiaries) or any Domestic Subsidiary existing on the Closing Date which ceases to be an Excluded Subsidiary, promptly (a) cause such new Subsidiary (i) to become a party to the Subsidiary Guarantee and (ii) to deliver to the Administrative Agent a certificate of such Subsidiary in compliance with Section 4.1(b) hereof, with appropriate insertions and attachments and (b) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions concerning the matters covered by the legal opinions delivered pursuant to Section 4.1(d) above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

SECTION 5.9.                  Compliance with Anti-Corruption Laws.

 

Maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

 

6.     NEGATIVE COVENANTS

 

For so long as the Commitments shall be in effect or any amount shall remain outstanding or unpaid under this Agreement or there shall be any outstanding L/C Exposure, unless the Required Lenders shall otherwise consent in writing, the Borrower agrees that it will not, nor will it permit any of its Subsidiaries to, directly or indirectly:

 

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SECTION 6.1.                  Limitation on Subsidiary Indebtedness and Borrower Indebtedness.

 

Incur, assume or suffer to exist any Indebtedness of any Material Subsidiary or Subsidiary Guarantor, except:

 

(a)   Indebtedness in existence on the Closing Date, or required to be incurred pursuant to a contractual obligation in existence on the Closing Date, which in either case (to the extent not otherwise permitted by paragraphs (b)-(p) of this Section 6.1), is listed on Schedule 6.1 hereto, but not any extensions or renewals thereof, unless effected on substantially the same terms or on terms which, in the aggregate, are not materially more adverse to the Lenders (as determined in good faith by a financial officer of the Borrower);

 

(b)   purchase money Indebtedness (including Capital Leases) to the extent permitted under Section 6.4(b);

 

(c)   Indebtedness owing by any Material Subsidiary or Subsidiary Guarantor to the Borrower or any other Subsidiary;

 

(d)   Indebtedness of any Material Subsidiary or Subsidiary Guarantor issued and outstanding prior to the date on which such Subsidiary became a Subsidiary of the Borrower (other than Indebtedness issued in connection with, or in anticipation of, such Subsidiary becoming a Subsidiary of the Borrower); provided that immediately prior and on a Pro Forma Basis after giving effect to such Person becoming a Subsidiary of the Borrower, no Default or Event of Default shall occur or then be continuing and the aggregate principal amount of such Indebtedness, when added to the aggregate outstanding principal amount of Indebtedness permitted by paragraphs (e) and (f) below, shall not exceed $150,000,000;

 

(e)   any renewal, extension or modification of Indebtedness under paragraph (d) above so long (i) as such renewal, extension or modification is effected on substantially the same terms or on terms which, in the aggregate, are not more materially adverse to the Lenders (as determined in good faith by a financial officer of the Borrower) and (ii) the principal amount of such Indebtedness is not increased other than as a result of accrued interest, fees and expenses incurred in connection with such renewal, extension or modification;

 

(f)    other Indebtedness of any Material Subsidiary or Subsidiary Guarantor in an aggregate principal amount which, when added to the aggregate outstanding principal amount of Indebtedness permitted by paragraphs (d) and (e) above, does not exceed $150,000,000;

 

(g)   Indebtedness of Special Purpose Vehicle Subsidiaries incurred to finance investments in lease agreements and vehicles by such Subsidiaries, so long as the lender (and any other party) in respect of such Indebtedness has recourse, if any, solely to the assets of such Special Purpose Vehicle Subsidiary;

 

(h)   Indebtedness of any Asset Securitization Subsidiary incurred solely to finance asset securitization transactions as long as (i) such Indebtedness is unsecured or is secured solely as permitted by Section 6.4(n), and (ii) the lender (and any other party) in respect of such Indebtedness has recourse (other than customary limited recourse based on misrepresentations or failure of such assets to meet customary eligibility criteria), if any, solely to the assets securitized in the applicable asset securitization transaction and, if such Asset Securitization Subsidiary is of the type described in clause (i) of the definition of “Asset Securitization Subsidiary”, the capital stock of such Asset Securitization Subsidiary;

 

(i)    Indebtedness (other than Indebtedness of Asset Securitization Subsidiaries incurred to finance asset securitization transactions permitted by this Agreement) consisting of the obligation to

 

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repurchase mortgages and related assets or secured by mortgages and related assets in connection with Mortgage Warehouse Facilities;

 

(j)    Indebtedness of PHH Home Loans, LLC incurred under the PHH Home Loans Intercompany Credit Agreement, in an aggregate principal amount not to exceed $100,000,000;

 

(k)   Indebtedness of any Subsidiary Guarantor incurred under the Subsidiary Guarantee;

 

(l)    [Reserved];

 

(m)  Indebtedness incurred in connection with any Servicing Advance Facility, in an aggregate principal amount not to exceed $300,000,000;

 

(n)   Indebtedness pursuant to any software licensing agreement that is treated as a Capital Lease for accounting purposes of the Borrower and its Consolidated Subsidiaries;

 

(o)   Indebtedness incurred in connection with the financing of mortgage servicing rights as long as (i) the applicable mortgage servicing rights following the incurrence of such Indebtedness are not included in the Borrowing Base, (ii) the incurrence of such Indebtedness would not violate clause (ii) of the following paragraph and (iii) the Borrower is in Borrowing Base Compliance after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof; provided that at no time during the term of this Agreement may more than $350,000,000 of the Borrower’s and its Subsidiaries’ mortgage servicing rights (valued as of the date any encumbrances in respect thereof were first created or given) be subject to encumbrances; and

 

(p)   any recourse, liability or obligation incurred in connection with the sale or financing of fleet vehicle leases; provided that the aggregate amount of any guarantees in connection with such recourse, liability or obligation shall not exceed $30,000,000 at any time.

 

Notwithstanding the foregoing, (i) the Borrower and its Material Subsidiaries and the Subsidiary Guarantors shall not incur or issue after the Closing Date any Indebtedness for borrowed money which has scheduled or mandatory principal maturities prior to the Tranche A Termination Date (other than (w) Indebtedness incurred pursuant to Sections 6.1 (b), (c), (d), (e), (g), (h), (i), (j), (k) (m), (n), (o) and (p), (x) in the case of secured Indebtedness, prepayments required from the sale of the applicable collateral, (y) any other Indebtedness requiring prepayments in connection with a change in control of the Borrower or similar event or the occurrence of a Delisting (and any such change in control or similar event shall be incorporated herein and be deemed to be included in the definition of “Change in Control”), (z) any renewals, extensions or modifications (in each case having substantially the same terms or terms which, in the aggregate are not materially more adverse to the Lenders (as determined in good faith by a financial officer of the Borrower)) of existing Indebtedness permitted pursuant to this Section 6.1) and (aa) Indebtedness incurred pursuant to revolving credit facilities in an aggregate principal amount at any time outstanding not to exceed $20,000,000, (ii) the Borrower shall not permit any Subsidiary to incur, assume or suffer to exist any Indebtedness (or Debt, as defined in the 2010 Indenture) if doing so would, when taken together with all Loans, Letters of Credit, Indebtedness (or Debt) and Liens of the Borrower and its Subsidiaries, cause any Subsidiaries to be required to give a guarantee pursuant to any “equal and ratable” clause in the 2010 Indenture or any similar provision in any future indenture of the Borrower, (iii) the Borrower will not allow any Subsidiary to guarantee any Indebtedness or other obligations issued under the 2010 Indenture or any future indenture of the Borrower, (iv) the Borrower will not amend or modify the 2010 Indenture in a manner adverse to the Lenders and (v) the Borrower will cause the aggregate principal amount of the Tranche A Loans and the aggregate drawable amount of the Letters of Credit at any time to be less than an amount equal to the excess of $300,000,000 (or such

 

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higher amount to which such basket may be increased pursuant to amendments to the 2010 Indenture) over the aggregate amount of Debt (other than Debt under this Agreement) and Liens incurred in reliance on the Sections of the 2010 Indenture referred to in Section 3.19.  For purposes of this Section 6.1, the phrase “scheduled or mandatory principal maturities” shall not include conversion of any Convertible Notes made at the election of the holders thereof into common stock of the Borrower, cash or a combination thereof.

 

In furtherance of clause (ii) of the preceding paragraph, the Borrower shall (x) in the certificate delivered pursuant to Section 5.1(c), deliver to the Administrative Agent written notice of the incurrence, assumption or creation by the Borrower or any of its Material Subsidiaries (as defined in this Agreement and in indentures under which Indebtedness of the Borrower is issued) of any Liens or by Material Subsidiaries (as so defined) of the Borrower of any Indebtedness (including any “Debt” or “Indebtedness” as defined in the Borrower’s existing or future indentures), in each case through the last day of the most recently ended fiscal quarter, and (y) upon request by the Administrative Agent from time to time, provide calculations in reasonable detail demonstrating that the “equal and ratable” clauses referred to in such clause (ii) have not been triggered.

 

SECTION 6.2.                  Limitation on Transactions with Affiliates.

 

Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate (other than the Borrower or a wholly-owned Subsidiary of the Borrower) unless such transaction is (a) otherwise permitted under this Agreement and (b) upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person which is not an Affiliate.

 

SECTION 6.3.                  Consolidation, Merger, Sale of Assets.

 

(a)   Neither the Borrower nor any of its Material Subsidiaries (in one transaction or series of transactions) will wind up, liquidate or dissolve its affairs, or enter into any transaction of merger or consolidation, except any merger, consolidation, dissolution or liquidation (i) in which the Borrower is the surviving entity or if the Borrower is not a party to such transaction then a Subsidiary is the surviving entity, (ii) with respect to Material Subsidiaries, in which the surviving entity becomes a Material Subsidiary of the Borrower immediately upon the effectiveness of such merger, consolidation, dissolution or liquidation or (iii) in connection with a transaction permitted by Section 6.3(b); provided that immediately prior to and on a Pro Forma Basis after giving effect to such transaction no Default or Event of Default has occurred or is continuing.  In addition, an Asset Securitization Subsidiary may wind-up, liquidate or dissolve provided that immediately prior to and on a Pro Forma Basis after giving effect to such transaction no Default or Event of Default has occurred and is continuing.  For the avoidance of doubt the Borrower may not enter into a transaction of merger or consolidation unless the Borrower is the surviving entity.

 

(b)   Sell or otherwise dispose of all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole; provided that it is understood for purposes of clarity that this Section 6.3(b) shall not prohibit or limit in any respect transactions in the ordinary course of business of the Borrower or any of its Subsidiaries (including but not limited to asset securitization transactions or similar transactions entered into in the ordinary course of business).

 

(c)   Except as provided in Section 6.3(d), sell or otherwise dispose of any business unit of PHH Mortgage Corporation and its Subsidiaries, PHH Vehicle Management Services Group LLC and its Subsidiaries, PHH Broker Partner Corporation and its Subsidiaries or PHH Home Loans, LLC and its

 

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Subsidiaries; provided that any such sale or disposition shall be permitted so long as the nature of the business conducted by the Borrower and its Subsidiaries, taken as a whole, on the Closing Date will not change.

 

(d)   For the avoidance of doubt, the Borrower and its Subsidiaries may sell equity ownership interests in PHH Home Loans, LLC pursuant to contractual agreements existing on the Closing Date.

 

(e)   Notwithstanding the foregoing, the Borrower and its Subsidiaries may not make a Material Disposition.

 

SECTION 6.4.                  Limitations on Liens.

 

Suffer any Lien on the property of the Borrower or any of the Material Subsidiaries or Subsidiary Guarantor, except:

 

(a)   deposits under worker’s compensation, unemployment insurance and social security laws or to secure statutory obligations or surety or appeal bonds or performance or other similar bonds in the ordinary course of business, or statutory Liens of landlords, carriers, warehousemen, mechanics and materialmen and other similar Liens, in respect of liabilities which are not yet due or which are being contested in good faith, Liens for Taxes not yet due and payable, and Liens for Taxes due and payable, the validity or amount of which is currently 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 applicable Material Subsidiary in conformity with GAAP) and as to which foreclosure and other enforcement proceedings shall not have been commenced (unless fully bonded or otherwise effectively stayed);

 

(b)   purchase money Liens granted to the vendor or Person financing the acquisition of property, plant or equipment if (i) limited to the specific assets acquired and, in the case of tangible assets, other property which is an improvement to or is acquired for specific use in connection with such acquired property or which is real property being improved by such acquired property; (ii) the debt secured by such Lien is the unpaid balance of the acquisition cost of the specific assets on which the Lien is granted; and (iii) such transaction does not otherwise violate this Agreement;

 

(c)   Liens upon real and/or personal property, which property was acquired after the Closing Date (by purchase, construction or otherwise) by the Borrower or any of its Material Subsidiaries, each of which Liens existed on such property before the time of its acquisition and was not created in anticipation thereof; provided that no such Lien shall extend to or cover any property of the Borrower or such Material Subsidiary other than the respective property so acquired and improvements thereon;

 

(d)   Liens arising out of attachments, judgments or awards as to which an appeal or other appropriate proceedings for contest or review are promptly commenced (and as to which foreclosure and other enforcement proceedings (i) shall not have been commenced (unless fully bonded or otherwise effectively stayed) or (ii) in any event shall be promptly fully bonded or otherwise effectively stayed);

 

(e)   Liens created under any Fundamental Document as contemplated by this Agreement;

 

(f)    Liens securing Indebtedness of any Material Subsidiary or Subsidiary Guarantor to the Borrower;

 

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(g)   Liens covering only the property or assets of any Special Purpose Vehicle Subsidiary and securing only such Indebtedness of such Special Purpose Vehicle Subsidiary as is permitted under Section 6.1(g) hereof;

 

(h)   other Liens incidental to the conduct of its business or the ownership of its property and other assets, which do not secure any Indebtedness and did not otherwise arise in connection with the borrowing of money or the obtaining of advances or credit and which do not, in the aggregate, materially detract from the value of its property or other assets or materially impair the use thereof in the operation of its business;

 

(i)    to the extent not otherwise permitted by this Section 6.4, Liens existing on the Closing Date listed on Schedule 6.4 hereto and any extensions or renewals thereof;

 

(j)    Liens securing indebtedness in respect of one or more asset securitization transactions, which indebtedness is not reported on a consolidated balance sheet of the Borrower and its Subsidiaries, covering only the assets securitized in the asset securitization transaction financed by such indebtedness and the capital stock of any special purpose vehicle the sole purpose of which is to effectuate such asset securitization transaction;

 

(k)   other Liens securing obligations having an aggregate principal amount not to exceed $100,000,000;

 

(l)    Liens securing Indebtedness permitted by Section 6.1(j);

 

(m)  Liens on cash of Atrium Insurance Corporation and its successors and assigns in connection with its reinsurance business;

 

(n)   Liens securing Indebtedness and related obligations of an Asset Securitization Subsidiary in respect of one or more asset securitization transactions, which Indebtedness is reported on a consolidated balance sheet of the Borrower and its Subsidiaries, covering only the assets securitized in the asset securitization transaction financed by such Indebtedness and, if an Asset Securitization Subsidiary is of the type described in clause (i) of the definition of “Asset Securitization Subsidiary”, the capital stock of such Asset Securitization Subsidiary;

 

(o)   Liens on mortgages and related assets securing obligations to the extent such obligations are permitted by Sections 6.1(i) and 6.1(m);

 

(p)   Liens in connection with Indebtedness permitted under Section 6.1(n);

 

(q)   Liens securing judgments for the payment of money not constituting an Event of Default under Section 7(i), provided that enforcement of such Lien has been stayed;

 

(r)    Liens created as a result of a sale and leaseback transaction permitted by Section 6.5;

 

(s)    Liens in connection with cash or Cash Equivalents posted as collateral for Interest Rate Protection Agreements, mortgage repurchases, letters of credit, surety bonds and certain operating leases;

 

(t)    Liens securing cash management obligations of the Borrower and its Subsidiaries; and

 

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(u)   Liens on mortgage servicing rights and proceeds thereof securing Indebtedness (and related obligations) permitted by Section 6.1(o).

 

Notwithstanding the foregoing, the Borrower shall not, and shall not permit any Material Subsidiary (as defined in the last paragraph of Section 6.1) or any Subsidiary Guarantor to, incur, assume or suffer to exist any Liens if doing so would, when taken together with all Loans, Letters of Credit, Indebtedness and Liens of the Subsidiaries, cause any Subsidiaries to be required to give a guarantee pursuant to any “equal and ratable” clause in the 2010 Indenture or any similar provision in any future indenture of the Borrower.

 

SECTION 6.5.                  Sale and Leaseback.

 

Enter into any arrangement with any Person or Persons, whereby in contemporaneous transactions the Borrower or any of its Subsidiaries sells essentially all of its right, title and interest in a material asset and the Borrower or any of its Subsidiaries acquires or leases back the right to use such property except that the Borrower or any of its Subsidiaries may enter into sale-leaseback transactions relating to assets not in excess of $100,000,000 in the aggregate on a cumulative basis, and except (a) any FLRT Transaction; and (b) without limiting the foregoing clause (a), any sale-leaseback transaction entered into in connection with an asset securitization transaction the indebtedness or Indebtedness relating to which is permitted to be secured pursuant to Section 6.4(k) or 6.4(n).

 

SECTION 6.6.                  Consolidated Net Worth.

 

Permit Consolidated Net Worth on the last day of any fiscal quarter ended after the Closing Date to be less than $1,000,000,000.

 

SECTION 6.7.                  Ratio of Indebtedness To Tangible Net Worth.

 

Permit, at any time, the ratio of Indebtedness (less the balance in the 2014 Convertible Notes Escrow Account at such time) of the Borrower and its Subsidiaries to Tangible Net Worth to exceed 5.75 to 1.00.

 

SECTION 6.8.                  Accounting Practices.

 

Establish a fiscal year ending on a date other than December 31, or modify or change accounting treatments or reporting practices except as otherwise required or permitted by GAAP.

 

SECTION 6.9.                  Restrictions Affecting Subsidiaries.

 

Enter into, or suffer to exist, any Contractual Obligation with any Person, which prohibits or limits the ability of any Material Subsidiary or any Subsidiary Guarantor (other than Special Purpose Vehicle Subsidiaries and Asset Securitization Subsidiaries) to (a) pay dividends or make other distributions or pay any Indebtedness owed to the Borrower or any other Subsidiary, (b) make loans or advances to the Borrower or any other Subsidiary or (c) transfer any of its properties or assets to the Borrower or any other Subsidiary; provided, however, that this Section 6.9 shall not apply to (A) any restrictions applicable to PHH Home Loans, LLC, pursuant to the PHH Home Loans Mortgage Warehouse Facilities, (B) any restrictions imposed by Applicable Law, including, without limitation, any Applicable Law restricting payment of dividends or other distributions by Atrium Insurance Corporation and its successors and assigns, (C) (i) any restrictions imposed by the Specified Senior Notes or (ii) any Indebtedness that refinances or replaces such notes or any future indenture pursuant to which Indebtedness of the Borrower is issued, in each case, which, in the aggregate, is not materially more

 

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restrictive than the terms of the Specified Senior Notes or the 2016 Notes, in each case as in effect on the Closing Date (as determined in good faith by a financial officer of the Borrower), (D) any restriction with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with the disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, to the extent permitted under this Agreement, (E) any agreement governing any purchase money Liens or Capital Lease otherwise permitted hereby if the applicable restriction applies only to the assets subject to such Liens or Capital Lease, (F) any agreement in effect at the time such Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into in contemplation of such Person becoming a Subsidiary and applies only to such Subsidiary and its property, (G) any instrument assumed in connection with any Acquisition permitted under Section 6.13, which restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired,(H)  Contractual Obligations relating to secured Indebtedness permitted pursuant to Section 6.1 (including financing through repurchase agreements) to the extent that such restrictions apply only to the property or assets securing such Indebtedness (or assets subject to such repurchase agreement refinancing) or (I) any restrictions imposed under any agreement containing a recourse obligation permitted under Section 6.1(p) of this Agreement to the extent such restrictions apply only to the asset subject to the applicable financing.

 

SECTION 6.10.           Maintenance of Available Borrowing Capacity and Third Party Fleet Financing Capacity.

 

(a)   Fail to maintain aggregate Available Borrowing Capacity of at least $1,000,000,000 at all times.

 

(b)   Fail to maintain committed third party fleet vehicle lease financing capacity, including capacity under the FLRT Transactions and under financing arrangements involving Chesapeake Funding LLC (so long as Chesapeake Funding LLC continues to conduct financing on substantially the same terms, in the scope and manner as conducted on the Closing Date) of at least $750,000,000 at all times (including available and utilized capacity (whether or not any such utilized capacity is amortizing)).

 

SECTION 6.11.           Limitation on Negative Pledge Clauses.

 

Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of the Borrower or any Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure the Obligations, other than:

 

(a)   this Agreement and the other Fundamental Documents;

 

(b)   any agreements governing any purchase money Liens or Capital Lease otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby);

 

(c)   pursuant to customary restrictions and conditions contained in any agreement related to the sale of any property permitted under this Agreement, pending the consummation of such sale, provided that such prohibition or limitation shall only be effective against the assets to be sold;

 

(d)   leases, licenses and other agreements entered into in the ordinary course of business (other than in connection with or to secure Indebtedness);

 

(e)   customary non-assignment provisions in contracts;

 

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(f)    restrictions in connection with any Lien permitted under Section 6.4 hereto or any document or instrument governing any such Lien as long as such restrictions apply only to the assets subject to such Liens;

 

(g)   restrictions pursuant to any existing indenture (as in effect on the Closing Date) under which the Borrower issues Indebtedness or future indenture pursuant to which Indebtedness of the Borrower is issued (so long as the restrictions in any future indenture are not materially more restrictive than the terms contained in Section 6.4 of this Agreement, taken as a whole (excluding Section 6.4(e), but only to the extent such restrictions allow the Obligations to be secured if the securities issued under such indenture are equally and ratably secured therewith), as determined in good faith and certified in writing to the Lenders by the chief financial officer or chief executive officer of the Borrower; provided that, for the avoidance of doubt, to the extent the restrictions in any future indenture for a pari passu obligation limits the use of any carve outs or “baskets” similar to those contained in Section 6.4 of this Agreement (including limitations related to the utilization of such carve outs or “baskets” by other covenants in the indenture), such terms shall not be deemed to be materially more restrictive than the terms contained in Section 6.4 of this Agreement);

 

(h)   restrictions pursuant to agreements whereby the aggregate value of the assets subject to such prohibition or limitation shall not exceed $25,000,000;

 

(i)    the Canadian Credit Facility, so long as such prohibition or limitation is only applicable to Canadian Subsidiaries of the Borrower; and

 

(j)    restrictions imposed by guidelines of Government-Sponsored Enterprises.

 

SECTION 6.12.           Limitation on Certain Payments and Restricted Payments.

 

(a)   Prepay or redeem Indebtedness of any Material Subsidiary, the Borrower, or Subsidiary Guarantor, except:

 

(i)            the 2014 Convertible Notes;

 

(ii)           [Reserved];

 

(iii)          the Canadian Credit Facility;

 

(iv)          the 2016 Notes or the 2017 Convertible Notes; provided that after giving effect to any prepayment or redemption of the 2016 Notes or the 2017 Convertible Notes, as applicable (A) no Default or Event of Default shall have occurred and be continuing, (B) no Loans and no amounts shall be drawn on Letters of Credit are outstanding; (C) the Specified Senior Notes have been repaid or redeemed in full, (D) the aggregate outstanding principal amount of the 2014 Convertible Notes less the balance in the 2014 Convertible Notes Escrow Account is no more than $100,000,000; and (E) the aggregate amount of unrestricted and unencumbered cash and Cash Equivalents of the Borrower and the Subsidiary Guarantors would be at least $150,000,000;

 

(v)           any mandatory payments (including any scheduled payment) and conversions with respect to the Convertible Notes (including the 2017 Convertible Notes) or any future indenture requiring prepayments in connection with a change in control of the Borrower or similar event or the occurrence of a Delisting; and

 

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(vi)          Indebtedness incurred pursuant to Sections 6.1(a), (b), (c), (d), (e), (g), (h), (i), (j), (k), (m), (n), (o) and (p) (including Indebtedness referred to in subclause (aa) of clause (i) of the paragraph immediately following Section 6.1(p)) and this Agreement.

 

(b)   In the case of the Borrower, declare or pay any dividend (other than dividends payable solely in common stock of the Borrower) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of the Borrower, or make any other distribution in respect thereof, whether in cash, property or other consideration (the actions described in clause (b), collectively, “Restricted Payments”); provided the following shall be permitted:

 

(i)            the making of a Restricted Payment out of the proceeds of a substantially concurrent issuance and sale for cash (other than to a Subsidiary) of the Borrower’s Capital Stock (other than Disqualified Stock);

 

(ii)           if after giving effect thereto no Default or Event of Default shall have occurred and be continuing, the making of a Restricted Payment by the Borrower in its Capital Stock (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock;

 

(iii)          cashless repurchases of Capital Stock deemed to occur upon exercise of stock options, warrants or other securities if such Capital Stock represents a portion of the exercise price of such options or warrants;

 

(iv)          the payment of cash in lieu of the issuance of fractional shares upon the exercise of options or warrants upon the conversion or exchange of Capital Stock of any such Person in an aggregate amount not to exceed $10,000,000; and

 

(v)           the purchase by the Borrower of fractional shares arising out of stock dividends, splits or combinations or business combinations or other similar transactions in an aggregate amount not to exceed $10,000,000.

 

For the avoidance of doubt, neither the entering into by the Borrower nor the performance by the Borrower of its obligations thereunder of a customary call spread, capped call or similar heading arrangement with respect to any Convertible Notes shall constitute a Restricted Payment.

 

(c)   Notwithstanding the limitations set forth in clauses (a) and (b) above, the Borrower may prepay or redeem Indebtedness for borrowed money and make Restricted Payments otherwise prohibited by clauses (a) and (b) if after giving effect thereto (i) (w) no Default or Event of Default shall have occurred and be continuing, (x) no Loans and no more than $35,000,000 of Letters of Credit are outstanding; (y) the 2014 Convertible Notes have been repaid, prefunded, extended or refinanced (to a date later than November 2, 2015 in the case of any such extension or refinancing); and (z) the aggregate amount of unrestricted and unencumbered cash and Cash Equivalents of the Borrower and its Subsidiaries would be at least $50,000,000 or (ii) the Borrower has corporate ratings equal to or better than at least two of the following: Baa3 from Moody’s, BBB- from S&P and BBB- from Fitch (in each case with a stable or positive outlook).

 

(d)   Notwithstanding the foregoing the Borrower and its Subsidiaries will be permitted to extend the final maturity date of Indebtedness for borrowed money and refinance any such Indebtedness (including related interest and premiums) with Indebtedness having terms not materially more restrictive, in the aggregate, than the terms in such Indebtedness being refinanced (as determined in good faith by a

 

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financial officer of the Borrower) (or, in the case of Convertible Notes, terms then customary for convertible notes) and scheduled maturity dates later than November 2, 2015.

 

SECTION 6.13.           Acquisitions.

 

Make any acquisition of any Person or of any line of business or business unit of any Person other than those set forth on Schedule 6.13 hereto (all of the foregoing, “Acquisitions”); provided that the Borrower and its Subsidiaries may make Acquisitions to the extent (a) the Borrower and its Subsidiaries are in compliance on a Pro Forma Basis with Article 6 hereof, (b) no Default or Event of Default has occurred and is continuing or will result from such Acquisition and (c) there are no Loans outstanding under this Agreement after giving effect to such Acquisition.

 

SECTION 6.14.           Line of Business.

 

Enter into any business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries, taken as a whole, are engaged on the date of this Agreement or that are reasonably related, incidental, ancillary or complementary thereto.

 

SECTION 6.15.           [Reserved].

 

SECTION 6.16.           2014 Convertible Notes Escrow Account.

 

Until the 2014 Convertible Notes have been paid in full, utilize any amounts in the 2014 Convertible Notes Escrow Account other than to pay, redeem or purchase the 2014 Convertible Notes and pay related interest and premiums.

 

SECTION 6.17.           Use of Proceeds.

 

Use, and the respective directors, officers, employees and agents of the Borrower and its Subsidiaries shall not use, directly or indirectly, the proceeds of any Loan or Letter of Credit (A) 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, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

 

7.     EVENTS OF DEFAULT

 

In the case of the happening and during the continuance of any of the following events (herein called “Events of Default”):

 

(a)   any representation or warranty made or deemed made by any Loan Party in this Agreement or any other Fundamental Document or in connection with this Agreement or the Borrowings (or other extensions of credit) hereunder, or any statement or representation made in any report, financial statement, certificate or other document furnished by or on behalf of the Borrower or any of its Subsidiaries to the Administrative Agent or any Lender under or in connection with this Agreement, shall prove to have been false or misleading in any material respect when made, deemed made or delivered;

 

(b)   default shall be made in the payment of any principal of (or Letter of Credit reimbursement obligations) or interest on any Loan or of any fees or other amounts payable by any Loan Party under any Fundamental Document, when and as the same shall become due and payable, whether at

 

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the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise, and in the case of payments of interest, such default shall continue unremedied for five Business Days, and in the case of payments other than of any principal amount of or interest on any Loan, such default shall continue unremedied for five Business Days after receipt by the Borrower of an invoice therefor;

 

(c)   default shall be made in the due observance or performance of any covenant, condition or agreement contained in Section 2.14(c), Section 5.1(e) (with respect to notice of any Default or Event of Default), Section 5.1(g) or Article 6;

 

(d)   default shall be made by any Loan Party in the due observance or performance of any other covenant, condition or agreement to be observed or performed pursuant to the terms of this Agreement or any other Fundamental Document and such default shall continue unremedied for thirty (30) days after the Borrower obtains knowledge of such occurrence;

 

(e)   (i) default in payment shall be made with respect to any Indebtedness or Interest Rate Protection Agreements of the Borrower or any of its Subsidiaries (other than Securitization Indebtedness) where the amount or amounts of such Indebtedness and payment obligations of the Borrower and its Subsidiaries with respect to Interest Rate Protection Agreements exceeds $50,000,000 (or its equivalent thereof in any other currency) in the aggregate; or (ii) default shall be made with respect to the observance or performance of any other agreement or condition with respect to any Indebtedness or Interest Rate Protection Agreements of the Borrower or any of its Subsidiaries (other than Securitization Indebtedness) where the amount or amounts of such Indebtedness and the amount payable by the Borrower and its Subsidiaries upon termination of such Interest Rate Protection Agreements (whether or not such Interest Rate Protection Agreements are terminated) exceeds $50,000,000 (or its equivalent thereof in any other currency) in the aggregate, if the effect of such default is to result in, or permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause (with the giving of notice if required), the acceleration of the maturity of such Indebtedness or an Early Termination Date (as defined in such Interest Rate Protection Agreement) or similar event for such Interest Rate Protection Agreement resulting from such default if the Borrower or any of its Subsidiaries is the Defaulting Party (as defined in such Interest Rate Protection Agreement, including any similar term) or the sole Affected Party (as so defined, including any similar term); provided, further, that clause (ii) shall not apply to any Indebtedness or Interest Rate Protection Agreement of any Subsidiary issued and outstanding prior to the date such Subsidiary became a Subsidiary of the Borrower (other than Indebtedness or Interest Rate Protection Agreement issued in connection with, or in anticipation of, such Subsidiary becoming a Subsidiary of the Borrower) if such default or circumstance arises solely as a result of a “change in control” provision applicable to such Indebtedness or Interest Rate Protection Agreement which becomes operative as a result of the acquisition of such Subsidiary by the Borrower or any of its Subsidiaries;

 

(f)    the Borrower or any of its Material Subsidiaries or any Subsidiary Guarantor shall generally not pay its debts as they become due or shall admit in writing its inability to pay its debts, or shall make a general assignment for the benefit of creditors; or the Borrower or any of its Material Subsidiaries or any Subsidiary Guarantor shall commence any case, proceeding or other action seeking to have an order for relief entered on its behalf as debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property or shall file an answer or other pleading in any such case, proceeding or other action admitting the material allegations of any petition, complaint or similar pleading filed against it or consenting to the relief sought therein; or the Borrower or any Material Subsidiary or any Subsidiary Guarantor thereof shall take any action to authorize any of the foregoing;

 

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(g)   any involuntary case, proceeding or other action against the Borrower or any of its Material Subsidiaries or any Subsidiary Guarantor shall be commenced seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, and such case, proceeding or other action (i) results in the entry of any order for relief against it or (ii) shall remain undismissed for a period of sixty (60) days;

 

(h)   the occurrence of a Change in Control;

 

(i)    final judgment(s) for the payment of money in excess of $50,000,000 (or its equivalent thereof in any other currency) shall be rendered against the Borrower or any of its Material Subsidiaries or Subsidiary Guarantors which within thirty (30) days from the entry of such judgment shall not have been discharged, stayed pending appeal or otherwise satisfied, or which shall not have been discharged or otherwise satisfied within thirty (30) days from the entry of a final order of affirmance on appeal;

 

(j)    an ERISA Event shall have occurred that, when taken together with all other ERISA Events for which liability is reasonably likely to occur, would reasonably be expected to result in a Material Adverse Effect;

 

(k)   the Borrower or any of its Subsidiaries shall hold “plan assets” within the meaning of 29 C.F.R. § 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code) which is subject to Section 4975 of the Code; or

 

(l)    the Subsidiary Guarantee shall cease, for any reason, to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert.

 

then, in every such event and at any time thereafter during the continuance of such event, the Administrative Agent may or, if directed by the Required Lenders, shall take either or both of the following actions, at the same or different times: terminate forthwith the Commitments and/or declare the principal of and the interest on the Loans and all other amounts payable hereunder or thereunder to be forthwith due and payable, whereupon the same shall become and be forthwith due and payable, without presentment, demand, protest, notice of acceleration, notice of intent to accelerate or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement to the contrary notwithstanding.  If an Event of Default specified in paragraph (f) or (g) above shall have occurred, the principal of and interest on the Loans and all other amounts payable hereunder or thereunder shall thereupon and concurrently become due and payable without presentment, demand, protest, notice of acceleration, notice of intent to accelerate or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement to the contrary notwithstanding and the Commitments of the Lenders shall thereupon forthwith terminate.

 

8.     THE ADMINISTRATIVE AGENT AND EACH ISSUING LENDER

 

SECTION 8.1.                  Administration by Administrative Agent.

 

The general administration of the Fundamental Documents and any other documents contemplated by this Agreement shall be by the Administrative Agent or its designees as provided for herein.  Each of the Lenders hereby appoints the Administrative Agent as the agent of such Lender under

 

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this Agreement and the other Fundamental Documents and irrevocably authorizes the Administrative Agent, at its discretion, to take or refrain from taking such actions as agent on its behalf and to exercise or refrain from exercising such powers under the Fundamental Documents and any other documents contemplated by this Agreement as are delegated by the terms hereof or thereof, as appropriate, together with all powers reasonably incidental thereto.  The Administrative Agent shall have no duties or responsibilities except as expressly set forth in the Fundamental Documents and shall have no fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Fundamental Document or otherwise exist against the Administrative Agent. The Administrative Agent may execute any of its duties under this Agreement and the other Fundamental Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

 

SECTION 8.2.                  Advances and Payments.

 

(a)   On the date of each Loan, the Administrative Agent shall be authorized (but not obligated) to advance, for the account of each of the applicable Lenders, the amount of the Loan to be made by it in accordance with this Agreement.  Each of the Lenders hereby authorizes and requests the Administrative Agent to advance for its account, pursuant to the terms hereof, the amount of the Loan to be made by it, unless with respect to any Lender, such Lender has theretofore specifically notified the Administrative Agent that such Lender does not intend to fund that particular Loan.  Each of the Lenders agrees forthwith to reimburse the Administrative Agent in immediately available funds for the amount so advanced on its behalf by the Administrative Agent pursuant to the immediately preceding sentence.  If any such reimbursement is not made in immediately available funds on the same day on which the Administrative Agent shall have made any such amount available on behalf of any Lender in accordance with this Section 8.2, such Lender shall pay interest to the Administrative Agent at a rate per annum equal to the Administrative Agent’s cost of obtaining overnight funds in the New York Federal Funds Market (or such other equivalent source of funds, as determined by the Administrative Agent, in respect of Loans denominated in a currency other than Dollars) for the period until such Lender makes such amount immediately available to the Administrative Agent.  Notwithstanding the preceding sentence, if such reimbursement is not made by the second Business Day following the day on which the Administrative Agent shall have made any such amount available on behalf of any Lender or such Lender has indicated that it does not intend to reimburse the Administrative Agent, the Borrower shall immediately pay such unreimbursed advance amount (plus any accrued, but unpaid interest at the rate per annum equal to the interest rate applicable to such Loan) to the Administrative Agent.

 

(b)   Any amounts received by the Administrative Agent in connection with this Agreement or the Loans the application of which is not otherwise provided for shall be applied, in accordance with each of the Lenders’ pro rata interest therein, first, to pay costs, expense and other amounts owed to the Administrative Agent in its capacity as such, second, to pay accrued but unpaid Facility Fees, third, to pay accrued but unpaid interest on the Loans, fourth, to pay the principal balance outstanding on the Loans and fifth, to pay other amounts payable to the Administrative Agent and/or the Lenders.  All amounts to be paid to any of the Lenders by the Administrative Agent shall be credited to the applicable Lenders, after collection by the Administrative Agent, in immediately available funds either by wire transfer or deposit in such Lender’s correspondent account with the Administrative Agent, or as such Lender and the Administrative Agent shall from time to time agree.

 

SECTION 8.3.                  Sharing of Setoffs and Cash Collateral.

 

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Except to the extent this Agreement or a court order expressly provides for payments to be allocated to a particular Lender or Lenders, each of the Lenders agrees that if it shall, through the operation of Section 2.20, Section 2.24(h) or Section 2.24(i) or the exercise of a right of banker’s lien, setoff or counterclaim against the Borrower, including, but not limited to, a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim and received by such Lender under any applicable bankruptcy, insolvency or other similar law, or otherwise obtain payment in respect of its Loans or participations in Letters of Credit as a result of which the unpaid portion of its Loans or L/C Exposure is proportionately less than the unpaid portion of any of the other Lenders (any such Lender, a “Benefitted Lender”) (a) it shall promptly purchase at par (and shall be deemed to have thereupon purchased) from such other Lenders a participation in the Loans or L/C Exposure of such other Lenders, so that the aggregate unpaid principal amount of each of the Lenders’ Loans and L/C Exposure and its participation in Loans and L/C Exposure of the other Lenders shall be in the same proportion to the aggregate unpaid principal amount of all Loans and L/C Exposure then outstanding as the principal amount of its Loans and L/C Exposure prior to the obtaining of such payment was to the principal amount of all Loans and L/C Exposure outstanding prior to the obtaining of such payment and (b) such other adjustments shall be made from time to time as shall be equitable to ensure that the Lenders share such payment pro rata in a manner contemplated by this Agreement; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

 

SECTION 8.4.                  Notice to the Lenders; Notice of Default.

 

The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders.  The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

 

SECTION 8.5.                  Liability of the Administrative Agent.

 

(a)   Neither the Administrative Agent nor any of its officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under, or in connection with, this Agreement or any other Fundamental Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any other Loan Party or any officer thereof contained in this Agreement or any other Fundamental Document or in any certificate, report, statement or other document referred to or provided for in, or received by, the Administrative Agent under, or in connection with, this Agreement or any other Fundamental Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Fundamental Document for any failure of the Borrower or any other Loan Party to perform its obligations hereunder or thereunder.  The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this

 

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Agreement or any other Fundamental Document, or to inspect the properties, books or records of the Borrower or any other Loan Party.

 

(b)   The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy or email message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Loan Parties), independent accountants, and other experts selected by the Administrative Agent.  The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Fundamental Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action .  The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Fundamental Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

 

SECTION 8.6.                  Reimbursement and Indemnification.

 

Each of the Lenders severally and not jointly agrees (i) to reimburse the Administrative Agent and its officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates, in the amount of its Aggregate Exposure Percentage in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), for any reasonable and invoiced out-of-pocket expenses and fees incurred in connection with the Fundamental Documents, including, without limitation, reasonable and invoiced out-of-pocket counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, and any other reasonable expense incurred in connection with the administration or enforcement thereof not reimbursed by the Borrower or one of its Subsidiaries; and (ii) to indemnify and hold harmless the Administrative Agent and the Joint Lead Arrangers and any of their respective officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates, on demand, in the amount of its proportionate share (based on its Aggregate Exposure Percentage on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date)), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against it or any of them in any way relating to or arising out of the Fundamental Documents or any action taken or omitted by it or any of them under the Fundamental Documents to the extent not reimbursed by the Borrower or one of its Subsidiaries (except such as shall result from the gross negligence or willful misconduct of the Person seeking indemnification as found by a final and nonappealable decision of a court of competent jurisdiction).

 

SECTION 8.7.                  Agents in Its Individual Capacity.

 

Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent.  With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other

 

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Fundamental Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

 

SECTION 8.8.                  Independent Investigation by Lenders.

 

Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Borrower or its Subsidiaries, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender.  Each Lender represents to the Administrative Agent 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 appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and its Subsidiaries and made its own decision to make its Loans hereunder and enter into this Agreement.  Each Lender also represents 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 deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Fundamental Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and its Subsidiaries.  Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower and its Subsidiaries that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates.

 

SECTION 8.9.                  Notice of Transfer.

 

The Administrative Agent and the Issuing Lenders may deem and treat any Lender which is a party to this Agreement as the owner of such Lender’s respective portions of the Loans and Letter of Credit reimbursement rights for all purposes, unless and until a written notice of the assignment or transfer thereof executed by any such Lender shall have been received by the Administrative Agent and become effective pursuant to Section 10.3.

 

SECTION 8.10.           Successor Administrative Agent.

 

The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Lenders and the Borrower.  If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Fundamental Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 7(b), Section 7(f) or Section 7(g) shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans.  If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent

 

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hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.  After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 8 and of Section 10.4 shall continue to inure to its benefit.

 

SECTION 8.11.           Resignation of an Issuing Lender; Duties of Issuing Lender.

 

(a)   Any Issuing Lender may resign at any time by giving written notice thereof to the Lenders and the Borrower.  Upon any such resignation, such Issuing Lender shall be discharged from any duties and obligations under this Agreement in its capacity as an Issuing Lender with regard to Letters of Credit not yet issued.  After any retiring Issuing Lender’s resignation hereunder as an Issuing Lender, the provisions of this Agreement shall continue to inure to its benefit as to any outstanding Letters of Credit or otherwise with regard to outstanding L/C Exposure and any actions taken or omitted to be taken by it while it was a Issuing Lender under this Agreement.

 

(b)   The Issuing Lender in its capacity as such, shall be entitled to the same rights and standards of care as set forth for the Administrative Agent within Section 9, unless otherwise provided for in this Agreement.

 

SECTION 8.12.           Syndication Agents and Documentation Agent.

 

The Syndication Agents and Documentation Agent shall not have any duties or responsibility hereunder in their capacity as such.

 

9.     [RESERVED]

 

10.  MISCELLANEOUS

 

SECTION 10.1.           Notices.

 

(a)   Notices and other communications provided for herein shall be in writing and shall be delivered or mailed addressed, (i) if to the Administrative Agent or JPMorgan Chase Bank, N.A. to it at 1111 Fannin, 10th floor, Houston, Texas 77002 (Telephone: (713) 750-2513; Telecopy: (713) 750-2223), Attention: Angelica Castillo, with a copy to Richard Poworoznek, at 383 Madison Avenue, 23rd floor, New York, New York 10179 (Telephone: (212) 270-3894; Telecopy: (212) 270-2642), (ii) if to the Borrower, to it at 3000 Leadenhall Road, Mount Laurel, New Jersey 08054, Attention:  Assistant Treasurer, with a copy to the General Counsel, or (iii) if to a Lender, to it at its address set forth on Schedule 1.1A (or in its Assignment and Assumption or other agreement pursuant to which it became a Lender hereunder), or such other address as such party may from time to time designate by giving written notice to the Borrower, the Administrative Agent and the Issuing Lender.  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 third Business Day after the date when sent by registered or certified mail, postage prepaid, return receipt requested, if by mail, or when received, if by telecopy (or other customary electronic transmission), in each case addressed to such party as provided in this Section 10.1 or in accordance with the latest unrevoked written direction from such party; provided that all such notices and other communication given by telecopy (or other customary electronic transmission) shall be deemed received on such Business Day if received during normal business hours of the recipient.  Information required to be delivered hereunder may also be delivered by electronic communication to the extent provided in Section 10.1(b).

 

(b)   Notices and other communication to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent;

 

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provided that the foregoing shall not apply to notices pursuant to Article 2 unless otherwise agreed by the Administrative Agent and the applicable Lender.  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.

 

SECTION 10.2.    Survival of Agreement, Representations and Warranties, etc.

 

All warranties, representations and covenants made by any Loan Party herein or in any other Fundamental Document or in any certificate or other instrument delivered by it or on its behalf in connection with this Agreement shall be considered to have been relied upon by the Administrative Agent and the Lenders and shall survive the making of the Loans and the issuance of Letters of Credit herein contemplated regardless of any investigation made by the Administrative Agent or the Lenders or on their behalf and shall continue in full force and effect so long as any amount due or to become due hereunder is outstanding and unpaid and so long as the Commitments have not been terminated.  All statements in any such certificate or other instrument shall constitute representations and warranties by the Loan Party making any such statement hereunder or thereunder.

 

SECTION 10.3.    Successors and Assigns; Syndications; Loan Sales; Participations.

 

(a)         Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party (provided that the Borrower may not assign its rights or obligations hereunder without the prior written consent of all the Lenders), and all covenants, promises and agreements by, or on behalf of, the Borrower and any other Loan Party which are contained in this Agreement or any other Fundamental Document shall inure to the benefit of the successors and assigns of the Lenders.

 

(b)         Each of the Lenders may (but only with the prior written consent of the Administrative Agent, the Issuing Lenders and the Borrower, which consents shall not be unreasonably withheld or delayed) assign to one or more banks or other financial institutions all or a portion of its interests, rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments and the same portion of the applicable Loans at the time owing to it and the interests in applicable Letters of Credit held by it) provided that (i) each assignment shall be of a constant, and not a varying, percentage of the assigning Lender’s rights and obligations under the Commitment being assigned, (ii) the amount of the Commitments of the assigning Lender subject to each such assignment shall be in a minimum amount of $5,000,000 unless such assignment is an assignment of all of the assigning Lender’s rights and obligations under this Agreement or unless otherwise agreed by the Borrower and the Administrative Agent, (iii) [Reserved], (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register (as defined below), an Assignment and Assumption and a processing and recordation fee of $3,500 and (v) the consent of the Borrower shall not be required if the assignee is a Lender or an affiliate of a Lender or during the continuation of an Event of Default (and shall be deemed given if the Borrower has not delivered to the Administrative Agent a written objection to the applicable assignment within 10 Business Days after delivery of notice of such proposed assignment to Borrower).  Upon such execution, delivery, acceptance and recording, and from and after the effective date specified in each Assignment and Assumption, which effective date shall be not earlier than five Business Days after the date of acceptance and recording by the Administrative Agent (or such shorter period as may be agreed to by the Administrative Agent), (x) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Assumption, have the rights and obligations of a Lender hereunder and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption

 

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covering all or the remaining portion of the assigning Lender’s rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto, but shall continue to be entitled to the indemnity and expense reimbursement provisions hereof (including, without limitation, Sections 2.16, 2.18, 2.22, 2.24(g), 10.4, 10.5 and 10.15) for the period prior to such Assignment and Assumption).

 

(c)          Notwithstanding the other provisions of this Section 10.3, each Lender may at any time without the consent of the Borrower make an assignment of all or any part of its interests, rights and obligations under this Agreement to any Lender or Affiliate of a Lender or, if an Event of Default has occurred and is continuing, any other assignee.

 

(d)         By executing and delivering an Assignment and Assumption, the assigning Lender thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim created by it, the 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 and any other Fundamental Document or any other instrument or document furnished pursuant hereto or thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Fundamental Documents or any other instrument or document furnished pursuant hereto or thereto; (ii) such Lender assignor makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any other Loan Party or the performance or observance by the Borrower or any other Loan Party of any of its obligations under the Fundamental Documents; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Sections 5.1(a) and 5.1(b) 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 Assumption; (iv) such assignee will, independently and without reliance upon the assigning Lender, the Administrative Agent, 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; (v) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Fundamental Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (vi) such assignee agrees that it will be bound by the provisions of this Agreement and will perform in accordance with its terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

 

(e)          The Administrative Agent, on behalf of the Borrower, shall maintain at its address at which notices are to be given to it pursuant to Section 10.1, a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders and the Commitments of, and principal amount of the Loans owing to, and participations in Letters of Credit of, each Lender from time to time (the “Register”).  The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent, the Issuing Lenders and the Lenders may treat each Person whose name is recorded in the Register as the owner of a Loan or other obligation hereunder as the owner thereof for all purposes of this Agreement and the other Fundamental Documents, notwithstanding any notice to the contrary.  The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.

 

(f)           Upon its receipt of an Assignment and Assumption executed by an assigning Lender and an assignee and the processing and recordation fee, the Administrative Agent (subject to the right, if any, of the Borrower to require its consent thereto) shall, if such Assignment and Assumption has been completed and is substantially in the form of Exhibit A hereto, (i) accept such Assignment and Assumption, (ii) record the information contained therein in the Register and (iii) give prompt written

 

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notice thereof to the Borrower.  Upon acceptance by the Administrative Agent, Schedule 1.1A shall be deemed to be amended to reflect the information contained in such Assignment and Assumption.

 

(g)          Each of the Lenders may without the consent of the Borrower, the Administrative Agent or any Issuing Lender sell participations to one or more banks or other financial institutions (a “Participant”) in all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the Loans owing to it and the participations in Letters of Credit held by it); provided that (i) any such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Participant shall not be granted any voting rights under this Agreement, except with respect to matters requiring the consent of each of the Lenders hereunder (but only to the extent that the Lender from which the Participant purchased its interest would be entitled to vote thereon), (iii) any such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iv) the Participants shall be entitled to the cost protection provisions contained in Sections 2.15, 2.16, 2.18, 2.22 and 2.24(g) (subject to the requirements and limitations therein, including the requirements under Section 2.22(a) (it being understood that the documentation required under Section 2.22(a) shall be delivered to the participating Lender)) but such Participants (A) agree to be subject to the provisions of Sections 2.16 and 2.22 as if they were assignees under Section 10.3(b) and (B) shall not be entitled to receive pursuant to such provisions an amount larger than its share of the amount to which the Lender granting such participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from an adoption of or any change in any Applicable Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof that occurs after the Participant acquired the applicable participation and (v) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Each Lender that sells a participation, acting solely for tax purposes as a non-fiduciary agent of the Borrower, shall maintain (or cause to be maintained) 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 (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to the Borrower or any other Person (including the identity of any Participant or any information relating to a Participant’s interest in the Loans or other obligations under this Agreement) except to the extent that such disclosure may be necessary to establish that the Loans are in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or, if different, under Sections 871(h) or 881(c) of the Code.  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.

 

(h)         The Lenders may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 10.3, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower or any other Loan Party furnished to the Administrative Agent or the Lenders by or on behalf of the Borrower and such other Loan Party.

 

(i)             The Borrower consents that any Lender may at any time and from time to time pledge, or otherwise grant a security interest in, any Loan, including any such pledge or grant to any Federal Reserve Bank or any other central banking authority, and this Section 10.3 shall not apply to any such pledge or grant; provided that no such pledge or grant shall release a Lender from any of its obligations hereunder or substitute any such pledgee or grantee for such Lender as a party hereto.

 

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(j)            The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue promissory notes evidencing Loans made hereunder to any Lender requiring promissory notes to facilitate transactions of the type described in paragraph (i) above.

 

SECTION 10.4.    Expenses.

 

Whether or not the transactions hereby contemplated shall be consummated, the Borrower agrees to pay all reasonable and invoiced out-of-pocket expenses incurred by the Administrative Agent in connection with the syndication, preparation, execution, delivery, amendment and administration of this Agreement and the making of the Loans and issuance and administration of the Letters of Credit, including but not limited to the reasonable and invoiced fees and disbursements of Simpson Thacher & Bartlett LLP, counsel to the Administrative Agent, as well as all reasonable and invoiced out-of-pocket expenses incurred by the Lenders and the Administrative Agent in connection with any restructuring or workout of this Agreement or the Letters of Credit or in connection with the enforcement or protection of the rights of the Lenders and the Administrative Agent in connection with this Agreement or the Letters of Credit or any other Fundamental Document, and with respect to any action which may be instituted by any Person against any Lender, any Issuing Lender or the Administrative Agent in respect of the foregoing, or as a result of any transaction, action or nonaction arising from the foregoing, including but not limited to the fees and disbursements of any counsel for the Lenders or any Issuing Lender.  Such payments shall be made on the date of execution of this Agreement and thereafter promptly on demand.  The obligations of the Borrower under this Section 10.4 shall survive the termination of this Agreement and the Commitments, payment of the Loans and expiration of the Letters of Credit for two years.

 

SECTION 10.5.    Indemnity.

 

Further, by the execution hereof, the Borrower agrees to indemnify and hold harmless the Agents, the Joint Lead Arrangers, the Issuing Lenders and the Lenders and their respective affiliates and their and their affiliates’ respective directors, officers, employees, advisors, agents and representatives (each, an “Indemnified Party”) from and against any and all expenses (including reasonable fees and disbursements of counsel), losses, claims, damages (including special, exemplary, punitive or consequential damages) and liabilities arising out of any claim, litigation, investigation or proceeding (regardless of whether any such Indemnified Party is a party thereto or whether such claim, litigation, investigation or proceeding is brought by any Loan Party or on its behalf) in any way relating to the transactions contemplated hereby, but excluding therefrom all expenses, losses, claims, damages, and liabilities to the extent arising out of or resulting from (i) the gross negligence or willful misconduct of the Indemnified Party or any of its controlled affiliates, directors, officers or employees (collectively, the “related parties”) seeking indemnification in each case as determined by a final non-appealable judgment of a court of competent jurisdiction, (ii) a material breach in bad faith of the obligations of such Indemnified Party under this Agreement or any other Fundamental Document in connection with a claim brought by the Borrower as determined by a final non-appealable judgment of a court of competent jurisdiction or (iii) any dispute not involving any act or omission of the Borrower or any of its Affiliates solely among Indemnified Parties other than claims against any Person in its capacity or in fulfilling its role as an Administrative Agent or Joint Lead Arranger under this Agreement and the other Fundamental Documents, provided that the Borrower shall not be liable for the fees and expenses of more than one separate firm for all such Indemnified Parties (unless there shall exist an actual or perceived conflict of interest among such Persons, in which case Borrower shall be required to reimburse the reasonable and invoiced out-of-pocket expenses and legal fees of such additional counsel for each group of affected Indemnified Parties) in connection with any one such action or any separate but substantially similar or related actions in the same jurisdiction, nor shall the Borrower be liable for any settlement of any proceeding effected without the Borrower’s written consent (which shall not be unreasonably withheld or

 

74

 

delayed), and provided, further, that this Section 10.5 shall not be construed to expand the scope of the reimbursement obligations specified in Section 10.4.  The obligations of the Borrower under this Section 10.5 shall survive the termination of this Agreement and the Commitments, payment of the Loans and the expiration of the Letters of Credit.  This Section 10.5 shall not apply with respect to Taxes.

 

SECTION 10.6.    CHOICE OF LAW.

 

THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND, IN THE CASE OF PROVISIONS RELATING TO INTEREST RATES, ANY APPLICABLE LAWS OF THE UNITED STATES.

 

SECTION 10.7.    No Waiver.

 

No failure on the part of the Administrative Agent, any Issuing Lender or any Lender to exercise, and no delay in exercising, any right, power or remedy hereunder or with regard to the Letters of Credit shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

 

SECTION 10.8.    Extension of Maturity.

 

Except as otherwise specifically provided in this Agreement, should any payment of principal of or interest on the Loans made hereunder or any other amount due hereunder become due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, in the case of principal, interest shall be payable thereon at the rate herein specified during such extension.

 

SECTION 10.9.    Amendments, etc.

 

No modification, amendment or waiver of any provision of this Agreement or any other Fundamental Document, and no consent to any departure by the Borrower or any Loan Party herefrom or therefrom, shall in any event be effective unless the same shall be in writing and signed or consented to in writing by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given; provided that no such modification or amendment shall without the written consent of each Lender affected thereby (x) increase or extend the expiration date of the Commitment of a Lender or postpone or waive any scheduled reduction in the Commitments, (y) alter the stated maturity or principal amount of any installment of any Loan, or due date of any Letter of Credit reimbursement obligation or decrease the rate, or extend the date of payment, of interest payable thereon, or decrease the rate at which the Facility Fees or letter of credit fees are paid, or extend the date of payment thereof, or (z) waive a default under Section 7(b) with respect to a scheduled principal installment of any Loan or payment of a Letter of Credit reimbursement obligation or scheduled payment of interest or fees; provided further, that no such modification or amendment shall without the written consent of all of the Lenders (i) amend or modify any provision of this Agreement which provides for the unanimous consent or approval of the Lenders, (ii) amend this Section 10.9 or the definition of Required Lenders or Supermajority Lenders, (iii) discharge all or substantially all of the Guarantors from their respective Obligations under the Fundamental Documents, (iv) amend or modify the definition of “Material Disposition” or Section 6.3(e) or (v) waive a default under Section 7(c) with respect to the covenant set forth in Section 6.3(e); and provided further, that no such modification or amendment shall without the written consent of the Supermajority Lenders amend or modify (i) the definition of

 

75

 

“Borrowing Base” or “Borrowing Base Compliance” or any related defined term for the purposes of determining the Borrowing Base or Borrowing Base Compliance or waive any default with respect to Borrowing Base Compliance or (ii) Section 2.14(c), Section 3.16 and Section 4.2(d).  No such amendment or modification may adversely affect the rights and obligations of the Administrative Agent or any Issuing Lender hereunder without its prior written consent.  No notice to or demand on the Borrower shall entitle the Borrower to any other or further notice or demand in the same, similar or other circumstances.  Notwithstanding anything in this Section 10.9 to the contrary, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower and the Administrative Agent to cure any ambiguity, omission, defect or inconsistency so long as, in each case, (a) such amendment does not adversely affect the rights of any Lender and (b) 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 the Required Lenders stating that the Required Lenders object to such amendment.

 

SECTION 10.10.    Severability.

 

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

SECTION 10.11.    SERVICE OF PROCESS; WAIVER OF JURY TRIAL.

 

(a)         EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK (AND APPELLATE COURTS FROM ANY THEREOF), FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER BROUGHT BY THE BORROWER, THE ADMINISTRATIVE AGENT, AN ISSUING LENDER OR A LENDER.  EACH OF THE BORROWER AND EACH CREDIT PARTY TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (B) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER.  THE BORROWER AND EACH CREDIT PARTY HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN PURSUANT TO SECTION 10.1.  THE BORROWER AND EACH CREDIT PARTY AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE OTHER PARTIES HERETO.  FINAL JUDGMENT AGAINST ANY PARTY HERETO IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF INDEBTEDNESS

 

76

 

OR LIABILITY OF THE SUBMITTING PARTY THEREIN DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER JURISDICTION.

 

(b)         TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE.  EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE PROVISIONS OF THIS SECTION 10.11(b) CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT.  THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 10.11(b) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH OTHER PARTY TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.

 

(c)          EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION, SUIT OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES; PROVIDED THIS WAIVER SHALL NOT APPLY TO ANY OBLIGATIONS OF THE BORROWER UNDER SECTION 10.5 OR ANY OTHER INDEMNIFICATION OR SIMILAR PROVISION UNDER ANY FUNDAMENTAL DOCUMENT TO WHICH THE BORROWER IS A PARTY.

 

SECTION 10.12.    Headings.

 

Section headings used herein are for convenience only and are not to affect the construction of or be taken into consideration in interpreting this Agreement.

 

SECTION 10.13.    Execution in Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same instrument.

 

SECTION 10.14.    Entire Agreement.

 

This Agreement represents the entire agreement of the parties with regard to the subject matter hereof.

 

SECTION 10.15.    Language.

 

The parties hereto have agreed that this Agreement as well as any document or instrument relating thereto be drawn up in English only.

 

SECTION 10.16.    Confidentiality.

 

Each of the Administrative Agent and each Lender agrees to keep confidential all non-public information provided to it by the Borrower and its Subsidiaries pursuant to this Agreement that is

 

77

 

designated by the Borrower as confidential; provided that nothing herein shall prevent the Administrative Agent or any Lender from disclosing any such information (a) to the Administrative Agent, any other Lender or any affiliate thereof, (b) to any Transferee of such Lender or prospective Transferee which agrees to comply with the provisions of this Section 10.16, (c) to any of its and its Affiliates’ employees, directors, agents, attorneys, accountants and other professional advisors, (d) upon the request or demand of any Governmental Authority or any self-regulatory body, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any requirement of law, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) that has been publicly disclosed other than in breach of this Section 10.16, (h) was in the Administrative Agent’s or such Lender’s possession prior to its being furnished to the Administrative Agent or such Lender or becomes available to the Administrative Agent or such Lender on a non-confidential basis from a source other than the Borrower, any of its Subsidiaries or any of their respective agents, provided that the source of such information was not known by the Administrative Agent or such Lender to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the Borrower or any other party with respect to such information, (i) is independently developed by the Administrative Agent or such Lender without use or reference to such information, (j) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender, (k) in connection with the exercise of any remedy hereunder or under any other Fundamental Document, or (l) if agreed by the Borrower in its sole discretion, to any other Person.

 

Each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Fundamental Documents may include material non-public information concerning the Borrower and its Subsidiaries and their Affiliates and their related parties or their respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.

 

All information, including requests for waivers and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course of administering, this Agreement or the other Fundamental Documents will be syndicate-level information, which may contain material non-public information about the Borrower and its Subsidiaries and their Affiliates and their related parties or their respective securities.  Accordingly, each Lender represents to the Borrower and the Administrative Agent that it has identified in its administrative questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws.

 

SECTION 10.17.    USA PATRIOT Act.

 

Each Lender hereby notifies the Borrower and each Subsidiary Guarantor that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower and any Subsidiary Guarantor which information includes the name and address of the Borrower and/or such Subsidiary Guarantor other information that will allow such Lender to identify the Borrower and/or such Subsidiary Guarantor in accordance with the Act.  The Borrower and each Subsidiary Guarantor shall promptly provide such information upon request by any Lender.  In connection therewith, each Lender hereby agrees that the confidentiality provisions set forth in Section 10.17 shall apply to any non-public information provided to it by the Borrower and its Subsidiaries pursuant to this Section 10.18.

 

78

 

SECTION 10.18.    No Fiduciary Duty.

 

Each Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”) may have economic interests that conflict with those of the Borrower and its Subsidiaries and their respective stockholders and/or affiliates.  The Borrower agrees that nothing in this Agreement or the other Fundamental Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and the Borrower and its Subsidiaries and their respective stockholders or affiliates, on the other.  The Borrower acknowledges and agree that (i) the transactions contemplated by this Agreement and the other Fundamental Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Loan Parties, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Loan Party or its stockholders or affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise the Borrower, any other Loan Party or any of their respective stockholders or Affiliates on other matters) or any other obligation to the Borrower or any other Loan Party except the obligations expressly set forth in the Agreement and the other Fundamental Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of the Borrower or any other Loan Party or their respective management, stockholders, creditors or any other Person.  The Borrower acknowledges and agrees that the Borrower and each of the other Loan Parties have consulted their own legal and financial advisors to the extent each deemed appropriate and that each is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  The Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower or any Loan Party in connection with such transaction or the process leading thereto.

 

SECTION 10.19.    Release of Subsidiary Guarantors.

 

(a)         The Lenders authorize the Administrative Agent to release any Subsidiary Guarantor from its obligations under the Subsidiary Guarantee if such Person ceases to be a Subsidiary or becomes an Excluded Subsidiary as a result of a transaction permitted hereunder; provided that no such release shall occur with respect to a Person that ceases to be a Subsidiary or becomes an Excluded Subsidiary if such Subsidiary Guarantor is a guarantor in respect of any Indebtedness of the Borrower issued under the 2010 Indenture or any future indenture of the Borrower unless and until such Person is (or is being simultaneously) released from its guarantee with respect to such Indebtedness of the Borrower.

 

(b)         In addition, the obligations of the Subsidiary Guarantors under the Subsidiary Guarantee shall be automatically suspended during a Suspension Period and shall automatically be reinstated and in full force and effect upon the termination of any Suspension Period.

 

SECTION 10.20.    Excluded Subsidiaries.

 

(a)         Set forth on Schedule 1.1B is a list of all Excluded Subsidiaries of the Borrower as of the Closing Date.

 

(b)         After the Closing Date, a financial officer of the Borrower may designate a Subsidiary as an Excluded Subsidiary by notice sent to the Administrative Agent, provided that (i) no such designation shall be effective unless immediately after giving effect thereto there would exist no Default or Event of Default; (ii) any such designation shall be effective not less than five Business Days after written notice thereof shall have been provided to each Lender; (iii) upon such designation, Schedule 1.1B shall be deemed to be amended to reflect such designation, (iv) the Administrative Agent shall have approved in writing each designation of a Subsidiary as an Excluded Subsidiary (and such exclusion shall

 

79

 

be subject to revocation if reasonably requested by the Administrative Agent) and (v) except as otherwise mutually agreed by the Borrower and the Required Lenders, no Material Subsidiary which is a Domestic Subsidiary may be designated as an Excluded Subsidiary.

 

SECTION 10.21.    Reaffirmation.

 

(a)         The Borrower affirms its obligations under the Existing Credit Agreement.  This Agreement shall be deemed to be an amendment to and restatement of the Existing Credit Agreement and the Existing Credit Agreement as amended and restated hereby shall remain in full force and effect and is hereby ratified and confirmed in all respects.  All indebtedness, obligations and liabilities created by the Existing Credit Agreement and the Fundamental Documents referred to therein owing to Lenders under this Agreement shall continue unimpaired and in full force and effect, as amended and described in this Agreement and the other Fundamental Documents.  All references to the Existing Credit Agreement in any other agreement or document shall, on and after the Restatement Date, be deemed to refer to the Existing Credit Agreement as amended and restated hereby unless the context otherwise requires.

 

[Remainder of page left intentionally blank.]

 

80

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered as of the date first written above.

 

 

	
 
    	
PHH   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Richard J. Bradfield
    
	
 
    	
Name:
    	
Richard   J. Bradfield
    
	
 
    	
Title:   
    	
Senior   Vice President and Treasurer
    
				

 

[Signature Page to Credit Agreement]

 

 

	
 
    	
JPMORGAN   CHASE BANK, N.A., as
    
	
 
    	
a   Lender and Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Neha Desai
    
	
 
    	
Name:
    	
Neha   Desai
    
	
 
    	
Title:
    	
Vice   President
    
				

 

 

	
 
    	
Bank   of America, N.A., as a Lender and
    
	
 
    	
a   Syndication Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   William Soo
    
	
 
    	
Name:
    	
William   Soo
    
	
 
    	
Title:
    	
Vice   President
    
				

 

[Signature Page to Credit Agreement]

 

 

	
 
    	
Citibank,   N.A., as Syndication Agent
    
	
 
    	
and   Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Robert B. Goldstein
    
	
 
    	
Name:
    	
Robert   B. Goldstein
    
	
 
    	
Title:
    	
Managing   Director
    
				

 

[Signature Page to Credit Agreement]

 

 

	
 
    	
Manufacturers   and Traders Trust
    
	
 
    	
Company,   as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Ashley J. S. Thompson
    
	
 
    	
Name:
    	
Ashley   J.S. Thompson
    
	
 
    	
Title:
    	
AVP,   Relationship Manager
    
				

 

 

	
 
    	
THE   ROYAL BANK OF SCOTLAND
    
	
 
    	
PLC,   as a Lender and a Syndication 
    
	
 
    	
Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   James Welch
    
	
 
    	
Name:
    	
James   Welch
    
	
 
    	
Title:
    	
Director
    
				

 

[Signature Page to Credit Agreement]

 

 

	
 
    	
WELLS   FARGO BANK, NATIONAL
    
	
 
    	
ASSOCIATION,   as a Lender and a
    
	
 
    	
Syndication   Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Grainne M. Pergolini
    
	
 
    	
Name:
    	
Grainne   M. Pergolini
    
	
 
    	
Title:
    	
Director
    
				

 

 

	
 
    	
Barclays   Bank PLC, as Documentation
    
	
 
    	
Agent   and as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Alicia Borys
    
	
 
    	
Name:
    	
Alicia   Borys
    
	
 
    	
Title:
    	
Vice   President
    
				

 

 

	
 
    	
DEUTSCHE   BANK AG NEW YORK
    
	
 
    	
BRANCH,   as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Ming K. Chu
    
	
 
    	
Name:   
    	
Ming   K. Chu
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   John S. McGill
    
	
 
    	
Name:   
    	
John   S. McGill
    
	
 
    	
Title:
    	
Director
    
				

 

 

	
 
    	
ROYAL   BANK OF CANADA, as a
    
	
 
    	
Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Patrizia Lloyd
    
	
 
    	
Name:   
    	
Patrizia   Lloyd
    
	
 
    	
Title:
    	
Authorized   Signatory
    
				

 

[Signature Page to Credit Agreement]

 

 

	
 
    	
THE   BANK OF NEW YORK
    
	
 
    	
MELLON,   as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Gregory Muller
    
	
 
    	
Name:   
    	
Gregory   Muller
    
	
 
    	
Title:
    	
Managing   Director
    
				

 

 

	
 
    	
The   Bank of Nova Scotia, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   David Mahmood
    
	
 
    	
Name:   
    	
David   Mahmood
    
	
 
    	
Title:
    	
Managing   Director
    
				

 

 

	
 
    	
Canadian   Imperial Bank of
    
	
 
    	
Commerce,   New York Branch,
    
	
 
    	
as   a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Rhema Asaam
    
	
 
    	
Name:   
    	
Rhema   Asaam
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Andrew Campbell
    
	
 
    	
Name:   
    	
Andrew   Campbell
    
	
 
    	
Title:
    	
Authorized   Signatory
    
				

 

 

	
 
    	
Goldman   Sachs Bank USA, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Mark Walton
    
	
 
    	
Name:   
    	
Mark   Walton
    
	
 
    	
Title:
    	
Authorized   Signatory
    
				

 

 

Schedule 1.1A

 

Commitments

 

	
Lender
    	
 
    	
Tranche A
   Commitment
    	
 
    
	
JPMorgan Chase Bank,   N.A.
    	
 
    	
$
    	
32,100,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Bank of America, N.A.
    	
 
    	
$
    	
32,100,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Citibank, N.A.
    	
 
    	
$
    	
32,100,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Manufacturers and   Traders Trust Company
    	
 
    	
$
    	
32,100,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
The Royal Bank of   Scotland plc
    	
 
    	
$
    	
32,100,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Wells Fargo Bank,   National Association
    	
 
    	
$
    	
32,100,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Barclays Bank PLC
    	
 
    	
$
    	
24,750,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Deutsche Bank AG New   York Branch
    	
 
    	
$
    	
20,700,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Royal Bank of Canada
    	
 
    	
$
    	
18,210,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
The Bank of New York   Mellon
    	
 
    	
$
    	
13,800,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
The Bank of Nova Scotia
    	
 
    	
$
    	
13,800,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Canadian Imperial Bank   of Commerce, New York Branch
    	
 
    	
$
    	
9,270,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Goldman Sachs Bank USA
    	
 
    	
$
    	
6,870,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
$
    	
300,000,000.00
    	
 
    

 

 

Schedule 1.1B

 

I.  Excluded Subsidiaries

 

Excluded Subsidiaries pursuant to clause (v) of definition of “Excluded Subsidiary”

 

PHH Auto Finance LLC

Haddonfield Holding Corporation

PHH Foundation, Inc.

PHH de Brasil Paricopaceos Ltda.

PHH Services B.V.

PHH Charitable Trust

Coldwell Banker Mortgage Corporation

ERA Mortgage Corporation

Instamortgage.com Corporation

MortgageSave.com Corporation

Century 21 Mortgage Corporation

Long Island Mortgage Group, Inc.

PHH Corporate Services, Inc.

PHH Mortgage Services Corporation

Domain Distinctive Property Finance Corporation

Cartus Home Loans, LLC

Coldwell Banker Home Loans, LLC

ERA Home Loans, LLC

Preferred Mortgage Group, LLC

PHH Financial Services LLC

J.W. Geckle Trust

VMS Holdings LLC

PHH (Bermuda) Holdings Ltd.

JHH Partnership

Drivershield.com FS Corp.

First Fleet Master Titling Trust

PHH Corner Leasing, Inc.

PHH Market Leasing, Inc.

PHH St. Paul Leasing, Inc.

PHH Continental Leasing LLC

PHH Milford Leasing, Inc.

Carolina Fleet Truck Sales, LLC

 

Excluded Subsidiaries pursuant to clause (ii) of definition of “Excluded Subsidiary”

 

Speedy Title & Appraisal Review Services LLC

PHH Home Loans, LLC

Axiom Financial, LLC

NE Moves Mortgage LLC

RMR Financial, LLC

Landover Mortgage, LLC

Pacific Access Mortgage, LLC

 

 

Asset Securitization Subsidiaries

 

PHH Mortgage Capital LLC

Chesapeake Funding LLC

Chesapeake Finance Holdings LLC

D.L. Peterson Trust

Raven Funding LLC

FLR LP Inc.

FLR GP1 Inc.

FLR GP2 Inc.

PHH Fleet Lease Receivables LP

Fleet Leasing Receivables Trust

 

CFCs

 

PHH Vehicle Management Services Inc.

Center for Transportation Safety Inc.

Canadian Lease Management Limited

FLR LP Inc.

FLR GP1 Inc.

FLR GP2 Inc.

 

CFC Holdco

 

PHH Canadian Holdings, Inc.

 

Additional Excluded Subsidiaries

 

	
Atrium   Reinsurance Corporation
    	
 
    	
Regulated   entity
    
	
Atrium   Insurance Corporation
    	
 
    	
Regulated   entity
    
	
Dealers   Holding, Inc.
    	
 
    	
Dealer-Motor   Company restriction
    
	
Edenton   Motors, Inc.
    	
 
    	
Dealer-Motor   Company restriction
    
	
Williamsburg   Motors, Inc.
    	
 
    	
Dealer-Motor   Company restriction
    
	
PHH   Sub 1 Inc.
    	
 
    	
Chesapeake   securitization restriction
    
	
PHH   Sub 2 Inc.
    	
 
    	
Chesapeake   securitization restriction
    

 

 

Schedule 2.24

 

Existing Letters of Credit

 

	
Alias
    	
 
    	
Pricing Option
    	
 
    	
Facility/Borrower
    	
 
    	
Current
   Amount
    	
 
    	
Actual
   Expiry
    	
 
    
	
E-386831
    	
 
    	
Standby   Letter of Credit
    	
 
    	
REVOLVING   COMM 485MM EXTENDING / PHH CORP
    	
 
    	
$
    	
5,000,000.00
    	
 
    	
21-Feb-13
    	
 
    
	
E-734400
    	
 
    	
Standby   Letter of Credit
    	
 
    	
REVOLVING   COMM 485MM EXTENDING / PHH CORP
    	
 
    	
7,021,429.00
    	
 
    	
21-Feb-13
    	
 
    
	
S-201831
    	
 
    	
Standby   Letter of Credit
    	
 
    	
REVOLVING   COMM 485MM EXTENDING / PHH CORP
    	
 
    	
2,000,000.00
    	
 
    	
21-Feb-13
    	
 
    
											

 

 

Schedule 5.1(c)

 

Existing Mortgage Warehouse Facilities

 

PHH Mortgage Corporation, as borrower

 

	
Lender
    	
 
    	
Amount of
   Facility
    	
 
    	
Amount Drawn
   as of 06/30/2012
    	
 
    	
Maturity Date
    	
 
    
	
Fannie Mae (uncommitted)
    	
 
    	
$
    	
2,000,000,000
    	
(1)
    	
$
    	
0
    	
 
    	
N/A
    	
 
    
	
Fannie Mae Early Funding Letter Agreement   (committed)
    	
 
    	
$
    	
1,000,000,000
    	
 
    	
$
    	
652,206,733
    	
 
    	
12/15/2012
    	
 
    
	
JPM Chase Bank, National Association (gestation)
    	
 
    	
$
    	
500,000,000
    	
 
    	
$
    	
155,781,455
    	
 
    	
9/30/2012
    	
 
    
	
Barclays Bank PLC (gestation)
    	
 
    	
$
    	
500,000,000
    	
(2)
    	
$
    	
0
    	
 
    	
12/11/2012
    	
 
    
	
Barclays Bank PLC (warehouse)
    	
 
    	
$
    	
500,000,000
    	
(3)
    	
$
    	
69,086,397
    	
 
    	
12/11/2012
    	
 
    
	
The Royal Bank of Scotland plc (warehouse and   gestation)
    	
 
    	
$
    	
500,000,000
    	
 
    	
$
    	
187,217,541
    	
 
    	
6/21/2013
    	
 
    
	
Bank of America, N.A. (warehouse and gestation)
    	
 
    	
$
    	
400,000,000
    	
 
    	
$
    	
37,384,149
    	
 
    	
10/11/2012(4)
    	
 
    
	
Credit Suisse First Boston Mortgage Capital, LLC
    	
 
    	
$
    	
500,000,000
    	
(5)
    	
$
    	
103,268,147
    	
 
    	
5/22/2013
    	
 
    
	
Wells Fargo Bank, N.A.
    	
 
    	
$
    	
250,000,000
    	
 
    	
$
    	
26,366,281
    	
 
    	
10/09/2012
    	
 
    
	
Manufacturers and Traders Trust Company
    	
 
    	
$
    	
1,000,000
    	
 
    	
$
    	
0
    	
 
    	
9/30/2012
    	
 
    

 

(1)  Fannie Mae retains a unilateral right to terminate facility at any time upon notice to PHH Mortgage Corporation.

 

(2)  The aggregate combined amount outstanding under the Barclays/PHH Mortgage Warehouse Facility, the Barclays/PHH Mortgage Gestation Facility and the Barclays/PHH Home Loans Warehouse Facility cannot exceed $500 million and the aggregate amount outstanding under the Barclays/PHH Home Loans Warehouse Facility cannot exceed $150 million.  Axiom Financial, LLC, NE Moves Mortgage LLC, and RMR Financial, LLC are co-borrowers, along with PHH Home Loans, LLC, under the Barclays/PHH Home Loans Warehouse Facility.

 

(3)  The aggregate combined amount outstanding under the Barclays/PHH Mortgage Warehouse Facility, the Barclays/PHH Mortgage Gestation Facility and the Barclays/PHH Home Loans Warehouse Facility cannot exceed $500 million and the aggregate amount outstanding under the Barclays/PHH Home Loans Warehouse Facility cannot exceed $150 million.  Axiom Financial, LLC, NE Moves Mortgage LLC, and RMR Financial, LLC are co-borrowers, along with PHH Home Loans, LLC, under the Barclays/PHH Home Loans Warehouse Facility.

 

(4)  Subject to certain conditions, maturity date may be extended at PHH Mortgage’s option to 10/14/2013.

 

(5)  The aggregate combined amount outstanding under the CS/PHH Mortgage Warehouse Facility and the CS/PHH Home Loans Warehouse Facility cannot exceed $675 million.  Until September 15, 2012, the aggregate amount outstanding under the CS/PHH Mortgage Warehouse Facility cannot exceed $500 million and the aggregate amount outstanding under the CS/PHH Home Loans Warehouse Facility cannot exceed $425 million, subject to the aggregate combined amount under both facilities not exceeding $675 million.  After September 15, 2012, the aggregate amount outstanding under the CS/PHH Mortgage Warehouse Facility cannot exceed $500 million and the aggregate amount outstanding under the CS/PHH Home Loans Warehouse Facility cannot exceed $325 million, subject to the aggregate combined amount under both facilities not exceeding $675 million.  Axiom Financial, LLC, NE Moves Mortgage LLC, and RMR Financial, LLC are co-borrowers, along with PHH Home Loans, LLC, under the CS/PHH Home Loans Warehouse Facility.

 

 

PHH Home Loans, as borrower

 

	
Lender
    	
 
    	
Amount of Facility
    	
 
    	
Amount Drawn as
   of 06/30/2012
    	
 
    	
Maturity Date
    	
 
    
	
Credit Suisse First Boston Mortgage Capital, LLC
    	
 
    	
$
    	
425,000,000
    	
(6)
    	
$
    	
351,713,278
    	
 
    	
5/22/2013
    	
 
    
	
Wells Fargo Bank, N.A.
    	
 
    	
$
    	
200,000,000
    	
(7)
    	
$
    	
141,591,484
    	
 
    	
10/09/2012
    	
 
    
	
Barclays Bank PLC (warehouse)
    	
 
    	
$
    	
150,000,000
    	
(8)
    	
$
    	
140,046,850
    	
 
    	
12/11/2012
    	
 
    
	
Manufacturers and Traders Trust Company
    	
 
    	
$
    	
1,000,000
    	
 
    	
$
    	
0
    	
 
    	
9/30/2012
    	
 
    

 

Axiom Financial, LLC, a wholly owned subsidiary of PHH Home Loans, LLC as borrower

 

	
Lender
    	
 
    	
Amount of Facility
    	
 
    	
Amount Drawn as
   of 06/30/2012
    	
 
    	
Maturity Date
    	
 
    
	
Manufacturers and Traders Trust Company
    	
 
    	
$
    	
1,000,000
    	
 
    	
$
    	
0
    	
 
    	
9/30/2012
    	
 
    
										

 

NE Moves Mortgage, LLC, a wholly owned subsidiary of PHH Home Loans, LLC as borrower

 

	
Lender
    	
 
    	
Amount of Facility
    	
 
    	
Amount Drawn as
   of 06/30/2012
    	
 
    	
Maturity Date
    	
 
    
	
Manufacturers and Traders Trust Company
    	
 
    	
$
    	
1,000,000
    	
 
    	
$
    	
0
    	
 
    	
9/30/2012
    	
 
    
										

 

RMR Financial, LLC, a wholly owned subsidiary of PHH Home Loans, LLC as borrower

 

	
Lender
    	
 
    	
Amount of Facility
    	
 
    	
Amount Drawn as
   of 06/30/2012
    	
 
    	
Maturity Date
    	
 
    
	
Manufacturers and Traders Trust Company
    	
 
    	
$
    	
1,000,000
    	
 
    	
$
    	
0
    	
 
    	
9/30/2012
    	
 
    
										

 

(6)  The aggregate combined amount outstanding under the CS/PHH Mortgage Warehouse Facility and the CS/PHH Home Loans Warehouse Facility cannot exceed $675 million.  Until September 15, 2012, the aggregate amount outstanding under the CS/PHH Mortgage Warehouse Facility cannot exceed $500 million and the aggregate amount outstanding under the CS/PHH Home Loans Warehouse Facility cannot exceed $425 million, subject to the aggregate combined amount under both facilities not exceeding $675 million.  After September 15, 2012, the aggregate amount outstanding under the CS/PHH Mortgage Warehouse Facility cannot exceed $500 million and the aggregate amount outstanding under the CS/PHH Home Loans Warehouse Facility cannot exceed $325 million, subject to the aggregate combined amount under both facilities not exceeding $675 million.  Axiom Financial, LLC, NE Moves Mortgage LLC, and RMR Financial, LLC are co-borrowers, along with PHH Home Loans, LLC, under the CS/PHH Home Loans Warehouse Facility.

 

(7)  Axiom Financial, LLC, NE Moves Mortgage LLC, and RMR Financial, LLC are co-borrowers, along with PHH Home Loans, LLC, under the Wells Fargo/PHH Home Loans Warehouse Facility.

 

(8)  The aggregate combined amount outstanding under the Barclays/PHH Mortgage Warehouse Facility, the Barclays/PHH Mortgage Gestation Facility and the Barclays/PHH Home Loans Warehouse Facility cannot exceed $500 million and the aggregate amount outstanding under the Barclays/PHH Home Loans Warehouse Facility cannot exceed $150 million.  Axiom Financial, LLC, NE Moves Mortgage LLC, and RMR Financial, LLC are co-borrowers, along with PHH Home Loans, LLC, under the Barclays/PHH Home Loans Warehouse Facility.

 

 

Landover Mortgage, LLC, as borrower

 

	
Lender
    	
 
    	
Amount of Facility
    	
 
    	
Amount Drawn as
   of 06/30/2012
    	
 
    	
Maturity Date
    	
 
    
	
Bank of America,   N.A
    	
 
    	
$
    	
15,000,000
    	
 
    	
$
    	
12,294,446
    	
 
    	
10/4/2012
    	
 
    
										

 

Existing Servicing Advance Facilities

 

PHH Mortgage Corporation, as borrower

 

	
Lender
    	
 
    	
Amount of Facility
    	
 
    	
Amount Drawn as
   of 06/30/2012
    	
 
    	
Maturity Date
    	
 
    
	
Fannie Mae Early Advance Funding Addendum to   Mortgage Selling and Servicing Contract
    	
 
    	
$
    	
120,000,000
    	
 
    	
$
    	
68,074,847
    	
 
    	
6/30/2013
    	
 
    
										

 

 

Schedule 6.1

 

Existing Indebtedness of Material Subsidiaries and Subsidiary Guarantors

 

PHH Broker Partner Corporation

 

Limited Liability Company Operating Agreement of PHH Home Loans, LLC dated as of March 31, 2006, by and between PHH Broker Partner Corporation and Cendant Real Estate Services Venture Partner, Inc. (as amended and as further amended, restated, supplemented or modified from time to time)

 

PHH Mortgage Corporation

 

Fannie Mae Committed Early Funding Letter Agreement, dated as of December 15, 2011

 

Amendment No 1 to Fannie Mae Committed Early Funding Letter Agreement, dated as of April 27, 2012

 

Fannie Mae Master Agreement, dated as of April 27, 2012, as amended

 

Amended and Restated As Soon As Pooled Sale Agreement, dated as of April 27, 2012 between Fannie Mae and PHH Mortgage Corporation, f/k/a Cendant Mortgage Corporation

 

Amended and Restated As Soon As Pooled Plus Agreement, dated as of April 27, 2012 between Fannie Mae and PHH Mortgage Corporation

 

Freddie Mac Master Agreement, dated as of October 18, 2011, as amended

 

Credit Agreement, dated as of December 17, 2008, by and between PHH Mortgage Corporation, as borrower, and Manufacturers and Traders Trust Company, as bank

 

LIBOR Grid Note, dated as of December 17, 2008, by and between PHH Mortgage Corporation, as borrower, and Manufacturers and Traders Trust Company, as bank

 

First Amendment to Credit Agreement, dated as of March 30, 2010, by and between PHH Mortgage Corporation, as borrower, and Manufacturers and Traders Trust Company, as bank

 

First Amendment to LIBOR Grid Note, dated as of March 30, 2010, by and between PHH Mortgage Corporation, as borrower, and Manufacturers and Traders Trust Company, as bank

 

Second Amendment to Credit Agreement, dated as of May 30, 2010, by and between PHH Mortgage Corporation, as borrower, and Manufacturers and Traders Trust Company, as bank

 

Second Amendment to LIBOR Grid Note, dated as of May 30, 2010, by and between PHH Mortgage Corporation, as borrower, and Manufacturers and Traders Trust Company, as bank

 

Third Amendment to Credit Agreement, dated as of June 9, 2011, by and between PHH Mortgage Corporation, as borrower, and Manufacturers and Traders Trust Company, as bank

 

Third Amendment to LIBOR Grid Note, dated as of June 9, 2011, by and between PHH Mortgage Corporation, as borrower, and Manufacturers and Traders Trust Company, as bank

 

 

Strategic Relationship Agreement dated as of January 31, 2005, by and among Cendant Real Estate Services Group, LLC, Cendant Real Estate Services Venture Partner, Inc., PHH Corporation, PHH Mortgage Corporation (f/k/a Cendant Mortgage Corporation), PHH Broker Partner Corporation and PHH Home Loans, LLC (as amended and as further amended, restated, supplemented or modified from time to time)

 

Amended and Restated Limited Liability Company Agreement of Speedy Title & Appraisal Review Services LLC dated as of March 7, 2011, by and between PHH Mortgage Corporation and CoreLogic Holdings II, Inc. (as amended, restated, supplemented or modified from time to time)

 

PHH Home Loans, LLC

 

Credit Agreement, dated as of December 15, 2008, by and between PHH Home Loans, LLC, as borrower and Manufacturers and Traders Trust Company, as bank

 

LIBOR Grid Note, dated as of December 15, 2008, by and between PHH Home Loans, LLC, as borrower and Manufacturers and Traders Trust Company, as bank

 

First Amendment to Credit Agreement, dated as of March 30, 2010, by and between PHH Home Loans, LLC, as borrower and Manufacturers and Traders Trust Company, as bank

 

First Amendment to LIBOR Grid Note, dated as of March 30, 2010, by and between PHH Home Loans, LLC, as borrower and Manufacturers and Traders Trust Company, as bank

 

Second Amendment to Credit Agreement, dated as of May 30, 2010, by and between PHH Home Loans, LLC, as borrower and Manufacturers and Traders Trust Company, as bank

 

Second Amendment to LIBOR Grid Note, dated as of May 30, 2010, by and between PHH Home Loans, LLC, as borrower and Manufacturers and Traders Trust Company, as bank

 

Third Amendment to Credit Agreement, dated as of June 9, 2011, by and between PHH Home Loans, LLC, as borrower and Manufacturers and Traders Trust Company, as bank

 

Third Amendment to LIBOR Grid Note, dated as of June 9, 2011, by and between PHH Home Loans, LLC, as borrower and Manufacturers and Traders Trust Company, as bank

 

First Fleet Corporation

 

Loan and Security Agreement dated as of February 27, 2009, by and between Banc of America Leasing & Capital, LLC and First Fleet Corporation, together with the related promissory notes executed in connection therewith

 

Notice and Acknowledgement of Assignment dated as of February 27, 2009, among Banc of America Leasing & Capital, LLC, as assignor, BB&T Equipment Finance Corporation, as assignee, First Fleet Corporation, as borrower, and PHH Corporation, as guarantor, together with the related promissory notes executed in connection therewith

 

Notice and Acknowledgement of Assignment dated as of April 24, 2009, among Banc of America Leasing & Capital, LLC, as assignor, The Fifth Third Leasing Company, as assignee, First Fleet Corporation, as borrower, and PHH Corporation, as guarantor, together with the related promissory notes executed in connection therewith

 

 

Schedule 6.4

 

Existing Liens

 

PHH Mortgage Corporation

 

Fannie Mae Committed Early Funding Letter Agreement, dated as of December 15, 2011

 

Amendment No 1 to Fannie Mae Committed Early Funding Letter Agreement, dated as of April 27, 2012

 

Fannie Mae Master Agreement, dated as of April 27, 2012, as amended

 

Amended and Restated As Soon As Pooled Sale Agreement, dated as of April 27, 2012 between Fannie Mae and PHH Mortgage Corporation, f/k/a Cendant Mortgage Corporation

 

Amended and Restated As Soon As Pooled Plus Agreement, dated as of April 27, 2012 between Fannie Mae and PHH Mortgage Corporation

 

Amended and Restated Pledge and Security Agreement, dated as of April 27, 2012, by PHH Mortgage Corporation in favor of Federal National Mortgage Association

 

Escrow and Control Agreement dated as of November 20, 2009, by and among PHH Mortgage Corporation, Federal National Mortgage Association and JPMorgan Chase Bank, National Association, as amended

 

Freddie Mac Master Agreement, dated as of October 18, 2011, as amended

 

First Fleet Corporation

 

Loan and Security Agreement dated as of February 27, 2009, by and between Banc of America Leasing & Capital, LLC and First Fleet Corporation, together with the related promissory notes executed in connection therewith

 

Notice and Acknowledgement of Assignment dated as of February 27, 2009, among Banc of America Leasing & Capital, LLC, as assignor, BB&T Equipment Finance Corporation, as assignee, First Fleet Corporation, as borrower, and PHH Corporation, as guarantor, together with the related promissory notes executed in connection therewith

 

Notice and Acknowledgement of Assignment dated as of April 24, 2009, among Banc of America Leasing & Capital, LLC, as assignor, The Fifth Third Leasing Company, as assignee, First Fleet Corporation, as borrower, and PHH Corporation, as guarantor, together with the related promissory notes executed in connection therewith

 

 

Schedule 6.13

 

Potential Acquisitions

 

Potential acquisitions required pursuant to the following agreements:

 

Limited Liability Company Operating Agreement of PHH Home Loans, LLC dated as of March 31, 2006, by and between PHH Broker Partner Corporation and Cendant Real Estate Services Venture Partner, Inc. (as amended and as further amended, restated, supplemented or modified from time to time)

 

Strategic Relationship Agreement dated as of January 31, 2005, by and among Cendant Real Estate Services Group, LLC, Cendant Real Estate Services Venture Partner, Inc., PHH Corporation, PHH Mortgage Corporation (f/k/a Cendant Mortgage Corporation), PHH Broker Partner Corporation and PHH Home Loans, LLC (as amended and as further amended, restated, supplemented or modified from time to time)

 

Amended and Restated Limited Liability Company Agreement of Speedy Title & Appraisal Review Services LLC dated as of March 7, 2011, by and between PHH Mortgage Corporation and CoreLogic Holdings II, Inc. (as amended, restated, supplemented or modified from time to time)

 

 

EXHIBIT A

 

FORM OF
 ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into between the Assignor named below (the “Assignor”) and the Assignee named below (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 prior to the date hereof, 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 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 Tranche A Facility (including any letters of credit and guarantees included in such Facility) 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.

 

	
1.
    	
Assignor:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Assignee:
    	
 
    	
 
    
	
 
    	
 
    	
[and   is an Affiliate of [identify Lender](1)]
    
	
 
    	
 
    	
 
    
	
3.
    	
Borrower:
    	
PHH   Corporation
    
	
 
    	
 
    	
 
    
	
4.
    	
Administrative   Agent:
    	
JPMorgan   Chase Bank, N.A., as Administrative Agent under the Credit Agreement
    
	
 
    	
 
    	
 
    
	
5.
    	
Credit   Agreement:
    	
The   Amended and Restated Credit Agreement dated as of August 2, 2012 (as   amended and restated as of May 30, 2014) among PHH Corporation, the   Lenders party thereto, certain other parties and JPMorgan Chase Bank, N.A.,   as Administrative Agent
    

 

(1)  Select as applicable.

 

 

6.                                      Assigned Interest: Tranche A Facility

 

	
Aggregate Amount of
   Commitment/Loans for all
   Lenders
    	
 
    	
Amount of Commitment/Loans
   Assigned
    	
 
    	
Percentage Assigned of
   Commitment/Loans(2)
    	
 
    
	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    
	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    
	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    

 

Effective Date:                               , 201    [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, the Loan Parties and their Affiliates 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:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ASSIGNEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NAME   OF ASSIGNEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    

 

(2)  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders.

 

 

	
Consented   to and Accepted:
    	
 
    
	
 
    	
 
    
	
JPMORGAN   CHASE BANK, N.A., as
    	
 
    
	
Administrative Agent
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Consented   to:
    	
 
    
	
 
    	
 
    
	
PHH   CORPORATION
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[NAME OF ANY OTHER RELEVANT PARTY]
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

 

ANNEX 1

 

Amended and Restated Credit Agreement, dated as of August 2, 2012 (as amended and restated as of May 30, 2014 and as further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PHH Corporation (the “Borrower”), the Lenders party thereto, certain other parties and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”)

 

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 or any other Fundamental Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Fundamental Documents, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Fundamental Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Fundamental Document.

 

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 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 5.1 thereof, 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 or any other Lender and (v) if it is a Non-U.S. Lender, 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, the Assignor 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 the Fundamental Documents and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Fundamental Documents 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.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by email or telecopy 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.

 

 

EXHIBIT B

 

FORM OF
 COMPLIANCE CERTIFICATE

 

[PERIOD END               ]

 

[Date](3)

 

I, [          ] hereby certify:

 

1.                                      I am the duly elected and authorized [Chief Financial Officer or Vice President responsible for financial administration or Chief Accounting Officer] of PHH Corporation, a Maryland corporation (the “Company”).

 

2.                                      I am familiar with the terms and conditions of the Amended and Restated Credit Agreement dated as of August 2, 2012 (as amended and restated as of May 30, 2014), among the Company, the Lenders party thereto, certain other parties and JPMorgan Chase Bank, N.A., as Administrative Agent (as such agreement may be further amended, supplemented or otherwise modified, renewed or replaced from time to time, the “Credit Agreement”).

 

3.                                      The attached financial statements of the Company and its Subsidiaries for the end of the fiscal period referred to above have been prepared from the books of the Company and its Subsidiaries in accordance with the generally accepted accounting principles used in the preparation of the fiscal [    ] financial statements and, to the best of my knowledge, information, and belief, upon due inquiry, present fairly in all material respects the financial position of the Company and its Consolidated Subsidiaries as at the end of such fiscal period and the results of their operations for the period then ended, subject, in the case of quarterly statements, to year-end and audit adjustments and to the absence of footnote disclosure.(4)

 

4.                                      To the best of my knowledge, information, and belief, after due inquiry, there exists no Event of Default or Default, except as otherwise may be set forth herein.

 

Attached hereto, in reasonable detail, are the computations and comparisons required to demonstrate compliance with the provisions of Sections 6.6, 6.7 and 6.10 of the Credit Agreement.

 

Attached hereto is a schedule (in the form of Schedule 5.1(c) to the Credit Agreement) describing the Mortgage Warehouse Facilities and Servicing Advance Facilities in effect on the last day of the most recently ended fiscal quarter.

 

Attached hereto, in reasonable detail, is a description of repurchased mortgage loans, repurchase requests (existing and new), indemnification requests and payments made for such quarter and year to date periods, and comparisons to comparable periods for the prior year.

 

Attached hereto are detailed projections of the Borrower and its Consolidated Subsidiaries for the following two fiscal years.(5)

 

(3)  Date of delivery of Compliance Certificate.

(4)  Only applicable to quarterly financial statements.

(5)  Only applicable to annual financial statements, and as applicable, any significant revisions of such projections.

 

 

The foregoing certifications, together with the computations and comparisons set forth in the attachments hereto and the financial statements attached to this certificate in support hereof, are made and delivered the day and year first written above pursuant to Sections 5.1(a),(b), (c) and (d) of the Credit Agreement.

 

IN WITNESS WHEREOF, I have executed this Certificate this            day of                       , 201  .

 

	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

Attachment 1

to Compliance Certificate

 

Attachments

 

1.                                      financial statements;

 

2.                                      the computations and comparisons (in reasonable detail) required to demonstrate compliance with the provisions of Section 6.6, 6.7 and 6.10 of the Credit Agreement;

 

3.                                      a schedule of Mortgage Warehouse Facilities and Servicing Advance Facilities in effect on the last day of the most recently ended fiscal quarter;

 

4.                                      a description of repurchased mortgage loans, repurchase requests (existing and new), indemnification requests and payments made for such quarter and year to date periods, and comparisons to comparable periods for the prior year; and

 

5.                                      detailed projections of the Borrower and its Consolidated Subsidiaries for the following two fiscal years.(6)

 

(6)  Only applicable to annual financial statements, and as applicable, any significant revisions of such projections.

 

 

EXHIBIT C

 

FORM OF
 BORROWING REQUEST

 

JPMorgan Chase Bank, N.A., as Administrative Agent 
 for the Lenders referred to below,

1111 Fannin, 10th Floor

Houston, Texas 77002

 

	
Attention:                                                                    
    	
[Date]
    

 

Ladies and Gentlemen:

 

The undersigned, PHH Corporation (the “Borrower”), refers to the Amended and Restated Credit Agreement dated as of August 2, 2012 (as amended and restated as of May 30, 2014 and as the same may be further amended, supplemented or otherwise modified, renewed or replaced from time to time, the “Credit Agreement”), among PHH Corporation (the “Borrower”), the Lenders party thereto, certain other parties and JPMorgan Chase Bank, N.A., as administrative agent.  Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.  The Borrower hereby gives you notice pursuant to Section 2.5 of the Credit Agreement that it requests a Borrowing under the Credit Agreement and in that connection sets forth below the terms on which such Borrowing is requested to be made:

 

	
(A) LIBOR Borrowing or ABR Borrowing
    	
 
    	
[LIBOR][ABR]
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(B) The date of such Borrowing (which shall be a   Working Day)
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(C) The amount of such Borrowing
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(D) Interest Period(s) with respect to the   LIBOR Loan(s) and the last day of such Interest Period(s)(7)
    	
 
    	
 
    	
 
    
					

 

Upon acceptance of the Loans to be made by the Lenders in response to this request, the Borrower shall be deemed to have represented and warranted that the conditions to each Loan specified in Sections 4.2(b), 4.2(c) and 4.2(d) of the Credit Agreement have been satisfied.

 

	
 
    	
Very   truly yours,
    
	
 
    	
PHH   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

(7)                                 Shall be subject to the definition of “Interest Period” and shall not end later than the Tranche A Termination Date. [Complete only in the case where LIBOR Loan(s) are being requested.]

 

 

EXHIBIT D-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 Amended and Restated Credit Agreement, dated as of August 2, 2012 (as amended and restated as of May 30, 2014 and as further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PHH Corporation (the “Borrower”), the Lenders party thereto, certain other parties and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Pursuant to the provisions of Section 2.22 of the 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 ten 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.

 

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on the applicable IRS Form W-8BEN.  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.

 

 

	
[NAME OF LENDER]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:                          , 201  
    	
 
    

 

 

EXHIBIT D-2

 

FORM OF 
  U.S. TAX COMPLIANCE CERTIFICATE

 

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is made to the Amended and Restated Credit Agreement, dated as of August 2, 2012 (as amended and restated as of May 30, 2014 and as further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PHH Corporation (the “Borrower”), the Lenders party thereto, certain other parties and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Pursuant to the provisions of Section 2.22 of the 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 ten 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.

 

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on the applicable IRS Form W-8BEN.  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.

 

 

	
[NAME OF PARTICIPANT]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:                          , 201  
    	
 
    

 

 

EXHIBIT D-3

 

FORM OF
 U.S. TAX COMPLIANCE CERTIFICATE

 

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is made to the Amended and Restated Credit Agreement, dated as of August 2, 2012 (as amended and restated as of May 30, 2014 and as further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PHH Corporation (the “Borrower”), the Lenders party thereto, certain other parties and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Pursuant to the provisions of Section 2.22 of the 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 ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (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.

 

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 applicable IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an applicable IRS Form W-8BEN 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.

 

	
[NAME OF PARTICIPANT]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:                          , 201  
    	
 
    

 

 

EXHIBIT D-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 Amended and Restated Credit Agreement, dated as of August 2, 2012 (as amended and restated as of May 30, 2014 and as further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PHH Corporation (the “Borrower”), the Lenders party thereto, certain other parties and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

Pursuant to the provisions of Section 2.22 of the 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 Credit Agreement or any other Fundamental 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 ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (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.

 

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 applicable IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an applicable IRS Form W-8BEN 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.

 

 

	
[NAME OF LENDER]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:                          , 201  
    	
 
    

 

 

EXHIBIT E

 

FORM OF
 BORROWING BASE CERTIFICATE

 

This Borrowing Base Certificate is delivered pursuant to Section 5.1(h) of the Amended and Restated Credit Agreement, dated as of August 2, 2012 (as amended and restated as of May 30, 2014 and as further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PHH Corporation (the “Borrower”), the Lenders party thereto, certain other parties and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

The undersigned hereby certifies that the following information is true and correct as of [            ], 201   :

 

Borrowing Base(8)

 

	
 
    	
 
    	
(from detailed schedules attached and without double counting)
    	
 
    	
Amount in $
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
 
    	
The   book value of all unencumbered and unrestricted tangible assets of the   Borrower and its Consolidated Subsidiaries other than mortgage servicing   rights:
    	
 
    	
$
    	
[                      ]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
 
    	
The   book value of the Borrower’s and the Subsidiary Guarantors’ Unencumbered   Mortgage Servicing Rights:
    	
 
    	
$
    	
[                      ]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
 
    	
Borrowing   Base = (a) + ((b) x .75):
    	
 
    	
$
    	
[                      ]
    	
 
    

 

(8)  For purposes of determining the Borrowing Base, cash, Cash Equivalents and accounts receivable will be excluded in calculating the Borrowing Base; Unencumbered Mortgage Servicing Rights will be marked-to-market on a daily basis. For the avoidance of doubt, assets and mortgage servicing rights will not be included in the Borrowing Base if there are legal or contractual restrictions impairing or preventing the pledge of such assets or mortgage servicing rights in whole or in part (other than, in the case of mortgage servicing rights, restrictions imposed by guidelines of Government-Sponsored Enterprises).

 

 

Unsecured Indebtedness

 

	
 
    	
 
    	
(from detailed schedules attached and without double counting)
    	
 
    	
Amount in $
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(v) 
    	
 
    	
The   aggregate principal amount of all unsecured Indebtedness for borrowed money   of the Borrower and its Subsidiaries, including the Tranche A Facility:
    	
 
    	
$
    	
[                      ]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(w) 
    	
 
    	
The   face amount of all letters of credit issued for the account of the Borrower   or any Subsidiary, if the reimbursement obligation is unsecured, whether or   not drawn:
    	
 
    	
$
    	
[                      ]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(x) 
    	
 
    	
The   aggregate principal amount of any unsecured notes and debt securities issued   by the Borrower or any Subsidiary, including, without limitation, the   Convertible Notes:
    	
 
    	
$
    	
[                      ]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(y) 
    	
 
    	
The   aggregate principal amount of any unsecured Guarantee by the Borrower or any   of its Subsidiaries of obligations of third Persons of the type described in   (v) through (x) above:
    	
 
    	
$
    	
[                      ]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(z) 
    	
 
    	
Unsecured   Indebtedness = (v) + (w) + (x) + (y):
    	
 
    	
$
    	
[                      ]
    	
 
    

 

Borrowing Base Compliance

 

	
 
    	
 
    	
Borrowing   Base Compliance = The ratio of (c) to (z) (less the balance in the   2014 Convertible Notes Escrow Account at such time):
    	
 
    	
[     ]:[     ]
    	
 
    

 

IN WITNESS WHEREOF, I have executed this Certificate this            day of                       , 20    .

 

 

	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

EXHIBIT F

 

FORM OF

SUBSIDIARY GUARANTEE

 

 

	
 
    

 

GUARANTEE AGREEMENT

 

made by

 

CERTAIN SUBSIDIARIES OF PHH CORPORATION

 

in favor of

 

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

 

Dated as of August 2, 2012

 

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1.
    	
DEFINED TERMS
    	
1
    
	
1.1
    	
Definitions
    	
1
    
	
1.2
    	
Other Definitional Provisions
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
GUARANTEE
    	
2
    
	
2.1
    	
Guarantee
    	
2
    
	
2.2
    	
Right of Contribution
    	
3
    
	
2.3
    	
No Subrogation
    	
3
    
	
2.4
    	
Amendments, etc. with respect to the Tranche A   Obligations
    	
3
    
	
2.5
    	
Guarantee Absolute and Unconditional
    	
3
    
	
2.6
    	
Reinstatement
    	
4
    
	
2.7
    	
Payments
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
REPRESENTATIONS AND WARRANTIES; COVENANTS
    	
4
    
	
3.1
    	
Representations and Warranties
    	
4
    
	
3.2
    	
Covenants
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
MISCELLANEOUS
    	
5
    
	
4.1
    	
Amendments in Writing
    	
5
    
	
4.2
    	
Notices
    	
5
    
	
4.3
    	
No Waiver
    	
5
    
	
4.4
    	
Enforcement Expenses; Indemnification
    	
5
    
	
4.5
    	
Successors and Assigns
    	
6
    
	
4.6
    	
Set-Off
    	
6
    
	
4.7
    	
Counterparts
    	
6
    
	
4.8
    	
Severability
    	
6
    
	
4.9
    	
Headings
    	
6
    
	
4.10
    	
Integration
    	
6
    
	
4.11
    	
CHOICE OF LAW
    	
6
    
	
4.12
    	
SERVICE OF PROCESS AND WAIVER OF   JURY TRIAL
    	
6
    
	
4.13
    	
Acknowledgements
    	
8
    
	
4.14
    	
Additional Guarantors
    	
8
    
	
4.15
    	
Suspension Period
    	
8
    

 

SCHEDULES

Schedule 1                                     Notice Addresses

 

i

 

GUARANTEE AGREEMENT

 

GUARANTEE AGREEMENT (the “Agreement”), dated as of August 2, 2012, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “Guarantors”), in favor of JPMORGAN CHASE BANK, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) for the banks and other financial institutions or entities (the “Lenders”) from time to time parties to the Credit Agreement, dated as of August 2, 2012 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PHH CORPORATION (the “Borrower”), the Lenders, the Agents and the Administrative Agent.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein;

 

WHEREAS, each of the Guarantors is a direct or indirect domestic Subsidiary of the Borrower;

 

WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of the other Guarantors in connection with the operation of their respective businesses;

 

WHEREAS, the Borrower and the Guarantors are engaged in related businesses, and each Guarantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Tranche A Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Guarantors shall have executed and delivered this Agreement to the Administrative Agent for the benefit of the Tranche A Lenders;

 

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Tranche A Lenders to enter into the Credit Agreement and to induce the Tranche A Lenders to make their respective extensions of credit to the Borrower thereunder, each Guarantor hereby agrees with the Administrative Agent, for the ratable benefit of the Tranche A Lenders, as follows:

 

SECTION 1.                            DEFINED TERMS

 

1.1                               Definitions.  (a)             Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

(b)         The following term shall have the following meaning:

 

“Tranche A Obligations”:  the collective reference to the unpaid principal of and interest on the Tranche A Loans and reimbursement obligations in respect of the Letters of Credit, fronting fees and commissions in respect of Letters of Credit and all other obligations and liabilities of the Borrower (including, without limitation, interest, fees and commissions accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Tranche A Loans and interest, fees and commissions 

 

 

accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement if any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Administrative Agent or any Tranche A Lender, whether direct or indirect, absolute or contingent, due to or to become due, or now existing or hereafter incurred which may arise under, out of, or in connection with, the Tranche A Facility, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise.

 

1.2                               Other Definitional Provisions.  (a)  The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.

 

(b)                                 The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

SECTION 2.                            GUARANTEE

 

2.1                               Guarantee.  (a)  Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Tranche A Lenders and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Tranche A Obligations.

 

(b)                                 Anything herein or in any other Fundamental Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Fundamental Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.2).

 

(c)                                  Each Guarantor agrees that the Tranche A Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent or any Tranche A Lender hereunder.

 

(d)                                 The guarantee contained in this Section 2 shall remain in full force and effect until all the Tranche A Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full in cash, no Letter of Credit shall be outstanding and the Tranche A Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrower may be free from any Tranche A Obligations.

 

(e)                                  No payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any Tranche A Lender from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Tranche A Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Tranche A Obligations or any payment received or collected from such Guarantor in respect of the Tranche A Obligations), remain liable for the Tranche A Obligations up to the maximum liability of such Guarantor hereunder until the Tranche A Obligations are 

 

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paid in full in cash, no Letter of Credit shall be outstanding and the Tranche A Commitments are terminated.

 

2.2                               Right of Contribution.  Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2.3.  The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent and the Tranche A Lenders, and each Guarantor shall remain liable to the Administrative Agent and the Tranche A Lenders for the full amount guaranteed by such Guarantor hereunder.

 

2.3                               No Subrogation.  Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Administrative Agent or any Tranche A Lender, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent or any Tranche A Lender against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent or any Tranche A Lender for the payment of the Tranche A Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Administrative Agent and the Tranche A Lenders by the Borrower on account of the Tranche A Obligations are paid in full in cash, no Letter of Credit shall be outstanding and the Tranche A Commitments are terminated.  If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Tranche A Obligations shall not have been paid in full in cash, such amount shall be held by such Guarantor in trust for the Administrative Agent and the Tranche A Lenders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Tranche A Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine.

 

2.4                               Amendments, etc. with respect to the Tranche A Obligations.  Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Tranche A Obligations made by the Administrative Agent or any Tranche A Lender may be rescinded by the Administrative Agent or such Tranche A Lender and any of the Tranche A Obligations continued, and the Tranche A Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any Tranche A Lender, and the Credit Agreement and the other Fundamental Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders or the Supermajority Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any Tranche A Lender for the payment of the Tranche A Obligations may be sold, exchanged, waived, surrendered or released.  Neither the Administrative Agent nor any Tranche A Lender shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Tranche A Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

 

2.5                               Guarantee Absolute and Unconditional.  To the extent permitted by law, each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Tranche A 

 

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Obligations and notice of or proof of reliance by the Administrative Agent or any Tranche A Lender upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Tranche A Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Administrative Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2.  To the extent permitted by law, each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of the Guarantors with respect to the Tranche A Obligations.  Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement or any other Fundamental Document, any of the Tranche A Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Lender, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Borrower or any other Person against the Administrative Agent or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Tranche A Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance.  When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent or any Tranche A Lender may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Tranche A Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any Tranche A Lender to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any Tranche A Lender against any Guarantor.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

 

2.6                               Reinstatement.  The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Tranche A Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any Tranche A Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

 

2.7                               Payments.  Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the Funding Office.

 

SECTION 3.                            REPRESENTATIONS AND WARRANTIES; COVENANTS

 

3.1                               Representations and Warranties.  Each Guarantor makes to the Administrative Agent and the Lenders the representations and warranties set forth with respect to such Guarantor in Section 3 of the Credit Agreement, which representations and warranties are incorporated by reference in this Agreement, 

 

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mutatis mutandis, all of which survive the execution and delivery of this Agreement and the making of the Loans and issuance of the Letters of Credit.

 

3.2                               Covenants.  For so long as the Tranche A Commitments shall be in effect or any Tranche A Obligations remain outstanding or unpaid in cash or there shall remain any outstanding L/C Exposure, each Guarantor agrees that it will comply with the covenants set forth in Sections 5 and 6 of the Credit Agreement which are applicable to such Guarantor, which covenants are incorporated by reference in this Agreement, mutatis mutandis.

 

SECTION 4.                            MISCELLANEOUS

 

4.1                               Amendments in Writing.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 10.9 of the Credit Agreement.

 

4.2                               Notices.  All notices, requests and demands to or upon the Administrative Agent or any Guarantor hereunder shall be effected in the manner provided for in Section 10.1 of the Credit Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1.

 

4.3                               No Waiver.  No failure on the part of the Administrative Agent, any Issuing Lender or any Tranche A Lender to exercise, and no delay in exercising, any right, power or remedy hereunder or with regard to the Letters of Credit shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

 

4.4                               Enforcement Expenses; Indemnification.  (a)  Each Guarantor agrees to pay or reimburse each Tranche A Lender and the Administrative Agent for all its reasonable and invoiced out-of-pocket costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Fundamental Documents to which such Guarantor is a party, including, without limitation, the reasonable and invoiced out-of-pocket fees and disbursements of counsel to the Tranche A Lenders and of counsel to the Administrative Agent.

 

(b)                                 Each Guarantor agrees to pay, and to save the Administrative Agent and the Tranche A Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which are required to be paid by the Borrower under the Credit Agreement in connection with any of the transactions contemplated by this Agreement.

 

(c)                                  Each Guarantor agrees to pay, and to save the Administrative Agent and the Tranche A Lenders harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to Section 10.4 of the Credit Agreement.

 

(d)                                 The agreements in this Section 4.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Fundamental Documents.

 

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4.5                               Successors and Assigns.  Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party (provided that no Guarantor may assign its rights or obligations hereunder without the prior written consent of the Administrative Agent), and all covenants, promises and agreements by, or on behalf of, each Guarantor which are contained in this Agreement or any other Fundamental Document shall inure to the benefit of the successors and assigns of the Lenders.

 

4.6                               Set-Off.  In addition to any rights and remedies of the Tranche A Lenders provided by law, if any Event of Default shall have occurred and be continuing, each Tranche A Lender shall have the right, subject to Sections 2.20 and 8.3 of the Credit Agreement, without notice to any Guarantor, any such notice being expressly waived by each Guarantor to the extent permitted by applicable law, upon any Tranche A Obligations becoming due and payable by any Guarantor (whether at the stated maturity, by acceleration or otherwise), to apply to the payment of such Tranche A Obligations, by setoff or otherwise, any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Tranche A Lender, any affiliate thereof or any of their respective branches or agencies to or for the credit or the account of such Guarantor.  Each Tranche A Lender agrees promptly to notify the relevant Guarantor and the Administrative Agent after any such application made by such Tranche A Lender, provided that the failure to give such notice shall not affect the validity of such application.

 

4.7                               Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same instrument.

 

4.8                               Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

4.9                               Headings.  Section headings used herein are for convenience only and are not to affect the construction of or be taken into consideration in interpreting this Agreement.

 

4.10                        Integration.  This Agreement and the other Fundamental Documents represent the agreement of the Guarantors, the Administrative Agent and the Tranche A Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Tranche A Lender relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Fundamental Documents.

 

4.11                        CHOICE OF LAW.  THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND, IN THE CASE OF PROVISIONS RELATING TO INTEREST RATES, ANY APPLICABLE LAWS OF THE UNITED STATES.

 

4.12                        SERVICE OF PROCESS AND WAIVER OF JURY TRIAL.

 

(a)                                 EACH OF THE GUARANTORS AND EACH CREDIT PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS OF 

 

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THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER BROUGHT BY THE BORROWER, ANY GUARANTOR, THE ADMINISTRATIVE AGENT, AN ISSUING LENDER OR A LENDER.  EACH GUARANTOR AND EACH CREDIT PARTY TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (B) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER.  EACH GUARANTOR HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN PURSUANT TO SECTION 4.2.  EACH GUARANTOR AND EACH CREDIT PARTY AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE OTHER PARTIES HERETO.  FINAL JUDGMENT AGAINST ANY PARTY HERETO IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE SUBMITTING PARTY THEREIN DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER JURISDICTION.

 

(b)                                 TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE.  EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE PROVISIONS OF THIS SECTION 4.12(b) CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT.  THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.12(b) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH OTHER PARTY TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.

 

(c)                                  EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION, SUIT OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES; PROVIDED THIS WAIVER SHALL NOT APPLY TO ANY OBLIGATIONS OF ANY GUARANTORS UNDER SECTION 4.4 OR ANY OTHER 

 

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INDEMNIFICATION OR SIMILAR PROVISION UNDER ANY FUNDAMENTAL DOCUMENT TO WHICH SUCH GUARANTOR IS A PARTY.

 

4.13                        Acknowledgements.  Each Guarantor hereby acknowledges that:

 

(a)                                 it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Fundamental Documents to which it is a party;

 

(b)                                 neither the Administrative Agent nor any Tranche A Lender has any fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Agreement or any of the other Fundamental Documents, and the relationship between the Guarantors, on the one hand, and the Administrative Agent and the Tranche A Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(c)                                  no joint venture is created hereby or by the other Fundamental Documents or otherwise exists by virtue of the transactions contemplated hereby among the Tranche A Lenders or among the Guarantors and the Tranche A Lenders.

 

4.14                        Additional Guarantors.  Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to Section 5.8 of the Credit Agreement shall become a Guarantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.

 

4.15                        Suspension Period.  The guarantees of the Subsidiary Guarantors under this Agreement shall be automatically suspended during a Suspension Period and shall automatically be reinstated and in full force and effect upon the termination of any Suspension Period, and each Guarantor unconditionally and irrevocably agrees to the foregoing.  For the avoidance of doubt, any Tranche A Obligations incurred during a Suspension Period shall be automatically included in the Tranche A Obligations guaranteed hereunder upon the termination of any Suspension Period.

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered as of the date first above written.

 

 

	
 
    	
PHH MORTGAGE CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PHH BROKER PARTNER CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PHH VEHICLE MANAGEMENT SERVICES 
    
	
 
    	
GROUP LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PHH VEHICLE MANAGEMENT SERVICES, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FIRST FLEET CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PHH CARIBBEAN LEASING, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Guarantee]

 

 

	
 
    	
CENTER FOR TRANSPORTATION SAFETY,
    
	
 
    	
LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Guarantee]

 

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Schedule 1

 

NOTICE ADDRESSES OF GUARANTORS

 

c/o PHH Corporation

3000 Leadenhall Road

Mount Laurel, New Jersey 08054

Attention:  Assistant Treasurer, with a copy to the General Counsel

 

[Signature Page to Guarantee]

 

 

Annex 1 to
 Guarantee Agreement

 

ASSUMPTION AGREEMENT, dated as of [      ], 201  , made by [              ] (the “Additional Guarantor”), in favor of JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”) for the banks and other financial institutions or entities (the “Lenders”) parties to the Credit Agreement referred to below.  All capitalized terms not defined herein shall have the meaning ascribed to them in such Credit Agreement.

 

W  I  T  N  E  S  S  E  T  H :

 

WHEREAS, PHH Corporation (the “Borrower”), the Lenders and the Administrative Agent have entered into the Credit Agreement, dated as of August 2, 2012 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, in connection with the Credit Agreement, the Guarantors have entered into the Guarantee Agreement, dated as of August 2, 2012 (as amended, supplemented or otherwise modified from time to time, the “Guarantee Agreement”) in favor of the Administrative Agent for the benefit of the Tranche A Lenders;

 

WHEREAS, the Credit Agreement requires the Additional Guarantor to become a party to the Guarantee Agreement; and

 

WHEREAS, the Additional Guarantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1.  Guarantee Agreement.  By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 4.14 of the Guarantee Agreement, hereby becomes a party to the Guarantee Agreement as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder.

 

2.  CHOICE OF LAW.  THIS ASSUMPTION AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND, IN THE CASE OF PROVISIONS RELATING TO INTEREST RATES, ANY APPLICABLE LAWS OF THE UNITED STATES.

 

[Signature Page to Guarantee]

 

 

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

 

 

	
 
    	
[ADDITIONAL GUARANTOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

EXHIBIT G

 

FORM OF

AMENDMENT AND REAFFIRMATION OF GUARANTEE

 

Reference is made to (i) the Amended and Restated Credit Agreement, dated as of August 2, 2012 (as amended and restated as of May 30, 2014 and as further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among PHH Corporation (the “Borrower”), the Lenders from time to time party thereto (the “Lenders”) and JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”) and (ii) the Guarantee Agreement, dated as of August 2, 2012 (as amended, supplemented or otherwise modified from time to time, the “Guarantee Agreement”), by the Guarantors party thereto, in favor of the Administrative Agent, for the Lenders.  Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

 

Pursuant to the Credit Agreement, the Commitment of the Tranche A Lenders shall be increased by $50,000,000 (the “Tranche A Facility Increase”) to an aggregate principal amount of $300,000,000.  Each of the Guarantors executing a copy of this Amendment and Reaffirmation of Guarantee hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Tranche A Lenders and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the increase in the Tranche A Obligations (as defined in the Guarantee Agreement) resulting from the Tranche A Facility Increase and confirms and agrees that, notwithstanding the amendment and restatement of the Credit Agreement, the Guarantee Agreement (and all of its guarantee obligations in respect of the Tranche A Obligations thereunder) is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, after giving effect to the Credit Agreement as of the Restatement Date and the Tranche A Facility Increase contemplated thereby.

 

The Guarantee Agreement is hereby amended as follows:

 

(a) The definition of “Tranche A Obligations” is hereby amended by adding the following proviso at the end thereof: “; provided, that for purposes of determining any obligations of any Guarantor under this Agreement, the definition of “Tranche A Obligations” shall not create any guarantee by any Guarantor of any Excluded Swap Obligations of such Guarantor”.

 

(b) The definition of “Qualified Keepwell Provider” is hereby added in proper alphabetical order:

 

“Qualified Keepwell Provider”:  in respect of any Swap Obligation, each Guarantor that, at the time the relevant guarantee becomes effective with respect to such Swap Obligation, has total assets exceeding $10,000,000 or otherwise constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” with respect to such Swap Obligation at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

(c) Section 2.1 of the Guarantee Agreement is hereby amended by adding the following at the end thereof: “(other than, with respect to any Guarantor, any Excluded Swap Obligations of such Guarantor)”.

 

(d) Section 2.8 is hereby added to the Guarantee Agreement as follows:

 

 

“2.8        Keepwell.  Each Qualified Keepwell Provider hereby, jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Guarantor to honor all of its obligations under this Agreement in respect of the Swap Obligations; provided, however, that each Qualified Keepwell Provider shall only be liable under this Section 2.8 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 2.8, or otherwise under this Agreement, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount.  The obligations of each Qualified Keepwell Provider under this Section 2.8 shall remain in full force and effect until a discharge of the Tranche A Obligations of the Borrower.  Each Qualified Keepwell Provider intends that this Section 2.8 constitute, and this Section 2.8 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.”

 

e) The first sentence of Section 4.6 of the Guarantee Agreement is hereby amended by adding the following proviso at the end thereof: “; provided that to the extent prohibited by applicable law as described in the definition of “Excluded Swap Obligation,” no amounts received from, or set off with respect to, any Guarantor shall be applied to any Excluded Swap Obligations of such Guarantor”.

 

This Amendment and Reaffirmation of Guarantee may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single document.  Delivery of an executed counterpart of a signature page of this Amendment and Reaffirmation of Guarantee by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Amendment and Reaffirmation of Guarantee.

 

THIS AMENDMENT AND REAFFIRMATION OF GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

[Signature page immediately follows.]

 

 

	
 
    	
PHH   MORTGAGE CORPORATION
    
	
 
    	
PHH   BROKER PARTNER CORPORATION
    
	
 
    	
PHH   VEHICLE MANAGEMENT SERVICES, LLC
    
	
 
    	
PHH   VEHICLE MANAGEMENT SERVICES GROUP LLC
    
	
 
    	
FIRST   FLEET CORPORATION
    
	
 
    	
PHH   CARIBBEAN LEASING, INC.
    
	
 
    	
CENTER   FOR TRANSPORTATION SAFETY, LLC
    
	
 
    	
COMMERCIAL   TRUCK CENTER OF VIRGINIA, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Amendment and Reaffirmation of Guarantee]

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