As filed with the Securities and Exchange Commission on May 15, 2017
(Exact Name of Each Registrant as Specified in its Charter)
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Cayman Islands | 7372 | N/A | ||
(State or other jurisdiction of
Incorporation or organization) |
(Primary standard industrial
classification code number) |
(I.R.S. Employer
Identification Number) |
(Address, including zip code, and telephone number, including area code, of each registrants principal executive offices)
(Name, address, including zip code, and telephone number, including area code, of agent for service)
With copies to:
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David Alan Miller, Esq.
Jeffrey M. Gallant, Esq. Graubard Miller The Chrysler Building 405 Lexington Avenue New York, New York 10174 Telephone: (212) 818-8800 Fax: (212) 818-8881 |
Paul Sheridan, Esq.
Latham & Watkins LLP 555 Eleventh Street, N.W. Washington, DC 20004 Telephone: (202) 637-2200 Fax: (202) 637-2201 |
Rolf Lindsay, Esq.
Walkers Global 190 Elgin Avenue George Town, Grand Cayman KY1-9001 Cayman Islands Telephone: (345) 949-0100 Fax: (345) 949-7886 |
Stephen L. Ritchie, P.C.
Mark A. Fennell, P.C. Dennis M. Myers, P.C. Kirkland & Ellis LLP 300 North LaSalle Chicago, Illinois 60654 Telephone: (312) 862-2000 Fax: (312) 862-2200 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the transactions contemplated by the Agreement and Plan of Merger described in the included proxy statement/prospectus have been satisfied or waived.
If any of the securities being registered on this form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o | Accelerated filer o |
Non-accelerated filer
x
(Do not check if a smaller reporting company) |
Smaller reporting company
o
Emerging growth company x |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) o
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) o
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Title of each Class of Security being registered |
Amount
being Registered (1) |
Proposed
Maximum Offering Price Per Security (2) |
Proposed
Maximum Aggregate Offering Price (2) |
Amount of
Registration Fee |
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Ordinary Shares (3) | 39,025,000 | $ | 10.55 | $ | 411,713,750 | $ | 47,717.62 | |||||||||
Ordinary Shares (4) | 22,500,000 | $ | 10.55 | $ | 237,375,000 | $ | 27,511.76 | |||||||||
Total | $ | 649,088,750 | $ | 75,229.38 | (5) |
(1) | All securities being registered will be issued by Capitol Acquisition Holding Company Ltd., an exempted company incorporated in the Cayman Islands with limited liability ( Holdings ). In connection with the business combination described in the included proxy statement/prospectus: (a) all of the share capital and convertible preferred equity certificates of Canyon Holdings S.a r.l., a Luxembourg private limited liability company ( Cision ), shall be contributed to Holdings in exchange for shares and warrants of Holdings and (b) Capitol Acquisition Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings ( Merger Sub ), shall be merged with and into Capitol Acquisition Corp. III, a Delaware corporation ( Capitol ), with Capitol surviving the merger. As a result of the foregoing transactions, Holdings will become the public company, and the current security holders of Capitol and the owners of Cision will become security holders of Holdings. |
(2) | Based on the market price on April 3, 2017 of the common stock of Capitol (the company to which the Registrant will succeed after the transactions described in this registration statement and enclosed proxy statement/prospectus). |
(3) | Includes ordinary shares issuable in exchange for outstanding shares of common stock underlying units of Capitol, each such unit consisting of one share of common stock and one-half of one warrant. |
(4) | Represents ordinary shares issuable upon exercise of outstanding Capitol warrants, each whole warrant entitling the holder to purchase one share of Capitol common stock at a price of $11.50 per share 30 days after Capitols successful completion of a business combination. Pursuant to the terms of the warrants, each such warrant will automatically entitle the holder to purchase one ordinary share of Holdings in lieu of one share of Capitol common stock upon consummation of the business combination. |
(5) | Previously paid. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
TO THE STOCKHOLDERS OF CAPITOL ACQUISITION CORP. III:
NOTICE IS HEREBY GIVEN that an annual meeting of stockholders of Capitol Acquisition Corp. III ( Capitol ), a Delaware corporation, will be held at [] a.m. eastern time, on [], 2017, at the offices of Graubard Miller, counsel to Capitol, at The Chrysler Building, 405 Lexington Avenue, 11 th Floor, New York, New York 10174. You are cordially invited to attend the annual meeting, which will be held for the following purposes:
(1) | to consider and vote upon a proposal to approve the business combination described in this proxy statement/prospectus, including (a) the Agreement and Plan of Merger, dated as of March 19, 2017 and amended as of April 7, 2017 ( Merger Agreement ), by and among Capitol, Capitol Acquisition Holding Company Ltd., an exempted company incorporated in the Cayman Islands with limited liability and wholly-owned subsidiary of Capitol ( Holdings ), Capitol Acquisition Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings ( Merger Sub ), Canyon Holdings (Cayman) L.P., a Cayman Islands exempted limited partnership ( Cision Owner ), and Canyon Holdings S.a r.l., a Luxembourg private limited liability company ( Cision ) which, among other things, provides for (i) Cision Owner to contribute to Holdings all of the share capital and convertible preferred equity certificates in Cision in exchange for the issuance of 82,100,000 ordinary shares of Holdings and warrants to purchase 2,000,000 ordinary shares of Holdings (in each case, subject to certain adjustments), plus the right to receive up to 6,000,000 ordinary shares in the future if certain price targets are met (the Contribution and Exchange ) and (ii) Merger Sub to be merged with and into Capitol with Capitol being the surviving corporation in the merger (the Merger , together with the Contribution and Exchange and other transactions contemplated by the Merger Agreement, the Transactions ) and (b) the transactions contemplated by the Merger Agreement and related Sponsor Support Agreement (including the future issuance to Cision Owner or Sponsor of additional ordinary shares and warrants thereunder under certain circumstances) described in this proxy statement/prospectus we refer to this proposal as the business combination proposal ; |
(2) | to consider and vote upon separate proposals to approve the following material differences between the constitutional documents of Holdings that will be in effect upon the closing of the Transactions and Capitols current amended and restated certificate of incorporation: (i) the name of the new public entity will be Cision Ltd. as opposed to Capitol Acquisition Corp. III; (ii) Holdings will have 480,000,000 authorized ordinary shares and 20,000,000 authorized preferred shares, as opposed to Capitol having 120,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; and (iii) Holdings constitutional documents do not include the various provisions applicable only to specified purpose acquisition corporations that Capitols amended and restated certificate of incorporation contains (such as the obligation to dissolve and liquidate if a business combination is not consummated in a certain period of time) we refer to these proposals collectively as the charter proposals ; |
(3) | to elect seven directors who, upon consummation of the Transactions, will be the directors of Holdings we refer to this proposal as the director election proposal ; |
(4) | to consider and vote upon a proposal to approve the 2017 Omnibus Incentive Plan, which is an incentive compensation plan for employees of Holdings and its subsidiaries, including Cision we refer to this proposal as the incentive plan proposal ; and |
(5) | to consider and vote upon a proposal to adjourn the annual meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if Capitol is unable to consummate the business combination contemplated by the Merger Agreement we refer to this proposal as the adjournment proposal . |
These items of business are described in the attached proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of Capitol common stock at the close of business on [], 2017 are entitled to notice of the annual meeting and to vote and have their votes counted at the annual meeting and any adjournments or postponements of the annual meeting.
After careful consideration, Capitols board of directors has determined that the business combination proposal, the charter proposals, the director election proposal, the incentive plan proposal and the adjournment proposal are fair to and in the best interests of Capitol and its stockholders and unanimously recommends that you vote or give instruction to vote FOR the business combination proposal, FOR each of the charter proposals, FOR the election of all of the persons nominated by Capitols management for election as directors, FOR the incentive plan proposal and FOR the adjournment proposal, if presented.
Consummation of the Transactions is conditional on approval of each of the business combination proposal, the charter proposals, the director election proposal and the incentive plan proposal. If any of the proposals is not approved, the other proposals will not be presented to stockholders for a vote.
All Capitol stockholders are cordially invited to attend the annual meeting in person. To ensure your representation at the annual meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a stockholder of record of Capitol common stock, you may also cast your vote in person at the annual meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the annual meeting and vote in person, obtain a proxy from your broker or bank.
A complete list of Capitol stockholders of record entitled to vote at the annual meeting will be available for ten days before the annual meeting at the principal executive offices of Capitol for inspection by stockholders during ordinary business hours for any purpose germane to the annual meeting.
Your vote is important regardless of the number of shares you own. Whether you plan to attend the annual meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in street name or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
Thank you for your participation. We look forward to your continued support.
By Order of the Board of Directors
/s/ Mark D. Ein
Mark D. Ein
Chairman of the Board and Chief Executive Officer
[], 2017
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR CONVERSION RIGHTS, YOU MUST AFFIRMATIVELY VOTE EITHER FOR OR AGAINST THE BUSINESS COMBINATION PROPOSAL AND DEMAND THAT CAPITOL CONVERT YOUR SHARES INTO CASH NO LATER THAN THE CLOSE OF THE VOTE ON THE BUSINESS COMBINATION PROPOSAL BY TENDERING YOUR STOCK TO CAPITOLS TRANSFER AGENT PRIOR TO THE VOTE AT THE MEETING. SEE ANNUAL MEETING OF CAPITOL STOCKHOLDERS CONVERSION RIGHTS FOR MORE SPECIFIC INSTRUCTIONS.
This proxy statement/prospectus is dated [], 2017 and is first being mailed to Capitol Acquisition Corp. III stockholders, together with Capitols annual report on Form 10-K for the year ended December 31, 2016, on or about [], 2017.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on [], 2017: Capitols proxy statement/prospectus and annual report to security holders are available at http://www.cstproxy.com/capitolacquisition/2017.
The information in this proxy statement/prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commissions is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
The board of directors of Capitol Acquisition Corp. III, a Delaware corporation ( Capitol ), has unanimously approved the Agreement and Plan of Merger, dated as of March 19, 2017 and amended as of April 7, 2017 ( Merger Agreement ), by and among Capitol, Capitol Acquisition Holding Company Ltd., an exempted company incorporated in the Cayman Islands with limited liability and wholly-owned subsidiary of Capitol ( Holdings ), Capitol Acquisition Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings ( Merger Sub ), Canyon Holdings (Cayman) L.P., a Cayman Islands exempted limited partnership ( Cision Owner ), and Canyon Holdings S.a r.l., a Luxembourg private limited liability company ( Cision ) which, among other things, provides for(a) Cision Owner to contribute to Holdings all of the share capital and convertible preferred equity certificates in Cision in exchange for shares and warrants of Holdings (the Contribution and Exchange ) and (b) Merger Sub to be merged with and into Capitol with Capitol being the surviving corporation in the merger (the Merger, together with the Contribution and Exchange and other transactions contemplated by the Merger Agreement, the Transactions ). As a result of and upon consummation of the Transactions, Capitol and Cision will become wholly-owned subsidiaries of Holdings, which will change its name to Cision Ltd. as described in this proxy statement/prospectus, with Cision Owner and former securityholders of Capitol becoming securityholders of Holdings.
Pursuant to the Merger Agreement, each outstanding share of common stock of Capitol shall be converted into one ordinary share of Holdings. The outstanding warrants of Capitol shall, by their terms, automatically entitle the holders to purchase ordinary shares of Holdings upon consummation of the business combination. Accordingly, this prospectus covers an aggregate of 39,025,000 ordinary shares of Holdings and the 22,500,000 ordinary shares underlying such warrants of Holdings issuable to the stockholders of Capitol following consummation of the Transactions.
Proposals to approve the Merger Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the annual meeting of stockholders of Capitol scheduled to be held on [], 2017.
Capitols units, common stock and warrants are currently listed on the Nasdaq Capital Market under the symbols CLACU, CLAC and CLACW, respectively. Holdings intends to apply for listing under the name Cision Ltd., to be effective at the time of the business combination, of its ordinary shares and warrants on the New York Stock Exchange under the proposed symbols CISN and CISNW, respectively. Holdings will not have units traded following consummation of the business combination. It is a condition of the consummation of the business combination that Holdings ordinary shares are approved for listing on a national securities exchange, but there can be no assurance such listing condition will be met. If such listing condition is not met, the Transactions will not be consummated unless the listing condition set forth in the Merger Agreement is waived by the parties.
Each of Capitol and Holdings is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to comply with certain reduced public company reporting requirements.
This proxy statement/prospectus provides you with detailed information about the Transactions and other matters to be considered at the annual meeting of Capitols stockholders. We encourage you to carefully read this entire document. You should also carefully consider the risk factors described in Risk Factors . These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated [], 2017, and is first being mailed to Capitol security holders on or about [], 2017.
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As used in this proxy statement/prospectus:
Annual meeting means the annual meeting of the stockholders of Capitol that is the subject of this proxy statement/prospectus;
Articles means the amended and restated memorandum and articles of association of Holdings;
Bulletin Intelligence means collectively Bulletin Intelligence, LLC, Bulletin News Network, LLC and Bulletin News Investment, LLC;
Business Combination or business combination means the Transactions contemplated by the Merger Agreement and related agreements;
Capitol means Capitol Acquisition Corp. III, a Delaware corporation;
Cision means Canyon Holdings S.a r.l., a Luxembourg private limited liability company;
Cision Owner means Canyon Holdings (Cayman) L.P., a Cayman Islands exempted limited partnership;
Citi means Citigroup Global Markets Inc.;
Code means the Internal Revenue Code of 1986, as amended;
Companies Law means the Companies Law of the Cayman Islands (2016 Revision);
Contribution and Exchange means the contribution by Cision Owner of all of its share capital and convertible preferred equity certificates in Cision in exchange for shares and warrants of Holdings;
CPECs means the convertible preferred equity certificates of Cision;
CS means Credit Suisse;
C3 means the Cision Communications Cloud TM ;
DB means Deutsche Bank Securities Inc.;
Designated Stock Exchange means any stock exchange or automated quotation system on which Holdingss securities are then traded;
DGCL means the General Corporation Law of the State of Delaware;
Exchange Act means the Securities Exchange Act of 1934, as amended;
FASB means the Financial Accounting Standards Board;
Gorkana means Discovery Group Holdings Ltd.;
GTCR means GTCR LLC and its affiliates;
Holdings means Capitol Acquisition Holding Company Ltd., an exempted company incorporated in the Cayman Islands with limited liability and wholly-owned subsidiary of Capitol;
Initial shares means the 8,125,000 shares of common stock of Capitol that were issued prior to Capitols initial public offering;
ISPs means internet service providers;
JOBS Act means the Jumpstart Our Business Startups Act;
Marcum means Marcum LLP, an independent registered public accounting firm, serving as Capitols auditors;
Merger means the merger of Merger Sub with and into Capitol with Capitol being the surviving entity in the merger;
Merger Agreement means the Agreement and Plan of Merger, dated as of March 19, 2017 and amended as of April 7, 2017, by and among Capitol, Holdings, Merger Sub, Cision Owner and Cision;
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Merger Sub means Capitol Acquisition Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings;
Nominating Agreement means that certain director nomination agreement to be entered into at or prior to the closing of the Transactions among Holdings, Cision Owner and certain investment vehicles affiliated with GTCR LLC;
PFIC means a passive foreign investment company;
Private warrants means the 8,250,000 warrants of Capitol sold to the Sponsors simultaneously with Capitols initial public offering;
PR means public relations;
PR Newswire means PRN Group;
Public shares means the shares of common stock included in the units issued in Capitols initial public offering;
Public stockholder means holders of public shares, including the Capitol Sponsors to the extent they hold public shares, provided , that the Capitol Sponsors will be considered a public stockholder only with respect to any public shares held by them;
PwC means PricewaterhouseCoopers LLP, an independent registered public accounting firm, serving as Cisions auditors;
QEF means a qualified electing fund;
Registration Rights Agreement means the registration rights agreement to be entered into at or prior to the closing of the Transactions by Cision Owner and affiliates of Mark D. Ein and L. Dyson Dryden;
SaaS means software as a service;
SEC means the Securities and Exchange Commission;
Second Lien Credit Facility means Cisions $370.0 million term loan facility entered into with Deutsche Bank AG, New York Branch, as administrative agent and collateral agent, and a syndicate of commercial lenders from time to time party thereto;
Securities Act means the Securities Act of 1933, as amended;
Sponsors means Capitols officers, directors and stockholders prior to Capitols initial public offering;
Sponsor Support Agreement means the Sponsor Support Agreement, dated as of March 19, 2017, entered into among the Sponsors, Capitol, Holdings, Cision and Cision Owner;
TPE means third-party evidence;
Transactions means (a) the Contribution and Exchange and (b) the Merger;
U.S. GAAP means generally accepted accounting principles in the United States;
Viralheat means Viralheat, Inc.;
Visible means Visible, Inc.;
Vocus means Vocus, Inc.;
VSOE means vendor-specific objective evidence; and
2017 Plan means the 2017 Omnibus Incentive Plan of Holdings.
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| The parties to the Transactions are Capitol, Holdings, Merger Sub, Cision Owner and Cision. Pursuant to the Merger Agreement, (a) Cision Owner will contribute to Holdings all of its share capital and CPECs in Cision in exchange for shares and warrants of Holdings and (b) Merger Sub will be merged with and into Capitol with Capitol being the surviving corporation in the Merger. See the section entitled The Merger Agreement . |
| Cision is a leading global provider of cloud-based earned media solutions. Cision delivers a sophisticated, easy-to-use platform for communicators to reach relevant media influencers and craft compelling campaigns that impact customer behavior. With rich monitoring and analytics, C3 arms brands with the insights they need to link their earned media to strategic business objectives, while aligning it with owned and paid channels. This platform enables companies and brands to build consistent, meaningful and enduring relationships with influencers and buyers in order to amplify their marketplace presence. |
| Under the Merger Agreement, Cision Owner will receive an aggregate of 82,100,000 ordinary shares of Holdings and warrants to purchase 2,000,000 ordinary shares of Holdings (in each case, subject to certain adjustments). Cision Owner will also have the right to receive up to an additional 6,000,000 ordinary shares in 2,000,000 share increments when Holdings stock price reaches $13.00, $16.00 and $19.00 per share. The Sponsors of Capitol will forfeit 1,600,000 shares of Capitol and warrants to purchase 2,000,000 shares of Capitol at closing of the Transactions (in each case, subject to certain adjustments). See the section entitled The Business Combination Proposal Structure of the Transactions. |
| Each outstanding share of common stock of Capitol shall be converted into one ordinary share of Holdings. The outstanding warrants of Capitol shall, by their terms, automatically entitle the holders to purchase ordinary shares of Holdings upon consummation of the business combination. Accordingly, at the closing of the Transactions, Cision Owner will hold approximately 68% of the issued and outstanding ordinary shares of Holdings and current stockholders of Capitol will hold approximately 32% of the issued and outstanding shares of Holdings (assuming no holder of Capitols public shares exercises conversion rights as described in this proxy statement/prospectus). See the section entitled The Business Combination Proposal Structure of the Transactions. |
| The Merger Agreement provides that either Capitol or Cision may terminate the Merger Agreement if the Transactions are not consummated by October 19, 2017 (or December 19, 2017 if a later date is approved by the stockholders of Capitol). Additionally, the Merger Agreement may be terminated, among other reasons, by either Capitol or Cision upon material breach of the other party if not cured within the time period specified within the Merger Agreement and subject to certain other conditions. See the section entitled The Merger Agreement Termination . |
| In addition to voting on the Transactions, the stockholders of Capitol will vote on separate proposals to approve the following material differences between the constitutional documents of Holdings that will be in effect upon the closing of the Transactions and Capitols current amended and restated certificate of incorporation: (i) the name of the new public entity will be Cision Ltd. as opposed to Capitol Acquisition Corp. III; (ii) Holdings will have 480,000,000 authorized ordinary shares and 20,000,000 authorized preferred shares, as opposed to Capitol having 120,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; and (iii) Holdings constitutional documents do not include the various provisions applicable only to specified purpose acquisition corporations that Capitols amended and restated certificate of incorporation contains (such as the obligation to dissolve and liquidate if a business combination is not consummated in a certain period of time). This vote, however, will not actually result in stockholders of Capitol approving Holdings' constitutional documents or amendments to Capitol's corporate governing documents but instead will simply approve the aforementioned material differences in the two sets of documents. The stockholders of Capitol will also vote on proposals to elect seven directors who, upon consummation of the Transactions, will be the directors of Holdings, to approve the 2017 Plan and to approve, if necessary, an adjournment of the annual meeting. The parties expect that upon |
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consummation of the Transactions, the board will consist of seven (7) directors and will have one vacancy. See the sections entitled The Charter Proposals, The Director Election Proposal, The Incentive Plan Proposal and The Adjournment Proposal . |
| Upon completion of the Transactions, if managements nominees are elected, the directors of Holdings will be Stephen P. Master, Mark M. Anderson and Philip A. Canfield, who were designated by Cision, and Kevin Akeroyd (Cisions Chief Executive Officer), Stuart Yarbrough, Mark D. Ein (Capitols Chairman and Chief Executive Officer) and L. Dyson Dryden (Capitols President and Chief Financial Officer). See the section entitled The Director Election Proposal . |
| Upon completion of the Transactions, the executive officers of Holdings will include Kevin Akeroyd (Chief Executive Officer) and Jack Pearlstein (Chief Financial Officer), as well as those persons described under The Director Election Proposal Information about Executive Officers, Directors and Nominees . These individuals hold the same positions with Cision. See the section entitled The Director Election Proposal . |
| Pursuant to the Registration Rights Agreement, Cision Owner and affiliates of Mark D. Ein and L. Dyson Dryden will be granted certain rights to have registered, in certain circumstances, the resale under the Securities Act of the ordinary shares of Holdings received by them in the Transactions, subject to certain conditions set forth therein. |
| Cision Owner will be granted certain rights to nominate members of the board of Holdings following the closing of the Transactions, pursuant to the Nominating Agreement, subject to certain conditions set forth therein. |
| The Sponsors have entered into the Sponsor Support Agreement pursuant to which they have agreed to comply with the provisions of the Merger Agreement applicable to such Sponsors as well as the covenants set forth in the Sponsor Support Agreement, including voting all shares of common stock of Capitol beneficially owned by such Sponsors in favor of the transactions contemplated by the Merger Agreement. The Sponsor Support Agreement also provides that, at the closing of the Transactions, depending on the number of public shares being converted, the Sponsors may be required to forfeit an additional number of Capitol shares and warrants and, at the same time, the number of ordinary shares and warrants of Holdings that Cision Owner would otherwise receive at closing may be reduced. In such event, a number of ordinary shares and warrants of Holdings equal to the total number of shares and warrants so forfeited and reduced will be available for use by Holdings to issue to third parties for certain corporate purposes and, if not so used within one year following the closing of the Transaction (or, if earlier, at such time as Holdings has repaid the Second Lien Credit Facility in full) will be issued to the Sponsors and Cision Owner. |
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The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Annual Meeting and the proposals to be presented at the Annual Meeting, including with respect to the proposed business combination. The following questions and answers do not include all the information that is important to Capitol stockholders. Stockholders are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the proposed business combination and the voting procedures for the Annual Meeting.
Q. | Why am I receiving this proxy statement/prospectus? |
A. | Capitol and Cision have agreed to a business combination under the terms of the Merger Agreement that is described in this proxy statement/prospectus. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A , and Capitol encourages its stockholders to read it in its entirety. Capitols stockholders are being asked to consider and vote upon a proposal to adopt the Merger Agreement, which, among other things, provides for (a) the Contribution and Exchange whereby Cision Owner will contribute to Holdings all of its share capital and CPECs in Cision in exchange for shares and warrants of Holdings and (b) the Merger whereby Merger Sub will be merged with and into Capitol with Capitol being the surviving corporation in the Merger. See the section entitled The Business Combination Proposal . |
Q. | Are there any other matters being presented to stockholders at the meeting? |
A. | In addition to voting on the business combination, the stockholders of Capitol will vote on the following: |
1. | Separate proposals to approve the following material differences between the constitutional documents of Holdings that will be in effect upon the closing of the Transactions and Capitols current amended and restated certificate of incorporation: (i) the name of the new public entity will be Cision Ltd. as opposed to Capitol Acquisition Corp. III; (ii) Holdings will have 480,000,000 authorized ordinary shares and 20,000,000 authorized preferred shares, as opposed to Capitol having 120,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; and (iii) Holdings constitutional documents do not include the various provisions applicable only to specified purpose acquisition corporations that Capitols amended and restated certificate of incorporation contains (such as the obligation to dissolve and liquidate if a business combination is not consummated in a certain period of time). See the section entitled The Charter Proposals . |
2. | To elect seven directors who, upon consummation of the Transactions, will be the directors of Holdings. See the section entitled The Director Election Proposal . |
3. | To approve the 2017 Plan. See the section entitled The Incentive Plan Proposal . |
4. | To adjourn the meeting to a later date or dates to permit further solicitation and vote of proxies if Capitol would not have been able to consummate the business combination. See the section entitled The Adjournment Proposal . |
Capitol will hold the annual meeting of its stockholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed business combination and the other matters to be acted upon at the annual meeting. Stockholders should read it carefully.
Consummation of the Transactions is conditional on approval of each of the business combination proposal, the charter proposals, director election proposal and the incentive plan proposal. If any of the proposals is not approved, the other proposals will not be presented to stockholders for a vote.
The vote of stockholders is important. Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.
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Q. | I am a Capitol warrant holder. Why am I receiving this proxy statement/prospectus? |
A. | Upon consummation of the Transactions, the Capitol warrants shall, by their terms, entitle the holders to purchase ordinary shares of Holdings in lieu of shares of Capitol common stock at a purchase price of $11.50 per share. This proxy statement/prospectus includes important information about Holdings and the business of Holdings and its subsidiaries following consummation of the Transactions. As holders of Capitol warrants will be entitled to purchase ordinary shares of Holdings upon consummation of the Transactions, we urge you to read the information contained in this proxy statement/prospectus carefully. |
Q. | Why is Capitol proposing the business combination? |
A. | Capitol was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities. |
On October 19, 2015, Capitol completed its initial public offering of units, with each unit consisting of one share of its common stock and one-half of one warrant, each whole warrant to purchase one share of common stock at a price of $11.50, raising total gross proceeds of approximately $325,000,000. Since the initial public offering, Capitols activity has been limited to the evaluation of business combination candidates.
Cision is a leading global provider of cloud-based earned media solutions. Cision delivers a sophisticated, easy-to-use platform for communicators to reach relevant media influencers and craft compelling campaigns that impact customer behavior. With rich monitoring and analytics, C3 arms brands with the insights they need to link their earned media to strategic business objectives, while aligning it with owned and paid channels. This platform enables companies and brands to build consistent, meaningful and enduring relationships with influencers and buyers in order to amplify their marketplace presence.
Based on its due diligence investigations of Cision and the industry in which it operates, including the financial and other information provided by Cision in the course of their negotiations in connection with the Merger Agreement, Capitol believes that Cision has a strong position in its industry, meaningful scale, a very appealing market opportunity and growth profile, strong profitability and a compelling valuation. As a result, Capitol believes that a business combination with Cision will provide Capitol stockholders with an opportunity to participate in the ownership of a company with significant growth potential. See the section entitled The Business Combination Proposal Capitols Board of Directors Reasons for Approval of the Business Combination.
Q. | Did the Capitol board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the business combination? |
A. | Capitols board of directors did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the business combination with Cision. The officers and directors of Capitol have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Capitols financial advisors, enabled them to make the necessary analyses and determinations regarding the business combination with Cision. In addition, Capitols officers and directors and Capitols advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of Capitols board of directors in valuing Cisions business, and assuming the risk that the board of directors may not have properly valued such business. |
Q. | Do I have conversion rights? |
A. | If you are a holder of public shares, you have the right to demand that Capitol convert such shares into a pro rata portion of the cash held in Capitols trust account provided that you vote either for or against the business combination proposal. We sometimes refer to these rights to demand conversion of the public shares as conversion rights. |
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Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom such holder is acting in concert or as a group (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 20% or more of the public shares. Accordingly, all public shares in excess of 20% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a group will not be converted to cash.
Under Capitols amended and restated certificate of incorporation, the business combination may only be consummated if Capitol has at least $5,000,001 of net tangible assets after giving effect to all holders of public shares that properly demand conversion of their shares into cash. However, Cision is not required to consummate the Transactions if there is not at least $225,000,000 of cash available to be released from Capitols trust account after giving effect to payment of amounts that Capitol will be required to pay to converting stockholders upon consummation of the business combination and certain other fees and expenses described in the Merger Agreement.
Q. | How do I exercise my conversion rights? |
A. | If you are a holder of public shares and wish to exercise your conversion rights, you must (i) affirmatively vote either for or against the business combination proposal and (ii) demand that Capitol convert your shares into cash no later than the close of the vote on the business combination proposal by delivering your stock to Capitols transfer agent physically or electronically using Depository Trust Companys DWAC (Deposit Withdrawal at Custodian) System prior to the vote at the meeting. Any holder of public shares voting for or against the business combination proposal will be entitled to demand that such holders shares be converted for a full pro rata portion of the amount then in the trust account (which, for illustrative purposes, was $[], or $[] per share, as of [], 2017, the record date). Such amount, less any owed but unpaid taxes on the funds in the trust account, will be paid promptly upon consummation of the business combination. There are currently no owed but unpaid income taxes on the funds in the trust account. However, under Delaware law, the proceeds held in the trust account could be subject to claims which could take priority over those of Capitols public stockholders exercising conversion rights, regardless of whether such holders vote for or against the business combination proposal. Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the business combination proposal will have no impact on the amount you will receive upon exercise of your conversion rights. |
Any request for conversion, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the business combination proposal at the annual meeting. If you deliver your shares for conversion to Capitols transfer agent and later decide prior to the annual meeting not to elect conversion, you may request that Capitols transfer agent return the shares (physically or electronically). You may make such request by contacting Capitols transfer agent at the address listed at the end of this section.
Any corrected or changed proxy card or written demand of conversion rights must be received by Capitols transfer agent prior to the vote taken on the business combination proposal at the annual meeting. No demand for conversion will be honored unless the holders stock has been delivered (either physically or electronically) to the transfer agent prior to the vote at the meeting.
If a holder of public shares votes for or against the business combination proposal and demand is properly made as described above, then, if the business combination is consummated, Capitol will convert these shares into a pro rata portion of funds deposited in the trust account. If you exercise your conversion rights, then you will be exchanging your shares of Capitol common stock for cash and will not be entitled to ordinary shares of Holdings upon consummation of the Transactions.
If you are a holder of public shares and you exercise your conversion rights, it will not result in the loss of any Capitol warrants that you may hold. Your whole warrants will become exercisable to purchase one ordinary share of Holdings in lieu of one share of Capitol common stock for a purchase price of $11.50 upon consummation of the business combination.
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Q. | Do I have appraisal rights if I object to the proposed business combination? |
A. | No. Neither Capitol stockholders nor its unit or warrant holders have appraisal rights in connection with the business combination under the DGCL. See the section entitled Annual Meeting of Capitol Stockholders Appraisal Rights. |
Q. | What happens to the funds deposited in the trust account after consummation of the business combination? |
A. | Of the net proceeds of Capitols initial public offering, $317,665,553, together with $7,334,447 raised from the private sale of warrants simultaneously with the consummation of the initial public offering, for a total of $325,000,000, was placed in the trust account immediately following the initial public offering. After consummation of the business combination, the funds in the trust account will be used to pay holders of the public shares who exercise conversion rights, to pay fees and expenses incurred in connection with the business combination (including aggregate fees of approximately $11,375,000 to the underwriters of Capitols initial public offering as deferred underwriting commissions) and for Holdings working capital and general corporate purposes, including to pay down a portion of Cisions Second Lien Credit Facility. |
Q. | What happens if a substantial number of public stockholders vote in favor of the business combination proposal and exercise their conversion rights? |
A. | Capitols public stockholders may vote in favor of the business combination and still exercise their conversion rights. Accordingly, the business combination may be consummated even though the funds available from the trust account and the number of public stockholders are substantially reduced as a result of conversions by public stockholders. However, Cision is not required to consummate the Transactions if there is not at least $225,000,000 of cash available to be released from Capitols trust account after giving effect to payment of amounts that Capitol will be required to pay to converting stockholders upon consummation of the Transactions and certain other fees and expenses described in the Merger Agreement. Also, with fewer public shares and public stockholders, the trading market for Holdings ordinary shares may be less liquid than the market for Capitols shares of common stock were prior to the Transactions and Holdings may not be able to meet the listing standards of a national securities exchange. In addition, with fewer funds available from the trust account, the capital infusion from the trust account into Cisions business will be reduced and Cision may not be able to achieve its plan of reducing its outstanding indebtedness. |
Q. | What happens if the business combination is not consummated? |
A. | If Capitol does not complete the business combination with Cision for whatever reason, Capitol would search for another target business with which to complete a business combination. If Capitol does not complete the business combination with Cision or another business combination by October 19, 2017, Capitol must redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to an amount then held in the trust account. The Capitol Sponsors have no conversion rights in the event a business combination is not effected in the required time period, and, accordingly, their initial shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to our outstanding warrants. Accordingly, the warrant will expire worthless. |
Q. | How do the Sponsors of Capitol intend to vote on the proposals? |
A. | Capitols Sponsors, including Capitols officers, directors and stockholders prior to the initial public offering, beneficially own and are entitled to vote an aggregate of 20% of the outstanding shares of Capitols common stock. These holders have agreed to vote their securities in favor of the business combination proposal. The holders have also indicated that they intend to vote their shares in favor of all other proposals being presented at the meeting. |
Q. | When do you expect the business combination to be completed? |
A. | It is currently anticipated that the business combination will be consummated promptly following the Capitol annual meeting which is set for [], 2017; however, such meeting could be adjourned, as |
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described above. For a description of the conditions for the completion of the business combination, see the section entitled The Merger Agreement Conditions to the Closing of the Business Combination. |
Q. | What do I need to do now? |
A. | Capitol urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the business combination will affect you as a stockholder and/or warrant holder of Capitol. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card. |
Q. | How do I vote? |
A. | If you are a holder of record of Capitol common stock on the record date, you may vote in person at the annual meeting or by submitting a proxy for the annual meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in street name, which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote in person, obtain a proxy from your broker, bank or nominee. |
Q. | If my shares are held in street name, will my broker, bank or nominee automatically vote my shares for me? |
A. | No. Your broker, bank or nominee cannot vote your shares unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. |
Q. | May I change my vote after I have mailed my signed proxy card? |
A. | Yes. Stockholders may send a later-dated, signed proxy card to Capitols transfer agent at the address set forth at the end of this section so that it is received prior to the vote at the annual meeting or attend the annual meeting in person and vote. Stockholders also may revoke their proxy by sending a notice of revocation to Capitols transfer agent, which must be received prior to the vote at the annual meeting. |
Q. | What happens if I fail to take any action with respect to the meeting? |
A. | If you fail to take any action with respect to the meeting and the business combination is approved by stockholders and consummated, you will become a shareholder of Holdings and/or your warrants will entitle you to purchase ordinary shares of Holdings. As a corollary, failure to vote either for or against the business combination proposal means you will not have any right in connection with the business combination to exchange your shares for a pro rata share of the funds held in Capitols trust account. If you fail to take any action with respect to the meeting and the business combination is not approved, you will continue to be a stockholder and/or warrant holder of Capitol. |
Q. | What should I do with my stock and/or warrants certificates? |
A. | Those stockholders who do not elect to have their Capitol shares converted into the pro rata share of the trust account should not submit their stock certificates now. After the consummation of the business combination, Holdings will send instructions to Capitol stockholders regarding the exchange of their Capitol stock for ordinary shares of Holdings. Capitol stockholders who exercise their conversion rights must deliver their stock certificates to Capitols transfer agent (either physically or electronically) prior to the vote at the meeting as described above. |
Upon consummation of the Transactions, Capitols warrants, by their terms, will entitle holders to purchase ordinary shares of Holdings. Therefore, warrant holders need not deliver their warrants to Holdings at that time.
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Q. | What should I do if I receive more than one set of voting materials? |
A. | Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your Capitol shares. |
Q. | Who can help answer my questions? |
A. | If you have questions about the merger or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact: |
Mr. L. Dyson Dryden
Capitol Acquisition Corp. III
509 7
th
Street, N.W.
Washington, D.C. 20004
Tel: (202) 654-7060
Email: info@capitolacquisition.com
or:
Morrow Sodali LLC
470 West Avenue
Stamford, CT 06902
Tel: (800) 662-5200 or banks and brokers can call collect at (203) 658-9400
Email: CLAC.info@morrowsodali.com
You may also obtain additional information about Capitol from documents filed with the SEC by following the instructions in the section entitled Where You Can Find More Information. If you are a holder of public shares and you intend to seek conversion of your shares, you will need to deliver your stock (either physically or electronically) to Capitols transfer agent at the address below prior to the vote at the annual meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:
Mr. Mark Zimkind
Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Email: mzimkind@continentalstock.com
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This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the annual meeting, including the business combination, you should read this entire document carefully, including the Merger Agreement attached as Annex A to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Transactions that will be undertaken in connection with the business combination. It is also described in detail in this proxy statement/prospectus in the section entitled The Merger Agreement.
Capitol Acquisition Corp. III is a blank check company formed in order to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities. Capitol was incorporated under the laws of Delaware on July 13, 2015.
On October 19, 2015, Capitol closed its initial public offering of 32,500,000 units, including the exercise of the over-allotment option to the extent of 2,500,000 units, with each unit consisting of one share of its common stock and one-half of one warrant, each whole warrant to purchase one share of its common stock at a purchase price of $11.50 commencing 30 days after the consummation of an initial business combination. The units from the initial public offering (including the over-allotment option) were sold at an offering price of $10.00 per unit, generating total gross proceeds of $325,000,000. Simultaneously with the consummation of the initial public offering and the exercise of the underwriters over-allotment option, Capitol consummated the private sale of 8,250,000 private warrants at $1.00 per warrant for an aggregate purchase price of $8,250,000. A total of $325,000,000, was deposited into the trust account and the remaining proceeds became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The initial public offering was conducted pursuant to a registration statement on Form S-1 (Reg. No. 333-206693) that became effective on October 13, 2015. As of [], 2017, the record date, there was approximately $[] held in the trust account.
Capitols units, common stock and warrants are listed on Nasdaq under the symbols CLACU, CLAC and CLACW, respectively.
The mailing address of Capitols principal executive office is 509 7 th Street, N.W., Washington, D.C. 20004. Its telephone number is (202) 654-7060. After the consummation of the business combination, its principal executive office will be that of Cision.
Capitol Acquisition Holding Company Ltd. is a wholly-owned subsidiary of Capitol formed solely for the purpose of effectuating the Transactions described herein. Holdings was incorporated under the laws of the Cayman Islands as an exempted company on March 9, 2017. Holdings owns no material assets and does not operate any business.
The mailing address of Holdings principal executive office is 509 7 th Street, N.W., Washington, D.C. 20004. Its telephone number is (202) 654-7060. After the consummation of the business combination, its principal executive office will be that of Cision.
Capitol Acquisition Merger Sub, Inc. is a wholly-owned subsidiary of Holdings formed solely for the purpose of effectuating the Merger described herein. Merger Sub was incorporated under the laws of Delaware as a corporation on March 9, 2017. Merger Sub owns no material assets and does not operate any business.
The mailing address of Merger Subs principal executive office is 509 7 th Street, N.W., Washington, D.C. 20004. Its telephone number is (202) 654-7060. After the consummation of the business combination, it will cease to exist.
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Canyon Holdings (Cayman), L.P. is a partnership formed for the purpose of owning and acquiring Cision through a series of transactions. Cision Owner was formed under the laws of the Cayman Islands as an exempted limited partnership on February 11, 2014.
The mailing address of Cision Owner is c/o Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Its telephone number is (312) 922-2400. Upon the completion of the Transactions, Cision Owner will own approximately 68% of Cision Ltd.s outstanding ordinary shares.
Cision is a leading global provider of cloud-based earned media solutions. Cision delivers a sophisticated, easy-to-use platform for communicators to reach relevant media influencers and craft compelling campaigns that impact customer behavior. With rich monitoring and analytics, C3 arms brands with the insights they need to link their earned media to strategic business objectives, while aligning it with owned and paid channels. This platform enables companies and brands to build consistent, meaningful and enduring relationships with influencers and buyers in order to amplify their marketplace presence.
Cision is a Luxembourg private limited liability company that was formed in February 2014 and commenced operations in April 2014.
The mailing address of Cisions principal executive office is 130 East Randolph St. 7 th Floor, Chicago, IL 60601 and its telephone number is (866) 639-5087.
Each of Capitol and Holdings is an emerging growth company, as defined under the JOBS Act. As emerging growth companies, Capitol and Holdings are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and the requirement to obtain shareholder approval of any golden parachute payments not previously approved.
In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Capitol and Holdings have elected to take advantage of such extended transition period.
Holdings could remain an emerging growth company until the last day of Holdings fiscal year following October 19, 2020 (the fifth anniversary of the consummation of its predecessors initial public offering). However, if Holdings non-convertible debt issued within a three-year period or its total revenues exceed $1 billion or the market value of its ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, Holdings would cease to be an emerging growth company as of the following fiscal year.
Pursuant to the Merger Agreement, a business combination between Capitol and Cision will be effected through the Contribution and Exchange, whereby all of the share capital and CPECs of Cision will be contributed by Cision Owner to Holdings, followed by the Merger, whereby Merger Sub will merge with and into Capitol, with Capitol surviving such Merger as a wholly-owned subsidiary of Holdings.
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The following diagram illustrates the organizational structure of Capitol, Cision and Holdings immediately prior to the Transactions:
The following diagram illustrates the structure of Holdco immediately following the Transactions.
In exchange for all of the share capital and CPECs of Cision, Cision Owner will receive 82,100,000 ordinary shares of Holdings and 2,000,000 warrants to purchase ordinary shares of Holdings (subject to adjustment).
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Cision Owner will also have the right to receive certain additional securities of Holdings upon the happening of certain events as described in more detail in this proxy statement/prospectus.
Each outstanding share of common stock of Capitol shall be converted into one ordinary share of Holdings. The outstanding warrants of Capitol shall, by their terms, automatically entitle the holders to purchase ordinary shares of Holdings upon consummation of the business combination.
At the closing of the Transactions, Cision Owner will hold approximately 68% of the issued and outstanding ordinary shares of Holdings and current stockholders of Capitol will hold approximately 32% of the issued and outstanding shares of Holdings (assuming no holder of public shares exercises conversion rights).
After consideration of the factors identified and discussed in the section entitled The Business Combination Proposal Capitols Board of Directors Reasons for Approval of the Transactions , Capitols board of directors concluded that the Transactions met all of the requirements disclosed in the prospectus for its initial public offering, including that such business had a fair market value of at least 80% of the balance of the funds in the trust account at the time of execution of the Merger Agreement (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account). See the section entitled The Business Combination Proposal Structure of the Transactions for more information.
In addition to voting on the business combination proposal, the stockholders of Capitol will vote on separate proposals to approve the following material differences between the constitutional documents of Holdings that will be in effect upon the closing of the Transactions and Capitols current amended and restated certificate of incorporation: (i) the name of the new public entity will be Cision Ltd. as opposed to Capitol Acquisition Corp. III; (ii) Holdings will have 480,000,000 authorized ordinary shares and 20,000,000 authorized preferred shares, as opposed to Capitol having 120,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; and (iii) Holdings constitutional documents do not include the various provisions applicable only to specified purpose acquisition corporations that Capitols amended and restated certificate of incorporation contains (such as the obligation to dissolve and liquidate if a business combination is not consummated in a certain period of time). This vote, however, will not actually result in stockholders of Capitol approving Holdings' constitutional documents or amendments to Capitol's corporate governing documents but instead will simply approve the aforementioned material differences in the two sets of documents. See the section entitled The Charter Proposals .
The stockholders of Capitol will also vote to elect seven directors who, upon consummation of the Transactions, will be the directors of Holdings. If managements nominees are elected, L. Dyson Dryden and Stephen P. Master will be Class I directors serving until the general meeting of shareholders to be held in 2018, Stuart Yarbrough and Kevin Akeroyd will be Class II directors serving until the general meeting to be held in 2019 and Mark D. Ein, Mark M. Anderson and Philip A. Canfield will be Class III directors serving until the general meeting to be held in 2020 and, in each case, until their successors are elected and qualified. See the section entitled The Director Election Proposal .
The proposed 2017 Plan will reserve up to 6,100,000 ordinary shares of Holdings for issuance in accordance with the plans terms, subject to certain adjustments. The purpose of the plan is to provide Holdings and its subsidiaries officers, directors, employees and consultants who, by their position, ability and diligence are able to make important contributions to Holdings growth and profitability, with an incentive to assist Holdings in achieving its long-term corporate objectives, to attract and retain executive officers and other employees of outstanding competence and to provide such persons with an opportunity to acquire an equity interest in Holdings. The plan is attached as Annex C to this proxy statement. You are encouraged to read the plan in its entirety. See the section entitled The Incentive Plan Proposal .
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If Capitol is unable to consummate the business combination, Capitols board of directors may submit a proposal to adjourn the annual meeting to a later date or dates, if necessary. See the section entitled The Adjournment Proposal .
As of [], 2017, the record date for the Capitol annual meeting, the Capitol Sponsors, including Capitols officers, directors and stockholders prior to the initial public offering, beneficially owned and were entitled to vote an aggregate of 8,125,000 initial shares. These individuals and entities also purchased an aggregate of 8,250,000 private warrants simultaneously with the consummation of Capitols initial public offering. The initial shares currently constitute 20% of the outstanding shares of Capitols common stock.
In connection with the initial public offering and again pursuant to the Sponsor Support Agreement, each Capitol Sponsor agreed to vote the initial shares, as well as any shares of common stock acquired in the aftermarket, in favor of the business combination proposal. Each Capitol Sponsor has also indicated that he, she or it intends to vote his, her or its shares in favor of all other proposals being presented at the meeting and will have no conversion rights with respect to initial shares in the event a business combination is not effected in the required time period. Accordingly, the initial shares will be worthless if no business combination is consummated by Capitol. In connection with the initial public offering, the holders entered into an escrow agreement pursuant to which their initial shares are held in escrow and may not be transferred (subject to limited exceptions) until one year after the consummation of an initial business combination or earlier if, subsequent to the consummation of an initial business combination, (i) the last sales price of Capitols common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial business combination or (ii) Capitol (or any successor entity) consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the companys stockholders having the right to exchange their shares of common stock for cash, securities or other property. This escrow arrangement will continue upon closing of the Transactions in accordance with its terms.
The annual meeting of stockholders of Capitol will be held at []:00 a.m., Eastern time, on [], 2017, at the offices of Graubard Miller, counsel to Capitol, at The Chrysler Building, 405 Lexington Avenue, 11 th Floor, New York, New York 10174, to consider and vote upon the business combination proposal, the charter proposals, the incentive plan proposal, the director election proposal and/or if necessary, the adjournment proposal to permit further solicitation and vote of proxies if Capitol is not able to consummate the Transactions.
Stockholders will be entitled to vote or direct votes to be cast at the annual meeting if they owned shares of Capitol common stock at the close of business on [], 2017, which is the record date for the annual meeting. Stockholders will have one vote for each share of Capitol common stock owned at the close of business on the record date. If your shares are held in street name or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. Capitol warrants do not have voting rights. On the record date, there were 40,625,000 shares of Capitol common stock outstanding, of which 32,500,000 were public shares with the rest being held by the Capitol Sponsors.
A quorum of Capitol stockholders is necessary to hold a valid meeting. A quorum will be present at the Capitol annual meeting if a majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. The Capitol Sponsors hold 20% of the outstanding shares of Capitol common stock. Such shares,
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as well as any shares of common stock acquired in the aftermarket by the Capitol Sponsors, will be voted in favor of the proposals presented at the annual meeting. The proposals presented at the annual meeting will require the following votes:
| The approval of the business combination proposal will require the affirmative vote of the holders of a majority of the outstanding shares of common stock on the record date. There are currently 40,625,000 shares of Capitol common stock outstanding so at least 20,312,501 shares must be voted in favor to pass the proposal. Capitols Sponsors own an aggregate of 8,125,000 shares of Capitol common stock and have agreed to vote in favor of the proposal so only 12,187,501 public shares are required to be voted in favor of the proposal for it to be approved. |
| The approval of each of the charter proposals will require the affirmative vote of the holders of a majority of the outstanding shares of Capitol common stock on the record date. |
| The election of directors requires a plurality vote of the shares of common stock present in person or represented by proxy and entitled to vote at the annual meeting. Plurality means that the individuals who receive the largest number of votes cast FOR are elected as directors. Consequently, any shares not voted FOR a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominees favor. |
| The approval of the incentive plan proposal will require the affirmative vote of the holders of a majority of the then outstanding shares of common stock present and entitled to vote at the meeting. |
| The approval of the adjournment proposal will require the affirmative vote of the holders of a majority of the then outstanding shares of common stock present and entitled to vote at the meeting. |
Abstentions and broker non-votes will have the same effect as a vote against the business combination proposal and the charter proposals. With respect to the incentive plan proposal and adjournment proposal, if presented, abstentions will have the same effect as a vote against such proposals while broker non-votes will have no effect on such proposals. With respect to the director election proposal, abstentions and broker non-votes will have no effect on such proposal. Please note that holders of the public shares cannot seek conversion of their shares into cash unless they affirmatively vote for or against the business combination proposal.
Consummation of the Transactions is conditional on approval of each of the business combination proposal, the charter proposals and director election proposal. If any proposal is not approved, the other proposals will not be presented to the stockholders for a vote.
Pursuant to Capitols amended and restated certificate of incorporation, a holder of public shares may demand that Capitol convert such shares into cash if the business combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they (i) affirmatively vote either for or against the business combination proposal and (ii) demand that Capitol convert their shares into cash no later than the close of the vote on the business combination proposal by delivering their stock to Capitols transfer agent prior to the vote at the meeting. If the business combination is not completed, these shares will not be converted into cash. If a holder of public shares properly demands conversion and votes for or against the business combination proposal, Capitol will convert each public share into a full pro rata portion of the trust account, calculated as of two business days prior to the anticipated consummation of the business combination. As of [], 2017, the record date, this would amount to approximately $[] per share. If a holder of public shares exercises its conversion rights, then it will be exchanging its shares of Capitol common stock for cash and will no longer own the shares. See the section entitled Annual Meeting of Capitol Stockholders Conversion Rights for a detailed description of the procedures to be followed if you wish to convert your shares into cash.
Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13(d)(3) of the Exchange Act) will
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be restricted from seeking conversion rights with respect to 20% or more of the public shares. Accordingly, all public shares in excess of 20% held by a public stockholder will not be converted to cash.
The business combination will not be consummated if Capitol has net tangible assets of less than $5,000,001 after taking into account holders of public shares that have properly demanded conversion of their shares into cash. Further, the Merger Agreement provides that Cision is not required to consummate the Transactions if immediately prior to the consummation of the Transactions, Capitol does not have at least $225,000,000 of cash available to be released from the trust account after giving effect to payment of amounts that Capitol will be required to pay to converting stockholders upon consummation of the Transactions and certain other fees and expenses. If Cision does not waive its termination right and Capitol has less than the required amount in trust, the Transactions will not be consummated.
Holders of Capitol warrants will not have conversion rights with respect to such securities.
Capitol stockholders (including the initial stockholders) and Capitol warrant holders do not have appraisal rights in connection with the Transactions under the DGCL.
Proxies may be solicited by mail, telephone or in person. Capitol has engaged Morrow Sodali LLC to assist in the solicitation of proxies. If a stockholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the annual meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section entitled Annual Meeting of Capitol Stockholders Revoking Your Proxy .
When you consider the recommendation of Capitols board of directors in favor of approval of the business combination proposal, you should keep in mind that Capitols Sponsors, including its directors and executive officers, have interests in such proposal that are different from, or in addition to, your interests as a stockholder or warrant holder. These interests include, among other things:
| If the business combination with Cision or another business combination is not consummated by October 19, 2017, Capitol will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 8,125,000 initial shares held by Capitols Sponsors, including its directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to Capitols initial public offering, would be worthless because the holders are not entitled to participate in any conversion or distribution with respect to such shares. Such shares had an aggregate market value of $[] based upon the closing price of $[] per share on Nasdaq on [], 2017, the record date. |
| Capitols Sponsors, including its directors and officers, purchased an aggregate of 8,250,000 private warrants from Capitol for an aggregate purchase price of $8,250,000 (or $1.00 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the initial public offering. All of the proceeds Capitol received from these purchases were placed in the trust account. Such warrants had an aggregate market value of $[] based upon the closing price of $[] per unit on Nasdaq on [], 2017, the record date. The private warrants will become worthless if Capitol does not consummate a business combination by October 19, 2017. |
| The transactions contemplated by the Merger Agreement provide that Mark D. Ein and L. Dyson Dryden will be directors of Holdings after the closing of the Transactions (assuming they are elected at the annual meeting as described in this proxy statement/prospectus). As such, in the future each will receive any cash fees, stock options or stock awards that the Holdings board of directors determines to pay to its non-executive directors. |
| If Capitol is unable to complete a business combination within the required time period, its executive officers will be personally liable under certain circumstances described herein to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of |
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vendors or other entities that are owed money by Capitol for services rendered or contracted for or products sold to Capitol. If Capitol consummates a business combination, on the other hand, Capitol will be liable for all such claims. |
| Capitols Sponsors, including its officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Capitols behalf, such as identifying and investigating possible business targets and business combinations. However, if Capitol fails to consummate a business combination within the required period, they will not have any claim against the trust account for reimbursement. Accordingly, Capitol may not be able to reimburse these expenses if the business combination with Cision or another business combination, is not completed by October 19, 2017. As of [], 2017, the record date, Capitols Sponsors and their affiliates had incurred approximately $[] of unpaid reimbursable expenses. |
| The continued indemnification of current directors and officers and the continuation of directors and officers liability insurance. |
| Since its inception, Capitols officers and directors (or their affiliates) have made loans from time to time to Capitol to fund certain capital requirements. As of the date of this proxy statement/prospectus, an aggregate of $[] principal amount of these loans are outstanding. If the business combination is not consummated, the notes will not be repaid and will be forgiven. |
| If Capitol is required to be liquidated and there are no funds remaining to pay the costs associated with the implementation and completion of such liquidation, Capitols executive officers have agreed to advance Capitol the funds necessary to pay such costs and complete such liquidation (currently anticipated to be no more than approximately $15,000) and not to seek repayment for such expenses. |
At any time prior to the annual meeting, during a period when they are not then aware of any material nonpublic information regarding Capitol or its securities, the Capitol Sponsors, Cision or Cisions shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Capitols common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the shares entitled to vote at the annual meeting to approve the business combination proposal vote in its favor and that Capitol have in excess of the required amount to consummate the business combination under the Merger Agreement, where it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or warrants owned by the Capitol initial stockholders for nominal value.
Entering into any such arrangements may have a depressive effect on Capitols common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the annual meeting.
If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the business combination proposal and other proposals to be presented at the annual meeting and would likely increase the chances that such proposals would be approved. Moreover, any such purchases may make it more likely that Capitol will have in excess of the required amount of cash available to consummate the business combination as described above.
As of the date of this proxy statement/prospectus, no agreements dealing with the above have been entered into. Capitol will file a Current Report on Form 8-K to disclose any arrangements entered into or significant
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purchases made by any of the aforementioned persons that would affect the vote on the business combination proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
Capitols board of directors believes that the business combination proposal and the other proposals to be presented at the annual meeting are fair to and in the best interest of Capitols stockholders and unanimously recommends that its stockholders vote FOR the business combination proposal, FOR each of the charter proposals, FOR the director election proposal, FOR the incentive plan proposal and FOR the adjournment proposal, if presented.
Consummation of the Transactions is conditioned on the Capitol stockholders approving the proposals by the required vote, and Capitol having at least $5,000,001 of net tangible assets remaining after the closing.
In addition, the consummation of the Transactions is conditioned upon, among other things, (i) no order, statute, rule or regulation enjoining or prohibiting the consummation of the Transactions shall be in force, (ii) all necessary permits, approvals, clearances, and consents of or filings with any governmental authorities shall have been obtained or made, as applicable, and the completion of necessary proceedings, (iii) the Articles of Holdings shall have been amended and restated in an agreed upon form, and (iv) the Registration Statement on Form S-4 of which this prospectus forms a part shall have become effective in accordance with the provisions of the Securities Act, no stop order shall have been issued by the SEC which remains in effect with respect to the Form S-4 and no proceeding seeking such a stop order shall have been threatened or initiated by the SEC which remains pending.
The obligations of Cision and Cision Owner to consummate the Transactions also are conditioned upon, among other things:
| Holdings executing the Registration Rights Agreement; |
| Holdings executing the Nominating Agreement; |
| certain covenants required under the Sponsor Support Agreement shall have been performed in all material respects by the applicable parties thereto; |
| the ordinary shares of Holdings to be issued pursuant to the Merger Agreement shall have been approved for listing on a national securities exchange; and |
| the amount of cash available to be released from Capitols trust account shall not be less than $225,000,000 after giving effect to payment of amounts that Capitol will be required to pay to converting stockholders upon consummation of the business combination and certain other fees and expenses. |
The obligations of Capitol, Holdings and Merger Sub to consummate the Transactions are also conditioned upon, among other things, the accuracy of the representations and warranties of Cision and Cision Owner (subject to customary bring-down standards).
The Merger Agreement may be terminated at any time, but not later than the closing, as follows:
| by mutual written consent of Capitol and Cision; |
| by either Capitol or Cision if the transactions are not consummated on or before October 19, 2017 (or December 19, 2017 if a later date is approved by the stockholders of Capitol); |
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| by either Capitol or Cision if a governmental entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the merger, which order, decree, judgment, ruling or other action is final and nonappealable; |
| by either Capitol or Cision if the other party has breached any of its covenants or representations and warranties in any material respect which would cause the conditions to closing not to be satisfied and has not cured its breach within thirty days of the notice of an intent to terminate, provided that the terminating party is itself not in breach; or |
| by either Capitol or Cision if, at the Capitol stockholder meeting, the Transactions shall fail to be approved by the required vote described herein (subject to any adjournment or recess of the meeting). |
For a description of the material United States federal income tax consequences of the Transactions and the exercise of conversion rights, please see the information set forth in The Business Combination Proposal Material United States Federal Income Tax Consequences of the Business Combination to Capitol Securityholders .
The business combination will be accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting Capitol will be treated as the acquired company for financial reporting purposes. This determination was primarily based on Cision comprising the ongoing operations of the combined entity, Cisions senior management comprising the majority of the senior management of the combined company, and current shareholders of Cision having a majority of the voting power of the combined entity. Accordingly, for accounting purposes, the business combination will be treated as the equivalent of Cision issuing stock for the net assets of Capitol, accompanied by a recapitalization. The net assets of Capitol will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the business combination will be those of Cision.
The Transactions are not subject to any additional federal or state regulatory requirement or approval, except for the filings with the State of Delaware and the Cayman Islands necessary to effectuate the Transactions.
In evaluating the proposals to be presented at the annual meeting, a stockholder should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled Risk Factors .
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Capitol is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the merger.
Capitols balance sheet data as of March 31, 2017 and statement of operations data for the three months ended March 31, 2017 and March 31, 2016 are derived from Capitols unaudited financial statements, which are included elsewhere in this proxy statement/prospectus. Capitols consolidated balance sheet data as of December 31, 2016 and December 31, 2015 and statement of operations data for the year ended December 31, 2016 and for the period from July 13, 2015 (inception) through December 31, 2015 are derived from Capitols audited financial statements, audited by Marcum LLP, independent registered public accountants, included elsewhere in this proxy statement/prospectus. Cisions balance sheet data as of March 31, 2017 and statement of operations data for the three months ended March 31, 2017 and March 31, 2016 are derived from Cisions unaudited financial statements, which are included elsewhere in this proxy statement/prospectus. Cisions consolidated balance sheet data as of December 31, 2016 and December 31, 2015 and consolidated statement of operations data for the fiscal year ended December 31, 2016, the fiscal year ended December 31, 2015 and for the period from April 14, 2014 (inception) through December 31, 2014 are derived from Cisions audited financial statements, audited by PricewaterhouseCoopers LLP, independent registered public accounting firm, included elsewhere in this proxy statement/prospectus.
The information is only a summary and should be read in conjunction with each of Cisions and Capitols consolidated financial statements and related notes and Other Information Related to Capitol Capitols Managements Discussion and Analysis of Financial Condition and Results of Operations and Cisions Managements Discussion and Analysis of Financial Condition and Results of Operations contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of Cision or Capitol. All amounts are in US dollars.
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Income Statement Data: |
For the three
months ended March 31, 2017 |
For the three
months ended March 31, 2016 |
For the year
ended December 31, 2016 |
Period from
July 13, 2015 (inception) through December 31, 2015 |
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Revenue | $ | | $ | | $ | | $ | | ||||||||
Loss from operations | (506,356 | ) | (477,521 | ) | (1,491,184 | ) | (141,984 | ) | ||||||||
Interest income | 339,818 | 132,167 | 837,950 | 25,479 | ||||||||||||
Net loss attributable to common shareholders | (166,538 | ) | (345,354 | ) | (653,234 | ) | (116,505 | ) | ||||||||
Basic and diluted net loss per share | (0.02 | ) | (0.04 | ) | (0.07 | ) | (0.01 | ) | ||||||||
Weighted average shares outstanding excluding shares subject to possible conversion basic and diluted | 9,814,869 | 9,680,095 | 9,735,456 | 9,098,268 |
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Balance Sheet Data: |
As of
March 31, 2017 |
As of
December 31, 2016 |
As of
December 31, 2015 |
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Working capital | $ | 954,276 | $ | 670,814 | $ | 824,048 | ||||||
Trust account, restricted | 325,000,000 | 325,000,000 | 325,000,000 | |||||||||
Total assets | 326,316,348 | 325,859,105 | 325,900,502 | |||||||||
Total liabilities | 12,687,072 | 12,063,291 | 11,451,454 | |||||||||
Value of common stock which may be redeemed for cash ($10.00 per share) | 308,629,275 | 308,795,813 | 309,449,047 | |||||||||
Stockholders equity | 5,000,001 | 5,000,001 | 5,000,001 |
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Statement of Operations Data: |
For the three
months ended March 31, 2017 |
For the three
months ended March 31, 2016 |
For the year ended
December 31, 2016 |
For the year ended
December 31, 2015 |
Period April 14, 2014 (inception) to
December 31, 2014 |
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Revenue | $ | 145,818 | $ | 77,704 | $ | 467,772 | $ | 333,958 | $ | 170,114 | ||||||||||
Cost of revenue | 45,066 | 28,537 | 162,583 | 125,006 | 74,552 | |||||||||||||||
Gross profit | 100,752 | 49,167 | 305,189 | 208,952 | 95,562 | |||||||||||||||
Operating costs and expenses | ||||||||||||||||||||
Sales and marketing | 27,290 | 16,536 | 92,594 | 71,603 | 56,029 | |||||||||||||||
Research and development | 5,452 | 3,536 | 19,445 | 16,604 | 5,657 | |||||||||||||||
General and administrative | 40,232 | 18,344 | 135,737 | 88,448 | 112,722 | |||||||||||||||
Amortization of intangible assets | 21,011 | 11,555 | 77,058 | 59,914 | 22,065 | |||||||||||||||
Total operating costs and expenses | 93,985 | 49,971 | 324,834 | 236,569 | 196,473 | |||||||||||||||
Operating income (loss) | 6,767 | (804 | ) | (19,645 | ) | (27,617 | ) | (100,911 | ) | |||||||||||
Non operating income (losses) | ||||||||||||||||||||
Foreign exchange gains (losses) | (1,948 | ) | 2,097 | 6,299 | (10,886 | ) | (10,992 | ) | ||||||||||||
Equity in earnings of unconsolidated affiliate | | | 241 | | | |||||||||||||||
Interest and other income, net | 2,049 | 33 | 590 | 5,750 | 339 | |||||||||||||||
Interest expense | (36,915 | ) | (15,382 | ) | (117,997 | ) | (61,398 | ) | (28,408 | ) | ||||||||||
Loss on extinguishment of debt | | | (23,591 | ) | | | ||||||||||||||
Total non operating loss | (36,814 | ) | (13,252 | ) | (134,458 | ) | (66,534 | ) | (39,061 | ) | ||||||||||
Loss before income taxes | (30,047 | ) | (14,056 | ) | (154,103 | ) | (94,151 | ) | (139,972 | ) | ||||||||||
Provision for (benefit from) income taxes | (7,054 | ) | 90 | (55,691 | ) | (3,607 | ) | (31,010 | ) | |||||||||||
Net loss | $ | (22,993 | ) | $ | (14,146 | ) | $ | (98,412 | ) | $ | (90,544 | ) | $ | (108,962 | ) |
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Statements of Cash Flow Data: | ||||||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||
Operating activities | $ | 12,838 | $ | 14,182 | $ | (2,038 | ) | $ | 22,422 | $ | (50,804 | ) | ||||||||
Investing activities | (32,993 | ) | (3,243 | ) | (819,416 | ) | (10,664 | ) | (771,555 | ) | ||||||||||
Financing activities | 26,009 | (1,333 | ) | 827,764 | (8,568 | ) | 851,819 |
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Balance Sheet Data: |
As of
March 31, 2017 |
As of
December 31, 2016 |
As of
December 31, 2015 |
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Cash and cash equivalents | $ | 41,330 | $ | 35,135 | $ | 30,606 | ||||||
Total assets | 1,815,015 | 1,787,068 | 918,930 | |||||||||
Total liabilities | 2,190,199 | 2,146,121 | 1,124,958 | |||||||||
Mandatory redeemable stockholders equity | 714 | 701 | 649 | |||||||||
Total stockholders deficit | (375,898 | ) | (359,754 | ) | (206,677 | ) |
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The following unaudited pro forma condensed combined balance sheet as of March 31, 2017 combines the historical consolidated balance sheet of Cision as of March 31, 2017 with the historical consolidated balance sheet of Capitol as of March 31, 2017, giving effect to the Transactions as if they had been consummated as of that date.
The following unaudited pro forma condensed combined income statement for the three months ended March 31, 2017 combines the historical consolidated statement of operations of Cision for the three months ended March 31, 2017 with the historical consolidated statement of operations of Capitol for the three months ended March 31, 2017, giving effect to the Transactions as if they had occurred on January 1, 2016. The following unaudited pro forma condensed combined income statement for the year ended December 31, 2016 combines the historical consolidated statement of operations of Cision for the year ended December 31, 2016 with the historical statement of operations of Capitol for the year ended December 31, 2016, giving effect to the Transactions as if they had occurred on January 1, 2016.
The historical financial information of Cision was derived from the unaudited consolidated financial statements of Cision for the three months ended March 31, 2017 and the audited consolidated financial statements of Cision for the year ended December 31, 2016 included elsewhere in this proxy statement/prospectus. The historical financial information of Capitol was derived from the unaudited financial statements of Capitol for the three months ended March 31, 2017 and the audited financial statements of Capitol for the years ended December 31, 2016 included elsewhere in this proxy statement/prospectus. This information should be read together with Cisions and Capitols financial statements and related notes, Cisions and Capitols Unaudited Pro Forma Condensed Combined Financial Statements, Cisions Managements Discussion and Analysis of Financial Condition and Results of Operations , Other Information Related to Capitol Capitols Managements Discussion and Analysis of Financial Condition and Results of Operations and other financial information included elsewhere in this proxy statement/prospectus.
The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Transactions, are factually supportable and, with respect to the pro forma statement of operations, are expected to have a continuing impact on the results of the combined company. The adjustments presented on the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the Transactions.
The unaudited pro forma condensed combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience. Cision and Capitol have not had any historical relationship prior to the Transactions. Accordingly, no pro forma adjustments were required to eliminate activities between the companies. Other than the Transactions described in this proxy statement/prospectus, the unaudited pro forma condensed combined financial statements do not include pro forma adjustments for subsequent events as disclosed in the notes to Cisions financial statements for the year ended December 31, 2016 and the three months ended March 31, 2017, as these are not related and/or directly attributable to the Transactions.
The unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of conversions into cash of Capitol public shares:
| Assuming no conversions into cash : This presentation assumes that no Capitol stockholders exercise conversion rights with respect to their public shares upon the consummation of the Transactions; and |
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| Assuming conversions of 8,567,753 Capitol public shares into cash : This presentation assumes that Capitol public stockholders exercise their conversion rights with respect to a maximum of 8,567,753 public shares upon consummation of the Transactions at a conversion price of approximately $10.03 per share. The maximum conversion amount is derived from the $225,000,000 minimum cash required to be released from Capitols trust account after giving effect to payments to converting stockholders and certain other fees and expenses per the Merger Agreement. |
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Cision | Capitol |
Pro Forma
Combined Assuming No Conversions into Cash |
Pro Forma
Combined Assuming Maximum Conversions into Cash |
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Statement of Operations Data Three months ended March 31, 2017
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Revenues | $ | 145,818 | $ | | $ | 145,818 | $ | 145,818 | ||||||||
Operating expenses | 139,051 | 506 | 136,190 | 136,190 | ||||||||||||
Operating income (loss) | 6,767 | (506 | ) | 9,628 | 9,628 | |||||||||||
Net loss | (22,993 | ) | (166 | ) | (12,461 | ) | (14,110 | ) | ||||||||
Net loss per common share basic and diluted | (0.02 | ) | (0.10 | ) | (0.13 | ) | ||||||||||
Balance Sheet Data As of March 31, 2017
|
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Total current assets | $ | 148,428 | $ | 1,316 | $ | 148,824 | $ | 148,824 | ||||||||
Total assets | 1,815,015 | 326,316 | 1,815,411 | 1,815,411 | ||||||||||||
Total current liabilities | 681,792 | 362 | 234,375 | 234,401 | ||||||||||||
Total liabilities | 2,190,199 | 12,687 | 1,463,602 | 1,543,606 | ||||||||||||
Total stockholders equity (deficit) | (375,898 | ) | 5,000 | 351,809 | 271,805 |
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Cision | Capitol |
Pro Forma
Combined Assuming No Conversions into Cash |
Pro Forma
Combined Assuming Maximum Conversions into Cash |
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Statement of Operations Data Year Ended December 31, 2016
|
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Revenues | $ | 467,772 | $ | | $ | 467,772 | $ | 467,772 | ||||||||
Operating expenses | 487,417 | 1,491 | 488,908 | 488,908 | ||||||||||||
Operating loss | (19,645 | ) | (1,491 | ) | (21,136 | ) | (21,136 | ) | ||||||||
Net loss | (98,412 | ) | (653 | ) | (82,204 | ) | (86,075 | ) | ||||||||
Net loss per common share basic and diluted | (0.07 | ) | (0.68 | ) | (0.78 | ) |
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The following table sets forth the per share data of Capitol and Cision on a stand-alone basis and the unaudited pro forma condensed combined per share data for the year ended December 31, 2016 and the three months ended March 31, 2017 after giving effect to the Transactions, (1) assuming Capitol stockholders exercise conversion rights with respect to their public shares upon the consummation of the Transactions; and (2) assuming that Capitol public stockholders exercise their conversion rights with respect to a maximum of 8,567,753 public shares upon consummation of the Transactions.
You should read the information in the following table in conjunction with the selected historical financial information summary included elsewhere in this proxy statement/prospectus, and the historical financial statements of Capitol and Cision and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited Capitol and Cision pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/prospectus.
The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Capitol and Cision would have been had the companies been combined during the period presented.
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Cision | Capitol |
Pro Forma
Combined Assuming No Conversions into Cash |
Pro Forma
Combined Assuming Maximum Conversions into Cash |
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(in thousands except share and per share amounts) | ||||||||||||||||
Three Months Ended March 31, 2017
|
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Net loss | $ | (22,993 | ) | $ | (166 | ) | $ | (12,461 | ) | $ | (14,110 | ) | ||||
Stockholders equity (deficit) at March 31, 2017 | (375,898 | ) | 5,000 | 351,809 | 271,805 | |||||||||||
Weighted average shares outstanding basic and diluted | 9,814,869 | 121,090,690 | 110,380,999 | |||||||||||||
Basic and diluted net loss per share | (0.02 | ) | (0.10 | ) | (0.13 | ) | ||||||||||
Stockholders equity per share basic and diluted at March 31, 2017 | 0.51 | 2.91 | 2.46 | |||||||||||||
Year Ended December 31, 2016
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Net loss | $ | (98,412 | ) | $ | (653 | ) | $ | (82,204 | ) | $ | (86,075 | ) | ||||
Weighted average shares outstanding basic and diluted | 9,735,456 | 121,045,587 | 110,335,896 | |||||||||||||
Basic and diluted net loss per share | (0.07 | ) | (0.68 | ) | (0.78 | ) |
23
Stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus.
The value of your investment in Holdings following consummation of the business combination will be subject to the significant risks affecting Cision and inherent in the industry in which it operates. You should carefully consider the risks and uncertainties described below and other information included in this proxy statement/prospectus. If any of the events described below occur, the post-acquisition business and financial results could be adversely affected in a material way. This could cause the trading price of its ordinary shares to decline, perhaps significantly, and you therefore may lose all or part of your investment. As used in the risks described in this subsection, references to we, us and our are intended to refer to Cision unless the context clearly indicates otherwise.
We face intense competition from numerous large and small businesses. This competition includes both product and price competition. Increased competition may result in a decline in our market share thereby adversely affecting our operating results. The markets in which we operate are fragmented, competitive and rapidly evolving, and there are limited barriers to entry to certain segments of those markets. We expect the intensity of competition to increase in the future as existing competitors develop their capabilities and as new companies enter our markets. If we are unable to compete effectively, it will be difficult for us to maintain our market share and pricing rates and add and retain customers, and our business, financial condition and results of operations will be seriously harmed.
Increased competition could result in pricing pressure, reduced sales or lower margins. We face intense price competition in all areas of our business. In particular, the cloud-based PR services business, the media intelligence business and the media distribution business are characterized by intense price competition. Our profit margin, and therefore our profitability, is dependent on the rates we are able to charge for our services. We have in the past lowered prices, and may need to do so in the future, to attempt to gain or maintain market share. These strategies have not always been successful and have at times hurt operating performance. Additionally, we have also been, and may once again be, required to adjust pricing to respond to actions by competitors, which could adversely impact operating results. The rates we are able to charge for our services are affected by a number of factors, including competition, volume fluctuations, productivity of employees and processes, the value our customers derive from our services and general economic and political conditions. We are also subject to potential price competition from new competitors and from existing competitors. If we are unable to compete successfully in respect to the pricing of our services and products, our business, financial condition and operating results may be adversely affected.
Our competitors may be able to respond more quickly than we can to new or changing opportunities, technologies, standards or customer requirements or devote greater resources to the promotion and sale of their products and services than we can. To the extent our competitors have an existing relationship with a potential customer, that customer may be unwilling to switch vendors due to existing time and financial commitments with our competitors.
We also expect that new competitors will enter the cloud-based PR services and distribution market with competing products. Many of these potential competitors have established or may establish business, financial or strategic relationships among themselves or with existing or potential customers, alliance partners or other third parties or may combine and consolidate to become more formidable competitors with better resources. It is possible that these new competitors could rapidly acquire significant market share.
If we are unable to compete successfully in this environment, our business, financial condition and operating results will be adversely affected.
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Our business performance is impacted by a number of factors, including economic and market volatility, changes in PR and marketing spending patterns, budgets and priorities, general economic conditions in North America, Latin America, Europe, the Middle East and Asia, and other factors that are generally beyond our control. To the extent that global or national economic conditions weaken, our business is likely to be negatively impacted. Adverse market conditions could reduce customer demand for our services and the ability of our customers, suppliers and other counterparties to meet their obligations to us. A reduction in customer demand for our products and services due to economic conditions or other market factors could adversely affect our business, financial condition and operating results.
Our businesses depend on the integrity and performance of the technology, computer and communications systems supporting them. If our systems cannot expand to cope with increased demand or otherwise fail to perform, we could experience unanticipated disruptions in service, slower response times and delays in the introduction of new products and services. These consequences could result in service outages, financial losses, decreased customer service and satisfaction and regulatory sanctions. The solutions we provide are susceptible to telecommunication system failures, data corruption or virus attacks, and they have experienced systems failures and delays in the past and could experience future systems failures and delays. We have, for example, experienced temporary system outages and service degradation related to telecommunication and network provider interruptions, denial-of-service attacks and equipment failures. Although we currently maintain and expect to maintain multiple computer facilities that are designed to provide redundancy and back-up to reduce the risk of system disruptions and have facilities in place that are expected to maintain service during a system disruption, such systems and facilities may prove inadequate. If unanticipated events occur, we may need to expand and upgrade our technology, transaction processing systems and network infrastructure. We do not know whether we will be able to accurately project the rate, timing or cost of any increases, or expand and upgrade our systems and infrastructure to accommodate any increases in a timely manner.
While we have programs in place to identify and minimize our exposure to vulnerabilities and work in collaboration with the technology industry to share corrective measures with our business partners, we cannot guarantee that such events will not occur in the future. Any system issue that causes an interruption in services, decreases the responsiveness of our services or otherwise affects our services could impair our reputation, damage our brand name and negatively impact our business, financial condition and operating results.
Our business relies on continuous access to content, which is increasingly generated digitally or via social media. If content providers impose onerous terms for accessing content, refuse to do business with us or move their content behind digital paywalls without providing access to us, our future financial performance may be adversely affected. Such changes could impact our operations and could have an adverse effect on our future financial performance or position.
We rely on third parties to license their technology and provide or make available certain data for our information databases, our news monitoring service and our social media monitoring service. Losing access to licensed technology and content, such as broadcast content, news outlets and social media platforms, could result in delays in the provision of our services until we develop, identify, license and integrate equivalent technology or content. These third parties may not renew agreements to provide licenses to us or may increase the price they charge for their licenses. Additionally, the quality of the technology content provided to us may not be acceptable to us and we may need to enter into agreements with additional third parties. Third-party licenses may not continue to be available to us on commercially reasonable or competitive terms, if at all. Any delay in the provision of our services could damage our business and adversely affect our results of
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operations by forcing customers to seek out other suppliers that can provide access to their desired licensed content. In the event we are unable to use such third-party technology or content or are unable to enter into agreements with third parties, current customers may not renew their subscription agreements with us or continue purchasing solutions from us, and it may be difficult to acquire new customers.
We rely on third parties to perform certain functions, and our business could be adversely affected if these third parties fail to perform as expected. We rely on third parties for regulatory, data center, data storage, data content, clearing and other services. To the extent that any of our vendors or other third-party service providers experience difficulties, materially change their business relationship with us or is unable for any reason to perform their obligations, our business or our reputation may be materially adversely affected.
The PR software and media intelligence industries are characterized by rapidly changing technology, evolving industry and regulatory standards, new product and service introductions, frequent enhancements to existing products and services, the emergence of competitors, the adoption of new services and products and changing customer demands, needs and preferences. We must complete development of, successfully implement and maintain platforms that have the functionality, performance, capacity, reliability and speed required by our business, as well as by our customers. While we intend to launch new products and initiatives and continue to explore and pursue opportunities to strengthen our business and grow our company, we may not be able to keep up with rapid technological and other competitive changes affecting our industry. For example, we must continue to enhance our platforms to remain competitive, and our business will be negatively affected if our platforms or the technology solutions we sell to our customers fail to function as expected. If we are unable to develop our platforms to include other products and markets, or if our platforms do not have the required functionality, performance, capacity, reliability and speed required by our customers, we may not be able to compete successfully. We may spend substantial time and money developing new products and initiatives. If these products and initiatives are not successful, we may not be able to offset their costs, which could have an adverse effect on our business, financial condition and operating results. Further, our failure to anticipate or respond adequately to changes in technology and customer preferences or any significant delays in product development efforts, could have a material adverse effect on our business, financial condition and operating results.
In our technology operations, we have invested substantial amounts in the development of system platforms and in the rollout of our platforms. For the year ended December 31, 2016, we spent $19.5 million on research and development activities and $11.7 million in capitalized software development costs, and such figures may increase in the future as we strive to develop new products and solutions for our customers. Although investments are carefully planned, there can be no assurance that the demand for such platforms will justify the related investments and that the future levels of transactions executed on these platforms will be sufficient to generate an acceptable return on such investments. We also cannot guarantee that we will be able to compete effectively with new vendors, or that products, services or technologies developed by others will not render our services non-competitive or obsolete. If we fail to generate adequate revenue from planned system platforms or new products or services, or if we fail to do so within the envisioned timeframe, it could have an adverse effect on our results of operations and financial condition. In addition, customers may delay purchases in anticipation of new products or enhancements.
Our credit facilities contain operating covenants and financial covenants that may limit managements discretion with respect to certain business matters. Among other things, these covenants will restrict our ability to incur additional debt, pay dividends, redeem stock, change the nature of our business, sell or otherwise dispose of assets, make acquisitions or investments, and merge or consolidate with other entities. As a result of these covenants and restrictions, we will be limited in how we conduct our business and we may be unable to raise additional debt or other financing to compete effectively or to take advantage of new business opportunities. In addition, our credit facilities contain covenants that require us to comply with a number of financial ratios, the breach of which could trigger a default that could, in turn, trigger defaults under other
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debt obligations. The terms of any future indebtedness we may incur could include more restrictive covenants. Failure to comply with such restrictive covenants may lead to default and acceleration under our credit facilities and may impair our ability to conduct business. We may not be able to maintain compliance with these covenants in the future and, if we fail to do so, we may be unable to obtain waivers from the lenders and/or amend the covenants. See Cisions Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources for a description of our credit facilities.
We depend on the availability of adequate capital to maintain and develop our business. Although we believe that we can meet our current capital requirements from internally generated funds, cash on hand and available borrowings under our revolving credit facility, we may finance future acquisitions by issuing additional equity and/or debt, and if the capital and credit markets experience volatility, access to capital or credit may not be available on terms acceptable to us or at all. Limited access to capital or credit in the future could have an impact on our ability to refinance debt, maintain our credit rating, meet our regulatory capital requirements, engage in strategic initiatives, make acquisitions or strategic investments in other companies or react to changing economic and business conditions. If we are unable to fund our capital or credit requirements, it could have an adverse effect on our business, financial condition and operating results.
In addition to our debt obligations, we will need to continue to invest in our operations for the foreseeable future to integrate acquired businesses and to fund new initiatives. If we do not achieve the expected operating results, we will need to reallocate our cash resources. This may include borrowing additional funds to service debt payments, which may impair our ability to make investments in our business or to integrate acquired businesses.
Should we need to raise funds by issuing additional equity, our equity holders will suffer dilution. In addition, announcement or implementation of future transactions by us or others could have a material effect on the price of our equity. Should we need to raise funds by incurring additional debt, we may become subject to covenants even more restrictive than those contained in our credit facilities, the indentures governing our notes and our other debt instruments. The issuance of additional debt could increase our leverage substantially. We could face financial risks associated with incurring additional debt, particularly if the debt results in significant incremental leverage. Additional debt may reduce our liquidity, curtail our access to financing markets, impact our standing with credit agencies and increase the cash flow required for debt service. Any incremental debt incurred to finance an acquisition could also place significant constraints on the operation of our business. Furthermore, if adverse economic conditions occur, we could experience decreased revenues from our operations which could affect our ability to satisfy financial and other restrictive covenants to which we are subject under our existing indebtedness.
We must rationalize, coordinate and integrate the operations of our acquired businesses, including PR Newswire, Bulletin Intelligence and other acquisitions we make in the future. This process involves complex technological, operational and personnel-related challenges, which are time-consuming and expensive and may disrupt our business. The difficulties, costs and delays that could be encountered may include:
| difficulties, costs or complications in combining the companies operations, including technology platforms, which could lead to us not achieving the synergies we anticipate or to customers not renewing their contracts with us as we integrate platforms; |
| inability to maintain uniform standards, controls, procedures and policies as we attempt to integrate the acquired businesses; |
| difficulty streamlining operations or eliminating redundancies, resulting in the failure to achieve expected cost savings; |
| incompatibility of systems and operating methods; |
| reliance on a deal partner for transition services, including billing services; |
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| inability to use capital assets efficiently to develop the business of the combined company; |
| difficulties of complying with government-imposed regulations in the United States and abroad, which may be conflicting; |
| resolving possible inconsistencies in standards, controls, procedures and policies, business cultures and compensation structures; |
| the diversion of managements attention from ongoing business concerns and other strategic opportunities; |
| difficulties in operating acquired businesses in parallel with similar businesses that we operated previously; |
| difficulties in operating businesses we have not operated before; |
| difficulties of integrating multiple acquired businesses simultaneously; |
| the retention of key employees and management, including key management of the companies that we acquire; |
| the implementation of disclosure controls, internal controls and financial reporting systems at non-U.S. subsidiaries to enable us to comply with U.S. GAAP; |
| the coordination of geographically separate organizations; |
| the coordination and consolidation of ongoing and future research and development efforts; |
| possible tax costs or inefficiencies associated with integrating the operations of a combined company; |
| pre-tax restructuring and revenue investment costs; |
| the retention of strategic partners and attracting new strategic partners; and |
| negative impacts on employee morale and performance as a result of job changes, reassignments and reductions in force. |
For these reasons, we may not achieve the anticipated financial and strategic benefits from our acquisitions. Actual cost savings and synergies may be lower than we expect and may take a longer time to achieve than we anticipate, and we may fail to realize the anticipated benefits of acquisitions.
Because certain of our solutions are cloud-based, the amount of data that we store for our customers on our servers is ever-increasing. Any person who circumvents our security measures could steal proprietary or confidential customer information or cause interruptions in our operations. We incur significant costs to protect against security breaches, and may incur significant additional costs to alleviate problems caused by any breaches. Our failure to prevent security breaches, or well-publicized security breaches affecting the Internet in general, could significantly harm our reputation and business and financial results.
Certain laws and regulations regarding data privacy and security affecting our customers impose requirements regarding the privacy and security of information maintained by these customers, as well as notification to persons whose personal information is accessed by an unauthorized third party. We are also required to keep our employees personal data private and secure. Other proposed legislation could, if enacted, prohibit or limit the use of certain technologies that track individuals activities on web pages, in emails or on the Internet. In addition to government activity, privacy advocacy groups and the technology and marketing industries are considering various new, additional or different self-regulatory standards that may place additional burdens on us or our customers, which could reduce demand for our solutions. As a result of any continuing legislative initiatives and customer demands, we may have to modify our operations with the goal of further improving data security. The cost of compliance with these laws and regulations is high and is likely to increase in the future. Any such modifications may result in increased expenses and operating complexity, and we may be
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unable to increase the rates we charge for our services sufficiently to offset these increases. Any failure on our part to comply with these laws and regulations can result in negative publicity and diversion of management time and effort and may subject us to significant liabilities and other penalties.
If customer confidential information, including material non-public information, or employee personal data is inappropriately disclosed due to a breach of our computer systems, system failures or otherwise, or if any person, including any of our employees, negligently disregards or intentionally breaches controls or procedures with which we are responsible for complying with respect to such data or otherwise mismanages or misappropriates that data, we may have substantial liabilities to our clients. Any incidents with respect to the handling of such information could subject us to litigation or indemnification claims with our clients and other parties. In addition, any breach or alleged breach of our confidentiality agreements with our clients may result in termination of their engagements, resulting in associated loss of revenue and increased costs.
Our systems and operations are vulnerable to damage or interruption from security breaches, hacking, data theft, denial of service attacks, human error, natural disasters, power loss, fire, sabotage, terrorism, computer viruses, intentional acts of vandalism and similar events. Given our position in the global PR and media intelligence industry, we may be more likely than other companies to be a direct target, or an indirect casualty, of such events.
While we continue to employ resources to monitor our systems and protect our infrastructure, these measures may prove insufficient depending upon the attack or threat posed. Any system issue, whether as a result of an intentional breach or a natural disaster, could damage our reputation and cause us to lose customers, experience lower transaction volumes or values, incur significant liabilities or otherwise have a negative impact on our business, financial condition and operating results. Any system breach may go undetected for an extended period of time. We also could incur significant expense in addressing any of these problems and in addressing related data security and privacy concerns.
One of our competitive strengths is our strong reputation and brand name. We believe that developing and maintaining awareness of our brands and avoiding damage to our reputation is critical to our business. Successful promotion of our brands will depend largely on our ability to provide reliable and useful products and solutions. Various other issues may give rise to reputational risk, including issues relating to:
| our ability to maintain the security of our data and systems; |
| the quality and reliability of our technology platforms and systems; |
| the ability to fulfill our regulatory obligations; |
| the ability to execute our business plan, key initiatives or new business ventures; |
| the ability to keep up with changing customer demand; |
| the representation of our business in the media; |
| the accuracy of our financial statements and other financial and statistical information; |
| the accuracy of our financial guidance or other information provided to our investors; |
| the quality of our corporate governance structure; |
| the quality of our products and services; |
| the quality of our disclosure controls or internal controls over financial reporting, including any failures in supervision; |
| extreme price volatility on our markets; |
| any negative publicity surrounding our customers; and |
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| any misconduct, fraudulent activity or theft by our employees or other persons formerly or currently associated with us. |
If we fail to successfully promote and maintain our brands and protect our reputation, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brands, we may fail to attract new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building and brand-maintaining efforts, and our business could suffer.
In accordance with U.S. GAAP, we account for the completion of our acquisitions using the acquisition method of accounting. We allocate the total estimated purchase prices to net tangible assets, amortizable intangible assets and indefinite-lived intangible assets, and based on their fair values as of the date of completion of the acquisitions, recording the excess of the purchase price over those fair values as goodwill. Our financial results, including earnings per share, could be adversely affected by a number of financial adjustments required by U.S. GAAP. For example, we may have additional depreciation expense as a result of recording acquired tangible assets at fair value as compared to book value as recorded, or we may incur certain adjustments to reflect the financial condition and operating results under U.S. GAAP and in U.S. dollars.
Our business acquisitions typically result in the recording of goodwill and intangible assets, and the recorded values of those assets may become impaired in the future. As of March 31, 2017, goodwill totaled approximately $1,088.1 million and other intangible assets, net of accumulated amortization, totaled approximately $519.1 million. The determination of the value of such goodwill and intangible assets requires management to make estimates and assumptions that affect our consolidated financial statements.
We assess goodwill and intangible assets, as well as other long-lived assets, including equity and cost method investments, and property and equipment for impairment on an annual basis or more frequently if indicators of impairment arise. We estimate the fair value of such assets by assessing many factors, including historical performance, capital requirements and projected cash flows. Considerable management judgment is necessary to project future cash flows and evaluate the impact of expected operating and macroeconomic changes on these cash flows. Although the estimates and assumptions we use are consistent with our internal planning process, there are inherent uncertainties in these estimates.
In addition, we may experience future events that may result in asset impairments. Future disruptions to our business, prolonged economic weakness or significant declines in operating results at any of our reporting units or businesses may result in impairment charges to goodwill, intangible assets or other long-lived assets. A significant impairment charge in the future could have a material adverse effect on our operating results.
We have experienced, and expect to continue to experience, fluctuations in our quarterly revenues and results of operations. For example, we experience fluctuations in our revenue and earnings as we integrate new acquisitions and based on the seasonal impact of corporate reporting. This and other factors may contribute to fluctuations in our results of operations from quarter to quarter. A high percentage of our operating expenses, particularly personnel and rent, are relatively fixed in advance of any particular quarter. As a result, unanticipated variations in our operating results may cause us to run our operations inefficiently over a period of time, which could have an adverse effect on our results of operations.
We are subject to various legal proceedings, governmental inquiries and claims that arise in the ordinary course of business and otherwise. Any claims asserted against us, regardless of merit or eventual outcome, could harm our reputation and have an adverse impact on our reputation, brand and relationships with our customers and other third parties and could lead to additional related claims. Certain claims may seek
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injunctive relief and regulators, as part of settlements or otherwise, may seek to modify our products or services, which could disrupt the ordinary conduct of our business and operations, reduce our revenues or increase our cost of doing business. Any response to any such litigation or governmental investigation or claim may cause us to incur significant legal expenses. Substantial recovery against us or fines or penalties could have a material adverse impact on us, and unfavorable rulings, findings or recoveries in the other proceedings could have a material adverse impact on the operating results of the period in which the ruling or recovery occurs. See Business of Cision Legal Proceedings .
Although we maintain global general liability insurance, including coverage for errors and omissions and employment practices, this coverage may be inadequate, or may not be available in the future on acceptable terms, or at all. In addition, we cannot provide assurance that these policies will cover any claim against us for loss of data or other indirect or consequential damages and defending a suit, regardless of its merit, could be costly and divert managements attention.
To protect our intellectual property rights, we rely on a combination of trademark laws, copyright laws, patent laws, trade secret protection, confidentiality agreements and other contractual arrangements with our affiliates, clients, strategic partners and others. The protective steps that we take may be inadequate to deter misappropriation of our proprietary information. Third parties may challenge, circumvent, infringe or misappropriate our intellectual property, or such intellectual property may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of service offerings or other competitive harm. For example, competitors may try to use brand names confusingly similar to ours for similar services in order to benefit from our brands value. Others, including our competitors, may independently develop similar technology, duplicate our services or design around our intellectual property and, in such cases, we could not assert our intellectual property rights against such parties. Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential information, and we may be unable to detect the unauthorized use of, or take appropriate steps to enforce, our intellectual property rights.
We have registered, or applied to register, our trademarks in the United States and in over 25 foreign jurisdictions. We also maintain copyright protection on our tangible materials and pursue patent protection for software products, inventions and other processes developed by us. We also hold a number of patents, patent applications and licenses in the United States and other foreign jurisdictions. Effective trademark, copyright, patent and trade secret protection may not be available in every country in which we offer our services. Failure to protect our intellectual property adequately could harm our brand and affect our ability to compete effectively. Further, defending our intellectual property rights could result in the expenditure of significant financial and managerial resources.
We may be subject to costly litigation if our services and technology are alleged to infringe upon or otherwise violate a third partys proprietary rights. Third parties may have, or may eventually be issued, patents that could be infringed by our products, services or technology. Any of these third parties could make a claim of infringement against us with respect to our products, services or technology. We may also be subject to claims by third parties for patent, copyright or trademark infringement, breach of license or violation of other third-party intellectual property rights. Any intellectual property claims, with or without merit, could be expensive to litigate or settle and could divert management resources and attention. Successful challenges against us could require us to modify or discontinue our use of technology or business processes where such use is found to infringe or violate the rights of others, enter into costly settlement or license agreements, pay costly damage awards, face a temporary or permanent injunction prohibiting us from marketing or selling
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certain of our products or services or purchase licenses from third parties, any of which could adversely affect our business, financial condition and operating results. Additionally, in recent years, individuals and groups have been purchasing intellectual property assets for the sole purpose of making claims of infringement or other violations and attempting to extract settlements from companies like ours. Claims of intellectual property infringement or violation also might. Even if we have an agreement for indemnification against such costs, the indemnifying party, if any in such circumstances, may be unable to uphold its contractual obligations. If we cannot or do not license the infringed technology on reasonable terms or substitute similar technology from another source, our revenue and earnings could be adversely impacted.
Over the past several years, acquisitions have been significant factors in our growth. Although we cannot predict our rate of growth as the result of acquisitions with complete accuracy, we believe that additional acquisitions and investments or entering into partnerships and joint ventures will be important to our growth strategy. Such transactions may be material in size and scope. There can be no assurances that we will be able to complete suitable acquisitions for a variety of reasons, including the identification of and competition for acquisition targets, the need for regulatory approvals, the inability of the parties to agree to the structure or purchase price of the transaction, competition from competitors interested in making similar acquisitions and our inability to finance the transaction on commercially acceptable terms. Therefore, we cannot be sure that we will be able to complete future transactions on terms favorable to us.
Furthermore, any future acquisitions or investments in businesses or facilities could entail a number of additional risks, including:
| problems with effective integration of operations; |
| the inability to maintain key pre-acquisition business relationships; |
| increased operating costs; |
| the diversion of our management team from other operations; |
| problems with regulatory bodies; |
| declines in the value of investments; |
| exposure to unanticipated liabilities; |
| difficulties in realizing projected efficiencies, synergies and cost savings; and |
| changes in our credit rating and financing costs. |
As a global company, we, like other corporations, are subject to taxes at the U.S. federal, state and local levels, as well as in non-U.S. jurisdictions. Significant judgment is required to determine and estimate worldwide tax liabilities. Changes in tax laws, regulations or policies and the amount and composition of pre-tax income in countries with differing tax rates or valuation of our deferred tax assets and liabilities could result in us having to pay higher taxes, which would in turn reduce our net income.
We are subject to potential regular examination by the Internal Revenue Service and other tax authorities, and from time to time we initiate amendments to previously filed tax returns. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations and amendments to determine the adequacy of our provision for income taxes, which requires estimates and judgments. Although we believe our tax estimates are reasonable, we cannot assure you that the tax authorities will agree with such estimates. We may have to engage in litigation to achieve the results reflected in the estimates, which may be time-consuming and expensive. We cannot assure you that we will be successful or that any final determination will not be materially different from the treatment reflected in our historical income tax provisions and accruals, which could materially and adversely affect our financial condition and results of operations.
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In addition, some of our subsidiaries are subject to tax in the jurisdictions in which they are organized or operate. In computing our tax obligation in these jurisdictions, we take various tax positions. We cannot assure you that upon review of these positions the applicable authorities will agree with our positions. A successful challenge by a tax authority could result in additional tax imposed on our subsidiaries. Our non-U.S. businesses operate in various international markets, particularly emerging markets that are subject to greater political, economic and social uncertainties than developed countries. In certain of the countries in which we operate, tax authorities may exercise significant discretionary and arbitrary powers to make tax demands or decline to refund payments that may be due to us as per tax returns. As a result, applicable tax laws in jurisdictions where we do business could have a material adverse effect on our financial condition and results of operations.
A significant portion of our revenues are denominated in foreign currency. For the year ended December 31, 2016, 32% of our revenues were denominated in foreign currencies. In addition, a significant portion of our expenses are incurred in the local currencies of the countries in which we operate, including British Pound, the Euro, Swedish Krona and the Canadian Dollar. We have operations in the United States (our headquarters), Europe, the Americas and a number of other foreign countries. For financial reporting purposes, we translate all non-U.S. denominated transactions into U.S. dollars in accordance with U.S. GAAP. We therefore have significant exposure to exchange rate movements between the Pound, Euro, Kroner and Canadian Dollar and other foreign currencies towards the U.S. dollar. Fluctuations in exchange rates also affect the value of funds held by our foreign subsidiaries. Significant inflation or disproportionate changes in foreign exchange rates with respect to one or more of these currencies could occur as a result of general economic conditions, acts of war or terrorism, changes in governmental monetary or tax policy or changes in local interest rates. These exchange rate differences will affect the translation of our non-U.S. results of operations and financial condition into U.S. dollars as part of the preparation of our consolidated financial statements.
U.S. GAAP is subject to interpretation by the FASB, the American Institute of Certified Public Accountants, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations, including changes related to revenue recognition, could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.
A substantial portion of our solutions are sold pursuant to subscription agreements, and our customers have no obligation to renew these agreements. For the year ended December 31, 2016, subscription or recurring revenue streams represented approximately 82% of our revenues. As a result, we may not be able to consistently and accurately predict future renewal rates. Our subscription customers renewal rates may decline or fluctuate or our subscription customers may renew for fewer services or for less expensive services as a result of a number of factors, including their level of satisfaction with our solutions, budgetary or other concerns, and the availability and pricing of competing products. If large numbers of existing subscription customers do not renew these agreements, or renew these agreements on terms less favorable to us, and if we cannot replace or supplement those non-renewals with new subscription agreements generating the same or greater level of revenue, our business, financial condition and results of operations will be adversely affected.
We recognize revenue from our subscription customers over the terms of their subscription agreements. A significant portion of our quarterly revenue usually represents deferred revenue from subscription agreements
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entered into during previous quarters. As a result, a decline in new or renewed subscription agreements in any one quarter will not necessarily be fully reflected in the revenue for the corresponding quarter but will negatively affect our revenue in future quarters. Additionally, the effect of significant downturns in sales and market acceptance of our solutions may not be fully reflected in our results of operations until future periods. Our model also makes it difficult for us to rapidly increase our subscription-based revenue through additional sales in any period, as revenue from new customers must be recognized over the applicable subscription term.
Our ability to increase revenue and achieve profitability depends, in large part, on widespread acceptance of our cloud-based platform by enterprises. As we target our sales efforts at these customers, we face greater costs, longer sales cycles and less predictability in completing some of our sales. As a result of the variability and length of the sales cycle, we have limited ability to forecast the timing of sales. A delay in or failure to complete sales could harm our business and financial results, and could cause our financial results to vary significantly from period to period. Our sales cycle varies widely, reflecting differences in potential customers decision-making processes, procurement requirements and budget cycles, and is subject to significant risks over which we have little or no control, including:
| customers budgetary constraints and priorities, including with respect to resource allocation between PR and marketing and paid versus owned media; |
| the timing of customers budget cycles; |
| the need by some customers for lengthy evaluations prior to purchasing products; and |
| the length and timing of customers approval processes. |
Our typical direct sales cycles for more substantial enterprise customers can often be long, and we expect that this lengthy sales cycle may continue or could even increase as our products become more complex and we are asked to tailor our solutions to our enterprise customer needs. Longer sales cycles could cause our operating results and financial condition to suffer in a given period. If we cannot adequately scale our direct sales force, we will experience further delays in signing new customers, which could slow our revenue growth.
Market opportunity estimates and growth forecasts included in this prospectus are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. Even if the market in which we compete meets the size estimates and growth forecasted in this prospectus, our business could fail to grow at similar rates, if at all. For more information regarding the estimates of market opportunity and the forecasts of market growth included in this proxy statement/prospectus, See the section entitled Business of Cision Industry .
The success of our strategy is dependent, in part, on the success of our efforts to sell and cross-sell additional services, whether internally developed or acquired in an acquisition, to our existing customers. These customers might choose not to expand their use of or make additional purchases of our solutions or may choose to diversify the PR solution providers with which they do business. If we fail to generate additional business from our current customers, our revenue could grow at a slower rate or decrease. Our historical revenue growth rates are not indicative of future growth, and we may not achieve similar revenue growth rates in future periods. You should not rely on our revenue for any prior quarterly or annual periods as an indication of our future revenue or revenue growth. Our operating results may vary as a result of a number of factors, including our ability to execute on our business strategy and compete effectively for customers and
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business partners and other factors that are outside of our control. If we are unable to maintain consistent revenue or revenue growth, our share price could be volatile, and it could be difficult to achieve or maintain profitability.
We provide a portion of our services for specific projects that generate revenues that terminate on completion of a defined task. For the year ended December 31, 2016, approximately 2.2% of our revenue was related to project-based non-recurring revenue activities. While we seek, wherever possible, on completion or termination of large projects, to counterbalance periodic declines in revenues with new arrangements to provide services to the same customer or others, our inability to obtain sufficient new projects to counterbalance any decreases in such work may adversely affect our future revenues and results of operations.
We rely on search engines to attract new customers, and many of our customers locate our websites by clicking through on search results displayed by search engines such as Google, Bing and Yahoo!. Search engines typically provide two types of search results, algorithmic and purchased listings. Algorithmic search results are determined and organized solely by automated criteria set by the search engine and a ranking level cannot be purchased. Advertisers can also pay search engines to place listings more prominently in search results in order to attract users to advertisers websites. We rely on both algorithmic and purchased listings to attract customers to our websites. Search engines revise their algorithms from time to time in an attempt to optimize their search result listings. If search engines on which we rely for algorithmic listings modify their algorithms, then our websites may not appear at all or may appear less prominently in search results, which could result in fewer customers clicking through to our websites, requiring us to resort to other potentially costly resources to advertise and market our services. If one or more search engines on which we rely for purchased listings modifies or terminates its relationship with us, our expenses could rise, or our revenue could decline and our business may suffer. Additionally, the cost of purchased search listing advertising is rapidly increasing as demand for these channels grows, and further increases could greatly increase our expenses.
Moreover, our news distribution service depends upon the placement of our customers online press releases. If search engines on which we rely modify their algorithms or purposefully block our content, then information distributed via our news distribution service may not be displayed or may be displayed less prominently in search results, and as a result we could lose customers or fail to attract new customers and our results of operations could be adversely affected.
High-quality education, training and customer support is important for the successful retention of existing customers. Providing this education, training and support requires that our support personnel have specific knowledge and expertise of our platforms, making it more difficult for us to hire qualified personnel and to scale up our support operations. The importance of high-quality customer support will increase as we expand our business and continue to integrate acquired businesses. If we do not provide effective and timely ongoing support, our ability to sell additional features to, or to retain, existing customers may suffer, and our reputation with existing or potential customers may be harmed.
ISPs can block emails from reaching their users. The implementation of new or more restrictive policies by ISPs may make it more difficult to deliver our customers emails. If ISPs materially limit or halt the delivery of our customers emails, or if we fail to deliver our customers emails in a manner compatible with ISPs email handling, authentication technologies or other policies, then customers may cancel their accounts which could harm our business and financial performance.
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We depend on email to market to and communicate with our customers, and our customers rely on email to communicate with journalists, social media influencers, and their customers and members. Various private entities attempt to regulate the use of email for commercial solicitation. These entities often advocate standards of conduct or practice that exceed legal requirements and classify certain email solicitations that comply with legal requirements as spam. Some of these entities maintain blacklists of companies and individuals, and the websites, ISPs and Internet protocol addresses associated with those entities or individuals. If a companys Internet protocol addresses are listed by a blacklisting entity, emails sent from those addresses may be blocked if they are sent to any Internet domain or Internet address that subscribes to the blacklisting entitys service or purchases its blacklist. If our services are blacklisted, our customers may be unable to effectively use our services, and as a result we could lose customers or fail to attract new customers and our results of operations could be adversely affected.
Our cloud-based software may contain undetected errors or defects that may result in product failures, misleading reports or otherwise cause our solutions to fail to perform in accordance with customer expectations. Because our customers use our solutions for important aspects of their business, any errors or defects in, or other performance problems with, our solutions could hurt our reputation and may damage our customers businesses. If that occurs, we could lose future sales, our existing subscription customers could elect to not renew or, in certain circumstances, terminate their agreements with us. Product performance problems could result in loss of market share, failure to achieve market acceptance and the diversion of development resources. If one or more of our solutions fail to perform or contain a technical defect, a customer may assert a claim against us for substantial damages, whether or not we are responsible for our solutions failure or defect. Product liability claims could require us to spend significant time and money in litigation or arbitration/dispute resolution or to pay significant settlements or damages.
Our news distribution service is a trusted information source, and our customers rely on our email services to communicate with journalists, social media influencers, and their customers and members. To the extent we were to distribute an inaccurate or fraudulent press release or our customers used our services to transmit negative messages or website links to harmful applications, reproduce and distribute copyrighted and trademarked material without permission, or report inaccurate or fraudulent data or information, our reputation could be harmed, even though we are not responsible for the content distributed via our services.
We have incurred operating losses in the past and we may incur operating losses in the future. Our recent operating losses were $19.6 million in 2016, $27.6 million in 2015 and $100.9 million in 2014. We expect our operating expenses to increase as we continue to expand our operations, and if our increased operating expenses exceed our revenue growth, we may not be able to generate operating income.
We have significant net operating losses. Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an ownership change (generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period), its ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. If we undergo an ownership change, including as a result of the Transactions, we may be limited in the portion of net operating loss carryforwards that we can use in the future to offset taxable income for U.S. Federal and state income tax purposes and the utilization of other tax attributes to reduce our Federal and state income tax expense.
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Taxing jurisdictions, including state and local entities, have differing rules and regulations governing sales and use or other taxes, and these rules and regulations are subject to varying interpretations that may change over time. In particular, the applicability of sales taxes to our subscription services and e-commerce transactions in general in various jurisdictions is a complex and evolving issue. It is possible that we could face sales tax audits and an assertion that we should be collecting sales or other taxes on our services in jurisdictions where we have not historically done so and do not accrue for sales taxes. The imposition of Internet usage taxes or enhanced enforcement of sales tax laws could result in substantial tax liabilities for past sales or could have an adverse effect on our business, financial condition and results of operations.
The operations of our non-U.S. business are subject to the risk inherent in international operations. Our expansion into lower cost locations may increase operational risk. Some of these economies may be subject to greater political, economic and social uncertainties than countries with more developed institutional structures. Political, economic or social events or developments in one or more of these countries could adversely affect our operations and financial results.
We operate a global business. For the year ended December 31, 2016, 32% of our revenue was derived from Europe (including the United Kingdom), Canada, Asia and Latin America. We are subject to certain adverse economic factors relating to overseas economies generally, including foreign currency fluctuation, inflation, external debt, a negative balance of trade and underemployment. Risks associated with our international business activities include:
| difficulties in managing international operations, including overcoming logistical and communications challenges; |
| local competition; |
| trade and tariff restrictions; |
| price or exchange controls; |
| currency control regulations; |
| foreign tax consequences; |
| labor disputes and related litigation and liability; |
| limitations on repatriation of earnings; |
| compliance with foreign laws and different legal standards; and |
| changing laws and regulations, occasionally with retroactive effect. |
The occurrence of any one of these risks could negatively affect our international operations and, consequently, our results of operations generally.
Our customers may perform audits or require us to perform audits, provide audit reports or obtain certifications with respect to the controls and procedures that we use in the performance of services for such customers, especially when we process data or information belonging to them. Our ability to acquire new customers and retain existing customers may be adversely affected and our reputation could be harmed if we cannot obtain an appropriate certification or opinion with respect to our controls and procedures in connection with any such audit in a timely manner. Additionally, our profitability could suffer if our controls and procedures were to fail or to impair our customers ability to comply with their own internal control requirements.
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We continually evaluate our various products and services in order to determine whether any should be discontinued or, to the extent possible, divested. We cannot guarantee that we have correctly forecasted, or will correctly forecast in the future, the right products or services to dispose of or discontinue, or that our decision to dispose of or discontinue various investments, products or services is prudent. There are no assurances that the discontinuance of various products or services will reduce our operating expenses or will not cause us to incur material charges with such a decision. The disposal or discontinuance of existing solutions presents various risks, including, but not limited to the inability to find a purchaser for a product or service or the purchase price obtained will not be equal to at least the book value of the net assets for the product or service, managing the expectations of, and maintaining good relations with, our customers who previously purchased discontinued solutions, which could prevent us from selling other products to them in the future. We may also incur other significant liabilities and costs associated with our disposal or discontinuance of solutions, including, but not limited to employee severance costs and excess facilities costs, all of which could have an adverse effect on our business, financial condition and results of operations.
Our success depends upon the continued services of our senior management and other key personnel who have substantial experience in the PR software and services industry and the markets in which we offer our services. In addition, our success depends in large part upon the reputation within the industry of our senior managers. Further, in order for us to continue to successfully compete and grow, we must attract, recruit, develop and retain personnel, including key executives of organizations we acquire, who will provide us with expertise across the entire spectrum of our intellectual capital needs. Our success also depends on the skill and experience of our sales force, which we must continuously work to maintain. While we have a number of key personnel who have substantial experience with our operations, we must also develop our personnel to provide succession plans capable of maintaining the continuity of our operations. The market for qualified personnel is competitive, and we may not succeed in recruiting additional personnel or may fail to effectively replace current personnel who depart with qualified or effective successors.
Failure to retain or attract key personnel could impede our ability to grow and could result in our inability to operate our business profitably. In addition, contractual obligations related to confidentiality, assignment of intellectual property rights, and non-solicitation may be ineffective or unenforceable and departing employees may share our proprietary information with competitors in ways that could adversely impact us, or seek to solicit customers or recruit our key personnel to competing businesses.
As of December 31, 2016, we had approximately 3,130 global employees, with approximately 1,445 employees located in the United States and 1,685 employees located internationally. In various countries, local law requires our participation in works councils, and we have approximately 500 employees working under collective bargaining agreements. While we have not experienced any material work stoppages at any of our facilities, any stoppage or slowdown could cause material interruptions in our business, and we cannot assure you that alternate qualified personnel would be available on a timely basis, or at all. As a result, labor disruptions at any of our locations could materially adversely affect our business, financial condition and results of operations.
Natural disasters or other catastrophic events may cause damage or disruption to our operations, our servers and data centers and the global economy, and thus could have a strong negative effect on us. Our business operations and our servers and data centers are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to continue operations, and
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could decrease demand for our platform. Our primary data centers are located in Chicago, IL, Sterling, VA, and Piscataway, NJ, and our secondary data centers include facilities in Dallas, TX and London, UK, making our business particularly susceptible to natural disasters in those areas as well as in areas where our third-party data centers are located. Any natural disaster affecting our data centers could have an adverse effect on our financial condition and operating results.
We conduct business in countries and regions that are vulnerable to disruptions from political uncertainty, political unrest or terrorist acts. Any damage or disruption from political uncertainty, political unrest or terrorist acts would damage our ability to provide services, in whole or in part, and/or otherwise damage our operations and could have an adverse effect on our business, financial condition or results of operations. Further, political tensions and escalation of hostilities could adversely affect our operations in these countries and therefore adversely affect our revenues and results of operations. Terrorist attacks and other acts of violence or war could affect us or our clients by disrupting normal business practices for extended periods of time and reducing business confidence. In addition, acts of violence or war may make travel more difficult and may effectively curtail our ability to serve our clients needs, any of which could adversely affect our results of operations.
The volume of content from print news sources has declined in recent years, which has reduced the volume of print news stories delivered through our content offerings. This has largely been driven by a decline in print media readership which has in turn seen a reduction in media publisher revenue and journalist numbers associated with media such as print newspapers. If the volume of content continues to decline (e.g., because of further reductions in journalist numbers by print media publishers), and if we are unable to offset this decline with our current and/or future other software and services, our future financial performance could be adversely affected.
The proliferation of digital, free-to-access news content has led to the introduction of low-cost or free self-service media intelligence offerings. Moreover, our insights group provides human-generated media intelligence analysis and consultation to some of our larger customers. More efficient or cost-effective technology that replaces the need for such human-generated analysis could have an adverse effect on our business. Our future financial performance could be affected by customers adopting these low-cost, self-service media intelligence platforms and technologies.
Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the board of directors and subject to certain limitations set forth in the agreements governing our Credit Facilities. The boards determination to declare dividends will depend upon our profitability and financial condition, contractual restrictions, restrictions imposed by applicable law and other factors that the board deems relevant. Based on an evaluation of these factors, the board of directors may determine not to declare future dividends at all or to declare future dividends at a reduced amount. Accordingly, there can be no guarantee that we will pay future dividends to our shareholders.
Our corporate affairs are governed by our amended and restated memorandum and articles of association and by the Companies Law and common law of the Cayman Islands. The rights of shareholders to take legal
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action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands have a less exhaustive body of securities laws as compared to the United States. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the United States federal courts. As a result, our shareholders may have more difficulty in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.
We are a Cayman Islands company and a portion our assets are located outside of the United States. As a result, it may be difficult or impossible for you to bring an action against us in the United States in the event that you believe that your rights have been infringed under U.S. federal securities laws or otherwise. It may not be possible to enforce certain court judgments obtained in the United States against us (or our directors or officers) in the Cayman Islands. We have been advised that there is no statutory enforcement in the Cayman Islands of judgments obtained in United States courts, and such matters are governed by the common law of the Cayman Islands. Uncertainty exists as to whether the courts of the Cayman Islands would:
| recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liabilities provisions of the securities laws of the United States or any state in the United States; or |
| entertain original actions brought in the Cayman Islands against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. |
We have been advised that the uncertainty with regard to Cayman Islands law relates to whether a judgment obtained from the United States courts under civil liability provisions of the securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company. Because the courts of the Cayman Islands have yet to rule on whether such judgments are penal or punitive in nature, it is uncertain whether they would be enforceable in the Cayman Islands. We are further advised us that a final and conclusive judgment in the federal or state courts of the United States under which a sum of money is payable, other than a sum payable in respect of taxes, fines, penalties or similar charges, will ordinarily be recognized and enforced in the courts of the Cayman Islands without re-examination of the merits, at common law. For more information regarding the relevant laws of the Cayman Islands, see the section entitled Description of Holdings Securities Enforcement of civil liabilities .
On a pro forma basis after giving effect to the Transactions, Cision would have had approximately $1,226.6 million of indebtedness as of March 31, 2017, consisting of amounts outstanding under the First Lien Credit Facility and Second Lien Credit Facility. We also would have had capacity to borrow up to an additional $40.2 million under our Revolving Credit Facility. Because borrowings under our Credit Facilities bear interest at variable rates, any increase in interest rates on debt that we have not fixed using interest rate hedges will increase our interest expense, reduce our cash flow or increase the cost of future borrowings or refinancings. Our indebtedness could have important consequences to our investors, including, but not limited to:
| increasing vulnerability to, and reducing its flexibility to respond to, general adverse economic and industry conditions; |
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| requiring the dedication of a substantial portion of cash flow from operations to the payment of principal of, and interest on, its indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, joint ventures or other general corporate purposes; |
| limiting flexibility in planning for, or reacting to, changes in its business and the competitive environment; and |
| limiting our ability to borrow additional funds and increasing the cost of any such borrowing. |
Other than variable rate debt, we believe our business has relatively large fixed costs and low variable costs, which magnifies the impact of revenue fluctuations on our operating results. As a result, a decline in our revenue may lead to a relatively larger impact on operating results. A substantial portion of our operating expenses will be related to personnel costs, regulation and corporate overhead, none of which can be adjusted quickly and some of which cannot be adjusted at all. Our operating expense levels will be based on our expectations for future revenue. If actual revenue is below managements expectations, or if our expenses increase before revenues do, both revenues less transaction-based expenses and operating results would be materially and adversely affected. Because of these factors, it is possible that our operating results or other operating metrics may fail to meet the expectations of stock market analysts and investors. If this happens, the market price of our ordinary shares may be adversely affected.
Cisions First Lien and Second Lien credit agreements provides that an event of default will occur upon specified change of control events, which include Cision Owner ceasing to beneficially own directly or indirectly a majority of the voting equity interests of certain credit parties thereunder. As a result, Cision will need to seek an amendment or refinancing of this indebtedness prior to such time as it issues ordinary shares in amount that would reduce Cision Owners beneficial ownership below 50%. Although we do not currently anticipate that Cision Owner would dispose of equity interests that would cause it to cease to beneficially own a majority of the ordinary shares prior to our amendment or refinancing of this indebtedness, Cision Owner is not contractually obligated to retain the ordinary shares and warrants it will acquire upon consummation of the business combination. If we are unable to amend these agreements or refinance this indebtedness, we will be limited in our ability to issue additional equity and will need to rely on other sources of financing, including additional borrowings.
We do not anticipate that our board of directors will declare dividends in the foreseeable future. If we decide to declare dividends in the future, as a holding company, we will require dividends and other payments from our subsidiaries to meet such cash requirements. Our credit agreements place certain contractual restrictions on our subsidiaries ability to make distributions to us. See Cisions Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Overview for a discussion of our credit facilities restrictions on our subsidiaries ability to make distributions to us. In addition, minimum capital requirements may indirectly restrict the amount of dividends paid upstream, and repatriations of cash from our subsidiaries may be subject to withholding, income and other taxes in various applicable jurisdictions. If our subsidiaries are unable to distribute cash to us and we are unable to pay dividends, our ordinary shares may become less attractive to investors and the price of our ordinary shares may become volatile.
The U.S. government, the Organisation for Economic Co-operation and Development and other governmental agencies in jurisdictions where we do business have had an extended focus on issues related to the taxation of multinational corporations. One example is in the area of base erosion and profit shifting, where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. In addition, legislative proposals have been put forth in the U.S. that may limit deductibility of interest and/or impose a border adjustment tax. It is unclear whether any such proposals or other proposals will be enacted.
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As a result, the tax laws in the United States and other countries in which we do business could change on a prospective or retroactive basis, and any such changes could adversely affect us.
The withdrawal of the U.K. from the European Union (commonly referred to as Brexit) may cause an increase in our taxes including withholding taxes on repatriation of cash from jurisdictions that are members of the European Union to or through any of our U.K. subsidiaries as a result of the U.K. no longer being entitled to benefits provided by the European Union directives.
Under Section 7874 of the Code, if, following an acquisition of a U.S. corporation by a foreign corporation, at least 80% of the acquiring foreign corporations stock by (vote and value) is considered to be held by former shareholders of the U.S. corporation by reason of holding stock of such U.S. corporation then the acquiring corporation could be treated as a U.S. corporation for U.S. federal tax purposes even though it is a corporation created and organized outside the United States.
In addition, following the acquisition of a U.S. corporation by a foreign corporation, Section 7874 of the Code can limit the ability of the acquired U.S. corporation and its U.S. affiliates to utilize U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions if the shareholders of the acquired U.S. corporation hold at least 60% (but less than 80%), by either vote or value, of the shares of the foreign acquiring corporation by reason of holding shares in the U.S. corporation, and certain other conditions are met.
Because Holdings is a non-U.S. corporation, Section 7874 of the Code and the regulations thereunder may apply with respect to potential future acquisitions of U.S. corporations by Holdings. As a result, these rules may impose adverse consequences or apply limitations on our ability to engage in future acquisitions.
As a privately held company, Cision has not been required to comply with certain corporate governance and financial reporting practices and policies required of a publicly traded company. As a publicly traded company, we will incur significant legal, accounting and other expenses that we were not required to incur in the recent past, particularly after we are no longer an emerging growth company as defined under the JOBS Act. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated and to be promulgated thereunder, as well as under the Sarbanes-Oxley Act, the JOBS Act, and the rules and regulations of the SEC and national securities exchanges have created uncertainty for public companies and increased the costs and the time that our board of directors and management must devote to complying with these rules and regulations. We expect these rules and regulations to increase our legal and financial compliance costs and lead to a diversion of management time and attention from revenue generating activities.
Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert managements attention from implementing our growth strategy, which could prevent us from improving our business, results of operations and financial condition. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a publicly traded company. However, the measures we take may not be sufficient to satisfy our obligations as a publicly traded company.
For as long as we remain an emerging growth company as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We may remain an emerging growth company until October 19, 2020 (the fifth anniversary of the consummation of its predecessors initial public offering) or until such earlier time that we have more than $1.0 billion in annual revenues, have more than $700.0 million in market value of our ordinary shares held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period. Further, there is no guarantee that the exemptions available to
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us under the JOBS Act will result in significant savings. To the extent we choose not to use exemptions from various reporting requirements under the JOBS Act, we will incur additional compliance costs, which may impact earnings.
We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to obtain an assessment of the effectiveness of our internal controls over financial reporting from our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies. Holdings and Capitol have elected to take advantage of such extended transition period. We cannot predict if investors will find our ordinary shares less attractive because we will rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may be a less active market for our ordinary shares and our share price may be more volatile.
If we fail to develop and maintain effective internal controls and procedures and disclosure procedures and controls, we may be unable to provide financial information and required SEC reports that a U.S. publicly traded company is required to provide in a timely and reliable fashion. Any such delays or deficiencies could penalize us, including by limiting our ability to obtain financing, either in the public capital markets or from private sources and hurt our reputation and could thereby impede our ability to implement our growth strategy. In addition, any such delays or deficiencies could result in our failure to meet the requirements for listing of our ordinary shares on a national securities exchange.
The price of Holdings ordinary shares may fluctuate due to a variety of factors, including:
| actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in industry; |
| mergers and strategic alliances in the industry in which Cision operates; |
| market prices and conditions in the industry in which Cision operates; |
| changes in government regulation; |
| potential or actual military conflicts or acts of terrorism; |
| the failure of securities analysts to publish research about us, or shortfalls in our operating results compared to levels forecast by securities analysts; |
| announcements concerning us or our competitors; and |
| the general state of the securities markets. |
These market and industry factors may materially reduce the market price of our ordinary shares, regardless of our operating performance.
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We currently expect that securities research analysts will establish and publish their own periodic projections for our business. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. While we expect research analyst coverage, if no analysts commence coverage of us, the trading price and volume for our ordinary shares could be adversely affected.
Upon consummation of the Transactions, Holdings will have warrants outstanding to purchase an aggregate of 24,500,000 ordinary shares (assuming no holders of public shares seeks to convert such shares to cash) and may issue an aggregate of 6,000,000 ordinary shares to Cision Owner upon achievement of milestone targets as described in this proxy statement/prospectus. Holdings may also issue additional ordinary shares or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without shareholder approval, in a number of circumstances.
Holdings issuance of additional ordinary shares or other equity securities of equal or senior rank would have the following effects:
| Holdings existing shareholders proportionate ownership interest in Holdings will decrease; |
| the amount of cash available per share, including for payment of dividends in the future, may decrease; |
| the relative voting strength of each previously outstanding common share may be diminished; and |
| the market price of Holdings ordinary shares may decline. |
Our articles of association will contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of control transactions, including, among other things:
| provisions that authorize our board of directors, without action by our shareholders, to issue additional ordinary shares and preferred shares with preferential rights determined by our board of directors; |
| provisions that permit only a majority of our board of directors, the chairman of our board of directors or, for so long as Cision Owner beneficially and its affiliates own at least 10% of our ordinary shares, Cision Owner to call shareholder meetings and therefore do not permit shareholders to call shareholder meetings; |
| provisions that impose advance notice requirements, minimum shareholding periods and ownership thresholds, and other requirements and limitations on the ability of shareholders to propose matters for consideration at shareholder meetings; provided, however, at any time when Cision Owner beneficially owns, in the aggregate, at least 5% of our ordinary shares, such advance notice procedure will not apply to it; and |
| a staggered board whereby our directors are divided into three classes, with each class subject to retirement and re-election once every three years on a rotating basis. |
These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our
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company in a tender offer or similar transaction. With our staggered board of directors, at least two annual meetings of shareholders will generally be required in order to effect a change in a majority of our directors. Our staggered board of directors can discourage proxy contests for the election of our directors and purchases of substantial blocks of our shares by making it more difficult for a potential acquirer to gain control of our board of directors in a relatively short period of time.
Upon the completion of the Transactions, Cision Owner will own approximately 82.1 million of our ordinary shares, or approximately 68% of our outstanding ordinary shares. Accordingly, we will be a controlled company for purposes of the New York Stock Exchange listing requirements. As such, we will be exempt from the obligation to comply with certain corporate governance requirements, including the requirements that a majority of our board of directors consists of independent directors, and that we have nominating and compensation committees that are each composed entirely of independent directors. These exemptions do not modify the requirement for a fully independent audit committee. Once we are no longer a controlled company, we must comply with the independent board committee requirements as they relate to the nominating and compensation committees, on the same phase-in schedule as set forth above, with the trigger date being the date we are no longer a controlled company as opposed to our listing date. Additionally, we will have 12 months from the date we cease to be a controlled company to have a majority of independent directors on our board of directors.
As a result of its ownership of our ordinary shares, Cision Owner, so long as it holds two thirds of our outstanding ordinary shares, will have the ability to control the outcome of matters requiring the assent of a special resolution of shareholders. Moreover, for so long as it holds at least a majority of our outstanding ordinary shares it will have the ability, through the board of directors, to control decision-making with respect to our business direction and policies. Matters over which Cision Owner will, directly or indirectly, exercise control following the completion of the Transactions include:
| the election of our board of directors and the appointment and removal of our officers; |
| mergers and other business combination transactions requiring shareholder approval, including proposed transactions that would result in our shareholders receiving a premium price for their shares; and |
| amendments of the Articles or increases or decreases in the size of our board of directors. |
Even if Cision Owners ownership of our ordinary shares falls below a majority, it may continue to be able to strongly influence or effectively control our decisions.
If 75% or more of Holdings gross income in a taxable year, including its pro-rata share of the gross income of any company, U.S. or foreign, in which Holdings is considered to own, directly or indirectly, 25% or more of the shares by value, is passive income, then Holdings will be a PFIC for U.S. federal income tax purposes. Alternatively, Holdings will be considered to be a PFIC if at least 50% of its assets in a taxable year, averaged over the year and ordinarily determined based on fair market value and including its pro-rata share of the assets of any company in which it is considered to own, directly or indirectly, 25% or more of the shares by value, are held for the production of, or produce, passive income. Once treated as a PFIC, for any taxable year, a foreign corporation will generally continue to be treated as PFIC for all subsequent taxable years. If Holdings were to be a PFIC, and a U.S. holder does not make an election to treat Holdings
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as a QEF or a mark-to-market election, excess distributions to a U.S. holder, and any gain recognized by a U.S. holder on a disposition of Holdings ordinary shares, would be taxed in an unfavorable way. Among other consequences, Holdings dividends, to the extent that they constituted excess distributions, would be taxed at the regular rates applicable to ordinary income, rather than the 20% maximum rate applicable to certain dividends received by an individual from a qualified foreign corporation, and certain interest charges may apply. In addition, gains on the sale of Holdings shares would be treated in the same way as excess distributions. The tests for determining PFIC status are applied annually and it is difficult to make accurate predictions of future income and assets, which are relevant to the determination of PFIC status. In addition, under the applicable statutory and regulatory provisions, it is unclear whether Holdings would be permitted to use a gross loss from sales (sales less cost of goods sold) to offset its passive income in the calculation of gross income. Although Holdings does not expect that it will be a PFIC in the future, in light of the periodic asset and income tests applicable in making this determination, no assurance can be given that it will not become a PFIC. If Holdings does become a PFIC in the future, U.S. holders who hold ordinary shares during a period when Holdings is a PFIC will be subject to the foregoing rules, even if Holdings ceases to be a PFIC, subject to exceptions for U.S. holders who made a timely QEF election or mark-to-market election, or certain other elections. Holdings does not currently intend to prepare or provide the information that would enable you to make a QEF election. Accordingly, Holdings shareholders are urged to consult their tax advisors regarding the application of PFIC rules.
The Merger Agreement provides that all of the representations, warranties and covenants of the parties contained therein shall not survive the closing of the Transactions, except for those covenants contained therein that by their terms apply or are to be performed in whole or in part after the closing. Accordingly, there are no remedies available to the parties with respect to any breach of the representations, warranties, covenants or agreements of the parties to the Merger Agreement after the closing, except for covenants to be performed in whole or in part after the closing. As a result, Capitol will have no remedy available to it if the Transactions are consummated and it is later revealed that there was a breach of any of the representations, warranties and covenants made by Cision or Cision Owner at the time of the Transactions.
Capitols board of directors did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the business combination with Cision. In analyzing the business combination, Capitols board and management conducted due diligence on Cision and researched the industry in which Cision operates and concluded that the business combination was in the best interest of Capitols stockholders. Accordingly, investors will be relying solely on the judgment of Capitols board of directors in valuing Cisions business, and the board of directors may not have properly valued such business. The lack of a third-party valuation or fairness opinion may also lead an increased number of stockholders to vote against the proposed business combination or demand conversion of their shares into cash, which could potentially impact Capitols ability to consummate the business combination.
Cision Owner and affiliates of Mark D. Ein and L. Dyson Dryden will be granted certain rights, pursuant to the Registration Rights Agreement, to require Holdings to register, in certain circumstances, the resale under the Securities Act of ordinary shares of Holdings held by them, subject to certain conditions. The sale or possibility of sale of these shares could have the effect of increasing the volatility in Holdings share price or putting significant downward pressure on the price of Holdings shares.
Capitol stockholders holding public shares may demand that Capitol convert their shares into a pro rata portion of the trust account, calculated as of two business days prior to the anticipated consummation of the
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business combination. Capitol stockholders who seek to exercise this conversion right must deliver their stock (either physically or electronically) to Capitols transfer agent prior to the vote at the meeting. Any Capitol stockholder who fails to properly demand conversion rights will not be entitled to convert his or her shares into a pro rata portion of the trust account for conversion of his shares. See the section entitled Annual Meeting of Capitol Stockholders Conversion Rights for the procedures to be followed if you wish to convert your shares to cash.
A public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a group, will be restricted from seeking conversion rights with respect to more than 20% of the public shares. Accordingly, if you hold more than 20% of the public shares and the business combination proposal is approved, you will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold the shares in excess of 20% or sell them in the open market. Capitol cannot assure you that the value of such excess shares will appreciate over time following a business combination or that the market price of Capitols shares of common stock will exceed the per-share conversion price.
Holdings intends to apply to have its securities listed on the New York Stock Exchange upon consummation of the business combination. Holdings will be required to meet the initial listing requirements to be listed. Holdings may not be able to meet those initial listing requirements. Even if Holdings securities are so listed, Holdings may be unable to maintain the listing of its securities in the future.
If Holdings fails to meet the initial listing requirements and the New York Stock Exchange does not list its securities and the related closing condition is waived by the parties, Holdings could face significant material adverse consequences, including:
| a limited availability of market quotations for its securities; |
| a limited amount of news and analyst coverage for the company; and |
| a decreased ability to issue additional securities or obtain additional financing in the future. |
Capitols Sponsors, including its officers and directors and/or their affiliates, beneficially own or have a pecuniary interest in initial shares and private warrants that they purchased prior to, or simultaneously with, Capitols initial public offering. Capitols Sponsors have no conversion rights with respect to these securities in the event a business combination is not effected in the required time period. Therefore, if the business combination with Cision or another business combination is not approved within the required time period, such securities held by such persons will be worthless. Such securities had an aggregate market value of $[ ] based upon the closing prices of the shares and units on Nasdaq on [ ], 2017, the record date. Furthermore, Capitols officers have loaned Capitol an aggregate of $[ ] as of the record date and Capitols officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Capitols behalf, such as identifying and investigating possible business targets and business combinations. These loans and expenses will be repaid upon completion of the business combination with Cision. However, if Capitol fails to consummate the business combination, they will not have any claim against the trust account for repayment or reimbursement. Accordingly, Capitol may not be able to repay or reimburse these amounts if the business combination is not completed. See the section entitled The Business Combination Proposal Interests of Capitols Directors and Officers in the Business Combination .
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These financial interests may have influenced the decision of Capitols directors to approve the business combination with Cision and to continue to pursue such business combination. In considering the recommendations of Capitols board of directors to vote for the business combination proposal and other proposals, its stockholders should consider these interests.
If the business combination with Cision or another business combination is not consummated by Capitol within the required time period, Capitols executive officers will be personally liable under certain circumstances described herein to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Capitol for services rendered or contracted for or products sold to Capitol. If Capitol consummates a business combination, on the other hand, Capitol will be liable for all such claims. Neither Capitol nor the executive officers have any reason to believe that the executive officers will not be able to fulfill their indemnity obligations to Capitol. See the section entitled Other Information Related to Capitol Financial Condition and Liquidity for further information. If Capitol is required to be liquidated and there are no funds remaining to pay the costs associated with the implementation and completion of such liquidation, Capitols executive officers have also agreed to advance Capitol the funds necessary to pay such costs and complete such liquidation (currently anticipated to be no more than approximately $15,000) and not to seek repayment for such expense.
These personal obligations of the executive officers may have influenced Capitols board of directors decision to approve the business combination with Cision and to continue to pursue such business combination. In considering the recommendations of Capitols board of directors to vote for the business combination proposal and other proposals, Capitols stockholders should consider these interests.
In the period leading up to the closing of the business combination, events may occur that, pursuant to the merger agreement, would require Capitol to agree to amend the merger agreement, to consent to certain actions taken by Cision or to waive rights that Capitol is entitled to under the merger agreement. Such events could arise because of changes in the course of Cisions business, a request by Cision to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on Cisions business and would entitle Capitol to terminate the Merger Agreement. In any of such circumstances, it would be at Capitols discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors described in the preceding risk factors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is best for Capitol and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, Capitol does not believe there will be any material changes or waivers that Capitols directors and officers would be likely to make after the mailing of this proxy statement/prospectus. Capitol will circulate a new or amended proxy statement/prospectus if changes to the terms of the Transactions that would have a material impact on its stockholders are required prior to the vote on the business combination proposal.
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Under the terms of Capitols amended and restated certificate of incorporation, Capitol must complete the business combination with Ability or another business combination by October 19, 2017, or Capitol must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against Capitol. Although Capitol has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the trust account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims which could take priority over those of Capitols public stockholders. If Capitol is unable to complete a business combination within the required time period, the executive officers have agreed they will be personally liable under certain circumstances described herein to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Capitol for services rendered or contracted for or products sold to Capitol. However, he may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation may be less than $10.00 due to such claims.
Additionally, if Capitol is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, or if Capitol otherwise enters compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of its stockholders. To the extent any bankruptcy claims deplete the trust account, Capitol may not be able to return to its public stockholders at least $10.00.
If Capitol is unable to complete the business combination with Cision or another business combination within the required time period, Capitol will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Capitol cannot assure you that it will properly assess all claims that may be potentially brought against Capitol. As such, Capitols stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, Capitol cannot assure you that third parties will not seek to recover from its stockholders amounts owed to them by Capitol.
If Capitol is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a preferential transfer or a fraudulent conveyance. As a result, a bankruptcy court could seek to recover all amounts received by Capitols stockholders. Furthermore, because Capitol intends to distribute the proceeds held in the trust account to its public stockholders promptly after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from
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its assets. Furthermore, Capitols board may be viewed as having breached their fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and the company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Capitol cannot assure you that claims will not be brought against it for these reasons.
At any time prior to the annual meeting, during a period when they are not then aware of any material nonpublic information regarding Capitol or its securities, Capitols Sponsors, including its officers, directors and stockholders prior to the initial public offering, Cision or Cisions stockholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Capitol common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the business combination where it appears that such requirements would otherwise not be met. Entering into any such arrangements may have a depressive effect on Capitol common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the annual meeting.
Capitols board of directors is seeking approval to adjourn the annual meeting to a later date or dates if, at the annual meeting, Capitol is unable to consummate the business combination. If the adjournment proposal is not approved, Capitols board will not have the ability to adjourn the annual meeting to a later date and, therefore, the business combination would not be completed.
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Capitol believes that some of the information in this proxy statement/prospectus constitutes forward-looking statements within the definition of the Private Securities Litigation Reform Act of 1995. However, because Capitol is a blank check company, the safe-harbor provisions of that act do not apply to statements made in this proxy statement/prospectus. You can identify these statements by forward-looking words such as may, expect, anticipate, contemplate, believe, estimate, intends, and continue or similar words. You should read statements that contain these words carefully because they:
| discuss future expectations; |
| contain projections of future results of operations or financial condition; or |
| state other forward-looking information. |
Capitol believes it is important to communicate its expectations to its securityholders. However, there may be events in the future that Capitol is not able to predict accurately or over which it has no control. The risk factors and cautionary language discussed in this proxy statement/prospectus provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by Capitol or Cision in such forward-looking statements, including among other things:
| the timing to complete the Transactions; |
| the number and percentage of its public stockholders voting against the business combination proposal and/or seeking conversion; |
| the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; |
| the ability to maintain the listing of Holdings securities on a national securities exchange following the business combination; |
| the inability to recognize the anticipated benefits of the proposed business combination, which may be affected by, among other things, the amount of cash available following any conversion of public shares by Capitol stockholders; |
| changes adversely affecting the business in which Cision is engaged; |
| Cisions ability to execute on its plans to develop and market new products and the timing of these development programs; |
| Cisions estimates of the size of the markets for its solutions; |
| the rate and degree of market acceptance of Cisions solutions; |
| the success of other competing technologies that may become available; |
| Cisions ability to identify and integrate acquisitions; |
| the performance and security of Cisions services; |
| potential litigation involving Capitol or Cision; |
| general economic conditions; and |
| the result of future financing efforts. |
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement/prospectus.
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All forward-looking statements included herein attributable to any of Capitol, Cision or any person acting on either partys behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, Capitol and Cision undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.
Before a stockholder grants its proxy or instructs how its vote should be cast or vote on the business combination proposal, charter proposals, director election proposal, the incentive plan proposal or the adjournment proposal, it should be aware that the occurrence of the events described in the Risk Factors section and elsewhere in this proxy statement/prospectus may adversely affect Capitol and/or Cision.
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Capitol is furnishing this proxy statement/prospectus to Capitols stockholders as part of the solicitation of proxies by Capitols board of directors for use at the annual meeting of Capitol stockholders to be held on [], 2017, and at any adjournment or postponement thereof. This proxy statement/prospectus provides Capitols stockholders with information they need to know to be able to vote or instruct their vote to be cast at the annual meeting.
The annual meeting of stockholders will be held on [], 2017, at []:00 a.m., eastern time, at the offices of Graubard Miller, counsel to Capitol, at The Chrysler Building, 405 Lexington Avenue, 11 th Floor, New York, New York 10174.
At the annual meeting, Capitol is asking holders of Capitol common stock to:
| consider and vote upon a proposal to adopt the Merger Agreement and approve the business combination contemplated thereby (the business combination proposal); |
| consider and vote upon separate proposals to approve the following material differences between the constitutional documents of Holdings that will be in effect upon the closing of the Transactions and Capitols current amended and restated certificate of incorporation: (i) the name of the new public entity will be Cision Ltd. as opposed to Capitol Acquisition Corp. III; (ii) Holdings will have 480,000,000 authorized ordinary shares and 20,000,000 authorized preferred shares, as opposed to Capitol having 120,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; and (iii) Holdings constitutional documents do not include the various provisions applicable only to specified purpose acquisition corporations that Capitols amended and restated certificate of incorporation contains (such as the obligation to dissolve and liquidate if a business combination is not consummated in a certain period of time) (charter proposals); |
| to elect seven directors who, upon consummation of the Transactions, will be the directors of Holdings, in each case, until their successors are elected and qualified (director election proposal); |
| to consider and vote upon a proposal to approve the 2017 Plan (incentive plan proposal); and |
| consider and vote upon a proposal to adjourn the annual meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that Capitol is unable to consummate the business combination (adjournment proposal). |
Capitols board of directors has unanimously determined that the business combination proposal is fair to and in the best interests of Capitol and its stockholders; has unanimously approved the business combination proposal; unanimously recommends that stockholders vote FOR the business combination proposal; unanimously recommends that stockholders vote FOR each of the charter proposals; unanimously recommends that stockholders vote FOR the election of all of the persons nominated by Capitols management for election as directors; unanimously recommends that stockholders vote FOR the incentive plan proposal; and unanimously recommends that stockholders vote FOR an adjournment proposal if one is presented to the meeting.
Capitol has fixed the close of business on [], 2017, as the record date for determining Capitol stockholders entitled to notice of and to attend and vote at the annual meeting. As of the close of business on [], 2017, there were 40,625,000 shares of Capitol common stock outstanding and entitled to vote. Each share of Capitol common stock is entitled to one vote per share at the annual meeting.
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Pursuant to agreements with Capitol, the 8,125,000 initial shares held by the Capitol Sponsors, including all of Capitols officers and directors, and any shares of common stock acquired by them in the aftermarket, will be voted in favor of the business combination proposal. Such holders have indicated they intend to vote their shares in favor of the other proposals presented at the annual meeting.
The presence, in person or by proxy, of a majority of all the outstanding shares of common stock entitled to vote constitutes a quorum at the annual meeting.
Proxies that are marked abstain and proxies relating to street name shares that are returned to Capitol but marked by brokers as not voted will be treated as shares present for purposes of determining the presence of a quorum on all matters. The latter will not be treated as shares entitled to vote on the matter as to which authority to vote is withheld from the broker. If a stockholder does not give the broker voting instructions, under applicable self-regulatory organization rules, its broker may not vote its shares on non-routine proposals, such as the business combination proposal, the charter proposals and the incentive plan proposal.
The approval of the business combination proposal and the charter proposals will require the affirmative vote for the proposal by the holders of a majority of the then outstanding shares of common stock. Abstentions and broker non-votes have the same effect as a vote against the proposals.
The approval of the incentive plan proposal and adjournment proposal, if presented, will require the affirmative vote of the holders of a majority of Capitol common stock represented and entitled to vote thereon at the meeting. Abstentions are deemed entitled to vote on such proposals. Therefore, they have the same effect as a vote against the proposals. Broker non-votes are not deemed entitled to vote on such proposals and, therefore, they will have no effect on the vote on such proposals.
Directors are elected by a plurality. Plurality means that the individuals who receive the largest number of votes cast FOR are elected as directors. Consequently, any shares not voted FOR a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominees favor.
Each share of Capitol common stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares of Capitol common stock that you own. If your shares are held in street name or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
There are two ways to vote your shares of Capitol common stock at the annual meeting:
| You Can Vote By Signing and Returning the Enclosed Proxy Card . If you vote by proxy card, your proxy, whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by Capitols board FOR the business combination proposal, the charter proposals, each director included in the director election proposal, the incentive plan proposal and the adjournment proposal, if presented. Votes received after a matter has been voted upon at the annual meeting will not be counted. |
| You Can Attend the Annual meeting and Vote in Person . You will receive a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way Capitol can be sure that the broker, bank or nominee has not already voted your shares. |
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If you are a stockholder and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:
| you may send another proxy card with a later date; |
| you may notify Capitols Secretary in writing before the annual meeting that you have revoked your proxy; or |
| you may attend the annual meeting, revoke your proxy, and vote in person, as indicated above. |
If you are a stockholder and have any questions about how to vote or direct a vote in respect of your shares of Capitol common stock, you may call Morrow Sodali LLC, Capitols proxy solicitor, at 800-662-5200 or L. Dyson Dryden, Capitols President and Chief Financial Officer, at (202) 654-7060.
Holders of public shares may seek to convert their shares to cash, regardless of whether they vote for or against the business combination proposal. Any stockholder holding public shares as of the record date who votes in favor of or against the business combination proposal may demand that Capitol convert such shares into a full pro rata portion of the trust account (which, for illustrative purposes, was $[] per share as of [], 2017, the record date), calculated as of two business days prior to the anticipated consummation of the business combination. If a holder properly seeks conversion as described in this section and the business combination is consummated, Capitol will convert these shares into a pro rata portion of funds deposited in the trust account and the holder will no longer own these shares following the business combination.
Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking conversion rights with respect to 20% or more of the public shares. Accordingly, all public shares in excess of 20% held by a public stockholder will not be converted to cash.
Capitols Sponsors will not have conversion rights with respect to any shares of common stock owned by them, directly or indirectly.
Capitol stockholders who seek to convert their public shares into cash must affirmatively vote for or against the business combination proposal. Capitol stockholders who do not vote with respect to the business combination proposal, including as a result of an abstention or a broker non-vote, may not convert their shares into cash. Holders may demand conversion by delivering their stock, either physically or electronically using Depository Trust Companys DWAC System, to Capitols transfer agent prior to the vote at the meeting. If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Certificates that have not been tendered (either physically or electronically) in accordance with these procedures will not be converted into cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting stockholder. In the event the proposed business combination is not consummated this may result in an additional cost to stockholders for the return of their shares.
Any request to convert such shares, once made, may be withdrawn at any time up to the vote on the business combination proposal. Furthermore, if a holder of a public share delivered its certificate in connection with an election of its conversion and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that the transfer agent return the certificate (physically or electronically).
If the business combination is not approved or completed for any reason, then Capitols public stockholders who elected to exercise their conversion rights will not be entitled to convert their shares into a full pro rata portion of the trust account, as applicable. In such case, Capitol will promptly return any shares delivered by
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public holders. If Capitol would be left with less than $5,000,001 of net tangible assets as a result of the holders of public shares properly demanding conversion of their shares to cash, Capitol will not be able to consummate the business combination.
The closing price of Capitol common stock on [], 2017, the record date, was $[]. The cash held in the trust account on such date was approximately $[] ($[] per public share). Prior to exercising conversion rights, stockholders should verify the market price of Capitol common stock as they may receive higher proceeds from the sale of their common stock in the public market than from exercising their conversion rights if the market price per share is higher than the conversion price. Capitol cannot assure its stockholders that they will be able to sell their shares of Capitol common stock in the open market, even if the market price per share is higher than the conversion price stated above, as there may not be sufficient liquidity in its securities when its stockholders wish to sell their shares.
If a holder of public shares exercises its conversion rights, then it will be exchanging its shares of Capitol common stock for cash and will no longer own those shares. You will be entitled to receive cash for these shares only if you affirmatively vote for or against the business combination proposal and properly demand conversion no later than the close of the vote on the business combination proposal by delivering your stock certificate (either physically or electronically) to Capitols transfer agent prior to the vote at the meeting, and the business combination is consummated.
Neither stockholders, unitholders nor warrant holders of Capitol have appraisal rights in connection the business combination under the DGCL.
Capitol is soliciting proxies on behalf of its board of directors. This solicitation is being made by mail but also may be made by telephone or in person. Capitol and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Capitol will bear the cost of the solicitation.
Capitol has hired Morrow Sodali LLC to assist in the proxy solicitation process. Capitol will pay that firm a fee of $12,500 plus disbursements. Such payment will be made from non-trust account funds. If the Transactions are successfully closed, Capitol will pay Morrow Sodali LLC an additional contingent fee of $20,000.
Capitol will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. Capitol will reimburse them for their reasonable expenses.
As of [], 2017, the record date, Capitols Sponsors, including Capitols officers and directors, beneficially owned and were entitled to vote an aggregate of 8,125,000 initial shares that were issued prior to Capitols initial public offering. Such shares currently constitute 20% of the outstanding shares of Capitols common stock. The holders of these securities have agreed to vote the initial shares, as well as any shares of common stock acquired in the aftermarket, in favor of the business combination proposal. The holders have also indicated that they intend to vote their shares in favor of all other proposals being presented at the meeting. The initial shares have no right to participate in any redemption distribution and will be worthless if no business combination is effected by Capitol.
In connection with the initial public offering, the Capitol Sponsors entered into an escrow agreement pursuant to which their initial shares are held in escrow and may not be transferred (subject to limited exceptions) until one year after the consummation of an initial business combination or earlier if, subsequent to the consummation of an initial business combination, (i) the last sales price of Capitols common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial business combination or (ii) Capitol (or any successor entity) consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the companys stockholders having the right to exchange their shares of common stock for cash, securities or other property.
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At any time prior to the annual meeting, during a period when they are not then aware of any material nonpublic information regarding Capitol or its securities, the Capitol Sponsors, Cision or Cision Owner and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Capitols common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to complete the business combination where it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the Capitol Sponsors for nominal value.
Entering into any such arrangements may have a depressive effect on Capitol common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the annual meeting.
If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the business combination proposal and other proposals and would likely increase the chances that such proposals would be approved.
No agreements dealing with the above arrangements or purchases have been entered into as of the date of this proxy statement/prospectus. Capitol will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the business combination proposal or the net tangible asset threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
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The discussion in this proxy statement/prospectus of the business combination and the principal terms of the Merger Agreement is subject to, and is qualified in its entirety by reference to, the Merger Agreement. A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus.
Pursuant to the Merger Agreement, a business combination between Capitol and Cision will be effected through the Contribution and Exchange, whereby all of the share capital and CPECs of Cision will be contributed by Cision Owner to Holdings, followed by the Merger, whereby Merger Sub will merge with and into Capitol, with Capitol surviving such Merger as a wholly-owned subsidiary of Holdings.
As consideration for all of the share capital and CPECs of Cision, Cision Owner will receive 82,100,000 ordinary shares of Holdings and 2,000,000 warrants to purchase ordinary shares of Holdings (in each case, subject to adjustment). Cision Owner will also have the right to receive up to 6,000,000 additional ordinary shares of Holdings, issued in 2,000,000 increments, when Holdings stock price reaches $13.00, $16.00 and $19.00 per share.
Each outstanding share of common stock of Capitol shall be converted into one ordinary share of Holdings. The outstanding warrants of Capitol shall, by their terms, automatically entitle the holders to purchase ordinary shares of Holdings upon consummation of the business combination.
Pursuant to the Merger Agreement, the Capitol Sponsors will forfeit 1,600,000 shares of Capitol common stock and warrants to purchase 2,000,000 shares of Capitol common stock at closing (in each case, subject to adjustment).
At the closing of the Transactions, Cision Owner will hold approximately 68% of the issued and outstanding ordinary shares of Holdings and current stockholders of Capitol will hold approximately 32% of the issued and outstanding shares of Holdings (assuming no holder of public shares exercises conversion rights).
In connection with the execution of the Merger Agreement, the Sponsors entered into the Sponsor Support Agreement pursuant to which they have agreed to comply with the provisions of the Merger Agreement applicable to such Sponsors as well as the covenants set forth in the Sponsor Support Agreement, including voting all shares of common stock of Capitol beneficially owned by such Sponsors in favor of the transactions contemplated by the Merger Agreement. The Sponsor Support Agreement also provides that, at the closing of the Transactions, depending on the number of public shares being converted to cash, the Sponsors may be required to forfeit an additional number of Capitol shares and warrants and, at the same time, the number of ordinary shares and warrants of Holdings that Cision Owner would otherwise receive at closing may be reduced. In such event, a number of ordinary shares and warrants of Holdings equal to the total number of shares and warrants so forfeited and reduced will be available for use by Holdings to issue to third parties for certain corporate purposes and, if not so used within one year following the closing of the Transaction (or, if earlier, at such time as Holdings has repaid the Second Lien Credit Facility in full), will be issued to the Sponsors and Cision Owner.
Cision Owner and affiliates of Mark D. Ein and L. Dyson Dryden will be granted certain rights, pursuant to the Registration Rights Agreement which will be entered into at or prior to the closing of the Transactions. Pursuant to the Registration Rights Agreement, the parties will be entitled to have registered, in certain
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circumstances, the resale of the ordinary shares of Holdings held by them, subject to certain conditions set forth therein. The registration rights described in this paragraph apply to (i) any ordinary shares issued in connection with the Transactions, (ii) any warrants or any ordinary shares issued or issuable upon exercise thereof, (iii) any capital stock of Holdings or its subsidiary issued or issuable with respect to the securities referred to in clause (i) or (ii) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization, and (iv) any other ordinary shares held by persons holding securities described above (the registrable securities). Cision Owner will be entitled to request that the company register its shares on a long-form or short-form registration statement on one or more occasions in the future, which registrations may be shelf registrations. In certain limited circumstances, the holder of a majority of registrable securities held by the affiliates of Messrs. Ein and Dryden will also be entitled to make demand registrations. The parties to the Registration Rights Agreement will also be entitled to participate in certain registered offerings by Holdings, subject to certain limitations and restrictions. Holdings will pay expenses of the parties incurred in connection with the exercise of their rights under this agreement. These registration rights are also for the benefit of any subsequent holder of the registrable securities; provided that any securities will cease to be registrable securities when they have been (a) sold or distributed pursuant to a public offering, (b) sold in compliance with Rule 144 or (c) repurchased by the company or its subsidiary; provided further, however, that any securities held by a person that, together with its affiliates, collectively beneficially owns less than 2% of the outstanding ordinary shares shall cease to constitute registrable securities at such time as such securities may be sold under Rule 144 without regard to volume and manner of sale restrictions.
Pursuant to the Nominating Agreement, Cision Owner (or its affiliates) will have the right to designate nominees for election to Holdings board of directors for so long as Cision Owner beneficially owns 5% or more of the total number of Holdings ordinary shares then outstanding. The number of nominees that Cision Owner (or its affiliates) is entitled to nominate under the Nominating Agreement is dependent on its beneficial ownership of ordinary shares. For so long as Cision Owner beneficially owns a number of ordinary shares equal to or greater than 35%, 15% or 5%, respectively, of the total number issued and outstanding, Cision Owner will have the right to nominate three, two or one director(s), respectively. In addition, Cision Owner will have the right to designate the replacement for any of its designees whose board service has terminated prior to the end of the directors term, regardless of Cision Owners beneficial ownership at such time. Cision Owner will also have the right to have its designees participate on committees of the board of directors, subject to compliance with applicable law and stock exchange listing rules. So long as GTCR and its affiliates are the beneficial owners of a majority of the ordinary shares of Cision held by Cision Owner, Cision Owner will, upon the request of GTCR, assign all of its rights under the Nominating Agreement to GTCR (or one of its affiliates).
After completion of the Transactions:
| the corporate headquarters and principal executive offices of Holdings will be located at 130 East Randolph St., 7 th Floor, Chicago, IL 60601, which are Cisions corporate headquarters; and |
| if the parties application for listing is approved, Holdings ordinary shares and warrants will be traded on the New York Stock Exchange under the symbols CISN and CISNW, respectively. |
Capitol is a blank check company formed as a corporation in Delaware on July 13, 2015 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The business combination with Cision is the result of an extensive search for a potential transaction utilizing the global network and investing and transaction experience of our management team and board of directors. The terms of the Merger Agreement are the result of arms-length negotiations between representatives of Capitol and Cision. The following is a brief discussion of the background of these negotiations, the Merger Agreement and Transactions.
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On October 19, 2015, Capitol completed its initial public offering. Prior to the consummation of the initial public offering, neither Capitol, nor anyone on its behalf, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to a transaction with Capitol.
From the date of Capitols initial public offering through the signing of the Merger Agreement with Cision on March 19, 2017, representatives of Capitol contacted and were contacted by a number of individuals and entities with respect to business combination opportunities and engaged with several possible target businesses in discussions with respect to potential transactions. During that period, Mark D. Ein, the Chairman and Chief Executive Officer of Capitol, L. Dyson Dryden, President and Chief Financial Officer of Capitol, and representatives of their team, including Alfheidur Saemundsson, Derek Apfel, and Preston Parnell (each consultants to Capitol):
| identified and evaluated over 250 potential transactions from a wide range of industry segments including, among others, consumer products, retail, financial, technology, telecom, media, leisure, real estate, industrial, food & beverage and energy; |
| entered into substantial discussions with more than ten companies, including discussions regarding the type and amount of consideration to be provided relative to a potential transaction; and |
| provided a preliminary non-binding letter of intent to eight companies. |
The decision not to pursue the alternative acquisition targets was generally the result of one or more of (i) Capitols determination that each business did not represent as attractive a target as Cision due to a combination of business prospects, strategy, management teams, structure and valuation, (ii) a difference in valuation expectations between Capitol, on the one hand, and a seller, on the other hand, or (iii) a potential targets unwillingness to engage with Capitol given the timing and uncertainty of closing due to the requirement for Capitol stockholder approval.
On October 6, 2016, Michael Gilbert of PJT Partners contacted Mr. Dryden to discuss potential target companies for Capitol, including Cision for which PJT Partners was serving as financial advisor. Mr. Dryden indicated an interest in meeting to continue their discussion and scheduled a follow-up meeting.
On October 25, 2016, Mr. Ein, Mr. Dryden and representatives of Capitol met in person with Mr. Gilbert and his associates, who provided more background on Cision and its industry position. At this meeting, Capitol also outlined the advantages of a merger with Capitol for the owners of Cision.
On November 3, 2016, Mr. Ein and Mr. Dryden were introduced via email by Mr. Gilbert to Mark M. Anderson, a Managing Director at GTCR, who was responsible for its investment in Cision. Messrs. Ein and Dryden exchanged further email correspondence with Mr. Anderson and the parties agreed to schedule a follow-up meeting in person to discuss a potential transaction.
On November 4, 2016, Mr. Dryden, Mr. Apfel and Mr. Parnell had a call with the team at PJT, including Mr. Gilbert, to discuss Cisions positioning in the industry and potential public equity market valuation ranges for Cision in order to begin to assess potential investor interest in the opportunity.
On November 10, 2016, Mr. Dryden met with Mr. Anderson at GTCRs offices in Chicago. The parties discussed the background of Cision, its growth plan and goals for the company in a potential transaction, including refinancing the existing capital structure using proceeds from Capitols trust fund. Mr. Dryden also reviewed Capitols successful track record with public investment vehicles and advantages of taking Cision public through a merger with Capitol. Following the meeting, Mr. Dryden had further email correspondence with representatives of GTCR, who agreed to schedule another meeting in Chicago between representatives of Capitol, Cision management and GTCR.
On November 18, 2016, Capitol executed a non-disclosure agreement with Cision and both parties began conducting diligence on each others businesses.
On November 22, 2016, representatives of Capitol met with Cision management and representatives of GTCR in Chicago to review Cisions business and discuss a potential transaction. Attendees included Mr. Ein and Ms. Saemundsson, Kevin Akeroyd, Chief Executive Officer of Cision, Jack Pearlstein, Chief Financial Officer of Cision, and Mr. Anderson from GTCR. Mr. Dryden and Mr. Parnell also joined the meeting telephonically.
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The parties reviewed an introductory company overview presentation detailing Cisions business plan and recent financial performance. In addition, Capitol reviewed the process and benefits of a potential merger with Capitol as a public investment vehicle.
On November 23, 2016, Mr. Ein spoke with Mr. Anderson telephonically, who shared mutual interest in moving forward with diligence and continuing to explore a potential transaction.
On November 27, 2016, Mr. Dryden sent an initial due diligence request list to Mr. Anderson. Subsequently, during the period from November 30, 2016 through December 12, 2016, representatives of GTCR provided responses to Capitols due diligence requests, including overviews of Cisions products and customer base, historical financial statements, credit documents and industry research.
As part of its product diligence, on December 6, 2016, Capitol representatives participated in a WebEx product review demonstration with a representative from Cision. Participants from Capitol included Messrs. Ein, Dryden, Apfel and Parnell and Ms. Saemundsson. The demonstration highlighted the various point solutions and integrated functionality provided by C3.
On December 16, 2016, the Capitol team received an initial set of long-term financial projections for Cision. Following a thorough review of the long-term plan, on December 23, 2016, representatives of Capitol including Messrs. Dryden, Apfel and Parnell, participated in a financial due diligence call with Mr. Pearlstein to review the financial projections including the key assumptions underlying the forecast. Representatives of Capitol continued initial financial diligence for the next several weeks.
On January 3, 2017, Mr. Dryden and Mr. Apfel had an email correspondence with representatives of PJT to review valuation and transaction structure considerations for a potential Cision transaction. The parties agreed to schedule a follow-up call for a more detailed discussion.
On January 6, 2017, representatives of Capitol had a call with representatives of PJT, including a representative from its capital markets team, to review public market valuation considerations for Cision, including the appropriate set of trading comparable companies. Attendees from Capitol included Messrs. Ein, Dryden, Apfel, and Parnell and Ms. Saemundsson.
On January 8, 2017, Mr. Ein and Mr. Anderson agreed to ask DB to provide preliminary views to Capitol on potential trading ranges for Cision if it were to be publicly listed. On January 11, 2017, representatives of Capitol had a call with representatives of DB, who were familiar with the business from previous debt financing processes, to discuss potential public investor receptivity to a combination of Capitol and Cision. Following Capitols initial round of business and financial diligence and with valuation input from investment banking representatives at PJT and DB, Capitol began to develop a draft business combination proposal to share with GTCR.
On January 14, 2017, Mr. Ein spoke with Mr. Anderson telephonically. During this discussion, Mr. Ein proposed a business combination with Cision valued at a $2.3 billion enterprise value, based on a multiple of 10.5 times 2017 Adjusted EBITDA. Mr. Ein also indicated that Capitol would provide Cision with a written proposal the following week.
On January 18, 2017, Mr. Dryden held a call with a representative from PJT, to discuss additional capital structure considerations related to the written proposal for Cision.
On January 19, 2017, Capitol submitted a non-binding indication of interest (First IOI), which contemplated a proposed fully diluted enterprise value of $2.296 billion, based on a multiple of 10.5 times 2017 Adjusted EBITDA, and other key terms of the potential business combination. The following day, Mr. Anderson replied to Capitols proposal with a list of questions related to key terms of Capitols proposal. Both parties agreed to schedule a call to review the First IOI in further detail.
On January 23, 2017, Messrs. Ein, Dryden, Apfel, and Parnell and Ms. Saemundsson met telephonically with Mr. Anderson and Mr. Master from GTCR to review the terms of Capitols First IOI. Mr. Anderson indicated that GTCR would carefully consider the proposal and revert back to Capitol later in the week. During the call, the parties also discussed a more detailed transaction timeline including a schedule to advance the due diligence process with further in-person management meetings.
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On January 25, 2017, Mr. Master submitted a formal written response to Capitols proposal on behalf of Cision ( Counter Proposal ). The Counter Proposal included a fully diluted enterprise value of $2.396 billion, based on a multiple of 10.5 times 2017 Adjusted EBITDA, the concept of a modest reduction of Founder Shares held by Capitol Sponsor, a significant number of new warrants issued to Cision shareholders and other key terms of the potential business combination. At this time, Cision also communicated its plans to divest its Vintage business and acquire a business intelligence and media analysis provider prior to entering into a definitive agreement with Capitol. The net impact of these transactions was an increase in estimated 2017 Adjusted EBITDA. In addition, the proposal outlined that Cision had outperformed its year-end estimates on balance sheet cash and revolver borrowings, which would impact estimated net debt at closing.
After careful consideration and review of the Counter Proposal, Capitol began developing a revised proposal. On January 27, 2017, Mr. Ein had a call with Mr. Anderson to discuss Capitols revised proposal, based on a fully diluted enterprise value of $2.396 billion, with the higher proposed value reflecting the divestiture of Vintage and inclusion of the pending acquisition in the transaction. The revised transaction structure included a proposed cancellation of approximately 1.6 million shares of Capitol common stock and 2.0 million warrants by Capitols Sponsors and new shares and warrants of equal amounts being issued to Cision Owner. In addition, a potential earnout opportunity was proposed equaling up to 6 million shares issued in 2.0 million share increments subject to share price targets of $13.00, $16.00 and $19.00 per share. Following this conversation, on behalf of Capitol, Mr. Dryden submitted to Mr. Anderson a non-binding indication of interest (Second IOI) memorializing the new proposal in writing, along with a detailed diligence request list and proposed due diligence agenda for a follow-up diligence sessions with management.
On January 30, 2017, Mr. Anderson communicated Cisions interest in pursuing a transaction based on the terms communicated in Capitols Second IOI. Both parties then agreed to move forward and launch the next phase of diligence. From January 31, 2017 to February 6, 2017, representatives from Cision provided additional diligence materials and Capitol conducted further diligence in preparation for meetings with Cision management.
On February 2, 2017, representatives of Capitol had a call with representatives from DB and met with bankers from Citi to review the most recent proposal it had made to Cision and further gauge potential market reception to a merger between Cision and Capitol. Present for these sessions were Messrs. Ein, Dryden, Apfel and Parnell and Ms. Saemundsson from Capitol.
On February 7, 2017, representatives from Capitol engaged in a full-day diligence session with Cision management at Cisions headquarters in Chicago. Attendees for this session were Messrs. Ein, Dryden, Apfel and Parnell and Ms. Saemundsson from Capitol, Messrs. Akeroyd and Pearlstein from Cision and Mr. Master from GTCR. Cision management provided an overview of the organization and management structure, business mix, product roadmap, key operating statistics and trends, organic growth opportunities and the M&A pipeline. At the conclusion of the diligence session, representatives of Capitol and Mr. Master discussed next steps with respect to the transaction timeline and drafting of the merger agreement.
Separately, on February 7, 2017, Capitol engaged Latham & Watkins to serve as merger and acquisition counsel to Capitol and assist in negotiating the Merger Agreement and related agreements.
On February 10, 2017, Mr. Dryden had an introductory call with a representative in the Mergers & Acquisitions Tax group at PwC to provide some background on the transaction, and discuss the scope of an engagement for PwC to assist Capitol with tax and accounting due diligence. On that same day, Capitol engaged Graubard Miller to serve as corporate securities counsel in connection with the Cision transaction.
On February 15, 2017, Mr. Ein had breakfast in New York with Mr. Anderson to discuss the status of the transaction and review outstanding diligence items.
On February 16, 2017, representatives of Capitol had a conference call with representatives of CS to discuss public markets investors likely receptiveness to a transaction and valuation ranges based on the latest financial projections for the company.
On February 21, 2017, Mr. Anderson notified Messrs. Ein and Dryden that GTCRs investment committee had met to review the contemplated transaction and that subject to three items would like to move forward to
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signing. The items noted included: (i) a closing condition based on a mutually agreeable threshold for minimum cash or maximum redemptions and (ii) aligning Capitol founders overall economics pro rata to delivering Capitols $325 million of cash in trust at closing.
On February 23, 2017, Messrs. Ein and Dryden had dinner with Messrs. Akeroyd and Pearlstein in New York to discuss the status of the transaction and review their vision for the business.
On February 24, 2017, a meeting was held at Citis offices in New York to review Capitols preliminary investor presentation and discuss communication and investor strategy. Attendees for this meeting included Messrs. Ein, Dryden, Apfel and Parnell and Ms. Saemundsson from Capitol, Messrs. Akeroyd and Pearlstein from Cision and investment banking representatives from Citi and DB.
Over the next week, from February 24, 2017 through March 3, 2017, Messrs. Ein, Dryden, Akeroyd and Pearlstein met with potential investors on a confidential basis to discuss their interest in making an equity investment in connection with the potential business combination. During these meetings, Messrs. Ein, Dryden, Akeroyd and Pearlstein reviewed with potential investors certain information regarding Cision and the post-combination company, including certain financial projections regarding Cisions business. Each potential investor was informed in advance that the information that would be shared may constitute material non-public information, and each potential investor agreed to be bound by certain confidentiality obligations as well as a prohibition on trading the securities of Capitol and using the information for purposes other than such potential investors investment in connection with the potential business combination. The feedback and responses received from the potential investors regarding a potential business combination between the Capitol and Cision was positive.
Following the first day of meetings with potential investors, on February 26, 2017, representatives from Capitol, including Messrs. Ein, Dryden, Apfel, Parnell, Ms. Saemundsson, and Capitols independent directors, met via teleconference to discuss the potential transaction. Messrs. Ein and Dryden provided an update on Capitols search for a proposed target business, including the proposed transaction with Cision and the group agreed to continue moving forward with the Cision negotiations.
On February 26, 2017, Capitol received an initial draft of the Merger Agreement from Cisions counsel, Kirkland & Ellis LLP. This initial draft included a provision whereby the equity value consideration to existing Cision shareholders would be increased to the extent the resulting cash proceeds from the ongoing process to divest the Vintage Group exceeded initial sale price expectations as outlined in the GTCR Proposal. Additionally, the draft Merger Agreement proposed a post-merger structure involving a foreign holding company organized in the Cayman Islands. In light of Cisions current foreign holding company structure, Cision insisted upon a foreign holding company structure for the go-forward company in connection with the business combination. During the two weeks preceding the receipt of the initial draft of the Merger Agreement, as part of discussions with Capitol, Cision had proposed a foreign holding company structure organized in Luxembourg. During such discussions, Capitol proposed the Cayman Islands as an alternative jurisdiction of organization for the combined business, which the parties agreed would be preferable to Luxembourg from a corporate governance standpoint as well as other issues related to being publicly traded in the United States. Capitol and Latham reviewed the agreement and held a series of calls over the next several days to discuss how to address key issues in the Merger Agreement including transaction economics, representations, covenants, closing conditions and the post-merger corporate structure.
On March 1, 2017, Mr. Dryden spoke with Mr. Master, who updated Mr. Dryden on the expected Vintage transaction terms. At such time, the parties agreed to consider updating the equity consideration to existing Cision shareholders, reflecting lower expected net debt at closing.
On March 2, 2017, representatives from Latham and Capitol responded with a first round of comments to Kirkland & Ellis LLPs proposed draft of the Merger Agreement and accepted the proposed post-merger structure as a Cayman Islands exempted company. Between March 2, 2017 and March 5, 2017, representatives of Capitol, GTCR, Cision, Latham and Kirkland & Ellis LLP continued to negotiate terms of the Merger Agreement.
On March 6, 2017, Kirkland & Ellis LLP sent to Capitol and Latham an updated draft of the Merger Agreement, which included a $5 million increase to the equity consideration to Cision owners, reflecting
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updated cash proceeds from the Vintage Group divestiture. Capitol representatives agreed this adjustment would be appropriate and fair to Capitol and its shareholders, based on updated expectations with respect to the Vintage Group sale price.
On March 8, 2017, Capitols Board of Directors met via teleconference as part of its regularly scheduled quarterly Board meetings. The entire Board was present at the meeting. Also participating by invitation were Ms. Saemundsson and Messrs. Apfel and Parnell, and representatives of Graubard Miller, counsel to Capitol. At this meeting, Mr. Ein provided an update on the potential transaction with Cision and status of its ongoing due diligence.
On March 10, 2017, Mr. Pearlstein contacted Mr. Dryden to notify him that the transaction to divest Vintage Group was signed at the updated price Mr. Master had outlined in a conversation with Mr. Dryden on March 1, 2017.
On March 12, 2017, Mr. Master exchanged email correspondence with Mr. Dryden and indicated that Cision had signed an agreement to acquire the business intelligence and media analysis provider under the same (or largely similar) terms to those outlined in the GTCR Proposal.
Between March 13, 2017 and the date of signing on March 19, 2017, representatives of Capitol, GTCR, Cision, Latham and Kirkland & Ellis LLP continued to draft and finalize terms of the Merger Agreement and other related agreements. During this same period, Capitol and its advisors continued to conduct business, financial, legal, tax and accounting diligence.
On March 16, 2017, Capitols Board of Directors met via teleconference. The entire Board was present at the meeting. Also participating by invitation were Ms. Saemundsson and Messrs. Apfel and Parnell, representatives of Latham, and representatives of Graubard Miller. Mr. Ein gave an extensive presentation about the prospective Cision merger. After considerable review and discussion of the transaction, including the post-merger structure as a Cayman Islands exempted company, the Merger Agreement and related documents were unanimously approved, subject to final negotiations and modifications, and the board determined to recommend the approval of the merger transaction. The board also concluded that the fair market value of Cision was equal to at least 80% of the funds held in Capitols trust account.
The Merger Agreement was signed on March 19, 2017. Prior to the market open on March 20, 2017, Capitol and Cision jointly issued a press release announcing the signing of the Merger Agreement and Capitol filed a Current Report on Form 8-K announcing the execution of the Merger Agreement and discussing the key terms of the Merger Agreement in detail.
Subsequent to this, on April 7, 2017, the parties amended the Merger Agreement to clarify that having the ordinary shares of Holdings to be issued pursuant to the Merger Agreement be approved for listing on any national securities exchange (as opposed to solely Nasdaq which was originally set forth in the Merger Agreement) would satisfy the applicable closing condition in the Merger Agreement.
Capitols board of directors, in evaluating the business combination, consulted with Capitols management and legal and financial advisors. In reaching its unanimous resolution (i) that the terms and conditions of the Merger Agreement, including the proposed business combination, are advisable, fair to, and in the best interests of Capitol and its stockholders and (ii) to recommend that stockholders adopt and approve the Merger Agreement and approve the Transactions contemplated therein, Capitols board considered a range of factors, including but not limited to, the factors discussed below. In light of the number and wide variety of factors, the Capitol board did not consider it practicable to and did not attempt to quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. The Capitol board viewed its position as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of Capitols reasons for the business combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under Forward-Looking Statements .
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In approving the Transactions, the Capitol board determined not to obtain a fairness opinion. The officers and directors of Capitol have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Capitols financial advisors, including Citi, DB and CS, enabled them to make the necessary analyses and determinations regarding the business combination with Cision. In addition, Capitols officers and directors and Capitols advisors have substantial experience with mergers and acquisitions.
In considering the business combination, the Capitol board of directors gave considerable weight to the following factors:
| Global, Cloud-Based PR Solutions Leadership. Cision is a leader in the $3 billion global communications intelligence software and services market (according to Burton-Taylor International Consulting LLC), with a comprehensive suite of products covering each major PR category: media monitoring, analysis, database, and distribution; |
| Compelling Market Opportunity. Cision is investing in enhancements to its earned media cloud software that will expand its addressable market beyond communications intelligence software and services into the broader marketing software market, which IDC estimates will reach $32 billion by 2018, and ultimately digital marketing market and data, which is expected to be a $195 billion market by 2020, per Statista; |
| Recurring Revenue Model. Cision has a highly attractive SaaS delivery model, with subscription and recurring revenue representing 82% of the total revenue base; |
| Heavily Diversified Customer Base. The top 25 of Cisions more than 75,000 customers account for only 3% of revenue; |
| Experienced Leadership Team with a Proven Track Record. Kevin Akeroyd, Chief Executive Officer, led the team at Oracle that built the Oracle Marketing Cloud, a cloud-based marketing technology platform, over the three-year period prior to joining Cision and has 25 years of experience reshaping modern digital, social and mobile marketing, globally. Jack Pearlstein, Chief Financial Officer, has a successful track record as chief financial officer of four prior companies, three of which completed initial public offerings to become public companies; |
| Favorable Industry Trends. The PR software and services market is experiencing a number of favorable trends, including: (i) Chief Marketing Officers are shifting their marketing budgets toward earned media, according to Outsell, Inc., due to its higher return on investment and proven success in building brands; (ii) marketing technology spend grew 12% in 2016 compared to 3% growth for core enterprise Information Technology (IT) spend, and is expected to exceed core enterprise IT spending by 2017, according to Gartner, Inc.; and (iii) declining efficacy of traditional paid media, as evidenced by GlobalWebIndex research indicating that 60% of desktop users have used ad-blockers; |
| Industry Standard Platform Poised for Significant Growth. Cisions recent launch of C3, an integrated cloud platform that incorporates Cisions full suite of products, is expected to drive a higher average selling price and total spend opportunity; |
| Synergy Opportunity. Cision has significant cross-selling and cost synergy opportunity related to the 2016 acquisition of PR Newswire, which significantly expanded Cisions distribution capabilities and global reach; |
| Significant Opportunities to Drive Growth. Cision has a number of variables that drive revenue and EBITDA growth, including: (i) expanded measurement and attribution capabilities expected to drive data monetization, (ii) extension of Cisions earned media platform into adjacent categories including content marketing, user-generated content, ratings and reviews and (iii) a robust pipeline of accretive and strategic acquisitions; |
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| Substantial Free Cash Flow Generation. Cisions projected growth in Adjusted EBITDA and strong free cash flow conversion (87% ratio of 2017E Adjusted EBITDA to unlevered free cash flow, defined as Adjusted EBITDA less capital expenditures) are expected to drive rapid debt paydown; |
| Commitment of Current Shareholders. GTCR and current management are retaining 100% of their equity interests in the transaction, which the Capitol board believes reflects their belief in and commitment to the continued growth prospects of the combined company; |
| Top Tier Sponsorship from GTCR. GTCR is one of the most successful private equity firms in the nation with a long track record of investing in, building and growing technology companies; |
| Capital Structure Optimization. Cisions expected paydown of a portion of its Second Lien Credit Facility with cash proceeds from the business combination and further capital structure optimization, including potential re-pricing of other Cision debt, are expected to drive material interest savings, improving the companys financial flexibility to execute its growth plan; and |
| Attractive Valuation. The current valuations experienced by comparable publicly traded companies in the information services and enterprise software sectors, which the Capitol board believes imply a favorable comparison for Capitol following the business combination. |
The Capitol board also considered a variety of uncertainties and risks and other potentially negative factors concerning the business combination, including, but not limited to, the following:
| Macroeconomic Risks. Macroeconomic uncertainty and the effects it could have on the combined companys revenues; |
| Benefits Not Achieved. The risk that the potential benefits of the Transactions may not be fully achieved or may not be achieved within the expected timeframe; |
| Other Risks. Various other risks associated with the business of Cision, as described in the section entitled Risk Factors appearing elsewhere in this proxy statement/prospectus. |
The Capitol board concluded that the potential benefits that it expected Capitol and its shareholders to achieve as a result of the Transactions outweighed the potentially negative factors associated with the Transactions. The board also noted that the Capitol stockholders would have a substantial economic interest in the combined company (depending on the level of Capitol stockholders that sought conversion of their public shares into cash). Accordingly, the board unanimously determined that the Merger Agreement and the Transactions contemplated therein, were advisable, fair to, and in the best interests of the Capitol and its stockholders.
Cision provided Capitol with its internally prepared forecasts for each of the years in the five-year period ending December 31, 2021. This prospective financial information was not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. These forecasts were prepared solely for internal use and capital budgeting and other management purposes, are subjective in many respects and therefore susceptible to varying interpretations and the need for periodic revision based on actual experience and business developments, and were not intended for third-party use, including by investors or holders. You are cautioned not to rely on the forecasts in making a decision regarding the transaction, as the forecasts may be materially different than actual results.
The forecasts are based on information as of the date of this proxy statement/prospectus and reflect numerous assumptions including assumptions with respect to general business, economic, market, regulatory and financial conditions and various other factors, all of which are difficult to predict and many of which are beyond Cisions control, such as the risks and uncertainties contained in the section entitled Risk Factors . The most significant assumptions upon which Cisions management based its projections and the reasonable and supportable basis for those assumptions are, among other things, (i) increased spending from existing customers due to the bundling of various point solutions under the integrated C3 platform, especially from the large number of current PR Newswire and Cision customers that do not overlap; (ii) the achievement of cost
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synergies related to the PR Newswire acquisition, largely related to workforce rationalization and the consolidation of redundant spending, of which over half have already been actioned and the rest identified; (iii) the acquisition of new customers through a combination of increased penetration in its current market segment driven by the comprehensive C3 platform as well as expansion into new market segments by offering new audience analytics capabilities to brands and media networks; and (iv) constant foreign exchange rates based on the current exchange rates at the time the forecasts were created.
Although the assumptions and estimates on which the forecasts for revenue and costs are based are believed by Cisions management to be reasonable and based on the best-then currently available information, the financial forecasts are forward-looking statements that are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond Cisions control. While all forecasts are necessarily speculative, Cision believes that the prospective financial information covering periods beyond twelve months from its date of preparation carries increasingly higher levels of uncertainty and should be read in that context. There will be differences between actual and forecasted results, and actual results may be materially greater or materially less than those contained in the forecasts. The inclusion of the forecasted financial information in this proxy statement/prospectus should not be regarded as an indication that Cision or its representatives considered or consider the forecasts to be a reliable prediction of future events, and reliance should not be placed on the forecasts.
The forecasts were requested by, and disclosed to, Capitol for use as a component in its overall evaluation of Cision, and are included in this proxy statement/prospectus on that account. Cision has not warranted the accuracy, reliability, appropriateness or completeness of the forecasts to anyone, including to Capitol. Neither Cisions management nor any of its representatives has made or makes any representation to any person regarding the ultimate performance of Cision compared to the information contained in the forecasts, and none of them intends to or undertakes any obligation to update or otherwise revise the forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events in the event that any or all of the assumptions underlying the forecasts are shown to be in error. Accordingly, they should not be looked upon as guidance of any sort. Cision will not refer back to these forecasts in its future periodic reports filed under the Exchange Act. Unlevered Free Cash Flow data was created for the Capitol board at their request, in conjunction with the proposed transaction. Cision management has not used, and in the future does not plan to use or disclose this as a performance metric.
The prospective financial information included in this proxy statement/prospectus was prepared by, and is the responsibility of, Cisions management. PwC, Cisions auditor, has neither audited, reviewed, examined, compiled nor performed agreed upon procedures with respect to the accompanying prospective financial information and, accordingly, PwC does not express an opinion or any other form of assurance with respect thereto. The report furnished by PwC included in this proxy statement/prospectus relates to historical financial information of Cision. It does not extend to the prospective financial information and should not be read to do so. The forecasts reflect the consistent application of the accounting policies of Cision and should be read in conjunction with the accounting policies included in Note 2 ( Summary of Significant Accounting Policies ) accompanying the historical audited consolidated financial statement of Cision included in this proxy statement/prospectus.
The key elements of the forecasts provided to Capitol are summarized below (in millions of dollars):
(1) | 2017 estimates (i) include a full years results from the acquisition of Bulletin Intelligence which was acquired by Cision on March 27, 2017 and (ii) exclude the results of the Vintage Group, which was divested in March 2017. |
(2) | Cision defines Adjusted EBITDA as net income (loss), determined in accordance with U.S. GAAP, for the period presented, before interest expense, income tax benefit (provision), and depreciation and amortization expense, further adjusted to exclude the following items: (a) acquisition related costs and expenses, including |
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severance costs; (b) deferred revenue reduction from purchase accounting; (c) sponsor fees; and expenses (d) stock-based compensation expense; (e) gains or losses related to divested businesses or asset groups and (g) unrealized (gain) or loss on foreign currency translation. |
(3) | Forecasts include $1 million of estimated public company expenses, incremental to Cisions standalone plan. |
(4) | Cision defines Unlevered Free Cash Flow as Adjusted EBITDA less capital expenditures. |
(5) | Cision does not provide GAAP financial measures on a forward-looking basis as it is unable to predict with reasonable certainty factors such as future changes in interest rates, effective income tax rate, the future impact of unusual gains and losses, restructuring, acquisition and integration-related costs and stock based compensation due to the timing of future awards, without unreasonable effort. These items are uncertain, and depend on various factors and so this reconciliation has not been provided. These items and factors could be material to Cisions results computed in accordance with GAAP. |
Capitols management primarily relied upon a comparable company analysis to assess the value that the public markets would likely ascribe to Cision following a business combination with Capitol and this analysis was presented to the board. The relative valuation analysis was based on publicly-traded companies in the information services and enterprise software sector, which were determined to be most comparable. The comparable companies the Capitol board reviewed within the information services sector were S&P Global Inc. (S&P), Nielsen N.V. (Nielsen), Verisk Analytics, Inc. (Verisk), and Factset Research Systems Inc. (Factset). Within the enterprise software sector the Capitol board reviewed Aspen Technology, Inc. (Aspen Technology), Blackbaud, Inc. (Blackbaud), Manhattan Associates, Inc. (Manhattan Associates), Verint Systems, Inc. (Verint Systems), MicroStrategy Incorporated (MicroStrategy), and Inovalon Holdings, Inc. (Inovalon Holdings). These companies were selected by Capitol as the publicly traded companies having businesses most similar to the combined companys business in the broader information services and enterprise software sector in the United States. However, Capitols board realized that no company was identical in nature to Cision. Within the narrower industry of companies focused on communication software and analytics in the United States, there are no publicly traded companies.
Capitols board of directors reviewed, among other things, the enterprise values of the selected companies, enterprise values as a multiple of estimated EBITDA for calendar years 2017 and 2018, and projected revenue and EBITDA compound annual growth rates from calendar year 2017 through calendar year 2019.
The enterprise values, multiples and growth rates for the selected comparable companies are summarized in the table below:
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Company
($ in millions) |
Enterprise
Value |
EV/CY
2017 EBITDA |
EV/CY
2018 EBITDA |
2017 2019
Revenue CAGR % |
2017 2019
EBITDA CAGR % |
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Information Services
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S&P | $ | 36,740 | 13.7x | 12.9x | 5.9 | % | 6.1 | % | ||||||||||||
Nielsen | 23,075 | 11.3x | 10.7x | 4.1 | % | 5.9 | % | |||||||||||||
Verisk | 15,881 | 14.8x | 13.8x | 6.0 | % | 6.8 | % | |||||||||||||
Factset | 7,214 | 17.2x | 16.1x | 6.8 | % | 6.1 | % | |||||||||||||
Information Services Median | $ | 19,478 | 14.3x | 13.3x | 5.9 | % | 6.1 | % | ||||||||||||
Enterprise Software
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Aspen Technology | $ | 4,529 | 19.1x | 17.9x | 5.5 | % | 7.1 | % | ||||||||||||
Blackbaud | 3,990 | 21.5x | 18.6x | 9.8 | % | 22.5 | % | |||||||||||||
Manhattan Associates | 3,557 | 15.8x | 14.4x | 8.1 | % (1) | 9.9 | % (1) | |||||||||||||
Verint Systems | 3,082 | 11.7x | 10.7x | 5.3 | % | 7.7 | % | |||||||||||||
MicroStrategy | 1,588 | 11.2x | 10.8x | 4.9 | % | 6.4 | % | |||||||||||||
Inovalon Holdings | 1,517 | 14.0x | 11.9x | 7.6 | % | 17.5 | % | |||||||||||||
Enterprise Software Median | $ | 3,320 | 14.9x | 13.1x | 6.6 | % | 8.8 | % |
Note: | Estimates based on Wall Street research. Balance sheet data as of December 31, 2016 for all companies listed above, except Verint Systems and Factset, which are as of October 31, 2016 and November 30, 2016, respectively. Fiscal year EBITDA estimates were converted to calendar year where applicable to improve comparability. |
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(1) | Based on 2017 2018 estimated growth, as estimates for 2019 were not available. |
The median multiples for the information services companies were 14.3x and 13.3x for calendar years 2017 and 2018 EBITDA, respectively. The median multiples for enterprise software company were 14.9x and 13.1x for calendar years 2017 and 2018 EBITDA, respectively.
Based on the review of these selected comparable publicly traded companies, Capitols board concluded that Capitols pro forma implied total enterprise value as a multiple of Adjusted EBITDA was below the similar benchmarks of such companies, while Capitols pro forma financial metrics were comparable or better than those of the comparable companies. This analysis supported the Capitol boards determination that the terms of the business combination were fair to and in the best interests of Capitol and its stockholders.
It is a requirement under Capitols amended and restated certificate of incorporation that any business acquired by Capitol have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for an initial business combination. As of March 19, 2017, the date of the execution of the merger agreement, the balance of the funds in the trust account was approximately $314 million (excluding $11 million of deferred underwriting commissions) and 80% thereof represents approximately $251 million. In reaching its conclusion on the 80% asset test, Capitols board of directors used as a fair market value the $2,309 million enterprise value for Cision, which was implied based on the terms of the Transactions agreed to by parties in negotiating the Merger Agreement. This fair market value was implied based on adding (i) the $821 million common equity value consideration to the current Cision owners, and (ii) the $1,488 million of estimated net debt at closing. The parties to the Merger Agreement considered factors such as Cisions historical financial results, the future growth outlook and financial plan, as well as valuations and trading of publicly traded companies in similar and adjacent sectors. The board determined that the consideration being paid in the merger, which amount was negotiated at arms-length, was fair to and in the best interests of Capitol and its stockholders and appropriately reflected Cisions value. The board based this conclusion on (i) a comparison of (a) the ratio of enterprise value over estimated 2017 Adjusted EBITDA of 10.1x for Cision, based on a $2,309 million enterprise value of Cision, to (b) the median enterprise value over estimated 2017 Adjusted EBITDA of 14.3x and 14.9x, respectively, for the comparable companies within the information services and enterprise software sectors, respectively; (ii) a review of projections provided by Cision showing material compounded annual growth in revenues and Adjusted EBITDA through 2021, as described above in the section Certain Projected Financial Information for Cision; and (iii) a range of qualitative and quantitative factors such as Cisions leadership position, management experience, Adjusted EBITDA growth, strong operating metrics, and future growth opportunities.
The Capitol board of directors believes that because of the financial skills and background of its directors, it was qualified to conclude that the acquisition of Cision met the 80% requirement. Based on the fact that the $2,309 million fair market value of Cision as described above, is in excess of the threshold of approximately $251 million, representing 80% of the balance of the funds in the trust account (excluding the deferred underwriting commissions), the Capitol board determined that the fair market value of Cision was substantially in excess of 80% of the funds in the trust account and that the 80% test was met.
In considering the recommendation of the board of directors of Capitol to vote in favor of approval of the business combination proposal, the charter amendments proposal and the other proposals, stockholders should keep in mind that Capitols Sponsors, including its directors and executive officers, have interests in such proposals that are different from, or in addition to, those of Capitol stockholders generally. In particular:
| If the business combination with Cision or another business combination is not consummated by October 19, 2017, Capitol will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 8,125,000 initial shares held by Capitols Sponsors, including its directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to Capitols initial public offering, would be worthless |
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because the holders are not entitled to participate in any conversion or distribution with respect to such shares. Such shares had an aggregate market value of $[] based upon the closing price of $[] per share on Nasdaq on [], 2017, the record date. |
| Capitols Sponsors, including its directors and officers, purchased an aggregate of 8,250,000 private warrants from Capitol for an aggregate purchase price of $8,250,000 (or $1.00 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the initial public offering. All of the proceeds Capitol received from these purchases were placed in the trust account. Such warrants had an aggregate market value of $[] based upon the closing price of $[] per unit on Nasdaq on [], 2017, the record date. The private warrants will become worthless if Capitol does not consummate a business combination by October 19, 2017. |
| The transactions contemplated by the Merger Agreement provide that Mark D. Ein and L. Dyson Dryden will be directors of Holdings after the closing of the Transactions (assuming they are elected at the annual meeting as described in this proxy statement/prospectus). As such, in the future each will receive any cash fees, stock options or stock awards that the Holdings board of directors determines to pay to its non-executive directors. |
| If Capitol is unable to complete a business combination within the required time period, its executive officers will be personally liable under certain circumstances described herein to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Capitol for services rendered or contracted for or products sold to Capitol. If Capitol consummates a business combination, on the other hand, Capitol will be liable for all such claims. |
| Capitols Sponsors, including its officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Capitols behalf, such as identifying and investigating possible business targets and business combinations. However, if Capitol fails to consummate a business combination within the required period, they will not have any claim against the trust account for reimbursement. Accordingly, Capitol may not be able to reimburse these expenses if the business combination with Cision or another business combination, is not completed by October 19, 2017. As of [], 2017, the record date, Capitols Sponsors and their affiliates had incurred approximately $[] of unpaid reimbursable expenses. |
| The continued indemnification of current directors and officers and the continuation of directors and officers liability insurance. |
| Since its inception, Capitols officers and directors (or their affiliates) have made loans from time to time to Capitol to fund certain capital requirements. As of the date of this proxy statement/prospectus, an aggregate of $[] principal amount of these loans are outstanding. If the business combination is not consummated, the notes will not be repaid and will be forgiven. |
| If Capitol is required to be liquidated and there are no funds remaining to pay the costs associated with the implementation and completion of such liquidation, Capitols executive officers have agreed to advance Capitol the funds necessary to pay such costs and complete such liquidation (currently anticipated to be no more than approximately $15,000) and not to seek repayment for such expenses. |
After careful consideration of the matters described above, particularly Cisions leading position in its industry, potential for growth and profitability, the experience of Cisions management, Cisions competitive positioning, its customer relationships, and technical skills, Capitols board determined unanimously that each of the business combination proposal, the charter proposals, the director election proposal, the incentive plan proposal and the adjournment proposal, if presented, is fair to and in the best interests of Capitol and its stockholders. Capitols board of directors has approved and declared advisable and unanimously recommend that you vote or give instructions to vote FOR each of these proposals.
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The foregoing discussion of the information and factors considered by the Capitol board of directors is not meant to be exhaustive, but includes the material information and factors considered by the Capitol board of directors.
The following section is a summary of the material United States federal income tax consequences of the Merger to holders of Capitol common stock and warrants. This discussion addresses only those Capitol security holders (other than the Sponsors and its affiliates) that hold their securities as a capital asset within the meaning of Section 1221 of the Code and does not address all the United States federal income taxconsequences that may be relevant to particular holders in light of their individual circumstances (such as a stockholder owning directly or indirectly 5% or more of Capitols shares or of Holdings shares) or to holders that are subject to special rules, such as:
| financial institutions; |
| partnerships or other entities classified as partnerships for U.S. federal income tax purposes; |
| tax-exempt organizations; |
| dealers in securities or currencies; |
| traders in securities that elect to use a mark-to-market method of accounting; |
| persons holding Capitol common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated investment; and |
| Non-U.S. holders (as defined below, and except as otherwise discussed below). |
For purposes of this section, a U.S. holder is a beneficial owner of Capitol common shares or warrants who or which is any of the following for U.S. federal income tax purposes:
| an individual who is a citizen or resident of the U.S.; |
| a corporation, including any entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the U.S., any state thereof or the District of Columbia; |
| an estate if its income is subject to U.S. federal income taxation regardless of its source; or |
| a trust if (a) a U.S. court can exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (b) it has in effect a valid election under applicable U.S. Treasury regulations to be treated as a U.S. person. |
If an entity treated as a partnership for U.S. federal income tax purposes holds our capital stock or warrants the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding Capitol stock and/or warrants and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
This discussion is based upon the Code, applicable treasury regulations thereunder, published rulings and court decisions, all as currently in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. Tax considerations under state, local and foreign laws, or federal laws other than those pertaining to the income tax, are not addressed.
Neither Capitol nor Cision intends to request any ruling from the Internal Revenue Service as to the U.S. federal income tax consequences of the Merger.
THE U.S. FEDERAL INCOME TAX TREATMENT OF THE MERGER AND THE U.S. FEDERAL INCOME TAX TREATMENT OF HOLDERS OF CAPITOL COMMON SHARES AND WARRANTS DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX PROVISIONS OF U.S. FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. IN ADDITION, THE U.S. FEDERAL INCOME
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TAX TREATMENT OF THE TRANSACTIONS AND THE U.S. FEDERAL INCOME TAX TREATMENT OF HOLDING HOLDINGS ORDINARY SHARES AND WARRANTS TO ANY PARTICULAR STOCKHOLDER WILL DEPEND ON THE STOCKHOLDERS PARTICULAR TAX CIRCUMSTANCES. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES TO YOU, IN LIGHT OF YOUR PARTICULAR INVESTMENT OR TAX CIRCUMSTANCES, OF ACQUIRING, HOLDING, AND DISPOSING OF HOLDINGS ORDINARY SHARES AND WARRANTS.
The Merger of Capitol and Merger Sub together with the Contribution and Exchange by Cision Owner of all its share capital and CPECs in Cision for shares and warrants of Holdings should qualify as an exchange under Section 351 of the Code. The Merger may also qualify as a reorganization within the meaning of Section 368(a) of the Code (a reorganization). The U.S. federal income tax consequences to U.S. holders may differ depending on whether the Merger qualifies as a reorganization in addition to an exchange under Section 351 of the Code and on the type of consideration received by a U.S. holder in connection with the Merger. U.S. holders are urged to consult their independent tax advisors regarding the proper tax treatment of the Merger.
For U.S. federal income tax purposes, the automatic conversion in the Merger of Capitol warrants into warrants to acquire Holdings ordinary shares should be treated as a surrender of Capitol warrants and the receipt of Holdings warrants.
A U.S. holder who owns only Capitol common shares but not Capitol warrants and who exchanges such common shares for Holdings ordinary shares will generally not recognize gain or loss. The aggregate tax basis for U.S. federal income tax purposes of the shares of Holdings received by such a U.S. holder in the Merger will be the same as the aggregate adjusted tax basis of the Capitol shares surrendered in exchange therefor. The holding period of the shares of Holdings received in the Merger by such U.S. holder will include the period during which the Capitol shares exchanged therefor were held by such U.S. holder.
If the Merger qualifies as an exchange under Code Section 351, but not as a reorganization, a U.S. holder whose Capitol warrant automatically convert into a warrant to purchase Holdings ordinary shares will recognize gain or loss upon such exchange equal to the difference between the fair market value of the Holdings warrant received and such U.S. holders adjusted basis in its Capitol warrant. A U.S. holders basis in its Holdings warrant deemed received in the Merger will equal the fair market value of such warrant. A U.S. holders holding period in its Holdings warrant will begin on the day after the Merger.
However, if the Merger qualifies as a reorganization as well as a Code Section 351 exchange, a U.S. holder whose Capitol warrant is converted into a warrant to purchase Holdings ordinary shares will not recognize gain or loss on such exchange. In such case, a U.S. holders basis in the Holdings warrant received will be equal to the holders adjusted basis in the Capitol warrant exchanged therefor and the U.S. holder will be able to tack on its holding period in the surrendered Capitol warrant to such U.S. holders holding period in its Holdings warrant.
If the Merger only qualifies as an exchange under Code Section 351 but not as a reorganization, a U.S. holder who receives Holdings ordinary shares in exchange for such U.S. holders Capitol shares and whose Capitol warrants automatically convert into warrants to purchase Holdings ordinary shares will recognize gain (if any) with respect to each share of Capitol common shares and warrant held immediately prior to the Merger in an amount equal to the lesser of (i) the excess (if any) of the fair market value of the Holdings ordinary shares and warrants to acquire Holdings ordinary shares deemed received in exchange for such share or warrant, as described below over such U.S. holders tax basis in the Capitol share or warrant exchanged therefor or (ii) the fair market value of the warrants to acquire Holdings ordinary shares deemed received in exchange for such Capitol share or warrant . To determine the amount of gain, if any, that such U.S. holder must recognize,
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the holder must compute the amount of gain or loss realized as a result of the Merger on a share-by-share and warrant-by-warrant basis by allocating the aggregate fair market value of (i) the Holdings ordinary shares received by such U.S. holder and (ii) the warrants to purchase Holdings ordinary shares owned by such U.S. holder as a result of the Merger among the Capitol common shares and warrants owned by such U.S. holder immediately prior to the Merger in proportion to their fair market values . Any loss recognized by a U.S. holder is disallowed.
Gain, if any, recognized by a U.S. holder will generally be long-term capital gain to the extent it is allocated to surrendered Capitol shares or warrants that were held by such U.S. holder for more than one year at the time of the Merger. A U.S. holder will be able to tack on its holding period in the surrendered Capitol shares to such U.S. holders holding period in its Holdings shares. A U.S. holders holding period in the Holdings warrants received will begin on the day after the Merger.
However, if the Merger qualifies as a reorganization as well as a Code Section 351 exchange, a U.S. holder who receives Holdings ordinary shares and whose warrants are automatically converted into warrants to purchase Holdings ordinary shares in the Merger will not recognize any gain or loss. In such case, a U.S. holders basis in the Holdings warrants received in the exchange will be equal to such U.S. holders adjusted basis in the Capitol warrants exchanged therefor and the U.S. holder will be able to tack on its holding period in the surrendered Capitol warrants to such U.S. holders holding period in its Holdings warrants. Similarly, a U.S. holders basis in the Holdings shares received in the exchange will be equal to such U.S holders adjusted basis in the Capitol shares exchanged therefor and the U.S. holder will be able to tack on its holding period in the surrendered Capitol shares to such U.S. holders holding period in its Holdings shares.
Regardless of whether the Merger qualifies as a reorganization or only as a Code Section 351 exchange, U.S. holders who exercise conversion rights and elect to receive cash in exchange for their Capitol shares in the Merger will recognize gain or loss on such exchange equal, subject to the discussion below, to the difference between the amount of cash received and such U.S. holders adjusted basis in the Capitol shares exchanged therefor. Such gain or loss will be long-term capital gain or loss if the U.S. holders holding period in such Capitol shares is more than one year at the time of the Merger.
If the Merger does not qualify as a reorganization, a U.S. holder receiving cash for Capitol common shares whose Capitol warrants automatically convert into warrants to purchase Holdings ordinary shares will recognize gain and loss upon such conversion equal to the difference between the fair market value of the Holdings warrants received less such U.S. holders adjusted basis in its Capitol warrants surrendered. A U.S. holders basis in its Holdings warrants received will be equal to the fair market value of such warrants. A U.S. holders holding period in its Holdings warrants will begin on the day after the Merger.
If the Merger qualifies as a reorganization, a U.S. holder receiving cash for Capitol common shares whose Capitol warrants are converted into Holdings warrants will not recognize gain or loss on such conversion. In such case, a U.S. holders basis in the Holdings warrants received will be equal to the holders adjusted basis in the Capitol warrants surrendered therefor and the U.S. holder will be able to tack on its holding period in the surrendered Capitol warrants to such U.S. holders holding period in its Holdings warrants. Cash received by a U.S. holder in exchange for its Capitol shares may be treated as taxable boot received in a reorganization. Under this characterization, such U.S. holder may be required to recognize more gain than if the surrender of Capitol shares for cash was treated as a separate transaction from the exchange of Capitol warrants for Holdings warrants. Such U.S. holders are urged to consult their tax advisors regarding the U.S. federal income tax consequences of the Merger.
U.S. holders who hold different blocks of Capitol stock (generally, shares of Capitol stock purchased or acquired on different dates or at different prices) and holders of Capitol stock who receive a mixture of cash and Holdings ordinary shares in exchange for their Capitol stock should consult their tax advisors to determine how the above rules apply to them.
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This section summarizes the U.S. federal income tax considerations of the Merger for non-U.S. holders. For these purposes, a non-U.S. holder is a beneficial owner of Capitol stock or warrants who is neither a U.S. holder nor an entity that is treated as a partnership for U.S. federal income tax purposes.
A non-U.S. holder will generally be treated in the same manner as a U.S. holder for U.S. federal income tax purposes except that any such non-U.S. holder who would otherwise recognize gain under the rules described above for U.S.-holders will not be subject to U.S. federal income tax on the exchange of such non-U.S. holders Capitol shares or warrants unless (i) such non-U.S. holder is engaged in a trade or business within the United States and any gain recognized in the exchange is treated as effectively connected with such trade or business (in which case the non-U.S. holder will generally be subject to the same treatment as a U.S. holder with respect to the exchange) or (ii) such non-U.S. holder is an individual who is present in the United States for 183 days or more during the taxable year in which the Merger takes place and has a tax home in the United States (in which case the non-U.S. holder will be subject to a 30% tax on the individuals net capital gain for the year).
The conclusions expressed above are based on current law. Future legislative, administrative or judicial changes or interpretations, which can apply retroactively, could affect the accuracy of those conclusions.
This discussion is intended to provide only a summary of the material United States federal income tax consequences of the Merger to holders of Capitol shares and/or warrants. It does not address tax consequences that may vary with, or are contingent on, your individual circumstances. In addition, the discussion does not address any non-income tax or any foreign, state or local tax consequences of the business combination. Accordingly, you are strongly urged to consult with your tax advisor to determine the particular United States federal, state, local or foreign income or other tax consequences to you of the business
combination.
There are no income taxes, withholdings, levies, registration taxes, or other duties or similar taxes or charges now imposed, or which under the present laws of the Cayman Islands could in the future become imposed, in connection with the holding of shares in capital of Holdings. The Cayman Islands currently have no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax. Holdings has been registered as an exempted company pursuant to the Companies Law. Holdings has received an undertaking from the Governor in Cabinet of the Cayman Islands to the effect that, for a period of twenty years from the date of the undertaking, no law that thereafter is enacted in the Cayman Islands imposing any tax or duty to be levied on profits, income or on gains or appreciation, or any tax in the nature of estate duty or inheritance tax, will apply to any property comprised in or any income arising under Holdings, in respect of any such property or income.
The business combination will be accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting Capitol will be treated as the acquired company for financial reporting purposes. This determination was primarily based on Cision comprising the ongoing operations of the combined entity, Cisions senior management comprising the majority of the senior management of the combined company, and current shareholders of Cision having a majority of the voting power of the combined entity. Accordingly, for accounting purposes, the business combination will be treated as the equivalent of Cision issuing stock for the net assets of Capitol, accompanied by a recapitalization. The net assets of Capitol will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the business combination will be those of Cision.
The Transactions are not subject to any federal or state regulatory requirement or approval, except for the filings with the State of Delaware and the Cayman Islands necessary to effectuate the Transactions.
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The approval of the business combination proposal will require the affirmative vote of the holders of a majority of the then outstanding shares of Capitol common stock entitled to vote at the meeting. Additionally, the business combination will not be consummated if Capitol has less than $5,000,001 of net tangible assets after taking into account the holders of public shares that properly demanded that Capitol convert their public shares into their pro rata share of the trust account.
The approval of the business combination proposal is a condition to the consummation of the business combination. If the business combination proposal is not approved, the other proposals (except an adjournment proposal, as described below) will not be presented to the stockholders for a vote.
THE CAPITOL BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE CAPITOL STOCKHOLDERS VOTE FOR THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.
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For a discussion of the merger structure and merger consideration provisions of the Merger Agreement, see the section entitled The Business Combination Proposal . Such discussion and the following summary of other material provisions of the Merger Agreement is qualified by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. All stockholders are encouraged to read the Merger Agreement in its entirety for a more complete description of the terms and conditions of the business combination.
The closing of the Transactions will take place promptly following the satisfaction of the conditions described below under the subsection entitled Conditions to Closing of the Transactions , unless Capitol and Cision agree in writing to another time or unless the Merger Agreement is terminated. The Transactions are expected to be consummated promptly after the annual meeting of Capitols stockholders described in this proxy statement/prospectus.
The Merger Agreement contains representations and warranties of Cision relating, among other things, to:
| proper organization; |
| subsidiaries; |
| the authorization, performance and enforceability of the Merger Agreement; |
| no conflict; |
| consent, approval or authorization of governmental authorities; |
| pre- and post-transaction capitalization; |
| financial statements; |
| absence of undisclosed liabilities; |
| litigation and proceedings; |
| compliance with laws; |
| contracts; |
| benefit plans; |
| labor matters; |
| tax matters; |
| brokers fees; |
| insurance; |
| assets and property; |
| environmental matters; |
| absence of certain changes or events; |
| transactions with affiliates; |
| internal controls; |
| intellectual property matters; |
| permits; and |
| the proxy statement. |
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The Merger Agreement contains representations and warranties of Cision Owner relating, among other things, to:
| proper organization; |
| the authorization, performance and enforceability of the Merger Agreement; |
| title to Cision securities; |
| no conflict; |
| governmental authorities and consents; |
| litigation and proceedings; |
| tax matters; |
| the proxy statement; and |
| brokers fees. |
The Merger Agreement contains representations and warranties of each of Capitol, Holdings and Merger Sub relating, among other things, to:
| proper organization; |
| the authorization, performance and enforceability of the Merger Agreement; |
| no conflict; |
| litigation and proceedings; |
| governmental authorities and consents; |
| financial ability and trust account; |
| brokers fees; |
| SEC reports, financial statements and Sarbanes-Oxley Act; |
| business activities; |
| the proxy statement; |
| no outside reliance; |
| tax matters; |
| capitalization; and |
| Nasdaq listing. |
The parties have each agreed to use commercially reasonable efforts to obtain any required consents and approvals and to take such other actions as may be reasonably necessary to consummate the Transactions. Capitol and Cision have each also agreed to continue to operate their respective businesses in the ordinary course prior to the closing. Cision has agreed that, unless otherwise required or permitted under the Merger Agreement, neither it nor its subsidiaries will take the following actions, among others, without the prior written consent of Capitol (which consent will not be unreasonably conditioned, withheld, delayed or denied):
| change or amend its certificate of incorporation, bylaws or other organizational documents; |
| make, declare or pay any dividend or distribution to the stockholders of Cision in their capacities as stockholders; |
| effect any recapitalization, reclassification, split or other change in its capitalization; |
| repurchase, redeem or otherwise acquire or offer to repurchase redeem or otherwise acquire any shares of capital stock or other equity interests; |
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| authorize for issuance, issue, sell, transfer, pledge, encumber, dispose of or deliver any additional shares of its capital stock or securities convertible into or exchangeable for shares of its capital stock, or issue, sell, transfer, pledge, encumber or grant any right, option or other commitment for the issuance of shares of its capital stock, or split, combine or reclassify any shares of its capital stock; |
| enter into, assume, assign, partially or completely amend any material term of, modify any material term of or terminate (excluding any expiration in accordance with its terms) any material contract, any lease related to the material leased real property or any collective bargaining or similar agreement (including agreements with works councils and trade unions and side letters) other than such agreements in the ordinary course consistent with past practice or as required by law; |
| subject to certain exceptions, sell, transfer, lease, pledge or otherwise encumber, abandon, cancel or convey or dispose of any assets, properties or business; |
| except as otherwise required by law or existing company benefit plans, policies or contracts of Cision or its subsidiaries in effect on the date of the Merger Agreement, (i) grant any material increase in compensation, benefits or severance to any employee or manager, except in the ordinary course of business consistent with past practice with annual base compensation less than $200,000, (ii) adopt, enter into or materially amend any company benefit plan, (iii) grant or provide any severance or termination payments or benefits to any employee or manager, except in connection with the hiring or firing of any in the ordinary course of business consistent with past practice, (iv) accelerate the time of payment or vesting of, or the lapsing of restrictions with respect to, or fund or otherwise secure the payment of, any compensation or benefits to any current or former employee, officer, manager, director, independent contractor or consultant, or (v) hire any employee or any other individual who is providing or will provide services to Cision or its subsidiaries other than any employee with annual base compensation below $200,000 in the ordinary course of business consistent with past practice; |
| acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, or businesses in excess of certain thresholds; |
| make any capital expenditures (or commitment to make any capital expenditures) that in the aggregate exceed $1,000,000, other than any capital expenditures consistent in all material respects with Cisions annual capital expenditure budget; |
| make any loans or advances to any person, except any made in the ordinary course of business consistent with past practice; |
| make or change any material tax election or adopt or change any material tax accounting method, file any amendment to a material tax return, enter into any agreement with a governmental authority with respect to taxes, settle or compromise any claim or assessment in respect of material taxes, or consent to any extension or waiver of the statutory period of limitations applicable to any claim or assessment in respect of taxes, or take or fail to take any other action that could have the effect of materially increasing the present or future tax liability or materially decreasing any present or future tax asset of capitol and its affiliates after the closing; |
| take any action, or knowingly fail to take any action, which action or failure to act prevents or impedes, or could reasonably be expected to prevent or impede, the intended tax treatment of the Transactions; |
| enter into any agreement that restricts the ability to engage or compete in any line of business, or enter into any agreement that restricts the ability to enter a new line of business; |
| enter into, renew or amend in any material respect certain material agreements or any agreement with an affiliate; |
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| waive, release, compromise, settle or satisfy any pending or threatened material claim or compromise or settle any material liability, other than in the ordinary course of business or that does not exceed certain thresholds; |
| incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness, other than in connection with borrowings, extensions of credit and other financial accommodations under Cisions existing credit facilities, provided, that, in no event shall any such borrowing, extension of credit or other financial accommodation be subject to any prepayment fee or penalty or similar arrangement or amend, restate or modify any terms of or any agreement with respect to any outstanding indebtedness, other than as set forth in the Merger Agreement; |
| make any change in financial accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations, except insofar as may have been required by a change in U.S. GAAP or law; |
| voluntarily fail to maintain, cancel or materially change coverage under any insurance policy in form and amount equivalent in all material respects to the insurance coverage currently maintained with respect to Cision and its subsidiaries and their assets and properties; and |
| enter into any agreement to do any of the foregoing. |
The Merger Agreement also contains additional covenants of the parties, including among other things covenants providing for:
| the protection of confidential information of the parties and, subject to the confidentiality requirements, the provision of reasonable access to information; |
| Capitol to prepare and file this proxy statement/prospectus with Cisions cooperation to solicit proxies from the Capitol stockholders to vote on the proposals that will be presented for consideration at the annual meeting; |
| customary indemnification of, and provision of insurance with respect to, former and current officers and directors of Capitol and Cision; and |
| each party to use reasonable best efforts to effect the intended tax treatment of the Transactions. |
Consummation of the Transactions is conditioned on the approval of the business combination proposal, the charter proposals and the director election proposal as described in this proxy statement/prospectus.
In addition, the consummation of the Transactions contemplated by the Merger Agreement is conditioned upon, among other things:
| no order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority or statute, rule or regulation that is in effect and prohibits or enjoins the consummation of the Transactions; |
| certain necessary permits, approvals, clearances, and consents of or filings with regulatory authorities, or as specified in the agreement being procured or made, as applicable; |
| Capitol having at least $5,000,001 of net tangible assets remaining after the closing; and |
| the delivery by each party to the other party of a certificate with respect to the truth and accuracy of such partys representations and warranties as of execution of the merger agreement and as of the closing as well as the performance by such party of covenants contained in the merger agreement required to by complied with by such party prior to the closing. |
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The obligations of Capitol, Holdings and Merger Sub to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things, the accuracy of the representations and warranties of Cision and Cision Owner (subject to customary bring-down standards).
The obligations of Cision and Cision Owner to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:
| Holdings executing the Registration Rights Agreement; |
| Holdings executing the Nominating Agreement; |
| certain covenants required under the Sponsor Support Agreement shall have been performed in all material respects by the applicable parties thereto; |
| the ordinary shares of Holdings to be issued pursuant to the Merger Agreement shall have been approved for listing on a national securities exchange; and |
| the amount of cash available to be released from Capitols trust account shall not be less than $225,000,000 after giving effect to payment of amounts that Capitol will be required to pay to converting stockholders upon consummation of the business combination and certain other fees and expense. |
If permitted under applicable law, either Capitol or Cision Owner may waive any inaccuracies in the representations and warranties made to such party contained in the Merger Agreement or in any document delivered pursuant to the Merger Agreement and waive compliance with any agreements or conditions for the benefit of itself or such party contained in the Merger Agreement or in any document delivered pursuant to the Merger Agreement. Notwithstanding the foregoing, pursuant to Capitols current amended and restated certificate of incorporation, Capitol cannot consummate the proposed business combination if it has less than $5,000,001 of net tangible assets remaining after the closing.
The existence of the financial and personal interests of the directors may result in a conflict of interest on the part of one or more of them between what he may believe is best for Capitol and what he may believe is best for himself in determining whether or not to grant a waiver in a specific situation.
The Merger Agreement may be terminated at any time, but not later than the closing, as follows:
| by mutual written consent of Capitol and Cision; |
| by either Capitol or Cision if the transactions are not consummated on or before October 19, 2017 (or December 19, 2017 if a later date is approved by the stockholders of Capitol); |
| by either Capitol or Cision if a governmental entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the merger, which order, decree, judgment, ruling or other action is final and nonappealable; |
| by either Capitol or Cision if the other party has breached any of its covenants or representations and warranties in any material respect which would cause the conditions to closing not to be satisfied and has not cured its breach within thirty days of the notice of an intent to terminate, provided that the terminating party is itself not in breach; or |
| by either Capitol or Cision if, at the Capitol stockholder meeting, the Transactions shall fail to be approved by holders of Capitols outstanding shares (subject to any adjournment or recess of the meeting). |
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In the event of proper termination by either Capitol or Cision, the Merger Agreement will become void and have no effect (other than with respect to certain surviving obligations specified in the Merger Agreement), without any liability on the part of any party thereto or its respective affiliates, officers, directors or stockholders, other than liability of any party thereto for any intentional and willful breach of the Merger Agreement by such party occurring prior to such termination.
Except as provided for in the Merger Agreement, all fees and expenses incurred in connection with the Merger Agreement and the Transactions contemplated thereby will be paid by the party incurring such expenses whether or not the Transactions are consummated.
Cision will afford Capitol and its financial advisors, accountants, counsel and other representatives prior to the completion of the mergers reasonable access during normal business hours, upon reasonable notice, to all of their respective properties, books, material contracts, commitments, tax returns, records and appropriate officers and employees to obtain all financial and operating data and other information concerning the affairs of the Cision and its subsidiaries. Capitol and Cision will maintain in confidence any non-public information received from the other party, and use such non-public information only for purposes of consummating the transactions contemplated by the merger agreement, subject to customary exceptions.
The Merger Agreement may be amended by the parties thereto at any time by execution of an instrument in writing signed on behalf of each of the parties. Capitol would file a Current Report on Form 8-K and issue a press release to disclose any amendment to the Merger Agreement entered into by the parties. If such amendment is material to investors, a proxy statement supplement would also be sent to holders of Capitol common stock as promptly as practicable.
The Merger Agreement is governed by the laws of the State of Delaware. Capitol and Cision have irrevocably submitted to the exclusive jurisdiction of federal and state courts the State of Delaware.
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The following unaudited pro forma condensed combined balance sheet as of March 31, 2017 combines the historical consolidated balance sheet of Cision as of March 31, 2017 with the historical consolidated balance sheet of Capitol as of March 31, 2017, giving effect to the Transactions as if they had been consummated as of that date.
The following unaudited pro forma condensed combined income statement for the three months ended March 31, 2017 combines the historical consolidated statement of operations of Cision for the three months ended March 31, 2017 with the historical consolidated statement of operations of Capitol for the three months ended March 31, 2017, giving effect to the Transactions as if they had occurred on January 1, 2016. The following unaudited pro forma condensed combined income statement for the year ended December 31, 2016 combines the historical consolidated statement of operations of Cision for the year ended December 31, 2016 with the historical statement of operations of Capitol for the year ended December 31, 2016, giving effect to the Transactions as if they had occurred on January 1, 2016.
The historical financial information of Cision was derived from the unaudited consolidated financial statements of Cision for the three months ended March 31, 2017 and the audited consolidated financial statements of Cision for the year ended December 31, 2016 included elsewhere in this proxy statement/prospectus. The historical financial information of Capitol was derived from the unaudited consolidated financial statements of Capitol for the three months ended March 31, 2017 and the audited financial statements of Capitol for the years ended December 31, 2016 included elsewhere in this proxy statement/prospectus. This information should be read together with Cisions and Capitols financial statements and related notes, Cisions and Capitols Unaudited Pro Forma Condensed Combined Financial Statements, Cisions Managements Discussion and Analysis of Financial Condition and Results of Operations , Other Information Related to Capitol Capitols Managements Discussion and Analysis of Financial Condition and Results of Operations and other financial information included elsewhere in this proxy statement/prospectus.
Pursuant to the Merger Agreement, all of the share capital and CPECs in Cision will be contributed to Holdings, in exchange for 82,100,000 ordinary shares of Holdings and 2,000,000 warrants to purchase ordinary shares of Holdings. Following the Contribution and Exchange, Merger Sub will merge with and into Capitol, with Capitol surviving the Merger as a wholly-owned subsidiary of Holdings. In connection with the Transactions, each outstanding share of common stock of Capitol shall be exchanged into a like number ordinary shares of Holdings. The outstanding warrants of Capitol shall, by their terms, automatically entitle the holders to purchase ordinary shares of Holdings upon consummation of the business combination. The Sponsors will forfeit 1,600,000 shares of Capitols common stock and warrants to purchase 2,000,000 shares of Capitol common stock at the closing of the Transactions. The number of Capitol shares and warrants forfeited by the Sponsors will increase by a certain number and the ordinary shares and warrants of Holdings issued to Cision Owner will be reduced by a certain number if any Capitol shareholders elect to convert their common stock in Capitol into cash at the closing of the Transactions.
The Merger Agreement contains a provision pursuant to which Holdings may issue up to 6,000,000 additional ordinary shares to Cision Owner, issued in 2,000,000 share increments, for the achievement of specified share price thresholds of $13.00, $16.00 and $19.00 between the closing date of the Transactions and the fifth anniversary of the closing date of the Transactions.
The Transactions will be accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting, Capitol will be treated as the acquired company for financial reporting purposes. This determination was primarily based on Cision stockholders having a majority of the voting power of the combined company, Cision comprising the ongoing operations of the combined entity, Cision comprising a majority of the governing body of the combined company, and Cisions senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Transactions will be treated as the equivalent of Cision issuing stock for the net assets of Capitol, accompanied by a
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recapitalization. The net assets of Capitol will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Transactions will be those of Cision.
As the issuance of the 6,000,000 of additional ordinary shares to Cision Owner is contingent on the future performance of Holdings share price, they have been classified as an equity arrangement and therefore have not been recorded in the unaudited pro forma condensed combined financial statements.
The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Transactions, are factually supportable and, with respect to the pro forma statement of operations, are expected to have a continuing impact on the results of the combined company. The adjustments presented on the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the Transactions.
The unaudited pro forma condensed combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience. Cision and Capitol have not had any historical relationship prior to the Transactions. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
The unaudited pro forma condensed combined financial statements do not include pro forma adjustments for the acquisition of Bulletin Intelligence and the sale of the Vintage business by Cision in March 2017 as these transactions were not considered material to an understanding of Cision and a stockholders vote on the Transactions.
The unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of conversions into cash of Capitol public shares:
| Scenario 1 Assuming no conversions into cash: This presentation assumes that no Capitol stockholders exercise conversion rights with respect to their public shares upon the consummation of the Transactions; and |
| Scenario 2 Assuming conversions of 8,567,753 Capitol public shares into cash: This presentation assumes that Capitol public stockholders exercise their conversion rights with respect to a maximum of 8,567,753 public shares upon consummation of the Transactions at a conversion price of approximately $10.03 per share. The maximum conversion amount is derived from the $225,000,000 minimum cash required to be released from Capitols trust account after giving effect to payments to converting stockholders and certain other fees and expenses per the Merger Agreement. |
Included in the shares outstanding and weighted average shares outstanding as presented in the pro forma condensed combined financial statements are 82,100,000 ordinary shares to be issued to Cision Owner under Scenario 1 and 81,678,203 ordinary shares to be issued to Cision Owner under Scenario 2.
As a result of the Transactions, assuming that no Capitol stockholders elect to convert their public shares into cash, Cision will own approximately 68% of Holdings ordinary shares to be outstanding immediately after the Transactions, and the Capitol stockholders will own approximately 32% of Holdings outstanding ordinary shares, based on the number of Capitol common stock outstanding as of December 31, 2016 (in each case, not giving effect to any shares issuable to them upon exercise of their warrants). If 8,567,753 shares of common stock are converted into cash, which assumes the maximum conversion of Capitols public shares and providing for a minimum of $225,000,000 cash required to be released from Capitols trust account after giving effect to payments to converting shareholders and certain other fees and expenses, Cision will own approximately 74% and the Capitol stockholders will own approximately 26% of Holdings ordinary shares to be outstanding immediately after the Transactions (in each case, not giving effect to any shares issuable to them upon exercise of their warrants).
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The Transactions will result in the exchange of Class C Units by Cision Owner for vested and unvested common stock of Holdings. The recapitalization does not constitute a change in control of Cision and so there will be no change in the existing vesting schedules or value of the awards. Equity based compensation expense will continue to be recognized in the post combination period, based on the corresponding remaining vesting periods. As a result, no adjustment has been made in the pro forma financial statements related to the continued recognition of equity based compensation expense related to the Class C Units.
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Scenario 1
Assuming No Conversions into Cash |
Scenario 2
Assuming Maximum Conversions into Cash |
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(A)
Cision |
(B)
Capitol |
Pro Forma
Adjustments |
Pro Forma
Balance Sheet |
Pro Forma
Adjustments |
Pro Forma Balance Sheet | |||||||||||||||||||||||||||
Assets
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Current assets:
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Cash and cash equivalents | $ | 41,330 | $ | 274 | $ | 325,920 | (1 | ) | ||||||||||||||||||||||||
(14,050 | ) | (2 | ) | |||||||||||||||||||||||||||||
(11,000 | ) | (3 | ) | |||||||||||||||||||||||||||||
400 | (4 | ) | ||||||||||||||||||||||||||||||
(1,350 | ) | (5 | ) | 85,920 | (6 | ) | ||||||||||||||||||||||||||
(299,920 | ) | (6 | ) | $ | 41,604 | (85,920 | ) | (7 | ) | $ | 41,604 | |||||||||||||||||||||
Cash and cash equivalents held in Trust Account, interest income available for taxes | | 729 | (729 | ) | (1 | ) | | | | |||||||||||||||||||||||
Restricted cash | 628 | | | 628 | | 628 | ||||||||||||||||||||||||||
Accrued interest receivable held in Trust Account | | 191 | (191 | ) | (1 | ) | | | | |||||||||||||||||||||||
Accounts receivable, net | 89,439 | | | 89,439 | | 89,439 | ||||||||||||||||||||||||||
Prepaid expenses and current assets | 17,031 | 122 | | 17,153 | | 17,153 | ||||||||||||||||||||||||||
Total Current Assets | 148,428 | 1,316 | (920 | ) | 148,824 | | 148,824 | |||||||||||||||||||||||||
Long term assets:
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Cash and cash equivalents held in Trust Account | | 325,000 | (325,000 | ) | (1 | ) | | | | |||||||||||||||||||||||
Property and equipment, net | 50,510 | | | 50,510 | | 50,510 | ||||||||||||||||||||||||||
Other intangible assets, net | 519,063 | | | 519,063 | | 519,063 | ||||||||||||||||||||||||||
Goodwill | 1,088,073 | | | 1,088,073 | | 1,088,073 | ||||||||||||||||||||||||||
Other assets | 8,941 | | | 8,941 | | 8,941 | ||||||||||||||||||||||||||
Total Long Term Assets | 1,666,587 | 325,000 | (325,000 | ) | 1,666,587 | | 1,666,587 | |||||||||||||||||||||||||
Total Assets | $ | 1,815,015 | $ | 326,316 | $ | (325,920 | ) | $ | 1,815,411 | $ | | $ | 1,815,411 | |||||||||||||||||||
Liabilities
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Current liabilities:
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Current portion of long-term debt | $ | 11,414 | $ | | $ | | $ | 11,414 | $ | | $ | 11,414 | ||||||||||||||||||||
Due to Parent Convertible Preferred Equity | 444,178 | | (444,178 | ) | (8 | ) | | | | |||||||||||||||||||||||
Accounts payable and accrued expenses | 77,044 | 362 | (362 | ) | (2 | ) | ||||||||||||||||||||||||||
(3,151 | ) | (3 | ) | |||||||||||||||||||||||||||||
(88 | ) | (6) | $ | 73,805 | $ | 26 | (6 | ) | $ | 73,831 | ||||||||||||||||||||||
Accrued compensation and benefits | 19,316 | | | 19,316 | | 19,316 | ||||||||||||||||||||||||||
Deferred revenue | 129,840 | | | 129,840 | | 129,840 | ||||||||||||||||||||||||||
Total Current Liabilities | 681,792 | 362 | (447,779 | ) | 234,375 | 26 | 234,401 | |||||||||||||||||||||||||
Long term liabilities:
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Long-term debt, net of current portion | 1,413,879 | | (279,180 | ) | (6 | ) | 1,134,699 | 79,978 | (6 | ) | 1,214,677 | |||||||||||||||||||||
Notes payable to related parties | | 950 | 400 | (4 | ) | |||||||||||||||||||||||||||
(1,350 | ) | (5 | ) | | | | ||||||||||||||||||||||||||
Deferred revenue, net of current portion | 1,840 | | | 1,840 | | 1,840 | ||||||||||||||||||||||||||
Deferred tax liability | 75,351 | | | 75,351 | | 75,351 | ||||||||||||||||||||||||||
Deferred underwriting fee | | 11,375 | (11,375 | ) | (2 | ) | | | | |||||||||||||||||||||||
Other liabilities | 17,337 | | | 17,337 | | 17,337 | ||||||||||||||||||||||||||
Total Liabilities | 2,190,199 | 12,687 | (739,284 | ) | 1,463,602 | 80,004 | 1,543,606 |
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Scenario 1
Assuming No Conversions into Cash |
Scenario 2
Assuming Maximum Conversions into Cash |
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(A)
Cision |
(B)
Capitol |
Pro Forma
Adjustments |
Pro Forma
Balance Sheet |
Pro Forma
Adjustments |
Pro Forma Balance Sheet | |||||||||||||||||||||||||||
Commitments and Contingencies
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Series A-1 and Series C-2 mandatorily redeemable stockholders equity | 714 | | (714 | ) | (8 | ) | | | | |||||||||||||||||||||||
Common stock subject to possible redemption | | 308,629 | (308,629 | ) | (7 | ) | | | | |||||||||||||||||||||||
Stockholders Equity (Deficit)
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Common stock/Ordinary shares | 22 | 1 | 3 | (7 | ) | |||||||||||||||||||||||||||
(14 | ) | (8 | ) | 12 | (1 | ) | (7 | ) | 11 | |||||||||||||||||||||||
Additional paid-in capital | 12,384 | 5,935 | 308,626 | (7 | ) | |||||||||||||||||||||||||||
443,970 | (8 | ) | 770,915 | (85,919 | ) | (7 | ) | 684,996 | ||||||||||||||||||||||||
Accumulated other comprehensive loss | (68,008 | ) | | | (68,008 | ) | | (68,008 | ) | |||||||||||||||||||||||
Accumulated deficit | (320,296 | ) | (936 | ) | (2,313 | ) | (2 | ) | ||||||||||||||||||||||||
(7,849 | ) | (3 | ) | |||||||||||||||||||||||||||||
(20,652 | ) | (6 | ) | |||||||||||||||||||||||||||||
936 | (8) | (351,110 | ) | 5,916 | (6 | ) | (345,194 | ) | ||||||||||||||||||||||||
Total Stockholders Equity (Deficit) | (375,898 | ) | 5,000 | 722,707 | 351,809 | (80,004 | ) | (271,805 | ) | |||||||||||||||||||||||
Total Liabilities and Stockholders Equity (Deficit) | $ | 1,815,015 | $ | 326,316 | $ | (325,920 | ) | $ | 1,815,411 | $ | | $ | 1,815,411 |
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(A) | Derived from the unaudited consolidated balance sheet of Cision as of March 31, 2017. |
(B) | Derived from the unaudited consolidated balance sheet of Capitol as of March 31, 2017. |
(1) | Represents the release of cash from investments held in the trust account. |
(2) | To reflect the payment of the deferred underwriting fee payable and estimated fees and expenses incurred by Capitol related to the Transactions. |
(3) | To reflect the payment of estimated fees and expenses incurred by Cision related to the Transactions, including legal, accounting and other professional fees and prepayment costs related to the repayment of a portion of Cisions Second Lien Credit Facility. |
(4) | To reflect $400 in additional loans from the Capitol Sponsors received by Capitol on April 20, 2017. |
(5) | To record the repayment of a total of $1,350 loans made by the Capitol Sponsors to Capitol in August 2016, February 2017 and April 2017. |
(6) | To record the repayment of a portion of Cisions Second Lien Credit Facility with cash released from the trust account after giving effect to payments to converting stockholders and the payment of fees and expenses in connection with the Transactions. Under Scenario 1, $299,832 of the principal of the Second Lien Credit Facility ($279,180 net of discount and deferred financing fees) and $88 of accrued interest is repaid. Under Scenario 2, $213,938 of the principal of the Second Lien Credit Facility ($199,202 net of discount and deferred financing fees) and $62 of accrued interest is repaid. |
(7) | In scenario 1, which assumes no Capitol stockholders exercise their conversion rights, the common stock subject to conversion into cash amounting to $308,629 would be transferred to permanent equity. In scenario 2, which assumes the maximum number of shares are converted into cash by the Capitol stockholders, $85,920 of the common stock subject to conversion would be paid out in cash and the remaining balance of $222,709 would be transferred to permanent equity. The $85,920, or 8,567,753 shares of common stock, represents the maximum conversion amount providing for a minimum cash of $225,000 to be released from Capitols trust account after giving effect to payments to converting shareholders, repayment of loans from the Capitol Sponsors, and certain other fees and expenses per the Merger Agreement based on a consummation of the Transactions on March 31, 2017. |
(8) | To reflect recapitalization of Cision through the contribution of all the share capital and CPECs in Cision to Holdings, the issuance of 82,100,000 ordinary shares of Holdings (under scenario 1) or 81,678,203 ordinary shares of Holdings (under Scenario 2) and the elimination of the historical accumulated deficit of Capitol, the accounting acquiree. |
87
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Scenario 1
Assuming No Conversions into Cash |
Scenario 2
Assuming Maximum Conversions into Cash |
|||||||||||||||||||||||||||||||
(A)
Cision |
(B)
Capitol |
Pro Forma Adjustments | Pro Forma Income Statement | Pro Forma Adjustments | Pro Forma Income Statement | |||||||||||||||||||||||||||
Revenue | $ | 145,818 | $ | | $ | | $ | 145,818 | $ | | $ | 145,818 | ||||||||||||||||||||
Cost of revenue | 45,066 | | | 45,066 | | 45,066 | ||||||||||||||||||||||||||
Gross Profit | 100,752 | | | 100,752 | | 100,752 | ||||||||||||||||||||||||||
Operating costs and expenses:
|
||||||||||||||||||||||||||||||||
Sales and marketing | 27,290 | | | 27,290 | | 27,290 | ||||||||||||||||||||||||||
Research and development | 5,452 | | | 5,452 | | 5,452 | ||||||||||||||||||||||||||
General and administrative | 40,232 | 506 | (3,367 | ) | (4 | ) | 37,371 | | 37,371 | |||||||||||||||||||||||
Amortization of intangible assets | 21,011 | | | 21,011 | | 21,011 | ||||||||||||||||||||||||||
Total operating costs and expenses | 93,985 | 506 | (3,367 | ) | 91,124 | | 91,124 | |||||||||||||||||||||||||
Operating income (loss) | 6,767 | (506 | ) | 3,367 | 9,628 | | 9,628 | |||||||||||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||||||||||
Foreign exchange losses | (1,948 | ) | | | (1,948 | ) | | (1,948 | ) | |||||||||||||||||||||||
Interest income and other income (expense) | 2,049 | 340 | (340 | ) | (1 | ) | 2,049 | | 2,049 | |||||||||||||||||||||||
Interest expense | (36,915 | ) | | 8,587 | (2 | ) | (28,328 | ) | (2,460 | ) | (2 | ) | (30,788 | ) | ||||||||||||||||||
Loss before income taxes | (30,047 | ) | (166 | ) | 11,614 | (18,599 | ) | (2,460 | ) | (21,059 | ) | |||||||||||||||||||||
Provision for (benefit from) income taxes | (7,054 | ) | | 916 | (3 | ) | (6,138 | ) | (812 | ) | (3 | ) | (6,949 | ) | ||||||||||||||||||
Net income (loss) | $ | (22,993 | ) | $ | (166 | ) | $ | 10,698 | $ | (12,461 | ) | $ | (1,648 | ) | $ | (14,110 | ) | |||||||||||||||
Weighted average shares outstanding, basic and diluted | 9,814,869 | 111,275,821 | (5 | ) | 121,090,690 | (10,709,691 | ) | (5 | ) | 110,380,999 | ||||||||||||||||||||||
Basic and diluted net loss per share | $ | (0.02 | ) | $ | (0.10 | ) | $ | (0.13 | ) |
88
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Scenario 1
Assuming No Conversions into Cash |
Scenario 2
Assuming Maximum Conversions into Cash |
|||||||||||||||||||||||||||||||
(C)
Cision |
(D)
Capitol |
Pro Forma Adjustments | Pro Forma Income Statement | Pro Forma Adjustments | Pro Forma Income Statement | |||||||||||||||||||||||||||
Revenue | $ | 467,772 | $ | | $ | | $ | 467,772 | $ | | $ | 467,772 | ||||||||||||||||||||
Cost of revenue | 162,583 | | | 162,583 | | 162,583 | ||||||||||||||||||||||||||
Gross profit | 305,189 | | | 305,189 | | 305,189 | ||||||||||||||||||||||||||
Operating costs and expenses:
|
||||||||||||||||||||||||||||||||
Sales and marketing | 92,594 | | | 92,594 | | 92,594 | ||||||||||||||||||||||||||
Research and development | 19,445 | | | 19,445 | | 19,445 | ||||||||||||||||||||||||||
General and administrative | 135,737 | 1,491 | | 137,228 | | 137,228 | ||||||||||||||||||||||||||
Amortization of intangible assets | 77,058 | | | 77,058 | | 77,058 | ||||||||||||||||||||||||||
Total operating costs
and expenses |
324,834 | 1,491 | | 326,325 | | 326,325 | ||||||||||||||||||||||||||
Operating loss | (19,645 | ) | (1,491 | ) | | (21,136 | ) | | (21,136 | ) | ||||||||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||||||||||
Foreign exchange gains | 6,299 | | | 6,299 | | 6,299 | ||||||||||||||||||||||||||
Equity in earnings of unconsolidated affiliate | 241 | | | 241 | | 241 | ||||||||||||||||||||||||||
Interest income and other income (expense) | 590 | 838 | (838 | ) | (1 | ) | 590 | | 590 | |||||||||||||||||||||||
Interest expense | (117,997 | ) | | 32,902 | (2 | ) | (85,095 | ) | (5,778 | ) | (2 | ) | (90,873 | ) | ||||||||||||||||||
Loss on extinguishment of debt | (23,591 | ) | | | (23,591 | ) | | (23,591 | ) | |||||||||||||||||||||||
Loss before income taxes | (154,103 | ) | (653 | ) | 32,064 | (122,692 | ) | (5,778 | ) | (128,470 | ) | |||||||||||||||||||||
Provision for (benefit from) income taxes | (55,691 | ) | | 15,203 | (3 | ) | (40,488 | ) | (1,907 | ) | (3 | ) | (42,395 | ) | ||||||||||||||||||
Net income (loss) | $ | (98,412 | ) | $ | (653 | ) | $ | 16,861 | $ | (82,204 | ) | $ | (3,871 | ) | $ | (86,075 | ) | |||||||||||||||
Weighted average shares outstanding, basic and diluted | 9,735,456 | 111,310,131 | (5 | ) | 121,045,587 | (10,709,691 | ) | (5 | ) | 110,335,896 | ||||||||||||||||||||||
Basic and diluted net loss per share | $ | (0.07 | ) | $ | (0.68 | ) | $ | (0.78 | ) |
89
(A) | Derived from the unaudited consolidated statements of operations of Cision for the three months ended March 31, 2017. |
(B) | Derived from the unaudited consolidated statements of operations of Capitol for the three months ended March 31, 2017. |
(C) | Derived from the consolidated statements of operations of Cision for the year ended December 31, 2016. |
(D) | Derived from the audited statements of operations of Capitol for the year ended December 31, 2016. |
(1) | Represents an adjustment to eliminate interest income on marketable securities held in the trust account as of the beginning of the period, respectively. |
(2) | Represents an adjustment to eliminate interest expense on Cisions Second Lien Credit Facility to be repaid in part in connection with the Transactions as of the beginning of the period. |
(3) | To record normalized blended statutory income tax benefit rate of 33.0% for pro forma financial presentation purposes. |
(4) | Represents an adjustment to eliminate direct, incremental costs of the Transactions which are reflected in the historical financials statements of Cision and Capitol in the amount of $3,201 and $166 as of March 31, 2017, respectively. There were no such amounts recorded as of December 31, 2016. |
(5) | As the Transactions are being reflected as if they had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Transactions have been outstanding for the entire period presented. Weighted average common shares outstanding basic and diluted are calculated as follows: |
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||||||||||||
Scenario 1
Combined (Assuming No Conversions into Cash) |
Scenario 2
Combined (Assuming Maximum Conversions into Cash) |
|||||||||||||||
Three Months Ended March 31,
2017 |
Year
Ended December 31, 2016 |
Three Months Ended March 31,
2017 |
Year
Ended December 31, 2016 |
|||||||||||||
Capitol weighted average shares outstanding | 9,814,869 | 9,735,456 | 9,814,689 | 9,735,456 | ||||||||||||
Capitol shares forfeited and cancelled | (1,600,000 | ) | (1,600,000 | ) | (3,320,141 | ) | (3,320,141 | ) | ||||||||
Capitol shares subject to conversion reclassified to equity | 30,775,821 | 30,810,131 | 22,208,068 | 22,242,378 | ||||||||||||
Capitol shares issued in Transactions | 82,100,000 | 82,100,000 | 81,678,203 | 81,678,203 | ||||||||||||
Weighted average shares outstanding | 121,090,690 | 121,045,587 | 110,380,999 | 110,335,896 | ||||||||||||
Percent of shares owned by Cision holders | 67.8 | % | 67.8 | % | 74.0 | % | 74.0 | % | ||||||||
Percent of shares owned by Capitol | 32.2 | % | 32.2 | % | 26.0 | % | 26.0 | % | ||||||||
Weighted average shares calculation, basic and diluted
|
||||||||||||||||
Existing Cision holders | 82,100,000 | 82,100,000 | 81,678,203 | 81,678,203 | ||||||||||||
Capitol holders | 38,990,690 | 38,945,587 | 28,702,796 | 28,657,693 | ||||||||||||
Weighted average shares, basic and diluted | 121,090,690 | 121,045,587 | 110,380,999 | 110,335,896 |
The computation of diluted loss per share excludes (1) the effect of warrants to purchase 24,500,000 shares of Holdings common stock under scenario 1, (2) the effect of warrants to purchase 22,325,109 shares of Holdings common stock under scenario 2, and (3) an aggregate of 6,000,000 additional ordinary shares that may be issued to Cision Owner upon the achievement of specified share price thresholds because the inclusion of any of these would be anti-dilutive.
90
On June 16, 2016, Cision acquired PR Newswire (PR Newswire), a global leader in public relations and investor relations communications and related services from United Business Media, plc. The operating results of PR Newswire are included in Cisions consolidated statements of operations from June 16, 2016. Cision is supplementally providing the following additional pro forma financial information to reflect the acquisition of PR Newswire as if the transaction had occurred on January 1, 2016. This information is presented because it may be considered material to an understanding of Cision and a stockholders vote on the Transactions. The pro forma information below begins with the pro forma income statement which reflects the pro forma adjustments related to the Transactions.
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Scenario 1 Assuming No Conversions into Cash | Scenario 2 Assuming Maximum Conversions into Cash | |||||||||||||||||||||||||||||||||||||||
Pro Forma
Income Statement |
(A)
PR Newswire |
Pro Forma
Adjustments |
Adjusted Pro
Forma Income Statement |
Pro Forma
Income Statement |
(A)
PR Newswire |
Pro Forma
Adjustments |
Adjusted Pro
Forma Income Statement |
|||||||||||||||||||||||||||||||||
Revenue | $ | 467,772 | $ | 146,542 | $ | 1,168 | (1 | ) | $ | 615,482 | $ | 467,772 | $ | 146,542 | $ | 1,168 | (1 | ) | $ | 615,482 | ||||||||||||||||||||
Cost of revenue | 162,583 | 47,566 | (363 | ) | (1 | ) | 209,786 | 162,583 | 47,566 | (363 | ) | (1 | ) | 209,786 | ||||||||||||||||||||||||||
Gross profit | 305,189 | 98,976 | 1,531 | 405,696 | 305,189 | 98,976 | 1,531 | 405,696 | ||||||||||||||||||||||||||||||||
Operating costs and expenses:
|
||||||||||||||||||||||||||||||||||||||||
Sales and marketing | 92,594 | 26,496 | (57 | ) | (1 | ) | 119,033 | 92,594 | 26,496 | (57 | ) | (1 | ) | 119,033 | ||||||||||||||||||||||||||
Research and development | 19,445 | 6,687 | (108 | ) | (1 | ) | 26,024 | 19,445 | 6,687 | (108 | ) | (1 | ) | 26,024 | ||||||||||||||||||||||||||
General and administrative | 137,228 | 36,236 | (22,400 | ) | (1 | ) | 151,064 | 137,228 | 36,236 | (22,400 | ) | (1 | ) | 151,064 | ||||||||||||||||||||||||||
Amortization of intangible assets | 77,058 | 27,013 | | 104,071 | 77,058 | 27,013 | | 104,071 | ||||||||||||||||||||||||||||||||
Total operating costs
and expenses |
326,325 | 96,432 | (22,565 | ) | 400,192 | 326,325 | 96,432 | (22,565 | ) | 400,192 | ||||||||||||||||||||||||||||||
Operating (loss) income | (21,136 | ) | 2,544 | 24,096 | 5,504 | (21,136 | ) | 2,544 | 24,096 | 5,504 | ||||||||||||||||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||||||||||||||||||
Foreign exchange gains (losses) | 6,299 | (299 | ) | | 6,000 | 6,299 | (299 | ) | | 6,000 | ||||||||||||||||||||||||||||||
Equity in earnings of unconsolidated affiliate | 241 | 211 | | 452 | 241 | 211 | | 452 | ||||||||||||||||||||||||||||||||
Interest income and other income (expense) | 590 | (161 | ) | | 429 | 590 | (161 | ) | | 429 | ||||||||||||||||||||||||||||||
Interest expense | (85,095 | ) | (11,812 | ) | | (96,907 | ) | (90,873 | ) | (11,812 | ) | | (102,685 | ) | ||||||||||||||||||||||||||
Loss on extinguishment of
debt |
(23,591 | ) | | | (23,591 | ) | (23,591 | ) | | | (23,591 | ) | ||||||||||||||||||||||||||||
Loss before income taxes | (122,692 | ) | (9,517 | ) | 24,096 | (108,113 | ) | (128,470 | ) | (9,517 | ) | 24,096 | (113,891 | ) | ||||||||||||||||||||||||||
Provision for (benefit) income taxes | (40,488 | ) | (2,760 | ) | 7,571 | (2 | ) | (35,677 | ) | (42,395 | ) | (2,760 | ) | 7,571 | (37,584 | ) | ||||||||||||||||||||||||
Net income (loss) | $ | (82,204 | ) | $ | (6,757 | ) | $ | 16,524 | $ | (72,436 | ) | $ | (86,075 | ) | $ | (6,757 | ) | $ | 16,524 | $ | (76,307 | ) | ||||||||||||||||||
Weighted average shares outstanding, basic and diluted | 121,045,587 | 121,045,587 | 110,335,896 | 110,335,896 | ||||||||||||||||||||||||||||||||||||
Basic and diluted net
loss per share |
$ | (0.68 | ) | $ | (0.60 | ) | $ | (0.78 | ) | $ | (0.69 | ) | ||||||||||||||||||||||||||||
Weighted average shares outstanding, diluted | 121,045,587 | 121,045,587 | 110,335,896 | 110,335,896 | ||||||||||||||||||||||||||||||||||||
Diluted net income
(loss) per share |
$ | (0.68 | ) | $ | (0.60 | ) | $ | (0.78 | ) | $ | (0.69 | ) |
(A) | Represents the results of operations of PR Newswire for the period from January 1, 2016 through June 15, 2016. |
(1) | Revenue was adjusted to account for a fair market value adjustment to deferred revenue required under purchase accounting rules resulting from the acquisition of PR Newswire. Cost of revenue, sales and marketing, research and development and general and administrative expenses were adjusted to account for acquisition costs incurred in the acquisition. The adjustments to cost of revenue, sales and marketing, and research and development were predominantly travel costs incurred by Cision employees in connection with the acquisition. The adjustment to general and administrative expense includes legal fees, professional fees, investment banking fees and travel costs incurred by Cision employees in connection with the acquisition. |
(2) | To record normalized blended statutory income tax expense rate of 33% for pro forma financial presentation purposes. |
91
The charter proposals, if approved, will approve the following material differences between the constitutional documents of Holdings that will be in effect upon the closing of the Transactions and Capitols current amended and restated certificate of incorporation:
| the name of the new public entity will be Cision Ltd. as opposed to Capitol Acquisition Corp. III; |
| Holdings will have 480,000,000 authorized ordinary shares and 20,000,000 authorized preferred shares, as opposed to Capitol having 120,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock; and |
| Holdings constitutional documents do not include the various provisions applicable only to specified purpose acquisition corporations that Capitols amended and restated certificate of incorporation contains. |
This vote, however, will not actually result in stockholders of Capitol approving Holdings' constitutional documents or amendments to Capitol's corporate governing documents but instead will simply approve the aforementioned material differences in the two sets of documents.
In the judgment of Capitols board of directors, the charter proposals are desirable for the following reasons:
| The name of the new public entity is desirable to reflect the business combination with Cision and the combined business going forward. |
| The greater number of authorized number of shares of capital stock is desirable for Holdings to have sufficient shares to issue to the holders of common stock and warrants of Capitol and Cision Owner to complete the business combination and have additional authorized shares for financing its business, for acquiring other businesses, for forming strategic partnerships and alliances and for stock dividends and stock splits. |
| The provisions that relate to the operation of Capitol as a blank check company prior to the consummation of its initial business combination and would not be applicable to Holdings (such as the obligation to dissolve and liquidate if a business combination is not consummated in a certain period of time). |
Notwithstanding the foregoing, authorized but unissued ordinary shares may enable Holdings board of directors to render it more difficult or to discourage an attempt to obtain control of Holdings and thereby protect continuity of or entrench its management, which may adversely affect the market price of Holdings securities. If, in the due exercise of its fiduciary obligations, for example, Holdings board of directors were to determine that a takeover proposal were not in the best interests of Holdings, such shares could be issued by the board of directors without shareholder approval in one or more private placements or other transactions that might prevent or render more difficult or make more costly the completion of any attempted takeover transaction by diluting voting or other rights of the proposed acquirer or insurgent stockholder group, by creating a substantial voting block in institutional or other hands that might support the position of the incumbent board of directors, by effect effecting an acquisition that might complicate or preclude the takeover, or otherwise. The authorization of additional shares will, however, enable Holdings to have the flexibility to authorize the issuance of shares in the future for financing its business, for acquiring other businesses, for forming strategic partnerships and alliances and for stock dividends and stock splits. Holdings currently has no such plans, proposals, or arrangements, written or otherwise, to issue any of the additional authorized shares for such purposes.
If the business combination proposal is not approved, the charter proposals will not be presented at the annual meeting.
The approval of each charter proposal will require the affirmative vote of the holders of a majority of the outstanding shares of Capitol common stock on the record date.
92
Under the Merger Agreement, the approval of the charter proposals is a condition to the adoption of the business combination proposal and vice versa.
A copy of Holdings constitutional documents, as will be in effect assuming approval of all of the charter proposals and upon consummation of the business combination and filing with the Cayman Islands registrar, is attached to this proxy statement as Annex B .
CAPITOLS BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF EACH OF THE CHARTER PROPOSALS.
93
At the annual meeting, seven directors will be elected who will be the directors of Holdings upon consummation of the Transactions, and one board seat will remain vacant. Holdings board of directors will be divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to Holdings first annual meeting of shareholders) serving a three-year term. If managements nominees are elected, L. Dyson Dryden and Stephen P. Master will be Class I directors serving until the general meeting of shareholders to be held in 2018, Stuart Yarbrough and Kevin Akeroyd will be Class II directors serving until the general meeting to be held in 2019 and Mark D. Ein, Mark M. Anderson and Philip Canfield will be Class III directors serving until the general meeting to be held in 2020 and, in each case, until their successors are elected and qualified.
Under Delaware law, the election of directors requires a plurality vote of the shares of common stock present in person or represented by proxy and entitled to vote at the annual meeting. Plurality means that the individuals who receive the largest number of votes cast FOR are elected as directors. Consequently, any shares not voted FOR a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominees favor.
Unless authority is withheld or the shares are subject to a broker non-vote, the proxies solicited by the board of directors will be voted FOR the election of these nominees. In case any of the nominees becomes unavailable for election to the board of directors, an event that is not anticipated, the persons named as proxies, or their substitutes, will have full discretion and authority to vote or refrain from voting for any other candidate in accordance with their judgment.
If the business combination proposal is not approved or any of the charter proposals is not approved and the applicable condition in the Merger Agreement is not waived, the director election proposal will not be presented at the meeting.
Following consummation of the Transactions, the election of directors of Holdings will be governed by its charter documents, the laws of the Cayman Islands and the Nominating Agreement described below.
CAPITOLS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CAPITOL STOCKHOLDERS VOTE FOR EACH OF THE NOMINEES LISTED IN THIS PROXY STATEMENT/PROSPECTUS.
94
At the effective time of the business combination, in accordance with the terms of the Merger Agreement, and assuming the election of the nominees set forth above, the board of directors and executive officers of Holdings will be as follows:
|
|
|
||
Name | Age | Position | ||
Executive Officers:
|
||||
Kevin Akeroyd | 48 | President, Chief Executive Officer and Director | ||
Jack Pearlstein | 53 | Executive Vice President and Chief Financial Officer | ||
Jason Edelboim | 40 | President, Americas | ||
Yujie Chen | 47 | President, Asia-Pacific | ||
Sean ODriscoll | 47 | Senior Vice President, Global Insights | ||
Robert Coppola | 46 | Chief Information Officer | ||
Chris Lynch | 32 | Chief Marketing Officer | ||
Non-Employee Directors:
|
||||
Mark M. Anderson (2) (3) | 41 | Director and Chairman of the Board | ||
Philip A. Canfield (3) | 49 | Director | ||
L. Dyson Dryden (1) (2) | 41 | Director | ||
Mark D. Ein (1) (3) | 52 | Director and Vice-Chairman of the Board | ||
Stephen P. Master (2) | 33 | Director | ||
Stuart Yarbrough (1) | 66 | Director |
(1) | Member of the Audit Committee |
(2) | Member of the Corporate Governance and Nominating Committee |
(3) | Member of the Compensation Committee |
Kevin Akeroyd. Mr. Akeroyd has served as Cisions Chief Executive Officer and President since August 2016. Mr. Akeroyd has over 25 years of experience in digital, social and mobile marketing globally. Prior to joining Cision, Mr. Akeroyd was General Manager and Senior Vice President at Oracle Marketing Cloud from September 2013 to August 2016. Mr. Akeroyd and Oracle created and led the Enterprise Marketing Platform category. Prior to Oracle, he held senior leadership positions at Badgeville from September 2011 to September 2013, Salesforce.com (Jigsaw/Data.com) from September 2007 to August 2011. Mr. Akeroyd holds a degree from the University of Washington, Michael G. Foster School of Business and attended the EPSO program at the Stanford University Graduate School of Business.
The parties determined that Mr. Akeroyds extensive experience in the global digital, social and mobile marketing industry as well as extensive experience operating and advising similar companies qualifies him to serve as a director on Holdings board of directors.
Jack Pearlstein. Mr. Pearlstein has served as Cisions Chief Financial Officer of Cision since June 2014. Previously, from June 2009 to November 2013, he was chief financial officer of Six3 Systems, Inc., a leading provider of software development, sensor development and signal processing services to the US intelligence community. As a chief financial officer, Mr. Pearlstein has led three different companies through their initial public offerings: AppNet from May 1999 to September 2000, DigitalNet from September 2001 to November 2004 and Solera from April 2006 to March 2009. Mr. Pearlstein is a CPA and received his Bachelor of Science in accounting from New York University. He also holds an MBA in finance from The George Washington University.
Jason Edelboim. Mr. Edelboim has served as Cisions President of the Americas since December 2016. Mr. Edelboim was named President of PR Newswire in June 2016, and prior to that was a Senior Vice President at PR Newswire from June 2013 to June 2016. Mr. Edelboim has over 15 years of experience at the intersection of media and technology. He previously worked at Bloomberg LP from 2003 to 2009 where he held progressing leadership roles within the companys Media Group. Mr. Edelboim holds an MBA from the Stern School of Business at New York University and a BA from Columbia University.
95
Yujie Chen. Mr. Chen joined PR Newswire in November 2003 and was promoted from Managing Director (China) to head PR Newswires business for the entire Asia-Pacific region in June 2013. Prior to PR Newswire, Mr. Chen worked in a number of media and publishing industry roles, including with CNBC Asia from June 2013 to November 2003, Deluxe Global Media from September 2001 to June 2003 and Beijing Television from February 1996 to August 1999. Chen holds an MBA degree from the Anderson School of Management at UCLA.
Sean ODriscoll. Mr. ODriscoll joined Cision in September 2016 from PricewaterhouseCoopers (PwC) where he was a Partner with global leadership responsibilities for Digital Transformation, Social and Community Technologies practices from September 2012 to January 2015. He also ran his own agency, Ants Eye View, from January 2009 to September 2012 and has held several senior leadership positions at Microsoft, including General Manager of their MVP Program and Community Support organization from February 2004 to August 2008. Mr. ODriscoll holds a Bachelors in Business Administration, Marketing and a Bachelors in Philosophy from Pacific University.
Robert Coppola. Mr. Coppola is responsible for managing and enhancing Cisions technology capabilities and security posture on a global basis. Mr. Coppola joined Cision to serve as the Chief Information Officer in July 2016. Prior to joining Cision, Mr. Coppola spent four years from June 2011 to September 2015 with McGraw-Hill Financial as the Chief Information and Technology Officer for S&P Capital IQ and S&P Dow Jones Indices, a leading provider of ratings, benchmarking and analytics in the global capital and commodity markets. There, he was responsible for driving the overarching technology strategy, architecture and development in addition to evolving multiple silo-based teams into one global operating team. He has also held leadership positions with Thomson Reuters from November 2003 to June 2011 and Bloomberg LP from September 1992 to November 2003. Mr. Coppola holds a Bachelors in Economics from Rutgers University.
Chris Lynch. Mr. Lynch has served as Chief Marketing Officer of Cision since November 2016. Mr. Lynch is responsible for Cisions global marketing strategy, which includes communications, product and digital marketing. From January 2014 to October 2016, he ran product marketing and go-to-market strategy for Oracles Marketing Cloud business and also held leadership positions at Badgeville from February 2012 to January 2014 and TIBCO from June 2011 to January 2012. Mr. Lynch attended Northeastern University where he received his Bachelor of Arts in Journalism.
Mark M. Anderson. Mr. Anderson joined GTCR in 2000 and is currently a Managing Director of the firm. He previously worked at Gracie Capital and at Bowles Hollowell Conner & Co. He holds an MBA from Harvard Business School and a BS from the McIntire School of Commerce at the University of Virginia. Mr. Anderson currently is a Director of Cision, Global Traffic Network, Beeline, Lytx, Rural Broadband Investments and XIFIN. In addition, Mr. Anderson was previously a Director of GTCRs past investments including CAMP Systems, Land Lease Group and Landmark Aviation, and was instrumental in other GTCR investments including Skylight Financial, Solera and Transaction Network Services. Mr. Anderson serves on the board of the Chicago Foundation for Education, a non-profit organization that seeks to improve the educational experience of Chicagos public school children.
The parties determined that Mr. Andersons directorship experience and experience advising similar companies qualifies him to serve as a director on Holdings board of directors.
Philip A. Canfield. Mr. Canfield is a Managing Director of private equity firm GTCR LLC and currently co-heads GTCRs Technology, Media and Telecommunications investment team. Mr. Canfield joined GTCR in 1992 and became a Principal in 1997. From 1990 to 1992, Mr. Canfield worked in the Corporate Finance Department at Kidder, Peabody and Company. Mr. Canfield has served as a Director of Zayo Group Holdings, Inc. since July 2012 and is the Chairman of its Nominating & Governance Committee. Mr. Canfield currently serves on several private company boards. He holds an M.B.A. from the University of Chicago and a B.B.A. in finance with High Honors from the Honors Business Program at the University of Texas.
The parties determined that Mr. Canfields extensive experience in corporate finance and in the telecommunications industry qualifies him to serve as a director on Holdings board of directors.
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L. Dyson Dryden. Mr. Dryden has served as Capitols President, Chief Financial Officer, Treasurer, Secretary and a member of the Board of Directors since its inception. From March 2013 to July 2015, Mr. Dryden served as the Chief Financial Officer and a Director of Capitol II. Mr. Dryden has continued to serve as a director of Lindblad Expeditions since the closing of its business combination. Mr. Dryden is also the founder of Dryden Capital Management, LLC, a private investment firm that invests in and builds private companies, and has served as its President since March 2013. From August 2005 to February 2013, Mr. Dryden worked in Citigroups Investment Banking division in New York, most recently as a Managing Director where he led the coverage effort for a number of the firms Global Technology, Media and Telecommunications clients. From 2000 to 2005, Mr. Dryden held the titles of Associate and Vice President at Jefferies & Company, a middle market investment banking firm. From 1998 to 2000, Mr. Dryden worked in the investment banking group at BB&T Corporation. Mr. Dryden holds a B.S. in Business Administration with a dual concentration in finance and management from the University of Richmond.
The parties determined that Mr. Drydens corporate finance and public company experience qualifies him to serve as a director on Holdings board of directors.
Mark D. Ein. Mr. Ein has served as Capitols Chairman, Chief Executive Officer and Director since its inception. Mr. Ein is an investor, entrepreneur and philanthropist, who has created, acquired, invested in and built a series of growth companies across a diverse set of industries over the course of his 25-year career. From August 2010 to July 2015, Mr. Ein was the Chairman of the Board, Chief Executive Officer, Treasurer and Secretary of Capitol II, a blank check company formed for substantially similar purposes as our company. Capitol II completed its business combination with Lindblad Expeditions, Inc. in July 2015. Since the closing of the business combination, Mr. Ein has continued to serve as the Chairman of the Board of Capitol II and now post-merger Lindblad Expeditions Holdings, Inc.). From June 2007 to October 2009, Mr. Ein was the Chief Executive Officer and Director of Capitol I, a blank check company formed for substantially similar purposes as our company. Capitol I completed its business combination with Two Harbors Investment Corp., a Maryland real estate investment trust, in October 2009. From October 2009 to May 2015, Mr. Ein served as the Non-Executive Vice Chairman of Two Harbors board of directors. Mr. Ein is the Founder of Venturehouse Group, LLC, a holding company that creates, invests in and builds companies, and has served as its Chairman and Chief Executive Officer since 1999. Venturehouses portfolio includes or has included the seed investment in Matrics Technologies in August 2000 (sold to Symbol Technologies in September 2004), the lead investment in the buyout of Cibernet Corporation from the CTIA in March 2003 (sold to MACH S.à.r.l. in April 2007), the acquisition of VSGi from Net2000 Communications, and an early investment in XM Satellite Radio. He has also been the President of Leland Investments Inc., a private investment firm, since 2005. Mr. Ein is Co-Chairman of Kastle Holding Company LLC, which through its subsidiaries conducts the business of Kastle Systems, LLC, a provider of building and office security systems that was acquired in January 2007. An entity owned by Mr. Ein is also the majority owner and managing member of Kastle Holding Company LLC. In 2008, Mr. Ein founded and is the owner of the Washington Kastles, the World Team Tennis franchise in Washington, D.C., that has won the league championship six times in its nine years in the league. In March, 2017, Mr Ein led the acquisition of World TeamTennis LLC, the professional team tennis league of which the Washington Kastles are a franchisee, from Billie Jean King and is now its Chairman. Previously in his career, Mr. Ein worked for The Carlyle Group, Brentwood Associates, and Goldman, Sachs & Co. Mr. Ein is the Chairman of the Board of Visual Systems Group, Inc (VSGi), a provider of videoconferencing services. Mr. Ein is also the Chairman of the Board of the District of Columbia Public Education Fund and Vice President of the board of directors of the United States Tennis Association and a member of the boards of The District of Columbia College Access Program (DC-CAP) and the International Tennis Hall of Fame. He was appointed by Mayor Vincent Gray to be a member of the D.C. Tax Revision Commission and also serves on the Executive Committee of the Federal City Council. Mr. Ein received a B.S. in Economics with a concentration in Finance from the University of Pennsylvanias Wharton School of Finance and an M.B.A. from the Harvard Business School.
The parties determined that Mr. Eins public company experience, operational experience and his business contacts qualifies him to serve as a director on Holdings board of directors.
Stephen P. Master. Mr. Master joined GTCR in January 2008 and became a Vice President in September 2012. Prior to joining GTCR, Mr. Master worked as an Analyst in the Telecommunications and Mergers &
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Acquisitions groups at UBS Investment Bank from June 2006 to December 2007. He holds an MBA with honors from the University of Chicago and a BA summa cum laude from Northwestern University in mathematical methods in the social sciences and economics. He is currently a Director of Cision, Inteliquent, Beeline and Park Place and played an instrumental role in GTCRs investment in Landmark Aviation. He was previously a Director of Protection 1.
The parties determined that Mr. Masters experience in finance and in advising similar companies qualifies him to serve as a director on Holdings board of directors.
Stuart Yarbrough. Mr. Yarbroughs professional experience includes over 24 years in public accounting, primarily with Ernst & Young and BDO Seidman, LLP. Since June 2008, Mr. Yarbrough has been a private investor. From February 2007 through its final distributions during June 2008, Mr. Yarbrough served as the chief executive officer of 3Point Capital Partners, a private equity firm. From 1994 through February 2007, Mr. Yarbrough was a principal at CrossHill Financial Group Inc., a company he co-founded, which provided investment banking services and venture debt financing to growth companies. Mr. Yarbrough previously served on the board of directors of Solera Holdings, Inc. and DigitalNet Holdings, Inc., as well as several other public companies. Mr. Yarbrough has a B.A. in management sciences from Duke University.
The parties determined Mr. Yarbroughs extensive practical and management experience in public accounting and corporate finance, as well as leadership expertise through his directorship roles in public companies, including service on audit and other board of directors committees, qualifies him to serve as a director on Holdings board of directors.
The parties to the Merger Agreement agreed that the initial board would be comprised of eight persons, including Messrs. Ein and Dryden and three persons designated by Cision Owner. Messrs. Anderson, Canfield and Master will be designated by Cision Owner as its three designees under the Nominating Agreement.
There are no family relationships between any of Holdings executive officers and directors or director nominees.
As a result of its ordinary shares being listed on the New York Stock Exchange following consummation of the business combination, Holdings will adhere to the rules of such exchange in determining whether a director is independent. The board of directors of Holdings has consulted, and will consult, with its counsel to ensure that the boards determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors. The New York Stock Exchange listing standards generally define an independent director as a person, other than an executive officer of a company or any other individual having a relationship which, in the opinion of the issuers board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The parties have determined that Messrs. Anderson, Canfield, Ein, Dryden, Master and Yarbrough will be considered independent directors. Holdings independent directors will have regularly scheduled meetings at which only independent directors are present.
For purposes of New York Stock Exchange rules, we will be a controlled company after completion of the Transactions. Controlled companies under those rules are companies of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. Upon completion of the Transaction, Cision Owner will continue to control more than 50% of the voting power of Holdings ordinary shares and will have certain director nomination rights. For more information relating to Cision Owners director nomination rights, see the section entitled The Business Combination Agreement Related Agreements Nominating Agreement . Accordingly, it is anticipated that Holdings will be eligible to, and the parties intend to, take advantage of certain exemptions from corporate governance requirements provided in the New York Stock Exchange rules. Specifically, as a controlled company, Holdings will not be required to have (1) a majority of independent directors, (2) a Nominating and Corporate Governance Committee
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composed entirely of independent directors, (3) a Compensation Committee composed entirely of independent directors or (4) an annual performance evaluation of the Nominating and Corporate Governance Committee and Compensation Committee. Therefore, following consummation of the Transactions, Holdings may not have a majority of independent directors, its Compensation, Nominating and Corporate Governance Committee may not consist entirely of independent directors and such committees may not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to shareholders of listed companies that are subject to all of the applicable corporate governance requirements. In the event that Holdings ceases to be a controlled company, it will be required to comply with those requirements within specified transition periods.
The controlled company exemption does not modify the independence requirements for the Audit Committee, and Holdings intends to comply with the requirements of the New York Stock Exchange rules with respect thereto.
Our board of directors will oversee the risk management activities designed and implemented by our management. Our board of directors will execute its oversight responsibility both directly and through its committees. Our board of directors will also consider specific risk topics, including risks associated with our strategic initiatives, business plans and capital structure. Our management, including our executive officers, is primarily responsible for managing the risks associated with operation and business of the company and will provide appropriate updates to the board of directors and the audit committee. Our board of directors will delegate to the audit committee oversight of its risk management process, and our other committees will also consider risk as they perform their respective committee responsibilities. All committees will report to the board of directors as appropriate, including when a matter rises to the level of material or enterprise risk.
Upon consummation of the business combination, Holdings will establish a separately standing audit committee, corporate governance and nominating committee and compensation committee.
Effective upon consummation of the business combination, Holdings will establish an audit committee comprised of independent directors. It is expected that the audit committee will initially consist of Stuart Yarbrough, Mark D. Ein and L. Dyson Dryden. Each of the member of the audit committee will be independent under the applicable listing standards. The audit committee will have a written charter. The purpose of the audit committee will be, among other things, to appoint, retain, set compensation of, and supervise Holdings independent accountants, review the results and scope of the audit and other accounting related services and review Holdings accounting practices and systems of internal accounting and disclosure controls.
The audit committee will at all times be composed exclusively of independent directors, as defined for audit committee members under the New York Stock Exchange listing standards and the rules and regulations of the SEC, who are financially literate. Financially literate generally means being able to read and understand fundamental financial statements, including a companys balance sheet, income statement and cash flow statement. In addition, Holdings will be required to certify to the exchange that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individuals financial sophistication.
Stuart Yarbrough will serve as a financial expert on the Audit Committee.
Effective upon consummation of the business combination, Holdings will establish a corporate governance and nominating committee of the board of directors comprised of Mark M. Anderson, L. Dyson Dryden and Stephen P. Master. Each member of the corporate governance and nominating committee will be independent under the applicable listing standards. The corporate governance and nominating committee will have a written charter. The corporate governance and nominating committee will be responsible for overseeing the selection of persons to be nominated to serve on Holdings board of directors.
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The corporate governance and nominating committee will consider persons identified by its members, management, stockholders, investment bankers and others. The guidelines for selecting nominees, which are specified in the corporate governance and nominating committee charter, generally provide that persons to be nominated:
| should have demonstrated notable or significant achievements in business, education or public service; |
| should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and |
| should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders. |
The corporate governance and nominating committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a persons candidacy for membership on the board of directors. The corporate governance and nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The corporate governance and nominating committee will not distinguish among nominees recommended by stockholders and other persons.
Effective upon consummation of the business combination, the board of directors of Holdings will establish a compensation committee consisting of independent directors. It is expected that the Compensation Committee will initially consist of Mark M. Anderson, Philip A. Canfield and Mark D. Ein. The compensation committee will have a written charter. The purpose of the compensation committee will be to review and approve compensation paid to Holdings officers and directors and to administer Holdings incentive compensation plans, including authority to make and modify awards under such plans.
Any award made pursuant to an individual subject to the requirements of Section 16 of the Exchange Act must consist of a committee of two or more members of the board who are Section 162(m)(4)I of nonemployee directors as defined in Rule 16b-3(d)(1) under the Exchange Act.
Holdings will adopt a Code of Ethics that applies to all of its employees, officers, and directors. This includes Holdings principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions. The full text of Holdings Code of Ethics will be posted on its website at www.cision.com . Holdings intends to disclose on its website any future amendments of the Code of Ethics or waivers that exempt any principal executive officer, principal financial officer, principal accounting officer or controller, persons performing similar functions, or Holdings directors from provisions in the Code of Ethics.
None of the members of the compensation committee is currently, or has been at any time, one of Holdings officers or employees. None of Holdings executive officers currently serves, or has served during the last year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of Holdings board of directors or compensation committee.
Prior to the Transactions, Holdings board of directors did not provide a process for shareholders or other interested parties to send communications to the board of directors because management believed that it was premature to develop such processes given the limited liquidity of Holdings ordinary shares at that time. However, management of Holdings following the Transactions may establish a process for shareholder and interested party communications in the future.
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Capitol is an emerging growth company, as defined in the JOBS Act and the following is intended to comply with the scaled disclosure requirements applicable to emerging growth companies. No executive officer or director of Capitol has received any compensation for services rendered to Capitol. No fees of any kind, including finders, consulting or other similar fees, will be paid to any of Capitols existing stockholders, including its officers and directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of the mergers. Since its formation, Capitol has not granted any stock options, stock appreciation rights, or any other equity or equity-based awards under long-term incentive plans to any of its executive officers or directors.
Commencing on October 13, 2015, Capitol began paying Venturehouse Group, LLC, an affiliate of Mark D. Ein, and Dryden Capital Management, LLC, an affiliate of L. Dyson Dryden, an aggregate fee of $10,000 per month for providing Capitol with office space and certain office and secretarial services. Capitol will continue to pay this fee through the closing of the Transactions. However, this arrangement is solely for Capitols benefit and is not intended to provide Messrs. Ein or Dryden compensation in lieu of a salary. During the year ended December 31, 2016, and the period from July 13, 2015 (inception) through December 31, 2015, Capitol paid Venturehouse Group, LLC and Dryden Capital Management, LLC an aggregate of $120,000 and $30,000, respectively, pursuant to this arrangement.
Other than the $10,000 per month office space and administrative fee, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of Capitols sponsors, officers and directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. However, such individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on Capitols behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses.
The following section provides compensation information pursuant to the scaled disclosure rules applicable to emerging growth companies under the rules of the SEC.
Our Named Executive Officers for the year ended December 31, 2016, include Kevin Akeroyd, our Chief Executive Officer, and Peter Granat, the former Chief Executive Officer, and Mark Jones and Jeremy Thompson, our two most highly compensated executive officers other than our current and former Chief Executive Officers who were serving as executive officers as of December 31, 2016 (collectively, the Named Executive Officers).
Our compensation policies and philosophies are designed to align compensation with business objectives and the creation of stockholder value, while also enabling us to attract, motivate and retain individuals who contribute to our long-term success. We believe our executive compensation program must be competitive in order to attract and retain executive officers. We seek to implement compensation policies and philosophies by linking a significant portion of executive officers cash compensation to performance objectives and have historically provided a portion of their compensation as long-term incentive compensation in the form of equity awards in Cision Owner.
To date, the compensation of our Named Executive Officers has consisted of a base salary, an annual cash incentive bonus, equity compensation in Cision Owner and health and welfare benefits. Pursuant to their employment agreements, the Named Executive Officers are also eligible to receive certain payments and benefits upon a termination of employment under certain circumstances. Each of our executive officers, along with certain other members of our management, have been given the opportunity to receive grants of equity in Cision Owner pursuant to the Cision Owner Partnership Agreement as further described below. GTCR
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established the Cision Owner Partnership Agreement to align the interests of our executive officers and management investors with those of our other equity investors and to encourage our executive officers and management investors to continue to operate the business in a manner that enhances our equity value.
Cision Owner has historically determined all of the components of compensation of our executive officers. As we transition from a private company to a publicly-traded company, the combined company will evaluate its compensation program as circumstances require. As part of the ongoing evaluation, it is expected that the compensation committee of the combined company will apply Cisions policies and philosophies described above.
The following table presents summary information regarding the total compensation for the years ended December 31, 2016 and 2015 for the Named Executive Officers.
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Name and Principal Position | Year |
Salary
($) |
Bonus
($) |
Stock
Awards ($) (1) |
Option
Awards ($) |
Nonequity
Incentive Plan Compensation ($) |
All Other
Compensation ($) (2) |
Total
($) |
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Kevin Akeroyd
Chief Executive Officer |
2016 | 197,954 | (3) | 370,000 | (4) | 3,799,177 | (5) | 98,959 | | 4,466,090 | ||||||||||||||||||||||
2015 | | | | | | |||||||||||||||||||||||||||
Peter Granat
Former Chief Executive Officer |
2016 | 342,056 | (6) | 118,750 | (7) | | | 180,505 | 641,311 | |||||||||||||||||||||||
2015 | 475,000 | 475,000 | 231,107 | 118,750 | 11,308 | 1,311,165 | ||||||||||||||||||||||||||
Jeremy Thompson
(8)
President, EMEA |
2016 | 294,087 | 1,204,018 | (9) | | 99,710 | | 1,959,021 | ||||||||||||||||||||||||
2015 | 325,927 | 1,167,353 | (10) | | 73,500 | | 1,566,780 | |||||||||||||||||||||||||
Mark Jones
Former Chief Product Officer |
2016 | 380,138 | 190,000 | (11) | 657,023 | 152,000 | 15,625 | 1,394,786 | ||||||||||||||||||||||||
2015 | 33,128 | | | | | 33,128 |
(1) | Represents the grant date fair value of such awards as determined in accordance with ASC Topic 718. For a discussion of the assumptions underlying these amounts, see Note 9 to Cisions audited financial statements for the year ended December 31, 2016 included in this proxy statement/prospectus. Mr. Granat forfeited 990,385 Class C Units in 2016 in connection with his separation. |
(2) | Represents all other compensation paid to or earned by the Named Executive Officers. Other compensation paid to Mr. Granat includes $138,542 in severance payments and $34,338 for accumulated paid time off. |
(3) | Represents salary from August 1, 2016, Mr. Akeroyds start date, to December 31, 2016. |
(4) | Represents a one-time cash signing bonus paid to Mr. Akeroyd. |
(5) | Consists of (i) 3,091,679 Class C Units with a grant date fair market value of $3,429,177 and (ii) 3,700 Class A Units with a grant date fair market value of $370,000 included as part of Mr. Akeroyds signing bonus. |
(6) | Represents salary from January 1, 2016 to September 16, 2016, the date of Mr. Granats separation from the company. |
(7) | Bonus was payable pursuant to the terms of Mr. Granats separation agreement for the closing of the PR Newswire Acquisition. |
(8) | Salary, bonus and nonequity incentive plan compensation amounts for Mr. Thompson have been converted from pounds sterling to U.S. dollars using the yearly average exchange rates for 2015 ($1.47/£) and 2016 ($1.30/£). |
(9) | Consists of $171,665 integration bonus and $1,032,353 retention bonus. |
(10) | Consists of $1,167,353 retention bonus. |
(11) | Represents a one-time cash signing bonus paid to Mr. Jones. |
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The Named Executive Officers receive a base salary to compensate them for services rendered to our company. The base salary payable to each Named Executive Officer is intended to provide a fixed component of compensation reflecting the executives skill set, experience, position and responsibilities.
Pursuant to the terms of their employment agreements, our Named Executive Officers are eligible to receive cash bonuses based on their performance and the performance of the company and its subsidiaries. Although we do not have a formal plan in place, the board sets performance targets at the beginning of each fiscal year and communicates these targets to our Named Executive Officers. Our performance bonus targets are generally based on a combination of metrics which includes revenue and EBITDA components. The table below sets forth the target bonus amounts and applicable metrics for each of our Named Executive Officers.
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Name and Principal Position | Year |
Target Incentive Bonus
($) |
Performance Metrics
(% weight) |
Incentive Bonus Paid
($) |
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Kevin Akeroyd
Chief Executive Officer |
2016 | 197,954 | (1) |
EBITDA (33.3%),
Other Metrics (66.7%) (2) |
98,959 | |||||||||||
2015 | | | | |||||||||||||
Peter Granat
Former Chief Executive Officer |
2016 | | | | ||||||||||||
2015 | 475,000 |
EBITDA (40%),
Other Metrics (60%) (3) |
118,750 | |||||||||||||
Jeremy Thompson
President, EMEA |
2016 | 102,794 |
Global Revenue (10%),
Global EBITDA (10%), EMEA Revenue (40%), EMEA EBITDA (40%) |
99,710 | ||||||||||||
2015 | 73,500 |
Gorkana Revenue (50%),
Gorkana EBITDA (50%) |
73,500 | |||||||||||||
Mark Jones
Former Chief Product Officer |
2016 | 190,000 |
Cision Revenue (50%),
Cision Adjusted EBITDA (50%) |
152,000 | ||||||||||||
2015 | | | |
(1) | Represents Mr. Akeroyds annual salary prorated for the period from August 1, 2016, Mr. Akeroyds start date, to December 31, 2016. |
(2) | Other Metrics include components based on Cision U.S. sales volumes (33.3%) and PR Newswire synergy achievement (33.3%). |
(3) | Other Metrics include components based on talent management (30%), development of a key performance indicator reports (15%) and new business sales productivity (15%). |
Prior to the formation of Holdings, Cision Owner granted newly-hired Named Executive Officers an interest in Cision Owner by awarding Class C Units of Cision Owner ( Class C Units ) pursuant to Cision Owners Sixth Amended and Restated Agreement of Exempted Limited Partnership (the Cision Owner Partnership Agreement ). The Class C Units were reserved for issuance by Cision Owner for incentive purposes at the discretion of the general partner of Cision Owner, subject to certain approvals.
Class C Units were awarded to the Named Executive Officers in 2016, 2015 and 2014 for zero compensation and will have a participation threshold as determined by the general partner of Cision Owner. The Class C Units are subject to the terms of the respective agreements with the executives, but generally vest over a four-year period in annual or quarterly increments following the date of grant, contingent on the individual continuing to provide services to the company. These awards have a fixed-dollar threshold as stated in the respective award agreements that provides the holder an interest only in the appreciation in value of the company over this stated amount (a Participation Threshold ).
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Upon termination of employment of the respective holder, the unvested Class C Units are forfeited and the vested Class C Units are subject to repurchase by Cision Owner at a price equal to the fair market value of the award on the date of repurchase.
We believe that overall business success creates meaningful value to both unit holders and, through their equity holdings, Cisions executives. The Class C Units are designed as profits interests within the meaning of Revenue Procedures 93-27 and 2001-43, and provide an immediate and significant alignment between our Named Executive Officers and Cisions business. Prior to the Business Combination, Cision Owner followed the practice of awarding Class C Units at or near the time of hire and when deemed appropriate to further demonstrate commitment and reinforcement of value creation. The number of Class C Units granted to each of Cisions Named Executive Officers was not determined pursuant to any formulaic equation or benchmarking to any peer groups; rather, the number of Class C Units is determined by the general partner of Cision Owner in its sole discretion, after taking into account discussions with the Cision management team and overall retention goals.
As profits interests, the Class C Units have no value for tax purposes on the date of grant, but instead are designed to gain value only after Cision Owner has realized a certain level of returns for the holders of its Class A Units (as defined in Cision Owner Partnership Agreement). Distributions will be made first to holders of Class A Units until those holders have received a full return on their capital contributions to Cision Owner plus a specified yield calculated in accordance with the Cision Owner Partnership Agreement. Once Class A Unit holders have received these amounts, the holders of Class C Units are generally entitled to participate in any distributions together with the holders of Cision Owners Class B Units (as defined in the Cision Owner Partnership Agreement) in the proportions set forth in the Cision Owner Partnership Agreement, provided that no Class C Unit is entitled to any portion of a distribution until the Participation Threshold with respect to such unit has been realized. The threshold value of each Class C Unit is based on the liquidation value of the equity of Cision Owner at the date of the grant.
The following table summarizes, for each of the Named Executive Officers, the number of Class C Units of Cision Owner held as of December 31, 2016.
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Stock Awards | ||||||||||||||||
Name and Principal Position |
# Shares or Units of Stock that have not vested
(#) (1) |
Market Value # Share or Units of Stock that have not vested ($) (2) |
# Unearned Shares, Units or Other Rights that have not vested
(#) |
Payout Value of Unearned Shares, Units or other Rights that have not vested
($) |
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Kevin Akeroyd
CEO |
2,705,219 | (3) | 7,493,457 | | | |||||||||||
Peter Granat
(4)
Former CEO |
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Jeremy Thompson
President, EMEA |
348,609 | (5) | 965,648 | | | |||||||||||
Mark Jones
Former Chief Product Officer |
450,000 | (6) | 1,246,500 | | |
(1) | Represents unvested Class C Units of Cision Owner. |
(2) | There is no established public trading market for the Class C Units of Cision Owner. The value of the Class C Units at December 31, 2016 was $2.77 per Class C Unit based on a valuation analysis of the Fair Market Value of such units. For each Named Executive Officer, the participation threshold at which such units will participate in distributions has not been deducted from the fair market value of the applicable units. Mr. Akeroyds participation threshold for all his Class C Units is $3.09, Mr. Granats participation threshold for 25,000 of his Class C Unit is $3.09, and is $0.00 for the remainder of his Class C Units. Mr. Thompsons participation threshold for all his Class C Unit is $3.09. Mr. Jones participation threshold for 325,000 of his Class C Units is $3.09, and is $7.79 for 275,000 of his Class C |
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Units. See Incentive Unit Awards above. These values may not reflect the value actually realized by the Named Executive Officers upon vesting. |
(3) | Mr. Akeroyds Class C Units vest over a four-year period at quarterly intervals beginning on September 30, 2016. |
(4) | All unvested Class C Units held by Mr. Granat on the date of his separation: (i) became vested, (ii) were repurchased by Cision Owner, or (iii) were forfeited, in each case in accordance with the terms of the Granat Separation Agreement. |
(5) | In connection with Mr. Thompsons planned separation on May 31, 2017, Cision Owner will repurchase 273,609 of the unvested Class C Units held by Mr. Thompson. The remaining 75,000 unvested Class C units will be retained by Mr. Thompson and will vest 12 months following the date of his separation, subject to Mr. Thompsons compliance with the agreed terms of his separation. |
(6) | All unvested Class C Units held by Mr. Jones were forfeited in connection with his separation on April 3, 2017. |
We maintain a tax-qualified defined contribution plan meeting the requirements of Section 401(k) of the Internal Revenue Code, commonly called a 401(k) plan, for substantially all of our U.S. employees through Fidelity. The 401(k) plan is available on the same terms to all of our U.S. employees, including the Named Executive Officers. Each participant can elect to contribute from 0% to 100% of his or her base salary to the 401(k) plan, subject to Internal Revenue Service and ERISA limitations. We also make matching 401(k) contributions up to a specified portion of each employees salary. The deferred amount is invested in accordance with the election of the participant in a variety of investment choices.
We sponsor a defined-contribution, profit-sharing and other benefit plan in the United Kingdom and France. Jeremy Thompson participates in a defined-contribution through one of our subsidiaries organized in the United Kingdom.
The 2017 Plan will become effective upon approval by the stockholders pursuant to this joint proxy statement/prospectus and closing of the business combination. A summary of the terms of the 2017 Plan is in the section entitled Incentive Plan Proposal below.
Each of the Named Executive Officers (other than Mr. Granat, who resigned on September 16, 2016) is a party to an employment agreement. Mr. Akeroyds employment agreement is among himself, Cision Owner and Cision US Inc. ( Cision US ). Mr. Thompsons employment agreement is between himself and Durrants Press Cuttings Limited ( Thompson Employer ). Mr. Jones' employment agreement is among himself, Cision Owner and Cision US. Although Mr. Jones separated from Cision in April 2017, his employment agreement remains in effect and governs the terms of his separation. Prior to the completion of the Transactions, Cision Owner expects to amend each Named Executive Officers employment agreement to: (i) move the provisions of each employment agreement which govern the issuance and vesting of incentive equity of Cision Owner into new agreements between Cision Owner and each Named Executive Officer; and (ii) substitute Cision for Cision Owner as a party to each Named Executive Officers existing employment agreement. The amendments are intended to reflect the compensation and performance obligations of the respective parties following the completion of the Transactions. The terms of the new and amended agreements are expected to be substantially identical to the terms set forth in the existing employment agreements. The following summary sets forth the material terms of their existing employment agreements.
The employment agreement with Kevin Akeroyd provides that Mr. Akeroyd will serve as the Chief Executive Officer of Cision Owner and Cision US. The term of Mr. Akeroyds employment commenced on August 1, 2016 and will continue until (i) Mr. Akeroyds resignation, death or disability or (ii) Cision Owner terminates his employment with or without Cause. Mr. Akeroyds base salary is set at $475,000 per year and is subject to annual increase as approved by Cision Owner.
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Subject to continued employment, Mr. Akeroyd will be eligible to receive an annual bonus in an amount up to 100% of his base salary, as determined by Cision Owner based upon Mr. Akeroyds performance and the performance of Cision Owner, Cision US and certain subsidiaries of Cision Owner relative to financial, operating and other objectives mutually agreed upon by Cision Owner and Mr. Akeroyd. With respect to his first fiscal year for which Mr. Akeroyd is eligible for a bonus, such bonus will be prorated based upon the portion of the fiscal year that remained after commencement of Mr. Akeroyds employment. In addition, Mr. Akeroyd is entitled to such other benefits as are approved by Cision Owner and made generally available to all senior management of Cision Owner and Cision US.
If Mr. Akeroyds employment is terminated for any reason, Mr. Akeroyd is entitled to receive:
| any earned but unpaid portion of his base salary through the date of such termination, subject to withholding and other appropriate deductions; |
| reimbursement for expenses accrued during employment, subject to and in accordance with, Cision USs expense reimbursement policy; |
| any earned but unpaid annual bonus relating to any prior period; and |
| any vested benefits (including vacation) accrued through the date of such termination in accordance with applicable law or the governing agreement, plan or policy rules (together, the Akeroyd Accrued Obligations ). |
If Mr. Akeroyds employment is terminated by resignation with Good Reason or by Cision Owner without Cause, then, in addition to the Akeroyd Accrued Obligations, during the 12-month period commencing on the date of termination (the Akeroyd Severance Period ), (x) Cision US shall pay to Mr. Akeroyd an aggregate amount equal to 100% of his annual base salary, and (y) Cision US shall pay the premiums for Mr. Akeroyds continued coverage under Cision USs health benefit plan during the Akeroyd Severance Period (subject to certain limitations).
In the event of Mr. Akeroyds resignation, if at the time of such resignation Cision US had the right to terminate Mr. Akeroyds employment with Cause, then Cision US may elect to treat such resignation as a termination of Mr. Akeroyds employment by Cision US with Cause.
Mr. Akeroyds employment agreement also contains provisions relating to obligations to maintain confidentiality, ownership of property developed during employment, third-party information, use of information of prior employers and non-solicitation of Cision USs employees for a period of 12 months.
For purposes of Mr. Akeroyds employment agreement:
Cause means (i) (a) the conviction or plea of no contest for or indictment on a felony or a crime involving moral turpitude or (b) the commission of any other act or omission involving (x) dishonesty that is reasonably likely to materially and adversely affect Cision Owner or (y) fraud, in either case, with respect to Cision Owner, Cision US or any of their respective subsidiaries or any of their customers, vendors or employees, (ii) substantial and repeated failure to perform duties of the office held by Mr. Akeroyd as reasonably and expressly directed by Cision Owner, provided that Mr. Akeroyd shall have the opportunity to address Cision Owner before a termination pursuant to this clause (ii) becomes effective, (iii) gross negligence or willful misconduct with respect to the Cision Owner, Cision US or any of their respective subsidiaries or any of their customers, vendors or employees, (iv) conduct which could reasonably be expected to bring Cision Owner, Cision US or any of their respective subsidiaries into substantial public disgrace or disrepute, (v) any breach by Mr. Akeroyd of the confidentiality or non-solicitation provisions of his agreement and/or (vi) a failure to observe Cision Owners, Cision USs or any of their respective subsidiaries policies or standards regarding employment practices (including, without limitation, nondiscrimination and sexual harassment policies) as approved by Cision Owner from time to time.
Good Reason means (i) a material reduction in Mr. Akeroyds then effective annual base salary, (ii) a material diminution in Mr. Akeroyds title, (iii) the assignment of duties to Mr. Akeroyd materially
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inconsistent with his position or (iv) the relocation by Cision US of Mr. Akeroyds principal office to a location which is more than 50 miles outside of the San Jose metropolitan area, in each case, without the prior written consent of Mr. Akeroyd.
The employment agreement with Mark Jones provides that Mr. Jones will serve as an executive of Cision US and report to the Chief Executive Officer of Cision US. The term of Mr. Jones employment commenced on November 30, 2015 and ended in April 2017, although his employment agreement remains in effect and governs the terms of his separation. Mr. Jones base salary was set at $380,000 per year.
In connection with his termination in April 2017, Mr. Jones is entitled to receive:
| any earned but unpaid portion of his base salary through the date of such termination, subject to withholding and other appropriate deductions; |
| reimbursement for expenses accrued during employment, subject to and in accordance with, Cision USs expense reimbursement policy; |
| any earned but unpaid annual bonus relating to any prior period; and |
| any vested benefits (including vacation) accrued through the date of such termination in accordance with applicable law or the governing agreement, plan or policy rules (together, the Jones Accrued Obligations ). |
In addition, because Mr. Jones was terminated without Cause, during the 6-month period commencing on the date of termination (the Jones Severance Period ), (x) Cision US shall pay to Mr. Jones an aggregate amount equal to 50% of his annual base salary, and (y) Cision US shall pay the premiums for Mr. Jones continued coverage under Cision USs health benefit plan during the Jones Severance Period (subject to certain limitations). Cision US may, at its election, extend the Jones Severance Period by 12 months,
Mr. Jones employment agreement also contains provisions relating to obligations to maintain confidentiality, ownership of property developed during employment, third party information and use of information of prior employers, as well as non-competition and non-solicitation covenants which remain in effect during the term of Mr. Jones employment and during the Jones Severance Period.
For purposes of Mr. Jones employment agreement, Cause means (i) the commission of a felony or a crime involving moral turpitude or the commission of any other act or omission involving dishonesty or fraud with respect to Cision US, Cision Owner or any of their respective subsidiaries or any of their customers, vendors or employees, (ii) substantial and repeated failure to perform duties of the office held by Mr. Jones as reasonably directed by an executive to whom executive directly or indirectly reports or by Cision US, (iii) gross negligence or willful misconduct with respect to Cision US, Cision Owner or any of their respective subsidiaries or any of their customers, vendors or employees, (iv) conduct which could reasonably be expected to bring Cision US, Cision Owner or any of their respective subsidiaries into substantial public disgrace or disrepute, (v) any breach by Mr. Jones of the confidentiality, non-competition or non-solicitation provisions of his agreement and/or (vi) a failure to observe policies or standards regarding employment practices (including, without limitation, nondiscrimination and sexual harassment policies) as approved by Cision US from time to time.
The employment agreement with Jeremy Thompson provides that Mr. Thompson will serve as the Managing Director of Thompson Employer or in such other capacity as the board of Thompson Employer may from time to time decide. Mr. Thompsons employment agreement became effective April 12, 2006 and will terminate on May 31, 2017. In connection with his termination, Mr. Thompson is entitled to receive:
| reimbursement of expenses reasonably incurred during employment in accordance with the guidelines of Thompson Employer; and |
| salary and all benefits (including pension contributions) accrued through the date of separation, plus a payment in lieu of any accrued vacation. |
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Pursuant to Mr. Thompsons separation agreement, he is entitled to salary and benefits continuation for a six- month period after his termination date.
Mr. Thompsons employment agreement also contains provisions relating to obligations to maintain confidentiality and ownership of property developed during employment. Mr. Thompson is also prohibited from soliciting Thompson Employers customers or employees for a period of 12 months after termination and is subject to certain non-competition restrictions for six months following his termination.
No directors received compensation for their services as director for the year ended December 31, 2016.
Following the closing of the business combination, Holdings intends to develop an executive compensation program that is consistent with Cisions existing compensation policies and philosophies, which are designed to align compensation with Holdings business objectives and the creation of stockholder value, while enabling Holdings to attract, motivate and retain individuals who contribute to the long-term success of the company.
Decisions on the executive compensation program will be made by a compensation committee of the board of directors, which will be established at the closing of the business combination. The following discussion is based on the present expectations as to the executive compensation program to be adopted by the compensation committee. The executive compensation program actually adopted will depend on the judgment of the members of the compensation committee and may differ from that set forth in the following discussion.
We anticipate that decisions regarding executive compensation will reflect our belief that the executive compensation program must be competitive in order to attract and retain our executive officers. We anticipate that the compensation committee will seek to implement our compensation policies and philosophies by linking a significant portion of our executive officers cash compensation to performance objectives and by providing a portion of their compensation as long-term incentive compensation in the form of equity awards.
We anticipate that compensation for our executive officers will have three primary components: base salary, an annual cash incentive bonus and long-term incentive based compensation in the form of stock-based awards.
It is expected that our Named Executive Officers base salaries will continue as described under Cision Executive Officer and Director Compensation Salaries subject to the terms of the employment agreements described under Cision Executive Officer and Director Compensation Employment Agreement and will be reviewed annually by the compensation committee based upon advice and counsel of its advisors.
Holdings intends to use annual cash incentive bonuses for the Named Executive Officers to tie a portion of their compensation to financial and operational objectives achievable within the applicable fiscal year. Holdings expects that, near the beginning of each year, the compensation committee will select the performance targets, target amounts, target award opportunities and other term and conditions of the non-equity incentive bonuses for the Named Executive Officers, subject to the terms of any employment agreement. Following the end of each year, the compensation committee will determine the extent to which the performance targets were achieved and the amount of the award that is payable to the Named Executive Officers.
Holdings intends to use stock-based awards to reward long-term performance of the Named Executive Officers. Holdings believes that providing a meaningful portion of the total compensation package in the form of stock-based awards will align the incentives of its Named Executive Officers with the interests of its stockholders and serve to motivate and retain the individual Named Executive Officers. Stock-based awards will be awarded under the 2017 Omnibus Incentive Plan, which is being submitted to our stockholders for approval at the annual meeting of stockholders. For a description of the 2017 Omnibus Incentive Plan, please see the section of this proxy statement/prospectus under the heading The Incentive Plan Proposal.
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We anticipate that the employment agreements for the Named Executive Officers will remain in place following the consummation of the business combination. Any new employment agreements for the Named Executive Officers following the business combination will be subject to compensation committee approval.
Holdings expects to continue to maintain various employee benefit plans, including medical and 401(k) plans, in which the Named Executive Officers will participate.
Section 162(m) of the Internal Revenue Code denies a federal income tax deduction for certain compensation in excess of $1.0 million per year paid to the chief executive officer and the three other most highly-paid executive officers (other than a companys chief executive officer and chief financial officer) of a publicly-traded corporation. Certain types of compensation, including compensation based on performance criteria that are approved in advance by stockholders, are excluded from the deduction limit. Holdings expects that its policy will qualify compensation paid to our executive officers for deductibility for federal income tax purposes to the extent feasible. However, to retain highly skilled executives and remain competitive with other employers, the compensation committee may authorize compensation that would not be deductible under Section 162(m) or otherwise if it determines that such compensation is in the best interests of Holdings and its stockholders.
We expect that our compensation committee will determine the annual compensation to be paid to the members of the board of directors upon completion of the business combination.
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In connection with the Transactions, we intend to adopt the 2017 Plan. The 2017 Plan will provide for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards. Directors, officers and other employees of us and our subsidiaries, as well as others performing consulting or advisory services for us, are eligible for grants under the 2017 Plan. The purpose of the 2017 Plan is to provide incentives that will attract, retain and motivate high performing officers, directors, employees and consultants by providing them with appropriate incentives and rewards either through a proprietary interest in our long-term success or compensation based on their performance in fulfilling their personal responsibilities. Set forth below is a summary of the material terms of the 2017 Plan. For further information about the 2017 Plan, we refer you to the complete copy of the 2017 Plan, which is attached as an exhibit to the registration statement, of which this prospectus is a part.
The 2017 Plan will be administered by the Compensation Committee of our board of directors. Among the Compensation Committees powers is to determine the form, amount and other terms and conditions of awards; clarify, construe or resolve any ambiguity in any provision of the 2017 Plan or any award agreement; amend the terms of outstanding awards; and adopt such rules, forms, instruments and guidelines for administering the 2017 Plan as it deems necessary or proper. The Compensation Committee has authority to administer and interpret the 2017 Plan, to grant discretionary awards under the 2017 Plan, to determine the persons to whom awards will be granted, to determine the types of awards to be granted, to determine the terms and conditions of each award, to determine the number of ordinary shares to be covered by each award, to make all other determinations in connection with the 2017 Plan and the awards thereunder as the Compensation Committee deems necessary or desirable and to delegate authority under the 2017 Plan to our executive officers.
The aggregate number of ordinary shares which may be issued or used for reference purposes under the 2017 Plan or with respect to which awards may be granted may not exceed 6,100,000 shares. The number of shares available for issuance under the 2017 Plan may be subject to adjustment in the event of a reorganization, stock split, merger or similar change in the corporate structure or the outstanding number of ordinary shares. In the event of any of these occurrences, we may make any adjustments we consider appropriate to, among other things, the number and kind of shares, options or other property available for issuance under the plan or covered by grants previously made under the plan. The shares available for issuance under the plan may be, in whole or in part, either authorized and unissued ordinary shares or ordinary shares held in or acquired for our treasury. In general, if awards under the 2017 Plan are for any reason cancelled, or expire or terminate unexercised, the shares covered by such awards may again be available for the grant of awards under the 2017 Plan. With respect to stock appreciation rights and options settled in ordinary shares, upon settlement, only the number of ordinary shares delivered to a participant will count against the aggregate and individual share limitations. If any ordinary shares are withheld to satisfy tax withholding obligations on an award issued under the 2017 Plan, the number of ordinary shares withheld shall again be available for purposes of awards under the 2017 Plan. Any award under the 2017 Plan settled in cash shall not be counted against the foregoing maximum share limitations.
The maximum number of ordinary shares with respect to which any stock option, stock appreciation right, shares of restricted stock or other stock-based awards that are subject to the attainment of specified performance goals and intended to satisfy Section 162(m) of the Internal Revenue Code and may be granted under the 2017 Plan during any fiscal year to any eligible individual will be 3,000,000 shares (per type of award). The total number of ordinary shares with respect to all awards that may be granted under the 2017 Plan during any fiscal year to any eligible individual will be 3,000,000 shares. There are no annual limits on the number of ordinary shares with respect to an award of restricted stock that are not subject to the attainment of specified performance goals to eligible individuals. The maximum number of ordinary shares subject to any performance award which may be granted under the 2017 Plan during any fiscal year to any eligible individual will be 3,000,000 shares. The maximum value of a cash payment made under a performance award which may be granted under the 2017 Plan during any fiscal year to any eligible
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individual will be $5,000,000. The aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all types of awards granted under the Plan to any individual non-employee director in any fiscal year (excluding awards made pursuant to deferred compensation arrangements in lieu of all or a portion of cash retainers and any stock dividends payable in respect of outstanding awards) may not exceed $500,000.
Independent non-employee members of our board of directors, as well as employees of, and consultants to, us or any of our subsidiaries and affiliates are eligible to receive awards under the 2017 Plan.
Awards granted under the 2017 Plan are evidenced by award agreements, which need not be identical, that provide additional terms, conditions, restrictions and/or limitations covering the grant of the award, including, without limitation, additional terms providing for the acceleration of exercisability or vesting of awards in the event of a change of control or conditions regarding the participants employment, as determined by the Compensation Committee.
The Compensation Committee may grant nonqualified stock options to eligible individuals and incentive stock options only to eligible employees. The Compensation Committee will determine the number of ordinary shares subject to each option, the term of each option, which may not exceed ten years, or five years in the case of an incentive stock option granted to a ten percent stockholder, the exercise price, the vesting schedule, if any, and the other material terms of each option. No incentive stock option or nonqualified stock option may have an exercise price less than the fair market value of an ordinary share at the time of grant or, in the case of an incentive stock option granted to a ten percent stockholder, 110% of such shares fair market value. Options will be exercisable at such time or times and subject to such terms and conditions as determined by the Compensation Committee at grant and the exercisability of such options may be accelerated by the Compensation Committee.
The Compensation Committee may grant stock appreciation rights, which we refer to as SARs, either with a stock option, which may be exercised only at such times and to the extent the related option is exercisable, which we refer to as a Tandem SAR, or independent of a stock option, which we refer to as a Non-Tandem SAR. A SAR is a right to receive a payment in ordinary shares or cash, as determined by the Compensation Committee, equal in value to the excess of the fair market value of an ordinary share on the date of exercise over the exercise price per share established in connection with the grant of the SAR. The term of each SAR may not exceed ten years. The exercise price per share covered by a SAR will be the exercise price per share of the related option in the case of a Tandem SAR and will be the fair market value of our ordinary shares on the date of grant in the case of a Non-Tandem SAR. The Compensation Committee may also grant limited SARs, either as Tandem SARs or Non-Tandem SARs, which may become exercisable only upon the occurrence of a change in control, as defined in the 2017 Plan, or such other event as the Compensation Committee may designate at the time of grant or thereafter.
The Compensation Committee may award shares of restricted stock. Except as otherwise provided by the Compensation Committee upon the award of restricted stock, the recipient generally has the rights of a stockholder with respect to the shares, including the right to receive dividends, the right to vote the shares of restricted stock and, conditioned upon full vesting of shares of restricted stock, the right to tender such shares, subject to the conditions and restrictions generally applicable to restricted stock or specifically set forth in the recipients restricted stock agreement. The Compensation Committee may determine at the time of award that the payment of dividends, if any, will be deferred until the expiration of the applicable restriction period.
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Recipients of restricted stock are required to enter into a restricted stock agreement with us that states the restrictions to which the shares are subject, which may include satisfaction of pre-established performance goals, and the criteria or date or dates on which such restrictions will lapse.
If the grant of restricted stock or the lapse of the relevant restrictions is based on the attainment of performance goals, the Compensation Committee will establish for each recipient the applicable performance goals, formulae or standards and the applicable vesting percentages with reference to the attainment of such goals or satisfaction of such formulae or standards while the outcome of the performance goals are substantially uncertain. Such performance goals may incorporate provisions for disregarding, or adjusting for, changes in accounting methods, corporate transactions, including, without limitation, dispositions and acquisitions, and other similar events or circumstances. Section 162(m) of the Internal Revenue Code requires that performance awards be based upon objective performance measures. The performance goals for performance-based restricted stock will be based on one or more of the objective criteria set forth on Exhibit A to the 2017 Plan and are discussed in general below.
The Compensation Committee may, subject to limitations under applicable law, make a grant of such other stock-based awards, including, without limitation, performance units, dividend equivalent units, stock equivalent units, restricted stock and deferred stock units under the 2017 Plan that are payable in cash or denominated or payable in or valued by our ordinary shares or factors that influence the value of such shares. The Compensation Committee may determine the terms and conditions of any such other awards, which may include the achievement of certain minimum performance goals for purposes of compliance with Section 162(m) of the Internal Revenue Code and/or a minimum vesting period. The performance goals for performance-based other stock-based awards will be based on one or more of the objective criteria set forth on Exhibit A to the 2017 Plan and discussed in general below.
The Compensation Committee may grant awards payable in cash. Cash-based awards will be in such form, and dependent on such conditions, as the Compensation Committee will determine, including, without limitation, being subject to the satisfaction of vesting conditions or awarded purely as a bonus and not subject to restrictions or conditions. If a cash-based award is subject to vesting conditions, the Compensation Committee may accelerate the vesting of such award in its discretion.
The Compensation Committee may grant a performance award to a participant payable upon the attainment of specific performance goals. The Compensation Committee may grant performance awards that are intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code as well as performance awards that are not intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. If the performance award is payable in cash, it may be paid upon the attainment of the relevant performance goals either in cash or in ordinary shares, based on the then current fair market value of such shares, as determined by the Compensation Committee. Based on service, performance and/or other factors or criteria, the Compensation Committee may, at or after grant, accelerate the vesting of all or any part of any performance award.
The Compensation Committee may grant awards of restricted stock, performance awards, and other stock-based awards that are intended to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code. These awards may be granted, vest and be paid based on attainment of specified performance goals established by the committee. These performance goals may be based on the attainment of a certain target level of, or a specified increase or decrease in, one or more of the following measures selected by the Compensation Committee: (1) earnings per share; (2) operating income; (3) gross income; (4) net income, before or after taxes; (5) cash flow; (6) gross profit; (7) gross profit return on investment; (8) gross margin return on investment; (9) gross margin; (10) operating margin; (11) working capital; (12) earnings before interest and taxes; (13) earnings before interest, tax, depreciation and
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amortization; (14) return on equity; (15) return on assets; (16) return on capital; (17) return on invested capital; (18) net revenues; (19) gross revenues; (20) revenue growth; (21) annual recurring revenues; (22) recurring revenues; (23) license revenues; (24) sales or market share; (25) total shareholder return; (26) economic value added; (27) specified objectives with regard to limiting the level of increase in all or a portion of our bank debt or other long-term or short-term public or private debt or other similar financial obligations, which may be calculated net of cash balances and other offsets and adjustments as may be established by the Compensation Committee; (28) the fair market value of an ordinary share; (29) the growth in the value of an investment in our ordinary shares assuming the reinvestment of dividends; (30) reduction in operating expenses; (31) cash earnings per share; (32) adjusted net income; (33) adjusted net income per share; (34) volume/volume growth; (35) in year volume; (36) merchant account production; (37) distribution partner account production; (38) new merchant locations; (39) new merchant locations using a particular product; (40) calculated attrition; (41) product revenue; (42) goals based on product performance; (43) annual cash adjusted earnings per share growth; (44) annual stock price growth; (45) diluted earnings per share; (46) total shareholder return positioning within a comparator group; or (47) adjusted cash net income per share.
To the extent permitted by law, the Compensation Committee may also exclude the impact of an event or occurrence which the Compensation Committee determines should be appropriately excluded, such as (1) restructurings, discontinued operations, extraordinary items and other unusual or non-recurring charges; (2) an event either not directly related to our operations or not within the reasonable control of management; or (3) a change in accounting standards required by generally accepted accounting principles.
Performance goals may also be based on an individual participants performance goals, as determined by the Compensation Committee.
In addition, all performance goals may be based upon the attainment of specified levels of our performance, or the performance of a subsidiary, division or other operational unit, under one or more of the measures described above relative to the performance of other corporations. The Compensation Committee may designate additional business criteria on which the performance goals may be based or adjust, modify or amend those criteria.
In connection with a change in control, as defined in the 2017 Plan, the Compensation Committee may accelerate vesting of outstanding awards under the 2017 Plan. In addition, such awards may be, in the discretion of the committee, (1) assumed and continued or substituted in accordance with applicable law; (2) purchased by us for an amount equal to the excess of the price of an ordinary share paid in a change in control over the exercise price of the awards; or (3) cancelled if the price of an ordinary share paid in a change in control is less than the exercise price of the award. The Compensation Committee may also provide for accelerated vesting or lapse of restrictions of an award at any time.
Except as otherwise provided in the applicable award agreement, and with respect to an award of restricted stock, a participant has no rights as a stockholder with respect to our ordinary shares stock covered by any award until the participant becomes the record holder of such shares.
Notwithstanding any other provision of the 2017 Plan, our board of directors may at any time amend any or all of the provisions of the 2017 Plan, or suspend or terminate it entirely, retroactively or otherwise, subject to stockholder approval in certain instances; provided, however, that, unless otherwise required by law or specifically provided in the 2017 Plan, the rights of a participant with respect to awards granted prior to such amendment, suspension or termination may not be adversely affected without the consent of such participant.
Awards granted under the 2017 Plan generally are nontransferable, other than by will or the laws of descent and distribution, except that the committee may provide for the transferability of nonqualified stock options at the time of grant or thereafter to certain family members.
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The 2017 Plan provides that awards granted under the 2017 Plan are subject to any recoupment policy that we may have in place or any obligation that we may have regarding the clawback of incentive-based compensation under the Securities Act or under any applicable rules and regulations promulgated by the SEC.
Grants under the 2017 Plan will be made at the discretion of the compensation committee. The grants under the 2017 Plan are not yet determinable. The value of the awards granted under the 2017 Plan will depend on a number of factors, including the fair market value of our ordinary shares on future dates, the exercise decisions made by the participants and the extent to which any applicable performance goals necessary for vesting or payment are achieved.
We expect the 2017 Plan to be effective upon the completion of the Business Combination. No award will be granted under the 2017 Plan on or after, [ ] 2027. Any award outstanding under the 2017 Plan at the time of termination will remain in effect until such award is exercised or has expired in accordance with its terms.
If the business combination proposal is not approved, the incentive plan proposal will not be presented at the annual meeting.
The approval of the incentive plan proposal requires the affirmative vote of the holders of a majority of Capitol common stock represented and entitled to vote thereon at the meeting. Abstentions are deemed entitled to vote on the incentive plan proposal; therefore, they have the same effect as a vote against the incentive plan proposal. Broker non-votes are not deemed entitled to vote on the proposal and, therefore, they will have no effect on the vote.
THE CAPITOL BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CAPITOL STOCKHOLDERS VOTE FOR THE APPROVAL OF THE INCENTIVE PLAN PROPOSAL.
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The adjournment proposal allows Capitols board of directors to submit a proposal to adjourn the annual meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event Capitol is unable to consummate the business combination. In no event will Capitol solicit proxies to adjourn the annual meeting or consummate the business combination beyond the date by which it may properly do so under its amended and restated certificate of incorporation and Delaware law. The purpose of the adjournment proposal is to provide more time for the Capitol Sponsors, Cision and Cision Owner to make purchases of public shares or other arrangements that would increase the likelihood of obtaining a favorable vote on the business combination proposal and to meet the requirements that are necessary to consummate the business combination. See the section entitled The Business Combination Proposal Interests of Capitols Directors and Officers in the Business Combination .
In addition to an adjournment of the annual meeting upon approval of an adjournment proposal, the board of directors of Capitol is empowered under Delaware law to postpone the meeting at any time prior to the meeting being called to order. In such event, Capitol will issue a press release and take such other steps as it believes are necessary and practical in the circumstances to inform its stockholders of the postponement.
If an adjournment proposal is presented to the meeting and is not approved by the stockholders, Capitols board of directors may not be able to adjourn the annual meeting to a later date if Capitol is unable to consummate the business combination (because either the business combination proposal is not approved or the conditions to consummating the business combination have not been met). In such event, the business combination would not be completed.
Adoption of the adjournment proposal requires the affirmative vote of a majority of the issued and outstanding shares of Capitols common stock represented in person or by proxy at the meeting and entitled to vote thereon. Adoption of the adjournment proposal is not conditioned upon the adoption of any of the other proposals.
THE CAPITOL BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CAPITOL STOCKHOLDERS VOTE FOR THE APPROVAL OF THE ADJOURNMENT PROPOSAL.
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Capitol was incorporated on July 13, 2015 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. Capitols efforts to identify a prospective target business were not limited to any particular industry or geographic region. Prior to executing the Merger Agreement, Capitols efforts were limited to organizational activities, completion of its initial public offering and the evaluation of possible business combinations.
On October 19, 2015, Capitol consummated its initial public offering of 32,500,000 units, including 2,500,000 units under the underwriters over-allotment option, with each unit consisting of one share of common stock and one half of one warrant, each whole warrant to purchase one share of common stock. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $325,000,000. Simultaneously with the consummation of the initial public offering, Capitol consummated the private placement of 8,250,000 private warrants at a price of $1.00 per warrant, generating total proceeds of $8,250,000.
After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to Capitol from the initial public offering and private placement were $317,665,553 (up to an additional $11,375,000 of deferred underwriting expenses may be paid upon the completion of a business combination) and $8,250,000, respectively. Of these amounts, $325,000,000 was deposited into a trust account at JP Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee. Except as described in the prospectus for Capitols initial public offering and described in the subsection below entitled Capitols Managements Discussion and Analysis of Financial Condition and Results of Operations , these proceeds will not be released until the earlier of the completion of an initial business combination and Capitols redemption of 100% of the outstanding public shares upon its failure to consummate a business combination within the required time period.
The target business or businesses that Capitol acquires must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for its initial business combination, although Capitol may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. Capitols board of directors determined that this test was met in connection with the proposed business combination with Cision as described in the section titled The Business Combination Proposal above.
Under Capitols amended and restated certificate of incorporation, in connection with any proposed business combination, Capitol must seek stockholder approval of an initial business combination at a meeting called for such purpose at which public stockholders may seek to convert their public shares into cash, regardless of whether they vote for or against the proposed business combination, subject to the limitations described in the prospectus for Capitols initial public offering. Accordingly, in connection with the business combination with Cision, the Capitol public stockholders may seek to convert their public shares into cash in accordance with the procedures set forth in this proxy statement/prospectus.
In connection with any vote for a proposed business combination, including the vote with respect to the business combination proposal, all of Capitols Sponsors, including all of its officers and directors, have agreed to vote the initial shares as well as any shares of common stock acquired in the aftermarket in favor of such proposed business combination.
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At any time prior to the annual meeting, during a period when they are not then aware of any material nonpublic information regarding Capitol or its securities, the Capitol Sponsors, Cision or Cision Owner and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase such shares from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire shares of Capitols common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the business combination be approved where it appears that such requirements would otherwise not be met. All shares repurchased by Capitols affiliates pursuant to such arrangements would be voted in favor of the proposed business combination. As of the date of this proxy statement/prospectus, no agreements dealing with the above have been entered into.
Under Capitols amended and restated certificate of incorporation, if Capitol does not complete the business combination with Cision or another initial business combination by October 19, 2017, Capitol will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Capitols remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to Capitols obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. At such time, the warrants will expire. Holders of warrants will receive nothing upon a liquidation with respect to such rights and the warrants will be worthless.
Each of Capitols Sponsors has agreed to waive its rights to participate in any distribution from Capitols trust account or other assets with respect to the initial shares. There will be no distribution from the trust account with respect to Capitols warrants, which will expire worthless if Capitol is liquidated.
The proceeds deposited in the trust account could, however, become subject to the claims of Capitols creditors which would be prior to the claims of the Capitol public stockholders. Although Capitol has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses Capitol has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, and although Capitol will seek such waivers from vendors it engages in the future, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the trust account notwithstanding such agreements. Capitols executive officers have agreed that they will be personally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by Capitol for services rendered or contracted for or products sold to it, but Capitol cannot assure that they will be able to satisfy their indemnification obligations if they are required to do so. Additionally there are two exceptions to the personal indemnity they have given: they will have no personal liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed a valid and enforceable agreement with Capitol waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims under the indemnity with the underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, such executives will not be personally liable to the Capitol public stockholders and instead will only have liability to Capitol. Furthermore, neither of the executives may be able to satisfy his indemnification obligations if he is required to so as Capitol has not required such executives to retain any assets to provide for their respective indemnification obligations, nor has Capitol taken any further steps to ensure that such executives will be able to satisfy any indemnification obligations that arise. Accordingly, the actual per-share redemption price could be less than approximately $10.00, plus interest, due to claims of creditors. Additionally, if Capitol is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in Capitols bankruptcy estate and subject to the claims of third parties with priority over the claims of Capitols stockholders. To the extent any bankruptcy claims deplete the trust account, Capitol cannot assure you it will be able to return to the Capitol public stockholders at least approximately $10.00 per share. Capitols public stockholders are entitled to receive funds from the trust account only in the event of its failure to complete a
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business combination within the required time periods or if the stockholders properly seek to have Capitol convert their respective shares for cash upon a business combination which is actually completed by Capitol. In no other circumstances does a stockholder have any right or interest of any kind to or in the trust account.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The portion of Capitols trust account distributed to the Capitol public stockholders upon the redemption of 100% of its outstanding public shares in the event Capitol does not complete its initial business combination within the required time period may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholders pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the portion of Capitols trust account distributed to the Capitol public stockholders upon the redemption of 100% of its public shares in the event Capitol does not complete its initial business combination within the required time period is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If Capitol is unable to complete a business combination within the prescribed time frame, it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish the Capitol public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Capitols remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, if a business combination does not occur, it is Capitols intention to redeem its public shares as soon as reasonably possible following the expiration of the time periods described above and, therefore, Capitol does not intend to comply with the procedures required by Section 280 of the DGCL, which would limit the amount and duration of Capitols stockholders liability with respect to liquidating distributions as described above. As such, Capitols stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of Capitols stockholders may extend well beyond the third anniversary of such date.
Because Capitol will not be complying with Section 280 of the DGCL, Section 281(b) of the DGCL requires Capitol to adopt a plan, based on facts known to it at such time that will provide for its payment of all existing and pending claims or claims that may be potentially brought against it within the subsequent 10 years. However, because Capitol is a blank check company, rather than an operating company, and Capitols operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from its vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
Capitol will pay the costs of any subsequent liquidation from its remaining assets outside of the trust account. If such funds are insufficient, Capitols executive officers have agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and have agreed not to seek repayment for such expenses.
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Capitol currently maintains its principal executive offices at 509 7 th Street, N.W., Washington, DC 20004 and maintains other offices as provided to it by its officers. The cost for this space is included in the $10,000 per-month aggregate fee Venturehouse Group, LLC and Dryden Capital Management, LLC charge Capitol for general and administrative services pursuant to a letter agreement between Capitol and such entities. Capitol believes, based on rents and fees for similar services in the D.C. metropolitan area, that the fee charged by Venturehouse Group, LLC and Dryden Capital Management, LLC is at least as favorable as Capitol could have obtained from an unaffiliated person. Capitol considers its current office space, combined with the other office space otherwise available to its executive officers, adequate for its current operations.
Upon consummation of the business combination, the principal executive offices of Holdings will be those of Cision, at which time nothing more will be paid to Venturehouse Group, LLC and Dryden Capital Management, LLC.
Capitol has two executive officers. These individuals are not obligated to devote any specific number of hours to Capitols matters and intend to devote only as much time as they deem necessary to its affairs. Capitol does not intend to have any full time employees prior to the consummation of a business combination.
Capitols current directors and executive officers are as follows:
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Name | Age | Position | ||
Mark D. Ein | 52 | Chairman, Chief Executive Officer and Director | ||
L. Dyson Dryden | 41 | President, Chief Financial Officer, Treasurer, Secretary and Director | ||
Richard C. Donaldson | 57 | Director | ||
Piyush Sodha | 58 | Director | ||
Lawrence Calcano | 52 | Director |
The biographies of Messrs. Ein and Dryden are set forth under the section titled The Director Election Proposal above.
Richard C. Donaldson has served as a member of Capitols Board of Directors since September 2015. Mr. Donaldson has been with Pillsbury Winthrop Shaw Pittman LLP, a global law firm, as an attorney since 1985, where he is a Partner, and has served as Pillsburys Chief Operating Officer since June 2006. As Chief Operating Officer, Mr. Donaldson oversees the finances, capital structure and operations of Pillsbury, with nearly 650 lawyers, $573 million in 2016 revenues and 20 offices across the United States and overseas. Mr. Donaldson serves on the Pillsbury Executive Team and served as a member of Pillsburys Board of Directors from May 2006 until May 2015. From September 2007 until its merger with Two Harbors in October 2009, Mr. Donaldson served as a member of the Board of Directors of Capitol I. From March 2013 until its merger with Lindblad Expeditions, Mr. Donaldson also served as a member of the Board of Directors of Capitol II. Mr. Donaldson also serves on the Board of Directors of Arizona Cardinals Holdings, Inc. From June 2000 to August 2001, Mr. Donaldson served as Managing Director of Venturehouse Group and he has served as a member of its Board of Directors since June 2000. He previously served on the Board of Directors of Greater DC Cares and the Board of Directors of the Woolly Mammoth Theatre Company in Washington, D.C. Mr. Donaldson received a B.A. from Cornell University in 1982 and a J.D. from The University of Chicago Law School in 1985.
Piyush Sodha has served as a member of Capitols Board of Directors since September 2015. Mr. Sodha has served as the Chief Executive Officer and Co-Chairman of Kastle Systems, LLC since April 2008. Prior to joining Kastle Systems, Mr. Sodha was Chief Technical Officer and head of the Americas Region for MACH S.à.r.l., a leading global provider of clearing and settlement services for the mobile phone industry. He previously served as the Chairman and Chief Executive Officer of Cibernet Corporation which merged into MACH S.à.r.l. in April 2007. Prior to that, he was a General Manager and Vice President of Symbol Technologies, Inc., a company which acquired Matrics, Inc. Mr. Sodha had served as the Chairman and Chief
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Executive Officer of Matrics, Inc., which was a leading provider of RFID technology solutions and infrastructure products. From June 2007 until its merger with Two Harbors in October 2009, Mr. Sodha served as a member of the Board of Directors of Capitol I. From March 2013 until its merger with Lindblad Expeditions, Mr. Sodha also served as a member of the Board of Directors of Capitol II. Earlier in his career, Mr. Sodha had served as Chief Executive Officers of WirelessHome, NextLinx Corp and LCC International, a Nasdaq listed provider of integrated network design, implementation and optimization solutions for wireless voice and data communication networks which went public under his leadership in 1996. Mr. Sodha is currently a director of Orchestro, a data analytics company serving the retail industry. Mr. Sodha received a Bachelor of Science in Electrical Engineering from India Institute of Technology in New Delhi, India, a Master of Science in Electrical Engineering from Drexel University and an M.B.A. from Wharton Business School.
Lawrence Calcano has served as a member of Capitols Board of Directors since September 2015. Mr. Calcano is the Chief Executive Officer of iCapital Network, which he joined in January 2014. Prior to iCapital Network, Mr. Calcano co-founded i1 Biometrics, a privately held information and technology company developing protection and performance products for the sports and military markets, in June 2012 and served as the companys Chief Executive Officer from June 2012 to September 2013. From January 2010 to June 2012, Mr. Calcano served as Chairman and Chief Executive Officer of Bite Tech, Inc., a maker of protective and performance oriented oral devices for the athletic marketplace. Mr. Calcano served as a member of the Board of Directors of Capitol II from March 2013 until its merger with Lindblad Expeditions; Mr. Calcano also served as a member of the Board of Directors of Capitol I. From 1990 to June 2006, Mr. Calcano was affiliated with Goldman, Sachs & Co., most recently serving as the co-head of the Global Technology Banking Group of the Investment Banking Division, prior to which he headed the firms east coast technology group and was the co-Chief Operating Officer of the High Technology Department. From 1985 to 1988, Mr. Calcano was an analyst at Morgan Stanley. Mr. Calcano was named to the Forbes Midas List of the most influential people in venture capital in 2001 (the inaugural year), 2002, 2004, 2005 and 2006. Mr. Calcano received a B.A. from Holy Cross College, and attended the Amos Tuck School of Business at Dartmouth from 1988 to 1990, and graduated as a Tuck Scholar.
There is no material litigation, arbitration, governmental proceeding or any other legal proceeding currently pending or known to be contemplated against Capitol, and Capitol has not been subject to any such proceeding in the 10 years preceding the date of this proxy statement/prospectus.
Capitol has registered its securities under the Exchange Act and has reporting obligations, including the requirement to file annual and quarterly reports with the SEC. In accordance with the requirements of the Exchange Act, Capitols annual reports contain financial statements audited and reported on by Capitols independent registered public accounting firm. Capitol has filed with the SEC its Annual Report on Form 10-K covering the year ended December 31, 2016 and its Quarterly Report on Form 10-Q covering the quarter ended March 31, 2017.
The following discussion of Capitols financial condition and results of operations should be read in conjunction with Capitols consolidated financial statements and notes to those statements included in this proxy statement/prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Please see Forward-Looking Statements and Risk Factors in this proxy statement/prospectus.
For a more detailed discussion of Capitols Accounting Policies, please see Note 2 to the consolidated financial statements of Capitol included elsewhere in this proxy statement/prospectus.
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Capitol accounts for its common stock subject to possible conversion in accordance with the guidance enumerated in ASC 480 Distinguishing Liabilities from Equity. Common stock subject to mandatory conversion (if any) is classified as a liability instrument and is measured at fair value. Conditionally convertible common stock (including common stock that features conversion rights that are either within the control of the holder or subject to conversion upon the occurrence of uncertain events not solely within Capitols control) is classified as temporary equity. At all other times, common stock is classified as stockholders equity. Capitols common stock features certain conversion rights that are considered by Capitol to be outside of Capitols control and subject to the occurrence of uncertain future events.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entitys ability to continue as a Going Concern (ASU 2014-15). ASU 2014-15 provides guidance on managements responsibility in evaluating whether there is substantial doubt about a companys ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a companys ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in ASU 2014-15 are effective for annual reporting periods ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. Capitol has adopted the methodologies prescribed by ASU 2014-15. The adoption of ASU 2014-15 had no material effect on Capitols financial position or results of operations.
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
Capitol has not generated any revenues to date. Capitols entire activity from inception up to the closing of the initial public offering on October 19, 2015 was in preparation for that event. Since the offering, Capitols activity has been limited to the evaluation of business combination candidates, and Capitol will not generate any operating revenues until the closing and completion of its initial business combination. Capitol expects to generate small amounts of non-operating income in the form of interest income on cash and cash equivalents. Interest income is not expected to be significant in view of current low interest rates on risk-free investments (treasury securities). Capitol currently incurs increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
Capitol incurred net losses of approximately $167,000 and $345,000 for the three months ended March 31, 2017 and 2016, respectively. These consisted of operating expenses such as professional and consulting fees, rent and office administrative costs of approximately $506,00 and $478,000, offset by interest income from the funds held in Capitols trust account of approximately $340,000 and $132,000 for the three months ended March 31, 2017 and 2016, respectively.
For the year ended December 31, 2016, Capitol had a net loss of approximately $653,000, which consisted of operating expenses such as professional and consulting fees, rent, and office administrative costs of approximately $1,491,000 offset by interest income from the funds held in Capitols trust account of approximately $838,000.
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For the period from July 13, 2015 (inception) through December 31, 2015, Capitol had a net loss of approximately $116,500 representing formation and operating costs. These costs consisted mainly of professional and consulting fees, rent and office administrative costs. Capitol incurred offering costs of approximately $834,500 with regard to the offering, which were netted against additional paid-in capital upon the consummation of the offering.
The net proceeds from Capitols initial public offering and private placement, after deducting $7,334,447 of transaction costs (up to an additional $11,375,000 of deferred underwriting expenses may be paid upon the completion of a business combination), were $325,915,553. Of this amount, $325,000,000 was placed in the trust account. The remaining $915,553 of net proceeds not in trust have been, and will continue to be, used for working capital purposes.
Capitol intends to use the net proceeds of its initial public offering and simultaneous private placement, including the funds held in the trust account and funds made available to it by Capitols officers and directors, to acquire a target business and to pay its expenses relating thereto. To the extent that our capital stock is used in whole or in part as consideration to effect a Business Combination, the remaining proceeds held in the trust account, as well as any other net proceeds not expended, will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders fees, which we had incurred prior to the completion of our Business Combination if the funds available to us outside of the trust account were insufficient to cover such expenses.
Generally, the proceeds held in the trust account will not be released to us until the earlier of our completion of an initial Business Combination and our redemption of 100% of the outstanding public shares upon our failure to consummate a Business Combination prior to October 19, 2017. Notwithstanding the foregoing, there can be released to Capitol from the trust account any interest earned on the funds in the trust account that Capitol needs to pay its income or other tax obligations.
As of March 31, 2017, Capitol had cash of approximately $274,000. In addition, Capitol had (1) $325,000,000 in cash and equivalents held in trust for use in a business combination, (2) approximately $729,000 of cash from interest income in the trust account available for tax purposes, and (3) approximately $191,000 in accrued interest income earned to be used for tax purposes. As of April 27, 2017, the balance of the trust account was invested in a United States treasury securities money market fund.
Until consummation of an initial business combination, Capitol will be using the funds not held in the trust account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.
On August 11, 2016, August 12, 2016 and August 15, 2016, Capitol's officers and directors (or their affiliates) loaned Capitol an aggregate of $500,000. On February 7, 2017, Capitol's officers and directors (or their affiliates) loaned Capitol an additional aggregate of $450,000. Capitol had a cash position of approximately $274,000 as of March 31, 2017. On April 20, 2017, Capitol's officers and directors (or their affiliates) loaned Capitol a further $400,000 in aggregate. The August 2016, February 2017 and April 2017 loans, and any future ones that may be made by Capitol's officers and directors (or their affiliates), are, and will be, evidenced by notes and will be repaid upon the consummation of a business combination. The terms of the August 2016 and February 2017 loans state that they may be converted into warrants but in connection with the Transactions, the note holders have agreed not to convert the loans into warrants. Additionally, Capitol has received new commitments from its Chief Executive Officer, Mark D. Ein, and its President and Chief Financial Officer, L. Dyson Dryden, to provide additional loans to Capitol of up to $175,000 in the aggregate. Based on the foregoing, Capitol believes it has sufficient cash to meet its needs through October 19, 2017.
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Commencing on October 13, 2015 and ending upon the consummation of a Business Combination or its liquidation, Capitol began incurring a fee payable to Venturehouse Group, LLC and Dryden Capital Management, LLC of $10,000 per month for providing it with office space and certain general and administrative services.
Capitol did not have any off-balance sheet arrangements as of March 31, 2017 and December 31, 2016.
The firm of Marcum acts as Capitols independent registered public accounting firm. The following is a summary of fees paid or to be paid to Marcum for services rendered. The firm of PricewaterhouseCoopers LLP, acts as Cisions independent registered public accounting firm. PricewaterhouseCoopers LLP will act as Holdings independent public accounting firm after consummation of the business combination.
During the fiscal years ended December 31, 2015 and 2016, audit fees for Capitols independent registered public accounting firm were $73,648 and $58,195, respectively.
During the fiscal years ended December 31, 2015 and 2016, audit-related fees for Capitols independent registered public accounting firm were $0 and $0, respectively.
During the fiscal years ended December 31, 2015 and 2016, fees for tax services were $0 and $0, respectively.
During the fiscal years ended December 31, 2015 and 2016, fees for other services were $0 and $0 , respectively.
Since Capitols audit committee was not formed until October 2015, the audit committee did not pre-approve any of the foregoing services prior to such date, although any services rendered prior to the formation of the audit committee were reviewed and ratified by Capitols board of directors. The audit committee pre-approved all the foregoing services subsequent to such date. In accordance with Section 10A(i) of the Exchange Act, before Capitol engages its independent accountant to render audit or non-audit services on a going-forward basis, the engagement will be approved by its audit committee.
In October 2015, Capitols board of directors adopted a code of ethics that applies to all of Capitols executive officers, directors and employees. The code of ethics codifies the business and ethical principles that govern all aspects of Capitols business. Capitol will provide, without charge, upon request, copies of its code of ethics. Requests for copies of Capitols code of ethics should be sent in writing to Capitol Acquisition Corp. III, 509 7 th Street, N.W., Washington, D.C. 20004.
Upon the consummation of the business combination, Holdings will adopt a similar code of ethics that will apply to Holdings executive officers, directors and employees as well as those of its subsidiaries.
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Cision is a leading global provider of PR software, media distribution, media intelligence and related professional services according to Burton-Taylor International Consulting LLC, as measured by total revenue. Public relations and communications professionals use Cisions products and services to help manage, execute, and measure their strategic PR and communications programs. Similar to Bloomberg for finance professionals, LinkedIn for HR professionals, and Salesforce for sales professionals, Cision is an industry standard SaaS solution for PR and marketing professionals and is deeply embedded in industry workflow.
Cision delivers a sophisticated, easy-to-use platform for communicators to reach relevant media influencers and craft compelling campaigns that impact customer behavior. With rich monitoring and analytics, C3 arms brands with the insights they need to link their earned media to strategic business objectives, while aligning it with owned and paid channels. This platform enables companies and brands to build consistent, meaningful and enduring relationships with influencers and buyers in order to amplify their marketplace influence.
Cision has undergone a strategic transformation since GTCRs initial investment in 2014, evolving into a PR and marketing software leader through a series of complementary acquisitions.
The acquisitions of Cision and Vocus in 2014 and their subsequent merger established the foundation of the core media database, monitoring and analysis business. Over the twelve months following this initial merger, the company acquired Gorkana to expand its global footprint and also completed acquisitions of Visible Technologies and Viralheat to enhance its social media functionality. The subsequent acquisition of PR Newswire in 2016 was highly strategic, adding the depth and breadth of a global distribution network and making Cision the only vendor with a comprehensive global solution for PR professionals. Following these acquisitions, in October 2016, the company introduced C3, a cloud-based platform that integrates each of Cisions point solutions into a single unified interface. In the first quarter of 2017, Cision acquired Bulletin Intelligence to expand its capability to provide expert-curated executive briefings for the Executive Office of the President and Corporate C-Suite executives.
Cision provides its comprehensive solution through subscription contracts of one year or longer, with different tiers of pricing depending on the level of functionality and customer support required. Cisions SaaS delivery model provides a stable recurring revenue base. In 2016, the company generated $615 million of revenue, proforma for PR Newswire, and approximately 82% of Cisions revenue is generated by customers purchasing services on a subscription or recurring basis. The business mix is also highly diversified, with more than 75,000 customers, of which the top 25 only account for 3% of revenue.
PR professionals are responsible for critical corporate functions including communications and relations with media, government, consumers, industry and community stakeholders. The process of managing relationships and communications with journalists, analysts, public officials and other key influencers and audiences is vital to an organization achieving its corporate objectives and financial success. PR is top-of-mind for senior management executives and a key component of how companies manage and enhance their brands reputation through the media. The primary activities of in-house PR departments and PR agencies include:
| Creating and communicating news, feature articles and multimedia; |
| Distributing information to target audiences; |
| Planning, developing, managing and monitoring traditional and social media campaigns and implementing strategies to generate interest and popularity and influence brand reputation and sentiment; |
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| Organizing events such as media visits, receptions and conferences; |
| Editing and producing journals, corporate identity programs, video and other presentations; and |
| Compiling reports on activities and campaign performance. |
Central to all PR activities is a distribution strategy, which determines how an organization delivers consistent and well-executed communications to key constituents. The PR function is rapidly evolving with the proliferation of digital media, as PR professionals work to optimize communications across multiple online, mobile and social channels as well as traditional media outlets. In a multi-channel, data-driven environment, content can be distributed to a significantly larger and more targeted audience, increasing the importance of a broad and reliable distribution network and creating demand for integrated solutions that include distribution, targeting, monitoring and reporting. The importance of distribution to broader PR success was a driving force behind Cisions decision to acquire PR Newswire, the worlds largest press release distribution network, according to Burton-Taylor International Consulting LLC, as measured by total revenue.
The emergence and proliferation of digital media, search engine technology and social media has driven rapid change in the public relations and communications industries. In addition to traditional interaction with journalists and editors to manage news and content distributed through print media channels, PR and communications professionals must now also interact with and monitor bloggers, online news sites, consumer review websites, social media platforms and customer communications. The increasing complexity of these functions requires the use of numerous, sophisticated and often discrete software tools, analytics, and professional services to achieve PR professionals business objectives.
Media consumption patterns and brand interactions with consumers are rapidly evolving. Consumer purchases are increasingly influenced by a variety of different information sources, including search engines, blogs, online reviews and social media networks. This dynamic presents a challenge for marketing professionals who have traditionally relied on paid and owned media to shape a brands image and perception with consumers. As a result, marketers are being forced reevaluate how they reach and engage with their target audience.
As opposed to paid media campaigns, which directly target consumers through television, radio, print and search engine advertising, or owned media campaigns, which directly target consumers through company websites or social media accounts, earned media campaigns do not directly target consumers but rather target key influencers. With consumer behavior increasingly shaped by these influencers, including online reviewers, press and social media posters, effective earned media campaigns are becoming critical for marketers.
According to Nielsen, earned media is recognized as the most trusted media category, yet it receives a smaller allocation of a companys marketing budget than owned and paid media. Marketers have traditionally targeted the paid and owned channels because content is more easily controlled through those channels; however, declining efficacy of paid media and higher consumer trust in earned media is increasing marketers focus on the earned channel, which is Cisions core category.
According to eMarketer, more than $192 billion was spent on paid media in 2016, despite consumers actively trying to reduce their paid media exposure. For example, GlobalWebIndex indicates that 60% of desktop users have used ad-blockers. Consumers appear to be gravitating instead toward key influencers in making their purchase decisions. Launchmetrics research indicates that 93% of marketers believe influencer marketing is effective in raising brand awareness and 75% believe it is effective in generating sales leads.
In addition to having a greater impact on consumer purchase decisions than paid media, earned media has a lower cost, as distribution is assisted by the content author. As such, earned medias ROI is high. Chief marketing officers are beginning to recognize this dynamic and the value of earned media, which is driving a shift of paid media dollars into the earned channel, according to Outsell Inc.
Proactive management of earned media has increased in importance following the recent rise of consumers suspicions of fake news. Brands have responded to this challenge by proactively publishing factual content
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around key issues to manage their brand and reputation where possible. Press releases are considered an appropriate outlet for this purpose and have long been viewed by journalists and other earned media sources as a preferred source of reliable information.
With marketers P&L responsibilities continuing to expand and multi-channel marketing becoming a critical revenue-generating function, marketing technology is becoming a core part of technology in the enterprise. According to Gartner Inc., marketing technology spend is expected to exceed spend on core enterprise IT by 2017 and is growing at a much faster rate (12% versus 3%, respectively). This increased marketing technology spend will increasingly be captured by the earned channel.
A comprehensive and integrated PR platform is becoming increasingly critical as the proliferation of new media channels drives complexity in the execution of successful PR and marketing campaigns. PR, communications and marketing professionals increasingly value and prefer the ease of having the entire solution set monitoring, analyzing, identifying and distributing on a single, integrated platform.
The global communications intelligence software and services market is approximately $3 billion in annual spend, and has grown at a 6% CAGR since 2011, according to Burton-Taylor International Consulting LLC. This market comprises spend on press release distribution, media and social media monitoring, measurement and engagement, and targeting. Key drivers of steady growth in recent years include GDP and advertising expenditure growth, proliferation of advanced social media tools and an increasing focus on transparency and information disclosure.
As the needs of PR and marketing professionals converge, with the mutual desire for measurement and attribution, the PR and communications software market is beginning to converge with the marketing software market, which IDC estimates will reach $32 billion by 2018. Beyond marketing software, the broader digital marketing market is expected to reach $195 billion by 2020 according to Statista.
Cisons competitive strengths include:
C3 offers the communications professional a one-stop shop for all the tools they need to conceive, execute, monitor and analyze an earned media campaign. The company believes that offering a comprehensive cloud-based platform with multiple integrated functionalities is what communications professionals today require and prefer over the alternative of using several individual point solutions that are not interconnected, lack consistency and require interactions with and payments to several external software providers. The effectiveness and appeal of integrated platforms over point solutions has been demonstrated in the broader marketing realm with the creation and growth of cloud-based platforms such as the Adobe Marketing Cloud, the Oracle Marketing Cloud and the Salesforce Marketing Cloud.
Cisions PR software is known as a go-to global SaaS platform for communications professionals and is deeply embedded in industry workflow. For individuals working in the PR sector, fluency with the Cision platform is viewed by many as a key skill, similar to how knowledge of Bloomberg is critical to many finance professionals and experience with Salesforce is important for many sales professionals.
Cisions offering has wide geographic reach within all of its vertical markets. The company believes that being able to deal with only one provider to deliver earned media solutions across the globe is a key differentiator for Cision that has value to clients, in particular large multi-national corporations that manage PR and communications efforts globally.
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Cisions platform incorporates the largest media database and largest distribution network in the world, as measured by revenue estimates from Burton-Taylor International Consulting LLC. With Cisions proprietary database of 1.6 million contacts for journalists, bloggers and social influencers, including contact information, in-depth profiles, preferences and detailed pitching tips, clients can build smarter media lists to connect with the appropriate influencers and build meaningful relationships. Through Cisions distribution network, customers can conduct both wide-reaching and targeted campaigns across traditional and digital media in more than 170 countries in over 40 languages.
Cisions products are designed with easy-to-use functionality, built-in workflow capabilities, a high degree of flexibility in outputs and a sleek and intuitive user interface to help the communications professional execute their work in the best way possible.
Cision has a strong, highly experienced management team. CEO Kevin Akeroyd has more than 25 years of experience reshaping modern digital, social and mobile marketing. In his previous role, he led the team that built the marketing cloud business unit at Oracle from a nascent stage into one of the largest marketing and advertising technology providers in the industry. Cisions CFO, Jack Pearlstein, has 20 years of financial, operational and strategic planning experience with technology companies. Mr. Pearlstein has served as CFO of four technology companies, three of which completed initial public offerings.
C3, Cisions cloud-based software platform, delivers critical functionality across the entire earned media lifecycle. Cision believes that C3 is the first software solution that allows communications professionals to plan, execute and analyze PR campaigns in a fully integrated fashion. Given the recent launch of C3, the majority of Cisions revenue today comes from customers who purchase only a subset of the capabilities currently offered by Cision. As C3 continues to improve and these customers are migrated onto the C3 platform, Cision will attempt to upsell additional capabilities. For example, a customer who previously used Cision to plan campaigns and monitor campaign results will be a candidate to purchase PR Newswire press release distribution services. Customers who purchase PR Newswires distribution service within C3 will have improved ability to measure the return on investment of specific campaign activities compared to customers who use other press release distribution services that cannot be accessed within the C3 platform.
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For the year ended December 31, 2016 approximately 82% of Cisions pro forma revenue was subscription-based or recurring, with only 18% being transactional. Recurring and transactional revenue is largely related to PR Newswire, which was acquired in June 2016 and has since been incorporated into the broader Cision platform. PR Newswires services are increasingly sold on a subscription basis as part of C3.
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Discovering and maintaining relationships with relevant journalists and other influencers that communicate an organizations message to the public are critical to any earned media strategy. Cision offers the largest database in the world, based on database revenue estimates from Burton-Taylor International Consulting LLC, with contacts for over 1.6 million journalists and other influencers across 200 countries, including over 300,000 digital influencers. The database is updated more than 20,000 times daily to provide the most accurate and timely information to PR and communications professionals.
The media database is integrated with CRM tools and content generation and distribution features to give PR and communications professionals access to relevant influencers when planning a campaign as well as to schedule and record all interactions with contacts. Access to the database is offered both on a regional and on a global basis.
The distribution strategy of an earned media campaign determines how a company delivers consistent and well-executed communications to influencers across the media spectrum. In a multi-channel, data-driven environment, press releases and other content can be distributed to a significantly larger audience, increasing the importance of a broad and reliable distribution network. Cisions distribution product allows earned media professionals to execute campaigns and distribute corporate news, events information, content and multimedia through press releases, web and email. Compared to free, high volume channels such as social media and corporate newsrooms, Cisions distribution platform is an important way for brands to signal the relative importance of a message. This signaling mechanism is often the difference between a message becoming part of the noise or ending up in the hands of a key influencer. Brands compete for influencer attention with several thousand stories that are transmitted over the major distribution networks in a day, which compares favorably to competing with 500 million tweets per day on Twitter.
Cision has the largest global distribution network of its kind in the world, based on distribution revenue estimates from Burton-Taylor International Consulting LLC. The companys network reaches traditional and digital media in more than 170 countries in over 40 languages, including major media organizations, over 10,000 syndicated websites and over 900,000 contacts such as journalists, bloggers and social influencers. Cisions products enable communications professionals to distribute press releases and other content such as photos, videos, infographics, financial information and articles through web, wire and email. In addition, the company offers around-the-clock editorial support for clients.
| PR Newswire: Cisions primary distribution product is PR Newswire, a leading provider of premium wire distribution services in the U.S., Canada and globally, with international operations in Canada, Europe, the Middle East, Asia and Latin America. For more than 60 years PR Newswire has represented an industry standard for high-impact dissemination of critical news, financial releases and other content and has customers spanning Fortune 2000 multinationals, small and medium businesses, public relations agencies and government entities. PR Newswire also offers a comprehensive suite of products and services for Investor Relations professionals, including distribution for earnings and other material news, webcasts and conference calls, IR website hosting, and virtual investor conferences. |
| iReach, WebMax, PRWeb: Cision offers alternative distribution products to clients who seek a more economical option. These products include iReach, WebMax and PRWeb and generally provide customers the ability to distribute shorter releases across a smaller network with web-focused delivery and search engine discovery. |
| Multimedia content and broadcast distribution: MultiVu provides creative services and video production to help companies enhance their communications through webcast and broadcast. Cision also provides hosted, white-label web pages integrated into a customers website and managed on behalf of investor relations and public relations departments. |
| iContact: iContact is a cloud-based e-mail and social marketing software application that marketing professionals use to create, publish and distribute professional-quality e-mails. The application integrates with social media platforms and Salesforces Sales Cloud. |
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Cision enables PR and communications professionals to track the media coverage of their companies and brands, assess the impact of strategic initiatives and discover how influencers portray their content and gauge overall brand sentiment. Cisions products allow clients to monitor all forms of media, including global print, digital, social media, television and radio sources, and store articles, content and corporate news. The companys media monitoring software tracks and monitors content on over 200,000 digital, print, social and broadcast sources in over 150 countries. Cision delivers its customers over 2 million stories every day. Additionally, through the acquisition of Bulletin Intelligence, Cision has expanded its capability to provide expert-curated executive briefings to the Executive Office of the President and Corporate C-Suite executives. Cision also offers tools to filter and automatically update relevant news sources and content to make monitoring an efficient aspect of customers overall PR strategies. The graphics below are examples of monitoring insights Cision provides to customers from their PR campaigns.
Cision provides functionality that enables its customers to assess media coverage by collecting and analyzing data and metrics configured to meet the needs of the client. Metrics on audience engagement, campaign reach and effectiveness, sentiment and competitive benchmarking allow PR and communications professionals to quantify campaign results of earned media strategies. Analysis also provides data-driven insights that inform the creation of future campaigns and marketing investment.
Cisions media analysis capabilities also include a robust technology-enabled service aimed at Global 2000 companies with complex PR strategies, as well as an automated self-serve module that can be configured by customers for high-level reporting needs. The charts below are examples of analysis insights Cision provides to customers from their PR campaigns.
Cision intends to continue to drive growth and enhance its market position through the following key strategies:
While Cision has established itself as a leading player in the PR software market, the company believes there is still a substantial opportunity to increase market penetration globally by selling its platform advantage. Most vendors in the market offer point solutions that address one or two functions in a PR campaign, resulting in
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the need for multiple vendors; however, chief marketing officers prefer integrated platforms over individual solutions, according to Gartner, Inc. The recent launch of C3 provides the market with a comprehensive platform that integrates all the core capabilities needed for a PR software campaign, establishing Cision as a reference platform for the PR software market.
Cision understands the importance of offering an easy-to-use product with extensive features that meet and exceed its customers needs. Cisions product team is constantly working to introduce new features that augment its existing platform. For example, in 2016 Cision expanded its media database capabilities, providing its customers with insights into the audience demographics of each individual Cision influencer and providing tailored influencer recommendations for each of its customers. Cisions account management and customer service representatives continuously communicate the needs of its customers to the product team, providing for continuous platform improvement.
Cisions new product innovation pipeline aims to introduce new products to market that improve the way PR and marketing professionals do business. Over the short-term, Cision plans to leverage the fact that its new platform, C3, provides a fully integrated set of PR capabilities under one umbrella by adding data attribution capabilities and eventually selling the data it compiles. Cisions measurement and attribution capabilities, which the company expects to add to its products by the end of 2017, will enable customers to track end-user reach, demographics, engagement and purchase conversion data from their earned media campaigns, allowing customers to measure ROI. Cision plans to sell the highly valuable consumer and influencer data it compiles to brands and media networks that may use the data to improve audience targeting and increase advertising effectiveness.
Cision believes a significant opportunity exists to increase spending by its more than 75,000 existing customers by expanding product and service offerings sold. Because Cision has grown through acquisitions and because a comprehensive platform did not previously exist in the PR software market, many of Cisions customers use various PR point solutions, including solutions provided by competitors. For example, Cision has 13,000 U.S. customers and PR Newswire has 16,000 U.S. customers, of which only approximately 2,600 overlap. By providing the first comprehensive platform for executing and analyzing earned media campaigns, Cision is well positioned to increase product penetration among existing customers by encouraging them to bundle various point solutions under one umbrella. In some markets, Cision has not yet introduced its full range of products. Cision plans to roll out its entire product suite in each of its markets, which is expected to increase average customer spend through increased product penetration and attract new customers through a broader product set. Additionally, Cisions sales team has historically been successful in selling higher tiered product or service offerings to existing clients and will have more opportunities to increase product penetration as the Cision product team continues to add products and features to its platform.
Cision has an expansive global reach, spanning many major international markets around the globe including those outside of the United States such as Canada, China, India, EMEA and Latin America, which, in aggregate, accounted for 32% of the companys 2016 pro forma revenue. In many international markets, Cisions presence is limited today. The company views these markets as opportunities for geographic expansion, which include Latin America, Asia and Continental Europe accounting for only 1%, 3% and 7% of Cisions 2016 pro forma revenue, respectively.
Cision aims to establish the earned media cloud as the third marketing software category, alongside paid and owned media, by providing valuable demographic, psychographic, sociographic and attribution end-user data to its customers and by selling the data to brands and media networks. Cisions development of data attribution and data monetization products is expected to enable it to enter the $32 billion marketing software market, as measured by IDC. Once Cision establishes itself in that market, Cision plans to enter the broader $195 billion digital marketing market, as measured by Statista, through platform extensions into adjacent earned media categories. These categories include ratings and reviews, employee amplification, influencer performance and content marketing. Cision will opportunistically employ both organic initiatives and acquisitions to expand into the digital marketing market.
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Cision has successfully sourced and integrated several strategic acquisitions in the last three years, including Vocus, Visible, Viralheat, Gorkana and PR Newswire. These acquisitions have strengthened Cisions market position and enabled the company to provide a comprehensive PR communications product suite with a scaled, efficient cost-structure.
Most recently, on March 27, 2017, Cision closed the acquisition of Bulletin Intelligence. Bulletin Intelligence is supported by proprietary, patented collaboration and authoring software written to support its more than 100 analysts, delivers must-read daily briefings to closed audiences, providing a comprehensive view of news and other competitive intelligence to highest-level corporate and government leaders. Cision believes the addition of Bulletin Intelligences reputable analyst services bolsters the companys ability to provide data-driven insights that executives rely on to make critical business decisions.
Cisions management is actively evaluating additional acquisition opportunities to enhance Cisions leadership in the global PR software market by expanding its market reach, geographic presence and product capabilities.
Cision has a large and highly diversified customer base of more than 75,000 customers, spanning the Americas, Europe and Asia. Clients range from small businesses to large enterprises across a wide range of industries and also include a large number of PR agencies. Annual spend for these customers can range from hundreds of dollars for small businesses to several million for the largest customers.
Cisions customer base includes 91 of the worlds 100 most valuable brands, according to Forbes.com, 96 of the top 100 PR companies in the United States and 47 of the top 50 PR companies in the UK, as listed in the Holmes Report 2016.
Select customers include McDonalds, Samsung, Edelman, Coca Cola, Google, Exxon Mobil and Nike. Cisions top 25 customers account for only 3% of revenue.
Technology is key to Cisions Communications Cloud strategy of creating a unique competitive advantage by offering the only globally accessible end-to-end PR workflow solution in the market. Cisions PR software platforms are built upon a highly scalable and flexible component or multi-tenant based infrastructures in a hybrid cloud environment allowing us to provide a cost effective and secure offering. The platforms leverage proven delivery technologies along with leading big data and analytic offerings to create a competitive advantage. Cisions online infrastructure is geographically distributed across multiple public and private cloud locations to facilitate both resilience and performance.
Cision has an experienced and highly skilled technology team managing product development and IT operations. Cision utilizes a modified agile development approach with a standard 2-week cadence but can accelerate or extend deployment time-frames as needed. This agile approach to development is partnered with an IT Infrastructure Library focused devops based approach to guarantee that there are appropriate controls and a heightened focus on the customer experience.
Cision maintains a focus on continual improvement from both an IT performance and security perspective. For its critical systems and platforms, the company has implemented a initiatives and procedures that include:
| A technology risk framework that enables us to identify opportunities for improvement, emerging patterns, and other concerns so they can be understood, addressed and periodically re-reviewed. |
| A multi-pronged approach to security that includes awareness education, asset and data identification, protection, detection, response and remediation. |
| An architectural approach that puts security in the forefront for all new development initiatives to improve efficacy and reduce Cisons longer-term security costs. |
These approaches will be extended as appropriate to Cisions other systems, platforms and acquisitions.
In 2016, Cision initiated several consolidation and integration initiatives aimed at simplifying and modernizing its critical infrastructures to increase flexibility, improve margins and further improve the customer experience.
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These initiatives include data center consolidations, infrastructure upgrades, management information software system enhancements and the deployment of enhanced global operating models across Cisions operations.
Cision operates direct sales organizations throughout the United States and within each of its international markets. As of December 31, 2016, Cision had approximately 730 direct sales professionals. In the U.S., Cision divides its direct sales professionals into two distinct go-to-market teams, new business teams and account management (renewal) teams. Within each of the two go-to-market teams, U.S. direct sales professionals are further segmented into groups based upon customer size, including an enterprise group for large customers and agencies, a midmarket group for medium size customers and a small business group for small customers. Cisions U.S. new business sales teams source and develop new customer relationships. Cisions U.S. account management sales teams focus on maintaining customer relationships, increasing product penetration and ensuring contract renewals. In the United Kingdom and in several other larger international markets, Cisions direct sales structure is similar to that in the United States. In Cisions smaller international markets, there are sometimes unified direct sales structures without clear distinction between new business teams and account management teams.
Cisions marketing team focuses on attracting, acquiring and retaining Cisions customers through digital demand campaigns, brand building and showcases of customer success. With persona-based content aimed at communications professionals, the team delivers cross-channel campaigns that span paid search, email, web and customer events. Supporting Cisions global sales team, marketing also develops messaging, product positioning, and tools to communicate the business value of Cision solutions. To establish the Communications Cloud category, marketing develops insightful thought leadership for Cision executives to disseminate through content marketing and keynote presentations. As of December 31, 2016, Cision had approximately 82 marketing professionals globally.
The communications software market is highly fragmented, highly competitive and rapidly evolving. Whereas Cisions product suite provides a global end-to-end solution, other industry participants generally operate in select geographic regions or particular verticals including media monitoring and analysis or distribution. In media monitoring and analysis, industry participants include Meltwater, Kantar Media, Trendkite and iSentia. In distribution, industry participants include Business Wire, Nasdaq and The London Stock Exchange through its RNS service.
Key factors which impact competition in Cisions industry include:
| Product features, effectiveness and reliability; |
| User interface and ease of use; |
| Media database breadth and quality; |
| Expertise of sales and after-market support organizations; |
| Measurement and attribution capabilities; |
| Breadth and depth of the distribution network; |
| Pace of innovation and product roadmap; |
| Strength of professional services organization; |
| Price of products and services; and |
| Scale and financial stability of the organization |
Building and maintaining a strong corporate culture benefits both Cisions customers and employees and serves as the foundation for the successful execution of the companys strategy, and, as a result, Cisions corporate culture is critical for its growth strategy.
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As of December 31, 2016, Cision had approximately 3,130 global employees, with approximately 1,445 employees located in the U.S. and 1,685 employees located internationally. The company also engages temporary employees and consultants. None of Cisions employees in the United States are members of a union, however 514 of Cisions foreign employees are currently subject to collective bargaining agreements and/or are members of local work councils. Cision considers relations with its employees to be very good.
Cision relies on a combination of patent, trademark, copyright and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions to protect its proprietary technology and its brand. Cision has registered, and applied for the registration of, U.S. and international trademarks, service marks and domain names. Additionally, Cision has filed U.S. patent applications covering certain of its proprietary technology and own several issued patents. Cision also controls access to software, documentation and other proprietary information and enter into confidentiality and proprietary rights agreements with substantially all of its employees, consultants and other third parties, pursuant to which such employees, consultants and other parties assign to Cision the intellectual property rights that they develop and agree to keep confidential its confidential and proprietary information.
Cision currently licenses content included in its cloud-based software from several providers pursuant to data reseller, data distribution and license agreements with these providers. These agreements provide Cision with content such as news coverage from print and Internet news sites, as well as contact information for journalists, analysts, public officials, media outlets and publicity opportunities. The licenses for this content are non-exclusive. The agreements vary in length, and generally renew automatically subject to certain cancellation provisions available to the parties. Cision does not believe that any of its content providers are single source suppliers, the loss of whom would substantially affect its business.
Cisions business involves the supply of copyrighted works of third-parties, including publishers and broadcasters, which necessitates working closely with these copyright owners on clients behalf. Delivering content to clients typically requires copyright fees to be paid to copyright owners. Cision is typically able to pass these copyright fees directly through to clients.
Cision also contracts with content providers for the rights to access and distribute paywalled or subscription-only content. As paywalled content becomes increasingly prevalent on publisher websites, Cision expects to continue negotiating access rights with key content providers.
If a claim is asserted that Cision has infringed the intellectual property rights of a third-party, it may be required to seek licenses to that technology. In addition, Cision licenses third-party technologies that are incorporated into some elements of its services. Licenses from third parties may not continue to be available to Cision at a reasonable cost, or at all. Additionally, the steps Cision has taken to protect its intellectual property rights may not be adequate. Third parties may infringe or misappropriate Cisions intellectual property rights or proprietary technology. Competitors may also independently develop technologies that are substantially equivalent or superior to the technologies Cision employs in its services.
Demand for Cisions products and services fluctuates from month to month, with periods of greater demand corresponding to earnings release cycles of public companies and periods of lower demand corresponding to periods in which activity in the financial markets is reduced, such as during months with fewer business days and months with more holidays, due to the transactional component of Cisions distribution business.
From time to time, Cision is subject to litigation incidental to its business and to governmental investigations related to its products and services. Cision is not currently party to any legal proceedings or investigations that would reasonably be expected to have a material adverse effect on its business or financial condition. See Risk Factors We are the subject of continuing litigation and governmental inquiries .
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Cisions corporate headquarters is located in Chicago, Illinois and consists of approximately 46,000 square feet of leased space. Cision also leases approximately 20 other offices throughout the United States and approximately 45 offices in foreign countries where it operates. Cision owns one facility in Mexico City, Mexico, which consists of approximately 7,000 square feet.
Cisions current facilities meet its employee base and can accommodate its currently contemplated growth. Cision believes that it will be able to obtain suitable additional facilities on commercially reasonable terms to meet any future needs.
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You should read the following managements discussion and analysis together with Selected Historical Financial Information of Cision and Cisions audited financial statements and the related notes included elsewhere in this proxy statement/prospectus. This discussion contains forward-looking statements about Cisions business, operations and industry that involve risks and uncertainties, such as statements regarding Cisions plans, objectives, expectations and intentions. Cisions future results and financial condition may differ materially from those currently anticipated by Cision as a result of the factors described in the sections entitled Risk Factors and Cautionary Note Regarding Forward-Looking Statements. Throughout this section, unless otherwise noted we, us and the Company refer to Cision and its consolidated subsidiaries. Certain amounts in this section may not foot due to rounding.
We are a leading global provider of PR software, media distribution, media intelligence and related professional services according to Burton-Taylor International Consulting LLC, as measured by total revenue. Public relations and communications professionals use our products and services to help manage, execute, and measure their strategic public relations and communications programs. Similar to Bloomberg for finance professionals, LinkedIn for HR professionals, and Salesforce for sales professionals, we are an industry standard SaaS solution for PR and marketing professionals, and is deeply embedded in industry workflow. We deliver a sophisticated, easy-to-use platform for communicators to reach relevant media influencers and craft compelling campaigns that impact customer behavior. With rich monitoring and analytics, C3 arms brands with the insights they need to link their earned media to strategic business objectives, while aligning it with owned and paid channels. This platform enables companies and brands to build consistent, meaningful and enduring relationships with influencers and buyers in order to amplify their marketplace influence. We have more than 75,000 customers and an expansive global reach, spanning most major international markets around the globe including those outside of the United States such as Canada, China, India, EMEA, and Latin America, which, in aggregate, accounted for 32% of our 2016 revenue.
Since our merger with an investment vehicle affiliated with GTCR in April 2014, we have acquired six businesses and we have divested of three businesses, as set forth below.
Acquisition of Vocus. On May 30, 2014, we acquired all of the outstanding shares of Vocus, a provider of cloud-based software, services and tools for the marketing and public relations industry for approximately $454.7 million in cash.
Acquisition of Visible. On September 12, 2014, we acquired substantially all of the assets of Visible, a provider of advanced social intelligence and engagement tools for social media monitoring, data analytics and insights, and customer engagement through a cloud-based software platform for $7.1 million in cash.
Acquisition of Gorkana. On October 21, 2014, we acquired substantially all of the assets of Gorkana, a provider of media intelligence and information, offering PR and marketing professionals access to customized solutions through a cloud-based software platform in the United Kingdom for $268.9 million in cash.
Acquisition of Viralheat. On March 20, 2015, we acquired substantially all of the assets of Viralheat, a social media engagement platform for $4.5 million in cash.
Divestiture of Cision UK and Vocus UK. On June 24, 2015, we divested certain assets of our Cision UK and Vocus UK businesses for approximately $2.1 million in cash.
Acquisition of PR Newswire. On June 16, 2016, we acquired substantially all of the assets of PR Newswire, a provider of premium wire distribution services for $813.3 million in cash and LP units with a nominal value of $40 million.
Divestiture of Agility. On July 7, 2016, we divested certain assets related to our Agility business for approximately $4.3 million in cash. The Agility business was acquired in conjunction with our acquisition of PR Newswire.
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Divestiture of Vintage. On March 8, 2017, the Company sold substantially all of the assets of its Vintage Corporate Filings business for approximately $26.6 million and received approximately $23.7 million in cash after escrow and expenses.
Acquisition of Bulletin Intelligence. On March 27, 2017, we acquired all of the outstanding shares of Bulletin Intelligence, which has written the daily White House News Summary for the Executive Office of the President since 2001, and which also provides custom, expert-curated executive briefings to the CEOs and C-suites of many of the U.S. largest businesses, for $60.5 million in cash, LP units with a nominal value of $7.0 million, and contingent consideration valued at $6.1 million.
The results of operations of these acquired businesses and divestitures have been included in our financial statements since the applicable acquisition date or through the divestiture date. For more information regarding these transactions, see Note 3 to our consolidated financial statements included elsewhere in this proxy statement/prospectus.
We derive our revenue from subscription arrangements and related professional services in connection with the Companys cloud-based software and services offerings. We also derive revenues from news distribution services on both a subscription basis and separately from non-subscription arrangements. We recognize revenue when there is persuasive evidence of an arrangement, the service has been provided to the customer, the collection of the fee is probable and the amount of the fee to be paid by the customer is fixed or determinable.
Our separate units of accounting consist of subscription services, transactional services and professional services. The subscription services include access to our cloud-based software, hosting services, content and content updates and customer support. Our subscription agreements are typically one to three years in length and are non-cancelable, though customers have the right to terminate their agreements for cause if we materially breach our obligations under the agreement. Subscription agreements do not provide customers the right to take possession of the software at any time. We do not charge customers an up-front fee for use of the technology. Implementation activities are insignificant and not subject to a separate fee. In certain cases, the Company charges annual membership fees recognized over the one year membership period.
We also distribute individual news releases to thousands of distribution points on the Internet, which are then indexed by major search engines and also directly to journalists and other key constituents. Dependent on the nature of the contract with the customer, we recognize revenue on subscription basis over the term of the subscription, or on a per-transaction basis when the press releases are made available to the public.
Professional services include broadcast and webcast production. For these services, revenue is recognized when the specific performance is completed and customer acceptance received.
When sold together, revenue from our different service offerings are accounted for separately as those services have value on a standalone basis and do not involve a significant degree of risk or unique acceptance criteria. We allocate revenue to each element in a multiple element arrangement based on a selling price hierarchy. The selling price for a deliverable is based on its VSOE, if available, TPE, if VSOE is not available, or estimated selling price, if neither VSOE nor TPE is available. As we have been unable to establish VSOE or TPE for the elements of its arrangements due to factors such as a high number of varied service offerings sold on a subscription basis to differing customer concentrations as well as varied discounting practices and unobservable competitive data for similar services, we estimate selling prices by analyzing multiple factors such as historical pricing trends, customer renewed activity, and discounting practices. The volume of multiple element arrangements we sold in which any element of the arrangement has a revenue attribution pattern different to the other elements was not significant for all years presented.
Sales and other taxes collected from customers to be remitted to government authorities are excluded from revenues.
Cost of Revenue. Cost of revenue consists primarily of compensation for training, editorial and support personnel, hosting and network infrastructure costs, royalty and license fees for content, press release distribution costs, third-party contractor fees, equipment and software maintenance costs, amortization of our
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proprietary database and purchased technology, amortization of capitalized software development costs and depreciation associated with computer equipment and software.
Sales and Marketing Expenses. Our sales and marketing expenses consist primarily of compensation for our sales and marketing personnel, related travel costs, sales commissions and incentives, marketing programs, promotional events, webinars and other brand building expenses.
Research and Development. Our research and development expenses consist primarily of compensation for our software application development personnel and fees to third-party software development firms. Capitalized software development costs are amortized using the straight-line method over the useful life of the software, which is generally two years. All other research and developmental costs are expensed as incurred.
General and Administrative Expenses. Our general and administrative expenses consist primarily of compensation and related expenses for general corporate functions such as executive, legal, finance, human resources and administrative personnel, as well as costs for external legal, accounting and other professional services, acquisition and other related expenses, restructuring costs, third-party payment processing and credit card fees, facilities rent and other corporate expenses.
Depreciation and Amortization. Depreciation includes depreciation of property, equipment and software. Assets acquired under capital leases and leasehold improvements are amortized. Amortization of assets acquired under capital leases is included in depreciation and amortization expense. When assets are retired or otherwise disposed of, the asset and related accumulated depreciation are eliminated from the accounts and resulting gain or loss is recorded in the results of operations. Amortization of intangible assets consist primarily of the amortization of intangibles related to customer relationships and trademark assets acquired through our acquisitions of Vocus, Visible, Gorkana, ViralHeat and PR Newswire.
In connection with any acquisition, we are required to recognize any assets acquired and liabilities assumed measured at fair value as of that date. With respect to determining fair value, the excess of the purchase price over these allocations will be assigned to goodwill, which is not amortized for accounting purposes but is subject to testing for impairment, at least annually, and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The allocation of the purchase price of any assets acquired in an acquisition will result in increases in amortization expense relating to acquired intangible assets, because we will record the fair value of the acquired intangible assets. We amortize the intangible assets over their estimated useful lives.
We report in U.S. dollar, and the functional currency of our foreign subsidiaries is the local currency, including British Pound, the Euro, the Swedish Krona and the Canadian Dollar. Many of these currencies have weakened significantly against the U.S. dollar since the end of 2014. Approximately 32% of our revenues are generated in non-U.S. dollar-denominated currencies. The financial statements of these subsidiaries are translated into U.S. dollars using exchange rates in effect at each balance sheet date for assets and liabilities and average exchange rates during the period for revenues and expenses. To the extent we experience significant currency fluctuations and our hedging transactions are insufficient, our results of operations may be impacted.
Growth of our customer base is important to our continued revenue growth. With our recent acquisition history, we have the opportunity to expand our customer base and to use our new platforms for cross-selling opportunities. Our ability to execute on cross-selling strategies and successfully integrate our acquisitions will have an impact on our results.
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We face intense price competition in all areas of our business. We have in the past lowered prices, and may need to do so in the future to attempt to gain or maintain market share. Additionally, we have also been, and may once again be, required to adjust pricing to respond to actions by competitors, which could adversely impact operating results.
As the needs of PR and communications professionals have evolved, we are increasingly distributing non-press release content over our network, including multimedia, infographics, white papers and other forms of brand-created content. Companies are progressively more focused on earned media, and we are well-positioned to take advantage of this structural shift in the market. Our results will be affected as the mix of content distributed over our network evolves and PR and communications professionals focus additional spend to earned media.
The switch to social channels as a companys preferred method to interface with clients and customers has fueled the demand for PR and communications skills and solutions worldwide. PR budgets are increasing as businesses lower paid marketing budgets and leverage the shift towards earned media by actively monitoring and engaging in conversations about their products and services online. To the extent this trend continues, our results of operations will be impacted by this evolution in spending practice.
We are focused on expanding market awareness of our cloud-based PR solutions. Although we have seen companies adopt our solutions, we expect further growth to coincide with the rapid increase of online content and influencers and new digital media channels. In response to this trend, we have transitioned from traditional print monitoring services to cloud-based solutions capable of managing the entire lifecycle of a PR campaign. To the extent this trend continues, we expect our revenues to experience growth.
The financial information herein presents the consolidated financial statements of Cision and its subsidiaries from February 11, 2014 through December 31, 2014 (Fiscal 2014). We were incorporated on February 11, 2014 to facilitate the acquisition of Cision, AB and its subsidiaries (Cision) and to then subsequently pursue further growth both organically and through acquisition. Effective April 14, 2014, we acquired 65.3% of the outstanding share capital of Cision. Prior to April 14, 2014, we had no material assets and had not commenced operations.
The measures of revenue and Adjusted EBITDA are the measures currently utilized by management to assess performance, and we disclose these measures to investors to provide them with a meaningful understanding of our companys performance. We are in the process of an operational, technological and financial integration effort for all recently combined businesses, particularly with respect to the acquisition of PR Newswire which was acquired in June 2016. One of our current objectives is to identify the most relevant key performance indicators to stakeholders for the fully integrated business. The determination as to when we will be able to identify these performance measures will be dependent on our ability to migrate customers from legacy platforms onto the C3 platform. When such integration and implementation is complete and such measures are available and utilized by management, these measures will be included in future disclosures to investors.
This section includes a summary of our historical results of operations, followed by detailed comparisons of our results for (i) the quarters ended March 31, 2017 and 2016, (ii) the years ended December 31, 2016 and 2015 and (iii) the year ended December 31, 2015 and Fiscal 2014. We have derived this data from our consolidated financial statements included elsewhere in this proxy statement/prospectus.
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The following table shows certain income statement data in dollars and percentages for the periods indicated:
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Ended March 31, 2017 |
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Year Ended
December 31, 2016 |
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Fiscal 2014 | ||||||||||||||||||||||||||||||||||||
Revenue | $ | 145,818 | 100.0 | % | $ | 77,704 | 100.0 | % | $ | 467,772 | 100.0 | % | $ | 333,958 | 100.0 | % | $ | 170,114 | 100.0 | % | ||||||||||||||||||||
Cost of revenue | 45,066 | 30.9 | % | 28,537 | 36.7 | % | 162,583 | 34.8 | % | 125,006 | 37.4 | % | 74,552 | 43.8 | % | |||||||||||||||||||||||||
Gross Profit | 100,752 | 69.1 | % | 49,167 | 63.3 | % | 305,189 | 65.2 | % | 208,952 | 62.6 | % | 95,562 | 56.2 | % | |||||||||||||||||||||||||
Operating costs and expenses:
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Sales and marketing | 27,290 | 18.7 | % | 16,536 | 21.3 | % | 92,594 | 19.8 | % | 71,603 | 21.4 | % | 56,029 | 32.9 | % | |||||||||||||||||||||||||
Research and development | 5,452 | 3.7 | % | 3,536 | 4.6 | % | 19,445 | 4.2 | % | 16,604 | 5.0 | % | 5,657 | 3.3 | % | |||||||||||||||||||||||||
General and administrative | 40,232 | 27.6 | % | 18,344 | 23.6 | % | 135,737 | 29.0 | % | 88,448 | 26.5 | % | 112,722 | 66.3 | % | |||||||||||||||||||||||||
Amortization of intangibles | 21,011 | 14.4 | % | 11,555 | 14.9 | % | 77,058 | 16.5 | % | 59,914 | 17.9 | % | 22,065 | 13.0 | % | |||||||||||||||||||||||||
Total operating costs and expenses | 93,985 | 64.5 | % | 49,971 | 64.3 | % | 324,834 | 69.4 | % | 236,569 | 70.8 | % | 196,473 | 115.5 | % | |||||||||||||||||||||||||
Operating income (loss) | 6,767 | 4.6 | % | (804 | ) | (1.0 | )% | (19,645 | ) | (4.2 | )% | (27,617 | ) | (8.3 | )% | (100,911 | ) | (59.3 | )% | |||||||||||||||||||||
Non operating income (losses):
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Foreign exchange gains (losses) | (1,948 | ) | (1.3 | )% | 2,097 | 2.7 | % | 6,299 | 1.4 | % | (10,886 | ) | (3.3 | )% | (10,992 | ) | (6.5 | )% | ||||||||||||||||||||||
Equity in earnings of unconsolidated affiliate | | | | | 241 | 0.1 | % | | | | | |||||||||||||||||||||||||||||
Interest and other income, net | 2,049 | 1.4 | % | 33 | 0.0 | % | 590 | 0.1 | % | 5,750 | 1.7 | % | 339 | 0.2 | % | |||||||||||||||||||||||||
Interest expense | (36,915 | ) | (25.3 | )% | (15,382 | ) | (19.8 | )% | (117,997 | ) | (25.2 | )% | (61,398 | ) | (18.4 | )% | (28,408 | ) | (16.7 | )% | ||||||||||||||||||||
Loss on extinguishment of debt | | | | | (23,591 | ) | (5.0 | )% | | | | | ||||||||||||||||||||||||||||
Total non operating loss | (36,814 | ) | (25.3 | )% | (13,252 | ) | (17.1 | )% | (134,458 | ) | (28.7 | )% | (66,534 | ) | (19.9 | )% | (39,061 | ) | (23.0 | )% | ||||||||||||||||||||
Loss before income taxes | (30,047 | ) | (20.6 | )% | (14,056 | ) | (18.1 | )% | (154,103 | ) | (32.9 | )% | (94,151 | ) | (28.2 | )% | (139,972 | ) | (82.3 | )% | ||||||||||||||||||||
Provision for (benefit from) income taxes | (7,054 | ) | (4.8 | )% | 90 | 0.0 | % | (55,691 | ) | (11.9 | )% | (3,607 | ) | (1.1 | )% | (31,010 | ) | (18.2 | )% | |||||||||||||||||||||
Net loss | $ | (22,993 | ) | (15.8 | )% | $ | (14,146 | ) | (18.2 | )% | $ | (98,412 | ) | (21.0 | )% | $ | (90,544 | ) | (27.1 | )% | $ | (108,962 | ) | (64.1 | )% |
We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, for the period presented, before depreciation and amortization, interest expense and loss on extinguishment of debt, and income taxes, further adjusted to exclude the following items: (a) acquisition related costs and expenses; including severance costs; (b) stock-based compensation expense; (c) deferred revenue reduction from purchase accounting; (d) gains or losses related to divested businesses or assets groups; (e) sponsor fees and expenses; (f) unrealized (gain) or loss on foreign currency translation.
We believe Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain drivers of the business, such as sales growth and operating costs. We believe Adjusted EBITDA can be useful in providing an understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. While Adjusted EBITDA is not a recognized measure under GAAP, management uses this financial measure to evaluate and forecast business performance. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as capital expenditures and related depreciation, principal and interest payments, and tax payments. Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.
The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and the related notes thereto also included within.
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The following table outlines the reconciliation from net income (loss) to Adjusted EBITDA for the periods indicated:
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Ended March 31, 2017 |
Three Months
Ended March 31, 2016 |
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Twelve Months
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Fiscal 2014 | ||||||||||||||||
Net income (loss) | $ | (22,993 | ) | $ | (14,146 | ) | $ | (98,412 | ) | $ | (90,544 | ) | $ | (108,962 | ) | |||||
Depreciation and amortization | 32,592 | 22,023 | 126,983 | 104,038 | 45,685 | |||||||||||||||
Interest expense and loss on extinguishment of debt | 36,915 | 15,382 | 141,588 | 61,398 | 28,408 | |||||||||||||||
Income tax | (7,054 | ) | 90 | (55,691 | ) | (3,607 | ) | (31,010 | ) | |||||||||||
Acquisition related costs and expenses | 8,240 | 4,763 | 45,006 | 28,010 | 47,419 | |||||||||||||||
Stock-based compensation | 993 | 1,313 | 5,302 | 5,294 | 31,902 | |||||||||||||||
Deferred revenue reduction from purchase accounting | | | 1,168 | 10,933 | 39,485 | |||||||||||||||
Reduction related to divested businesses or asset groups | (1,785 | ) | | | (7,628 | ) | (4,560 | ) | ||||||||||||
Sponsor fees and expenses | 140 | 128 | 587 | 636 | 405 | |||||||||||||||
Unrealized translation loss (gain) | 1,775 | (2,150 | ) | (4,350 | ) | 10,359 | 10,707 | |||||||||||||
Adjusted EBITDA | $ | 48,823 | $ | 27,403 | $ | 162,181 | $ | 118,889 | $ | 59,479 |
Revenue increased $68.1 million, or 87.6%, from $77.7 million for the quarter ended March 31, 2016 to $145.8 million for the quarter ended March 31, 2017. This increase was primarily driven by our acquisition of PR Newswire, offset by net customer losses, resulting in part from our increased focus on bundled solutions, and a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. Revenue from PR Newswire for the quarter ended March 31, 2017 was $74.5 million. Revenue, excluding PR Newswire, declined from $77.7 million in the three months ended March 31, 2016 to $71.3 million for the three months ended March 31, 2017. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2017 versus 2016 reduced revenue by approximately $2.5 million for the quarter ended March 31, 2017. Revenues in our US business, excluding PR Newswire, declined from $51.5 million in the three months March 31, 2016 to $46.8 million for the three months ended March 31, 2017 due primarily to net customer losses, resulting in part from our increased focus on bundled solutions.
Cost of revenue increased $16.5 million, or 57.9%, from $28.5 million for the quarter ended March 31, 2016 to $45.1 million for the quarter ended March 31, 2017. This increase was primarily driven by our acquisition of PR Newswire, offset by a reduction in personnel costs resulting from our realization of integration cost synergies, a reduction in our content acquisition costs and a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. Cost of revenue from PR Newswire for the quarter ended March 31, 2017 was $19.2 million. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2017 versus 2016 reduced our cost of revenue by approximately $1.0 million for the quarter ended March 31, 2017.
Sales and marketing expenses increased $10.8 million, or 65.0%, from $16.5 million for the quarter ended March 31, 2016 to $27.3 million for the quarter ended March 31, 2017. This increase was primarily driven by our acquisition of PR Newswire, offset by a reduction in our sales compensation costs resulting from our realization of integration cost synergies, a reduction in our marketing costs resulting in part from the consolidation of third party contracts and reduced paid advertising costs and a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. Sales and marketing expenses from PR Newswire for the quarter ended March 31, 2017 were $11.8 million. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2017 versus 2016 reduced our sales and marketing expenses by approximately $0.3 million for the quarter ended March 31, 2017.
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Research and development expenses increased $1.9 million, or 54.2%, from $3.5 million for the quarter ended March 31, 2016 to $5.5 million for the quarter ended March 31, 2017. This increase was primarily driven by our acquisition of PR Newswire offset by a reduction in our research and development compensation costs resulting from the realization of certain planned integration synergies, and a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. Research and development expenses from PR Newswire for the quarter ended March 31, 2017 were $2.9 million. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2017 versus 2016 reduced our research and development expenses by approximately $0.1 million for the quarter ended March 31, 2017.
General and administrative expenses increased $21.9 million, or 119.3%, from $18.3 million for the quarter ended March 31, 2016 to $40.2 million for the quarter ended March 31, 2017. This increase was primarily driven by our acquisition of PR Newswire and acquisition related expenses, related to our purchase of Bulletin Intelligence in the three months ended March 31, 2017 and offset by the impact of a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. General and administrative expenses from PR Newswire for the quarter ended March 31, 2017 were $19.4 million. Acquisition related expenses increased by $2.6 million in the quarter ended March 31, 2017 versus the quarter ended March 31, 2016. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2017 versus 2016 reduced our general and administrative expenses by approximately $0.6 million for the quarter ended March 31, 2017.
We recognized a $1.9 million foreign exchange loss for the quarter ended March 31, 2017 primarily due to fluctuations in foreign exchange rates that impacted the carrying value of certain intercompany notes. We recognized a $2.1 million foreign exchange gain for the quarter ended March 31, 2016 due to fluctuations in foreign exchange rates that impacted the carrying value of certain intercompany notes.
We recognized a $1.8 million gain on the sale of our Vintage business during the quarter ended March 31, 2017. No other activity was significant for the quarterly periods presented.
Interest expense increased $21.5 million, or 140.0%, from $15.4 million for the quarter ended March 31, 2016 to $36.9 million for the quarter ended March 31, 2017. This increase was primarily driven by the increase in our debt under the Credit Facilities that were entered into in connection with our acquisition of PR Newswire.
Benefit from income taxes was $7.1 million for the quarter ended March 31, 2017 versus a provision for income taxes of $0.1 million for the quarter ended March 31, 2016. The provision for income taxes for the quarter ended March 31, 2017 was primarily driven by an increase in our taxable income across a number of foreign jurisdictions.
Other comprehensive income was $5.9 million for the quarter ended March 31, 2017 versus a $10.0 million loss for the quarter ended March 31, 2016. Other comprehensive income for the quarter ended March 31, 2017 was primarily due to foreign currency translation gains that resulted from a strengthening of the US dollar versus certain foreign currencies, primarily the British Pound and the Euro, since December 31, 2016. Other comprehensive loss for the three months ended March 31, 2016 resulted from significant depreciation of the US dollar versus the British Pound that impacted the carrying value of the intangibles and goodwill in the UK that resulted from our acquisition of Gorkana.
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Revenue increased $133.8 million, or 40.1%, from $334.0 million for the year ended December 31, 2015 to $467.8 million for the year ended December 31, 2016. This increase was primarily driven by our acquisition of PR Newswire, offset by net customer losses, resulting in part from our increased focus on bundled solutions, a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro, and the divestiture of our Cision UK and Vocus UK businesses. Revenue from PR Newswire from acquisition date to December 31, 2016 was $165.1 million. Revenue, excluding PR Newswire, declined from $334.0 million in the year ended December 31, 2015 to $302.7 million for the year ended December 31, 2016. For the year ended December 31, 2015, our revenue included approximately $6.8 million, from our Cision UK and Vocus UK businesses that were divested during June 2015. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2016 versus 2015 reduced revenues by approximately $9.0 million for the year ended December 31, 2016. Revenues in our US business, excluding PR Newswire, declined from $218.6 million in the year ended December 31, 2015 to $199.8 million for the year ended December 31, 2016 due primarily to net customer losses, resulting in part from our increased focus on bundled solutions.
Cost of revenue increased $37.6 million, or 30.1%, from $125.0 million for the year ended December 31, 2015 to $162.6 million for the year ended December 31, 2016. This increase was primarily driven by our acquisition of PR Newswire offset by a reduction in our personnel costs resulting from our realization of integration cost synergies, a reduction in our content acquisition costs, a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro, and the divestiture of our Cision UK and Vocus UK businesses. Cost of revenue from PR Newswire for the year ended December 31, 2016 was $50.5 million. For the year ended December 31, 2015, our cost of revenue included approximately $2.0 million, from our Cision UK and Vocus UK businesses that were divested during June 2015. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2016 versus 2015 reduced our cost of revenue by approximately $3.9 million for the year ended December 31, 2016.
Sales and marketing expenses increased $21.0 million, or 29.3%, from $71.6 million for the year ended December 31, 2015 to $92.6 million for the year ended December 31, 2016. This increase was primarily driven by our acquisition of PR Newswire, offset by a reduction in our sales compensation costs resulting from our realization of integration cost synergies, a reduction in our marketing costs resulting in part from the consolidation third party contracts and reduced paid advertising costs, a decline in the US dollar versus foreign currencies, including the British Pound and the Euro, and the divestiture of our Cision UK and Vocus UK businesses. Sales and marketing expenses from PR Newswire for the year ended December 31, 2016 were $28.5 million. Our sales compensation costs decreased by approximately $0.4 million in the year ended December 31, 2016 versus the year ended December 31, 2015. Our marketing expenses decreased by $1.1 million in the year ended December 31, 2016 versus the year ended December 31, 2015 due primarily to a reduction in our spend on paid advertising and other third party marketing costs. For the year ended December 31, 2015, our sales and marketing expenses include approximately $2.4 million, from our Cision UK and Vocus UK businesses that were divested during June 2015. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2016 versus 2015 reduced our sales and marketing expenses by approximately $1.1 million for the year ended December 31, 2016.
Research and development expenses increased $2.8 million, or 17.1%, from $16.6 million for the year ended December 31, 2015 to $19.4 million for the year ended December 31, 2016. This increase was primarily driven by our acquisition of PR Newswire offset by a reduction in our research and development compensation costs resulting from the realization of certain planned integration synergies, and a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. Research and development expenses from PR Newswire for the year ended December 31, 2016 was $7.2 million. Our research and development compensation costs decreased by $4.5 million in the year ended December 31, 2016 versus the
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year ended December 31, 2015 due to lower overall headcount and a shift in the mix of capitalizeable development work. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2016 versus 2015 reduced our research and development expenses by approximately $0.5 million for the year ended December 31, 2016.
General and administrative expenses increased $47.3 million, or 53.5%, from $88.4 million for the year ended December 31, 2015 to $135.7 million for the year ended December 31, 2016. This increase was primarily driven by our acquisition of PR Newswire and an increase in our acquisition related expenses, offset by a reduction in our general and administrative personnel costs, a decline in the US dollar versus foreign currencies, including principally the British Pound and the Euro, and the divestiture of our Cision UK and Vocus UK businesses. General and administrative expenses from PR Newswire for the year ended December 31, 2016 were $46.7 million. Our acquisition related expenses increased by $13.2 million in the year ended December 31, 2016 versus the year ended December 31, 2015. Our general and administrative personnel costs decreased by $5.7 million in the year ended December 31, 2016 versus the year ended December 31, 2015 resulting from the elimination of a number of senior personnel roles that became redundant as a result of our acquisition. For the year ended December 31, 2015, our general and administrative expenses include approximately $1.6 million, from our Cision UK and Vocus UK businesses that were divested during June 2015. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2016 versus 2015 reduced our general and administrative expenses by approximately $2.5 million for the year ended December 31, 2016.
We recognized a $6.3 million foreign exchange transaction gain for the year ended December 31, 2016 primarily due to the settlement in cash of an intercompany note involving one of our foreign subsidiaries that resulted in a $5.0 million gain. We incurred a $10.9 million foreign exchange loss for the year ended December 31, 2015 due to fluctuations in foreign exchange rates that impacted the carrying value of certain intercompany notes.
We recognized a $4.7 million gain on the sale of our Cision UK and Vocus UK assets during the year ended December 31, 2015. No other activity was significant for all periods presented.
Interest expense and loss on extinguishment of debt increased $80.2 million, or 130.6%, from $61.4 million for the year ended December 31, 2015 to $141.6 million for the year ended December 31, 2016. This increase was primarily driven by the increase in our debt under the Credit Facilities that were entered into in connection with our acquisition of PR Newswire.
The benefit from income taxes was $55.7 million for the year ended December 31, 2016 versus a benefit from income taxes of $3.6 million for the year December 31, 2015. The benefit from income taxes for the year ended December 31, 2016 was primarily driven by the acquisition of PR Newswire which resulted in a reduction of valuation allowances in the US group due to the establishment of deferred tax liabilities in purchase accounting.
Other comprehensive loss increased $49.8 million for the year ended December 31, 2016 to $58.9 million, from $9.1 million for the year ended December 31, 2015. This increase was primarily the result of foreign currency translation losses that resulted from significant depreciation of the US dollar versus the British Pound that impacted the carrying value of the intangibles and goodwill in the UK that resulted from our 2014 acquisition of Gorkana.
Year Ended December 31, 2015 Compared to the period February 11, 2014 to December 31, 2014 (Fiscal 2014)
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The following table shows certain income statement data for the periods indicated:
Revenue increased $163.8 million, or 96.3%, from $170.1 million for Fiscal 2014 to $334.0 million for the year ended December 31, 2015. This increase was primarily driven by our 2014 acquisitions of Vocus, Visible and Gorkana and recording a full year of Cision revenue in 2015 versus eight and a half months of in Fiscal 2014, offset by net customer losses, resulting in part from our increased focus on bundled solutions, and a decline in the US dollar versus foreign currencies, including the British Pound and the Euro. Revenue from Vocus, Visible and Gorkana for the years ended December 31, 2015 and Fiscal 2014 were $224.0 million and $90.2 million respectively. Revenue from Cision for the year ended December 31, 2015 and Fiscal 2014 was $109.9 million and $79.9 million, respectively. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2015 versus 2014 reduced revenue by approximately $6.1 million for the year ended December 31, 2015.
Cost of revenue increased $50.5 million, or 67.7%, from $74.6 million for Fiscal 2014 to $125.0 million for the year ended December 31, 2015. This increase was primarily driven by our acquisition of Vocus, Visible and Gorkana and a full year of Cision cost of revenues in 2015 versus eight and a half months of Cision in Fiscal 2014, offset by a reduction in our personnel costs due to realization of certain planned cost synergies and a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. Cost of revenue from Vocus, Visible and Gorkana for the year ended December 31, 2015 and Fiscal 2014 was $78.5 million and $38.8 million respectively. Cost of revenue from Cision for the year ended December 31, 2015 and Fiscal 2014 was $46.2 million and $35.8 million, respectively. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2015 versus 2014 reduced cost of revenues by approximately $2.5 million for the year ended December 31, 2015.
Sales and marketing expenses increased $15.6 million, or 27.8%, from $56.0 million for Fiscal 2014 to $71.6 million for the year ended December 31, 2015. This increase was primarily driven by our acquisition of Vocus, Visible and Gorkana, a full year of Cision sales and marketing expenses in 2015 versus eight and a half months of Cision in Fiscal 2014, and an increase in other sales and marketing expenses, offset by a reduction in sales and marketing personnel due to consolidation of US sales and marketing teams, and a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. Sales and marketing expenses from Vocus, Visible and Gorkana for the year ended December 31, 2015 and Fiscal 2014 were $45.7 million and $37.5 million respectively. Sales and marketing expenses from Cision for the year ended December 31, 2015 and Fiscal 2014 were $25.6 million and $18.5 million respectively. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2015 versus 2014 reduced sales and marketing expenses by approximately $1.6 million for the year ended December 31, 2015.
Research and development expenses increased $10.9 million, or 193.5%, from $5.7 million for Fiscal 2014 to $16.6 million for the year ended December 31, 2015. This increase was primarily driven by our acquisition of Vocus, Visible and Gorkana, a full year of Cision research and development expenses in 2015 versus eight and a half months of Cision in Fiscal 2014, and an increase in other research and development expenses, offset by a decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. Research and development expenses from Vocus, Visible and Gorkana for the year ended December 31, 2015 and Fiscal 2014 were $10.9 million and $5.3 million respectively. Research and development expenses from Cision for the year ended December 31, 2015 and Fiscal 2014 were $5.2 million and $0.3 million respectively. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2015 versus 2014 reduced research and development expenses by approximately $0.1 million for the year ended December 31, 2015.
General and administrative expenses decreased $24.3 million, or 21.5%, from $112.7 million for Fiscal 2014 to $88.4 million for the year ended December 31, 2015. This decrease was primarily driven be a reduction in
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our stock compensation expense and a reduction in acquisition related fees and expenses, offset by an increase in general and administrative expenses primarily driven by our acquisition of Vocus, Visible and Gorkana, and a full year of Cision general and administrative expenses in 2015 versus eight and a half months in Fiscal 2014, and decline in the US dollar versus foreign currencies, principally the British Pound and the Euro. Stock compensation expense was $5.3 million and $31.4 million, respectively, for the year ended December 31, 2015 and Fiscal 2014. Acquisition related fees and expenses were $11.7 million and $28.2 million, respectively, for the years ended December 31, 2015 and Fiscal 2014. The decline in the US dollar versus the British Pound, the Euro, and other foreign currencies in 2015 versus 2014 reduced general and administrative expenses by approximately $1.7 million for the year ended December 31, 2015.
Losses from foreign exchange were $11.0 million for Fiscal 2014 and $10.9 million for the year ended December 31, 2015. Our foreign exchange losses in the respective periods were the result of foreign currency translation losses due to fluctuations in foreign exchange rates that impacted the carrying value of certain intercompany notes.
Interest and other income, net, increased $5.4 million to $5.8 million for the year ended December 31, 2015. This increase was driven primarily by the $4.7 million gain on the sale of our Cision UK and Vocus UK assets that we recognized during the year ended December 31, 2015.
Interest expense increased $33.0 million, or 116.1%, from $28.4 million for Fiscal 2014 to $61.4 million for the year ended December 31, 2015. This increase was primarily driven by the increase in debt that we incurred to complete the acquisition of Cision, Vocus, and Gorkana in 2014.
The benefit from income taxes was $31.0 million and $3.6 million, respectively, for Fiscal 2014 and the year ended December 31, 2015. The benefit from income taxes in 2015 was primarily driven by operating losses resulting from interest expense, financing and transaction costs related to our acquisitions.
Other comprehensive loss increased $2.4 million for the year ended December 31, 2015 to $9.1 million from $6.7 million for Fiscal 2014. The increase in foreign currency translation losses resulted from significant depreciation of the US dollar versus the British Pound that impacted the carrying value of the intangibles and goodwill that resulted from our acquisition of Gorkana.
We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our revenues as a result of press release cycles, primarily related to the release of public company operating results and other corporate news events.
We fund our business primarily with cash generated from operations and from borrowings under our Credit Facilities. We use cash to satisfy our contractual obligations and to fund other non-contractual business needs.
Our contractual obligations include scheduled interest and principal payments under our First Lien Credit Facility and our Second Lien Credit Facility and our operating leases and capital leases. We also use cash to fund business acquisitions and capital expenditures and to pay taxes.
We incurred a significant amount of indebtedness in connection with our acquisition of PR Newswire that was completed in June 2016. In connection with the Merger, we expect to repay a portion of our Second Lien Credit Facility. We intend to continue to reduce our net leverage and improve the terms of our First Lien Credit Facility as we seek to refinance or otherwise improve upon the terms of such facility.
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Based on the terms of our Credit Facilities and our current operations and expectations for continued growth, we believe that cash generated from operating activities, together with available borrowings under our First Lien Credit Facility, will be adequate to meet our current and expected operating, capital investment, acquisition financing and debt service obligations for the next twelve months, although no assurance can be given in this regard.
While we have a history of a negative working capital position as calculated by subtracting current assets less current liabilities substantially all of this negative balance is created by the requirement in GAAP to present our CPECs as current liabilities due to the contractual put rights held by our Parent. As described in the notes to the financial statements we have obtained a waiver from our Parent that the CPECs will not be put for at least twelve months from the date of the issuance of the financial statements. This waiver does not result in long term classification of the CPECs, as this determination is made in the absence of intent to put, however it does enable us to conclude that the CPECs do not taint the ability to assert that we have sufficient resources to meet current funding needs. In addition, there are no other significant debt obligations falling due in the next twelve months other than scheduled principal repayments in the amount of $2.8 million per quarter related to the First Lien credit Agreement. No quarterly principal payments are required under our Second Lien Credit Agreement for at least the next twelve months. Finally, our cash flow from operations in all periods presented has been significantly impacted by the impact of the cash costs incurred related to strategic business combinations, including costs of integration to ultimately achieve synergies and also deal costs. These business combinations have a short term operating cash cost, but once fully integrated are expected to derive significant long term cost and revenue synergies. For the year ended December 31, 2016, we also experienced cash outflows related to the restructuring of our debt obligations which are not expected to recur in the short term, unless such a restructuring results in a long term reduction in our cash interest expense.
We do not currently expect to declare dividends in the foreseeable future. The declaration of dividends will be subject to our actual future earnings and capital requirements and to the discretion of our board of directors. Our board of directors may take into account such matters as general business conditions, our financial results, capital requirements, contractual, legal and regulatory restrictions and such other factors as our board of directors may deem relevant.
Our ability to pay cash dividends on our ordinary shares will be subject to our continued compliance with the terms of our Credit Facilities. Under our First Lien Credit Facility, our subsidiaries are prohibited from making cash dividends to us, subject to certain exceptions, including that our subsidiaries are permitted to declare and pay cash dividends (x) in an amount that does not exceed the sum of (i) $50,000,000, plus (ii) the sum of the amount (which amount shall not be less than zero) equal to 50% of consolidated net income of our subsidiaries from January 1, 2016 to the end of the most recent quarter subject to certain conditions, plus (iii) certain other amounts set forth in the definition of Available Amount in our First Lien Credit Facility or (y) so long as the total net leverage ratio under the First Lien Credit Facility does not exceed 3.75 to 1.00. Under our Second Lien Credit Facility, our subsidiaries are prohibited from making cash dividends to us, subject to certain exceptions, including that our subsidiaries are permitted to declare and pay cash dividends (x) in an amount that does not exceed the sum of (i) $57,500,000, plus (ii) the sum of the amount (which amount shall not be less than zero) equal to 50% of consolidated net income of our subsidiaries from January 1, 2016 to the end of the most recent quarter subject to certain conditions, plus (iii) certain other amounts set forth in the definition of Available Amount in our Second Lien Credit Facility or (y) so long as the total net leverage ratio under the Second Lien Credit Facility does not exceed 3.75 to 1.00. Except as otherwise described in this paragraph, we do not believe these restrictions will have a material impact on our liquidity.
As of March 31, 2017, we had $41.3 million of cash and cash equivalents on hand, and we had aggregate unused availability of $40.2 million under our Revolving Credit Facility. Borrowings under this facility bear interest at a variable rate and is a significant source of our liquidity. Our liquidity needs, including our funding of acquisition activities, causes the aggregate amount of outstanding borrowings under our Revolving Credit Facility to fluctuate. Accordingly, the amount of borrowing capacity available to us can fluctuate depending on operating cash flows, debt service requirements and acquisition and investment activity.
Our future financial and operating performance, ability to service or refinance our debt and ability to comply with covenants and restrictions contained in our credit agreements governing our Credit Facilities will be subject to future economic conditions and to financial, business and other factors, many of which are beyond
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our control and will be substantially dependent on the global economy, demand for our products and solutions and our ability to successfully implement our business strategies.
Repatriation of cash from some of our foreign subsidiaries may be subject to withholding, income and other taxes in various applicable jurisdictions. However, the majority of the unremitted earnings are located in European countries in which the earnings can be remitted to the parent company with no additional taxation.
The following sections present the components of our debt obligations. In connection with the consummation of the Merger, we expect to repay in part our Second Lien Credit Facility.
On June 16, 2016, in connection with the acquisition of PR Newswire, we entered into a $1,175.0 million credit agreement with Deutsche Bank AG, New York Branch, as administrative agent and collateral agent, and a syndicate of commercial lenders from time to time party thereto. The first lien credit agreement consists of: (i) the revolving loan facility, which permits borrowings and letters of credit up to $75.0 million (the Revolving Credit Facility), of which up to $25.0 million may be used issued as standby and trade letters of credit; and (ii) a $1,100 million term loan facility (the First Lien Term Loan Facility and, together with the Revolving Credit Facility, the First Lien Credit Facility). We used the proceeds from the First Lien Term Loan Facility, along with proceeds from our Second Lien Credit Facility, cash equity from our sponsor and cash from our balance sheet to consummate the acquisition of PR Newswire, refinance our existing debt and pay related fees and expenses. From time to time, we may incur incremental revolving facilities and incremental term loan facilities under the First Lien Credit Facility in amounts not to exceed $100 million (minus any amounts incurred under the Second Lien Credit Facility), plus additional amounts subject to compliance with certain leverage ratios as set forth in the First Lien Credit Facility and certain other amounts.
As of March 31, 2017, we had $33.5 million of outstanding borrowings and $1.3 million of outstanding letters of credit under our Revolving Credit Facility and $1,121.7 million outstanding under the First Lien Term Loan Facility. On March 17, 2017, we entered into an incremental amendment to the First Lien Credit Facility, which provided for an incremental borrowing of $30 million of incremental term loans, which term loans are fungible with the First Lien Term Loan Facility. The proceeds of the incremental facility were used to fund the acquisition of Bulletin Intelligence and related transactions and to pay certain fees, costs and other expenses in connection with the Bulletin Intelligence acquisition and the incremental amendment and for general corporate purposes.
Interest is charged on U.S. dollar borrowings under our First Lien Credit Facility, at our option, at a rate based on (1) the adjusted LIBOR (a rate equal to the London interbank offered rate adjusted for statutory reserves, but which amount cannot be less than 1%) or (2) the alternate base rate (a rate that is highest of the (i) Deutsche Bank AG, New York Branchs prime lending rate, (ii) the overnight federal funds rate plus 50 basis points, (iii) the one month-adjusted LIBOR plus 1% or (iv) 2%), in each case, plus an applicable margin. The margin applicable to loans under the First Lien Term Loan Facility bearing interest at the alternate base rate is 5.00%; the margin applicable to loans under the First Lien Term Loan Facility bearing interest at the adjusted LIBOR is 6.00%. Revolving borrowings in Canadian dollars bear interest at the adjusted Canadian dollar bankers acceptance rate plus an applicable margin; revolving borrowings in Euro bear interest at the Euro interbank offered rate plus an applicable margin. The margin applicable to loans under the Revolving Facility bearing interest at the alternate base rate, the adjusted LIBOR, the adjusted Canadian dollar bankers acceptance rate and the adjusted Euro interbank offered rate bear interest at rates of 4.75%, 5.75%, 5.75% and 5.75%, respectively; provided that each such rate is reduced by 25 basis points if the senior secured first lien net leverage ratio of Canyon Companies S.à r.l. and its restricted subsidiaries under the First Lien Credit Facility is less than or equal to 3.50:1.00 at the end of the most recent fiscal quarter. As of December 31, 2016, the applicable interest rate under the First Lien Credit Facility was 7.0%. We make quarterly principal payments under the First Lien Term Loan Facility of $2.8 million (which amount may be reduced by the application of voluntary and mandatory prepayments pursuant to the terms of the First Lien Credit Facility), with the remaining balance due June 16, 2023. The maturity date of Revolving Loan Facility is June 16, 2021. We may also be required to make certain mandatory prepayments of the First Lien Term Loan Facility out of excess cash flow and upon the receipt of proceeds of asset sales and certain
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insurance proceeds (in each case, subject to certain minimum dollar thresholds and rights to reinvest the proceeds as set forth in the First Lien Credit Facility).
The obligations under the First Lien Credit Facilities are secured by substantially all of the assets of Canyon Companies S.à r.l. and each of its subsidiaries organized in the United States (or any state thereof), the United Kingdom, the Netherlands, Luxembourg and Ireland, subject to certain exceptions. The liens granted to the lenders under the First Lien Credit Facility are senior to the liens granted to the lenders under the Second Lien Credit Facility pursuant to the terms of an intercreditor agreement.
The First Lien Credit Facility includes a total net leverage financial maintenance covenant. Such covenant requires that, as of the last day of each fiscal quarter, the total net leverage ratio of Canyon Companies S.à r.l. and its restricted subsidiaries under the First Lien Credit Facility cannot exceed the applicable ratio set forth in the First Lien Credit Facility for such quarter (subject to certain rights to cure any failure to meet such ratio as set forth in the First Lien Credit Facility). The First Lien Credit Facility is also subject to certain customary affirmative covenants and negative covenants. Under our First Lien Credit Facility, our subsidiaries are prohibited from making cash dividends to us, subject to certain exceptions, including that our subsidiaries are permitted to declare and pay cash dividends (x) in an amount that does not exceed the sum of (i) $50,000,000, plus (ii) the sum of the amount (which amount shall not be less than zero) equal to 50% of consolidated net income of our subsidiaries from January 1, 2016 to the end of the most recent quarter subject to certain conditions, plus (iii) certain other amounts set forth in the definition of Available Amount in our First Lien Credit Facility or (y) so long as the total net leverage ratio under the First Lien Credit Facility does not exceed 3.75 to 1.00. As of March 31, 2017, we were in compliance with these covenants.
Our First Lien Credit Facility provides that an event of default will occur upon specified change of control events. Change in Control is defined to include, among other things, the failure by GTCR, its affiliates and certain other Permitted Holders to beneficially own, directly or indirectly through one or more holding company parents of Holdings, a majority of the voting equity of the borrower thereunder. See Risk Factors Cisions First Lien and Second Lien Credit Agreements Contain Change of Control Provisions that Will Require Cision to Amend or Refinance this Indebtedness.
We incurred approximately $81.9 million in financing costs with the lenders in connection with the entry into the First Lien Credit Facility, which were offset against the debt. All financing costs are being amortized using the effective interest method.
On June 16, 2016, in connection with the acquisition of PR Newswire, we entered into a second lien credit agreement with Deutsche Bank AG, New York Branch, as administrative agent and collateral agent, and a syndicate of commercial lenders from time to time party thereto. The second lien credit agreement consists of a $370.0 million Second Lien Credit Facility. We used the proceeds from the Second Lien Credit Facility, along with proceeds from our First Lien Credit Facility, cash equity from our sponsor and cash from our balance sheet to consummate the acquisition of PR Newswire, refinance our existing debt and pay related fees and expenses.
As of March 31, 2017, we had $370 million outstanding under the Second Lien Credit Facility.
Interest is charged on borrowings under our Second Lien Credit Facility, at our option, at a rate based on (1) the adjusted LIBOR (a rate equal to the London interbank offered rate adjusted for statutory reserves, but which amount cannot be less than 1%) or (2) the alternate base rate (a rate that is highest of the (i) Deutsche Bank AG, New York Branchs prime lending rate, (ii) the overnight federal funds rate plus 50 basis points, (iii) the one month adjusted LIBOR plus 1% or (iv) 2%), in each case, plus an applicable margin. The margin applicable to loans under the Second Lien Credit Facility bearing interest at the alternate base rate is 8.50%; the margin applicable to loans under the Second Lien Credit Facility bearing interest at the adjusted LIBOR is 9.50%. All principal amounts due under the Second Lien Credit Facility are due June 16, 2021. As of March 31, 2017, the applicable interest rate under the Second Lien Credit Facility was 10.5%. There are no quarterly or annual amortization payments required under the Second Lien Credit Facility.
The obligations under the Second Lien Credit Facility are secured by substantially all of the assets of Canyon Companies S.à r.l. and each of its subsidiaries organized in the United States (or any state thereof), the United
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Kingdom, the Netherlands, Luxembourg and Ireland, subject to certain exceptions. The liens granted to the lenders under the Second Lien Credit Facility are junior to the liens granted to the lenders under the First Lien Credit Facility pursuant to the terms of an intercreditor agreement. The Second Lien Credit Facility includes a total net leverage financial maintenance covenant. Such covenant requires that, as of the last day of each fiscal quarter, the total net leverage ratio of Canyon Companies S.à r.l. and its restricted subsidiaries under the Second Lien Credit Facility cannot exceed the applicable ratio set forth in the Second Lien Credit Facility for such quarter (subject to certain rights to cure any failure to meet such ratio as set forth in the Second Lien Credit Facility). The Second Lien Credit Facility is also subject to certain customary affirmative covenants and negative covenants. Under our Second Lien Credit Facility, our subsidiaries are prohibited from making cash dividends to us, subject to certain exceptions, including that our subsidiaries are permitted to declare and pay cash dividends (x) in an amount that does not exceed the sum of (i) $57,500,000, plus (ii) the sum of the amount (which amount shall not be less than zero) equal to 50% of consolidated net income of our subsidiaries from January 1, 2016 to the end of the most recent quarter subject to certain conditions, plus (iii) certain other amounts set forth in the definition of Available Amount in our Second Lien Credit Facility or (y) so long as the total net leverage ratio under the Second Lien Credit Facility does not exceed 3.75 to 1.00. As of March 31, 2017, we were in compliance with these covenants. Our Second Lien Credit Facility provides that an event of default will occur upon specified change of control events, with Change in Control defined in a manner consistent with the definition in the First Lien Credit Facility described above.
We incurred approximately $24.0 million in financing costs with the lenders in connection with the entry into the Second Lien Credit Facility, which were offset against the debt. All financing costs are being amortized over the term of the second lien credit agreement.
The following tables reflect the changes in cash flows for the comparative periods presented.
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Operating activities | $ | 12,838 | $ | 14,182 | $ | (2,038 | ) | $ | 22,422 | $ | (50,804 | ) | ||||||||
Investing activities | (32,993 | ) | (3,243 | ) | (819,416 | ) | (10,664 | ) | (771,555 | ) | ||||||||||
Financing activities | 26,009 | (1,333 | ) | 827,764 | (8,568 | ) | 851,819 | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 341 | 122 | (1,781 | ) | (1,161 | ) | (883 | ) | ||||||||||||
Net change in cash and cash equivalents | $ | 6,195 | $ | 9,728 | $ | 4,529 | $ | 2,029 | $ | 28,577 |
Net cash flows from operating activities consist of net income (loss) adjusted for non-cash items, such as: depreciation and amortization of property and equipment and intangible assets, non-cash interest charges, deferred income taxes, equity-based compensation and for changes in net working capital assets and liabilities. The cash impact of changes in deferred income taxes primarily relates to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Generally, the most significant factor relates to nondeductible book amortization expense associated with intangible assets.
Net cash provided by operating activities decreased $1.4 million to $12.8 million for the three months ended March 31, 2017, from net cash provided by operating activities of $14.2 million for the three months ended March 31, 2016. Cash provided by operating activities for the three months ended March 31, 2017 reflects a $9.7 million increase in deferred revenue due to the timing of invoicing to our subscription customers, an $8.6 million decrease in accrued compensation due to the timing of payment of annual bonuses, and a negative deferred income tax impact of a $7.9 million due to deferred tax benefit included in the tax provision. Cash provided by operating activities for the three months ended March 31, 2016 reflects a $5.4 million decrease in accounts receivable due to timing of cash collections from customers.
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We reported net cash used in operating activities of $2.0 million in 2016, compared to cash provided by operating activities of $22.4 million in 2015. Cash used in operating activities in 2016 reflects a $19.4 million payment of original issue discount upon debt extinguishment in connection with the financing of our acquisition of PR Newswire, a negative deferred income tax impact of $69.1 million due to a deferred tax benefit included in the tax provision, an $8.2 million increase in accrued compensation and benefits, and an increase in accounts receivable of $1.5 million due to timing of cash collections from customers. Cash provided by operating activities in 2015 reflects a $4.6 million decrease in accounts receivable due to the timing of cash collections from customers.
We reported net cash provided by operating activities of $22.4 million in 2015, compared to $50.8 million of cash used in operating activities in 2014. Cash used in operating activities in 2014 reflects a net loss of $109.0 million compared to a net loss of $90.5 million in 2015. Our net loss in 2014 reflects $30.0 million of compensation expense that resulted from our acquisition of Vocus, Inc. in May 2014. Cash provided by operating activities in 2015 reflects a $4.6 million decrease in accounts receivable compared to a $5.3 million increase in accounts receivable in 2014 due to the timing of cash collections from customers. Cash used in operating activities in 2014 reflects a $4.8 million increase in other assets due to a tax deferred charge being recorded for intercompany asset sales.
Net cash used in investing activities was $33.0 million for the three months ended March 31, 2017 compared to net cash used in investing activities of $3.2 million for the three months ended March 31, 2016. The increase in net cash used in investing activities for the three months ended March 31, 2017 compared to the three months ended March 31, 2016 was primarily driven by our acquisition of Bulletin Intelligence, offset by proceeds received from our sale of Vintage, and an increase in purchases of property and equipment.
Net cash used in investing activities was $819.4 million for 2016, $10.7 million for 2015 and $771.6 million for 2014.
Cash flows used in investing activities in 2016 reflects the acquisition of PR Newswire net of cash acquired of $804.2 million, capitalized software development costs of $11.7 million, purchases of property and equipment of $7.4 million, adjusted for proceeds from disposals of businesses and changes in restricted cash.
Cash flows used in investing activities in 2015 reflects the acquisition of Viralheat net of cash acquired of $4.5 million, capitalized software development costs of $11.3 million, purchases of property and equipment of $5.2 million, adjusted for proceeds from disposals of businesses and changes in restricted cash.
Cash flows used in investing activities in 2014 reflect reflects the acquisition of Vocus, Visible and Gorkana net of cash acquired of $755.3 million, capitalized software development costs of $6.0 million, purchases of property and equipment of $1.9 million, adjusted for proceeds from disposals of businesses and changes in restricted cash.
Net cash provided by financing activities was $26.0 million for the three months ended March 31, 2017 compared to net cash provided by financing activities of $1.3 million for the three months ended March 31, 2016. The increase in net cash provided by financing activities for the three months ended March 31, 2017 compared to the three months ended March 31, 2016 was primarily driven by an incremental $30.0 million term loan utilized to purchase Bulletin Intelligence.
Net cash provided by financing activities was $827.8 million in 2016, compared to net cash used in financing activities of $8.6 million in 2015 and net cash provided by financing activities of $851.8 million in 2014.
Cash flows provided by financing activities in 2016 reflect net borrowings under term loan facilities of $658.6 million, net borrowings under revolving credit facilities of $33.5 million, and proceeds from the issuance of CPECs (as defined below) of $136.0 million.
Cash flows used in financing activities in 2015 reflect net repayments under term loan facilities of $5.9 million, proceeds from the issuance of CPECs to Cisions owner of $2.8 million, adjusted for payments of deferred financing costs, and the acquisition of non-controlling interests.
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Cash flows provided by financing activities in 2014 reflect net borrowings under term loan facilities of $635.7 million, proceeds from the issuance of CPECs to Cisions owner of $257.6 million and, the acquisition of non-controlling interests in Cision of $44.5 million.
The following table sets forth our contractual obligations and commitments for the periods indicated as of December 31, 2016. The following table does not give effect to the Merger and related transactions.
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First Lien Credit Facility (1) | $ | 1,094,500 | $ | 11,000 | $ | 22,000 | $ | 22,000 | $ | 1,039,500 | ||||||||||
Second Lien Credit Facility (1) | 370,000 | | | | 370,000 | |||||||||||||||
Revolver | 33,475 | | | | 33,475 | |||||||||||||||
Capital leases (2) | 171 | 171 | | | | |||||||||||||||
Operating leases | 81,832 | 12,348 | 22,483 | 20,116 | 26,885 | |||||||||||||||
Purchase obligations | 15,615 | 12,196 | 3,419 | |||||||||||||||||
CPECs (3) | 443,102 | 443,102 | | | | |||||||||||||||
Cash interest (4) | 779,666 | 117,605 | 232,901 | 228,453 | 200,708 |
(1) | Represents the principal amount of our long-term debt under our Credit Facilities and expected cash payments for interest thereunder based on the applicable interest rates and amounts outstanding as of December 31, 2016. |
(2) | Includes the fixed rent payable under the leases and does not include additional amounts, such as taxes, that may be payable under leases. |
(3) | CPECs are held by Cision Owner and are presented as liabilities in the consolidated balance sheets of Cision. The CPECs are redeemable at any time by Cision and mature 49 years from the date of issuance. The CPECs can be converted to common stock of Cision at any time at a conversion price equal to the fair value of Cisions common stock on the date of issuance by Cision Owner. The CPECs are classified as liabilities due to the creditor-like rights held by the holder, including the right to force Cisions bankruptcy. The CPECs are puttable to the Company at any time. The Company has received a waiver from the Cision Owner and this put right will not be exercised for at least one year. |
(4) | Interest on variable rate long-term debt obligations is calculated based on debt outstanding and interest rates in effect on December 31, 2016, taking into account scheduled maturities and amortizations. The applied interest rates for the Revolver borrowings, First Lien Term Loan and Second Lien Term Loan at December 31, 2016 are 6.7%, 7.0% and 10.5%, respectively. |
We do not have any off-balance sheet transactions or interests.
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Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. Our critical accounting policies are described below.
The Company incurs software development costs related to its internal use software. Qualifying costs incurred during the application development stage are capitalized. These costs primarily consist of internal labor and third party development costs and are amortized using the straight-line method over the estimated useful life of the software, which is generally two years. All other research and development costs are expensed as incurred. Costs to maintain and update the information database are expensed within cost of revenues as these expenses are incurred. For the years ended December 31, 2016, 2015 and Fiscal 2014, the Company recorded amortization expense related to internal use software of $12.6 million, $6.9 million, and $0.5 million respectively. For the period ended March 31, 2017 and 2016 the Company recorded amortization expense of $3.1 million and $2.2 million, respectively.
Property, equipment and purchased software are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: three to five years for software and computer and office equipment and five to seven years for furniture and fixtures. Assets acquired under capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the terms of the leases. Amortization of assets acquired under capital leases is included in depreciation and amortization expense. Repairs and maintenance costs are charged to expense as incurred. When assets are retired or otherwise disposed of, the asset and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recorded in the statements of net loss and total comprehensive loss.
Long-lived assets include property, equipment and software and intangible assets with finite lives. Intangible assets consist of customer relationships, trade names and purchased technology acquired in business combinations. Intangible assets are amortized using the straight-line method, which approximates the pattern of usage of the economic benefit of the asset, over their estimated useful lives ranging from two to seven years. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, the Company evaluates recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the estimated fair value of the assets. There were no significant impairment charges for long-lived assets for the period ended March 31, 2017 of the years ended December 31, 2016, 2015 or Fiscal 2014.
The Company regularly revisits its estimate of useful economic lives of long lived assets and makes adjustments to those lives where appropriate.
The Company has completed a number of acquisitions of businesses during the period ended March 31, 2017 and the years ended December 31, 2016, 2015 and Fiscal 2014 that have resulted in the recording of goodwill and identifiable definite-lived intangible assets. The Company recognizes all of the assets acquired and liabilities assumed at their fair values on the acquisition date. The Company uses significant estimates and assumptions, including fair value estimates, as of the acquisition date and refines those estimates that are provisional, as necessary, during the measurement period. The measurement period is the period after the acquisition date, not to exceed one year, in which new information may be gathered about facts and circumstances that existed as of the acquisition date to adjust the provisional amounts recognized. Measurement period adjustments are applied retrospectively, and all other adjustments are recorded to the consolidated statements of net loss and to date have been immaterial. Acquisition-related costs are expensed as incurred separately from the acquisition and generally are included in general and administrative expenses in the statements of net loss and total comprehensive loss.
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Goodwill represents the excess of the cost of an acquired entity over the net fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. The Company performs its annual impairment assessment on October 1, or whenever events or circumstances indicate impairment may have occurred. On October 1, 2016, 2015 and 2014 the Company performed its annual goodwill impairment based on the fair value of the Companys reporting units. When assessing goodwill for impairment, the Company uses an income approach based on discounted cash flows to determine the fair value of its reporting unit. The Companys cash flow assumptions consider historical and forecasted revenue, operating costs and other relevant factors which are consistent with the plans used to manage the Companys operations.
Other than for reporting units newly formed in 2016, the results of the annual goodwill impairment test indicated that the estimated fair value of each reporting unit was, in all cases, at least 25% in excess of its carrying value. For reporting units created in the current year as part of the PRN acquisition, the fair value of the reporting units approximated their carrying value given the purchase price allocation performed during the year ended December 31, 2016. In addition, for the reporting units formed in June 2016, no events or circumstances occurred from the date of acquisition to December 31, 2016 that would indicate that the fair value of the reporting unit had decreased since the acquisition date.
Based on the results of the Companys most recent annual assessment on October 1, 2016, the Company therefore concluded that the fair value of each of its reporting units exceeded its carrying amount and no impairment charge was recorded.
The Company derives its revenues from subscription arrangements and related professional services in connection with the Companys cloud-based software and services offerings. The Company also derives revenues from news distribution services on both a subscription basis and separately from non-subscription arrangements. The Company recognizes revenue when there is persuasive evidence of an arrangement, the service has been provided to the customer, the collection of the fee is probable and the amount of the fee to be paid by the customer is fixed or determinable.
The Companys separate units of accounting consist of its subscription services, transactional services and professional services. The subscription services include access to the Companys cloud-based software, hosting services, content and content updates and customer support. The Companys subscription agreements are typically one to three years in length and are non-cancelable, though customers have the right to terminate their agreements for cause if the Company materially breaches its obligations under the agreement. Subscription agreements do not provide customers the right to take possession of the software at any time. The Company does not charge customers an up-front fee for use of the technology. Implementation activities are insignificant and are not subject to a separate fee. In certain cases, the Company charges annual membership fees to customers which are recognized ratably over the one year membership period.
The Company also distributes individual news releases to thousands of distribution points on the Internet, which are then indexed by major search engines and also directly to journalists and other key constituents. Dependent on the nature of the contract with the customer, the Company recognizes revenue on subscription basis over the term of the subscription, or on a per-transaction basis when the press releases are made available to the public.
Professional services include broadcast and webcast production. For these services, revenue is recognized when the specific performance is completed and customer acceptance received.
When sold together, revenue from the Companys different service offerings are accounted for separately as those services have value on a standalone basis and do not involve a significant degree of risk or unique acceptance criteria. The Company allocates revenue to each element in a multiple element arrangement based on a selling price hierarchy. The selling price for a deliverable is based on its VSOE, if available, TPE, if VSOE is not available, or estimated selling price, if neither VSOE nor TPE is available. As the Company has been unable to establish VSOE or TPE for the elements of its arrangements due to factors such as a high number of varied service offerings sold on a subscription basis to differing customer concentrations as well as
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varied discounting practices and unobservable competitive data for similar services, the Company estimates selling prices by analyzing multiple factors such as historical pricing trends, customer renewed activity, and discounting practices. The volume of multiple element arrangements sold by the Company in which any element of the arrangement has a revenue attribution pattern different to the other elements was not significant for all years presented.
Sales and other taxes collected from customers to be remitted to government authorities are excluded from revenues.
Compensation expense for all equity-based compensation awards is based on the grant date fair value recognition provisions of ASC Topic 718, Compensation Stock Compensation . The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally four years from the date of grant. As equity-based compensation expense recognized is based on awards ultimately expected to vest, such expense is reduced for estimated forfeitures.
Compensation expense for these equity-based awards is recognized by the Company, with an equal offsetting charge to Additional paid-in capital. Such compensation expense is reflected in the Companys consolidated financial statements because the Class C Unit awards to management relate to services provided by the employees of the Company. The Class C Units are reserved for issuance by Cision Owner for incentive purposes at the discretion of the general partner of Cision Owner, subject to certain approvals.
To date, substantially all the equity-based compensation expense recorded in the Companys financial statements results from the granting to management of Class C LP Units of Cision Owner. These Class C Units are considered Profits Interests as they allow recipients to participate in the residual profits of the Company on a predetermined fair value threshold (which can be zero). This threshold represents the threshold of proceeds from a sale of the Companys net assets at fair market value that must be distributed to the preferred LP Unit holders of Cision Owner before the holder of a Class C LP Unit can participate in a distribution.
The Company has determined that its Chief Executive Officer is the Chief Operating Decision Maker. The Companys Chief Executive Officer and the Board of Directors review financial information presented on both a consolidated basis and on a geographic regional basis. Since its inception, the Company has completed several significant acquisitions and has expended significant efforts in integrating these acquisitions into a single commercial software solution, available to all customers in all geographies. As a result of the long term qualitative and quantitative similar economic characteristics exhibited by the sale of a single product suite in all the Companys regions, the Company has determined that its operating segments meet the criteria to be aggregated into one reportable segment.
Income taxes are determined utilizing the asset and liability method whereby deferred tax assets and liabilities are recognized for deductible temporary differences between the respective reported amounts and tax bases of assets and liabilities, as well as for operating loss and tax-credit carryforwards. Net deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Companys estimates related to liabilities for uncertain tax positions require it to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. If it determines it is more likely than not that a tax position will be sustained based on its technical merits, the Company records the impact of the position in its consolidated financial statements at the largest amount that is greater than fifty percent likely of being realized upon ultimate settlement. The estimates are updated at each reporting date based on the facts, circumstances and information available. The Company is also required to assess at each reporting date whether it is reasonably possible that any significant increases or decreases to its unrecognized tax benefits will occur during the next twelve months. The Company files income tax returns in the U.S. federal jurisdictions and various state and foreign jurisdictions and is subject to U.S. federal, state, and foreign tax examinations for years ranging from 2011 to 2015.
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In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that all deferred tax assets and liabilities be classified as non-current on the balance sheet. Before the issuance of ASU 2015-17, deferred tax assets and liabilities were required to be presented as current and non-current. In the year ended December 31, 2015, the Company adopted ASU 2015-17. The adoption of ASU 2015-17 did not have a material impact on the consolidated financial statements and the balance sheets at December 31, 2016 and 2015 reflects this new presentation.
In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest, Simplifying the Presentation of Debt Issuance Costs (Topic 835-30). The amendment requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability rather than as an asset. The ASU did not address the presentation of costs of obtaining a revolving line of credit. In the June 2015 meeting of the Emerging Issues Task Force, the SEC staff clarified it would not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. The Company adopted this standard and a policy that the cost of securing a revolving line of credit will be recorded as an asset effective January 1, 2016 and the balance sheet at December 31, 2016 and 2015 reflects this new presentation.
In April 2015, the FASB issued ASU 2015-05, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40), Customers Accounting for Fees Paid in a Cloud Computing Arrangement to increase the consistency of accounting for cloud computing arrangements among reporting entities. The reporting entity must consider whether a cloud computing arrangement includes a software license. If the arrangement does not include a software license, the entity should account for the arrangement as a service contract. If the arrangement includes a software license, the entity should account for the software license element of the arrangement consistent with the acquisition of other licenses of intangible assets. The Company adopted this standard during fiscal year 2016 and the adoption did not have a material impact on the consolidated financial statements.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entitys ability to continue as a Going Concern (ASU 2014-15) . ASU 2014-15 provides guidance on managements responsibility in evaluating whether there is substantial doubt about a companys ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a companys ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in ASU 2014-15 are effective for annual reporting periods ending after December 15, 2016, and for annual and interim periods thereafter. The Company adopted ASU 2014-15 in fiscal year 2016. The adoption of ASU 2014-15 had no material effect on the consolidated financial statements.
In January 2017, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business . The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for interim and annual periods beginning in the Companys fiscal year 2019. The Company is in the process of evaluating the impact of this accounting standard update on the consolidated financial statements.
In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles-Goodwill and Other (Topic 350) . The ASU eliminates Step 2 of the goodwill impairment test, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. Under the amendments in this update, a goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.
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This ASU is effective for our fiscal year 2022, and interim periods within that year. The Company is in the process of evaluating the impact of this accounting standard update on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. ASU 2016-18 is effective for our fiscal year 2019.The new standard is not expected to have a material impact on the consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) : Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice. Among other things, the presentation of debt prepayment or debt extinguishment costs as cash outflows for financing activities on the statement of cash flow. The standard will become effective for us in the first quarter of fiscal year 2019, early adoption is permitted. The Company is in the process of evaluating the impact of this accounting standard update on the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for our fiscal year 2020 and interim periods in that year with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on the consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition, and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Topic 606 is effective for our fiscal year 2019 including interim periods within that year The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. We are still evaluating the impact that this standard will have on the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. ASU 2016-09, which amends several aspects of accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for our fiscal year 2018. The Company is evaluating the impact that this standard will have on the consolidated financial statements.
While inflation may impact revenues and cost of services, the Company believes the effects of inflation, if any, on the results of operations and financial condition have not been significant. However, there can be no assurance that the results of operations and financial condition will not be materially impacted by inflation in the future.
Our Credit Facilities bear interest at variable rates based on LIBOR plus a fixed margin. As of December 31, 2016, we had $1,498 million in outstanding borrowings under our Credit Facilities. At LIBOR rates below 3.0%, 100.0% of our outstanding borrowings bear interest at variable rates. Outstanding borrowings under our Credit Facilities are subject to a 1% LIBOR floor. As of December 31, 2016, the 3-month LIBOR rate was approximately 0.96%. A hypothetical 1% increase in the interest rate on our indebtedness as of December 31, 2016 would have increased our cash interest expense on our indebtedness by approximately $15.0 million per annum.
The reporting currency for all periods presented is the U.S. dollar. The functional currency for the Companys foreign operating subsidiaries is the local currency, including British Pound, the Euro, the Swedish Krona and
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the Canadian Dollar. These currencies all weakened significantly against the U.S. dollar. Approximately 32% of our revenues are generated in non-U.S. dollar-denominated currencies. The financial statements of these subsidiaries are translated into U.S. dollars using exchange rates in effect at each balance sheet date for assets and liabilities and average exchange rates during the period for revenues and expenses. The resulting translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders equity.
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The following table sets forth information regarding the beneficial ownership of Holdings ordinary shares as of the record date and immediately following consummation of the business combination by:
| each person known by Capitol to be the beneficial owner of more than 5% of Capitols outstanding shares of common stock either on the record date or after the consummation of the business combination; |
| each of Capitols current executive officers and directors; |
| each person who will become an executive officer or a director of Holdings upon consummation of the business combination; |
| all of Capitols current executive officers and directors as a group; and |
| all of Holdings executive officers and directors as a group after the consummation of the business combination. |
At any time prior to the annual meeting, during a period when they are not then aware of any material nonpublic information regarding Capitol or its securities, the Capitol Sponsors, Cision or Cision Owner and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase such shares from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire shares of Capitols common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the public shares entitled to vote at the annual meeting to approve the business combination proposal vote in its favor and that Capitol will have in excess of $5,000,001 of net tangible assets upon closing of the business combination after taking into account holders of public shares that properly demanded conversion of their public shares into cash, when it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or warrants owned by the Capitol Sponsors for nominal value.
Entering into any such arrangements may have a depressive effect on Capitol common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the annual meeting.
As of the date of this proxy statement/prospectus, no agreements dealing with the above have been entered into. Capitol will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the business combination proposal and charter amendments proposal or the conversion threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
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Name and Address of Beneficial Owner (1) | Pre-Business combination (2) | Post-Business combination (3) | ||||||||||||||
Amount and
Nature of Beneficial Ownership |
Approximate
Percentage of Outstanding Shares of Common Stock |
Amount and
Nature of Beneficial Ownership |
Approximate
Percentage of Outstanding Ordinary Shares |
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Directors and Executive Officers Pre-Business combination:
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Mark D. Ein (4) | 5,936,250 | 14.6 | % | 9,113,856 | 7.3 | % | ||||||||||
L. Dyson Dryden (5) | 1,978,750 | 4.9 | % | 3,037,952 | 2.5 | % | ||||||||||
Richard C. Donaldson (6) | 50,000 | * | 191,669 | * | ||||||||||||
Lawrence Calcano (6) | 50,000 | * | 191,669 | * | ||||||||||||
Piyush Sodha (6) | 50,000 | * | 191,669 | * | ||||||||||||
All directors and executive officers prior to the business combination as a group (five individuals) | 8,065,000 | 19.9 | % | 12,726,815 | 10.0 | % | ||||||||||
Directors and Executive Officers Post-Business combination:
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Kevin Akeroyd (7) | | | | | ||||||||||||
Peter Granat (7) | | | | | ||||||||||||
Mark Jones | | | | | ||||||||||||
Jack Pearlstein (7) | | | | | ||||||||||||
Jeremy Thompson (7) | | | | | ||||||||||||
Mark D. Ein (4) | 5,936,250 | 14.6 | % | 9,113,856 | 7.3 | % | ||||||||||
L. Dyson Dryden (5) | 1,978,750 | 4.9 | % | 3,037,952 | 2.5 | % | ||||||||||
Stephen P. Master (8) (9) | | | | | % | |||||||||||
Stuart Yarbrough | | | | | % | |||||||||||
Mark M. Anderson (8) (9) | | | | | % | |||||||||||
Philip A. Canfield (8) (9) | | | | | % | |||||||||||
All directors and executive officers post-business combination as a group (ten individuals) | 7,915,000 | 19.5 | % | 12,151,808 | 9.6 | % | ||||||||||
Five Percent Holders:
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Cision Owner (8) | | | % | 84,100,000 | 68.3 | % | ||||||||||
Capitol Acquisition Management 3 LLC (10) | 5,936,250 | 14.6 | % | 9,113,856 | 7.3 | % | ||||||||||
Capitol Acquisition Founder 3 LLC (11) | 1,978,750 | 4.9 | % | 3,037,952 | 2.5 | % | ||||||||||
Davidson Kempner Partners (12) | 2,970,000 | 7.3 | % | 2,970,000 | 2.5 | % | ||||||||||
TD Asset Management Inc. (13) | 2,946,600 | 7.3 | % | 2,946,600 | 2.4 | % | ||||||||||
BlueMountain Capital Management, LLC (14) | 2,750,000 | 6.8 | % | 2,750,000 | 2.3 | % | ||||||||||
Highbridge Capital Management Inc. (15) | 2,282,087 | 5.6 | % | 2,282,087 | 1.9 | % |
* | Less than one percent. |
(1) | Unless otherwise indicated, the business address of each of the individuals is 509 7 th Street, N.W., Washington, D.C. 20004. |
(2) | The pre-business combination percentage of beneficial ownership of Capitol in the table below is calculated based on 40,625,000 shares of common stock outstanding as of the record date. The amount of beneficial ownership does not reflect the shares of common stock issuable as a result of Capitols warrants as such warrants may not be exercisable within 60 days. Unless otherwise indicated, Capitol believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them prior to the business combination. |
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(3) | The post-business combination percentage of beneficial ownership of Holdings is calculated based on 121,125,000 ordinary shares outstanding. Such amount assumes that no public shareholders properly elect to convert their shares into cash. The amount of beneficial ownership for each individual or entity post-business combination includes shares of common stock issuable as a result of Capitols warrants as such warrants will become exercisable upon consummation of the business combination. Unless otherwise indicated, Capitol believes that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them upon consummation of the business combination. |
(4) | Represents shares held by Capitol Acquisition Management 3 LLC, of which Leland Investments Inc., an entity controlled by Mr. Ein, is the sole member. Does not include an aggregate of 36,139 shares held by two individuals that it may receive in the event such shares do not vest in accordance with restricted stock agreements between such individuals and Capitol Acquisition Management 3 LLC. Post-business combination ownership includes 4,346,591 ordinary shares issuable upon exercise of private warrants. |
(5) | Represents shares held by Capitol Acquisition Founder 3 LLC, an entity controlled by Mr. Dryden. Does not include an aggregate of 12,046 ordinary shares held by two individuals that it may receive in the event such shares do not vest in accordance with restricted stock agreements between such individuals and Capitol Acquisition Founder 3 LLC. Post-business combination ownership includes 1,448,864 shares issuable upon exercise of private warrants. |
(6) | Post-business combination ownership includes 151,515 shares issuable upon exercise of private warrants. |
(7) | Messrs. Akeroyd, Granat, Pearlstein and Thompson are investors in Cision Owner. The foregoing persons have neither a controlling interest in Cision Owner nor direct or indirect voting or dispositive power with respect to the ordinary shares of Cision held of record by Cision Owner. |
(8) | Includes 2,000,000 ordinary shares issuable upon exercise of the warrants. Voting and dispositive power with respect to the ordinary shares held by Cision Owner is exercised by its general partner, Canyon Partners, Ltd., which following the consummation of the Transactions will in turn be controlled by a majority vote of its ten-member board of directors (Canyon Board of Directors). GTCR Investment X AIV Ltd. (GTCR AIV) as the sole shareholder of Canyon Partners, Ltd. may be deemed to share voting and dispositive power over the ordinary shares held by Cision Owner. GTCR AIV is managed by a ten-member board of Directors (the AIV Board of Directors) comprised of Mark M. Anderson, Craig A. Bondy, Philip A. Canfield, Aaron D. Cohen, Sean L. Cunningham, David A. Donnini, Constantine A. Mihas, Collin E. Roche, Lawrence C. Fey IV and Benjamin J. Daverman. Each of the foregoing entities and the individual members of each of the Canyon Board of Directors and the AIV Board of Directors disclaim beneficial ownership of the shares held of record by Cision Owner except to the extent of his, her or its pecuniary interest. The address for Cision Owner, Canyon Partners, Ltd. and GTCR AIV is c/o GTCR Golder Rauner II, LLC, 300 North LaSalle Street, Suite 5600, Chicago, Illinois 60654. |
(9) | Messrs. Canfield and Anderson are Managing Directors of GTCR LLC, and Mr. Master is a Vice President of GTCR LLC. Each of Messrs. Canfield, Anderson and Master disclaims beneficial ownership of any units of Cision Owner beneficially owned by Canyon Partners, Ltd. and GTCR AIV, except to the extent of his indirect pecuniary interest. |
(10) | Post-business combination ownership includes 4,346,591 ordinary shares issuable upon exercise of private warrants. |
(11) | Post-business combination ownership includes 1,448,864 ordinary shares issuable upon exercise of private warrants. |
(12) | The business address of Davidson Kempner Partners is c/o Davidson Kempner Capital Management LP, 520 Madison Avenue, 30 th Floor, New York, New York 10022. Messrs. Thomas L. Kempner, Jr. and Robert J. Brivio, Jr. through Davidson Kempner Capital Management LP, are responsible for the voting and investment decisions relating to the securities held by Davidson Kempner Partners, Davidson Kempner Institutional Partners, L.P. and Davidson Kempner International, Ltd. Information derived from a Schedule 13G filed on October 26, 2015. |
(13) | The business address of TD Asset Management Inc. is Canada Trust Tower, BCE Place, 161 Bay Street, 35 th Floor, Toronto, Ontario, M5J 2T2. Excludes 1,600 shares held by TDAM USA Inc. Information derived from a Schedule 13G filed on February 10, 2017. |
(14) | The business address of BlueMountain Capital Management, LLC is 280 Park Avenue, 12 th Floor, New York, New York 10017. Information derived from a Schedule 13G/A filed on February 13, 2017. |
(15) | The business address of Highbridge Capital Management, LLC is 40 West 57 th Street, 32 nd Floor, New York, New York 10019. Information derived from a Schedule 13G filed on March 30, 2017. |
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Capitols Sponsors, including its officers and directors, beneficially own 20% of its issued and outstanding shares of common stock as of the record date. Because of the ownership block held by Capitols Sponsors, such individuals may be able to effectively exercise control over all matters requiring approval by Capitols stockholders, including the election of directors and approval of significant corporate transactions other than approval of its initial business combination.
All of the initial shares have been placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, until one year after the consummation of an initial business combination or earlier if, subsequent to the consummation of an initial business combination, (i) the last sales price of Capitols common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial business combination or (ii) Capitol (or any successor entity) consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the companys stockholders having the right to exchange their shares of common stock for cash, securities or other property.
During the escrow period, the holders of these shares will not be able to sell or transfer their securities except (i) for transfers to an entitys members upon its liquidation, (ii) to relatives and trusts for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death, (iv) pursuant to a qualified domestic relations order, (v) by certain pledges to secure obligations incurred in connection with purchases of Capitols securities or (vi) by private sales made at or prior to the consummation of a business combination at prices no greater than the price at which the shares were originally purchased, in each case where the transferee agrees to the terms of the escrow agreement, but will retain all other rights as Capitols stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be placed in escrow. If Capitol is unable to effect a business combination and liquidate the trust account, none of its initial stockholders will receive any portion of the liquidation proceeds with respect to their initial shares.
In a private placement conducted simultaneously with the consummation of Capitols initial public offering, the Capitol initial stockholders purchased 8,250,000 private warrants. The purchasers have agreed that these warrants will not be sold or transferred by them (except to certain permitted transferees) until 30 days after Capitol has completed a business combination.
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Capitols Code of Ethics requires Capitol to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) Capitol or any of its subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of Capitols shares of common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.
Capitols audit committee, pursuant to its written charter, is responsible for reviewing and approving related-party transactions to the extent Capitol enters into such transactions. The audit committee will consider all relevant factors when determining whether to approve a related party transaction, including whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related partys interest in the transaction. No director may participate in the approval of any transaction in which he is a related party, but that director is required to provide the audit committee with all material information concerning the transaction. Additionally, Capitol requires each of its directors and executive officers to complete an annual directors and officers questionnaire that elicits information about related party transactions.
These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
In July 2015, Capitol issued 10,062,500 shares of common stock to Capitol Acquisition Management 3 LLC and Capitol Acquisition Founder 3 LLC for $25,000 in cash, at a purchase price of approximately $0.002 per share, in connection with Capitols organization. Capitol Acquisition Management 3 LLC and Capitol Acquisition Founder 3 LLC subsequently transferred a portion of these shares to certain individuals, including Capitols independent directors, for the same purchase price originally paid for such shares. In October 2015, our sponsors then contributed back to Capitols capital, for no additional consideration, an aggregate of 1,437,500 shares. In connection with the closing of the Offering, an additional 500,000 shares were contributed back to Capitols capital for no additional consideration.
Capitols Sponsors, including its officers and directors, purchased an aggregate of 8,250,000 private warrants (for a total purchase price of $8,250,000) from Capitol on a private placement basis simultaneously with the consummation of Capitols initial public offering. The private warrants are identical to the warrants included in the units sold in the initial public offering except that the private warrants: (i) are not redeemable by Capitol and (ii) may be exercised for cash or on a cashless basis, as described in the prospectus for the initial public offering, so long as they are held by the initial purchasers or any of their permitted transferees. If the private warrants are held by holders other than the initial purchasers or any of their permitted transferees, they will be redeemable by Capitol and exercisable by the holders on the same basis as the warrants included in the units being sold in the initial public offering. The initial purchasers of the private warrants have agreed not to transfer, assign or sell any of the warrants, including the common stock issuable upon exercise of the warrants (except to certain permitted transferees), until 30 days after the completion of Capitols initial business combination.
In order to meet Capitols working capital needs, Capitols Sponsors, including its officers and directors, may loan funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. On August 11, 2016, August 12, 2016 and August 15, 2016, Capitols officers and directors (or their affiliates) loaned an aggregate of $500,000. On November 9, 2016, Capitol received new commitments (which commitments replaced and superseded the prior commitments provided to Capitol in May and
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August 2016) from Capitols officers and directors to provide additional loans of up to $767,000 in the aggregate when and if needed. On February 7, 2017, Capitols officers and director (or their affiliates) loaned an aggregate of $450,000. On April 20, 2017, Capitols officers and directors (or their affiliates) loaned an aggregate of an additional $400,000. Additionally, Capitol has received new commitments from its executive officers to provide Capitol with up to an additional $175,000 in the aggregate. These loans, and any future ones that may be made by Capitols officers and directors (or their affiliates), are, and will be, evidenced by notes and would be repaid upon the consummation of a business combination. If Capitol does not complete a business combination, the loans will be forgiven.
The holders of Capitols initial shares, as well as the holders of the private warrants and any warrants Capitols Sponsors or their affiliates may be issued in payment of working capital loans made to Capitol (and all underlying securities), are entitled to registration rights pursuant to an agreement signed on the effective date of the initial public offering. The holders of a majority of these securities are entitled to make up to two demands that Capitol register such securities. The holders of the majority of the initial shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the private warrants or warrants issued in payment of working capital loans made to Capitol (or underlying securities) can elect to exercise these registration rights at any time after Capitol consummates a business combination. In addition, the holders have certain piggy-back registration rights with respect to registration statements filed subsequent to Capitols consummation of a business combination. Capitol will bear the expenses incurred in connection with the filing of any such registration statements. This arrangement will be terminated in connection with the consummation of the Transactions and will be replaced by the Registration Rights Agreement with respect to the affiliates of Messrs. Ein and Dryden.
Leland Investments Inc., an affiliate of Mr. Ein, advanced to Capitol an aggregate of $200,000 to cover expenses related to the initial public offering. The loan was payable without interest on the consummation of the initial public offering. The loan was repaid from the proceeds of the initial public offering.
Venturehouse Group, LLC, an affiliate of Mark D. Ein, and Dryden Capital Management, LLC, an affiliate of L. Dyson Dryden, have agreed that, commencing on October 13, 2015 through the earlier of the consummation of Capitols initial business combination or its liquidation, it will make available to Capitol certain general and administrative services, including office space, utilities and administrative support, as Capitol may require from time to time. Capitol has agreed to pay these entities an aggregate of $10,000 per month for these services. Mr. Ein is the Chief Executive Officer of Venturehouse Group, LLC and Mr. Dryden is the sole member of Dryden Capital Management, LLC. Accordingly, they will benefit from the transaction to the extent of their interest in Venturehouse Group, LLC and Dryden Capital Management, LLC, respectively. However, this arrangement is solely for Capitols benefit and is not intended to provide Messrs. Ein or Dryden compensation in lieu of a salary. Capitol believes, based on rents and fees for similar services in the D.C. metropolitan area, that the fee charged by these entities are at least as favorable as it could have obtained from an unaffiliated person.
Capitol has also entered into three consulting arrangements for services to help identify and introduce it to potential targets and provide assistance with due diligence, deal structuring, documentation and obtaining stockholder approval for a business combination. These agreements provide for an aggregate annual fee of $550,000 and success fee of $1,125,000 upon the consummation of a business combination.
Other than this $10,000 per month fee, the repayment of the $200,000 loan from Leland Investments Inc. and the payment of consulting or success fees described above (none of which payments will be made from the proceeds of the Offering held in the trust account prior to the completion of Capitols initial business combination), no compensation or fees of any kind, including finders fees, consulting fees or other similar compensation, will be paid to any of Capitols sponsors, officers, directors or their respective affiliates, for services rendered to Capitol prior to, or in connection with the consummation of its initial business combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on Capitols behalf, such as identifying potential target businesses, performing business due diligence on suitable target
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businesses and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. There is no limit on the amount of out-of-pocket expenses reimbursable by Capitol.
On May 30, 2014, Canyon Valor Companies, Inc. (formerly GTCR Valor Companies, Inc.), a wholly owned indirect subsidiary of Cision (Cision Sub), entered into an Amended and Restated Professional Services Agreement (the Services Agreement) with Cision Owner, GTCR LLC and GTCR Management X LP (GTCR Management) pursuant to which Cision Sub agreed to engage GTCR Management as a financial and management consultant.
Under the terms of the Services Agreement, GTCR Management provides various services to Cision Owner and its subsidiaries, including Cision Sub, such as corporate strategy, budgeting of future corporate investments and acquisition and divestiture strategies. GTCR Management is entitled to a placement fee in connection with any equity or debt financing of Cision Owner or any of its subsidiaries (regardless of whether such financing is provided by GTCR Management or any of its affiliates), subject to certain exceptions. The Services Agreement also requires Cision Sub to pay an annual management fee to GTCR Management, unless such amounts are not permitted to be paid under the agreements governing Cisions First Lien Credit Facility and Second Lien Credit Facility, in which case such fees automatically accrue without interest for the benefit of GTCR Management, to be paid at such time as and to the extent that such fees are permitted to be paid under such credit facilities. Cision Sub is also required to reimburse GTCR Management for reasonable travel expenses, legal fees and other out-of-pocket fees and expenses incurred by GTCR Management or its affiliates in connection with the performance of its obligations under the Services Agreement. Cision Sub has also agreed to indemnify GTCR Management and its affiliates for any losses or liabilities they incur in connection with their performance under the Services Agreement, except to the extent resulting from GTCR Managements gross negligence or willful misconduct. Cision Sub paid fees and expense reimbursement to GTCR Management in an aggregate amount of $0.6 million, $0.6 million and $0.4 million in 2016, 2015 and 2014, respectively. As of December 31, 2016, there were approximately $148,000 accrued but unpaid management fees and expenses under the Services Agreement.
Cision and GTCR Management will terminate the Services Agreement in connection with the consummation of the Business Combination.
As a subsidiary of Cision Owner, Cision from time to time engages in intercompany transactions with Cision Owner, including intercompany loans. In connection with the acquisition of Bulletin Intelligence, on March 24, 2017, in exchange for a note, Cision Owner issued $7.0 million of Units of Cision Owner to a subsidiary of Cision, which Units were used as consideration for the purchase of Bulletin Intelligence. The note will be repaid to Cision Owner in connection with consummation of the business combination.
In connection with the acquisition of PR Newswire on June 16, 2016, Cision Owner loaned $195.9 million to Cision and issued $40.0 million of Units of Cision Owner to a subsidiary of Cision, which cash and Units were used to fund the PR Newswire acquisition. Cision Owner contributed these loans to Cision in exchange for CPECs, resulting in the cancellation of these loans.
From time to time, Cision issues CPECs to Cision Owner in connection with capital contributions from Cision Owner to Cision. See Convertible Preferred Equity Certificates of Cision (CPECs) and Note 2 to the Cisions audited financial statements included elsewhere in this proxy statement/prospectus for a description of the CPECs. In connection with the business combination, Cision Owner will contribute the CPECs, along with its outstanding equity in Cision, to Holdings.
Between April 2014 and July 2016, Cision Owner entered into 11 Subscription Agreements with Cision pursuant to which Cision issued and sold Convertible Preferred Equity Certificates (CPECs) to Cision Owner. The CPECs are redeemable at any time by Cision and mature 49 years from the date of issuance. The
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CPECs carry a 1% per year yield which is accounted for as interest expense in the consolidated statements of Net loss and total comprehensive loss. The CPECs can be converted to Class V shares of Cision at any time at a conversion price equal to the fair value of Cisions Class V shares on the date of issuance by Cision Owner. The CPECs are treated as debt instruments in Luxembourg. The CPECs are classified as liabilities due to the creditor like rights held by the holder, including the right to force the Cisions bankruptcy.
The CPECs are puttable to Cision for cash by the holder at any time and can be called by Cision at any time. As a result of this contracted put feature, the CPECs are classified as current liabilities in the consolidated balance sheets. The holder is not expected to redeem the CPECs.
In connection with the business combination, Cision Owner will contribute the CPECs, along with its outstanding equity in Cision, to Holdings.
In connection with the completion of Cisions acquisition of Gorkana on October 21, 2014, GTCR Canyon UK Investments Limited, a subsidiary of Cision, acquired Gorkana and issued promissory notes to the sellers of Gorkana, including to Jeremy Thompson, a portion denominated in US dollars and a portion denominated in pounds sterling. Notes in the amounts of $617,971 and £1,726,272 were issued to Mr. Thompson. The US dollar-denominated notes bore interest at a rate of 8% per annum and were payable on demand. The pounds sterling-denominated notes were secured by the value of a cash collateral account and bore interest equal to the interest paid on the underlying cash collateral account. Concurrently with the issuance of the notes, Mr. Thompson, Cision Owner and certain of its affiliates entered into a subscription agreement pursuant to which Mr. Thompson agreed to contribute the notes to Cision Luxembourg in exchange for equivalent notes issued by Cision Luxembourg (the Lux Notes).
On December 22, 2014, Cision Owner and Cision entered into an Investment Agreement with Mr. Thompson pursuant to which he agreed to contribute the Lux Notes to Cision in exchange for securities of Cision (the Cision Shares) and a portion in exchange for equivalent notes of Cision (the Cision Notes). On September 18, 2015, Cision Owner issued Units in Cision Owner (an aggregate deemed capital contribution of $662,939) to Mr. Thompson in exchange for the Cision Shares held by him. On December 21, 2015, Cision repaid the pounds sterling-denominated notes to Mr. Thompson in the amount of £1,726,272.
Section 16(a) of the Exchange Act requires Capitols directors, officers and persons owning more than 10% of Capitols common stock to file reports of ownership and changes of ownership with the SEC. Based on its review of the copies of such reports furnished to Capitol, or representations from certain reporting persons that no other reports were required, Capitol believes that all applicable filing requirements were complied with during the fiscal year ended December 31, 2016.
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The following description of the material terms of the share capital of Holdings following the transactions includes a summary of specified provisions of the charter documents of Holdings that will be in effect upon completion of the Transactions. This description is qualified by reference to Holdings charter documents as will be in effect upon consummation of the Transactions, copies of which are attached to this proxy statement/prospectus and are incorporated in this proxy statement/prospectus by reference.
Holdings is a Cayman Islands exempted company with limited liability. Its affairs are governed by its Articles and the Companies Law.
Upon consummation of the Transactions, the authorized share capital of Holdings will be US$50,000 consisting of 480,000,000 ordinary shares, par value $0.0001 per share, and 20,000,000 preferred shares of par value US$0.0001 per share. As of the date of this proxy statement/prospectus, there was one ordinary share issued and outstanding and no preferred shares have been issued or are outstanding.
Walkers, Cayman Islands counsel to Holdings, has confirmed that all of the issued and outstanding ordinary shares of Holdings are fully paid and non-assessable. Certificates representing the outstanding ordinary shares are generally not issued and legal title to the issued shares is recorded in registered form in the register of members. Holders of ordinary shares have no pre-emptive, subscription, redemption or conversion rights.
Preferred Shares
The board of directors of Holdings may provide for other classes of shares, including series of preferred shares, out of the authorized but unissued share capital, which could be utilized for a variety of corporate purposes, including future offerings to raise capital for corporate purposes or for use in employee benefit plans. Such additional classes of shares shall have such voting powers (full or limited or without voting powers), designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as may be determined by the board of directors. If any preferred shares are issued, the rights, preferences and privileges of holders of ordinary shares will be subject to, and may be adversely affected by, the rights of the holders of such preferred shares.
The holders of ordinary shares are entitled to such dividends as may be declared by the board of directors, subject to the Companies Law and the Articles. Dividends and other distributions on issued and outstanding ordinary shares may be paid out of the funds of Holdings lawfully available for such purpose, subject to any preference of any outstanding preferred shares. Dividends and other distributions will be distributed among the holders of ordinary shares on a pro rata basis.
Each ordinary share entitles the holder to one vote on all matters upon which the ordinary shares are entitled to vote. Voting at any shareholders meeting is by show of hands, unless voting by way of poll demanded by the chairman of the board of directors or any shareholder present or voting by proxy.
A quorum required for a meeting of shareholders requires the presence in person or by proxy of persons holding in aggregate not less than a simple majority of all voting share capital of Holdings in issue, provided that for so long as Holdings is a Controlled Company within the meaning of the rules of the then Designated Stock Exchange, general meetings shall not be quorate unless Cision Owner is in attendance (provided that Cision Owner holds shares in Holdings).
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A special resolution will be required for important matters such as a merger or consolidation of Holdings, change of name or making changes to the Articles or the voluntary winding up of Holdings.
An ordinary resolution of the shareholders of Holdings requires the affirmative vote of a simple majority of the votes cast at a quorate general meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast at a quorate general meeting or, in each case, a unanimous resolution in writing.
The rights attached to any class of shares (unless otherwise provided by the terms of issue of that class), such as voting, dividends and the like, may be varied only with the sanction of a special resolution passed at a general meeting or by the written consent of the holders of two-thirds of the shares of that class or with the sanction of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class shall not (unless otherwise provided by the terms of issue of that class) be deemed to be varied by the creation or issue of further shares ranking in priority to or pari passu with such previously existing shares.
Any shareholder may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form prescribed by the Designated Stock Exchange or as otherwise approved by the board of directors.
In addition, the Articles prohibit the transfer of shares in breach of the rules or regulations of the Designated Stock Exchange or any relevant securities laws (including the Exchange Act).
On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), assets available for distribution among the holders of ordinary shares shall be distributed among the holders of the ordinary shares on a pro rata basis.
The management of Holdings is vested in a board of directors. The Articles provide that there shall be a board of directors consisting of eight (8) directors, unless increased or decreased from time to time by the directors or by Holdings in general meeting, provided that, for so long as Cision Owner has the right to nominate any director for election pursuant to the Articles, the size of the board of directors shall not be increased or decreased without the prior written consent of Cision Owner. We expect that upon the consummation of the Transactions, the board will consist of seven (7) directors and will have one vacancy. So long as shares are listed on the Designated Stock Exchange, the board of directors shall include such number of independent directors as the relevant rules applicable to the listing of any shares on the Designated Stock Exchange require (subject to any applicable exceptions for Controlled Companies).
The directors shall be divided into three (3) classes designated as Class I, Class II and Class III, respectively. At the 2018 annual general meeting of shareholders, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three (3) years. At the 2019 annual general meeting of shareholders, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three (3) years. At the 2020 annual general meeting of shareholders, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three (3) years. At each succeeding annual general meeting of shareholders, directors shall be elected for a full term of three (3) years to succeed the directors of the class whose terms expire at such annual general meeting.
The directors of Holdings have the power from time to time and at any time to appoint any person as a director to fill a casual vacancy on the board of directors or as an addition to the existing board of directors, subject to the remaining provisions of the Articles, the terms of the Nominating Agreement, applicable law and the listing rules of the Designated Stock Exchange; provided that, subject to the terms of the Nominating
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Agreement, any vacancy not filled by the directors may be filled by the shareholders by ordinary resolution at the next annual general meeting or extraordinary general meeting called for that purpose; provided further, that, subject to the terms of the Nominating Agreement, whenever the holders of any class or classes of share or series thereof are entitled to elect one or more directors by the provisions of the Articles, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected or by the holders of such class or classes of shares or series thereof in accordance with the Articles. Any director so appointed shall hold office until the expiration of the term of such class of directors or until his earlier death, resignation or removal.
A director may be removed from office by the shareholders by special resolution only for cause (as defined in the Articles); provided that, subject to certain limitations set forth in the Articles, (x) until the date of the 2020 annual general meeting of the shareholders (and not thereafter), any director may be removed with or without cause upon the affirmative vote of the Cision Owner if the Cision Owner and its affiliates beneficially own at least 50% of the issued ordinary shares and (y) any director who was nominated for election by the Cision Owner may be removed with or without cause upon the affirmative vote of the Cision Owner for so long as the Cision Owner has the right to nominate such director for election pursuant to the Articles.
A vacancy on the board of directors created by the removal of a director under the provisions of the Articles may be filled by the election or appointment by ordinary resolution at the general meeting at which such director is removed or by the affirmative vote of a simple majority of the remaining directors present and voting at a meeting of the directors.
The appointment and removal of directors is subject to the applicable rules of the Designated Stock Exchange and to the provisions of the Nominating Agreement.
The detailed procedures for the nomination of persons proposed to be elected as directors at any general meeting of Holdings are set out in the Articles.
The Articles provide that the board of directors and officers shall be indemnified from and against all liability which they incur in execution of their duty in their respective offices, except liability incurred by reason of such directors or officers actual fraud or wilful default.
Cayman Islands companies are governed by the Companies Law. The Companies Law is modelled on English law but does not follow recent English Law statutory enactments, and differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of some significant differences between the provisions of the Companies Law applicable to Holdings and, for comparison purposes, the laws applicable to companies incorporated in the State of Delaware and their shareholders.
The Companies Law allows for the merger of two companies into either one consolidated company or one company merged into another so as to form a single surviving company. The merger or consolidation of two or more companies under Cayman Islands law requires the directors of the companies to enter into and to approve a written plan of merger or consolidation, which must also be authorized by a special resolution of the shareholders of each constituent company (which as noted above requires the affirmative vote of no less than two-thirds of the votes cast at a quorate general meeting), in which regard see Voting rights above. In relation to any merger or consolidation under the Companies Law, dissenting shareholders have certain limited appraisal rights in circumstances which are similar to those available to dissenting shareholders of a Delaware corporation, providing rights to receive payment in cash for the judicially determined fair value of the shares. Appraisal rights are ordinarily available where the consideration offered under the merger is payable in cash or, in some instances, the unlisted securities of a third party.
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The Companies Law also includes statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that such a scheme of arrangement is approved by shareholders or creditors who represent a majority in number and 75% in value of each such class of shareholders who attend and vote, either in person or by proxy, at a meeting or meetings convened for that purpose. The convening of meetings to consider any such scheme of arrangement, and the implementation of the sanction, must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| the statutory provisions as to the dual majority vote have been met; |
| the shareholders have been fairly represented at the meeting in question and the classes properly delineated; |
| the arrangement is such that a businessman would reasonably approve; and |
| the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law. |
If a scheme of arrangement is thus approved, the dissenting shareholders would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of a Delaware corporation.
When a tender offer to acquire shares is made and accepted (within four months) by holders of not less than 90% of the shares subject to such offer, the offeror may, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed unless there is evidence of fraud, bad faith or collusion.
In principle, Holdings will normally be the proper plaintiff and a class action or derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle, including when:
| a company acts or proposes to act illegally or ultra vires (beyond the scope of its authority); |
| the act complained of, although not ultra vires, could be effected duly if authorized by a special resolution that has not been obtained; and |
| those who control the company are perpetrating a fraud on the minority. |
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components, the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director must act in a manner he or she reasonably believes to be in the best interests of the corporation. A director must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interests of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction and that the transaction was of fair value to the corporation.
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As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company: a duty to act bona fide in the best interests of the company; a duty not to make a profit out of his position as director (unless the company permits him to do so); a duty to exercise his powers for the purposes for which they are conferred; and a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and care. A director will need to exhibit in the performance of his duties both the degree of skill than may reasonably be expected from a subjective perspective determined by reference to his knowledge and experience, and the skill and care objectively to be expected from a person occupying office as a director of Holdings.
Under the Articles, directors who are in any way, whether directly or indirectly, interested in a contract or proposed contract with Holdings must declare the nature of their interest at a meeting of the board of directors. Following such declaration, a director may vote in respect of any contract or proposed contract notwithstanding his interest; provided that, in exercising any such vote, such directors duties remain as described above.
Under Delaware corporate law, unless otherwise provided in the certificate of incorporation, any action to be taken at any annual or special meeting of shareholders of a corporation may be taken by written consent of the holders of outstanding stock having not less than the minimum number of votes that would be necessary to take that action at a meeting at which all shareholders entitled to vote were present and voted. In addition, a corporation may eliminate the right of shareholders to act by written consent through amendment to its certificate of incorporation.
Cayman Islands law and the Articles provide that shareholders may approve the appointment or removal of directors by way of unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.
Under Delaware corporate law, a shareholder has the right to put any proposal before the shareholders at the annual meeting, provided that such shareholder complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
Under the laws of the Cayman Islands, a proposal may only be put before the shareholders at any general meeting in respect of any matter requiring a special resolution if it is set out in the notice calling the meeting. Pursuant to the Articles, no business may be transacted at any general meeting, other than business that is either (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the directors (or any duly authorized committee thereof), (B) otherwise properly brought before an annual general meeting by or at the direction of the directors (or any duly authorized committee thereof) or (C) otherwise properly brought before an annual general meeting by any shareholder who (1) is a shareholder of record on both (x) the date of the giving of the notice by such shareholder provided for in the Articles and (y) the record date for the determination of shareholders entitled to vote at such annual general meeting and (2) complies with the notice procedures set forth in the remaining provisions of the Articles.
A general meeting may be called by the board of directors or any other person authorized to do so in the memorandum and articles of association, but shareholders may be precluded from calling general meetings. General meetings of Holdings may be convened by a majority of the board of directors or, whilst it continues to hold at least 10% of the issued ordinary shares, requisitioned by Cision Owner.
Under Delaware corporate law, a corporation is required to set a minimum quorum of one-third of the issued and outstanding shares for a shareholders meeting. Cayman Islands law permits a companys articles to have any quorum. See Voting rights .
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Under Delaware corporate law, cumulative voting for elections of directors is not permitted unless the corporations certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits a minority shareholder to cast all the votes to which such shareholder is entitled on a single director, which increases such shareholders voting power with respect to electing such director.
There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands, but the Articles do not permit cumulative voting. As a result, shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Under Delaware corporate law, unless otherwise specified in the certificate of incorporation or bylaws of a corporation, directors are elected by a plurality of the votes of the shares entitled to vote on the election of directors and may be removed with or without cause (or, with respect to a classified board, only with cause unless the certificate of incorporation provides otherwise) by the approval of a majority of the outstanding shares entitled to vote.
As permitted by the Companies Law and pursuant to the Articles, directors can be appointed and removed in the manner described in the section headed Directors above.
Cayman Islands law does not limit the extent to which a companys memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. The Articles provide that the board of directors and officers shall be indemnified from and against all liability which they incur in execution of their duty in their respective offices, except liability incurred by reason of such directors or officers actual fraud or wilful default. This standard of conduct is generally the same as permitted under Delaware corporate law.
The Cayman Islands has a less developed body of securities laws as compared to the United States and provides less protection to investors. Additionally, Cayman Islands companies may not have standing to sue before the Federal courts of the United States. Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize a foreign judgment as the basis for a claim at common law in the Cayman Islands provided such judgment:
| is given by a competent foreign court; |
| imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given; |
| is final; |
| is not in respect of taxes, a fine or a penalty; and |
| was not obtained in a manner and is not of a kind the enforcement of which is contrary to the public policy of the Cayman Islands. |
As a result of recent English case law, which will likely be highly persuasive in the Cayman Islands, the Cayman Islands Courts may also have discretion to enforce judgments obtained in foreign bankruptcy proceedings in other circumstances.
Under Delaware corporate law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise.
Under Cayman Islands law and the Articles, if Holdings share capital is divided into more than one class of shares, we may vary the rights attached to any class with either the written consent of the holders of
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two-thirds of the shares of such class or with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class.
Under Delaware corporate law, a vote of the shareholders is required to approve a sale of assets only when all or substantially all assets are being sold to a person other than a subsidiary of the Company.
The Companies Law contains no specific restrictions on the powers of directors to dispose of assets of a company. As a matter of general law, in the exercise of those powers, the directors must discharge their duties of care and to act in good faith, for a proper purpose and in the interests of the company.
The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an interested shareholder for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the targets outstanding voting stock within the past three years.
This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the targets board of directors.
Cayman Islands law has no comparable statute. As a result, Holdings cannot avail itself of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.
There are no limitations imposed by the Articles on the rights of non-resident or foreign shareholders to hold or exercise voting rights on shares held in the capital of Holdings. As similarly provided under Delaware corporate law, there are no restrictions on foreign or non-resident ownership or management of a Cayman Islands company under Cayman Islands law. In addition, there are no provisions in the Articles governing the ownership threshold above which shareholder ownership must be disclosed.
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporations outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with a dissolution initiated by the board of directors.
Under the Companies Law of the Cayman Islands and the Articles, Holdings may be voluntarily dissolved, liquidated or wound up only by a special resolution of the shareholders, in which regard see Voting rights above. In addition, a company may be wound up by the Grand Court of the Cayman Islands if the company is unable to pay its debts or if the court is of the opinion that it is just and equitable that the company is wound up.
Shareholders of Holdings will have no general right under Cayman Islands law to inspect or obtain copies of its register of shareholders or corporate records except the Articles.
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Under Delaware corporate law, any shareholder of a corporation may for any proper purpose inspect or make copies of the corporations stock ledger, list of shareholders and other books and records.
Under Delaware corporate law, a corporations certificate of incorporation may be amended only if adopted and declared advisable by the board of directors and approved by a majority of the outstanding shares entitled to vote, and the bylaws may be amended with the approval of a majority of the outstanding shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board of directors.
As permitted by Cayman Islands law, the Articles may be amended with the sanction of a special resolution passed at a general meeting of shareholders.
Upon consummation of the Transactions, Holdings will have warrants outstanding to purchase an aggregate of 24,500,000 ordinary shares (assuming no holders of public shares seek to convert such shares to cash). Each outstanding whole warrant of Capitol shall automatically represent the right to purchase one ordinary share of Holdings in lieu of one share of Capitol common stock upon closing of the Transactions at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing 30 days after the completion of Transactions.
The private warrants are identical to the public warrants underlying the units sold in Capitols initial public offering, except that such private warrants will be exercisable for cash (even if a registration statement covering the shares issuable upon exercise of such public warrants is not effective) or on a cashless basis, at the holders option, and will not be redeemable by us, in each case so long as they are still held by the initial purchasers or their affiliates.
Holdings may call the warrants for redemption (excluding the private warrants), in whole and not in part, at a price of $0.01 per warrant:
| at any time while the warrants are exercisable; |
| upon not less than 30 days prior written notice of redemption to each warrant holder; |
| if, and only if, the reported last sale price of Holdings shares equals or exceeds $18.00 per share (as adjusted for splits, dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period ending on the third business day prior to the notice of redemption to warrant holders; and |
| if, and only if, there is a current registration statement in effect with respect to the shares underlying such warrants. |
The right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a warrant will have no further rights except to receive the redemption price for such holders warrant upon surrender of such warrant.
If Holdings calls the warrants for redemption as described above, its management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the ordinary shares for the 5 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.
The exercise price and number of ordinary shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below their respective exercise prices.
173
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of ordinary shares and any voting rights until they exercise their warrants and receive ordinary shares. After the issuance of ordinary shares upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.
Warrant holders may elect to be subject to a restriction on the exercise of their warrants such that an electing warrant holder would not be able to exercise their warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% of the ordinary shares outstanding.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up to the nearest whole number the number of ordinary shares to be issued to the warrant holder.
174
Capitols units, warrants and common stock are traded on the Nasdaq Stock Market LLC under the symbols CLACU, CLACW and CLAC, respectively. The following table sets forth the high and low sales prices for the units, warrants and common stock for the periods indicated since the units commenced public trading on October 14, 2015, and since the warrants and common stock commenced separate trading on December 7, 2015.
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Period | Common Stock | Warrants | Units | |||||||||||||||||||||
High | Low | High | Low | High | Low | |||||||||||||||||||
2017:
|
||||||||||||||||||||||||
Second Quarter* | $ | [] | $ | [] | $ | [] | $ | [] | $ | [] | $ | [] | ||||||||||||
First Quarter | $ | 10.60 | $ | 9.92 | $ | 1.85 | $ | 0.85 | $ | 13.51 | $ | 10.24 | ||||||||||||
2016:
|
||||||||||||||||||||||||
Fourth Quarter | $ | 10.00 | $ | 9.80 | $ | 0.87 | $ | 0.63 | $ | 10.46 | $ | 10.10 | ||||||||||||
Third Quarter | $ | 10.00 | $ | 9.65 | $ | 0.70 | $ | 0.40 | $ | 10.85 | $ | 9.80 | ||||||||||||
Second Quarter | $ | 9.80 | $ | 9.62 | $ | 0.40 | $ | 0.32 | $ | 10.10 | $ | 9.74 | ||||||||||||
First Quarter | $ | 9.75 | $ | 9.40 | $ | 0.65 | $ | 0.30 | $ | 10.09 | $ | 9.56 | ||||||||||||
2015:
|
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Fourth Quarter** | $ | 11.00 | $ | 5.98 | $ | 0.80 | $ | 0.25 | $ | 10.10 | $ | 9.22 |
* | Through [], 2017. |
** | Trading commenced October 14, 2015 for our units and December 6, 2015 for our warrants and common stock. |
As of March 7, 2017, there was one holder of record of units, eight holders of record of shares of common stock and six holders of record of warrants. Management believes Capitol has in excess of 300 beneficial holders of its securities.
Capitol did not pay any dividends to its security holders during the year ended December 31, 2016.
Historical market price information regarding Cision is not provided because there is no public market for its securities.
As of March 19, 2017, the number of record holders of Cisions ordinary shares was six.
Cision did not pay any dividends to its security holders during the year ended December 31, 2016.
Historical market price information regarding Holdings is not provided because there is no public market for its securities.
175
As of March 19, 2017, Capitol was the only record holder of Holdings ordinary shares.
Following the completion of the Transactions, Holdings board of directors will consider whether or not to institute a dividend policy. It is presently intended that Holdings will retain its earnings for use in business operations and, accordingly, it is not anticipated that Holdings board of directors will declare dividends in the foreseeable future. In addition, the terms of Cisions credit facilities will include restrictions on Holdings ability to issue dividends. See Cisions Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Overview for a discussion of our credit facilities' restrictions on our subsidiaries ability to pay dividends or other payments to us.
176
Neither Capitol stockholders nor Capitol warrant holders have appraisal rights under the DGCL in connection with the Transactions.
The Holdings 2018 annual meeting of stockholders will be held on or about [], 2018 unless the date is changed by the board of directors. If you are a stockholder and you want to include a proposal in the proxy statement for the year 2018 annual meeting, you need to provide it to Holdings by no later than [], 2018. You should direct any proposals to Holdings secretary at its principal office which will be located at 130 East Randolph St., 7 th Floor, Chicago, IL 60601 and at its registered office which will be located at Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands. If you are a stockholder and you want to present a matter of business to be considered at the year 2018 annual meeting, under Holdings amended and restated memorandum and articles of association you must give timely notice of the matter, in writing, to Holdingss secretary. To be timely, the notice has to be given between [], 2018 and [], 2018.
Stockholders and interested parties may communicate with Capitols board of directors, any committee chairperson or the non-management directors as a group by writing to the board or committee chairperson in care of Capitol Acquisition Corp. III, 509 7 th Street, N.W., Washington, D.C. 20004. Following the business combination, such communications should be sent in care of Cision Ltd., 130 East Randolph St. 7 th Floor, Chicago, IL 60601. Each communication will be forwarded, depending on the subject matter, to the board of directors, the appropriate committee chairperson or all non-management directors.
The financial statements of Capitol as of December 31, 2016 and 2015 appearing in this proxy statement/prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere in this proxy statement/prospectus, and are included in reliance on such report given on the authority of such firm as an expert in accounting and auditing.
The financial statements of Canyon Holdings S.a.r.l. and its subsidiaries as of December 31, 2016 and December 31, 2015 and for each of the years ended December 31, 2016, December 31, 2015 and the period February 11, 2014 (Inception) to December 31, 2014 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
The financial statements of Vocus, Inc. and its subsidiaries as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 included in the Proxy Statement of Capitol Acquisition Holding Company Ltd., which is referred to and made a part of this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as an expert in accounting and auditing.
The combined financial statements of PRN Group as of December 31, 2015 and 2014 and for each of the two years in the period ended December 31, 2015 and the combined financial statements of PRN Group as of December 31, 2014 and 2013 and for each of the two years in the period ended December 31, 2014 included in the Proxy Statement of Capitol Acquisition Holding Company Ltd., which is referred to and made a part of this Prospectus and Registration Statement, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
177
Pursuant to the rules of the SEC, Capitol and services that it employs to deliver communications to its stockholders are permitted to deliver to two or more stockholders sharing the same address a single copy of each of Capitols annual report to stockholders and Capitols proxy statement. Upon written or oral request, Capitol will deliver a separate copy of the annual report to stockholder and/or proxy statement to any stockholder at a shared address to which a single copy of each document was delivered and who wishes to receive separate copies of such documents. Stockholders receiving multiple copies of such documents may likewise request that Capitol deliver single copies of such documents in the future. Stockholders receiving multiple copies of such documents may request that Capitol deliver single copies of such documents in the future. Stockholders may notify Capitol of their requests by calling or writing Capitol at its principal executive offices at 509 7 th Street, N.W., Washington, D.C. 20004 or (202) 654-7060. Following the business combination, such requests should be made by calling or writing Holdings at 130 East Randolph St. 7 th Floor, Chicago, IL 60601 or (866) 639-5087.
Capitol files reports, proxy statements and other information with the SEC as required by the Exchange Act. You may read and copy reports, proxy statements and other information filed by Capitol with the Securities SEC at the SEC public reference room located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain copies of the materials described above at prescribed rates by writing to the Securities and Exchange Commission, Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549. You may access information on Capitol at the SEC web site containing reports, proxy statements and other information at: http://www.sec.gov.
Information and statements contained in this proxy statement/prospectus or any annex to this proxy statement/prospectus are qualified in all respects by reference to the copy of the relevant contract or other annex filed as an exhibit to this proxy statement/prospectus.
All information contained in this document relating to Capitol has been supplied by Capitol, and all such information relating to Cision has been supplied by Cision. Information provided by one another does not constitute any representation, estimate or projection of the other.
If you would like additional copies of this document or if you have questions about the business combination, you should contact via phone or in writing:
Mr. L. Dyson Dryden
Capitol Acquisition Corp. III
509 7
th
Street, N.W.
Washington, D.C. 20004
Tel. (202) 654-7060
178
F-1
F-2
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March 31,
2017 |
December 31,
2016 |
|||||||
(unaudited) | ||||||||
ASSETS
|
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Current assets
|
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Cash and cash equivalents | $ | 274,005 | $ | 95,985 | ||||
Cash and cash equivalents held in trust account, interest income available for taxes | 728,968 | 567,469 | ||||||
Accrued interest receivable held in trust account | 190,900 | 165,126 | ||||||
Prepaid expenses | 122,475 | 30,525 | ||||||
Total current assets | 1,316,348 | 859,105 | ||||||
Cash and cash equivalents held in trust account, restricted | 325,000,000 | 325,000,000 | ||||||
Total assets | $ | 326,316,348 | $ | 325,859,105 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY
|
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Current liabilities
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Accounts payable and accrued expenses | $ | 362,072 | $ | 188,291 | ||||
Long term liabilities
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Notes payable to related parties | 950,000 | 500,000 | ||||||
Deferred underwriting fee | 11,375,000 | 11,375,000 | ||||||
Total liabilities | 12,687,072 | 12,063,291 | ||||||
Commitments and contingencies
|
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Common stock, subject to possible redemption, 30,775,821 and 30,810,131 shares at redemption value at March 31, 2017 and December 31, 2016, respectively | 308,629,275 | 308,795,813 | ||||||
Stockholders equity
|
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Preferred stock, $.0001 par value; 1,000,000 shares authorized; none issued and outstanding | | | ||||||
Common stock, $.0001 par value; 120,000,000 shares authorized; 9,849,179 and 9,814,869 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 985 | 981 | ||||||
Additional paid-in capital | 5,935,293 | 5,768,759 | ||||||
Accumulated deficit | (936,277 | ) | (769,739 | ) | ||||
Total stockholders equity | 5,000,001 | 5,000,001 | ||||||
Total liabilities and stockholders equity | $ | 326,316,348 | $ | 325,859,105 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
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Three months
ended March 31, 2017 |
Three months
ended March 31, 2016 |
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Operating costs | $ | (506,356 | ) | $ | (477,521 | ) | ||
Loss from operations | (506,356 | ) | (477,521 | ) | ||||
Other income and expense:
|
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Interest income | 339,818 | 132,167 | ||||||
Net loss | $ | (166,538 | ) | $ | (345,354 | ) | ||
Weighted average number of shares outstanding, basic and diluted | 9,814,869 | 9,680,095 | ||||||
Basic and diluted net loss per share | $ | (0.02 | ) | $ | (0.04 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
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|
|
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For the
three months ended March 31, 2017 |
For the
three months ended March 31, 2016 |
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss | $ | (166,538 | ) | $ | (345,354 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
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Cash held in trust account, interest income available for taxes | (314,043 | ) | (55,085 | ) | ||||
Accrued interest income | (25,774 | ) | (77,082 | ) | ||||
Changes in operational assets and liabilities:
|
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Prepaid expenses | (91,950 | ) | (8,258 | ) | ||||
Accounts payable and accrued expenses | 173,781 | 96,493 | ||||||
Net cash used in operating activities | (424,524 | ) | (389,286 | ) | ||||
Cash Flows from Investing Activities:
|
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Interest released from trust | 152,544 | | ||||||
Net cash provided by investment activities | 152,544 | | ||||||
Cash Flows from Financing Activities:
|
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Proceeds from notes payable to related parties | 450,000 | | ||||||
Net cash provided by financing activities | 450,000 | | ||||||
Net increase (decrease) in cash and cash equivalents | 178,020 | (389,286 | ) | |||||
Cash and cash equivalents, beginning of period | 95,985 | 857,325 | ||||||
Cash and cash equivalents, end of period | $ | 274,005 | $ | 468,039 | ||||
Supplemental disclosure of non-cash investing and financing activities:
|
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Change in value of common stock subject to possible redemption | $ | (166,538 | ) | $ | (345,354 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
Capitol Acquisition Corp. III (the Company) was incorporated in Delaware on July 13, 2015 as a blank check company whose objective is to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, one or more businesses or entities (a Business Combination). In connection with the Transactions (defined below), the Company formed Capitol Acquisition Holding Company Ltd. (Holdings) as a direct wholly-owned subsidiary and Capitol Acquisition Merger Sub, Inc. (Merger Sub) as a wholly-owned subsidiary of Holdings. Holdings was incorporated under the laws of the Cayman Islands as an exempted company on March 9, 2017. Merger Sub was incorporated under the laws of Delaware as a corporation on March 9, 2017.
All activity through March 31, 2017 relates to the Companys formation, initial public offering (Offering) and identifying and investigating prospective target businesses with which to consummate a Business Combination.
The registration statement for the Offering was declared effective on October 13, 2015. The Company consummated the Offering of 32,500,000 units on October 19, 2015, including the exercise of the over-allotment option to the extent of 2,500,000 units, generating gross proceeds of $325,000,000 and net proceeds of $317,665,553 after deducting $7,334,447 of transaction costs (up to an additional $11,375,000 of deferred underwriting expenses may be paid upon the completion of a Business Combination). The units sold pursuant to the Offering (Units) were sold at an offering price of $10.00 per Unit. In addition, the Company generated gross and net proceeds of $8,250,000 from the private placement (the Private Placement) of 8,250,000 warrants (Founders Warrants) at a price of $1.00 per warrant to Capitol Acquisition Management 3 LLC and Capitol Acquisition Founder LLC (collectively, the Sponsors), entities affiliated with the Companys executive officers, and the Companys directors.
The Companys management has broad discretion with respect to the specific application of the net proceeds of the Offering and the Founders Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to effect a Business Combination successfully.
Upon the closing of the Offering, $325,000,000 ($10.00 per Unit sold in the Offering), including the proceeds of the private placement of the Founders Warrants was placed in a trust account (Trust Account) and may be invested in U.S. government securities within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended the (Investment Company Act), having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act until the earlier of (i) the consummation of the Companys first Business Combination and (ii) the Companys failure to consummate a Business Combination within the prescribed time. Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The Companys executive officers have agreed that they will be liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for services rendered, contracted for or products sold to the Company. However, there can be no assurance that they will be able to satisfy those obligations should they arise.
On March 19, 2017, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Capitol Acquisition Holding Company Ltd., an exempted company incorporated in the Cayman Islands with limited liability and wholly-owned subsidiary of the Company (Holdings), Capitol Acquisition Merger Sub, Inc., a Delaware limited liability company and wholly-owned subsidiary of Holdings (Merger Sub), Canyon Holdings (Cayman) L.P., a Cayman Islands exempted limited partnership (Cision Owner), and Canyon Holdings S.a r.l., a Luxembourg private limited liability company (société à responsabilité limitée), having its registered office at 6D, L-2633 Senningerberg, Grand Duchy of Luxembourg and registered with the
F-6
RCS under number B 184599 (Cision). The Merger Agreement provides for a Business Combination between the Company and Cision pursuant to which, among other things, (i) Cision Owner will contribute to Holdings all of the share capital and convertible preferred equity certificates in Cision in exchange for the issuance of 82,100,000 ordinary shares of Holdings and warrants to purchase 2,000,000 Ordinary Shares of Holdings (in each case, subject to certain adjustments), plus the right to receive up to 6,000,000 ordinary shares in the future if certain price targets are met (the Contribution and Exchange), (ii) The Sponsors of Capitol will forfeit 1,600,000 shares of Capitol and warrants to purchase 2,000,000 shares of Capitol at closing of the Transactions (in each case, subject to certain adjustments), and (iii) Merger Sub will be merged with and into the Company with the Company being the surviving corporation in the merger (the Merger, together with the Contribution and Exchange and other transactions contemplated by the Merger Agreement, the Transactions). The Merger Agreement provides that Cision is not required to consummate the Transactions if immediately prior to the consummation of the Transactions, Capitol does not have at least $225,000,000 of cash available to be released from the trust account after giving effect to payment of amounts that Capitol will be required to pay to converting stockholders upon consummation of the Transactions and certain other fees and expenses. If Cision does not waive its termination right and Capitol has less than the required amount in trust, the Transactions will not be consummated. The Transactions are expected to be consummated promptly after the required approval by the stockholders of the Company and the fulfillment of certain other conditions.
The Business Combination will be accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting Capitol will be treated as the acquired company for financial reporting purposes. This determination was primarily based on Cision comprising the ongoing operations of the combined entity, Cisions senior management comprising the majority of the senior management of the combined company, and current shareholders of Cision having a majority of the voting power of the combined entity. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Cision issuing stock for the net assets of Capitol, accompanied by a recapitalization. The net assets of Capitol will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Cision.
The Company is required to seek shareholder approval of the foregoing Business Combination at a meeting called for such purpose at which shareholders may seek to convert their shares into their pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) will be restricted from seeking conversion rights with respect to 20% or more of the shares of common stock sold in the Offering without the Companys prior written consent. The Company will proceed with the Business Combination only if it has net tangible assets of at least $5 million upon consummation of the Business Combination and a majority of the outstanding shares of common stock of the Company voted are voted in favor of the Business Combination. In connection with the shareholder vote required to approve the Business Combination, the Sponsors and any other initial shareholders of the Company (collectively, the Initial Stockholders) have agreed (i) to vote any of their respective shares in favor of the initial Business Combination and (ii) not to convert any of their respective shares.
Pursuant to the Companys Amended and Restated Certificate of Incorporation, if the Company is unable to complete its initial Business Combination by October 19, 2017, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining holders of common stock and the Companys board of directors, dissolve and liquidate. If the Company is unable to consummate an initial Business Combination and is forced to redeem 100% of the outstanding Public Shares for a pro rata portion of the funds held in the Trust Account, each holder will receive a full pro rata portion of the amount then in the
F-7
Trust Account, plus any pro rata interest earned on the funds held in the Trust Account and not released to the Company to pay any of its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses).
If the Company is unable to complete its initial Business Combination and expends all of the net proceeds of the Offering not deposited in the Trust Account, without taking into account any interest earned on the Trust Account, the Company expects that the per-share conversion price for common stock would be $10.00. The proceeds deposited in the Trust Account could, however, become subject to claims of the Companys creditors that are in preference to the claims of the Companys stockholders. In addition, if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of the Companys common stockholders. Therefore, the actual per-share redemption price may be less than $10.00.
The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act) and will remain such for up to five years. However, if the Companys non-convertible debt issued within a three-year period or the Companys total revenues exceed $1 billion or the market value of the Companys shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, the Company would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, the Company has elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards.
The Company has experienced recurring net operating losses as well as negative cash flows from operations. The Companys main source of liquidity was from the Offering and the Private Placement proceeds, from which amounts have been used to fund the search for a prospective target business. On August 11, 2016, August 12, 2016 and August 15, 2016, the Companys officers and directors (or their affiliates) loaned the Company an aggregate of $500,000. On February 7, 2017, the Companys officers and directors (or their affiliates) loaned the Company an additional aggregate of $450,000. The Company had a cash position of approximately $274,000 as of March 31, 2017. On April 20, 2017, the Companys officers and directors (or their affiliates) loaned the Company a further $400,000 in aggregate. The August 2016, February 2017 and April 2017 loans, and any future ones that may be made by the Companys officers and directors (or their affiliates), are, and will be, evidenced by notes and will be repaid upon the consummation of a Business Combination. The terms of the August 2016 and February 2017 loans state that they may be converted into warrants but in connection with the Transactions, the note holders have agreed not to convert the loans into warrants. Additionally, the Company has received new commitments from its Chief Executive Officer, Mark D. Ein, and its President and Chief Financial Officer, L. Dyson Dryden, to provide additional loans to the company of up to $175,000 in the aggregate. Based on the foregoing, the Company believes it has sufficient cash to meet its needs through October 19, 2017.
The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Holdings and Merger Sub. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017
F-8
or any other period. The accompanying unaudited condensed financial statements should be read in conjunction with the Companys annual report on Form 10-K filed on March 10, 2017.
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
The Company considers all short-term investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash deposits with major financial institutions.
The amounts held in the Trust Account represent substantially all of the proceeds of the Initial Public Offering and are classified as restricted assets since such amounts can only be used by the Company in connection with the consummation of a Business Combination. As of March 31, 2017 and December 31, 2016, cash and cash equivalents (restricted) held in the Trust Account consisted of $325,000,000 in United States Treasury securities with an original maturity of three months or less. Cash and cash equivalents held in trust available for taxes consisted of $728,968 at March 31, 2017.
The fair value of the Companys assets and liabilities, which qualify as financial instruments under FASB ASC 820, Fair Value Measurements and Disclosures, approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
The Company accounts for its common stock subject to possible conversion in accordance with the guidance enumerated in ASC 480 Distinguishing Liabilities from Equity. Common stock subject to mandatory conversion is classified as a liability instrument and is measured at fair value. Conditionally convertible common stock (including common stock that features cash conversion rights that are either within the control of the holder or subject to cash conversion upon the occurrence of uncertain events not solely within the Companys control) is classified as temporary equity. At all other times, common stock is classified as stockholders equity. The Companys common stock features certain cash conversion rights that are considered by the Company to be outside of the Companys control and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2017 and December 31, 2016, the common stock subject to possible conversion is presented as temporary equity, outside of the stockholders equity section of the Companys balance sheet.
Loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture (Note 5). Common stock subject to possible redemption has been excluded from the calculation of basic loss per share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. At March 31, 2017 and 2016, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. The Company has not considered the effect of warrants to purchase shares of common stock in the calculation of diluted loss per share, since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted loss per common share is the same as basic loss per common share for the period.
F-9
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
The Company accounts for income taxes under ASC 740 Income Taxes (ASC 740). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period disclosure and transition. The Company is required to file income tax returns in the United States (federal) and in various state and local jurisdictions. Based on the Companys evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Companys financial statements. Since the Company was incorporated on July 13, 2015, the evaluation was performed for the 2015 and 2016 tax year. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position.
The Companys policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest as of or during the three months ended March 31, 2017 or the period ended December 31, 2016. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
Management of the Company evaluates events that have occurred after the balance sheet date of March 31, 2017 through the date which these financial statements were issued. On April 20, 2017, the Company issued notes payable to its officers and directors (or their affiliates) which totaled $400,000. These notes do not bear interest, and are repayable upon the consummation of the Companys initial merger, capital stock exchange, asset acquisition, or other similar business combination.
F-10
In connection with the Offering, on October 19, 2015, the Company sold 32,500,000 Units at $10.00 per Unit (including 2,500,000 Units subject to the underwriters over-allotment option. Each unit consists of one share of common stock in the Company and one half of one Warrant of the Company (Warrants). Each whole Warrant entitles the holder to purchase one share of common stock at a price of $11.50 commencing on the later of 30 days after the Companys completion of a Business Combination or October 19, 2016 and expiring five years from the completion of a Business Combination. The Company may redeem the Warrants at a price of $0.01 per Warrant upon 30 days notice, only in the event that the last sale price of the shares of common stock is at least $18.00 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given. If the Company redeems the Warrants as described above, management will have the option to require all holders that wish to exercise their Warrants to do so on a cashless basis. No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of the Warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the Warrants is not effective within a specified period following the consummation of an initial Business Combination, Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their Warrants on a cashless basis. In accordance with the warrant agreement relating to the Warrants to be sold and issued in the Offering the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Warrants.
Simultaneously with the consummation of the Offering, the Company consummated the Private Placement of 8,250,000 Founders Warrants at a price of $1.00 per warrant to the Sponsors. The Founders Warrants are identical to the Warrants included in the Units sold in the Offering except that the Founders Warrants: (i) are not redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, as described in the registration statement relating to the Offering, so long as they are held by the initial purchasers or any of their permitted transferees. Additionally, the purchasers have agreed not to transfer, assign or sell any of the Founders Warrants, including the common stock issuable upon exercise of the Founders Warrants (except to certain permitted transferees), until 30 days after the completion of the Companys initial Business Combination. In connection with the Transactions, the purchasers have agreed to contribute an aggregate of 2,000,000 Founders Warrants to the Company for cancellation upon closing of such Transactions.
At March 31, 2017 and December 31, 2016, there were 24,500,000 Warrants outstanding, which include 8,250,000 Founders Warrants.
On October 13, 2015, the Company entered into an agreement with the underwriters of the Offering (Underwriting Agreement). Pursuant to the Underwriting Agreement, the Company paid an underwriting discount of 2.0% of the gross proceeds of the Offering as an underwriting discount. The Company also agreed to pay the underwriters in the Offering a deferred underwriting discount of 3.5% of the gross proceeds of the Offering (Deferred Commissions) which was placed in the Trust Account and is only payable upon completion of a Business Combination.
The Company presently occupies office space provided by two affiliates of the Companys executive officers. Such affiliates have agreed that, until the Company consummates a Business Combination, they will make such office space, as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company will pay such affiliates an aggregate of $10,000 per month for such services.
F-11
The Initial Stockholders and the holders of the Founders Warrants (or underlying shares of common stock) will be entitled to registration rights with respect to their initial shares and the Founders Warrants (or underlying shares of common stock) pursuant to an agreement signed on the effective date of the Offering. The holders of the majority of the initial shares are entitled to demand that the Company register these shares at any time commencing three months prior to the first anniversary of the consummation of a Business Combination. The holders of the Founders Warrants (or underlying shares of common stock) are entitled to demand that the Company register these securities at any time after the Company consummates a Business Combination. In addition, the Initial Stockholders and holders of the Founders Warrants (or underlying shares of common stock) have certain piggy-back registration rights on registration statements filed after the Companys consummation of a Business Combination.
The Company entered into three consulting arrangements for services to help identify and introduce the Company to potential targets and provide assistance with due diligence, deal structuring, documentation and obtaining stockholder approval for a business combination. These agreements provide for an aggregate annual fee of $550,000 and success fee of $1,125,000 upon the consummation of a Business Combination.
During August 2016 and February 2017, the Company issued notes payable to certain shareholders which totaled $950,000. These notes do not bear interest, and are repayable upon the consummation of the Companys initial merger, capital stock exchange, asset acquisition, or other similar business combination. The terms of these notes state that upon consummation of a Business Combination, the note holders have the option to convert their principal balances into warrants at a price of $1.00 per warrant. The terms of these warrants will be identical to those of the founders warrants. However, in connection with the Transactions, the note holders have agreed not to convert the loans into warrants.
The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Companys board of directors.
As of March 31, 2017 and December 31, 2016, there are no shares of preferred stock issued or outstanding.
The Company is authorized to issue 120,000,000 shares of common stock with a par value of $0.0001 per share.
In connection with the organization of the Company, on July 13, 2015, a total of 10,062,500 shares of the Companys common stock were sold to the Sponsors at a price of approximately $0.0025 per share for an aggregate of $25,000. On October 13, 2015, the Sponsors contributed back to the Companys capital, for no additional consideration, an aggregate of 1,437,500 shares, leaving an aggregate of 8,625,000 shares outstanding. This number included an aggregate of 1,125,000 shares that were subject to forfeiture if the over-allotment option was not exercised in full by the underwriters. An aggregate of 500,000 shares were forfeited based on the amount of Units sold in the Offering pursuant to the over-allotment option.
F-12
On closing of the Offering, the shares were placed into an escrow account and will not be transferred, assigned, sold or released from escrow until one year after the date of the consummation of an initial Business Combination or earlier if, subsequent to an initial Business Combination, (i) the last sales price of the Companys common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (ii) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Companys stockholders having the right to exchange their shares of common stock for cash, securities or other property.
As of March 31, 2017 and December 31, 2016, 9,849,179 and 9,814,869 shares of common stock, respectively, were issued and outstanding, which excludes 30,775,821 and 30,810,131 shares subject to possible redemption, respectively.
F-13
To the Audit Committee of the
Board of Directors and Shareholders
of Capitol Acquisition Corp. III
We have audited the accompanying balance sheets of Capitol Acquisition Corp. III (the Company) as of December 31, 2016 and 2015, and the related statements of operations, changes in stockholders equity and cash flows for the year ended December 31, 2016 and for the period from July 13, 2015 (inception) through December 31, 2015. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Capitol Acquisition Corp. III, as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the year ended December 31, 2016 and the period from July 13, 2015 (inception) through December 31, 2015 in conformity with accounting principles generally accepted in the United States of America.
/s/ Marcum LLP
Marcum
llp
New York, NY
March 10, 2017
F-14
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December 31, 2016 | December 31, 2015 | |||||||
ASSETS
|
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Current assets
|
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Cash and cash equivalents | $ | 95,985 | $ | 857,325 | ||||
Cash and cash equivalents held in trust account, interest income available for taxes | 567,469 | | ||||||
Accrued interest receivable held in trust account | 165,126 | 25,377 | ||||||
Prepaid expenses | 30,525 | 17,800 | ||||||
Total current assets | 859,105 | 900,502 | ||||||
Cash and cash equivalents held in trust account, restricted | 325,000,000 | 325,000,000 | ||||||
Total assets | $ | 325,859,105 | $ | 325,900,502 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY
|
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Current liabilities
|
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Accounts payable and accrued expenses | $ | 188,291 | $ | 76,454 | ||||
Long-term liabilities
|
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Notes payable to related parties | 500,000 | | ||||||
Deferred underwriting fee | 11,375,000 | 11,375,000 | ||||||
Total liabilities | 12,063,291 | 11,451,454 | ||||||
Commitments and Contingencies
|
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Common stock, subject to possible redemption, 30,810,131 and 30,944,905 shares at redemption value at December 31, 2016 and December 31, 2015 | 308,795,813 | 309,449,047 | ||||||
Stockholders equity:
|
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Preferred stock, $.0001 par value; 1,000,000 shares authorized; none issued and outstanding | | | ||||||
Common stock, $.0001 par value; 120,000,000 shares authorized; 9,814,869 and 9,680,095 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively | 981 | 969 | ||||||
Additional paid-in capital | 5,768,759 | 5,115,537 | ||||||
Accumulated deficit | (769,739 | ) | (116,505 | ) | ||||
Total stockholders equity | 5,000,001 | 5,000,001 | ||||||
Total liabilities and stockholders equity | $ | 325,859,105 | $ | 325,900,502 |
The accompanying notes are an integral part of these financial statements.
F-15
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|
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Year ended
December 31, 2016 |
Period from
July 13, 2015 (inception) through December 31, 2015 |
|||||||
Operating costs | $ | (1,491,184 | ) | $ | (141,984 | ) | ||
Loss from operations | (1,491,184 | ) | (141,984 | ) | ||||
Other income and expense:
|
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Interest income | 837,950 | 25,479 | ||||||
Net loss | $ | (653,234 | ) | $ | (116,505 | ) | ||
Weighted average number of shares outstanding, basic and diluted | 9,735,456 | 9,098,268 | ||||||
Basic and diluted net loss per share | $ | (0.07 | ) | $ | (0.01 | ) |
The accompanying notes are an integral part of these financial statements.
F-16
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Common Stock |
Additional
Paid-in Capital |
Accumulated
Deficit |
Total
Stockholders Equity |
|||||||||||||||||
Shares | Amount | |||||||||||||||||||
Common stock issued to initial stockholders | 10,062,500 | $ | 1,006 | $ | 23,994 | $ | | $ | 25,000 | |||||||||||
Contribution of sponsors shares for no consideration | (1,437,500 | ) | (143 | ) | 143 | | | |||||||||||||
Sale of 32,500,000 units, net underwriters discount and offering expenses | 32,500,000 | 3,250 | 306,287,303 | | 306,290,553 | |||||||||||||||
Proceeds from issuance of sponsors warrants, at $1 per warrant | | | 8,250,000 | | 8,250,000 | |||||||||||||||
Forfeiture of initial stockholders shares pursuant to partial exercise of underwriters overallotment | (500,000 | ) | (50 | ) | 50 | | | |||||||||||||
Shares subject to possible redemption | (30,944,905 | ) | (3,094 | ) | (309,445,953 | ) | | (309,449,047 | ) | |||||||||||
Net loss | | | | (116,505 | ) | (116,505 | ) | |||||||||||||
Balance, December 31, 2015 | 9,680,095 | 969 | 5,115,537 | (116,505 | ) | 5,000,001 | ||||||||||||||
Shares subject to possible redemption | 134,774 | 12 | 653,222 | | 653,234 | |||||||||||||||
Net Loss | | | | (653,234 | ) | (653,234 | ) | |||||||||||||
Balance, December 31, 2016 | 9,814,869 | $ | 981 | $ | 5,768,759 | $ | (769,739 | ) | $ | 5,000,001 |
The accompanying notes are an integral part of these financial statements.
F-17
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|
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Year Ended
December 31, 2016 |
For the
period from July 13, 2015 (inception) through December 31, 2015 |
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Cash Flows from Operating Activities:
|
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Net loss | $ | (653,234 | ) | $ | (116,505 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Cash held in trust account, interest income available for taxes | (691,951 | ) | | |||||
Accrued interest income | (139,749 | ) | (25,377 | ) | ||||
Changes in operational assets and liabilities:
|
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Prepaid expenses | (12,725 | ) | (17,800 | ) | ||||
Accounts payable and accrued expenses | 111,837 | 76,454 | ||||||
Net cash used in operating activities | (1,385,822 | ) | (83,228 | ) | ||||
Cash Flows from Investing Activities:
|
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Proceeds released from Trust | 124,482 | | ||||||
Cash held in Trust Activity | | (325,000,000 | ) | |||||
Net cash provided (used in) investment activities | 124,482 | (325,000,000 | ) | |||||
Cash Flows from Financing Activities:
|
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Proceeds from notes payable to related parties | 500,000 | 280,000 | ||||||
Repayments of notes payable to related parties | | (280,000 | ) | |||||
Proceeds from issuance of common stock to initial stockholders | | 25,000 | ||||||
Proceeds from sale of Units, net underwriter commissions paid | | 317,665,553 | ||||||
Proceeds from issuance of Sponsors warrants | | 8,250,000 | ||||||
Net cash provided by financing activities | 500,000 | 325,940,553 | ||||||
Net (Decrease) Increase in cash and cash equivalents | (761,340 | ) | 857,325 | |||||
Cash and cash equivalents, beginning of period | 857,325 | | ||||||
Cash and cash equivalents, end of period | $ | 95,985 | $ | 857,325 | ||||
Supplemental disclosure of non-cash investing and financing activities:
|
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Initial value of common stock subject to redemption | $ | | $ | 309,564,545 | ||||
Change in value of common stock subject to redemption | $ | (653,234 | ) | $ | (115,498 | ) | ||
Deferred underwriter fee | $ | | $ | 11,375,000 |
The accompanying notes are an integral part of these financial statements.
F-18
Capitol Acquisition Corp. III (the Company) was incorporated in Delaware on July 13, 2015 as a blank check company whose objective is to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, one or more businesses or entities (a Business Combination).
All activity through December 31, 2016 relates to the Companys formation, initial public offering (Offering) and identifying and investigating prospective target businesses with which to consummate a Business Combination.
The registration statement for the Offering was declared effective on October 13, 2015. The Company consummated the Offering of 32,500,000 units on October 19, 2015, including the exercise of the over-allotment option to the extent of 2,500,000 units, generating gross proceeds of $325,000,000 and net proceeds of $317,665,553 after deducting $7,334,447 of transaction costs (up to an additional $11,375,000 of deferred underwriting expenses may be paid upon the completion of a Business Combination). The units sold pursuant to the Offering (Units) were sold at an offering price of $10.00 per Unit. In addition, the Company generated gross and net proceeds of $8,250,000 from the private placement (the Private Placement) of 8,250,000 warrants (Founders Warrants) at a price of $1.00 per warrant to Capitol Acquisition Management 3 LLC and Capitol Acquisition Founder LLC (collectively, the Sponsors), entities affiliated with the Companys executive officers, and the Companys directors.
The Companys management has broad discretion with respect to the specific application of the net proceeds of our Offering and the Founders Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to effect a Business Combination successfully.
Upon the closing of the Offering, $325,000,000 ($10.00 per Unit sold in the Offering), including the proceeds of the private placement of the Founders Warrants was placed in a trust account (Trust Account) and may be invested in U.S. government securities within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the Investment Company Act), having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act until the earlier of (i) the consummation of the Companys first Business Combination and (ii) the Companys failure to consummate a Business Combination within the prescribed time. Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The Companys executive officers have agreed that they will be liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for services rendered, contracted for or products sold to the Company. However, there can be no assurance that they will be able to satisfy those obligations should they arise.
The Company, after signing a definitive agreement for a Business Combination with a target business, is required to seek shareholder approval of such Business Combination at a meeting called for such purpose at which shareholders may seek to convert their shares into their pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) will be restricted from seeking conversion rights with respect to 20% or more of the shares of common stock sold in the Offering without the Companys prior written consent. The Company will proceed with a Business Combination only if it has net tangible assets of at least $5 million upon consummation of the Business Combination and a majority of the outstanding shares of common stock of the Company voted are voted in favor of the Business Combination. In connection with any shareholder vote required to approve any Business
F-19
Combination, the Sponsors and any other initial shareholders of the Company (collectively, the Initial Stockholders) have agreed (i) to vote any of their respective shares in favor of the initial Business Combination and (ii) not to convert any of their respective shares.
Pursuant to the Companys Amended and Restated Certificate of Incorporation, if the Company is unable to complete its initial Business Combination by October 19, 2017, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining holders of common stock and the Companys board of directors, dissolve and liquidate. If the Company is unable to consummate an initial Business Combination and is forced to redeem 100% of the outstanding Public Shares for a pro rata portion of the funds held in the Trust Account, each holder will receive a full pro rata portion of the amount then in the Trust Account, plus any pro rata interest earned on the funds held in the Trust Account and not released to the Company to pay any of its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses).
If the Company is unable to complete its initial business combination, the per-share conversion price for common stock would be $10.00, without taking into account any interest, if any, earned on the trust account. The proceeds deposited in the Trust Account could, however, become subject to claims of the Companys creditors that are in preference to the claims of the Companys stockholders. In addition, if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of the Companys common stockholders. Therefore, the actual per-share redemption price may be less than $10.00.
The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act) and will remain such for up to five years. However, if the Companys non-convertible debt issued within a three-year period or the Companys total revenues exceed $1 billion or the market value of the Companys shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, the Company would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, the Company has elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards.
The Company has experienced recurring net operating losses as well as negative cash flows from operations. The Companys main source of liquidity was from the Offering and the Private Placement proceeds, from which amounts have been used to fund the search for a prospective target business. On August 11, 2016, August 12, 2016 and August 15, 2016, the Companys officers and directors (or their affiliates) loaned the Company an aggregate of $500,000. The Company currently has a cash position of approximately $96,000. The Company also received new commitments (which commitments replaced and superseded certain prior commitments) from its Chief Executive Officer, Mark D. Ein, its President and Chief Financial Officer, L. Dyson Dryden, and its independent board members, Lawrence Calcano, Richard C. Donaldson and Piyush Sodha, to provide additional loans to the Company of up to $767,000 in the aggregate. On February 7, 2017, our officers and directors (or their affiliates) loaned us an aggregate of $450,000. The August 2016 loans and the February 2017 loans, as well as any future ones that may be made by the Companys officers and directors (or their affiliates), are, and will be, evidenced by notes and would either be repaid upon the consummation of a Business Combination or up to $1,500,000 of the notes may be converted into warrants. Based on the foregoing, the Company believes it has sufficient cash to meet its needs for the next twelve months.
F-20
The accompanying financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash deposits with major financial institutions.
The amounts held in the Trust Account represent substantially all of the proceeds of the Initial Public Offering and are classified as restricted assets since such amounts can only be used by the Company in connection with the consummation of a Business Combination. As of December 31, 2016 and December 31, 2015, cash and cash equivalents (restricted) held in the Trust Account consisted of $325,000,000 in United States Treasury securities with an original maturity of three months or less. Cash and cash equivalents held in trust available for taxes consisted of $567,469 at December 31, 2016.
The fair value of the Companys assets and liabilities, which qualify as financial instruments under FASB ASC 820, Fair Value Measurements and Disclosures, approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Offering costs consist principally of legal, accounting and underwriting costs incurred through the balance sheet date that are directly related to the Offering. Offering costs approximately to $18.7 million were charged to stockholders equity upon completion of the Offering.
The Company accounts for its common stock subject to possible conversion in accordance with the guidance enumerated in ASC 480 Distinguishing Liabilities from Equity. Common stock subject to mandatory conversion is classified as a liability instrument and is measured at fair value. Conditionally convertible common stock (including common stock that features cash conversion rights that are either within the control of the holder or subject to cash conversion upon the occurrence of uncertain events not solely within the Companys control) is classified as temporary equity. At all other times, common stock is classified as stockholders equity. The Companys common stock features certain cash conversion rights that are considered by the Company to be outside of the Companys control and subject to the occurrence of uncertain future events. Accordingly, at December 31, 2016 and December 31, 2015, the common stock subject to possible conversion is presented as temporary equity, outside of the stockholders equity section of the Companys balance sheet.
Loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture (Note 5). Common
F-21
stock subject to possible redemption has been excluded from the calculation of basic loss per share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the effect of warrants to purchase shares of common stock in the calculation of diluted loss per share, since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted loss per common share is the same as basic loss per common share for the period.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
The Company accounts for income taxes under ASC 740 Income Taxes (ASC 740). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period disclosure and transition. The Company is required to file income tax returns in the United States (federal) and in various state and local jurisdictions. Based on the Companys evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Companys financial statements. Since the Company was incorporated on July 13, 2015, the evaluation was performed for the 2015 tax year. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position.
The Companys policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest as of or during the year ended December 31, 2016 or the period ended December 31, 2015. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entitys Ability to continue as a Going Concern (ASU 2014-15). ASU 2014-15 provides guidance on managements responsibility in evaluating whether there is substantial doubt about a companys ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a companys ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in ASU 2014-15 are effective for annual reporting periods ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. The Company has adopted the methodologies prescribed by ASU 2014-15. The adoption of ASU 2014-15 had no material effect on the Companys financial position or results of operations.
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
F-22
Management of the Company evaluates events that have occurred after the balance sheet date of December 31, 2016 through the date which these financial statements were issued. Based upon the review, management noted that on February 7, 2017, the Company issued notes payable to its officers and directors (or their affiliates) which totaled $450,000. These notes do not bear interest, and are repayable upon the consummation of the Companys initial merger, capital stock exchange, asset acquisition, or other similar business combination. Upon consummation of a business combination, the note holders have the option to convert up to $1,500,000 of aggregate principal balances into warrants at a price of $1.00 per warrant. The terms of these warrants will be identical to those of the founders warrants.
On January 3, 2017, we received a notice from NASDAQ stating that we failed to hold an annual meeting of stockholders within 12 months after our fiscal year ended December 31, 2015, as required by NASDAQ Listing Rules 5620(a) and 5810(c)(2)(G). We submitted a plan to regain compliance pursuant to the procedures set forth in the NASDAQ Listing Rules on February 16, 2017. On March 2, 2017, NASDAQ approved our plan and indicated that we now have until June 29, 2017 to regain compliance with the aforementioned rules by holding an annual meeting of shareholders by such date. We intend to hold an annual meeting in connection with any proposed business combination we submit to stockholders for approval. Failure to hold an annual meeting by such date could result in the delisting of our securities from NASDAQ.
Other than the matter noted in the preceding two paragraphs, management did not identify any recognized or non-recognized subsequent events that would have required further adjustment or disclosure in the financial statements.
In connection with the Offering, on October 19, 2015, the Company sold 32,500,000 Units at $10.00 per Unit (including 2,500,000 Units subject to the underwriters over-allotment option. Each unit consists of one share of common stock in the Company and one half of one Warrant of the Company (Warrants). Each whole Warrant entitles the holder to purchase one share of common stock at a price of $11.50 commencing on the later of 30 days after the Companys completion of a Business Combination or October 19, 2016 and expiring five years from the completion of a Business Combination. The Company may redeem the Warrants at a price of $0.01 per Warrant upon 30 days notice, only in the event that the last sale price of the shares of common stock is at least $18.00 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given. If the Company redeems the Warrants as described above, management will have the option to require all holders that wish to exercise their Warrants to do so on a cashless basis. No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of the Warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the Warrants is not effective within 90 days following the consummation of an initial Business Combination, Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their Warrants on a cashless basis. In accordance with the warrant agreement relating to the Warrants to be sold and issued in the Offering the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Warrants.
Simultaneously with the consummation of the Offering, the Company consummated the Private Placement of 8,250,000 Founders Warrants at a price of $1.00 per warrant to the Sponsors. The Founders Warrants are identical to the Warrants included in the Units sold in the Offering except that the Founders Warrants: (i) are
F-23
not redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, as described in the registration statement relating to the Offering, so long as they are held by the initial purchasers or any of their permitted transferees. Additionally, the purchasers have agreed not to transfer, assign or sell any of the Founders Warrants, including the common stock issuable upon exercise of the Founders Warrants (except to certain permitted transferees), until 30 days after the completion of the Companys initial Business Combination.
At December 31, 2016 and December 31, 2015, there were 24,500,000 Warrants outstanding, which include 8,250,000 Founders Warrants.
During August 2016, the Company issued notes payable to certain shareholders which totaled $500,000. These notes do not bear interest, and are repayable upon the consummation of the Companys initial merger, capital stock exchange, asset acquisition, or other similar business combination. Upon consummation of a business combination, the note holders have the option to convert their principal balances into warrants at a price of $1.00 per warrant. The terms of these warrants will be identical to those of the founders warrants.
The Company issued a $200,000 principal amount unsecured promissory note to an affiliate of the Companys chief executive officer on July 13, 2015. The note was non-interest bearing and payable on the earlier to occur of (i) August 1, 2016, (ii) the consummation of the Offering or (iii) the abandonment of the Offering. The note was repaid in full on the closing of the Offering, along with other short-term advances of $80,000.
The Company presently occupies office space provided by two affiliates of the Companys executive officers. Such affiliates have agreed that, until the Company consummates a Business Combination, they will make such office space, as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company will pay such affiliates an aggregate of $10,000 per month for such services.
The Initial Stockholders and the holders of the Founders Warrants (or underlying shares of common stock) will be entitled to registration rights with respect to their initial shares and the Founders Warrants (or underlying shares of common stock) pursuant to an agreement signed on the effective date of the Offering. The holders of the majority of the initial shares are entitled to demand that the Company register these shares at any time commencing three months prior to the first anniversary of the consummation of a Business Combination. The holders of the Founders Warrants (or underlying shares of common stock) are entitled to demand that the Company register these securities at any time after the Company consummates a Business Combination. In addition, the Initial Stockholders and holders of the Founders Warrants (or underlying shares of common stock) have certain piggy-back registration rights on registration statements filed after the Companys consummation of a Business Combination.
On October 13, 2015, the Company entered into an agreement with the underwriters of the Offering (Underwriting Agreement). Pursuant to the Underwriting Agreement, the Company paid an underwriting discount of 2.0% of the gross proceeds of the Offering as an underwriting discount. The Company also agreed to pay the underwriters in the Offering a deferred underwriting discount of 3.5% of the gross proceeds of the Offering (Deferred Commissions) which was placed in the Trust Account and is only payable upon completion of a Business Combination.
The Company entered into three consulting arrangements for services to help identify and introduce the Company to potential targets and provide assistance with due diligence, deal structuring, documentation and obtaining stockholder approval for a business combination. These agreements provide for an aggregate annual fee of $550,000 and success fee of $1,125,000 upon the consummation of a business combination.
F-24
The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Companys board of directors.
As of December 31, 2016 and December 31, 2015, there are no shares of preferred stock issued or outstanding.
The Company is authorized to issue 120,000,000 shares of common stock with a par value of $0.0001 per share.
In connection with the organization of the Company, on July 13, 2015, a total of 10,062,500 shares of the Companys common stock were sold to the Sponsors at a price of approximately $0.0025 per share for an aggregate of $25,000. On October 13, 2015, the Sponsors contributed back to the Companys capital, for no additional consideration, an aggregate of 1,437,500 shares, leaving an aggregate of 8,625,000 shares outstanding. This number included an aggregate of 1,125,000 shares that were subject to forfeiture if the over-allotment option was not exercised in full by the underwriters. An aggregate of 500,000 shares were forfeited based on the amount of Units sold in the Offering pursuant to the over-allotment option.
On closing of the Offering, the shares were placed into an escrow account and will not be transferred, assigned, sold or released from escrow until one year after the date of the consummation of an initial Business Combination or earlier if, subsequent to an initial Business Combination, (i) the last sales price of the Companys common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (ii) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Companys stockholders having the right to exchange their shares of common stock for cash, securities or other property.
As of December 31, 2016 and December 31, 2015, 9,814,869 and 9,680,095 shares of common stock, respectively, were issued and outstanding, which excludes 30,810,131 and 30,944,905 shares subject to possible redemption, respectively.
For the year ended December 31, 2016 and the period from July 13, 2015 (inception) through December 31, 2015 there are no provisions for income taxes or corporate taxes payable due to the net operating losses incurred in each year.
Deferred income tax assets of $260,000 (2016) and $40,000 (2015) are primarily comprised of net operating loss carryforwards. The deferred tax benefits recorded in each year of $220,000 (2016) and $40,000 (2015) were offset by corresponding equal amounts of changes in the valuation allowance.
Deferred income taxes, if applicable, are provided for the differences between the basis of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has approximately $766,000 in net operating losses that expire through 2036 and if realized would have a tax benefit approximately $260,000. The Company has recorded a full valuation allowance against this deferred tax benefit since the Company believes it is more likely than not to that the Company will not utilize the losses in the future, and accordingly it has not been recorded as a deferred tax asset.
F-25
A reconciliation of the provision for income taxes with the amounts computed by applying the statutory Federal income tax rate to income from continuing operations before provision for income taxes is as follows:
|
|
|
||||||
Year Ended
December 31, 2016 |
Period from
July 13, 2015 (inception) through December 31, 2015 |
|||||||
Tax provision at statutory rate | (34 | )% | (34 | )% | ||||
State and local taxes (net of federal tax benefit) | | | ||||||
Effect of valuation allowance on deferred tax asset | 34 | % | 34 | % | ||||
Effective tax rate | 0 | % | 0 | % |
Following is a summary of the quarterly results of operations for the year ended December 31, 2016.
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|
|
|
|
||||||||||||
For the
three months ended March 31, 2016 |
For the
three months ended June 30, 2016 |
For the
three months ended September 30, 2016 |
For the three months ended December 31, 2016 | |||||||||||||
Operating costs | $ | (477,521 | ) | $ | (319,989 | ) | $ | (366,322 | ) | $ | (327,352 | ) | ||||
Loss from operations | $ | (477,521 | ) | $ | (319,989 | ) | $ | (366,322 | ) | $ | (327,352 | ) | ||||
Interest income | $ | 132,167 | $ | 225,337 | $ | 218,239 | $ | 262,207 | ||||||||
Net loss | $ | (345,354 | ) | $ | (94,652 | ) | $ | (148,083 | ) | $ | (65,145 | ) | ||||
Weighted average number of common shares outstanding, excluding shares subjected to possible conversions-basic and diluted | 9,680,095 | 9,729,607 | 9,748,052 | 9,783,543 | ||||||||||||
Basic and diluted net income (loss) per Share | $ | (0.04 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) |
Following is a summary of the quarterly results of operations for the period from July 13, 2015 (inception) through ended December 31, 2015.
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|
|
||||||
Period from
July 13, 2015 (inception) through September 30, 2015 |
For the
three months ended December 31, 2015 |
|||||||
Formation and operating costs | $ | (983 | ) | $ | (141,001 | ) | ||
Loss from operations | (983 | ) | (141,001 | ) | ||||
Interest income | | 25,479 | ||||||
Net loss | $ | (983 | ) | $ | (115,522 | ) | ||
Weighted average number of common shares outstanding, excluding shares subjected to possible conversions-basic and diluted | 8,750,000 | 8,433,123 | ||||||
Basic and diluted net income (loss) per Share | $ | | $ | (0.01 | ) |
F-26
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|
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March 31, 2017 | December 31, 2016 | |||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents | $ | 41,330 | $ | 35,135 | ||||
Restricted cash | 628 | 627 | ||||||
Accounts receivable, net | 89,439 | 87,605 | ||||||
Prepaid expenses and other current assets | 17,031 | 16,225 | ||||||
Total current assets | 148,428 | 139,592 | ||||||
Property and equipment, net | 50,510 | 47,947 | ||||||
Other intangible assets, net | 519,063 | 511,210 | ||||||
Goodwill | 1,088,073 | 1,079,518 | ||||||
Other assets | 8,941 | 8,801 | ||||||
Total assets | $ | 1,815,015 | $ | 1,787,068 | ||||
Liabilities, Mandatorily Redeemable Equity and Stockholders Deficit
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt | $ | 11,414 | $ | 11,171 | ||||
Due to Parent, Convertible Preferred Equity | 444,178 | 443,102 | ||||||
Due to Parent, other | 7,000 | | ||||||
Accounts payable | 8,223 | 8,723 | ||||||
Accrued compensation and benefits | 19,316 | 26,109 | ||||||
Other accrued expenses | 61,821 | 54,862 | ||||||
Current portion of deferred revenue | 129,840 | 119,600 | ||||||
Total current liabilities | 681,792 | 663,567 | ||||||
Long-term debt, net of current portion | 1,413,879 | 1,383,877 | ||||||
Deferred revenue, net of current portion | 1,840 | 961 | ||||||
Deferred tax liability | 75,351 | 83,209 | ||||||
Other liabilities | 17,337 | 14,507 | ||||||
Total liabilities | 2,190,199 | 2,146,121 | ||||||
Series A-1 and Series C-2 mandatorily redeemable stockholders' equity, 5,498,688 shares authorized, issued and outstanding at March 31, 2017 and December 31, 2016, aggregate liquidation value $714 at March 31, 2017 | 714 | 701 | ||||||
Commitments and contingencies (Note 9)
|
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Stockholders' equity (deficit):
|
||||||||
Class V, Class B-1 and Class C-1 shares, par value $0.001, 26,088,309 shares authorized, issued and outstanding at March 31, 2017 and December 31, 2016 | 22 | 22 | ||||||
Additional paid-in capital | 12,384 | 11,429 | ||||||
Accumulated other comprehensive loss | (68,008 | ) | (73,902 | ) | ||||
Accumulated deficit | (320,296 | ) | (297,303 | ) | ||||
Total stockholders' deficit | (375,898 | ) | (359,754 | ) | ||||
Total liabilities, mandatorily redeemable stock and stockholders' deficit | $ | 1,815,015 | $ | 1,787,068 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-27
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Three months ended
March 31, |
||||||||
2017 | 2016 | |||||||
Revenue | $ | 145,818 | $ | 77,704 | ||||
Cost of revenue | 45,066 | 28,537 | ||||||
Gross profit | 100,752 | 49,167 | ||||||
Operating costs and expenses
|
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Sales and marketing | 27,290 | 16,536 | ||||||
Research and development | 5,452 | 3,536 | ||||||
General and administrative | 40,232 | 18,344 | ||||||
Amortization of intangible assets | 21,011 | 11,555 | ||||||
Total operating costs and expenses | 93,985 | 49,971 | ||||||
Operating income (loss) | 6,767 | (804 | ) | |||||
Non operating income (losses)
|
||||||||
Foreign exchange gains (losses) | (1,948 | ) | 2,097 | |||||
Interest and other income, net | 2,049 | 33 | ||||||
Interest expense | (36,915 | ) | (15,382 | ) | ||||
Total non operating loss | (36,814 | ) | (13,252 | ) | ||||
Loss before income taxes | (30,047 | ) | (14,056 | ) | ||||
Provision for (benefit from) income taxes | (7,054 | ) | 90 | |||||
Net loss | $ | (22,993 | ) | $ | (14,146 | ) | ||
Other comprehensive income (loss) foreign currency translation
adjustments |
5,894 | (9,959 | ) | |||||
Total comprehensive loss | $ | (17,099 | ) | $ | (24,105 | ) | ||
Net loss per share basic and diluted attributable to:
|
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Class B-1 shares | $ | (3,318.17 | ) | $ | (1,910.41 | ) | ||
Class C-1 shares | $ | (0.82 | ) | $ | (0.94 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-28
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|
|
||||||
Three months ended
March 31, |
||||||||
2017 | 2016 | |||||||
Cash flows from operating activities
|
||||||||
Net loss | $ | (22,993 | ) | $ | (14,146 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization | 32,592 | 22,023 | ||||||
Noncash interest charges and amortization of debt discount and deferred financing costs | 6,074 | 2,580 | ||||||
Noncash yield on Convertible Preferred Equity Certificates | 1,075 | 651 | ||||||
Equity-based compensation expense | 993 | 1,313 | ||||||
Provision for doubtful accounts | 368 | 221 | ||||||
Deferred income taxes | (7,858 | ) | (1,894 | ) | ||||
Unrealized currency translation (gains) losses | 1,775 | (2,150 | ) | |||||
Gain on sale of business | (1,785 | ) | | |||||
Other | (164 | ) | | |||||
Changes in operating assets and liabilities, net of effect of acquisition and disposal:
|
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Accounts receivable | 1,637 | 5,448 | ||||||
Prepaid expenses and other current assets | 423 | (2,188 | ) | |||||
Other assets | 64 | 279 | ||||||
Accounts payable | (625 | ) | 378 | |||||
Accrued compensation and benefits | (8,597 | ) | 176 | |||||
Other accrued expenses | 1,932 | 1,747 | ||||||
Deferred revenue | 9,656 | 318 | ||||||
Other liabilities | (1,729 | ) | (574 | ) | ||||
Net cash provided by operating activities | 12,838 | 14,182 | ||||||
Cash flows from investing activities
|
||||||||
Purchases of property and equipment | (3,512 | ) | (325 | ) | ||||
Software development costs | (4,074 | ) | (2,901 | ) | ||||
Acquisitions of business, net of cash acquired of $11,457 | (49,081 | ) | | |||||
Proceeds from disposal of business | 23,675 | 1 | ||||||
Change in restricted cash | (1 | ) | (18 | ) | ||||
Net cash used in investing activities | (32,993 | ) | (3,243 | ) | ||||
Cash flows from financing activities
|
||||||||
Proceeds from term loan facility, net of debt discount of $1,108 | 28,892 | | ||||||
Repayments of term loan facility | (2,825 | ) | (1,262 | ) | ||||
Payments on capital lease obligations | (58 | ) | (71 | ) | ||||
Net cash provided by (used in) financing activities | 26,009 | (1,333 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 341 | 122 | ||||||
Increase in cash and cash equivalents | 6,195 | 9,728 | ||||||
Cash and cash equivalents
|
||||||||
Beginning of period | 35,135 | 30,606 | ||||||
End of period | $ | 41,330 | $ | 40,334 | ||||
Supplemental disclosure of cash flows information
|
||||||||
Cash paid during the period for
|
||||||||
Interest | $ | 29,954 | $ | 11,962 | ||||
Income taxes | 1,494 | 1,776 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-29
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting and include the accounts of Canyon Holdings S.a.r.l. and its Subsidiaries. Canyon Holdings S.a.r.l. is a majority owned subsidiary of Canyon Holdings Cayman LP (Parent), an entity domiciled in the Cayman Islands. The Companys Parent has no independent operating activity. Intercompany accounts and transactions have been eliminated in these condensed consolidated financial statements.
Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted. As such, the information herein should be read in conjunction with the consolidated financial statements and accompanying notes included in the Companys consolidated financial statements for the fiscal year ended December 31, 2016. The condensed consolidated balance sheet as of December 31, 2016 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP. The accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to state fairly the financial position, results of operations, and cash flows for the three month periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2017.
There have been no changes to the Companys significant accounting policies described in the consolidated financial statements for the year ended December 31, 2016 that have had a material impact on the condensed consolidated financial statements and related notes for the three months ended March 31, 2017.
Canyon Holdings S.a.r.l., a Luxembourg company, and its Subsidiaries (collectively, the Company) is a leading provider of cloud-based software, media intelligence and distribution services, and other related professional services to the marketing and public relations industry. Communications professionals use the Companys products and services to identify and connect with media influencers, manage industry relationships, create and distribute content, monitor media coverage, perform advanced analytics and measure the effectiveness of their campaigns. The Company has primary offices in Chicago, Illinois, Beltsville, Maryland, New York, New York, Cleveland, Ohio, and Albuquerque, New Mexico with additional offices in the U.S., as well as China, Finland, France, Hong Kong, Germany, India, Indonesia, Malaysia, Norway, Portugal, Sweden, Taiwan and the United Kingdom.
On March 19, 2017, the Company entered into a definitive agreement with Capitol Acquisition Corp. III (NASDAQ: CLAC; Capitol), a public investment vehicle, whereby the parties have agreed to merge, resulting in the Company becoming a publicly listed company. Under the terms of the proposed transaction, the combination will be effected through a contribution and exchange pursuant to which the Company will be contributed to a wholly owned subsidiary of Capitol (Holdings) that will become a publicly traded entity following a subsequent merger of a subsidiary of Holdings into Capitol.
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to the allowance for doubtful accounts, software development costs, useful lives of property, equipment and internal use software, intangible assets and goodwill, contingent liabilities, and fair value of equity-based awards and income taxes. The Company bases its estimates on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities as well as the reported amounts of revenues and expenses during the period. Actual results could differ from these estimates.
F-30
At March 31, 2017 and December 31, 2016, the Company did not carry any investments with original maturity dates of longer than three months. Other than long term debt and Convertible Preferred Equity Certificates due to Parent, the Company had no financial assets or liabilities that were other than Level 1 at March 31, 2017 and December 31, 2016.
As long as the Company remains an Emerging Growth Company, the Company plans to adopt new accounting standards using the effective dates available for non public entities.
In January 2017, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business . The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for interim and annual periods beginning in the Companys fiscal year 2019 The Company is still evaluating the impact of this accounting standard update.
In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles-Goodwill and Other (Topic 350) . The ASU eliminates Step 2 of the goodwill impairment test, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. Under the amendments in this update, a goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for the Companys fiscal year 2022, and interim periods within that year. The Company is still evaluating the impact of this accounting standard update on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice. Among other things, the presentation of debt prepayment or debt extinguishment costs as cash outflows for financing activities on the statement of cash flow. The standard will become effective in the first quarter of fiscal year 2019 and early adoption is permitted. The Company is still evaluating the impact of this accounting standard update on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for the Companys fiscal year 2020 and interim periods in that year with early adoption permitted. The Company is still evaluating the impact of this accounting standard update on its consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition, and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Topic 606 is effective for the Companys fiscal year 2019 including interim periods within that year The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. The Company is still evaluating the impact that this standard will have on its consolidated financial statements.
F-31
In March 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. ASU 2016-09, which amends several aspects of accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for the Companys fiscal year 2018. The Company is still evaluating the impact that this standard will have on its consolidated financial statements.
On March 10, 2017, the Company sold substantially all of the assets of its Vintage corporate filings business for approximately $26.6 million and received approximately $23.7 million in cash after escrow and expenses. The transaction resulted in a gain of approximately $1.8 million which has been recorded as other income in the condensed consolidated statements of net loss and total comprehensive loss. The Company has continuing obligations to provide the purchaser with certain transition services through July 2017.
On March 27, 2017, the Company acquired all of the membership interests of Bulletin Intelligence, LLC, Bulletin News Network, LLC, and Bulletin News Investment, LLC (collectively, Bulletin Intelligence). The Company acquired Bulletin Intelligence to expand the Companys ability to deliver actionable intelligence to senior leadership teams. During the three months ended March 31, 2017, the Company incurred acquisition-related transaction costs of $1.0 million, which are included in general and administrative expense in the condensed consolidated statements of net loss and total comprehensive loss. The acquisition was accounted for under the purchase method of accounting. The operating results are included in the accompanying condensed consolidated financial statements from March 27, 2017.
The purchase price was $71.8 million and consisted of $60.5 million in cash and the issuance of $7.0 million of Class A Units of the Parent to the seller which have a fair value of $5.2 million and contingent consideration valued at $6.1 million. The fair value of the contingent consideration was determined using a Monte Carlo simulation which utilized management's projections of Bulletin Intelligence revenues over the earn-out period, and is considered a Level 3 measurement. Changes in fair value subsequent to the acquisition date will be recognized in earnings each reporting period until the arrangement is settled. The Company is required to pay contingent consideration that can be earned during the years ending December 31, 2017 and December 31, 2018 for each year dependent on the achievement of financial targets as defined by the agreement with no cap. The Company simultaneously entered into a loan agreement with the Parent and recorded a payable to the Parent of $7.0 million in the consolidated balance sheet. The $1.8 million difference between the fair value of the Class A Units and the amount due to Parent has been recorded as interest expense.
The purchase price has been preliminarily allocated to the assets acquired and liabilities assumed based on fair values as of the acquisition date.
The following table summarizes the preliminary allocation of the purchase price based on currently available information by the Company to the fair value of the assets and liabilities of Bulletin Intelligence acquired on March 27, 2017. The amounts related to intangible assets shown below are preliminary and subject to adjustment as additional information is obtained about the facts and circumstances that existed at the date of acquisition. The Company expects to complete the purchase price allocation, including the finalization of useful lives and future amortization, during the three months ended June 30, 2017
F-32
|
|
|||
(in thousands) | ||||
Cash and cash equivalents | $ | 11,457 | ||
Accounts receivable, net | 5,232 | |||
Prepaid and other current assets | 216 | |||
Property, equipment and software, net | 704 | |||
Trademark | 1,070 | |||
Customer relationships | 28,870 | |||
Purchased technology | 9,510 | |||
Goodwill | 19,520 | |||
Total assets acquired | 76,579 | |||
Accounts payable and accrued liabilities | (3,481 | ) | ||
Deferred revenue | (1,271 | ) | ||
Total liabilities assumed | (4,752 | ) | ||
Net assets acquired | $ | 71,827 |
Goodwill will be deductible for tax purposes.
The preliminary purchase price is subject to customary post closing adjustments.
The excess of the purchase price over the total net identifiable assets has been recorded as goodwill which is attributable primarily to synergies expected from the expanded technology and service capabilities from the integrated business as well as the value of the assembled workforce in accordance with generally accepted accounting principles.
As this acquisition was not material to the Company results, no unaudited pro forma financial information has been included in these footnotes.
Goodwill consisted of the following at March 31, 2017 and December 31, 2016:
|
|
|||
(in thousands) | 2017 | |||
Balance as of December 31, 2016 | $ | 1,079,518 | ||
Disposal of Vintage | (14,662 | ) | ||
Acquisition of Bulletin Intelligence | 19,520 | |||
Effects of foreign currency | 3,697 | |||
Balance as of March 31, 2017 | $ | 1,088,073 |
F-33
Intangibles consisted of the following at March 31, 2017 and December 31, 2016:
|
|
|
|
|
||||||||||||
March 31, 2017 | ||||||||||||||||
(in thousands) |
Gross
Carrying Amount |
Foreign
Currency Translation |
Accumulated
Amortization |
Net Carrying
Amount |
||||||||||||
Trade name | $ | 369,295 | $ | (8,036 | ) | $ | (41,778 | ) | $ | 319,481 | ||||||
Customer relationships | 292,255 | (18,789 | ) | (129,606 | ) | 143,860 | ||||||||||
Developed technology | 129,517 | (7,011 | ) | (66,784 | ) | 55,722 | ||||||||||
Balances as of March 31, 2017 | $ | 791,067 | $ | (33,836 | ) | $ | (238,168 | ) | $ | 519,063 |
|
|
|
|
|
||||||||||||
December 31, 2016 | ||||||||||||||||
(in thousands) |
Gross
Carrying Amount |
Foreign
Currency Translation |
Accumulated
Amortization |
Net Carrying
Amount |
||||||||||||
Trade name | $ | 369,345 | $ | (9,877 | ) | $ | (30,551 | ) | $ | 328,917 | ||||||
Customer relationships | 270,495 | (29,898 | ) | (110,094 | ) | 130,503 | ||||||||||
Developed technology | 120,007 | (12,213 | ) | (56,004 | ) | 51,790 | ||||||||||
Balances as of December 31, 2016 | $ | 759,847 | $ | (51,988 | ) | $ | (196,649 | ) | $ | 511,210 |
Debt consisted of the following at March 31, 2017 and December 31, 2016:
|
|
|
|
|||||||||
March 31, 2017 | ||||||||||||
(in thousands) | Short Term | Long Term | Total | |||||||||
2016 First Lien Term Loan | $ | 11,300 | $ | 1,110,375 | $ | 1,121,675 | ||||||
2016 Second Lien Term Loan | | 370,000 | 370,000 | |||||||||
Revolving line of credit | | 33,475 | 33,475 | |||||||||
Unamortized debt discount and issuance costs | | (99,971 | ) | (99,971 | ) | |||||||
Total credit facilities | 11,300 | 1,413,879 | 1,425,179 | |||||||||
Capital lease obligations | 114 | | 114 | |||||||||
Balances at March 31, 2017 | $ | 11,414 | $ | 1,413,879 | $ | 1,425,293 |
|
|
|
|
|||||||||
December 31, 2016 | ||||||||||||
(in thousands) | Short Term | Long Term | Total | |||||||||
2016 First Lien Term Loan | $ | 11,000 | $ | 1,083,500 | $ | 1,094,500 | ||||||
2016 Second Lien Term Loan | | 370,000 | 370,000 | |||||||||
Revolving line of credit | | 33,475 | 33,475 | |||||||||
Unamortized debt discount and issuance costs | | (103,098 | ) | (103,098 | ) | |||||||
Total credit facilities | 11,000 | 1,383,877 | 1,394,877 | |||||||||
Capital lease obligations | 171 | | 171 | |||||||||
Balances at December 31, 2016 | $ | 11,171 | $ | 1,383,877 | $ | 1,395,048 |
In June 2016, in connection with the PR Newswire acquisition, the Company entered into a $1,175.0 million credit agreement (the 2016 First Lien Credit Agreement) with a syndicate of commercial lenders. The 2016 First Lien Credit Agreement consists of a revolving line of credit, which permits borrowings and issuances of letters of credit of up to $75.0 million (the 2016 Revolving Credit Facility), a $1,100.0 million term loan facility (the 2016 First Lien Term Loan). The 2016 First Lien Term Loan matures on June 16, 2023 and the 2016 Revolving Credit Facility matures on June 16, 2021.
F-34
As of March 31, 2017, and December 31, 2016, the Company had $33.5 million in borrowings outstanding on the 2016 Revolving Credit Facility. The Company had $1.3 million and $1.1 million in outstanding letters of credit under the 2016 Revolving Credit Facility at March 31, 2017 and December 31, 2016, respectively.
On March 17, 2017, the Company incurred incremental borrowings under the 2016 First Lien Term Loan of $30.0 million in connection with the Bulletin Intelligence acquisition.
Interest is charged on borrowings under the 2016 First Lien Credit Agreement, at the Companys option, at a rate based on 1) the greater of 1% or the British Bankers Association LIBOR Rate in dollars or 2) a rate that is the highest of the prime lending rate, the federal funds rate plus 50 basis points, the one month LIBOR rate plus 1% or 2%, in each case plus an applicable margin. As of March 31, 2017, and December 31, 2016 under the 2016 First Lien Credit Agreement the applicable interest rate was 7.1%, and 7.0% respectively. Beginning on September 30, 2016 quarterly principal payments of $2.8 million are required on the 2016 First Lien Term Loan.
The obligations under the 2016 First Lien Credit Agreement are secured by substantially all of the assets of the Company. The 2016 First Lien Credit Agreement contains certain restrictive covenants including, among others, requirements of the Companys net leverage ratio exceeding certain ratios quarterly related to operating results and net leverage. The net leverage ratio is determined by the ratio of total indebtedness to EBITDA adjusted by acquisition related costs and expenses. The Company was in compliance with these covenants as of March 31, 2017.
The Company incurred approximately $81.9 million in financing costs in connection with the 2016 First Lien Credit Agreement, which were offset against the debt. All financing costs are being amortized to interest expense over the term of the 2016 First Lien Credit Agreement.
In June 2016, in connection with the PR Newswire acquisition, the Company entered into a $370.0 million credit agreement (the 2016 Second Lien Credit Agreement) with a syndicate of commercial lenders. The 2016 Second Lien Credit Agreement matures on January 16, 2024.
In connection with the Vocus acquisition in 2014, the Company entered into a $115.0 million Second Lien Credit Agreement (the 2014 Second Lien Credit Agreement). The 2014 Second Lien Credit Agreement had two draw down dates. The initial borrowing occurred at the Vocus acquisition during May 2014 for $75.0 million (Second Lien Initial Borrowing) and the second draw down occurred in October 2014 for $40.0 million (Second Lien Delayed Draw Borrowing).
In connection with the Gorkana acquisition in 2014, the 2014 Second Lien Credit Agreement was amended to increase borrowing capacity for the 2014 Second Lien Credit Agreement by $65.0 million for a total capacity of the 2014 Second Lien Term Loan of $180.0 million. The incremental borrowing occurred in October 2014.
The 2014 Second Lien Credit Agreement was repaid upon execution of the 2016 Second Lien Credit Agreement.
Interest is charged on borrowings under the 2016 Second Lien Credit Agreement, at the Companys option, at a rate based on 1) the greater of 1% or the British Bankers Association LIBOR Rate in dollars or 2) a rate that is the highest of the prime lending rate, the federal funds rate plus 50 basis points, the one month LIBOR rate plus 1% or 2%, in each case plus an applicable margin. As of March 31, 2017 and December 31, 2016 under the 2016 Second Lien Credit Agreement, the applicable interest rate was 10.5%.
The obligations under the 2016 Second Lien Credit Agreement are secured by substantially all of the assets of the Company. The 2016 Second Lien Credit Agreement contains certain restrictive covenants including, among others, requirements of the Companys net leverage ratio exceeding certain ratios quarterly related to operating results and net leverage. The net leverage ratio is determined by the ratio of total indebtedness to EBITDA adjusted by acquisition related costs and expenses. The Company was in compliance with these covenants as of March 31, 2017.
F-35
The Company incurred approximately $24.0 million in financing costs in connection with the 2016 Second Lien Credit Agreement, which were offset against the debt. All financing costs are being amortized to interest expense over the term of the 2016 Second Lien Credit Agreement.
The fair value of the Companys First Lien Term Loan at March 31, 2017 and December 31, 2016 was $1,126 million and $1,082 million, respectively and the fair value of the Companys Second Lien Term Loan at March 31, 2017 and December 31, 2016 was $359.9 million and $364.9 million, respectively. The fair value of the Companys First and Second Lien debt was considered Level 2 in the fair value hierarchy.
Future minimum principal payments of debt, excluding CPECs, as of March 31, 2017 are as follows:
|
|
|||
(in thousands) | ||||
Remainder of 2017 | $ | 8,589 | ||
2018 | 11,300 | |||
2019 | 11,300 | |||
2020 | 11,300 | |||
2021 | 11,300 | |||
Thereafter | 1,471,475 | |||
$ | 1,525,264 |
There have been no changes in the number, classes or rights of the Companys outstanding stockholders equity in the three months ended March 31, 2017.
The membership interests of the Companys Parent, Canyon Holdings Cayman LP are denominated in units (the Units) of which there are three classes: Class A Units, Class B Units and Class C Units.
Pursuant to the terms of the Parents limited partnership agreement, holders of Class C Units generally participate only in liquidating distributions by the Parent, and then, only to the extent vested. The Class C Unit grants are subject to the terms of the respective agreements with the executives, but generally vest 6.25% per quarter following the date of grant contingent on the individual continuing to provide services to the Company. Unvested awards immediately vest upon a change in control of the Parent. Compensation expense related to these awards is measured based on the value of the unit on the date of grant.
The following table summarizes the Parents Class C Unit awards for the three months ended March 31, 2017. As of March 31, 2017, there were 1,797,582 Class C Units available for future grant.
|
|
|
|
|||||||||||||
Units
Outstanding |
Weighted-
Average Remaining Vesting Term (Years) |
Weighted Average
Participation Threshold ($) |
||||||||||||||
Outstanding units at December 31, 2016 | 12,239,495 | 2.4 | $ | 2.48 | ||||||||||||
Class C Units granted during 2017
|
||||||||||||||||
No Participating Threshold | | | ||||||||||||||
$3.09 Participating Threshold | | | ||||||||||||||
$4.25 Participating Threshold | 65,000 | | ||||||||||||||
Total Class C Units granted during 2017 | 65,000 | | $ | 4.25 | ||||||||||||
Class C Units forfeited/repurchased during 2017 | (863,350 | ) | $ | 4.32 | ||||||||||||
Outstanding units at March 31, 2017 | 11,441,145 | 2.2 | $ | 2.35 |
F-36
The Company recognized equity-based compensation costs of $1.0 million and $1.3 million relating to Class C Unit awards for the three months ended March 31, 2017 and 2016, respectively. The total fair value of the Class C Units vested during the three months ended March 2017 was approximately $14.0 million. As of March 31, 2017, $7.0 million of remaining unrecognized compensation cost is expected to be recognized over the weighted-average remaining requisite service period of 2.2 years.
Equity based compensation by department for the three months ended March 31, 2017 and 2016 is as follows:
|
|
|
||||||
(in thousands) | 2017 | 2016 | ||||||
Cost of revenue | $ | 70 | $ | 64 | ||||
Selling and marketing | 66 | 51 | ||||||
R&D | 109 | 153 | ||||||
G&A | 748 | 1,045 | ||||||
Total equity based compensation expense | $ | 993 | $ | 1,313 |
The Company evaluates and allocates net loss per share to the Class A-1, B-1, C-1, C-2 and V using the two-class method required for multiple classes of stock. The Companys CPECs are not considered participating securities. The Class A-1 and Class C-2 shares, have been excluded from any allocation of losses for all periods presented due to their redemption features.
The Class B-1, C-1 and Class V shares are all held by the Companys Parent. Prior to the issuance of the Class B-1 and Class C-1 shares in September 2015, the only participating security outstanding was the Class V shares and therefore was allocated all losses for the periods the Class V shares were outstanding to that point. Following the issuance to the Parent of the Class B-1 and Class C-1 shares, which rank senior to the Class V shares in any distributions or redemption, the Class V shares, also owned by the Parent, ceased to participate in any losses. From that date losses have been allocated solely to the Class B-1 and Class C-1 shares. For the three month period ended March 31, 2016, 87% of the losses have been allocated to the Class B-1 holders and the remaining 13% has been allocated to the Class C-1 holders. For the three months ended March 31, 2017, 93% of the losses have been allocated to the Class B-1 holders and the remaining 7% has been allocated to the Class C-1 holders.
Basic net loss per share is computed by dividing net loss attributable to Class B-1, C-1 and V shareholders by the weighted-average number of participating shares of Class B-1, C-1 and V outstanding during the period.
For the calculation of diluted net loss per share, net loss per share attributable to common stockholders is adjusted by the effect of the potential conversion of the Convertible Preferred Equity Certificates. In the three months ended March 31, 2017 and 2016, these potentially dilutive shares were not included in the computation of diluted net loss per share as the effect of including these shares in the calculation would have been anti-dilutive.
|
|
|
||||||
(in thousands, except share data) | 2017 | |||||||
Class B-1 | Class C-1 | |||||||
Numerator:
|
||||||||
Net loss | $ | (21,383 | ) | $ | (1,610 | ) | ||
Accretion of Series A yield | (12 | ) | (1 | ) | ||||
Total net loss attributable to participating securities | $ | (21,395 | ) | $ | (1,611) |
F-37
|
|
|
||||||
(in thousands, except share data) | 2017 | |||||||
Class B-1 | Class C-1 | |||||||
Denominator:
|
||||||||
Weighted average shares outstanding basic and diluted | 6,448 | 1,957,845 | ||||||
Net loss per share basic and diluted | $ | (3,318.17 | ) | $ | (0.82 | ) |
|
|
|
||||||
2016 | ||||||||
(in thousands, except share data) | Class B-1 | Class C-1 | ||||||
Numerator:
|
||||||||
Net loss | $ | (12,307 | ) | $ | (1,839 | ) | ||
Accretion of Series A yield | (11 | ) | (2 | ) | ||||
Total net loss attributable to participating securities | $ | (12,318 | ) | $ | (1,841 | ) | ||
Denominator:
|
||||||||
Weighted average shares outstanding basic and diluted | 6,448 | 1,957,845 | ||||||
Net loss per share basic and diluted | $ | (1,910.41 | ) | $ | (0.94 | ) |
The provision for income taxes is based on the current estimate of the annual effective tax rate adjusted to reflect the tax impact of items discrete to the fiscal period. We expect an annual effective tax rate in 2017 of approximately 24.85%. That rate includes the impact of an increase in the valuation allowance expected to be necessary at the end of the year for deductible temporary differences originating during the year.
The effective tax rate for the first quarter of 2016 was zero. The first quarter effective rate for 2016 was significantly impacted by the full valuation allowance on U.S. deferred tax assets that was necessary until the acquisition of PR Newswire. The first quarter 2016 effective tax rate was also impacted by U.S. deferred tax expense related to indefinite lived intangible assets which effectively offset tax benefit from other taxing jurisdictions.
The Companys estimates related to liabilities for uncertain tax positions require it to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. If it determines it is more likely than not that a tax position will be sustained based on its technical merits, the Company records the impact of the position in its consolidated financial statements at the largest amount that is greater than fifty percent likely of being realized upon ultimate settlement. The estimates are updated at each reporting date based on the facts, circumstances and information available. As of March 31, 2017, we believe the reasonably possible total amount of unrecognized tax benefits that could increase or decrease in the next 12 months as a result of various statute expirations, audit closures, and/or tax settlements would not be material to our consolidated financial statements.
The Company has various non-cancelable operating leases, primarily related to office real estate, that expire through 2035 and generally contain renewal options for up to five years. Lease incentives, payment escalations and rent holidays specified in the lease agreements are accrued or deferred as appropriate as a component of rent expense which is recognized on a straight-line basis over the terms of occupancy. As of March 31, 2017 and December 31, 2016, deferred rent of $9.2 million and $9.4 million, respectively, is included in other liabilities.
The Company also leases computer and office equipment under non-cancelable capital leases and other financing arrangements that expire through 2017.
F-38
Rent expense was $3.2 million and $2.0 million for the three months ended March 31, 2017 and 2016, respectively.
The Company entered into agreements with various vendors in the ordinary course of business.
As of March 31, 2017 and December 13, 2016, the Company had a total of $1.3 million and $1.1 million in letters of credit outstanding, respectively, substantially in favor of landlords for certain of its office spaces. These letters of credit do not require compensating balances and expire at various dates through March 2031.
The Company from time to time is subject to lawsuits, investigations and claims arising out of the ordinary course of business, including those related to commercial transactions, contracts, government regulation and employment matters. In the opinion of management based on all known facts, all such matters are either without merit or are of such kind, or involve such amounts that would not have a material effect on the financial position or results of operations of the Company if disposed of unfavorably.
The following table lists revenue for the three months ended March 31, 2017 and 2016, net by geographic region:
|
|
|
||||||
(in thousands) | 2017 | 2016 | ||||||
Revenue:
|
||||||||
Americas US | $ | 99,860 | $ | 51,522 | ||||
Rest of Americas | 11,928 | 2,197 | ||||||
EMEA | 28,788 | 23,985 | ||||||
APAC | 5,242 | | ||||||
$ | 145,818 | $ | 77,704 |
The following table lists long lived assets as of March 31, 2017 and December 31, 2016, net by geographic region:
|
|
|
||||||
(in thousands) | 2017 | 2016 | ||||||
Long-lived assets, net
|
||||||||
Americas US | $ | 1,208,743 | $ | 1,188,000 | ||||
Rest of Americas | 114,634 | 115,223 | ||||||
EMEA | 312,678 | 313,373 | ||||||
APAC | 30,532 | 30,880 | ||||||
$ | 1,666,587 | $ | 1,647,476 |
Subsequent events have been evaluated by the Company for disclosure through May 15, 2017, the date of issuance of these financial statements.
F-39
To the Board of Directors of Canyon Holdings S.a.r.l. and its Subsidiaries:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of net loss and total comprehensive loss, mandatorily redeemable equity and stockholders deficit and of cash flows present fairly, in all material respects, the financial position of Canyon Holdings S.a.r.l. and its subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for the years ended December 31, 2016, 2015 and the period February 11, 2014 (Inception) to December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
April 11, 2017
F-40
|
|
|
||||||
2016 | 2015 | |||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents | $ | 35,135 | $ | 30,606 | ||||
Restricted cash | 627 | | ||||||
Accounts receivable, net | 87,605 | 49,226 | ||||||
Prepaid expenses and other current assets | 16,225 | 7,379 | ||||||
Total current assets | 139,592 | 87,211 | ||||||
Property and equipment, net | 47,947 | 39,411 | ||||||
Other intangible assets, net | 511,210 | 204,501 | ||||||
Goodwill | 1,079,518 | 584,180 | ||||||
Other assets | 8,801 | 3,627 | ||||||
Total assets | $ | 1,787,068 | $ | 918,930 | ||||
Liabilities, Mandatorily Redeemable Equity and Stockholders Deficit
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt | $ | 11,171 | $ | 5,338 | ||||
Due to Parent, Convertible Preferred Equity | 443,102 | 264,497 | ||||||
Accounts payable | 8,723 | 4,721 | ||||||
Accrued compensation and benefits | 26,109 | 10,012 | ||||||
Other accrued expenses | 54,862 | 31,251 | ||||||
Current portion of deferred revenue | 119,600 | 92,142 | ||||||
Total current liabilities | 663,567 | 407,961 | ||||||
Long-term debt, net of current portion | 1,383,877 | 682,942 | ||||||
Deferred revenue, net of current portion | 961 | 3,090 | ||||||
Deferred tax liability | 83,209 | 18,599 | ||||||
Other liabilities | 14,507 | 12,366 | ||||||
Total liabilities | 2,146,121 | 1,124,958 | ||||||
Series A-1 and Series C-2 mandatorily redeemable stockholders equity, 5,498,688 shares authorized, issued and outstanding at December 31, 2016 and 2015, aggregate liquidation value $701 at December 31, 2016 | 701 | 649 | ||||||
Commitments and contingencies (Note 15)
|
||||||||
Stockholders' equity (deficit):
|
||||||||
Class B-1, Class C-1 and Class V shares, par $0.001, 21,964,293 shares authorized, issued and outstanding at December 31, 2016 and 2015 | 22 | 22 | ||||||
Additional paid-in capital | 11,429 | 6,179 | ||||||
Accumulated other comprehensive loss | (73,902 | ) | (14,973 | ) | ||||
Accumulated deficit | (297,303 | ) | (197,905 | ) | ||||
Total stockholders' deficit | (359,754 | ) | (206,677 | ) | ||||
Total liabilities, mandatorily redeemable stock and stockholders deficit | $ | 1,787,068 | $ | 918,930 |
The accompanying notes are an integral part of these consolidated financial statements.
F-41
|
|
|
|
|||||||||
2016 | 2015 | 2014 | ||||||||||
Revenue | $ | 467,772 | $ | 333,958 | $ | 170,114 | ||||||
Cost of revenue | 162,583 | 125,006 | 74,552 | |||||||||
Gross profit | 305,189 | 208,952 | 95,562 | |||||||||
Operating costs and expenses
|
||||||||||||
Sales and marketing | 92,594 | 71,603 | 56,029 | |||||||||
Research and development | 19,445 | 16,604 | 5,657 | |||||||||
General and administrative | 135,737 | 88,448 | 112,722 | |||||||||
Amortization of intangible assets | 77,058 | 59,914 | 22,065 | |||||||||
Total operating costs and expenses | 324,834 | 236,569 | 196,473 | |||||||||
Operating loss | (19,645 | ) | (27,617 | ) | (100,911 | ) | ||||||
Non operating income (losses)
|
||||||||||||
Foreign exchange gains (losses) | 6,299 | (10,886 | ) | (10,992 | ) | |||||||
Equity in earnings of unconsolidated affiliate | 241 | | | |||||||||
Interest and other income, net | 590 | 5,750 | 339 | |||||||||
Interest expense | (117,997 | ) | (61,398 | ) | (28,408 | ) | ||||||
Loss on extinguishment of debt | (23,591 | ) | | | ||||||||
Total non operating loss | (134,458 | ) | (66,534 | ) | (39,061 | ) | ||||||
Loss before income taxes | (154,103 | ) | (94,151 | ) | (139,972 | ) | ||||||
Benefit from income taxes | (55,691 | ) | (3,607 | ) | (31,010 | ) | ||||||
Net loss | (98,412 | ) | (90,544 | ) | (108,962 | ) | ||||||
Less: Net loss attributable to non controlling interest | | | 2,834 | |||||||||
Net loss attributable to Canyon Holdings S.a.r.l. stockholders | $ | (98,412 | ) | $ | (90,544 | ) | $ | (106,128 | ) | |||
Total other comprehensive loss foreign currency translation adjustments | $ | (58,929 | ) | $ | (9,085 | ) | $ | (6,671 | ) | |||
Less: Other comprehensive loss attributable to non controlling interest | | | 783 | |||||||||
Total other comprehensive loss attributable to Canyon Holdings S.a.r.l. stockholders | (58,929 | ) | (9,085 | ) | (5,888 | ) | ||||||
Total comprehensive loss attributable to Canyon Holdings S.a.r.l. stockholders | $ | (157,341 | ) | $ | (99,629 | ) | $ | (112,016 | ) | |||
Net loss per share attributable to Canyon Holdings S.a.r.l. stockholders basic and diluted:
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Class V shares | $ | | $ | (2.92 | ) | $ | (5.31 | ) | ||||
Class B-1 shares | $ | (13,673.83 | ) | $ | (4,324.09 | ) | $ | | ||||
Class C-1 shares | $ | (5.24 | ) | $ | (2.13 | ) | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
F-42
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Mandatorily Redeemable Equity | Stockholders' Deficit | |||||||||||||||||||||||||||||||||||
Share Capital | Additional Paid-in Capital | Noncontrolling Interest | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders' Deficit | |||||||||||||||||||||||||||||||
Shares | $ | Shares | $ | |||||||||||||||||||||||||||||||||
Balances at February 11,
2014 |
| $ | | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||||||
Fair value of non-controlling interest in Cision AB and subsidiaries | | | | | | 46,949 | | | 46,949 | |||||||||||||||||||||||||||
Acquisition of non controlling interest in Cision AB and subsidiaries | | | | | (2,384 | ) | (40,921 | ) | | (1,233 | ) | (44,538 | ) | |||||||||||||||||||||||
Issuance of Class V shares to Parent | | 20,000,000 | 20 | 434 | | | | 454 | ||||||||||||||||||||||||||||
Issuance of Class C-2 shares | 5,498,688 | 5 | | | | | | | ||||||||||||||||||||||||||||
Equity-based compensation expense | | | | | 1,950 | | | | 1,950 | |||||||||||||||||||||||||||
Net loss | | | | | | (2,834 | ) | | (106,128 | ) | (108,962 | ) | ||||||||||||||||||||||||
Foreign currency translation adjustments | | | | | | (783 | ) | (5,888 | ) | | (6,671 | ) | ||||||||||||||||||||||||
Balances at December 31,
2014 |
5,498,688 | $ | 5 | 20,000,000 | $ | 20 | $ | | $ | 2,411 | $ | (5,888 | ) | $ | (107,361 | ) | $ | (110,818 | ) | |||||||||||||||||
Acquisition of non controlling interest in Cision AB and subsidiaries | | | | | | (2,411 | ) | | | (2,411 | ) | |||||||||||||||||||||||||
Issuance of Class A-1 shares to Parent | 6,448 | 644 | | | | | | | | |||||||||||||||||||||||||||
Issuance of Class B-1 and C-1 shares to Parent | | | 1,964,293 | 2 | 885 | | | | 887 | |||||||||||||||||||||||||||
Equity-based compensation expense | | | | | 5,294 | | | | 5,294 | |||||||||||||||||||||||||||
Net loss | | | | | | | | (90,544 | ) | (90,544 | ) | |||||||||||||||||||||||||
Foreign currency translation adjustments | | | | | | | (9,085 | ) | | (9,085 | ) | |||||||||||||||||||||||||
Balances at December 31,
2015 |
5,505,136 | $ | 649 | 21,964,293 | $ | 22 | $ | 6,179 | $ | | $ | (14,973 | ) | $ | (197,905 | ) | $ | (206,677 | ) | |||||||||||||||||
Non cash capital contribution to Parent (net) | | | | | | | | (986 | ) | (986 | ) | |||||||||||||||||||||||||
Accretion of Class A-1 shares to redemption value | | 52 | | | (52 | ) | | | | (52 | ) | |||||||||||||||||||||||||
Equity-based compensation expense | | | | | 5,302 | | | | 5,302 | |||||||||||||||||||||||||||
Net loss | | | | | | | | (98,412 | ) | (98,412 | ) | |||||||||||||||||||||||||
Foreign currency translation adjustments | | | | | | | (58,929 | ) | | (58,929 | ) | |||||||||||||||||||||||||
Balances at December 31,
2016 |
5,505,136 | $ | 701 | 21,964,293 | $ | 22 | $ | 11,429 | $ | | $ | (73,902 | ) | $ | (297,303 | ) | $ | (359,754 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
F-43
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Cash flows from operating activities
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Net loss | $ | (98,412 | ) | $ | (90,544 | ) | $ | (108,962 | ) | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
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Depreciation and amortization | 126,983 | 104,038 | 45,685 | |||||||||
Noncash interest charges and amortization of debt discount and deferred financing costs | 34,439 | 9,869 | 3,519 | |||||||||
Noncash yield on Convertible Preferred Equity Certificates | 13,080 | 2,583 | 1,457 | |||||||||
Payment of original issuance discount upon debt extinguishment | (19,411 | ) | | | ||||||||
Equity-based compensation expense | 5,302 | 5,294 | 1,950 | |||||||||
Provision for doubtful accounts | 2,572 | 1,397 | 392 | |||||||||
Deferred income taxes | (69,115 | ) | (14,637 | ) | (19,410 | ) | ||||||
Unrealized currency translation losses | (4,350 | ) | 10,359 | 10,707 | ||||||||
Equity in earnings of unconsolidated affiliate | (241 | ) | | | ||||||||
Gain on sale of business | | (4,700 | ) | | ||||||||
Other | 7 | 123 | 472 | |||||||||
Changes in operating assets and liabilities, net of effect of acquisitions and disposals:
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Accounts receivable | (1,547 | ) | 4,590 | (5,327 | ) | |||||||
Prepaid expenses and other current assets | 4,227 | 3,705 | (452 | ) | ||||||||
Other assets | 4,376 | 4,777 | (4,789 | ) | ||||||||
Accounts payable | (807 | ) | (1,582 | ) | (1,940 | ) | ||||||
Accrued compensation and benefits | 8,228 | (3,893 | ) | (1,077 | ) | |||||||
Other accrued expenses | (1,564 | ) | (3,548 | ) | (31 | ) | ||||||
Deferred revenue | (7,362 | ) | (5,342 | ) | 30,940 | |||||||
Other liabilities | 1,557 | (67 | ) | (3,938 | ) | |||||||
Net cash provided by (used in) operating activities | (2,038 | ) | 22,422 | (50,804 | ) | |||||||
Cash flows from investing activities
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Purchases of property and equipment | (7,382 | ) | (5,249 | ) | (1,940 | ) | ||||||
Software development costs | (11,738 | ) | (11,307 | ) | (6,019 | ) | ||||||
Acquisitions of businesses, net of cash acquired of $9, $0 and $65,443 | (804,194 | ) | (4,500 | ) | (755,334 | ) | ||||||
Proceeds from disposal of business | 3,998 | 2,089 | 41 | |||||||||
Change in restricted cash | (100 | ) | 8,303 | (8,303 | ) | |||||||
Net cash used in investing activities | (819,416 | ) | (10,664 | ) | (771,555 | ) | ||||||
Cash flows from financing activities
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Proceeds from revolving credit facility | 33,475 | | 12,000 | |||||||||
Repayment of revolving credit facility | | | (12,000 | ) | ||||||||
Proceeds from issuance of Convertible Preferred Equity Certificates to Parent | 136,025 | 2,821 | 257,636 | |||||||||
Payment of amounts due to Parent | | (2,821 | ) | 2,821 | ||||||||
Acquisition of non controlling interests | | (2,411 | ) | (44,538 | ) | |||||||
Proceeds from term loan facility, net of debt discount of $105,930, $1,621
and $64,709 |
1,364,070 | 33,379 | 860,356 | |||||||||
Repayments of term loan facility | (705,519 | ) | (39,320 | ) | (224,710 | ) | ||||||
Payments on capital lease obligations | (287 | ) | (301 | ) | (205 | ) | ||||||
Proceeds from issuance equity, net of issuance costs of $0 and $2,149 | | 85 | 459 | |||||||||
Net cash provided by (used in) financing activities | 827,764 | (8,568 | ) | 851,819 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (1,781 | ) | (1,161 | ) | (883 | ) | ||||||
Increase in cash and cash equivalents | 4,529 | 2,029 | 28,577 | |||||||||
Cash and cash equivalents
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Beginning of year | 30,606 | 28,577 | | |||||||||
End of year | $ | 35,135 | $ | 30,606 | $ | 28,577 | ||||||
Supplemental disclosure of cash flows information
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Cash paid during the year for
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Interest | $ | 94,615 | $ | 48,059 | $ | 21,819 | ||||||
Income taxes | 5,582 | 4,680 | 1,682 | |||||||||
Supplemental non-cash information | ||||||||||||
Issuance of Convertible Preferred Equity Certificates in connection with acquisition (Note 7) | $ | 40,000 | | |
The accompanying notes are an integral part of these consolidated financial statements.
F-44
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and include the accounts of Canyon Holdings S.a.r.l. and its Subsidiaries. Canyon Holdings S.a.r.l. is a majority owned subsidiary of Canyon Holdings Cayman LP (Parent), an entity domiciled in the Cayman Islands. The Companys Parent has no independent operating activity. Intercompany accounts and transactions have been eliminated in these consolidated financial statements.
Canyon Holdings S.a.r.l., a Luxembourg company, and its Subsidiaries (collectively, the Company) is a leading provider of cloud-based software, media intelligence and distribution services, and other related professional services to the marketing and public relations industry. Communications professionals use the Companys products and services to identify and connect with media influencers, manage industry relationships, create and distribute content, monitor media coverage, perform advanced analytics and measure the effectiveness of their campaigns. The Company has primary offices in Chicago, Illinois, Beltsville, Maryland, New York, New York, Cleveland, Ohio, and Albuquerque, New Mexico with additional offices in the U.S., as well as China, Finland, France, Hong Kong, Germany, India, Indonesia, Malaysia, Norway, Portugal, Sweden, Taiwan and the United Kingdom.
The Company was incorporated by Parent on February 11, 2014 (Inception) through the issuance of 20 million common shares, at par referred to as Class V shares, to facilitate the acquisition of Cision AB and its subsidiaries (Cision) and to then subsequently pursue further growth both organically and through acquisition. Effective April 14, 2014, 65.3% of the outstanding share capital of Cision was acquired by the Company (Note 3) through the issuance of Convertible Preferred Equity Certificates (CPECs) to the parent. Prior to April 14, 2014, the Company had no material assets and had not commenced operations. Effective May 30, 2014, the Company acquired all of the outstanding share capital of Vocus, Inc. (Vocus) and its subsidiaries. Effective October 21, 2014, the Company acquired substantially all of the assets of Discovery Group Holdings Ltd. and its subsidiaries (Gorkana) and effective June 16, 2016, the Company acquired PR Newswire and its subsidiaries (PR Newswire). The acquisitions since inception have been principally funded through a combination of investments by the parent and through bank debt (Note 3 and Note 7).
These consolidated financial statements therefore present the consolidated results of operations of Cision from April 14, 2014, Vocus from May 30, 2014, Gorkana from October 21, 2014 and PR Newswire from June 16, 2016. Other, less significant, business combinations in the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 have been included in these consolidated financial statements beginning from the date of their acquisition (Note 3).
The accompanying financial statements have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred losses from operations for all periods presented and negative cash flows from operations during the period from Inception to December 31, 2014 and in the year ended December 31, 2016. Management believes that the Company is subject to other risks including, but not limited to, an evolving and unpredictable business model, development of new technological innovations, customer acceptance of new services, and dependence on key personnel. The Companys long-term viability is dependent on its ability to generate sufficient revenue, net income and cash flows from operations to support its business, as well as the ability to obtain additional financing, if needed. Management believes that the Company has the ability to do so. The Companys CPECs are puttable by the Parent at any time, however the parent has waived its right to put the CPEC for at least twelve months from the date of issuance of these financial statements. Management also believes that the Company has sufficient cash and available borrowings on debt to fund operations through at least April 11, 2018.
F-45
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to the allowance for doubtful accounts, software development costs, useful lives of property, equipment and internal use software, intangible assets and goodwill, contingent liabilities, and fair value of equity-based awards and income taxes. The Company bases its estimates on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities as well as the reported amounts of revenues and expenses during the period. Actual results could differ from these estimates.
The Company considers all highly liquid investments with original maturity dates of three months or less at the time of purchase to be cash equivalents. For all years reported the Company did not carry any investments with original maturity dates of longer than three months.
The Company measures certain financial assets and liabilities at fair value pursuant to a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entitys pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels:
Level 1 | Inputs are quoted prices in active markets for identical assets or liabilities. |
Level 2 | Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. |
Level 3 | Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. |
Other than long term debt and Convertible Preferred Equity Certificates due to Parent, the Company had no financial assets or liabilities that were other than Level 1 for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014.
Estimates are used to determine the amount of the allowance for doubtful accounts necessary to reduce accounts receivable to the estimated net realizable value. These estimates are made by analyzing the status of significant past-due receivables and by establishing provisions for estimated losses by analyzing current and historical bad debt trends. Actual collection experience has not varied significantly from prior estimates. The allowance for doubtful accounts at December 31, 2016 and 2015 was $1.3 million and $1.2 million, respectively (Note 18).
The Company incurs software development costs related to its internal use software. Qualifying costs incurred during the application development stage are capitalized. These costs primarily consist of internal labor and third party development costs and are amortized using the straight-line method over the estimated useful life
F-46
of the software, which is generally two years. All other research and development costs are expensed as incurred. Costs to maintain and update the information database are expensed within cost of revenues as these expenses are incurred. For the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014, the Company recorded amortization expense related to internal use software of $12.6 million, $6.9 million, and $0.5 million, respectively, within cost of revenue in the statements of net loss and total comprehensive loss.
Property, equipment and purchased software are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: three to five years for software and computer and office equipment and five to seven years for furniture and fixtures. Assets acquired under capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the terms of the leases. Amortization of assets acquired under capital leases is included in depreciation and amortization expense. Repairs and maintenance costs are charged to expense as incurred. When assets are retired or otherwise disposed of, the asset and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recorded in the results of operations.
Long-lived assets include property, equipment and software and intangible assets with finite lives. Intangible assets consist of customer relationships, trade names and purchased technology acquired in business combinations. Intangible assets are amortized using the straight-line method, which approximates the pattern of usage of the economic benefit of the asset, over their estimated useful lives ranging from two to seven years. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, the Company evaluates recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the estimated fair value of the assets. There were no significant impairment charges for long-lived assets for the years ended December 31, 2016, 2015 or the period from Inception to December 31, 2014.
The Company regularly revisits its estimate of useful economic lives of long lived assets and makes adjustments to those lives where appropriate.
The Company has completed a number of acquisitions of businesses during the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 that have resulted in the recording of goodwill and identifiable definite-lived intangible assets. The Company recognizes all of the assets acquired and liabilities assumed at their fair values on the acquisition date. The Company uses significant estimates and assumptions, including fair value estimates, as of the acquisition date and refines those estimates that are provisional, as necessary, during the measurement period. The measurement period is the period after the acquisition date, not to exceed one year, in which new information may be gathered about facts and circumstances that existed as of the acquisition date to adjust the provisional amounts recognized. Measurement period adjustments are applied retrospectively and all other adjustments are recorded to the consolidated statements of net loss to date have been immaterial. Acquisition-related costs are expensed as incurred separately from the acquisition and generally are included in general and administrative expenses in the statements of net loss and total comprehensive loss.
F-47
The Company amortizes costs incurred with third parties other than the lender to obtain financing over the term of the underlying obligation using either the effective interest method or the straight-line method, as appropriate. Debt discounts incurred directly with the lender are netted from the carrying value of the debt and amortized over the term of the debt using the effective interest method. The amortization of deferred financing costs and debt discounts is included in interest expense in the accompanying consolidated statements of net loss. Unamortized deferred financing fees are netted from the carrying value of the debt in the accompanying consolidated balance sheets.
Goodwill represents the excess of the cost of an acquired entity over the net fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. The Company performs its annual impairment assessment on October 1, or whenever events or circumstances indicate impairment may have occurred. On October 1, 2016, 2015 and 2014 the Company performed its annual goodwill impairment assessment based on the fair value of the Companys reporting units. When assessing goodwill for impairment, the Company uses an income approach based on discounted cash flows to determine the fair value of its reporting unit. The Companys cash flow assumptions consider historical and forecasted revenue, operating costs and other relevant factors which are consistent with the plans used to manage the Companys operations.
Other than for reporting units newly formed in June 2016, the results of the annual goodwill impairment test indicated that the estimated fair value of the each reporting unit was, in all cases, at least 25% in excess of its carrying value. For reporting units created in June 2016 as part of the PRN acquisition, the fair value of the reporting units approximated their carrying value given the purchase price allocation performed during the year ended December 31, 2016. In addition, for the reporting units formed in June 2016, no events or circumstances occurred from the date of acquisition to December 31, 2016 that would indicate that the fair value of the reporting unit had decreased since the acquisition date.
Based on the results of the Companys most recent annual assessment on October 1, 2016, the Company, therefore, concluded that the fair value of each of its reporting units exceeded its carrying amount and no impairment charge was recorded.
The reporting currency for all periods presented is the U.S. dollar. The functional currency for the Companys foreign operating subsidiaries is their local currency. The functional currency of the Company and substantially all of its non operating subsidiaries is the US dollar. The financial statements of these subsidiaries are translated into U.S. dollars using exchange rates in effect at each balance sheet date for assets and liabilities and average exchange rates during the period for revenues and expenses. The resulting translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders deficit. Gains or losses, whether realized or unrealized due to transactions in foreign currencies and the remeasurement of certain intercompany balances, are included in the consolidated statements of net loss and total comprehensive loss.
Employees of CNW Group Ltd. (CNW) participate in a defined benefit pension plan whereby pension expense is determined based on a number of actuarial assumptions, which are reviewed on an annual basis. The employees and accompanying pension plan were inherited with the acquisition of PR Newswire on June 16, 2016. The purchase price of PR Newswire was allocated to the assets and obligations of the pension
F-48
plan based on fair value at the acquisition date. These actuarial assumptions include discount rate, expected rate of return on plan assets, rate of salary increases and other factors. The unfunded status of the plan is recognized as a long term liability in the consolidated balance sheet at December 31, 2016, which is also the measurement date for the defined benefit pension plan for the CNW employees.
The Companys investment in an unconsolidated affiliate over which the Company has significant influence is accounted for under the equity method of accounting. The investment was acquired with the PR Newswire acquisition and the purchase price of PR Newswire was allocated to the investee based on its fair value as of the acquisition date. The Company records its share of the undistributed income or loss from this investment which to date have been immaterial. The Company regularly reviews the carrying value of this investment for impairment using such information as forecasts, business plans and available financial statements of the investee. Since the PR Newswire acquisition, no impairment losses have been recognized. The investment in unconsolidated affiliate is $5.6 million included within other long term assets in the consolidated balance sheet at December 31, 2016. Other disclosures regarding this investment have been omitted due to immateriality.
Comprehensive income (loss) includes the Companys net income (loss) and foreign currency translation adjustments. There are no other material components of comprehensive loss for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014.
The Company derives its revenues from subscription arrangements and related professional services in connection with the Companys cloud-based software and services offerings. The Company also derives revenues from news distribution services on both a subscription basis and separately from non-subscription arrangements. The Company recognizes revenue when there is persuasive evidence of an arrangement, the service has been provided to the customer, the collection of the fee is probable and the amount of the fee to be paid by the customer is fixed or determinable.
The Companys separate units of accounting consist of its subscription services, transactional services and professional services. The subscription services include access to the Companys cloud-based software, hosting services, content and content updates and customer support. The Companys subscription agreements are typically one to three years in length and are non-cancelable, though customers have the right to terminate their agreements for cause if the Company materially breaches its obligations under the agreement. Subscription agreements do not provide customers the right to take possession of the software at any time. The Company does not charge customers an up-front fee for use of the technology. Implementation activities are insignificant and are not subject to a separate fee. In certain cases, the Company charges annual membership fees to customers which are recognized ratably over the one year membership period.
The Company also distributes individual news releases to thousands of distribution points on the Internet, which are then indexed by major search engines and also directly to journalists and other key constituents. Dependent on the nature of the contract with the customer, the Company recognizes revenue on subscription basis over the term of the subscription, or on a per-transaction basis when the press releases are made available to the public.
Professional services include broadcast and webcast production. For these services, revenue is recognized when the specific performance is completed and customer acceptance received.
F-49
When sold together, revenue from the Companys different service offerings are accounted for separately as those services have value on a standalone basis and do not involve a significant degree of risk or unique acceptance criteria. The Company allocates revenue to each element in a multiple element arrangement based on a selling price hierarchy. The selling price for a deliverable is based on its vendor-specific objective evidence (VSOE), if available, third-party evidence (TPE), if VSOE is not available, or estimated selling price (ESP), if neither VSOE nor TPE is available. As the Company has been unable to establish VSOE or TPE for the elements of its arrangements due to factors such as a high number of varied service offerings sold on a subscription basis to differing customer concentrations as well as varied discounting practices and unobservable competitive data for similar services, the Company estimates selling prices by analyzing multiple factors such as historical pricing trends, customer renewed activity, and discounting practices. The volume of multiple element arrangements sold by the Company in which any element of the arrangement has a revenue attribution pattern different to the other elements was not significant for all years presented.
Sales and other taxes collected from customers to be remitted to government authorities are excluded from revenues.
Deferred revenue consists of payments received from or billings to customers in advance of revenue recognition. Deferred revenue to be recognized in the succeeding twelve month period is included in current deferred revenue with the remaining amounts included in noncurrent deferred revenue. Invoices issued in advance of the fulfillment of a deliverable or the start of the customers subscription term are typically not significant.
Sales commissions relate to the sale of subscription, transaction, and professional services agreements, and are expensed as incurred.
The Company expenses advertising costs as incurred. Advertising costs for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 were approximately $7.0 million, $8.9 million, and $8.4 million, respectively.
To date, substantially all the equity-based compensation expense recorded in the Companys financial statements results from the granting to management of Class C LP Units of the Parent. These Class C Units are considered Profits Interests as they allow recipients to participate in the residual profits of the Company on a predetermined fair value threshold. This threshold represents the threshold of proceeds from a sale of the Parents net assets at fair market value that must be distributed to the preferred holders of the Parent before the holder of a Class C LP Unit can participate in a distribution.
F-50
The Company calculates the fair value of Class C Unit grants using the Black Scholes Merton option pricing model using the following inputs:
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2016 | 2015 | 2014 | ||||||||||
Grant date fair value of Class C Units | $2.77 $2.87 | $2.87 $2.90 | $ 1.93 | |||||||||
Participation threshhold | $3.09 $4.25 | $3.09 $7.79 | $ | |||||||||
Volatility | 73% | 94% | 85% | |||||||||
Expected life (years) | 2.0 | 2.0 | 3.0 | |||||||||
Risk-free interest rate | 0.64% 0.70% | 0.64% 1.10% | 1.10% | |||||||||
Dividend yield | 0.00% | 0.00% | 0.00% |
Participation Threshold
Other than for certain awards granted in the year ended December 31, 2015 described below, the Participation Threshold established by the Company for awards made in the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 is intended to approximate the estimated fair value of the underlying Class C Unit on the date of grant. As historically there has been no public market for the Companys Class C Units, the fair value for the years ended December 31, 2016 and 2015 and the Period from Inception to December 31, 2014 was estimated by the Company by considering a number of objective and subjective factors, including cash flow forecasts, peer-group company trading multiples, the amount of the liquidation preference of the senior holders of Class A Units of the Parent, the illiquid nature of the Class C Units, the size of the Company and the Companys lack of historical profitability. Independent valuations were obtained to provide support for the estimated fair value of the underlying Class C Units for all years presented.
1,517,985 Class C Unit grants were made in 2015 to certain employees in connection with the acquisition of Viralheat with a participation threshold of $7.79 which, at the time, was in excess of the estimated grant date fair value of the underlying Class C Units.
Share Price Volatility
The Company determined the estimated volatility for Class C Units granted in the years ended December 31, 2016 and 2015 and the period from Inception to December 31, 2014 based on an analysis of reported data for a peer group of publicly traded companies. The expected volatility of Class C Units granted was determined using an average of the historical volatility measures of this peer group of companies for a period equal to the expected life of each Class C Units.
Expected Life of Class C Units, Risk-Free Interest Rate and Dividend Yield
The expected life of Class C Units was derived from managements estimate of the holding period to a major liquidity event of the Company. The risk-free interest rate is based on the daily treasury yield curve rate whose term is consistent with the expected life of the Class C Units. The expected dividend yield was assumed to be zero because the Company has not paid, and does not anticipate paying, cash dividends on its Class C Units.
Compensation expense for all equity-based compensation awards is based on the grant date fair value recognition provisions of ASC Topic 718, Compensation Stock Compensation . The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally four years from the date of grant. As equity-based compensation expense recognized is based on awards ultimately expected to vest, such expense is reduced for estimated forfeitures. Compensation expense for these equity-based awards is recognized by the Company, with an equal offsetting charge to Additional paid-in capital. Such compensation expense is reflected in the Companys financial results because the
F-51
Class C Unit awards to management relate to services provided by the employees of the Company. The Class C Units are reserved for issuance by Parent for incentive purposes at the discretion of the general partner of Parent, subject to certain approvals.
Convertible Preferred Equity Certificates (CPECs) are held by the Parent and are presented as liabilities in the consolidated balance sheets at December 31, 2016 and 2015. The CPECs are redeemable at any time by the Company and mature 49 years from the date of issuance. The CPECs carry a 1% per year yield which is accounted for as interest expense in the consolidated statements of net loss and total comprehensive loss. The CPECs can be converted by the Parent to Class V shares of the Company at any time into the number of Class V shares of the Company as calculated by dividing the initial investment amount of the outstanding CPECs, and excluding any accreted but unpaid yield, by $0.001. The CPECs are treated as debt instruments in Luxembourg. The CPECs are classified as liabilities due to the creditor like rights held by the holder, including the right to force the Companys bankruptcy.
The CPECs are puttable to the Company for cash by the holder at any time and can be called by the Company at any time. As a result of this contracted put feature, the CPECs are classified as current liabilities in the consolidated balance sheets. The Parent has waived its right to put the CPEC for at least twelve months from the date of issuance of the financial statements.
The Company has determined that its Chief Executive Officer is the Chief Operating Decision Maker. The Companys Chief Executive Officer and the Board of Directors review financial information presented on both a consolidated basis and on a geographic regional basis. Since its inception, the Company has completed several significant acquisitions and has expended significant efforts in integrating these acquisitions into a single commercial software solution, available to all customers in all geographies. As a result of the long term qualitative and quantitative similar economic characteristics exhibited by the sale of a single product suite in all the Companys regions, the Company has determined that its operating segments meet the criteria to be aggregated into one reportable segment. (Note 16)
Net loss per share is calculated under the two-class method, under which all losses (distributed and undistributed) are allocated to each class of shares and participating securities based on their respective rights to receive dividends and contractual obligation to participate in the net losses of the Company. Basic net loss per share is computed by dividing net loss by the weighted-average number of shares outstanding during the period, excluding the dilutive effects of CPECs. Diluted net loss per share equals basic loss per share due to losses incurred during the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments and accounts receivable. The Company generally maintains its cash and cash equivalents with various nationally recognized financial institutions. Customers are granted credit on an unsecured basis. Management monitors the creditworthiness of its customers and believes that it has adequately provided for any exposure to potential credit losses.
The Company provides cloud-based software, distribution services and related professional services to various customers across many industries. As of December 31, 2016 and 2015, no individual customer accounted for 10% or more of net accounts receivable. For the years ended December 31, 2016 and 2015, and for the period from Inception to December 31, 2014, no individual customer accounted for 10% or more of revenue.
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Income taxes are determined utilizing the asset and liability method whereby deferred tax assets and liabilities are recognized for deductible temporary differences between the respective reported amounts and tax bases of assets and liabilities, as well as for operating loss and tax-credit carryforwards. Net deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized (Note 18).
The Companys estimates related to liabilities for uncertain tax positions require it to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. If it determines it is more likely than not that a tax position will be sustained based on its technical merits, the Company records the impact of the position in its consolidated financial statements at the largest amount that is greater than fifty percent likely of being realized upon ultimate settlement. The estimates are updated at each reporting date based on the facts, circumstances and information available. The Company is also required to assess at each reporting date whether it is reasonably possible that any significant increases or decreases to its unrecognized tax benefits will occur during the next twelve months. The Company files income tax returns in the U.S. federal jurisdictions and various state and foreign jurisdictions and is subject to U.S. federal, state, and foreign tax examinations for years ranging from 2011 to 2016.
As long as the Company remains an Emerging Growth Company, the Company plans to adopt new accounting standards using the effective dates available for non public entities.
Accounting Pronouncement Recently Adopted
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that all deferred tax assets and liabilities be classified as non-current on the balance sheet. Before the issuance of ASU 2015-17, deferred tax assets and liabilities were required to be presented as current and non-current. In the year ended December 31, 2015, the Company adopted ASU 2015-17. The adoption of ASU 2015-17 did not have a material impact on the Companys consolidated financial statements and the balance sheet at December 31, 2016 and 2015 reflects this new presentation.
In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest, Simplifying the Presentation of Debt Issuance Costs (Topic 835-30). The amendment requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability rather than as an asset. The ASU did not address the presentation of costs of obtaining a revolving line of credit. In the June 2015 meeting of the Emerging Issues Task Force, the SEC staff clarified it would not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. The Company adopted this standard and a policy that the cost of securing a revolving line of credit will be recorded as an asset effective January 1, 2016 and the balance sheet at December 31, 2016 and 2015 reflects this new presentation.
In April 2015, the FASB issued ASU 2015-05, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40), Customers Accounting for Fees Paid in a Cloud Computing Arrangement to increase the consistency of accounting for cloud computing arrangements among reporting entities. The reporting entity must consider whether a cloud computing arrangement includes a software license. If the arrangement does not include a software license, the entity should account for the arrangement as a service contract. If the arrangement includes a software license, the entity should account for the software license element of the arrangement consistent with the acquisition of other licenses of intangible assets. The Company adopted this standard during fiscal year 2016 and the adoption did not have a material impact in the Companys consolidated financial statements.
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In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entitys ability to continue as a Going Concern (ASU 2014-15) . ASU 2014-15 provides guidance on managements responsibility in evaluating whether there is substantial doubt about a companys ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a companys ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in ASU 2014-15 are effective for annual reporting periods ending after December 15, 2016, and for annual and interim periods thereafter. The Company adopted ASU 2014-15 in fiscal year 2016. The adoption of ASU 2014-15 had no material effect on the Companys financial statements.
Recent Accounting Pronouncements Not Yet Effective
In January 2017, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business . The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for interim and annual periods beginning in the Companys fiscal year 2019 The Company is in the process of evaluating the impact of this accounting standard update.
In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles-Goodwill and Other (Topic 350). The ASU eliminates Step 2 of the goodwill impairment test, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. Under the amendments in this update, a goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for the Companys fiscal year 2022, and interim periods within that year. The Company is in the process of evaluating the impact of this accounting standard update on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. ASU 2016-18 is effective for the Companys fiscal year 2019. The new standard is not expected to have a material impact on the Companys consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice. Among other things, the presentation of debt prepayment or debt extinguishment costs as cash outflows for financing activities on the statement of cash flow. The standard will become effective for us in the first quarter of fiscal year 2019, early adoption is permitted. The Company is in the process of evaluating the impact of this accounting standard update on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for the Companys fiscal year 2020 and interim periods in that
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year with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition, and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Topic 606 is effective for the Companys fiscal year 2019 including interim periods within that year The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. The Company is still evaluating the impact that this standard will have on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. ASU 2016-09, which amends several aspects of accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for the Companys fiscal year 2018. The Company is still evaluating the impact that this standard will have on its consolidated financial statements.
As discussed in Note 1, on April 14, 2014, the Company completed a series of transactions that resulted in the acquisition of 65.3% of the outstanding voting equity interests of Cision AB and its Subsidiaries (Cision), for cash consideration of $90.1 million. Cision was a Swedish publicly-held provider of cloud-based software, services and tools for the marketing and public relations industry. The Company completed its acquisition of Cision to provide the basis for the Company to enter the software platform delivered for the public relations sector, and to serve as the basis of the core technology for subsequent planned acquisitions in the same sector.
Non-Controlling Interest
At the date of the acquisition of 65.3% of the outstanding voting equity interests, the fair value of the 34.7% non-controlling interest was estimated to be $46.9 million, measured by Cisions quoted stock price. During the remainder of the year from Inception to December 31, 2014 a further 33.1% of the outstanding voting equity interests of Cision was acquired for cash proceeds of $44.1 million. The carrying value of the remaining 1.7% non-controlling interest at December 31, 2014 was $2.4 million. During the year ended December 31, 2015, this remaining non-controlling interest was acquired by the Company.
Purchase Price Allocation
At the date control of Cision was obtained, the purchase price and the fair value of the non-controlling interest was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The identifiable intangible assets include a trade name, customer relationships and purchased technology and are being amortized over three to ten years on an accelerated basis. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill which is not deductible for tax purposes.
The Company recognized a deferred tax asset in the amount of $21.6 million relating to acquired net operating losses and established a deferred tax liability of $28.8 million relating to the step up in basis of identifiable intangibles, and recorded a valuation allowance of $7.9 million. The Company determined that
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while the acquired net operating loss is subject to the limitation provided in Section 382 of the Internal Revenue Code, this limitation will not preclude the Company from fully realizing the acquired U.S. net operating losses.
The operating results of Cision are included in the accompanying consolidated financial statements from April 14, 2014. The operating results of Cision between February 11, 2014 and April 14, 2014 are not material.
The following table summarizes the allocation of the purchase price paid by the Company to the fair value of the assets and liabilities of Cision acquired on April 14, 2014:
|
|
|||
(in thousands) | ||||
Cash and cash equivalents | $ | 15,128 | ||
Accounts receivable, net | 19,258 | |||
Prepaid and other current assets | 3,938 | |||
Property, equipment and software, net | 15,668 | |||
Trade name | 13,150 | |||
Customer relationships | 57,350 | |||
Purchased technology | 25,330 | |||
Goodwill | 91,949 | |||
Other assets | 3,210 | |||
Total assets acquired | 244,981 | |||
Accounts payable and accrued liabilities | (24,830 | ) | ||
Deferred revenue | (23,339 | ) | ||
Bank debt | (43,689 | ) | ||
Deferred taxes | (15,103 | ) | ||
Other liabilities | (1,002 | ) | ||
Total liabilities assumed | (107,963 | ) | ||
Net assets acquired | $ | 137,018 | ||
Purchase price
|
||||
Cash consideration for 65.3% of Cision | $ | 90,069 | ||
Fair value of 34.7% non controlling interest | 46,949 | |||
$ | 137,018 |
The bank debt inherited of $43.7 million presented above was repaid by the Company shortly after the close of the acquisition.
On May 30, 2014, the Company acquired all of the outstanding voting equity interests of Vocus, Inc. (Vocus). Vocus was a U.S. publicly-held provider of cloud-based software, services and tools for the marketing and public relations industry. The Company acquired Vocus to enhance, through integration, the Companys existing cloud-based capabilities inherited with the earlier acquisition of Cision. During the period from Inception to December 31, 2014, the Company incurred acquisition-related transaction costs of $10.8 million, which are included in general and administrative expense in the consolidated statement of comprehensive loss. The acquisition was accounted for using the purchase method of accounting. The operating results of Vocus are included in the accompanying consolidated financial statements from May 30, 2014.
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The purchase price consisted of $446.7 million in cash plus an additional $8.0 million relating to the mandatory cash settlement at the date of acquisition of vested Vocus employee equity. In addition, a number of non-vested equity awards were elected to be cash settled by the Company following the acquisition, resulting in compensation expense of $30.0 million reflected in general and administrative expense in the consolidated statements of net loss and total comprehensive loss. The Companys obligation to cash settle these awards upon the employees termination a dual trigger obligation was inherited by the Company. The amounts relating to these cash settled awards expensed in the consolidated statements of operations have not therefore been disclosed as equity based compensation expense in these financial statements.
The Vocus purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The identifiable intangible assets include a trade name, customer relationships and purchased technology and are being amortized over three to eight years on an accelerated basis. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill which is not deductible for tax purposes.
The Company recognized a deferred tax asset in the amount of $33.7 million relating to acquired net operating losses, established a deferred tax liability of $51.9 million relating to the step up in basis of identifiable intangibles, and recorded a valuation allowance of $2.9 million. The Company determined that while the acquired net operating loss is subject to the limitation provided in Section 382 of the Internal Revenue Code, this limitation will not preclude the Company from fully realizing the acquired U.S. net operating losses.
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The following table summarizes the allocation of the purchase price paid by the Company to the fair value of the assets and liabilities of Vocus acquired on May 30, 2014:
|
|
|||
(in thousands) | ||||
Cash and cash equivalents | $ | 40,170 | ||
Accounts receivable, net | 16,564 | |||
Prepaid and other current assets | 3,979 | |||
Property, equipment and software, net | 17,941 | |||
Trade name | 4,140 | |||
Customer relationships | 92,290 | |||
Purchased technology | 49,400 | |||
Goodwill | 320,637 | |||
Total assets acquired | 545,121 | |||
Accounts payable and accrued liabilities | (17,376 | ) | ||
Deferred revenue | (37,438 | ) | ||
Onerous lease provision | (7,114 | ) | ||
Other liabilities | (7,406 | ) | ||
Deferred taxes | (21,091 | ) | ||
Total liabilities assumed | (90,425 | ) | ||
Net assets acquired | $ | 454,696 |
On September 12, 2014, the Company acquired all of the assets of Visible, Inc. (Visible), a U.S. privately-held provider of advanced social intelligence and engagement tools for social media monitoring, data analytics and insights, and customer engagement through a cloud-based software platform. The Company acquired Visible to add to the existing technologys capabilities in social media monitoring and analytics. During the period from Inception to December 31, 2014, the Company incurred acquisition-related transaction costs of $0.3 million, which are included in general and administrative expense in the consolidated statements of net loss and total comprehensive loss. The acquisition was accounted for under the purchase method of accounting. The operating results of Visible are included in the accompanying consolidated financial statements from September 13, 2014.
The purchase price consisted of $7.1 million in cash.
The Visible purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The identifiable intangible assets include a trade name, customer relationships and purchased technology and are being amortized over a two to seven year period. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill which is deductible for tax purposes.
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The following table summarizes the allocation of the purchase price paid by the Company to the fair value of the assets and liabilities of Visible acquired on September 12, 2014:
|
|
|||
(in thousands) | ||||
Accounts receivable, net | $ | 762 | ||
Prepaid and other current assets | 224 | |||
Property, equipment and software, net | 1,206 | |||
Trade name | 70 | |||
Customer relationships | 3,295 | |||
Purchased technology | 1,125 | |||
Goodwill | 2,176 | |||
Total assets acquired | 8,858 | |||
Accounts payable and accrued liabilities | (664 | ) | ||
Deferred revenue | (1,119 | ) | ||
Total liabilities assumed | (1,783 | ) | ||
Net assets acquired | $ | 7,075 |
On October 21, 2014, the Company acquired all of the assets of Discovery Group Holdings Ltd. (Gorkana), a UK privately-held provider of media intelligence and information, offering PR and marketing professionals access to customized solutions through a cloud-based software platform. The Company acquired Gorkana to enhance the capabilities of its cloud-based marketing and public relations technology and to provide for increased scale in Europe. During the period from Inception to December 31, 2014, the Company incurred acquisition-related transaction costs of $5.9 million, which are included in general and administrative expense in the consolidated statements of net loss and total comprehensive loss. The acquisition was accounted for under the purchase method of accounting. The operating results of Gorkana are included in the accompanying consolidated financial statements from October 21, 2014.
The purchase price consisted of $268.9 million in cash.
The Gorkana purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The identifiable intangible assets include a trade name, customer relationships and purchased technology and are being amortized over five to seven years on an accelerated basis. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill which is not deductible for tax purposes.
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The Company recognized deferred tax liability in the amount of $0.7 million and established a deferred tax liability if $16.8 million relating to the step up in basis of identifiable intangibles. The following table summarizes the allocation of the purchase price paid by the Company to the fair value of the assets and liabilities acquired of Gorkana on October 21, 2014:
|
|
|||
(in thousands) | ||||
Cash and cash equivalents | $ | 10,145 | ||
Accounts receivable, net | 13,774 | |||
Prepaid and other current assets | 2,538 | |||
Property, equipment and software, net | 7,717 | |||
Trade name | 2,813 | |||
Customer relationships | 66,290 | |||
Purchased technology | 17,376 | |||
Goodwill | 191,173 | |||
Total assets acquired | 311,826 | |||
Accounts payable and accrued liabilities | (13,791 | ) | ||
Deferred revenue | (11,579 | ) | ||
Deferred taxes | (17,519 | ) | ||
Total liabilities assumed | (42,889 | ) | ||
Net assets acquired | $ | 268,937 |
On March 20, 2015, the Company acquired substantially all of the assets of Viralheat, Inc. (Viralheat), a U.S. privately-held social media engagement platform. Similar to the acquisition of Visible, the Company acquired Viralheat to enhance the Companys existing capabilities in social media monitoring and analytics. During the year ended December 31, 2015, the Company incurred acquisition-related transaction costs of $0.5 million, which are included in general and administrative expense in the consolidated statements of net loss and total comprehensive loss. The acquisition was accounted for under the purchase method of accounting. The operating results of Viralheat are included in the accompanying consolidated financial statements from March 20, 2015.
The purchase price consisted of $4.5 million in cash.
The Viralheat purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The identifiable intangible assets include a trade name, customer relationships and purchased technology and are being amortized over two to seven years on a straight-line basis. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill which is deductible for tax purposes.
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The following table summarizes the allocation of the purchase price paid by the Company to the fair value of the assets and liabilities of Viralheat acquired on March 20, 2015:
|
|
|||
(in thousands) | ||||
Accounts receivable, net | $ | 181 | ||
Prepaid and other current assets | 168 | |||
Property, equipment and software, net | 91 | |||
Trade name | 52 | |||
Customer relationships | 2,449 | |||
Purchased technology | 836 | |||
Goodwill | 1,610 | |||
Total assets acquired | 5,387 | |||
Accounts payable and accrued liabilities | (484 | ) | ||
Deferred revenue | (403 | ) | ||
Total liabilities assumed | (887 | ) | ||
Net assets acquired | $ | 4,500 |
In June 2015, the Company sold the net assets of Cision UK Limited and Vocus UK Limited for approximately $2.1 million. The transaction resulted in a gain of approximately $4.7 million which has been recorded as other income in the consolidated statements of net loss and total comprehensive loss.
On June 16, 2016, the Company acquired all of the assets of PR Newswire (PR Newswire), a global leader in public relations and investor relations communications and related services from United Business Media, plc. The Company acquired PR Newswire to enhance its content distribution capabilities related to its our public relations solution offerings. During the period ended December 31, 2016, the Company incurred acquisition-related transaction costs of $22.4 million, which are included in general and administrative expense in the consolidated statements of net loss and total comprehensive loss. The acquisition was accounted for under the purchase method of accounting. The operating results of PR Newswire are included in the accompanying consolidated financial statements from June 16, 2016.
The purchase price was $842.8 million and consisted of $813.3 million in cash and the issuance of $40 million of Class A LP Units of the Parent to the seller. CPECs of $40 million with a fair value of $29.5 million were issued by the Company to the Parent to record the transaction in these financial statements. The CPECs were immediately accreted to the carrying value following the issuance.
The PR Newswire purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The identifiable intangible assets include the value of the PR Newswire brand, customer relationships and purchased technology and are being amortized over five to seven years on an accelerated basis. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill which is not deductible for tax purposes.
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The Company recognized a deferred tax asset in the amount of $16.7 million relating to acquired net operations losses and disallowed interest carry forwards and established a deferred tax liability of $150.4 million relating to the step up in basis of identifiable intangibles. The following table summarizes the allocation of the purchase price paid by the Company to the fair value of the assets and liabilities acquired of PR Newswire on June 16, 2016:
|
|
|||
(in thousands) | ||||
Cash and cash equivalents | $ | 9,071 | ||
Accounts receivable, net | 42,869 | |||
Prepaid and other current assets | 18,430 | |||
Property, equipment and software, net | 18,917 | |||
Investment in unconsolidated affiliate | 5,376 | |||
Brand | 349,120 | |||
Customer relationships | 48,820 | |||
Purchased technology | 25,940 | |||
Goodwill | 537,218 | |||
Total assets acquired | 1,055,761 | |||
Accounts payable and accrued liabilities | (41,961 | ) | ||
Deferred revenue | (37,310 | ) | ||
Deferred taxes | (133,725 | ) | ||
Total liabilities assumed | (212,996 | ) | ||
Net assets acquired | $ | 842,765 |
In July 2016, the Company sold the net assets of its Agility PR workflow business for approximately $4.3 million. The transaction reduced goodwill by $2.0 million resulting in no gain or loss on the income statement. The assets of Agility have not been separately disclosed as held for sale in the acquisition balance sheet presented above due to immateriality.
The PR Newswire acquired entity contributed revenue of $165.1 million for the year ended December 31, 2016, The Vocus and Gorkana acquisitions contributed revenue for the period from Inception to December 31, 2014 of $74.1 million and $14.5 million, respectively. Net loss from these acquisitions is impracticle to determine due to the extent of integration activities.
For all acquisitions made since Inception, the excess of the purchase price over the total net identifiable assets has been recorded as goodwill which is attributable primarily to synergies expected from the expanded technology and service capabilities from the integrated acquisitions as well as the value of the assembled workforce in accordance with generally accepted accounting principles. The Company did not record any in-process research and development intangible assets in connection with any acquisition to date. The purchase price allocation is complete for all acquisitions made since Inception and measurement period adjustments have not been material.
The unaudited pro forma information below gives effect to the acquisition of PR Newswire as if it had occurred as of the January 1, 2015. For the period from Inception to December 31, 2014 the data below shows the proforma effect of the 2014 acquisitions of Vocus and Gorkana as if they had occurred on April 14,
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2014. The proforma results presented below show the impact of acquisition related costs as well as the increase in interest expense related to acquisition related debt. Other acquisition information has not been presented due to immateriality.
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|
|
|
|||||||||
(in thousands except share and per share data) | 2016 | 2015 | 2014 | |||||||||
Revenue | $ | 615,482 | $ | 657,267 | $ | 272,248 | ||||||
Net loss attributable to Canyon Holdings S.a.r.l shareholders | $ | (90,927 | ) | $ | (147,025 | ) | $ | (73,528 | ) | |||
Net loss per share attributable to Canyon Holdings S.a.r.l shareholders basic and diluted:
|
||||||||||||
Class V shares | $ | | $ | 4.93 | $ | (3.68 | ) | |||||
Class B-1 shares | $ | (13,013.28 | ) | $ | (6,546.89 | ) | $ | | ||||
Class C-1 shares | $ | (4.90 | ) | $ | (3.22 | ) | $ | |
Property, equipment and software consisted of the following at December 31, 2016 and 2015:
|
|
|
||||||
(in thousands) | 2016 | 2015 | ||||||
Purchased software, computer and office equipment | $ | 32,282 | $ | 25,178 | ||||
Furniture and fixtures | 3,557 | 2,757 | ||||||
Leasehold improvements | 23,149 | 13,150 | ||||||
Equipment under capital lease obligations | 1,034 | 984 | ||||||
Capitalized software development costs | 37,736 | 25,845 | ||||||
Property and equipment at cost | 97,758 | 67,913 | ||||||
Less: Accumulated depreciation and amortization | (49,811 | ) | (28,502 | ) | ||||
Property and equipment, net | $ | 47,947 | $ | 39,411 |
Depreciation and amortization expense of property equipment and software, including depreciation on equipment under capital leases, was $25.0 million, $19.5 million and $8.7 million for the years ended December 31, 2016 and 2015 and the period from Inception to December 31, 2014, respectively. Of this amount, $15.7 million, $9.9 million and $4.3 million is included in cost of revenue for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014, respectively, and $9.3 million, $9.6 million and $4.4 million is included in general and administrative expense for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014, respectively, in the consolidated statements of net loss and total comprehensive loss.
Goodwill consisted of the following at December 31, 2016 and 2015:
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|
|
||||||
(in thousands) | 2016 | 2015 | ||||||
Balances as of January 1 | $ | 584,180 | $ | 595,683 | ||||
Acquisition of Viralheat | | 1,610 | ||||||
Disposal of Vocus UK | | (1,754 | ) | |||||
Acquisition of PR Newswire | 537,218 | | ||||||
Disposal of Agility | (1,992 | ) | | |||||
Effects of foreign currency | (39,888 | ) | (11,359 | ) | ||||
Balances as of December 31 | $ | 1,079,518 | $ | 584,180 |
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Other intangible assets consisted of the following at December 31, 2016 and 2015:
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Foreign
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Value |
||||||||||||
Trade names and brand | $ | 369,345 | $ | (9,877 | ) | $ | (30,551 | ) | $ | 328,917 | ||||||
Customer relationships | 270,495 | (29,898 | ) | (110,094 | ) | 130,503 | ||||||||||
Purchased technology | 120,007 | (12,213 | ) | (56,004 | ) | 51,790 | ||||||||||
Balances at December 31, 2016 | $ | 759,847 | $ | (51,988 | ) | $ | (196,649 | ) | $ | 511,210 |
|
|
|
|
|
||||||||||||
2015 | ||||||||||||||||
(in thousands) |
Gross
Carrying Value |
Foreign
Currency Translation |
Accumulated
Amortization |
Net Carrying
Value |
||||||||||||
Trade names | $ | 20,225 | $ | (2,120 | ) | $ | (5,737 | ) | $ | 12,368 | ||||||
Customer relationships | 221,675 | (8,363 | ) | (73,679 | ) | 139,633 | ||||||||||
Purchased technology | 94,067 | (3,338 | ) | (38,229 | ) | 52,500 | ||||||||||
Balances at December 31, 2015 | $ | 335,967 | $ | (13,821 | ) | $ | (117,645 | ) | $ | 204,501 |
Expense related to amortization of intangible assets for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 was $102.0 million, $84.6 million, and $37.0 million, respectively. Of this amount, $24.9 million, $24.7 million and $15.0 million is included in cost of revenue for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014, respectively, and $77.1 million, $59.9 million and $22.0 million is included in general and administrative expense for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014, respectively, in the consolidated statements of net loss and total comprehensive loss.
|
|
|||
Years | ||||
Weighted average useful life at December 31, 2016
|
||||
Trade names and brand | 14 | |||
Customer relationships | 6 | |||
Purchased technology | 4 |
Future expected amortization of intangible assets at December 31, 2016 is as follows:
|
|
|||
(in thousands)
|
||||
Year ended December 31,
|
||||
2017 | $ | 107,667 | ||
2018 | 89,116 | |||
2019 | 70,407 | |||
2020 | 50,097 | |||
2021 | 41,247 | |||
Thereafter | 152,676 | |||
$ | 511,210 |
F-64
Debt consisted of the following at December 31, 2016 and 2015:
|
|
|
|
|||||||||
December 31, 2016 | ||||||||||||
(in thousands) | Short Term | Long Term | Total | |||||||||
2016 First Lien Term Loan | $ | 11,000 | $ | 1,083,500 | $ | 1,094,500 | ||||||
2016 Second Lien Term Loan | | 370,000 | 370,000 | |||||||||
Revolving line of credit | | 33,475 | 33,475 | |||||||||
Unamortized debt discount and issuance costs | | (103,098 | ) | (103,098 | ) | |||||||
Total credit facilities | 11,000 | 1,383,877 | 1,394,877 | |||||||||
Capital lease obligations | 171 | | 171 | |||||||||
Balances at December 31, 2016 | $ | 11,171 | $ | 1,383,877 | $ | 1,395,048 |
|
|
|
|
|||||||||
December 31, 2015 | ||||||||||||
(in thousands) | Short Term | Long Term | Total | |||||||||
2014 First Lien Term Loan | $ | 5,050 | $ | 493,175 | $ | 498,225 | ||||||
2014 Second Lien Term Loan | | 180,000 | 180,000 | |||||||||
Note Purchase Agreement | | 39,048 | 39,048 | |||||||||
Unamortized debt discount and issuance costs | | (29,451 | ) | (29,451 | ) | |||||||
Total credit facilities | 5,050 | 682,772 | 687,822 | |||||||||
Capital lease obligations | 288 | 171 | 459 | |||||||||
Balances at December 31, 2015 | $ | 5,338 | $ | 682,943 | $ | 688,281 |
The fair value of the Companys First Lien Term Loan at December 31, 2016 and 2015 was $1,082 million and $493.2 million, respectively and the fair value of the Companys Second Lien Term Loan at December 31, 2016 and 2015 was $364.9 million and $170.4 million, respectively. The fair value of the Companys First and Second Lien debt was considered Level 2 in the fair value hierarchy. The fair value of other debt at both years approximated the carrying value.
In June 2016, in connection with the PR Newswire acquisition, the Company entered into a $1,175.0 million credit agreement (the 2016 First Lien Credit Agreement) with a syndicate of commercial lenders. The 2016 First Lien Credit Agreement consists of a revolving line of credit, which permits borrowings and issuances of letters of credit of up to $75.0 million (the 2016 Revolving Credit Facility), a $1,100.0 million term loan facility (the 2016 First Lien Term Loan). The 2016 First Lien Term Loan matures on June 16, 2023 and the 2016 Revolving Credit Facility matures on June 16, 2021. Proceeds from the 2016 First Lien Term Loan, the 2016 Second Lien Term Loan (as defined below) and additional funds provided from issuances of CPECs to the Parent were used to fund the acquisition of PR Newswire and repay all amounts outstanding under the Companys prior First Lien Credit Agreement (the 2014 First Lien Term Loan and the 2014 Revolving Credit Facility) and the Companys prior Second Lien Credit Agreement (the 2014 Second Lien Term Loan). Total amounts repaid was approximately $503.7 million.
As of December 31, 2016, the Company had $33.5 million in borrowings outstanding on the 2016 Revolving Credit Facility. As of December 31, 2015, the Company had no borrowings outstanding on the 2014 Revolving Credit Facility. The Company had $1.1 million in outstanding letters of credit under the 2016 Revolving Credit Facility at December 31, 2016. The Company had $1.2 million in outstanding letters of credit under the 2014 Revolving Credit Facility at December 31, 2015.
F-65
Interest is charged on borrowings under the 2016 First Lien Credit Agreement, at the Companys option, at a rate based on 1) the greater of 1% or the British Bankers Association LIBOR Rate in dollars or 2) a rate that is the highest of the prime lending rate, the federal funds rate plus 50 basis points, the one month LIBOR rate plus 1% or 2%, in each case plus an applicable margin. As of December 31, 2016 under the 2016 First Lien Credit Agreement and as of December 31, 2015 under the 2014 First Lien Credit Agreement, the applicable interest rate was 7.0%, and 6.0% respectively. Interest is due and payable when the LIBOR rate matures which can be in 30, 60, or 90 days from when the LIBOR rate is set. If the prime lending rate is used, then the interest is due and payable quarterly. Beginning on September 30, 2016 quarterly principal payments of $2.8 million are required on the 2016 First Lien Term Loan.
The obligations under the 2016 First Lien Credit Agreement are secured by substantially all of the assets of the Company. The 2016 First Lien Credit Agreement contains certain restrictive covenants including, among others, requirements of the Companys net leverage ratio exceeding certain ratios quarterly related to operating results and net leverage. The net leverage ratio is determined by the ratio of total indebtedness to EBITDA adjusted for acquisition related costs and expenses. The Company was in compliance with these covenants as of December 31, 2016.
The Company incurred approximately $81.9 million in financing costs in connection with the 2016 First Lien Credit Agreement, which were offset against the debt. All financing costs are being amortized to interest expense over the term of the 2016 First Lien Credit Agreement. In connection with the repayment of all amounts outstanding under the Companys 2014 First Lien Credit Agreement, the Company expensed approximately $16.3 million of deferred financing costs that remained unamortized at the payoff date.
In June 2016, in connection with the PR Newswire acquisition, the Company entered into a $370.0 million credit agreement (the 2016 Second Lien Credit Agreement) with a syndicate of commercial lenders. The 2016 Second Lien Credit Agreement matures on January 16, 2024.
In connection with the Vocus acquisition in 2014, the Company entered into a $115.0 million Second Lien Credit Agreement (the 2014 Second Lien Credit Agreement). The 2014 Second Lien Credit Agreement had two draw down dates. The initial borrowing occurred at the Vocus acquisition during May 2014 for $75.0 million (Second Lien Initial Borrowing) and the second draw down occurred in October 2014 for $40.0 million (Second Lien Delayed Draw Borrowing).
In connection with the Gorkana acquisition in 2014, the 2014 Second Lien Credit Agreement was amended to increase borrowing capacity for the 2014 Second Lien Credit Agreement by $65.0 million for a total capacity of the 2014 Second Lien Term Loan of $180.0 million. The incremental borrowing occurred in October 2014.
Interest is charged on borrowings under the 2016 Second Lien Credit Agreement, at the Companys option, at a rate based on 1) the greater of 1% or the British Bankers Association LIBOR Rate in dollars or 2) a rate that is the highest of the prime lending rate, the federal funds rate plus 50 basis points, the one month LIBOR rate plus 1% or 2%, in each case plus an applicable margin. As of December 31, 2016 under the 2016 Second Lien Credit Agreement, the applicable interest rate was 10.5%. As of December 31, 2015 under the 2014 Second Lien Credit Agreement, the applicable interest rate was 9.5%. Interest is due and payable when the LIBOR rate matures which can be in 30, 60, or 90 days from when the LIBOR rate is set. If the prime lending rate is used, then the interest is due and payable quarterly. The Second Lien Credit Agreement has no required principal payments and the balance is due in full at maturity.
The obligations under the 2016 Second Lien Credit Agreement are secured by substantially all of the assets of the Company. The 2016 Second Lien Credit Agreement contains certain restrictive covenants including, among others, requirements of the Companys net leverage ratio exceeding certain ratios quarterly related to
F-66
operating results and net leverage. The net leverage ratio is determined by the ratio of total indebtedness to EBITDA adjusted for acquisition related costs and expenses. The Company was in compliance with these covenants as of December 31, 2016.
The Company incurred approximately $24.0 million in financing costs in connection with the 2016 Second Lien Credit Agreement, which were offset against the debt. All financing costs are being amortized to interest expense over the term of the 2016 Second Lien Credit Agreement. In connection with the repayment of all amounts outstanding under the Companys 2014 Second Lien Credit Agreement, the Company expensed approximately $2.4 million deferred financing costs that remained unamortized at the payoff date. Total amounts repaid was approximately $180.0 million.
The repayment of the 2014 First Lien Term Loan and 2014 Revolving Credit facility followed by the execution of the 2016 First Lien Credit Agreement was evaluated as a debt modification versus an extinguishment under the applicable guidance. As a result the Company recorded a loss on extinguishment of debt of $23.6 million during the year ended December 31, 2016.
In May 2014, in connection with the Vocus acquisition, the Company entered into a $135.0 million revolving loan authorization agreement (2014 Loan Authorization Agreement) with a commercial lender. The 2014 Loan Authorization Agreement was repayable on demand.
As of December 31, 2016 and 2015, the Company had no borrowings outstanding under the 2014 Loan Authorization Agreement. Interest was charged on borrowings under the 2014 Loan Authorization Agreement, at the Companys option, at a rate based on 1) the British Bankers Association LIBOR Rate plus 3% in dollars or 2) the prime commercial rate plus 25 basis points.
The Company incurred approximately $0.2 million in deferred financing costs in connection with the Loan Authorization Agreement which was included in interest expense in the consolidated statements of net loss and total comprehensive loss for the period ended December 31, 2015 as it was repayable on demand.
In June 2014, the Company entered into a $60.0 million credit agreement (the 2014 Commercial Credit Agreement) with a commercial lender. The 2014 Commercial Credit Agreement consisted of a revolving line of credit which permitted borrowings and issuances of letters of credit of $10.0 million (Revolving Credit Agreement) and a $50.0 million term loan facility (the Term Credit Agreement).
Interest was charged on borrowings under the 2014 Commercial Credit Agreement, at the Companys option, at a rate based on 1) the greater of 1% or the British Bankers Association LIBOR Rate in dollars or 2) a rate that is the higher of the prime rate or the federal funds rate plus 50 basis points, in each case plus an applicable margin that varies depending upon the Companys consolidated leverage ratio, as defined.
The obligations under the 2014 Commercial Credit Agreement were secured by certain assets of the Company. The Credit Agreement contains certain restrictive covenants including, among others, requirements related to operating results and leverage.
The Company incurred approximately $1.0 million in financing costs in connection with the 2014 Commercial Credit Agreement. Borrowings under the 2014 Commercial Credit Agreement were fully repaid in October 2014. The remaining deferred financing costs were expensed in full through the consolidated statements of operations at that time.
F-67
In January 2015, the Company entered into a $35.0 million note purchase agreement (the Note Purchase Agreement) with a commercial lender. The Note Purchase Agreement was paid in full in connection with the acquisition of PR Newswire in June 2016.
Interest was charged on borrowings under the Note Purchase Agreement at a rate of 11.75% per annum. Interest was due quarterly and paid with additional notes (PIK Interest). The outstanding balance of the Note Purchase agreement including the PIK Interest was $39.1 million as of December 31, 2015.
The Company incurred approximately $1.1 million in financing costs in connection with the Note Purchase Agreement, which were offset against the debt. In addition, the Company incurred approximately $0.6 million in other issuance costs, which are included as other assets on the accompanying consolidated balance sheet. All financing costs were amortized to interest expense over the term of the Note Purchase Agreement during the years ended December 31, 2015 and December 31, 2016. This Note was paid off in connection with the 2016 Credit Agreement. Total amounts repaid was approximately $41.2 million.
Convertible Preferred Equity Certificate (CPEC) activity since inception is as follows:
|
|
|||
$000 | ||||
Issued durinng 2014 | 257,636 | |||
Yield accreted for 2014 | 1,457 | |||
Balance at December 31, 2014 | 259,093 | |||
Issued during 2015 | 2,821 | |||
Yield accreted for 2015 | 2,583 | |||
Balance at December 31, 2015 | 264,497 | |||
Issued during 2016 | 165,525 | |||
Yield accreted for 2016 | 13,934 | |||
Yield paid in 2016 | (854 | ) | ||
Balance at December 31, 2016 | $ | 443,102 |
During the year ended December 31, 2016, CPECs with a contractual redemption value of $40.0 million were issued to the Parent in connection with the acquisition of PR Newswire, in exchange for the contribution by the Parent to the Company of a pro rata share of net assets in PR Newswire valued at $29.5 million. As the CPECs are contractually puttable by the Companys Parent for cash at any time at their redemption value, the Company recorded an immediate non cash accretion expense of $10.5 million.
In connection with the Vocus acquisition, the Company inherited certain loans principally with the State of Maryland. The borrowings bore interest at an annual rate 3.0%. During the year ended December 31, 2015, the loans were paid in full and no other conditions are required.
F-68
Future minimum principal payments of debt, excluding CPECs, as of Decembers 31, 2016 are as follows:
|
|
|||
(in thousands) | ||||
Year ended December 31,
|
||||
2017 | $ | 11,171 | ||
2018 | 11,000 | |||
2019 | 11,000 | |||
2020 | 11,000 | |||
2021 | 11,000 | |||
Thereafter | 1,442,975 | |||
$ | 1,498,146 |
Interest expense for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 was as follows:
|
|
|
|
|||||||||
(in thousands) | 2016 | 2015 | 2014 | |||||||||
First Lien Term Loan | $ | 56,352 | $ | 30,499 | $ | 10,786 | ||||||
Second Lien Term Loan | 29,408 | 17,338 | 6,391 | |||||||||
Loan Authorization Agreement | | 81 | 1,903 | |||||||||
Revolving line of credit | 1,198 | | 148 | |||||||||
Accretion of debt discount and deferred financing costs | 13,445 | 5,972 | 3,519 | |||||||||
Credit Agreement | | | 1,114 | |||||||||
Note Purchase Agreeement | 2,170 | 4,048 | | |||||||||
Accretion of Convertible Preferred Equity Certificates due to Parent | 10,500 | | | |||||||||
Yield on Convertible Preferred Equity Certificates due to Parent | 2,579 | 2,583 | 1,457 | |||||||||
Commitment fees and other | 2,345 | 877 | 3,090 | |||||||||
Total Interest Expense | $ | 117,997 | $ | 61,398 | $ | 28,408 |
F-69
Common stockholders are entitled to vote on all matters submitted to a vote of the Companys stockholders. The majority of the outstanding share capital of the Company (85%) is owned by the Companys Parent. Distribution rights to the holders of the remaining 15% are restricted to par value multiplied by LIBOR plus 2%. As of December 31, 2016 and 2015, the Companys authorized, issued and outstanding share capital with a par value of $0.001 per share is as follows:
|
|
|
||||||
2016
Shares |
2015
Shares |
|||||||
Mandatorily redeemable Class A-1 shares | 6,448 | 6,448 | ||||||
Mandatorily redeemable Class C-2 shares | 5,498,677 | 5,498,677 | ||||||
Total mandatorily redeemable shares | 5,505,136 | 5,505,136 | ||||||
Class B-1 shares | 6,448 | 6,448 | ||||||
Class C-1 shares | 1,957,845 | 1,957,845 | ||||||
Class V shares | 20,000,000 | 20,000,000 | ||||||
Total non mandatorily redeemable shares | 21,964,293 | 21,964,293 | ||||||
Total shares authorized, issued and outstanding | 27,469,429 | 27,469,429 |
All classes of shares, except for the Class C-2 shares, outstanding at December 31, 2016 and December 31, 2015 are held by the Parent . The rights of each class of shares is as follows:
Each share held entitles the holder to one vote.
All shares are transferable except for the Class C-2 shares. The Class C-2 shares are only transferable at the discretion of the Parent or upon sale of the Parent.
The Company may redeem any or all the outstanding share capital at any time, upon a vote of the Board of Directors. The Board of Directors is controlled by the Parent. Any redemption payments must follow the sequencing of distributions described below. As a result of this right, the Company has classified its Class A-1 and Class C-2 shares as mandatorily redeemable with an aggregate redemption amount at December 31, 2016 of $0.7 million. All shares ranking junior to the Class C-2 shares, namely the Class B-1, C-1, and V shares, are held by the Parent and participate in any remaining distributions on a pro rata basis with no upper limit and thus are not considered mandatorily redeemable.
Holders of all the classes of shares are entitled to distributions from the Company at the discretion of the shareholders, after payments of any debt amounts due, including the redemption or payment of Convertible Preferred Equity Certificates provided that distributions follow the sequencing below. In addition, distributions cannot be made in excess of 95% of the Companys net profits until the cumulative undistributed amounts equals at least 10% of the equity of the Company.
Amounts to be distributed are payable first to the holders of the Class A-1 shares until the holders of the Class A-1 shares have received an amount equal to the amount that would be received by the holders of the Parents Class A-1 LP units at December 31, 2016. This amount is $0.7 million.
After amounts have been paid to the Class A-1 shareholders, the Class C-2 shareholders will be entitled to an amount equal to the nominal value of the Class C-2 shares multiplied by LIBOR plus 2%.
F-70
After amounts have been paid to the Class C-2 shareholders, the Class B-1 and Class C-1 shareholders will be entitled to receive an amount equal to the amount that would be received by the Parents Class B-1 and C-1 LP Units which share in residual distributions in tandem based on a formula with no ceiling. As a result of the Parent holding all the Class B-1 and C-1 shares, this results in the Parent receiving 100% of any residual distribution. Finally, after amounts have been paid to the Class C-1 shareholders, the Class V shareholders will be entitled to receive an amount, on a pro rata basis, the remaining outstanding amount of assets remaining for distribution.
The membership interests of the Companys Parent, Canyon Holdings Cayman LP are denominated in units (the Units) of which there are three classes: Class A Units, Class B Units and Class C Units.
The Parent grants Class C Units (the Class C Unit Grants) to certain key employees of the Company for zero consideration. These Class C Units represent Profits Interests. Holders of the Class C Units are permitted to receive distributions only after specified amounts have been paid to the senior holders of Class A, Class B and Class C Units of the Parent.
Pursuant to the terms of the Parents limited partnership agreement, holders of Class C Units generally participate only in liquidating distributions by the Parent, and then, only to the extent vested. The Class C Unit grants are subject to the terms of the respective agreements with the executives, but generally vest 6.25% per quarter following the date of grant contingent on the individual continuing to provide services to the Company. Unvested awards immediately vest upon a change in control of the Parent. Compensation expense related to these awards is measured based on the value of the unit on the date of grant.
Certain Class C Unit grants were made in 2016, 2015 and 2014 for zero consideration with yearly vesting, however these awards have a fixed dollar threshold which provides the holder only for an interest in the appreciation in value of the Parent over this amount (a Participation Threshold). Class C Unit distributions are therefore reduced up to the amount of such Participation Threshold until the aggregate amount of all such reductions equals the amount of distributions to which the holders of Class C Units would be entitled to receive if, immediately prior to the issuance of such Class C Unit, the net assets of the Parent were sold at their fair market value and the proceeds were distributed in accordance with the Parents partnership agreement
F-71
The following table summarizes the Parents Class C Unit award activity since inception:
|
|
|
|
|||||||||
Units
Outstanding |
Weighted-
Average Remaining Vesting Term (Years) |
Weighted-
Average Participation Threshold $ |
||||||||||
Class C Units granted during 2014:
|
||||||||||||
No Participating Threshold | 6,653,850 | 3.3 | ||||||||||
$3.09 Participating Threshold | 1,941,000 | 3.9 | ||||||||||
Total Class C Units granted during 2014 | 8,594,850 | 3.4 | $ | 0.70 | ||||||||
Outstanding units at December 31, 2014 | 8,594,850 | 3.4 | $ | 0.70 | ||||||||
Class C Units granted during 2015:
|
||||||||||||
$3.09 Participating Threshold | 3,180,845 | 3.1 | ||||||||||
$7.79 Participating Threshold | 1,792,985 | 3.3 | ||||||||||
Total Class C Units granted during 2015 | 4,973,830 | 3.2 | $ | 4.77 | ||||||||
Class C Units forfeited during 2015 | (1,571,195 | ) | $ | 5.15 | ||||||||
Outstanding units at December 31, 2015 | 11,997,485 | 2.6 | $ | 1.81 | ||||||||
Class C Units granted during 2016:
|
||||||||||||
$3.09 Participating Threshold | 3,175,679 | 3.5 | ||||||||||
$4.25 Participating Threshold | 1,919,500 | 3.6 | ||||||||||
Total Class C Units granted during 2016 | 5,095,179 | 3.5 | $ | 3.53 | ||||||||
Class C Units forfeited/repurchased during 2016 | (4,853,169 | ) | $ | 1.91 | ||||||||
Outstanding units at December 31, 2016 | 12,239,495 | 2.4 | $ | 2.48 | ||||||||
Vested units at December 31, 2014 | 1,247,597 | $ | | |||||||||
Vested units at December 31, 2015 | 3,728,198 | $ | 0.68 | |||||||||
Vested units at December 31, 2016 | 4,691,959 | $ | 1.47 |
Upon termination of employment of the employee, the unvested Class C Units are forfeited and the vested Class C Units are subject to a right of repurchase by the Parent at a price equal to the fair market value of the award. That repurchase price equals the distribution that terminated employee would have been entitled to receive if the net assets of the Parent were liquidated at the date of repurchase. Repurchase activity inception to date has been insignificant. As of December 31, 2016, there remained 999,232 Class C Units available for future grant.
The Company recognized equity-based compensation costs of $5.3 million and $5.3 million relating to Class C Unit awards for the years ended December 31, 2016 and 2015, and $2.0 million for the period from Inception to December 31, 2014, which is included in general and administrative expense in the accompanying consolidated statements of net loss and total comprehensive loss. The total fair value of the Class C Units vested during 2016, 2015 and 2014 was $12.4 million, $10.7 million and $2.4 million, respectively. As of December 31, 2016 $11.9 million of remaining unrecognized compensation cost is expected to be recognized over the weighted-average remaining requisite period of 2.4 years.
F-72
Equity based compensation by department for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 is as follows:
|
|
|
|
|||||||||
(in thousands) | 2016 | 2015 | 2014 | |||||||||
Cost of revenue | $ | 277 | $ | 258 | $ | | ||||||
Selling and marketing | 255 | 228 | | |||||||||
R&D | 551 | 457 | | |||||||||
G&A | 4,218 | 4,352 | 1,950 | |||||||||
Total equity based compensation expense | $ | 5,301 | $ | 5,294 | $ | 1,950 |
As discussed in Note 3, a number of non-vested equity awards of Vocus were elected to be cash settled by the Company following the acquisition of Vocus. This resulted in compensation expense of $30.0 million reflected in general and administrative expense in the consolidated statements of net loss and total comprehensive loss for the period from Inception to December 31, 2014.
The Company sponsors defined-contribution, profit-sharing and other benefit plans in the United States, Canada, the United Kingdom and France. Total expense for the plans for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 related to defined contribution plans, were approximately $4.4 million, $2.2 million, and $0.9 million respectively.
CNW Retirement Plans
Employees of CNW participate in a defined benefit pension plan component. The defined benefit plan has been closed to new participants since 2006. In addition, CNW maintains a non-registered defined benefit pension plan for a former executive, which provides benefits in excess of those payable from the registered defined benefit plan. The actuarial cost method used for the valuation of the defined benefit post-employment benefits is the present value of the benefits expected to be paid. CNW's contributions to defined contribution plans are expensed as incurred. The net periodic pension expense recognized for CNWs defined benefit plan for the period since the date of acquisition of PR Newswire through December 31, 2016 was $0.3 million.
Reconciliation of Benefit Obligations, Plan Assets and Funded Status
The following table summarizes the benefit obligation, plan assets and the funded status of CNWs two defined benefit plans at December 31, 2016 and for the period since acquisition ending December 31, 2016 (in thousands):
|
|
|||
(in thousands) | 2016 | |||
Change in benefit obligation
|
||||
Benefit obligation balance at June 16, 2016: | $ | 11,758 | ||
Service cost | 118 | |||
Interest cost | 219 | |||
Participant contributions | 22 | |||
Actuarial gain/(loss) | (134 | ) | ||
Benefits paid | (185 | ) | ||
Currency translation | (386 | ) | ||
Benefit obligation balance at December 31, 2016 | $ | 11,412 |
F-73
|
|
|||
(in thousands) | 2016 | |||
Change in benefit obligation
|
||||
Fair value of plan assets at June 16, 2016 | $ | 10,101 | ||
Return on Plan assets | (850 | ) | ||
Employer contributions | 289 | |||
Participant contributions | 22 | |||
Benefits paid | (185 | ) | ||
Currency translation | (439 | ) | ||
Fair value of plan assets at December 31, 2016 | $ | 8,937 |
The amount recognized in the consolidated balance sheets as long term pension obligation as of December 31, 2016 was $2.5 million. The amount of net actuarial loss recognized in other comprehensive loss for the period ended December 31, 2016 was $0.5 million. Substantially all of the Plans assets consist primarily of a pooled fund, which is primarily invested in government and corporate bonds. They are valued using models with inputs including interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable and therefore the assets within the pooled fund have been classified as Level 2. The fair value reflects the proportionate share of the fair value of the investments held in the underlying pooled fund.
Assumptions
Weighted-average assumptions used to determine the benefit obligation reflected in the consolidated balance sheets and the net periodic pension cost in the consolidated statements of comprehensive loss were as follows:
|
|
|||
2016 | ||||
Discount rate | 4.1 | % | ||
Rate of compensation increase | 3.5 | % | ||
Expected return on Plan assets | 2.0 | % |
The long-term rates of return are determined based on the nature of each plans investments, an expectation for each plans investment strategies, historical rates of return and current economic forecasts, among other factors, and are evaluated annually and adjusted as necessary.
Other disclosures related to the CNW defined benefit pension plans have not been included as the amounts are immaterial.
Pursuant to the acquisition of PR Newswire in June 2016, the Company became the owner of a 50% interest in a joint venture with ANP Pers Support B.V in ANP Pers Support v.o.f. (ANPps). This investment in an unconsolidated affiliate is accounted for by the equity method. The Companys allocation of net income from ANPps was $0.2 million and is included in earnings of unconsolidated affiliate for the year ended December 31, 2016 in the consolidated statements of comprehensive loss.
F-74
For the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014, the U.S. and foreign components of loss before income taxes were as follows:
|
|
|
|
|||||||||
(in thousands) | 2016 | 2015 | 2014 | |||||||||
US | $ | (140,443 | ) | $ | (60,980 | ) | $ | (122,294 | ) | |||
Foreign | (13,660 | ) | (33,171 | ) | (17,678 | ) | ||||||
Total loss before income taxes | $ | (154,103 | ) | $ | (94,151 | ) | $ | (139,972 | ) |
For the years ended December 31, 2016, 2015 and period from Inception to December 31, 2014 the benefit from income taxes consisted of the following:
|
|
|
|
|||||||||
(in thousands) | 2016 | 2015 | 2014 | |||||||||
Current expense
|
||||||||||||
Federal | $ | 419 | $ | 570 | $ | 491 | ||||||
State | 1,260 | 714 | 255 | |||||||||
Foreign | 9,123 | 3,128 | 1,186 | |||||||||
Total current expense | 10,802 | 4,412 | 1,932 | |||||||||
Deferred benefit
|
||||||||||||
Federal | (54,550 | ) | (2,442 | ) | (27,612 | ) | ||||||
State | (5,805 | ) | 1,632 | (3,109 | ) | |||||||
Foreign | (6,138 | ) | (7,209 | ) | (2,221 | ) | ||||||
Total deferred benefit | (66,493 | ) | (8,019 | ) | (32,942 | ) | ||||||
Total benefit from income taxes | $ | (55,691 | ) | $ | (3,607 | ) | $ | (31,010 | ) |
The Companys effective tax rate for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 was 36.1%, 3.8% and 22.2%, respectively. The Company is a Luxembourg entity with a 29.2% statutory tax rate with subsidiaries in various jurisdictions including the U.S., Sweden, and United Kingdom. The Companys effective tax rate differed from the Cayman statutory rate as a result of the foreign statutory rates in the U.S., Sweden, and the U.K., as well as certain nondeductible expenses, including transaction costs and stock based compensation. In addition, differences were caused by U.S. state income taxes, as well as the need for valuation allowance for certain U.S. federal deferred tax assets.
For the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014, the Companys effective tax rate was as follows:
|
|
|
|
|||||||||
2016
% |
2015
% |
2014
% |
||||||||||
Luxembourg statutory rate | 29.22 | 29.22 | 29.22 | |||||||||
State income taxes, net of US federal benefit | 1.92 | (2.20 | ) | 1.32 | ||||||||
Expense from different foreign tax rates | 4.98 | (1.11 | ) | 3.56 | ||||||||
Change in valuation allowance | 10.15 | (17.22 | ) | (0.94 | ) | |||||||
Nondeductible expenses | (9.70 | ) | (5.17 | ) | (10.05 | ) | ||||||
Other | (0.43 | ) | 0.33 | (0.96 | ) | |||||||
Effective tax rate | 36.1 | % | 3.8 | % | 22.2 | % |
F-75
The Companys deferred tax components consisted of the following at December 31, 2016 and 2015:
|
|
|
||||||
(in thousands) | 2016 | 2015 | ||||||
Deferred tax assets
|
||||||||
Net operating loss carryforwards | $ | 42,206 | $ | 43,842 | ||||
Allowance for doubtful accounts | 2,043 | 171 | ||||||
Accrued expenses | 6,936 | 1,920 | ||||||
Deferred interest | 47,943 | 14,217 | ||||||
Deferred revenue | 2,526 | 1,177 | ||||||
Transaction costs | 3,215 | 4,940 | ||||||
Tax credits | 4,065 | 2,452 | ||||||
Other | 4,008 | 4,118 | ||||||
Total deferred tax assets | 112,942 | 72,837 | ||||||
Valuation allowance | (3,437 | ) | (19,017 | ) | ||||
Net deferred tax assets | 109,505 | 53,820 | ||||||
Deferred tax liabilities
|
||||||||
Capitalized software development costs | (5,707 | ) | (5,595 | ) | ||||
Fixed assets | (3,075 | ) | (3,378 | ) | ||||
Goodwill and intangible assets | (182,251 | ) | (62,335 | ) | ||||
Other | (1,681 | ) | (1,079 | ) | ||||
Total deferred tax liabilities | (192,714 | ) | (72,387 | ) | ||||
Net deferred tax liability | $ | (83,209 | ) | $ | (18,567 | ) | ||
Disclosed as
|
||||||||
Deferred tax asset long term | $ | | $ | 32 | ||||
Deferred tax liability long term | (83,209 | ) | (18,599 | ) | ||||
Net deferred tax liability long term | $ | (83,209 | ) | $ | (18,567 | ) |
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company assessed the realizability of deferred tax assets and whether it is more likely than not that a portion, or all, of the deferred tax assets can be realized. Management considers the scheduled reversal of deferred tax liabilities and tax planning strategies in making this assessment. As part of the 2014 purchase accounting, management concluded that a valuation allowance was required for deferred tax assets in Sweden and certain pre-acquisition net operating losses in the United Kingdom. During 2015 management has also concluded that a valuation allowance was required for the U.S. Federal deferred tax assets, net of Federal deferred tax liabilities excluding deferred tax liabilities relating to indefinite lived intangibles. In 2016, management has concluded that the valuation allowance on the U.S. federal deferred tax assets is no longer required as a result of the deferred tax liabilities established in the acquisition of PR Newswire. The reversal of such deferred tax liabilities will allow for the realizability of the US deferred tax assets.
At December 31, 2016, the Company has not provided for income taxes on the $28.5 million of undistributed earnings of its foreign subsidiaries as they are considered permanently reinvested. As a Luxembourg holding company, The majority of the undistributed earnings of subsidiaries can be distributed to the Company without additional taxation, and the Company has therefore determined that the deferred tax liability associated with a distribution of the undistributed earnings would be immaterial.
F-76
As of December 31, 2016, the Company has net operating loss carryforwards (NOL) for federal and state tax purposes of approximately $98.3 million and $80.0 million, respectively, which will expire between 2031 and 2036. The Company also has $1.4 million of federal and state tax credits that will expire at varying times between 2015 and 2033 and $2.0 million of federal alternative minimum tax credits that have no expiration date. The Company has foreign net operating losses of $22.3 million of which the majority do not expire.
As of December 31, 2015, the Company has net operating loss carryforwards (NOL) for federal and state tax purposes of approximately $109.5 million and $73.1 million, respectively, which will expire between 2029 and 2035. The Company also has $1.4 million of federal and state tax credits that will expire at varying times between 2015 and 2033 and $0.9 million of federal alternative minimum tax credits that have no expiration date. The Company has foreign net operating losses of $27.6 million of which the majority do not expire.
Certain of the Companys federal and state NOL carryforwards are subject to annual limitations under Section 382 of Internal Revenue Code. Based on the purchase price for the U.S. companies, the limitations imposed under Section 382 will not preclude the Company from realizing these NOLs.
The Company assessed the need to record an accrual for uncertain tax positions. The Company recognizes the effects of income tax positions only if those positions are more likely than not of being sustained. As such, the Company has recorded a liability for uncertain tax positions associated primarily associated with tax credits and transfer pricing in the amount of $2.6 million as of December 31, 2015 and $2.9 million as of December 31, 2016.
The Company does not expect unrecognized tax benefits to change significantly over the next twelve months, and the entire amount of unrecognized tax benefits, if recognized, would affect the effective tax rate The Company recognizes interest and penalties related to uncertain tax positions in the consolidated financial statements as a component of the income tax provision, and has accrued $0.7 million for interest and penalties as of December 31, 2016. The Company files income tax returns in the U.S. and various states, the United Kingdom, Canada, Sweden and other foreign jurisdictions and is subject to U.S. federal, state, and foreign tax examinations for years ranging from 2011 to 2016.
The Company evaluates and allocates net loss per share to the Class A-1, B-1, C-1, C-2 and V using the two-class method required for multiple classes of stock. The Companys CPECs are non participating securities. The Class A-1 and Class C-2 shares due to their redemption features, have been excluded from any allocation of losses for all periods presented.
The Class B-1, C-1 and Class V shares are all held by the Companys Parent. Prior to the issuance of the Class B-1 and Class C-1 shares in September 2015, the only participating security outstanding was the Class V shares and therefore was allocated all losses for the periods the Class V shares were outstanding to that point. Following the issuance to the Parent of the Class B-1 and Class C-1 shares, which rank senior to the Class V shares in any distributions or redemption, the Class V shares, also owned by the Parent, ceased to participate in any losses. From that date losses have been allocated to the Class B-1 and Class C-1 shares. The amounts available for distribution of the Company are allocated to the Class B-1 and Class C-1 shares on a basis equivalent to the relative amounts that these holders would have received if they held Class B-1 and C-1 Units in the Companys Parent. This basis is described in the Parents Partnership Agreement. In the absence of any contractual provisions that dictate otherwise, the Company has allocated losses using the same formula for the allocation of amounts available for distribution. The Partnership Agreement provides for amounts available for distribution to be allocated together and in tandem to the Class B-1 and Class C-1 Units based on a ratio.
F-77
For the period from issuance of the Class B-1 and C-1 shares through to July 1, 2016, the Partnership Agreement provides for 87% of the losses to be allocated to the Class B-1 holders and the remaining 13% to be allocated to the Class C-1 holders. For periods after August 1, 2016, the Partnership Agreement provides for 93% of the losses to be allocated to the Class B-1 holders and the remaining 7% to be allocated to the Class C-1 holders.
Basic net loss per share is computed by dividing net loss attributable to Class B-1, C-1 and V shareholders by the weighted-average number of participating shares of Class B-1, C-1 and V outstanding during the period.
For the calculation of diluted net loss per share, net loss per share attributable to common stockholders is adjusted by the effect of the potential conversion of the Convertible Preferred Equity Certificates. In the years ended December 31, 2016 and 2015 and the period from Inception to December 31, 2014 these potentially dilutive shares were not included in the computation of diluted net loss per share as the effect of including these shares in the calculation would have been anti-dilutive.
|
|
|
||||||
(in thousands except share and per share data) | 2016 | |||||||
Class B-1 | Class C-1 | |||||||
Numerator:
|
||||||||
Net loss | $ | (88,169 | ) | $ | (10,265 | ) | ||
Accretion of Series A yield | (30 | ) | (22 | ) | ||||
Total net loss attributable to participating securities | (88,199 | ) | (10,287 | ) | ||||
Denominator:
|
||||||||
Weighted average shares outstanding basic and diluted | 6,448 | 1,957,845 | ||||||
Net loss per share basic and diluted | $ | (13,673.83 | ) | $ | (5.24 | ) |
|
|
|
|
|||||||||||||
2015 | ||||||||||||||||
Class B-1 | Class C-1 | Class V | ||||||||||||||
Numerator:
|
||||||||||||||||
Net loss | $ | (27,882 | ) | $ | (4,166 | ) | $ | (58,496 | ) | |||||||
Denominator:
|
||||||||||||||||
Weighted average shares outstanding basic and diluted | 6,448 | 1,957,845 | 20,000,000 | |||||||||||||
Net loss per share basic and diluted | $ | (4,324.09 | ) | $ | (2.13 | ) | $ | (2.92 | ) |
|
|
|||
2014 | ||||
Class V | ||||
Numerator:
|
||||
Net loss | (108,962 | ) | ||
Less: Loss attributable to non controlling interest | 2,834 | |||
Net loss attributable to Canyon Holdings S.a.r.l. shareholders | $ | (106,128 | ) | |
Denominator:
|
||||
Weighted average shares outstanding basic and diluted | 20,000,000 | |||
Net loss per share basic and diluted | $ | (5.31 | ) |
F-78
The Company is party to a professional services agreement with the majority owner of its parent. The Company incurred approximately $0.6 million for the years ended December 31, 2016 and December 31, 2015 and incurred $0.4 million related to this agreement for the period from Inception to December 31, 2014. Upon consummation of an IPO, the professional services agreement terminates.
Certain transactions between the Company and its Parent have been described elsewhere in these consolidated financial statements.
The Company has various non-cancelable operating leases, primarily related to office real estate, that expire through 2035 and generally contain renewal options for up to five years. Lease incentives, payment escalations and rent holidays specified in the lease agreements are accrued or deferred as appropriate as a component of rent expense which is recognized on a straight-line basis over the terms of occupancy. As of December 31, 2016 and 2015, deferred rent of $9.4 million and $9.4 million, respectively, is included in other liabilities.
The Company also leases computer and office equipment under non-cancelable capital leases and other financing arrangements that expire through 2017.
Future minimum lease payments under non-cancelable operating and capital leases at December 31, 2016 are as follows:
|
|
|
||||||
(in thousands) | Operating Leases |
Capital
Leases |
||||||
2017 | $ | 12,348 | $ | 175 | ||||
2018 | 10,460 | | ||||||
2019 | 12,023 | | ||||||
2020 | 11,257 | | ||||||
2021 | 8,859 | |||||||
Thereafter | 26,885 | |||||||
Total future minimum payments | $ | 81,832 | 175 | |||||
Less: Amount representing interest | (4 | ) | ||||||
Less: Current portion | (171 | ) | ||||||
Long-term capital lease obligation | $ | |
Rent expense was $13.9 million, $9.4 million and $5.8 million for the years ended December 31, 2016 and December 31, 2015 and the period from Inception to December 31, 2014, respectively.
The Company entered into agreements with various vendors in the ordinary course of business. As of December 31, 2016, the minimum required payments in future years under these arrangements are as follows:
|
|
|||
(in thousands) | Commitments | |||
Year ended December 31,
|
||||
2017 | $ | 12,196 | ||
2018 | 2,960 | |||
2019 | 459 | |||
2010 | | |||
2021 | | |||
Thereafter | | |||
$ | 15,615 |
F-79
As of December 31, 2016 and 2015, the Company had a total of $1.1 million and $1.2 million in letters of credit outstanding, respectively, substantially in favor of landlords for certain of its office spaces. These letters of credit do not require compensating balances and expire at various dates through March 2031.
In the opinion of management based on all known facts, all such matters are either without merit or are of such kind, or involve such amounts that would not have a material effect on the financial position, the Companys cash flows or results of operations of the Company if disposed of unfavorably.
The Company has determined that its Chief Executive Officer is the Chief Operating Decision Maker as defined by ASC No. 280, Segment Reporting (ASC 280). The Companys Chief Executive Officer and the Board of Directors review financial information presented on both a consolidated basis and on a geographic regional basis. Since its inception, the Company has completed several significant acquisitions and has expended significant efforts to provide an integrated set of software and services to all customers in all geographies. As a result of the long term qualitative and quantitative similar economic characteristics exhibited by the sale of an integrated set of products and services in all the Companys regions, the Company has determined that its operating segments meet the criteria to be aggregated into one reportable segment.
The causes for variation among the Company's operating segments are the same and include factors such as (i) seasonality, (ii) price and cost fluctuations, (iii) number of competitors, and (iv) size of market opportunity. The composition of employees and the types of functions that they perform are similar for each operating segment. Finally, even though the Company periodically reorganizes the Company's operating segments based upon the completion of acquisitions and divestitures, and the experience and bandwidth of the senior executives in charge, the common financial goals for each operating segment remain constant.
Enterprise-wide information is provided in accordance with ASC 280. Geographical revenue information is based on revenue generated through the sale of products and services to customers located within the specified geography. Long-lived assets consist of property, plant and equipment. Property, plant and equipment information is based on the physical location of the assets at the end of each fiscal year.
Revenue by geography is based on the location of the subsidiary that executed the customer contract. The following table lists revenue and long lived assets, net by geographic region.
|
|
|
|
|||||||||
(in thousands) | 2016 | 2015 | 2014 | |||||||||
Revenue:
|
||||||||||||
Americas US | 316,177 | 218,628 | 117,837 | |||||||||
Rest of Americas | 29,891 | 10,105 | 9,524 | |||||||||
EMEA | 110,225 | 105,225 | 42,753 | |||||||||
APAC | 11,479 | | | |||||||||
$ | 467,772 | $ | 333,958 | $ | 170,114 |
F-80
|
|
|
||||||
(in thousands) | 2016 | 2015 | ||||||
Long-lived assets, net
|
||||||||
Americas US | 1,188,000 | 543,801 | ||||||
Rest of Americas | 115,223 | 1,957 | ||||||
EMEA | 313,373 | 285,961 | ||||||
APAC | 30,880 | | ||||||
$ | 1,647,476 | $ | 831,719 |
Subsequent events have been evaluated by the Company for disclosure through April 12, 2017 the date of issuance of these financial statements.
On March 10, 2017, the Company sold substantially all of the assets of its Vintage corporate filings business for approximately $26.6 million in cash. The Company has continuing obligations to provide the purchaser with certain transition services for periods that could extend to July 2017.
On March 12 2017, the Company entered into a definitive agreement to acquire Bulletin Intelligence, LLC, Bulletin News Network, LLC, and Bulletin News Investment, LLC (collectively, Bulletin Intelligence) for a purchase price of approximately $57.0 million, exclusive of additional contingent consideration that can be earned by the sellers during the calendar years ending December 31, 2017 and December 31, 2018. The Bulletin acquisition was completed on March 27, 2017 and was funded from the Companys cash, the issuance of Series A Units in the Parent to the sellers and an incremental $30.0 million from the Companys 2016 First Lien Term Loan.
On March 19, 2017, the Company entered into a definitive agreement with Capitol Acquisition Corp. III (NASDAQ: CLAC; Capitol), a public investment vehicle, whereby the parties have agreed to merge, resulting in the Company becoming a publicly listed company. Under the terms of the proposed transaction, the combination will be effected through a contribution and exchange pursuant to which the Company will be contributed to a wholly owned subsidiary of Capitol (Holdings) that will become a publicly traded entity following a subsequent merger of a subsidiary of Holdings into Capitol.
The allowance for doubtful accounts and deferred tax assets for the years ended December 31, 2016, 2015 and the period from Inception to December 31, 2014 is as follows:
|
|
|
|
|
||||||||||||
(in thousands) |
Balance at
Beginning of Year |
Amounts
Charged to Costs or Expense |
Additions
(Deductions) |
Balance at
End of Year |
||||||||||||
Allowance for doubtful accounts:
|
||||||||||||||||
Period from Inception to December 31, 2014 | $ | | $ | (392 | ) | $ | 1,363 | $ | 971 | |||||||
Year Ended December 31, 2015 | $ | 971 | $ | (1,397 | ) | $ | 1,674 | $ | 1,248 | |||||||
Year Ended December 31, 2016 | $ | 1,248 | $ | (2,572 | ) | $ | 2,596 | $ | 1,272 | |||||||
Allowance for deferred tax assets:
|
||||||||||||||||
Period from Inception to December 31, 2014 | $ | | $ | | $ | 12,648 | $ | 12,648 | ||||||||
Year Ended December 31, 2015 | $ | 12,648 | $ | 16,294 | $ | (9,925 | ) | $ | 19,017 | |||||||
Year Ended December 31, 2016 | $ | 19,017 | $ | (15,315 | ) | $ | (265 | ) | $ | 3,437 |
F-81
|
|
|
||||||
As of December 31, 2015 | As of March 31, 2016 | |||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and Cash Equivalents | $ | 12,046 | $ | 6,508 | ||||
Accounts Receivable, net of allowance of $4,786 and $4,338 at December 31, 2015 and March 31, 2016, respectively. | 49,533 | 45,601 | ||||||
Due from Related Parties | 78,326 | 35,011 | ||||||
Loans to Related Parties | 166,804 | 48 | ||||||
Income Tax Receivable | 1,666 | 2,292 | ||||||
Deferred Income Taxes | 6,116 | 6,116 | ||||||
Other Receivables | 1,021 | 685 | ||||||
Prepaids and Other Current Assets | 4,772 | 8,997 | ||||||
Total Current Assets | 320,284 | 105,258 | ||||||
Property and Equipment, net | 12,481 | 11,979 | ||||||
Computer Software, net | 15,244 | 15,972 | ||||||
Intangibles, net | 1,513 | 1,629 | ||||||
Goodwill | 123,578 | 123,957 | ||||||
Investment in Unconsolidated Affliate | 5,349 | 5,250 | ||||||
Deferred Income Taxes | 1,729 | 1,679 | ||||||
Other Assets | 5,086 | 4,235 | ||||||
TOTAL ASSETS | $ | 485,264 | $ | 269,959 | ||||
LIABILITIES
|
||||||||
Current Liabilities
|
||||||||
Accounts Payable and Accrued Liabilities | $ | 48,811 | $ | 41,725 | ||||
Deferred Revenue | 34,535 | 37,428 | ||||||
Due to Related Parties | 256,124 | 220,215 | ||||||
Loans from Related Parties | 688,490 | 659,157 | ||||||
Income Taxes Payable | 518 | 1,126 | ||||||
Other Current Liabilities | 438 | 558 | ||||||
Total Current Liabilities | 1,028,916 | 960,209 | ||||||
Deferred Income Taxes | 30,622 | 30,176 | ||||||
Pension Obligation | 1,504 | 1,885 | ||||||
Other Liabilities | 4,656 | 4,575 | ||||||
TOTAL LIABILITIES | 1,065,698 | 996,845 | ||||||
STOCKHOLDERS DEFICIT
|
||||||||
Capital | 288,199 | 203,484 | ||||||
Accumulated Deficit | (854,775 | ) | (917,668 | ) | ||||
Accumulated Other Comprehensive Loss | (13,858 | ) | (12,702 | ) | ||||
Total Stockholders Deficit | (580,434 | ) | (726,886 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT | $ | 485,264 | $ | 269,959 |
The accompanying unaudited Notes to Condensed Combined Financial Statements are an integral part of these statements
F-82
|
|
|
||||||
For the Three Months Ended, March 31, | ||||||||
2015 | 2016 | |||||||
Revenue | $ | 75,617 | $ | 76,401 | ||||
Operating Expenses | 20,057 | 19,250 | ||||||
Selling, General and Administrative Expenses | 40,987 | 39,754 | ||||||
Transaction Costs | | 759 | ||||||
Depreciation and Amortization | 2,980 | 3,043 | ||||||
Operating Costs | 64,024 | 62,806 | ||||||
Operating Income | 11,593 | 13,595 | ||||||
Interest Income | 19 | 19 | ||||||
Interest Income on Related Party Loans | 1,049 | 238 | ||||||
Interest Expense on Related Party Loans | (3,415 | ) | (4,051 | ) | ||||
Other Income on Related Party Agreement | 551 | | ||||||
Equity in Earnings of Unconsolidated Affiliate | 117 | 89 | ||||||
Income before Provision for Income Taxes | 9,914 | 9,891 | ||||||
Provision for Income Taxes | 3,816 | 3,601 | ||||||
Net Income | $ | 6,097 | $ | 6,289 |
The accompanying unaudited Notes to Condensed Combined Financial Statements are an integral part of these statements
F-83
|
|
|
||||||
For the Three Months Ended, March 31, | ||||||||
2015 | 2016 | |||||||
Net Income | $ | 6,097 | $ | 6,289 | ||||
Other Comprehensive (Loss) Income:
|
||||||||
Foreign Currency Translation | (4,193 | ) | 1,380 | |||||
Defined Benefit Plan Income, net of taxes | (54 | ) | (224 | ) | ||||
Comprehensive Income | $ | 1,851 | $ | 7,446 |
The accompanying unaudited Notes to Condensed Combined Financial Statements are an integral part of these statements
F-84
|
|
|
||||||
For the Three Months Ended, March 31, | ||||||||
2015 | 2016 | |||||||
Cash Flows from Operating Activities
|
||||||||
Net Income | $ | 6,097 | $ | 6,289 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
|
||||||||
Depreciation and Amortization | 2,980 | 3,043 | ||||||
Provision for Doubtful Accounts and Credit Memos | 337 | 110 | ||||||
Stock-Based Compensation Expense | 264 | 186 | ||||||
Provision for Deferred Taxes | 1,180 | (565 | ) | |||||
Taxes payable by Related Parties in Consolidated Filings | 2,997 | 2,979 | ||||||
Equity in Earnings of Unconsolidated Affiliate | (117 | ) | (89 | ) | ||||
Other
|
||||||||
Changes in Operating Assets and Liabilities
|
||||||||
Accounts Receivable | (2,973 | ) | 3,898 | |||||
Due from Related Parties Current | 2,840 | 593 | ||||||
Other Assets | (1,615 | ) | (3,342 | ) | ||||
Accounts Payables and Accrued Liabilities | (6,083 | ) | (6,962 | ) | ||||
Deferred Revenue | 3,125 | 3,045 | ||||||
Other Liabilities Current | 658 | 89 | ||||||
Income Tax Receivable and Payable | (1,218 | ) | 83 | |||||
Due to Related Parties Current | 10,476 | 2,334 | ||||||
Other Operating Assets and Liabilities | (2,024 | ) | (15 | ) | ||||
Net Cash Provided by Operating Activities | 16,924 | 11,676 | ||||||
Cash Flows from Investing Activities
|
||||||||
Purchases of Property and Equipment and Computer Software | (3,246 | ) | (2,762 | ) | ||||
Net Cash used in Investing Activities | (3,246 | ) | (2,762 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Dividends to Related Parties | | (918 | ) | |||||
Capital Contribution from Related Party | | 5,888 | ||||||
Loan Repayments to Related Parties | | (7,541 | ) | |||||
Loan Repayments from Related Parties | | 1,556 | ||||||
Advances to Related Parties | (15,476 | ) | (14,122 | ) | ||||
Net Cash Used in Financing Activities | (15,476 | ) | (15,137 | ) | ||||
Effect of Exchange Rate Changes on Cash | 1,395 | 685 | ||||||
Net Decrease in Cash and Cash Equivalents | (403 | ) | (5,538 | ) | ||||
Cash and Cash Equivalents
|
||||||||
Beginning of Period | 12,089 | 12,046 | ||||||
End of Period | $ | 11,686 | $ | 6,508 |
The accompanying unaudited Notes to Condensed Combined Financial Statements are an integral part of these statements
F-85
PRN Group (PRN or the Company) does business as PR Newswire, a global leader in public relations and investor relations communications and related products and services.
The Condensed Combined Financial Statements of the Company include the operations of the PRN Group businesses that are being carved-out for divestiture which include the PRN operations of PR Newswire Europe Ltd. and subsidiaries (Benelux Ltd., Newsdesk International Ltd., PR Newswire Disclose Ltd., OIT Ltd., PR Agency Ltd. and PR Newswire Gmbh), PR Newswire Ltda., NotilogPRN Argentina SA, PR Newswire S de RL de CV, PR Newswire Argentina SA, Hors Antenne Holding SAS and its subsidiary, Hors Antenne SAS, Cyperus SA, PR Newswire Asia Ltd., PRN Business Consulting Co Ltd., PRN Middle East Ltd., PRN India, PRNnet, PRN Delaware and subsidiaries (Virtual Press Office and PRN Holdings Inc. and its subsidiary CNW Group Ltd. and subsidiaries (Health Response Ltd., CCNW Quebec Inc., DNA 13 Inc. and DNA 13 (US) Inc.)), Communities Holdings and PR Newswire Association LLC and subsidiaries (MultiVu LLC and eWatch LLC). On October 1, 2014, MultiVu LLC was merged into PR Newswire Association LLC. The PRN Group businesses are all under the common control of UBM plc.
The accompanying condensed combined carve-out financial statements reflect the assets and liabilities, operating results, and cash flows of PRN. The Condensed Combined Financial Statements include certain expenses of UBM plc, which were allocated for certain functions, including general corporate expenses related to finance, legal, information technology, human resources, shared services, insurance, employee benefits and incentives, and stock-based compensation expense. These attributed expenses have been allocated to PRN on the basis of direct usage when identifiable, and for resources indirectly used by PRN, allocations were based on relative headcount, revenue, or other methodology, to reflect estimated usage by PRN. Management considers the allocation methodology and results to be reasonable for all periods presented. However, the financial information presented in these condensed combined carve-out financial statements may not reflect the combined financial position, operating results and cash flows of PRN had PRN been a separate stand-alone entity during the period presented. Actual costs that would have been incurred if PRN had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas.
The cash and cash equivalents held by UBM plc at the corporate level are not specifically identifiable to PRN, and therefore, were not allocated for any of the periods presented. Cash and cash equivalents in the accompanying Condensed Combined Balance Sheets primarily represent cash held locally by operations included in the condensed combined carve-out financial statements. UBM plc third-party debt, and the related interest expense has not been allocated for any of the periods presented as PRN was not the legal obligor of the debt and UBM plcs borrowings were not directly attributable to these operations.
The accompanying Condensed Combined Financial Statements have been derived from the consolidated financial statements and accounting records of UBM plc. These Condensed Combined Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). These principles require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Significant estimates inherent in the preparation of the accompanying Condensed Combined Financial Statements include estimates regarding allowance for doubtful accounts and credit memos, potential outcome of uncertain tax positions, fair value of acquired assets and liabilities, fair value of equity-based compensation and pension benefit assumptions. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results could differ from those estimates. All intercompany balances and transactions between the operations of the carved-out businesses have been eliminated in the accompanying Condensed Combined Financial Statements. The income
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tax amounts in the accompanying Condensed Combined Financial Statements have been calculated based on a separate return methodology and presented as if the Companys operations were separate taxpayers in the respective jurisdictions.
The accompanying condensed combined carve-out financial statements have been prepared to assist in UBM plcs divestiture of its PRN business and to demonstrate the historical results of operations, financial position, and cash flows of the PRN business that is being carved-out for the indicated periods under UBM plc management and do not include any accounts of entities that may be legally owned by any of the PRN entities but are not being included in any potential divestiture as they are not part of the PRN business.
Cash and cash equivalents include all highly-liquid investments with original maturities of three months or less, and the carrying amounts approximate fair value.
As more fully discussed in Note 6, Related Party Transactions, the Company has historically factored substantially all of its trade accounts receivable from its U.S. businesses to a subsidiary of UBM plc. On December 31, 2015, this arrangement was terminated and the Company purchased 100% of previously factored outstanding accounts receivable.
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. For accounts receivable not subject to the factoring program as well as any accounts receivable not yet factored, the Company maintains an allowance for doubtful accounts for estimated losses that result from the failure or inability of our customers to make required payments. When determining the allowance, the Company considers the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends as well as general economic factors. Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances. Accounts receivable may be fully reserved when specific collection issues are known to exist, such as pending bankruptcy or catastrophes. Trade accounts receivable are uncollateralized and represent a large number of geographically dispersed debtors. As of March 31, 2016 there were no individual customers representing more than 10% of the Companys outstanding gross accounts receivable balance. During the quarter ended March 31, 2016 there were no customers that accounted for more than 10% of revenue. In determining sales credit allowances, the Company analyzes historical trends, customer-specific factors and current economic trends. The Company records an allowance based on this information, as appropriate.
Property and equipment is stated at cost, net of accumulated depreciation or amortization. Major renewals and improvements are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Property and equipment are depreciated using the straight-line method. Computer hardware and equipment is depreciated over a period of three to ten years. Leasehold improvements are amortized on a straight-line basis over the shorter of the term of the lease or the estimated useful life of the improvement. Buildings are depreciated over a period of 20 years.
The Company develops various computer software applications for internal use including systems which support our internal business services and processes, our financial and administrative systems and systems which we use to provide services to our customers.
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The Company expenses costs as incurred during the preliminary development stage which includes conceptual formulation and review of alternatives. Once that stage is complete, the application development stage, which includes design, coding and testing, begins. Direct internal and external costs incurred during this stage are capitalized. Capitalization of costs ceases when the software is ready for its intended use and all substantial testing is completed. Upgrades and enhancements which provide added functionality are accounted for in the same manner. Maintenance costs incurred solely to extend the life of the software are expensed as incurred.
Computer software is amortized on a straight-line basis over a useful life of 3 to 5 years. Periodically, the Company reassesses the estimated useful lives of our computer software considering its overall technology strategy, the effects of obsolescence, technology, competition and other economic factors on the useful life of these assets.
The Company assesses impairment of long-lived assets pursuant with ASC 360 Property, Plant and Equipment. This includes determining if certain triggering events have occurred that could affect the value of an asset. The Company has not recorded any impairment charges related to long-lived assets.
Goodwill represents the excess of consideration paid over the fair value of net assets acquired in business combinations. Goodwill and other indefinite-lived intangible assets are not amortized but are tested at least annually for impairment. The Company completes its goodwill impairment testing annually at year end. Intangible assets that have finite useful lives are amortized over their useful lives on a straight-line basis, ranging from three to ten years. Amortizable intangible assets are tested for impairment utilizing an income approach based on undiscounted cash flows upon the occurrence of certain triggering events and, if impaired, are written down to fair value. The Company did not identify any such triggering events during the three-months ended March 31, 2016.
The Companys investment in an unconsolidated affiliate over which the Company has significant influence is accounted for under the equity method of accounting. The investment is carried at the cost of acquisition plus the Companys equity in undistributed income of the unconsolidated affiliate. The Company regularly reviews its equity method investment for impairment. The Company evaluates information such as budgets, business plans and financial statements of its equity method investee in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include, among others, recurring operating losses. See Note 5, Investment in Unconsolidated Affiliate.
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 | Quoted prices in active markets for identical assets or liabilities. |
Level 2 | Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
Level 3 | Inputs that are generally unobservable and typically reflect managements estimate of assumptions that market participants would use in pricing the asset or liability. |
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The carrying amounts for cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term maturity. The carrying amount of certain pension assets are recorded as Level 2 assets.
Assets and liabilities of foreign affiliates with a functional currency other than the U.S. Dollar are translated into U.S. Dollars using year-end exchange rates, while results of operations are translated at average exchange rates for the year. The Companys foreign affiliates use the local currency as the functional currency. Foreign currency translation gains and losses are included as a component of Accumulated Other Comprehensive Income in the Condensed Combined Balance Sheets. The Company does not hedge foreign currency translation risk in the net assets and income reported from these sources.
Revenue is recognized when persuasive evidence of an arrangement exists, the contract fee is fixed or determinable, delivery or performance has occurred and collectability is reasonably assured. If at the outset of an arrangement, the Company determines that collectability is not reasonably assured, revenue is deferred until the earlier of when collectability becomes probable or the receipt of payment. The Company reports revenue net of sales and other taxes collected from our customers.
The Companys distribution services are sold either through fixed-term contracts whereby customers are allotted a predetermined number of service units or through contracts where customers order units as needed. For fixed-term contracts, revenue is recognized on a straight-line basis over the term of the contract. For contracts where customers order units as needed, revenue is recognized upon fulfillment of the customer order.
Certain of the Companys services such as broadcast and webcast production, translation services and EDGAR filing services require the Company to make a specific singular performance. For these services, revenue is recognized when the specific performance is completed. The Companys XBRL filing services are sold through contracts where the Company is obligated to make a certain number of filings on behalf of the customer with the U.S. Securities and Exchange Commission (the SEC). For this service, revenue is recognized as each filing is made by the Company.
Certain of the Companys services such as its workflow platform and its hosted microsites are sold through fixed-term contracts where the Company is obligated to make the services available to the customer over the contract term. Customers can access these services without limitation over the contact term. For these services, revenue is recognized on a straight-line basis over the contract term.
Deferred revenue consists of amounts billed in excess of revenue recognized on sales. Deferred revenue is included in current liabilities in the Condensed Combined Balance Sheets and is subsequently recognized as revenue in accordance with the Companys revenue recognition policies.
Certain of the Companys services are sold as multiple-element arrangements. Revenues subject to these arrangements represent less than 5% of total revenues for the quarter ended March 31, 2016. The Company evaluates each deliverable in an arrangement to determine whether it represents a separate unit of accounting. Most product and service deliverables qualify as separate units of accounting and can be sold stand-alone or in various combinations. A deliverable constitutes a separate unit of accounting when it has stand-alone value and there are no customer-negotiated refunds or return rights for the delivered items. If the arrangement includes a customer-negotiated refund or return right relative to the delivered items, and the delivery and performance of the undelivered item is considered probable and substantially in our control, the delivered item constitutes a separate unit of accounting. If the deliverable or a group of deliverables meet the separation
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criteria, the total arrangement consideration is allocated to each unit of accounting based on its relative selling price. The amount of arrangement consideration that is allocated to a delivered unit of accounting is limited to the amount that is not contingent upon the delivery of another unit of accounting.
The Company determines the selling price for each deliverable using vendor-specific objective evidence (VSOE), if it exists, third-party evidence (TPE) if VSOE does not exist, or best estimated selling price (BESP) if neither VSOE nor TPE exist. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element. The Company determines VSOE of a deliverable by monitoring the price at which the Company sells the deliverable on a stand-alone basis to a third party. In certain instances, the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements due to infrequent selling each element separately, not pricing products or services within a set range, or only having a limited sales history. Where the Company is unable to establish VSOE, the Company may use the price at which the Company or a third party sells a similar product to similarly situated customers on a stand-alone basis. When the Company is not able to establish selling prices by using VSOE or TPE, the Company establishes the BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the solution were sold on a stand-alone basis.
Operating expenses include the costs incurred in connection with the fulfillment of the Companys products and services and includes compensation and benefits for operational staff and costs of third-party service providers.
Transaction costs include professional fees incurred in connection with the planned divestiture of PRN.
For operating leases, minimum lease payments, including minimum scheduled rent increases, are recognized as rent expense on a straight-line basis over the applicable lease terms. The term used for straight-line rent expense is calculated initially from the date the Company obtains possession of the leased premises through the expected lease termination date.
Employees of CNW Group, Ltd. (CNW) participate in a defined benefit pension plan whereby pension expense is determined based on a number of actuarial assumptions, which are generally reviewed and determined on an annual basis. These assumptions include discount rates, expected rate of return on plan assets, rate of salary increase, mortality rates and other factors. The funded status of the plan is recognized on the Condensed Combined Balance Sheets. Prior service costs or credits and actuarial gains and losses beyond a 10% corridor are recognized in earnings based on the estimated future service period of the participants. The measurement date for the defined benefit plan for CNW employees is December 31.
Company employees participate in the UBM 2008 Executive Share Option Scheme under which they are granted stock options to purchase UBM plc stock and the UBM 2010 Executive Retention Plan, as amended in 2014, under which they are granted UBM plc restricted stock.
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Under the provisions of ASC 718 Compensation-Stock Compensation, the Company recognizes share based compensation by estimating the fair value of each stock-based award at the date of grant. The stock-based compensation expense is recognized over the awards vesting period. In addition, the Company estimates future forfeitures in calculating the stock-based compensation expense as opposed to only recognizing these forfeitures and the corresponding reductions in expense as they occur.
For stock option awards, the fair value is estimated on the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires Company management to make assumptions about UBM plc stock price volatility, dividend yield, expected term of the stock option and risk-free interest rates. The expected stock price volatility assumption is derived from the historical volatility of UBM plc common stock. The expected dividend yield assumption is determined by dividing the anticipated annual dividend payment by the stock price on the date of grant. The expected term assumption is derived using a methodology that combines historical exercise data with hypothetical exercise data for unexercised stock options. The risk-free interest rate assumption corresponds to the expected term assumption of the stock option and is based on the UK Gilts yield in effect at the time of grant.
For restricted stock awards, which vest solely on service, the fair value is estimated by using the closing price of UBM plc common stock on the date of grant.
The Company provides for income taxes and the related accounts under the asset and liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect during the year in which the basis differences reverse. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized, which will be assessed on an on-going basis. In addition, income tax rules and regulations are subject to interpretation and the application of those rules and regulations require judgment by the Company and may be challenged by the taxation authorities. The Company follows ASC 740 Income Taxes , which requires the use of a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. Only tax positions that meet the more likely than not recognition threshold are recognized.
Accumulated other comprehensive income includes foreign currency translation and amortization of amounts related to defined benefit plans.
In May 2014, the Financial Accounting Standards Board (FASB) ASU) No. 2014-09, Revenue from Contracts with Customers . ASU 2014-09 will eliminate transaction and industry-specific revenue recognition guidance under current GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year to interim and annual reporting periods beginning after December 15, 2018. Entities can transition to the standard using either a full retrospective approach or a modified retrospective approach as of the date of adoption. Presently, the Company is assessing what effect the adoption of ASU 2014-09 will have on its Condensed Combined Financial Statements and accompanying notes.
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In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements Going Concern (ASU 2014-15). ASU 2014-15 requires that management evaluate at each annual and interim reporting period whether there is a substantial doubt about an entitys ability to continue as a going concern within one year of the date that the financial statements are issued. ASU 2014-15 will be effective for fiscal years and interim periods beginning after December 15, 2016 and early application is permitted. The Company does not expect that the application of ASU 2014-15 will have an impact on the Condensed Combined Financial Statements.
In January 2015, the FASB issued Accounting Standards Update 2015-01, Income Statement Extraordinary and Unusual Items ( Subtopic 225-20 ). The objective of this update is to simplify income statement presentation requirements by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will adopt this guidance effective January 1, 2016 and does not believe that it will have a material impact on the Companys Condensed Combined Financial Statements.
In November 2015, the FASB issued Accounting Standards Update 2015-17, Income Taxes Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. The ASU 2015-17 is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities. The Company will adopt this guidance effective January 1, 2018.
In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842). ASU 2016-02 supersedes the existing guidance for lease accounting, Leases (Topic 840) . ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
The Company evaluated subsequent events through May 10, 2017, the date the financial statements were available to be issued. All events that had a material impact on the Companys Condensed Combined Financial Statements are disclosed in the notes to the Condensed Combined Financial Statements.
The Company was acquired by Cision on June 16, 2016. In July 2016, the Company sold the net assets of its Agility PR workflow business for approximately $4.3 million. On March 10, 2017, Cision sold substantially all of the assets of its Vintage corporate filings business for approximately $26.0 million and received approximately $23.7 million in cash after escrow and expenses.
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Goodwill as of March 31, 2016 and December 31, 2015 was $123,957 and $123,578, respectively. Changes in goodwill were entirely due to changes in foreign currency.
The following is a summary of intangibles, at cost less accumulated amortization:
|
|
|
||||||
As of
March 31, 2016 |
As of
December 31, 2015 |
|||||||
Intangible Assets
|
||||||||
Brands | $ | 9,243 | $ | 9,183 | ||||
Customer Lists | 4,558 | 4,444 | ||||||
Other | 2,129 | 2,061 | ||||||
15,930 | 15,688 | |||||||
Accumulated amortization
|
||||||||
Brands | (7,697 | ) | (7,756 | ) | ||||
Customer Lists | (4,558 | ) | (4,441 | ) | ||||
Other | (2,046 | ) | (1,978 | ) | ||||
(14,301 | ) | (14,175 | ) | |||||
Intangible Assets, net | $ | 1,629 | $ | 1,513 |
Intangible amortization expense for the quarters ended March 31, 2016 and March 31, 2015 were $216 and $261, respectively. The estimated annual aggregate amortization expense for the remainder of 2016 is expected to be $664 and for the next four succeeding fiscal years is expected to be $534, $207, $206, and $18, respectively.
The Companys investment in unconsolidated affiliated is accounted for by the equity method and consists of a 50% interest in a joint venture with ANP Pers Support B.V in ANP Pers Support v.o.f. (ANPps).
The Company had revenues of $264 and $274 for the quarters ended March 31, 2016 and March 31, 2015, respectively, for billings made to ANPps for international distribution services provided to ANPps. The Company incurred operating expense of $39 and $33 for the quarters ended March 31, 2016 and March 31, 2015, respectively, for billings from ANPps for distribution services provided by ANPps to the Company for the countries in which ANPps operates.
The Company has recorded taxes payable by UBM in consolidated tax fillings as deemed capital contributions of $2,979 for the quarter ended March 31, 2016 and $8,301 for the year ended December 31, 2015, respectively.
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The following table displays the change in the components of accumulated other comprehensive income (loss), net of tax:
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|||||||||
Cumulative
Translation Adjustment |
Defined Benefit
Plan Adjustment |
Total
Accumulated Other Comprehensive Income (Loss) |
||||||||||
Balance at January 1, 2016 | $ | (10,806 | ) | $ | (3,052 | ) | $ | (13,858 | ) | |||
Foreign Currency Translation | 1,380 | | 1,380 | |||||||||
Defined Benefit Plan Adjustment | | (224 | ) | (224 | ) | |||||||
Balance at March 31, 2016 | $ | (9,426 | ) | $ | (3,276 | ) | $ | (12,702 | ) |
Stock-based compensation expense for the quarters ended March 31, 2016 and March 31, 2015 were $186 and $264, respectively.
The Company has leases for office space in the U.S., Canada, Brazil, Great Britain, France, Sweden, Dubai, China, Hong Kong, India, Taiwan, Malaysia and Singapore which expire between 2016 and 2027. The following is a schedule of the future minimum rental payments under these leases:
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Nine months
ended December 31, |
||||
2016 | $ | 6,350 |
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Year ended
December 31, |
||||
2017 | $ | 6,873 | ||
2018 | $ | 5,217 | ||
2019 | $ | 4,966 | ||
2020 | $ | 4,905 | ||
Thereafter | $ | 13,781 |
Rent expense for the quarters ended March 31, 2016 and March 31, 2015 were $2,874 and $2,508, respectively.
The Company has unconditional purchase obligations relating to certain vendors that provide software and technology oriented services ranging from less than one year to five years. The following is a schedule, by year, of the future minimum payments under these obligations:
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Nine months
ended December 31, |
||||
2016 | $ | 6,892 |
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Year ended
December 31, |
||||
2017 | $ | 2,524 | ||
2018 | $ | 414 | ||
2019 | $ | 27 | ||
2020 | $ | 13 | ||
Thereafter | $ | |
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The Company is named in various claims and legal actions in the normal course of its activities.
The Company believes that the outcome of such matters is not expected to have a material adverse effect on the Companys results of operations, financial position or cash flows.
In June 2014, the SEC commenced an inquiry concerning certain aspects of the Companys business that relate to the distribution of issuer press releases. The Company has been fully cooperative with the staff of the SEC Division of Enforcement in this ongoing inquiry. Although the Company cannot predict what the outcome of the inquiry will be, it may result in remedies which could include modifications to the Companys process for disseminating issuer press releases. Based on currently available information, the Company does not expect that the inquiry, or any resolution thereof, will have a material adverse effect on the Companys results of operations, financial position or cash flows.
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The Board of Directors of UBM plc:
We have audited the accompanying combined financial statements of the PRN Group, which comprise the combined balance sheets as of December 31, 2015 and 2014, and the related combined statements of operations, comprehensive income, stockholders deficit and cash flows for the years then ended, and the related notes to the combined financial statements.
Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of the PRN Group at December 31, 2015 and 2014, and the combined results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Iselin, NJ
April 12, 2016
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As of December 31, | ||||||||
2015 | 2014 | |||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and Cash Equivalents | $ | 12,046 | $ | 12,089 | ||||
Accounts Receivable, net of allowance of $4,786 and $3,928 at December 31, 2015 and December 31, 2014, respectively | 49,533 | 34,637 | ||||||
Due from Related Parties | 78,326 | 449,218 | ||||||
Loans to Related Parties | 166,804 | 176,115 | ||||||
Income Tax Receivable | 1,666 | 2,082 | ||||||
Deferred Income Taxes | 6,116 | 6,338 | ||||||
Other Receivables | 1,021 | 1,892 | ||||||
Prepaids and Other Current Assets | 4,772 | 3,250 | ||||||
Total Current Assets | 320,284 | 685,621 | ||||||
Property and Equipment, net of accumulated depreciation of $35,204 and $33,091 at December 31, 2015 and December 31, 2014, respectively | 12,481 | 10,587 | ||||||
Computer Software, net of accumulated amortization of $28,760 and $22,837 at December 31, 2015 and December 31, 2014, respectively | 15,244 | 13,789 | ||||||
Intangibles, net | 1,513 | 2,775 | ||||||
Goodwill | 123,578 | 126,288 | ||||||
Investment in Unconsolidated Affliate | 5,349 | 5,550 | ||||||
Deferred Income Taxes | 1,729 | 2,218 | ||||||
Other Assets | 5,086 | 6,142 | ||||||
TOTAL ASSETS | $ | 485,264 | $ | 852,970 | ||||
LIABILITIES
|
||||||||
Current Liabilities
|
||||||||
Accounts Payable and Accrued Liabilities | $ | 48,811 | $ | 44,732 | ||||
Deferred Revenue | 34,535 | 31,710 | ||||||
Due to Related Parties | 256,124 | 237,800 | ||||||
Loans from Related Parties | 688,490 | 677,437 | ||||||
Income Taxes Payable | 518 | 421 | ||||||
Other Current Liabilities | 438 | 534 | ||||||
Total Current Liabilities | 1,028,916 | 992,634 | ||||||
Loan from Related Party | | 25,982 | ||||||
Deferred Income Taxes | 30,622 | 28,213 | ||||||
Pension Obligation | 1,504 | 2,504 | ||||||
Other Liabilities | 4,656 | 5,513 | ||||||
TOTAL LIABILITIES | 1,065,698 | 1,054,846 | ||||||
Commitments and Contingencies (Note 13)
|
||||||||
STOCKHOLDERS DEFICIT
|
||||||||
Capital | 288,199 | 278,633 | ||||||
Accumulated Deficit | (854,775 | ) | (475,519 | ) | ||||
Accumulated Other Comprehensive Loss | (13,858 | ) | (4,990 | ) | ||||
Total Stockholders Deficit | (580,434 | ) | (201,876 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT | $ | 485,264 | $ | 852,970 |
The accompanying notes are an integral part of the combined financial statements.
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For the Years
Ended December 31, |
||||||||
2015 | 2014 | |||||||
Revenue | $ | 313,662 | $ | 322,693 | ||||
Operating Expenses | 84,297 | 85,391 | ||||||
Selling, General and Administrative Expenses | 160,890 | 165,119 | ||||||
Loss on Purchase of Previously Factored Accounts Receivable | 2,307 | | ||||||
Transaction Costs | 5,782 | | ||||||
Depreciation and Amortization | 11,399 | 9,861 | ||||||
Operating Costs | 264,675 | 260,371 | ||||||
Operating Income | 48,987 | 62,322 | ||||||
Interest Income | 150 | 155 | ||||||
Interest Income on Related Party Loans | 4,271 | 4,102 | ||||||
Interest Expense on Related Party Loans | (15,137 | ) | (13,941 | ) | ||||
Other Income on Related Party Agreement | 2,551 | 2,000 | ||||||
Equity in Earnings of Unconsolidated Affiliate | 419 | 470 | ||||||
Income before Provision for Income Taxes | 41,241 | 55,108 | ||||||
Provision for Income Taxes | 15,875 | 20,789 | ||||||
Net Income | $ | 25,366 | $ | 34,319 |
The accompanying notes are an integral part of the combined financial statements.
F-98
|
|
|
||||||
For the Years
Ended December 31, |
||||||||
2015 | 2014 | |||||||
Net Income | $ | 25,366 | $ | 34,319 | ||||
Other Comprehensive (Loss) Income:
|
||||||||
Foreign Currency Translation | (9,348 | ) | (9,361 | ) | ||||
Defined Benefit Plan Income (Expense), net of taxes of $170 and $28 for the years ended December 31, 2015 and 2014, respectively | 480 | (45 | ) | |||||
Comprehensive Income | $ | 16,498 | $ | 24,913 |
The accompanying notes are an integral part of the combined financial statements.
F-99
|
|
|
||||||
For the Years Ended
December 31, |
||||||||
2015 | 2014 | |||||||
Cash Flows from Operating Activities
|
||||||||
Net Income | $ | 25,366 | $ | 34,319 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
|
||||||||
Depreciation and Amortization | 11,399 | 9,861 | ||||||
Provision for Doubtful Accounts and Credit Memos | 2,474 | 1,338 | ||||||
Stock-Based Compensation Expense | 1,265 | 1,279 | ||||||
Provision for Deferred Taxes | 3,233 | 2,130 | ||||||
Taxes payable by Related Parties in Consolidated Filings | 8,301 | 15,349 | ||||||
Loss on Purchase of Previously Factored Accounts Receivable | 2,307 | | ||||||
Equity in Earnings of Unconsolidated Affiliate | (419 | ) | (470 | ) | ||||
Distribution of Earnings from Unconsolidated Affiliate | 421 | 496 | ||||||
Other | | 638 | ||||||
Changes in Operating Assets and Liabilities
|
||||||||
Accounts Receivable | (6,527 | ) | (1,058 | ) | ||||
Due from Related Parties Current | 5,586 | (3,462 | ) | |||||
Other Assets | (590 | ) | 481 | |||||
Accounts Payables and Accrued Liabilities | (205 | ) | 547 | |||||
Deferred Revenue | 3,554 | 4,027 | ||||||
Other Liabilities Current | (23 | ) | 280 | |||||
Income Tax Receivable and Payable | 269 | (1,581 | ) | |||||
Due to Related Parties Current | (9,463 | ) | (14,324 | ) | ||||
Other Operating Assets and Liabilities | (598 | ) | 1,744 | |||||
Net Cash Provided by Operating Activities | 46,350 | 51,594 | ||||||
Cash Flows from Investing Activities
|
||||||||
Purchases of Property and Equipment and Computer Software | (14,380 | ) | (10,981 | ) | ||||
Net Cash used in Investing Activities | (14,380 | ) | (10,981 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Dividends to Related Parties | (1,932 | ) | (911 | ) | ||||
Loans from Related Parties | 928 | 500 | ||||||
Loan Repayments to Related Parties | (9,450 | ) | (1,037 | ) | ||||
Loans to Related Parties | (6,207 | ) | (5,896 | ) | ||||
Loan Repayments from Related Parties | 9,330 | 1,348 | ||||||
Advances to Related Parties | (23,822 | ) | (31,792 | ) | ||||
Net Cash Used in Financing Activities | (31,153 | ) | (37,788 | ) | ||||
Effect of Exchange Rate Changes on Cash | (860 | ) | (805 | ) | ||||
Net (Decrease) Increase in Cash and Cash Equivalents | (43 | ) | 2,020 | |||||
Cash and Cash Equivalents
|
||||||||
Beginning of Year | 12,089 | 10,069 | ||||||
End of Year | $ | 12,046 | $ | 12,089 | ||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash Paid for Interest | $ | 12,312 | $ | 13,679 | ||||
Cash Paid for Income Taxes | $ | 3,804 | $ | 5,174 |
The accompanying notes are an integral part of the combined financial statements.
F-100
|
|
|
|
|
||||||||||||
Capital |
Accumulated
Deficit |
Accumulated
Other Comprehensive Income (Loss) |
Total
Stockholders' Deficit |
|||||||||||||
Balance as of January 1, 2014 | $ | 262,005 | $ | (508,927 | ) | $ | 4,416 | $ | (242,506 | ) | ||||||
Net Income | | 34,319 | | 34,319 | ||||||||||||
Stock-Based Compensation | 1,279 | | | 1,279 | ||||||||||||
Defined Benefit Plan Adjustment | | | (45 | ) | (45 | ) | ||||||||||
Foreign Currency Translation | | | (9,361 | ) | (9,361 | ) | ||||||||||
Taxes payable by Related Parties in Consolidated Filings | 15,349 | | | 15,349 | ||||||||||||
Dividend to Related Party | | (911 | ) | | (911 | ) | ||||||||||
Balance as of December 31, 2014 | 278,633 | (475,519 | ) | (4,990 | ) | (201,876 | ) | |||||||||
Net Income | | 25,366 | | 25,366 | ||||||||||||
Stock-Based Compensation | 1,265 | | | 1,265 | ||||||||||||
Defined Benefit Plan Adjustment | | | 480 | 480 | ||||||||||||
Foreign Currency Translation | | | (9,348 | ) | (9,348 | ) | ||||||||||
Taxes payable by Related Parties in Consolidated Filings | 8,301 | | | 8,301 | ||||||||||||
Distribution of Due from Related Party Receivable to Related Parties | | (401,772 | ) | | (401,772 | ) | ||||||||||
Dividend to Related Party | | (2,850 | ) | | (2,850 | ) | ||||||||||
Balance as of December 31, 2015 | $ | 288,199 | $ | (854,775 | ) | $ | (13,858 | ) | $ | (580,434 | ) |
The accompanying notes are an integral part of the combined financial statements.
F-101
PRN Group (PRN or the Company) does business as PR Newswire, a global leader in public relations and investor relations communications and related products and services.
The Combined Financial Statements of the Company include the operations of the PRN Group businesses that are being carved-out for divestiture which include the PRN operations of PR Newswire Europe Ltd. and subsidiaries (Benelux Ltd., Newsdesk International Ltd., PR Newswire Disclose Ltd., OIT Ltd., PR Agency Ltd. and PR Newswire Gmbh), PR Newswire Ltda., NotilogPRN Argentina SA, PR Newswire S de RL de CV, PR Newswire Argentina SA, Hors Antenne Holding SAS and its subsidiary, Hors Antenne SAS, Cyperus SA, PR Newswire Asia Ltd., PRN Business Consulting Co Ltd., PRN Middle East Ltd., PRN India, PRNnet, PRN Delaware and subsidiaries (Virtual Press Office and PRN Holdings Inc. and its subsidiary CNW Group Ltd. and subsidiaries (Health Response Ltd., CCNW Quebec Inc., DNA 13 Inc. and DNA 13 (US) Inc.)), Communities Holdings and PR Newswire Association LLC and subsidiaries (MultiVu LLC and eWatch LLC). On October 1, 2014, MultiVu LLC was merged into PR Newswire Association LLC. The PRN Group businesses are all under the common control of UBM plc.
The accompanying combined carve-out financial statements reflect the assets and liabilities, operating results, and cash flows of PRN. The Combined Financial Statements include certain expenses of UBM plc, which were allocated for certain functions, including general corporate expenses related to finance, legal, information technology, human resources, shared services, insurance, employee benefits and incentives, and stock-based compensation expense. These attributed expenses have been allocated to PRN on the basis of direct usage when identifiable, and for resources indirectly used by PRN, allocations were based on relative headcount, revenue, or other methodology, to reflect estimated usage by PRN. Management considers the allocation methodology and results to be reasonable for all periods presented. However, the financial information presented in these combined carve-out financial statements may not reflect the combined financial position, operating results and cash flows of PRN had PRN been a separate stand-alone entity during the period presented. Actual costs that would have been incurred if PRN had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas.
The cash and cash equivalents held by UBM plc at the corporate level are not specifically identifiable to PRN, and therefore, were not allocated for any of the periods presented. Cash and cash equivalents in the accompanying Combined Balance Sheets primarily represent cash held locally by operations included in the combined carve-out financial statements. UBM plc third-party debt, and the related interest expense has not been allocated for any of the periods presented as PRN was not the legal obligor of the debt and UBM plcs borrowings were not directly attributable to these operations.
The accompanying Combined Financial Statements have been derived from the consolidated financial statements and accounting records of UBM plc. These Combined Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). These principles require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Significant estimates inherent in the preparation of the accompanying Combined Financial Statements include estimates regarding allowance for doubtful accounts and credit memos, potential outcome of uncertain tax positions, fair value of acquired assets and liabilities, fair value of equity-based compensation and pension benefit assumptions. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results could differ from those estimates. All intercompany balances and transactions between the operations of the carved-out businesses have been eliminated in the accompanying Combined Financial Statements. The income tax amounts in the accompanying Combined Financial Statements have been calculated based on a separate return methodology and presented as if the Companys operations were separate taxpayers in the respective jurisdictions.
F-102
The accompanying combined carve-out financial statements have been prepared to assist in UBM plcs divestiture of its PRN business and to demonstrate the historical results of operations, financial position, and cash flows of the PRN business that is being carved-out for the indicated periods under UBM plc management and do not include any accounts of entities that may be legally owned by any of the PRN entities but are not being included in any potential divestiture as they are not part of the PRN business.
Cash and cash equivalents include all highly-liquid investments with original maturities of three months or less, and the carrying amounts approximate fair value.
As more fully discussed in Note 8, Related Party Transactions, the Company has historically factored substantially all of its trade accounts receivable from its U.S. businesses to a subsidiary of UBM plc. On December 31, 2015, this arrangement was terminated and the Company purchased 100% of previously factored outstanding accounts receivable.
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. For accounts receivable not subject to the factoring program as well as any accounts receivable not yet factored, the Company maintains an allowance for doubtful accounts for estimated losses that result from the failure or inability of our customers to make required payments. When determining the allowance, the Company considers the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends as well as general economic factors. Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances. Accounts receivable may be fully reserved when specific collection issues are known to exist, such as pending bankruptcy or catastrophes. Trade accounts receivable are uncollateralized and represent a large number of geographically dispersed debtors. As of December 31, 2015 and December 31, 2014, there were no individual customers representing more than 10% of the Companys outstanding gross accounts receivable balance. During the years ended December 31, 2015 and December 31, 2014, there were no customers that accounted for more than 10% of revenue. In determining sales credit allowances, the Company analyzes historical trends, customer-specific factors and current economic trends. The Company records an allowance based on this information, as appropriate.
Property and equipment is stated at cost, net of accumulated depreciation or amortization. Major renewals and improvements are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Property and equipment are depreciated using the straight-line method. Computer hardware and equipment is depreciated over a period of three to ten years. Leasehold improvements are amortized on a straight-line basis over the shorter of the term of the lease or the estimated useful life of the improvement. Buildings are depreciated over a period of 20 years.
The Company develops various computer software applications for internal use including systems which support our internal business services and processes, our financial and administrative systems and systems which we use to provide services to our customers.
The Company expenses costs as incurred during the preliminary development stage which includes conceptual formulation and review of alternatives. Once that stage is complete, the application development stage, which
F-103
includes design, coding and testing, begins. Direct internal and external costs incurred during this stage are capitalized. Capitalization of costs ceases when the software is ready for its intended use and all substantial testing is completed. Upgrades and enhancements which provide added functionality are accounted for in the same manner. Maintenance costs incurred solely to extend the life of the software are expensed as incurred.
Computer software is amortized on a straight-line basis over a useful life of 3 to 5 years. Periodically, the Company reassesses the estimated useful lives of our computer software considering its overall technology strategy, the effects of obsolescence, technology, competition and other economic factors on the useful life of these assets.
The Company assesses impairment of long-lived assets pursuant with ASC 360 Property, Plant and Equipment. This includes determining if certain triggering events have occurred that could affect the value of an asset. The Company has not recorded any impairment charges related to long-lived assets.
Goodwill represents the excess of consideration paid over the fair value of net assets acquired in business combinations. Goodwill and other indefinite-lived intangible assets are not amortized but are tested at least annually for impairment. The Company has completed its annual goodwill impairment testing for 2015 and 2014, which did not result in any impairment. Intangible assets that have finite useful lives are amortized over their useful lives on a straight-line basis, ranging from three to ten years. Amortizable intangible assets are tested for impairment utilizing an income approach based on undiscounted cash flows upon the occurrence of certain triggering events and, if impaired, are written down to fair value. The Company did not identify any such triggering events during 2015 or 2014.
The Companys investment in an unconsolidated affiliate over which the Company has significant influence is accounted for under the equity method of accounting. The investment is carried at the cost of acquisition plus the Companys equity in undistributed income of the unconsolidated affiliate. The Company regularly reviews its equity method investment for impairment. The Company evaluates information such as budgets, business plans and financial statements of its equity method investee in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include, among others, recurring operating losses. See Note 7, Investment in Unconsolidated Affiliate.
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 | Quoted prices in active markets for identical assets or liabilities. |
Level 2 | Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
Level 3 | Inputs that are generally unobservable and typically reflect managements estimate of assumptions that market participants would use in pricing the asset or liability. |
The carrying amounts for cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term maturity. The carrying amount of certain pension assets are recorded as Level 2 assets (see Note 10).
F-104
Assets and liabilities of foreign affiliates with a functional currency other than the U.S. Dollar are translated into U.S. Dollars using year-end exchange rates, while results of operations are translated at average exchange rates for the year. The Companys foreign affiliates use the local currency as the functional currency. Foreign currency translation gains and losses are included as a component of Accumulated Other Comprehensive Income in the Combined Balance Sheets. The Company does not hedge foreign currency translation risk in the net assets and income reported from these sources.
Revenue is recognized when persuasive evidence of an arrangement exists, the contract fee is fixed or determinable, delivery or performance has occurred and collectability is reasonably assured. If at the outset of an arrangement, the Company determines that collectability is not reasonably assured, revenue is deferred until the earlier of when collectability becomes probable or the receipt of payment. The Company reports revenue net of sales and other taxes collected from our customers.
The Companys distribution services are sold either through fixed-term contracts whereby customers are allotted a predetermined number of service units or through contracts where customers order units as needed. For fixed-term contracts, revenue is recognized on a straight-line basis over the term of the contract. For contracts where customers order units as needed, revenue is recognized upon fulfillment of the customer order.
Certain of the Companys services such as broadcast and webcast production, translation services and EDGAR filing services require the Company to make a specific singular performance. For these services, revenue is recognized when the specific performance is completed.
The Companys XBRL filing services are sold through contracts where the Company is obligated to make a certain number of filings on behalf of the customer with the U.S. Securities and Exchange Commission (the SEC). For this service, revenue is recognized as each filing is made by the Company.
Certain of the Companys services such as its workflow platform and its hosted microsites are sold through fixed-term contracts where the Company is obligated to make the services available to the customer over the contract term. Customers can access these services without limitation over the contact term. For these services, revenue is recognized on a straight-line basis over the contract term.
Deferred revenue consists of amounts billed in excess of revenue recognized on sales. Deferred revenue is included in current liabilities in the Combined Balance Sheets and is subsequently recognized as revenue in accordance with the Companys revenue recognition policies.
Certain of the Companys services are sold as multiple-element arrangements. Revenues subject to these arrangements represent less than 5% of total revenues for the years ended December 31, 2015 and December 31, 2014, respectively. The Company evaluates each deliverable in an arrangement to determine whether it represents a separate unit of accounting. Most product and service deliverables qualify as separate units of accounting and can be sold stand-alone or in various combinations. A deliverable constitutes a separate unit of accounting when it has stand-alone value and there are no customer-negotiated refunds or return rights for the delivered items. If the arrangement includes a customer-negotiated refund or return right relative to the delivered items, and the delivery and performance of the undelivered item is considered probable and substantially in our control, the delivered item constitutes a separate unit of accounting. If the deliverable or a group of deliverables meet the separation criteria, the total arrangement consideration is allocated to each unit of accounting based on its relative selling price. The amount of arrangement consideration that is allocated to a delivered unit of accounting is limited to the amount that is not contingent upon the delivery of another unit of accounting.
F-105
The Company determines the selling price for each deliverable using vendor-specific objective evidence (VSOE), if it exists, third-party evidence (TPE) if VSOE does not exist, or best estimated selling price (BESP) if neither VSOE nor TPE exist. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element. The Company determines VSOE of a deliverable by monitoring the price at which the Company sells the deliverable on a stand-alone basis to a third party. In certain instances, the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements due to infrequent selling each element separately, not pricing products or services within a set range, or only having a limited sales history. Where the Company is unable to establish VSOE, the Company may use the price at which the Company or a third party sells a similar product to similarly situated customers on a stand-alone basis. When the Company is not able to establish selling prices by using VSOE or TPE, the Company establishes the BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the solution were sold on a stand-alone basis.
Operating expenses include the costs incurred in connection with the fulfillment of the Companys products and services and includes compensation and benefits for operational staff and costs of third-party service providers.
Transaction costs include professional fees incurred in connection with the planned divestiture of PRN.
For operating leases, minimum lease payments, including minimum scheduled rent increases, are recognized as rent expense on a straight-line basis over the applicable lease terms. The term used for straight-line rent expense is calculated initially from the date the Company obtains possession of the leased premises through the expected lease termination date.
Employees of CNW Group, Ltd. (CNW) participate in a defined benefit pension plan whereby pension expense is determined based on a number of actuarial assumptions, which are generally reviewed and determined on an annual basis. These assumptions include discount rates, expected rate of return on plan assets, rate of salary increase, mortality rates and other factors. The funded status of the plan is recognized on the Combined Balance Sheets. Prior service costs or credits and actuarial gains and losses beyond a 10% corridor are recognized in earnings based on the estimated future service period of the participants. The measurement date for the defined benefit plan for CNW employees is December 31.
Company employees participate in the UBM 2008 Executive Share Option Scheme under which they are granted stock options to purchase UBM plc stock and the UBM 2010 Executive Retention Plan, as amended in 2014, under which they are granted UBM plc restricted stock.
Under the provisions of ASC 718 Compensation-Stock Compensation, the Company recognizes share based compensation by estimating the fair value of each stock-based award at the date of grant. The stock-based compensation expense is recognized over the awards vesting period. In addition, the Company estimates future forfeitures in calculating the stock-based compensation expense as opposed to only recognizing these forfeitures and the corresponding reductions in expense as they occur.
For stock option awards, the fair value is estimated on the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires Company management to make
F-106
assumptions about UBM plc stock price volatility, dividend yield, expected term of the stock option and risk-free interest rates. The expected stock price volatility assumption is derived from the historical volatility of UBM plc common stock. The expected dividend yield assumption is determined by dividing the anticipated annual dividend payment by the stock price on the date of grant. The expected term assumption is derived using a methodology that combines historical exercise data with hypothetical exercise data for unexercised stock options. The risk-free interest rate assumption corresponds to the expected term assumption of the stock option and is based on the UK Gilts yield in effect at the time of grant.
For restricted stock awards, which vest solely on service, the fair value is estimated by using the closing price of UBM plc common stock on the date of grant.
Stock-based compensation is described more fully in Note 11, Stock-Based Compensation.
The Company provides for income taxes and the related accounts under the asset and liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect during the year in which the basis differences reverse. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized, which will be assessed on an on-going basis. In addition, income tax rules and regulations are subject to interpretation and the application of those rules and regulations require judgment by the Company and may be challenged by the taxation authorities. The Company follows ASC 740 Income Taxes, which requires the use of a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. Only tax positions that meet the more likely than not recognition threshold are recognized. Refer to Note 12, Income Taxes.
Accumulated other comprehensive income includes foreign currency translation and amortization of amounts related to defined benefit plans.
The Company evaluated subsequent events through April 12, 2016, the date the financial statements were available to be issued. All events that had a material impact on the Companys Combined Financial Statements are disclosed in the notes to the Combined Financial Statements.
On December 14, 2015, UBM plc announced that it has reached an agreement for the sale of the Company to Cision, a business controlled by GTCR Canyon Holdings (Cayman), LP. for $841 million. The agreement is subject to anti-trust clearance in the U.S. and is expected to be completed after March 31, 2016.
On January 22, 2016, the Company made a distribution of receivables from United Finance Ltd. and Aztecgem Ltd., which are UBM plc entities outside of PRN, of $157,030 to two separate UBM plc entities outside of PRN. The distribution was comprised of $148,836 of Loans to Related Parties ST and $8,194 of Due from Related Parties ST. The distribution immediately followed a restructuring and assignment of certain loans, payables and receivables between the Company and various UBM entities.
On January 22, 2016, the Company received a capital contribution of $5,740 from a UBM plc entity outside of PRN.
F-107
In May 2014, the Financial Accounting Standards Board (FASB) ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction and industry-specific revenue recognition guidance under current GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year to interim and annual reporting periods beginning after December 15, 2018. Entities can transition to the standard using either a full retrospective approach or a modified retrospective approach as of the date of adoption. Presently, the Company is assessing what effect the adoption of ASU 2014-09 will have on its combined financial statements and accompanying notes.
In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements-Going Concern (ASU 2014-15). ASU 2014-15 requires that management evaluate at each annual and interim reporting period whether there is a substantial doubt about an entitys ability to continue as a going concern within one year of the date that the financial statements are issued. ASU 2014-15 will be effective for fiscal years and interim periods beginning after December 15, 2016 and early application is permitted. The Company does not expect that the application of ASU 2014-15 will have an impact on the Combined Financial Statements.
In January 2015, the FASB issued Accounting Standards Update 2015-01, Income Statement Extraordinary and Unusual Items (Subtopic 225-20). The objective of this update is to simplify income statement presentation requirements by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will adopt this guidance effective January 1, 2016 and does not believe that it will have a material impact on the Companys Combined Financial Statements.
In November 2015, the FASB issued Accounting Standards Update 2015-17, Income Taxes Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. The ASU 2015-17 is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities. The Company will adopt this guidance effective January 1, 2018.
In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842). ASU 2016-02 supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
F-108
The following is a summary of property and equipment, at cost less accumulated depreciation:
|
|
|
||||||
As of December 31, | ||||||||
2015 | 2014 | |||||||
Leasehold improvements and building | $ | 17,420 | $ | 16,404 | ||||
Computer hardware and equipment | 30,265 | 27,274 | ||||||
47,685 | 43,678 | |||||||
Less: accumulated depreciation | (35,204 | ) | (33,091 | ) | ||||
Total property and equipment, net | $ | 12,481 | $ | 10,587 |
Depreciation expense for the years ended December 31, 2015 and December 31, 2014 was $3,377 and $3,128, respectively.
The following is a summary of computer software, at cost less accumulated amortization:
|
|
|
||||||
As of December 31, | ||||||||
2015 | 2014 | |||||||
Software | $ | 44,004 | $ | 36,626 | ||||
Less: accumulated amortization | (28,760 | ) | (22,837 | ) | ||||
Total software, net | $ | 15,244 | $ | 13,789 |
Amortization expense for the years ended December 31, 2015 and December 31, 2014 was $6,987 and $5,232, respectively.
Goodwill as of December 31, 2015 and December 31, 2014 was $123,578 and $126,288, respectively. Changes in goodwill were entirely due to changes in foreign currency.
The following is a summary of intangibles, at cost less accumulated amortization:
|
|
|
||||||
As of December 31, | ||||||||
2015 | 2014 | |||||||
Intangible Assets
|
||||||||
Brands | $ | 9,183 | $ | 9,379 | ||||
Customer Lists | 4,444 | 4,826 | ||||||
Other | 2,061 | 2,287 | ||||||
15,688 | 16,492 | |||||||
Accumulated amortization
|
||||||||
Brands | (7,756 | ) | (6,906 | ) | ||||
Customer Lists | (4,441 | ) | (4,685 | ) | ||||
Other | (1,978 | ) | (2,126 | ) | ||||
(14,175 | ) | (13,717 | ) | |||||
Intangible Assets, net | $ | 1,513 | $ | 2,775 |
Intangible amortization expense for the years ended December 31, 2015, and December 31, 2014 was $1,035 and $1,501, respectively. The estimated annual aggregate amortization expense for the next five succeeding fiscal years is expected to be $745, $425, $165, $164, and $14, respectively.
F-109
The Companys investment in unconsolidated affiliated is accounted for by the equity method and consists of a 50% interest in a joint venture with ANP Pers Support B.V in ANP Pers Support v.o.f. (ANPps).
The Company had revenues of $1,110 and $1,645 for the years ended December 31, 2015 and December 31, 2014, respectively, for billings made to ANPps for international distribution services provided to ANPps. The Company incurred operating expense of $157 and $164 for the years ended December 31, 2015 and December 31, 2014, respectively, for billings from ANPps for distribution services provided by ANPps to the Company for the countries in which ANPps operates.
Due from Related Parties Current as of December 31, 2015 and December 31, 2014 was $78,326 and $449,218, respectively. Due from Related Parties Current arises principally from daily net cash advances made by the Company to UBM plc and its subsidiaries (UBM) as UBM maintains a zero balance cash concentration system in the U.S. and Europe and from revenue for providing services to UBM. In 2015, the Company made a distribution of a receivable from UBM Finance Inc. to UBM entities outside of PRN of $401,772, which decreased the Due from Related Parties Current balance.
Net cash advances to UBM for the year ended December 31, 2015 and December 31, 2014 were $38,004 and $43,231 respectively. Revenue from the sale of the Companys products and services provided to UBM for the year ended December 31, 2015 and December 31, 2014 were $1,111 and $1,100, respectively.
A summary of Loans to Related Parties Current is as follows:
|
|
|
|
|
||||||||||||
As of December 31, | ||||||||||||||||
PRN Affiliate | UBM Counterparty | 2015 | 2014 | Stated interest rate | ||||||||||||
PRN Europe Ltd. | Aztecgem Limited | $ | 144,426 | $ | 148,801 | British Pound Sterling LIBOR +2% | ||||||||||
Newsdesk International | United Finance Limited | 7,248 | 7,671 | non-interest bearing | ||||||||||||
OIT Ltd | United Finance Limited | 10,726 | 11,351 | non-interest bearing | ||||||||||||
CNW Group Ltd. | United Finance Ltd. | | 3,453 | Canadian Dollars LIBOR + 2% | ||||||||||||
PRN Europe Ltd. | UBMG Ltd | 2,350 | 2,617 | no interest charged | ||||||||||||
Various | Various | 2,054 | 2,222 | |||||||||||||
Loans to Related Parties Current | $ | 166,804 | $ | 176,115 |
Loans to Related Parties Current arise principally as the Company provides financing to UBM through formal loan agreements. Changes in 2015 resulted from loans of $6,207 made by the Company to UBM, loan repayments of $9,330 from UBM to the Company and foreign currency translation. Changes in 2014 resulted from loans of $5,896 made by the Company to UBM, loan repayments of $1,348 from UBM to the Company and foreign currency translation.
Due to Related Parties Current as of December 31, 2015 and December 31, 2014 was $256,124 and $237,800, respectively. Due to Related Parties Current arises principally from management fees charged to the Company by UBM, costs incurred by UBM on behalf of the Company, cash advances to the Company through the cash concentration system to allow for interest payments to UBM on loans payable by the Company to UBM (see Loans from Related Parties Current) and as of December 31, 2014, amounts collected from customers by the Company on behalf of UBM for Company accounts receivable factored to UBM. As of December 31, 2015, Due to Related Parties Current includes a dividend payable to UBM of $918 for a dividend declared in 2015 but not paid until 2016.
F-110
Management fees for the years ended December 31, 2015 and December 31, 2014 were $9,337 and $8,764, respectively, and relate to an allocation of corporate services such as accounting, treasury, information technology, legal, executive management and human resources provided by UBM to the Company.
Costs incurred by UBM on behalf of the Company for the years ended December 31, 2015 and December 31, 2014 were $2,838 and $3,312, respectively, and relate to business insurance, payroll services, audit fees and office rent primarily reflected in agreements between UBM and the respective vendors. In addition, benefit costs incurred by UBM on behalf of the Company for the years ended December 31, 2015 and December 31, 2014 were $10,422 and $9,830, respectively.
Cash advances by UBM to the Company for the year ended December 31, 2015 and December 31, 2014 were $14,182 and $11,439, respectively. Such cash advances are used by PRN Delaware, Inc. to pay interest expense on related party debt with UBM.
The Company has historically factored substantially all of its accounts receivable from its U.S. businesses to a subsidiary of UBM plc. at a discount of approximately 2% under a non-recourse arrangement. On December 31, 2015, this arrangement was terminated and the Company purchased 100% of previously factored accounts receivable outstanding at October 31, 2015 for $30,791, which resulted in a loss on purchase of $2,307. November 2015 and December 2015 accounts receivable was not factored by the Company.
The discount for the years ended December 31, 2015 and December 31, 2014 was $5,413 and $5,579, respectively. The discount is included in Selling, General and Administrative Expenses in the Combined Statements of Operations. In addition, UBM paid an annual fee to the Company in return for cash collection, cash application and record keeping services. This fee was $2,551 and $2,000 for the years ended December 31, 2015 and December 31, 2014, respectively. Such fee is included in Other Income in the Combined Statements of Operations.
A summary of Loans from Related Parties Short Term is as follows:
|
|
|
|
|
||||||||||||
As of December 31, | ||||||||||||||||
PRN Affiliate | USM Counterparty | 2015 | 2014 | Stated interest rate | ||||||||||||
PRN Delaware, Inc. | UBM Finance Sarl | $ | 327,098 | $ | 326,634 | 6 month U.S. Dollars LIBOR + 0.50% | ||||||||||
PRN Delaware, Inc. |
United BM (US)
Holdings Sarl |
300,000 | 300,000 | 6 month U.S. Dollars LIBOR + 2% | ||||||||||||
PRN Holdings USA Inc. | UBM Finance Inc. | 18,998 | 18,998 | U.S. Dollars LIBOR + 2% | ||||||||||||
CNW Group Ltd. | UBM Finance Sarl | 13,958 | | 7% | ||||||||||||
Hors Antenne Holdings |
UBM CP Holdings
No 4 Sarl |
5,750 | 7,359 | EURIBOR plus 2%% | ||||||||||||
PRN Benelux Ltd. | United Finance Limited | 6,270 | 6,944 | British Pound Sterling LIBOR + 0.5% | ||||||||||||
PRN Europe Ltd. | UBMG Holdings | 6,474 | 6,851 | non-interest bearing | ||||||||||||
PR Newswire Asia Ltd. | United Finance Ltd. | 3,805 | 4,482 | non-interest bearing | ||||||||||||
PRN Europe Ltd. | United Finance Limited | 3,133 | 3,470 | British Pound Sterling LIBOR +0.5% | ||||||||||||
PRN Europe Ltd. |
United Business
Information (UK) Ltd |
2,113 | 2,236 | non-interest bearing | ||||||||||||
Various | Various | 891 | 463 | |||||||||||||
Loans from Related Parties Current | $ | 688,490 | $ | 677,437 |
F-111
Loans from Related Parties Current arise principally as the Company has received financing from UBM from time to time. Changes in 2015 resulted from loans of $928 made by UBM to the Company, loan repayments of $9,450 from the Company to UBM, foreign currency translation and a reclassification of a non-current loan to short term. Changes in 2014 resulted from loans of $500 made by UBM to the Company, loan repayments of $1,037 from the Company to UBM and foreign currency translation.
Loan from Related Party Non-Current as of December 31, 2015 and December 31, 2014 was $0 and $25,982, respectively. Loan from Related Party Non-Current arose in connection with financing provided by UBM to the Company for the 2012 purchase by UBM of the non-controlling interest in CNW Group, Ltd. which is due on November 23, 2016. Changes in 2015 resulted from foreign currency translation and a reclassification of the loan to short term. Changes in 2014 were entirely due to foreign currency translation. The stated interest rate for this loan is 7%.
Interest income for all related party loans was $4,271 and $4,102 for the years ended December 31, 2015 and December 31, 2014, respectively. Interest expense for all related party loans was $15,137 and $13,941 for the years ended December 31, 2015 and December 31, 2014, respectively.
The Company has recorded taxes payable by UBM in consolidated tax fillings as deemed capital contributions of $8,301 and $15,349 for the years ended December 31, 2015 and December 31, 2014, respectively.
In 2015, the Company made a distribution of a receivable from UBM Finance Inc. to UBM entities outside of PRN of $401,772 and declared cash dividends to UBM of $2,850, of which $1,932 was paid in 2015 and $918 was paid in 2016.
The following table displays the change in the components of accumulated other comprehensive income (loss), net of tax:
|
|
|
|
|||||||||
Cumulative
Translation Adjustment |
Defined
Benefit Plan Adjustment |
Total
Accumulated Other Comprehensive Income (Loss) |
||||||||||
Balance at January 1, 2014 | $ | 7,903 | $ | (3,487 | ) | $ | 4,416 | |||||
Foreign Currency Translation | (9,361 | ) | | (9,361 | ) | |||||||
Defined Benefit Plan Adjustment | | (45 | ) | (45 | ) | |||||||
Balance at December 31, 2014 | (1,458 | ) | (3,532 | ) | (4,990 | ) | ||||||
Foreign Currency Translation | (9,348 | ) | | (9,348 | ) | |||||||
Defined Benefit Plan Adjustment | | 480 | 480 | |||||||||
Balance at December 31, 2015 | $ | (10,806 | ) | $ | (3,052 | ) | $ | (13,858 | ) |
F-112
PRNA employees participate in the UBM 401K savings plan. Under the plan, the Company contributes in cash based on a stated percentage of eligible employee contributions and based on a stated percentage of employee compensation, both subject to a specified ceiling. The expense recognized for the 401K savings plan in the years ended December 31, 2015 and December 31, 2014 was $2,934 and $2,628, respectively.
Certain executives of PRNA participate in a supplemental defined contribution plan. Under the plan the Company contributes in cash up to a set percentage of employee base salary based on the percentage of eligible employee base pay contributed by the employee. Amounts contributed are invested based on the investment choices by Wilmington Trust Company, the Companys appointed trustee. However, the Company is obligated to the employee based on the employees notional investment choice. The plan has been closed to new employees since 2010. As of December 31, 2015, all plan participants are 100% vested. Plan assets as of December 31, 2015 and December 31, 2014 were $4,618 and $5,630, respectively, and are reflected in Other Assets in the Combined Balance Sheets. Amounts due to employees as of December 31, 2015 and December 31, 2014 were $4,481 and $5,537, respectively, and are reflected in Accounts Payable and Accrued Liabilities in the Combined Balance Sheets. The expense recognized for this plan in the years ended December 31, 2015 and December 31, 2014 was $55 and $115, respectively.
Employees of CNW participate in a pension plan which has a defined benefit plan component and defined contribution plan component. CNW also maintains an unfunded defined contribution plan for certain former employees. The defined benefit plan has been closed to new participants since 2006. In addition, CNW maintains a non-registered defined benefit pension plan for a former executive, which provides benefits in excess of those payable from the registered defined benefit plan and the unfunded defined contribution plan.
The actuarial cost method used for the valuation of the defined benefit post-employment benefits is the present value of the benefits expected to be paid. CNWs contributions to defined contribution plans are expensed as incurred. The expense recognized for CNWs defined contribution plans in the years ended December 31, 2015 and December 31, 2014 was $285 and $303, respectively.
F-113
The following table summarizes changes in the benefit obligation, plan assets and the funded status of CNWs two defined benefit plans:
|
|
|
||||||
2015 | 2014 | |||||||
Change in benefit obligation
|
||||||||
Beginning benefit obligation balance | $ | 10,346 | $ | 10,066 | ||||
Service cost | 257 | 224 | ||||||
Interest cost | 438 | 521 | ||||||
Plan participants' contribution | 41 | 47 | ||||||
Actuarial (gain) loss | (694 | ) | 1,959 | |||||
Benefits paid | (597 | ) | (446 | ) | ||||
Currency translation | (52 | ) | (22 | ) | ||||
Ending benefit obligation | $ | 9,739 | $ | 12,349 | ||||
Ending accumulated benefit obligation | $ | 8,647 | $ | 10,931 | ||||
Change in plan assets
|
||||||||
Beginning fair value of plan assets | $ | 8,112 | $ | 7,326 | ||||
Return on plan assets | 119 | 1,848 | ||||||
Employer contributions | 631 | 907 | ||||||
Plan participants' contributions | 41 | 47 | ||||||
Benefits paid | (597 | ) | (446 | ) | ||||
Ending fair value of plan assets | $ | 8,306 | $ | 9,682 | ||||
Funded status | $ | 1,433 | $ | 2,667 |
The amount recognized in the Combined Balance Sheets as Pension Obligation as of December 31, 2015 and December 31, 2014 was $1,433 and $2,667, respectively. The amount of net actuarial loss recognized in accumulated other comprehensive (loss) income as of December 31, 2015 and December 31, 2014 was $2,628 and $4,220, respectively. The estimated amortization from accumulated comprehensive loss into net periodic benefit cost from actuarial losses for the years ended December 31, 2015 and December 31, 2014 was $187 and $233, respectively.
|
|
|
||||||
As of December 31, | ||||||||
2015 | 2014 | |||||||
Plans with projected benefit obligations in excess of plan assets
|
||||||||
Projected benefit obligation | $ | 9,739 | $ | 12,349 | ||||
Fair value of plan assets | 8,306 | 9,682 | ||||||
Total | $ | (1,433 | ) | $ | (2,667 | ) | ||
Plans with accumulated benefit obligations in excess of plan
|
||||||||
Accumulated benefit obligation | $ | 8,647 | $ | 10,931 | ||||
Fair value of plan assets | 8,306 | 9,682 | ||||||
Total | $ | (341 | ) | $ | (1,249 | ) |
F-114
The following table presents the plan assets by category:
|
|
|
||||||
As of December 31, | ||||||||
2015 | 2014 | |||||||
Debt instruments | $ | 8,306 | $ | 9,682 |
The following tables present the fair value hierarchy for pension assets measured at fair value on a recurring basis as of December 31, 2015 and December 31, 2014:
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
As of December 31, 2015 | As of December 31, 2014 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Debt instruments | $ | | $ | 8,306 | $ | | $ | 8,306 | $ | | $ | 9,682 | $ | | $ | 9,682 |
The pension assets consist primarily of a pooled fund, which is primarily invested in government and corporate bonds. They are valued using models with inputs including interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable and therefore the assets within the pooled fund have been classified as Level 2. The fair value reflects the proportionate share of the fair value of the investments held in the underlying pooled fund.
Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income (Loss) for the years ended December 31, 2015 and December 31, 2014 are as follows:
|
|
|
||||||
Years ended
December 31, |
||||||||
2015 | 2014 | |||||||
Net Periodic Benefit Cost:
|
||||||||
Service cost | $ | 257 | $ | 224 | ||||
Interest cost | 438 | 521 | ||||||
Expected return on plan assets | (177 | ) | (162 | ) | ||||
Amortization of prior service costs | | | ||||||
Amortization of net actuarial loss | 187 | 233 | ||||||
Amortization of transitional asset | (20 | ) | (23 | ) | ||||
Net Periodic Benefit Cost | $ | 685 | $ | 793 |
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income (Loss) for the years ended December 31, 2015 and December 31, 2014 were as follows:
|
|
|
||||||
Years ended December 31, | ||||||||
2015 | 2014 | |||||||
Actuarial (gain) loss | $ | (702 | ) | $ | 283 | |||
Amortization of net actuarial losses | (187 | ) | (233 | ) | ||||
Amortization of transitional asset | 20 | 23 | ||||||
Total recognized in other comprehensive (income) loss | (869 | ) | 73 | |||||
Total recognized in net periodic benefit cost and other
comprehensive (income) loss |
$ | (184 | ) | $ | 866 |
F-115
Weighted-average assumptions used to determine the benefit obligations reflected in the Combined Balance Sheets and the net benefit cost reflected in the Combined Statements of Operations were as follows:
|
|
|
||||||
Years ended December 31, | ||||||||
2015 | 2014 | |||||||
Discount rate | 4.40 | % | 4.00 | % | ||||
Rate of compensation increase | 3.50 | % | 3.50 | % | ||||
Rate of return on plan assets | 2.00 | % | 2.00 | % |
The long-term rates of return are determined based on the nature of each plans investments, an expectation for each plans investment strategies, historical rates of return and current economic forecasts, among other factors, and are evaluated annually and adjusted as necessary.
The CNW defined pension plan is funded via assets held in trust by Manulife and are invested in an ultra-long bond fund. This investment strategy is attempting to minimize interest rate risk in the funded position of the pension plan. The assets of the defined contribution component of the pension plan are selected by members. The other pension plans are unfunded.
The Company expects to make contributions of $494 to defined benefit plans during 2016. Total benefit payments expected to be paid from the plans are as follows:
|
|
|||
2016 | $ | 336 | ||
2017 | $ | 336 | ||
2018 | $ | 357 | ||
2019 | $ | 370 | ||
2020 | $ | 385 | ||
Next five years | $ | 2,045 |
Employees of PRNE based in the United Kingdom (U.K.) participate in a UBM sponsored pension plan which has a defined benefit and a defined contribution component. The defined benefit plan is closed to new members and currently has four participants who are employees of PRNE. The benefit accrues based on final salary and length of service. All PRNE employees in the U.K. are legally bound to enter the defined contribution plan but have an option to opt out after enrollment. The plan has three tiers. At the basic auto enroll level, employees contribute 2% of salary and the Company contributes 4%. At the Tier 1 level, employees contribute 3% of salary and the Company contributes 6%. At the Tier 2 level, employees contribute 4% of salary and the Company contributes 6%. Employees elect the tier at which they wish to contribute. For the years ended December 31, 2015 and December 31, 2014, the total pension plan expense was $640 and $585, respectively.
F-116
Stock option transactions under the UBM Executive Share Option Scheme for the years ended December 31, 2015 and December 31, 2014 are summarized as follows:
|
|
|
||||||
Number
of Options |
Weighted
Average Price |
|||||||
Outstanding at January 1, 2014 | 1,428,684 | $ | 9.37 | |||||
Granted | 346,000 | 11.66 | ||||||
Exercised | (122,666 | ) | 8.78 | |||||
Forfeited or expired | (148,013 | ) | 10.48 | |||||
December 2014 option grant | 435,951 | 7.49 | ||||||
Outstanding at December 31, 2014 | 1,939,956 | $ | 7.47 | |||||
Options Excercisable at December 31, 2014 | 801,107 | $ | 6.59 | |||||
Outstanding at January 1, 2015 | 1,939,956 | $ | 7.47 | |||||
Granted | 415,000 | 8.46 | ||||||
Exercised | (627,708 | ) | 6.23 | |||||
Forfeited or expired | (138,094 | ) | 8.36 | |||||
Outstanding at December 31, 2015 | 1,589,154 | $ | 7.88 | |||||
Options Excercisable at December 31, 2015 | 522,879 | $ | 7.15 |
Restricted stock activity during the years ended December 31, 2015 and December 31, 2014, respectively, were as follows:
|
|
|
||||||
Number
of Shares |
Weighted-
Average Grant-Date Fair Value per Share |
|||||||
Non-vested, as of January 1, 2014 | 67,507 | $ | 10.57 | |||||
Granted | 77,237 | 11.38 | ||||||
Vested | (9,071 | ) | 8.88 | |||||
Cancelled and forfeited | (11,459 | ) | 9.92 | |||||
December 2014 special grant | 40,004 | 7.34 | ||||||
Non-vested, as of December 31, 2014 | 164,218 | $ | 10.19 | |||||
Granted | 6,169 | 8.30 | ||||||
Vested | (3,389 | ) | 8.79 | |||||
Cancelled and forfeited | (53,962 | ) | 7.58 | |||||
Non-vested, as of December 31, 2015 | 113,036 | $ | 10.31 |
Stock options and restricted stock awards are typically granted with a three-year vesting period. In December 2014, UBM plc made a special grant of stock options and restricted stock to the Companys employees whereby approximately 0.29 stock options were awarded for every stock option held and approximately 0.29 shares of restricted stock were awarded for every share of restricted stock held. The vesting period for the special grant ranged from zero to 32 months. In connection with the special grant, the exercise price for existing stock options was adjusted such that the revised exercise price was discounted 22.4% from the original exercise price.
Stock-based compensation expense for the years ended December 31, 2015 and December 31, 2014 was $1,265 and $1,279, respectively, inclusive of $614 related to the December 2014 special grant and the related stock option repricing.
F-117
PRN Delaware, Inc. and its subsidiaries and PR Newswire Europe Ltd. and its subsidiaries are part of the consolidated tax filings of UBM in the U.S. and the United Kingdom. The Company files its own corporate tax returns in other jurisdictions including Canada, France, The Netherlands, China, Hong Kong, Brazil and Mexico. The Companys tax provision has been calculated as if the Company filed separate tax returns for PRN Delaware and PR Newswire Europe Ltd. in the U.S. and the United Kingdom.
The provision for income taxes for the years ended December 31, 2015 and December 31, 2014 is comprised of the following:
|
|
|
||||||
For the years ended
December 31, |
||||||||
2015 | 2014 | |||||||
Current Provision (Benefit)
|
||||||||
U.S. Federal | $ | 5,978 | $ | 9,935 | ||||
U.S. State and Local | 1,532 | 2,386 | ||||||
Foreign:
|
||||||||
Canada | 2,465 | 3,383 | ||||||
Europe and Middle East | 2,191 | 2,680 | ||||||
Latin America | 202 | (158 | ) | |||||
Asia | 274 | 433 | ||||||
Current Provision | 12,642 | 18,659 | ||||||
Deferred Provision (Benefit)
|
||||||||
U.S. | 2,923 | 2,490 | ||||||
Foreign: | 310 | (360 | ) | |||||
Deferred Provision | 3,233 | 2,130 | ||||||
Total Provision for Income Taxes | $ | 15,875 | $ | 20,789 |
The provision for income taxes differs from the amount computed by applying the U.S. statutory federal income tax rate of 35% to income before provision for income taxes due to state and local income taxes, foreign tax rate differentials on non-U.S. income, and non-deductible items such as meals and entertainment expenses.
As of December 31, 2015, the Company has non capital loss carry-forwards in Canada of approximately $4.8 million for tax purposes, which will be available to offset future taxable income. If not used, these carry-forwards will expire between 2028 and 2033. These losses are subject to a valuation allowance. In addition, there are approximately $0.9 million of investment tax credits in Canada. If not used, these credits will expire between 2024 and 2032.
F-118
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Companys deferred tax assets and liabilities are comprised of book-to-tax basis differences in fixed assets, intangibles, and non-deductible accruals and reserves. Deferred tax assets and liabilities as of December 31, 2015 and December 31, 2014 are comprised of the following:
|
|
|
||||||
As of December 31, | ||||||||
2015 | 2014 | |||||||
Deferred Tax Assets
|
||||||||
Current
|
||||||||
U.S. | $ | 6,116 | $ | 6,338 | ||||
Non-Current
|
||||||||
Canada | 3,612 | 4,988 | ||||||
Europe and Middle East | 337 | 331 | ||||||
Latin America | 183 | 167 | ||||||
Asia | 0 | 89 | ||||||
Valuation Allowance | (2,403 | ) | (3,357 | ) | ||||
Non-Current | 1,729 | 2,218 | ||||||
Deferred Tax Assets | 7,845 | 8,556 | ||||||
Deferred Tax Liabilities Non-Current
|
||||||||
U.S. | (30,622 | ) | (28,213 | ) | ||||
Deferred Tax Liabilities, net | $ | (22,777 | ) | $ | (19,657 | ) |
The Company follows guidance under U.S. GAAP for uncertain tax positions, which provides a comprehensive model for the recognition, measurement and disclosure in the financial statements of uncertain tax positions that the Company has taken or expects to take on an income tax return. There were no uncertain tax positions at December 31, 2015 and December 31, 2014.
The Companys share of undistributed earnings of foreign subsidiaries, amounting to approximately $15,608 and $8,677, is considered to be indefinitely reinvested at December 31, 2015 and December 31, 2014, respectively. Accordingly, no provision has been recorded for U.S. income taxes that might result from repatriation of these earnings.
The Company has leases for office space in the U.S., Canada, Brazil, Great Britain, France, Sweden, Dubai, China, Hong Kong, India, Taiwan, Malaysia and Singapore which expire between 2016 and 2027. The following is a schedule, by year, of the future minimum rental payments under these leases:
|
|
|||
Year ended December 31, | ||||
2016 | $ | 8,405 | ||
2017 | $ | 6,841 | ||
2018 | $ | 5,217 | ||
2019 | $ | 4,965 | ||
2020 | $ | 4,907 | ||
Thereafter | $ | 13,709 |
Rent expense for years ended December 31, 2015 and December 31, 2014 was $9,558 and $9,645, respectively.
F-119
The Company has unconditional purchase obligations relating to certain vendors that provide software and technology oriented services ranging from less than one year to five years. The following is a schedule, by year, of the future minimum payments under these obligations:
|
|
|||
Year ended December 31, | ||||
2016 | $ | 9,749 | ||
2017 | $ | 2,523 | ||
2018 | $ | 413 | ||
2019 | $ | 26 | ||
2020 | $ | 13 | ||
Thereafter | $ | |
The Company is named in various claims and legal actions in the normal course of its activities.
The Company believes that the outcome of such matters is not expected to have a material adverse effect on the Companys results of operations, financial position or cash flows.
In June 2014, the SEC commenced an inquiry concerning certain aspects of the Companys business that relate to the distribution of issuer press releases. The Company has been fully cooperative with the staff of the SEC Division of Enforcement in this ongoing inquiry. Although the Company cannot predict what the outcome of the inquiry will be, it may result in remedies which could include modifications to the Companys process for disseminating issuer press releases. Based on currently available information, the Company does not expect that the inquiry, or any resolution thereof, will have a material adverse effect on the Companys results of operations, financial position or cash flows.
F-120
The Board of Directors of UBM plc:
We have audited the accompanying combined financial statements of the PRN Group, which comprise the combined balance sheets as of December 31, 2014 and 2013, and the related combined statements of operations, comprehensive income, stockholders' deficit and cash flows for the years then ended, and the related notes to the combined financial statements.
Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of the PRN Group at December 31, 2014 and 2013, and the combined results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Iselin, NJ
October 21, 2015
F-121
|
|
|
||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and Cash Equivalents | $ | 12,089 | $ | 10,069 | ||||
Accounts Receivable, net of allowance of $3,928 and $4,078 at December 31, 2014 and 2013, respectively | 34,637 | 36,109 | ||||||
Due from Related Parties | 449,218 | 404,089 | ||||||
Loans to Related Parties | 176,115 | 178,687 | ||||||
Income Tax Receivable | 2,082 | 805 | ||||||
Deferred Income Taxes | 6,338 | 5,820 | ||||||
Other Receivables | 1,892 | 3,787 | ||||||
Prepaids and Other Current Assets | 3,250 | 3,255 | ||||||
Total Current Assets | 685,621 | 642,621 | ||||||
Property and Equipment, net of accumulated depreciation of $33,091 and $37,124 at December 31, 2014 and 2013, respectively | 10,587 | 11,880 | ||||||
Computer Software, net of accumulated amortization of $22,837 and $19,312 at December 31, 2014 and 2013, respectively | 13,789 | 10,666 | ||||||
Intangible Assets, net | 2,775 | 4,440 | ||||||
Goodwill | 126,288 | 128,442 | ||||||
Investment in Unconsolidated Affiliate | 5,550 | 5,816 | ||||||
Deferred Income Taxes | 2,218 | 1,992 | ||||||
Other Assets | 6,142 | 6,676 | ||||||
TOTAL ASSETS | $ | 852,970 | $ | 812,533 | ||||
LIABILITIES
|
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Current Liabilities
|
||||||||
Accounts Payable and Accrued Liabilities | $ | 44,732 | $ | 45,055 | ||||
Deferred Revenue | 31,710 | 28,345 | ||||||
Due to Related Parties | 237,800 | 237,649 | ||||||
Loans from Related Parties | 677,437 | 680,791 | ||||||
Income Taxes Payable | 421 | 398 | ||||||
Other Current Liabilities | 534 | 350 | ||||||
Total Current Liabilities | 992,634 | 992,588 | ||||||
Loan from Related Party | 25,982 | 28,320 | ||||||
Deferred Income Taxes | 28,213 | 25,204 | ||||||
Pension Obligation | 2,504 | 2,828 | ||||||
Other Liabilities | 5,513 | 6,099 | ||||||
TOTAL LIABILITIES | 1,054,846 | 1,055,039 | ||||||
Commitments and Contingencies (Note 13)
|
||||||||
STOCKHOLDERS' DEFICIT
|
||||||||
Capital | 278,633 | 262,005 | ||||||
Accumulated Deficit | (475,519 | ) | (508,927 | ) | ||||
Accumulated Other Comprehensive (Loss) Income | (4,990 | ) | 4,416 | |||||
Total Stockholders' Deficit | (201,876 | ) | (242,506 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 852,970 | $ | 812,533 |
The accompanying notes are an integral part of the combined financial statements.
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For the Years Ended
December 31, |
||||||||||||
2014 | 2013 | |||||||||||
Revenue | $ | 322,693 | $ | 315,883 | ||||||||
Operating Expenses | 85,391 | 87,338 | ||||||||||
Selling, General and Administrative Expenses | 165,119 | 169,091 | ||||||||||
Depreciation and Amortization | 9,861 | 12,888 | ||||||||||
Total Operating Costs | 260,371 | 269,317 | ||||||||||
Operating Income | 62,322 | 46,566 | ||||||||||
Interest Income | 155 | 26 | ||||||||||
Interest Income on Related Party Loans | 4,102 | 4,639 | ||||||||||
Interest Expense on Related Party Loans | (13,941 | ) | (15,433 | ) | ||||||||
Other Income on Related Party Agreement | 2,000 | 2,061 | ||||||||||
Equity in Earnings of Unconsolidated Affiliate | 470 | 685 | ||||||||||
Income before Provision for Income Taxes | 55,108 | 38,544 | ||||||||||
Provision for Income Taxes | 20,789 | 16,184 | ||||||||||
Net Income | $ | 34,319 | $ | 22,360 |
The accompanying notes are an integral part of the combined financial statements.
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For the Years Ended
December 31, |
||||||||
2014 | 2013 | |||||||
Net Income | $ | 34,319 | $ | 22,360 | ||||
Other Comprehensive (Loss) Income:
|
||||||||
Foreign Currency Translation | (9,361 | ) | 4,977 | |||||
Defined Benefit Plan (Expense) Income, net of taxes of $28 and $(99) for the years ended December 31, 2014 and 2013, respectively | (45 | ) | 136 | |||||
Comprehensive Income | $ | 24,913 | $ | 27,473 |
The accompanying notes are an integral part of the combined financial statements.
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For the Years Ended
December 31, |
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2014 | 2013 | |||||||
Cash Flows from Operating Activities
|
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Net Income | $ | 34,319 | $ | 22,360 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
|
||||||||
Depreciation and Amortization | 9,861 | 12,888 | ||||||
Provision for Doubtful Accounts and Credit Memos | 1,338 | 2,652 | ||||||
Stock-Based Compensation Expense | 1,279 | 650 | ||||||
Provision for Deferred Taxes | 2,130 | 1,984 | ||||||
Taxes payable by Related Parties in Consolidated Filings | 15,349 | 9,732 | ||||||
Equity in Earnings of Unconsolidated Affiliate | (470 | ) | (685 | ) | ||||
Distribution of Earnings from Unconsolidated Affiliate | 496 | 1,705 | ||||||
Other | 638 | 151 | ||||||
Changes in Operating Assets and Liabilities:
|
||||||||
Accounts Receivable | (1,058 | ) | (2,892 | ) | ||||
Due from Related Parties Current | (3,462 | ) | (3,052 | ) | ||||
Other Assets | 481 | (338 | ) | |||||
Accounts Payables and Accrued Liabilities | 547 | 4,224 | ||||||
Deferred Revenue | 4,027 | 724 | ||||||
Other Liabilities Current | 280 | (439 | ) | |||||
Income Tax Receivable and Payable | (1,581 | ) | (135 | ) | ||||
Due to Related Parties Current | (14,324 | ) | (9,822 | ) | ||||
Other Operating Assets and Liabilities | 1,744 | (851 | ) | |||||
Net Cash Provided by Operating Activities | 51,594 | 38,856 | ||||||
Cash Flows from Investing Activities
|
||||||||
Purchases of Property and Equipment and Computer Software | (10,981 | ) | (7,595 | ) | ||||
Earnout Payment for Acquisition | (166 | ) | ||||||
Net Cash Used in Investing Activities | (10,981 | ) | (7,761 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Dividend to Related Party | (911 | ) | | |||||
Loans from Related Parties | 500 | 301 | ||||||
Loan Repayments to Related Parties | (1,037 | ) | (1,462 | ) | ||||
Loans to Related Parties | (5,896 | ) | (2,321 | ) | ||||
Loan Repayments from Related Parties | 1,348 | 1,358 | ||||||
Advances to Related Parties | (31,792 | ) | (31,098 | ) | ||||
Net Cash Used in Financing Activities | (37,788 | ) | (33,222 | ) | ||||
Effect of Exchange Rate Changes on Cash | (805 | ) | 939 | |||||
Net Increase (Decrease) in Cash and Cash Equivalents | 2,020 | (1,188 | ) | |||||
Cash and Cash Equivalents
|
||||||||
Beginning of Year | 10,069 | 11,257 | ||||||
End of Year | $ | 12,089 | $ | 10,069 | ||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash Paid for Interest | $ | 13,679 | $ | 14,120 | ||||
Cash Paid for Income Taxes | $ | 5,174 | $ | 5,915 |
The accompanying notes are an integral part of the combined financial statements.
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||||||||||||
Capital |
Accumulated
Deficit |
Accumulated
Other Comprehensive (Loss) Income |
Total
Stockholders Deficit |
|||||||||||||
Balance as of January 1, 2013 | $ | 251,623 | $ | (531,287 | ) | $ | (697 | ) | $ | (280,361 | ) | |||||
Net Income | | 22,360 | | 22,360 | ||||||||||||
Stock-Based Compensation | 650 | | | 650 | ||||||||||||
Defined Benefit Plan Adjustment | | | 136 | 136 | ||||||||||||
Foreign Currency Translation | | | 4,977 | 4,977 | ||||||||||||
Taxes payable by Related Parties in Consolidated Filings | 9,732 | | | 9,732 | ||||||||||||
Balance as of December 31, 2013 | 262,005 | (508,927 | ) | 4,416 | (242,506 | ) | ||||||||||
Net Income | | 34,319 | | 34,319 | ||||||||||||
Stock-Based Compensation | 1,279 | | | 1,279 | ||||||||||||
Defined Benefit Plan Adjustment | | | (45 | ) | (45 | ) | ||||||||||
Foreign Currency Translation | | | (9,361 | ) | (9,361 | ) | ||||||||||
Taxes payable by Related Parties in Consolidated Filings | 15,349 | | | 15,349 | ||||||||||||
Dividend to UBM | | (911 | ) | | (911 | ) | ||||||||||
Balance as of December 31, 2014 | $ | 278,633 | $ | (475,519 | ) | $ | (4,990 | ) | $ | (201,876 | ) |
The accompanying notes are an integral part of the combined financial statements.
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PRN Group (PRN or the Company) does business as PR Newswire, a global leader in public relations and investor relations communications and related products and services.
The Combined Financial Statements of the Company include the operations of the PRN Group businesses that are being carved-out for potential divestiture which include the PRN operations of PR Newswire Europe Ltd. and subsidiaries (Benelux Ltd., Newsdesk International Ltd., PR Newswire Disclose Ltd., OIT Ltd., PR Agency Ltd. and PR Newswire Gmbh), PR Newswire Ltda., NotilogPRN Argentina SA, PR Newswire S de RL de CV, PR Newswire Argentina SA, Hors Antenne Holding SAS and its subsidiary, Hors Antenne SAS, Cyperus SA, PR Newswire Asia Ltd., PRN Business Consulting Co Ltd., PRN Middle East Ltd., PRN India, PRNnet, PRN Delaware and subsidiaries (Virtual Press Office and PRN Holdings Inc. and its subsidiary CNW Group Ltd. and subsidiaries (Health Response Ltd., CCNW Quebec Inc., DNA 13 Inc. and DNA 13 (US) Inc.)), Communities Holdings and PR Newswire Association LLC and subsidiaries (MultiVu LLC and eWatch LLC).
The accompanying combined carve-out financial statements reflect the assets and liabilities, operating results, and cash flows of PRN. The Combined Financial Statements include certain expenses of UBM plc, which were allocated for certain functions, including general corporate expenses related to finance, legal, information technology, human resources, shared services, insurance, employee benefits and incentives, and stock-based compensation expense. These attributed expenses have been allocated to PRN on the basis of direct usage when identifiable, and for resources indirectly used by PRN, allocations were based on relative headcount, revenue, or other methodology, to reflect estimated usage by PRN. Management considers the allocation methodology and results to be reasonable for all periods presented. However, the financial information presented in these combined carve-out financial statements may not reflect the combined financial position, operating results and cash flows of PRN had PRN been a separate stand-alone entity during the period presented. Actual costs that would have been incurred if PRN had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas.
The cash and cash equivalents held by UBM plc at the corporate level are not specifically identifiable to PRN, and therefore, were not allocated for any of the periods presented. Cash and cash equivalents in the accompanying Combined Balance Sheets primarily represent cash held locally by operations included in the combined carve-out financial statements. UBM plc third-party debt, and the related interest expense has not been allocated for any of the periods presented as PRN was not the legal obligor of the debt and UBM plcs borrowings were not directly attributable to these operations.
The accompanying Combined Financial Statements have been derived from the consolidated financial statements and accounting records of UBM plc. These Combined Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). These principles require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Significant estimates inherent in the preparation of the accompanying Combined Financial Statements include estimates regarding allowance for doubtful accounts and credit memos, potential outcome of uncertain tax positions, fair value of acquired assets and liabilities, fair value of equity-based compensation and pension benefit assumptions. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results could differ from those estimates. All intercompany balances and transactions between the operations of the carved-out businesses have been eliminated in the accompanying Combined Financial Statements. The income tax amounts in the accompanying Combined Financial Statements have been calculated based on a separate return methodology and presented as if the Companys operations were separate taxpayers in the respective jurisdictions.
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The accompanying combined carve-out financial statements have been prepared to assist in UBM plcs potential divestiture of its PRN business and to demonstrate the historical results of operations, financial position, and cash flows of the PRN business that is being carved-out for the indicated periods under UBM plc management and do not include any accounts of entities that may be legally owned by any of the PRN entities but are not being included in any potential divestiture as they are not part of the PRN business.
Cash and cash equivalents include all highly-liquid investments with original maturities of three months or less, and the carrying amounts approximate fair value.
As more fully discussed in Note 8, Related Party Transactions, the Company factors substantially all of its accounts receivable from its U.S. businesses to a subsidiary of UBM plc. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. For accounts receivable not subject to the factoring program as well as any accounts receivable not yet factored, the Company maintains an allowance for doubtful accounts for estimated losses that result from the failure or inability of our customers to make required payments. When determining the allowance, the Company considers the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends as well as general economic factors. Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances. Accounts receivable may be fully reserved when specific collection issues are known to exist, such as pending bankruptcy or catastrophes. Trade accounts receivable are uncollateralized and represent a large number of geographically dispersed debtors. As of December 31, 2014 and December 31, 2013, there were no individual customers representing more than 10% of the Companys outstanding gross accounts receivable balance. During the years ended December 31, 2014 and December 31, 2013, there were no customers that accounted for more than 10% of revenue. In determining sales credit allowances, the Company analyzes historical trends, customer-specific factors and current economic trends. The Company records an allowance based on this information, as appropriate.
Property and equipment is stated at cost, net of accumulated depreciation or amortization. Major renewals and improvements are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Property and equipment are depreciated using the straight-line method. Computer hardware and equipment is depreciated over a period of three to ten years. Leasehold improvements are amortized on a straight-line basis over the shorter of the term of the lease or the estimated useful life of the improvement. Buildings are depreciated over a period of 20 years.
The Company develops various computer software applications for internal use including systems which support our internal business services and processes, our financial and administrative systems and systems which we use to provide services to our customers.
The Company expenses costs as incurred during the preliminary development stage which includes conceptual formulation and review of alternatives. Once that stage is complete, the application development stage, which includes design, coding and testing, begins. Direct internal and external costs incurred during this stage are capitalized. Capitalization of costs cease when the software is ready for its intended use and all substantial testing is completed. Upgrades and enhancements which provide added functionality are accounted for in the same manner. Maintenance costs incurred solely to extend the life of the software are expensed as incurred.
F-128
Computer software is amortized on a straight-line basis over a useful life of 3 to 5 years. Periodically, the Company reassesses the estimated useful lives of our computer software considering its overall technology strategy, the effects of obsolescence, technology, competition and other economic factors on the useful life of these assets.
The Company assesses impairment of long-lived assets pursuant with ASC 360 Property, Plant and Equipment. This includes determining if certain triggering events have occurred that could affect the value of an asset. The Company has not recorded any impairment charges related to long-lived assets.
Goodwill represents the excess of consideration paid over the fair value of net assets acquired in business combinations. Goodwill and other indefinite-lived intangible assets are not amortized but are tested at least annually for impairment. The Company has completed its annual goodwill impairment testing for 2014 and 2013, which did not result in any impairment. Intangible assets that have finite useful lives are amortized over their useful lives on a straight-line basis, ranging from three to ten years. Amortizable intangible assets are tested for impairment utilizing an income approach based on undiscounted cash flows upon the occurrence of certain triggering events and, if impaired, are written down to fair value. The Company did not identify any such triggering events during 2014 or 2013.
The Companys investment in an unconsolidated affiliate over which the Company has significant influence is accounted for under the equity method of accounting. The investment is carried at the cost of acquisition plus the Companys equity in undistributed income of the unconsolidated affiliate. The Company regularly reviews its equity method investment for impairment. The Company evaluates information such as budgets, business plans and financial statements of its equity method investee in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include, among others, recurring operating losses. See Note 7, Investment in Unconsolidated Affiliate.
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 | Quoted prices in active markets for identical assets or liabilities. |
Level 2 | Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
Level 3 | Inputs that are generally unobservable and typically reflect managements estimate of assumptions that market participants would use in pricing the asset or liability. |
The carrying amounts for cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term maturity. The carrying amount of certain pension assets are recorded as Level 2 assets (see Note 10).
F-129
Assets and liabilities of foreign affiliates with a functional currency other than the U.S. Dollar are translated into U.S. Dollars using year-end exchange rates, while results of operations are translated at average exchange rates for the year. The Companys foreign affiliates use the local currency as the functional currency. Foreign currency translation gains and losses are included as a component of Accumulated Other Comprehensive Income in the Combined Balance Sheets. The Company does not hedge foreign currency translation risk in the net assets and income reported from these sources.
Revenue is recognized when persuasive evidence of an arrangement exists, the contract fee is fixed or determinable, delivery or performance has occurred and collectability is reasonably assured. If at the outset of an arrangement, the Company determines that collectability is not reasonably assured, revenue is deferred until the earlier of when collectability becomes probable or the receipt of payment. The Company reports revenue net of sales and other taxes collected from our customers.
The Companys distribution services are sold either through fixed-term contracts whereby customers are allotted a predetermined number of service units or through contracts where customers order units as needed. For fixed-term contracts, revenue is recognized on a straight-line basis over the term of the contract. For contracts where customers order units as needed, revenue is recognized upon fulfillment of the customer order.
Certain of the Companys services such as broadcast and webcast production, translation services and EDGAR filing services require the Company to make a specific singular performance. For these services, revenue is recognized when the specific performance is completed.
The Companys XBRL filing services are sold through contracts where the Company is obligated to make a certain number of filings on behalf of the customer with the U.S. Securities and Exchange Commission (the SEC). For this service, revenue is recognized as each filing is made by the Company.
Certain of the Companys services such as its workflow platform and its hosted microsites are sold through fixed-term contracts where the Company is obligated to make the services available to the customer over the contract term. Customers can access these services without limitation over the contact term. For these services, revenue is recognized on a straight-line basis over the contract term.
Deferred revenue consists of amounts billed in excess of revenue recognized on sales. Deferred revenue is included in current liabilities in the Combined Balance Sheets and is subsequently recognized as revenue in accordance with the Companys revenue recognition policies.
Certain of the Companys services are sold as multiple-element arrangements. Revenues subject to these arrangements represent less than 5% of total revenues for the years ended December 31, 2014 and December 31, 2013, respectively. The Company evaluates each deliverable in an arrangement to determine whether it represents a separate unit of accounting. Most product and service deliverables qualify as separate units of accounting and can be sold stand-alone or in various combinations. A deliverable constitutes a separate unit of accounting when it has stand-alone value and there are no customer-negotiated refunds or return rights for the delivered items. If the arrangement includes a customer-negotiated refund or return right relative to the delivered items, and the delivery and performance of the undelivered item is considered probable and substantially in our control, the delivered item constitutes a separate unit of accounting. If the deliverable or a group of deliverables meet the separation criteria, the total arrangement consideration is allocated to each unit of accounting based on its relative selling price. The amount of arrangement consideration that is allocated to a delivered unit of accounting is limited to the amount that is not contingent upon the delivery of another unit of accounting.
F-130
The Company determines the selling price for each deliverable using vendor-specific objective evidence (VSOE), if it exists, third-party evidence (TPE) if VSOE does not exist, or best estimated selling price (BESP) if neither VSOE nor TPE exist. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element. The Company determines VSOE of a deliverable by monitoring the price at which the Company sells the deliverable on a stand-alone basis to a third party. In certain instances, the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements due to infrequent selling each element separately, not pricing products or services within a set range, or only having a limited sales history. Where the Company is unable to establish VSOE, the Company may use the price at which the Company or a third party sells a similar product to similarly situated customers on a stand-alone basis. When the Company is not able to establish selling prices by using VSOE or TPE, the Company establishes the BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the solution were sold on a stand-alone basis.
Operating expenses include the costs incurred in connection with the fulfillment of the Companys products and services and includes compensation and benefits for operational staff and costs of third-party service providers.
For operating leases, minimum lease payments, including minimum scheduled rent increases, are recognized as rent expense on a straight-line basis over the applicable lease terms. The term used for straight-line rent expense is calculated initially from the date the Company obtains possession of the leased premises through the expected lease termination date.
Employees of CNW Group, Ltd. (CNW) participate in a defined benefit pension plan whereby pension expense is determined based on a number of actuarial assumptions, which are generally reviewed and determined on an annual basis. These assumptions include discount rates, expected rate of return on plan assets, rate of salary increase, mortality rates and other factors. The funded status of the plan is recognized on the Combined Balance Sheets. Prior service costs or credits and actuarial gains and losses beyond a 10% corridor are recognized in earnings based on the estimated future service period of the participants. The measurement date for the defined benefit plan for CNW employees is December 31.
Company employees participate in the UBM 2008 Executive Share Option Scheme under which they are granted stock options to purchase UBM plc stock and the UBM 2010 Executive Retention Plan, as amended in 2014, under which they are granted UBM plc restricted stock.
Under the provisions of ASC 718 Compensation Stock Compensation, the Company recognizes share based compensation by estimating the fair value of each stock-based award at the date of grant. The stock-based compensation expense is recognized over the awards vesting period. In addition, the Company estimates future forfeitures in calculating the stock-based compensation expense as opposed to only recognizing these forfeitures and the corresponding reductions in expense as they occur.
For stock option awards, the fair value is estimated on the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires Company management to make assumptions about UBM plc stock price volatility, dividend yield, expected term of the stock option and risk-free interest rates. The expected stock price volatility assumption is derived from the historical volatility
F-131
of UBM plc common stock. The expected dividend yield assumption is determined by dividing the anticipated annual dividend payment by the stock price on the date of grant. The expected term assumption is derived using a methodology that combines historical exercise data with hypothetical exercise data for unexercised stock options. The risk-free interest rate assumption corresponds to the expected term assumption of the stock option and is based on the UK Gilts yield in effect at the time of grant.
For restricted stock awards, which vest solely on service, the fair value is estimated by using the closing price of UBM plc common stock on the date of grant.
Stock-based compensation is described more fully in Note 11, Stock-Based Compensation.
The Company provides for income taxes and the related accounts under the asset and liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect during the year in which the basis differences reverse. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized, which will be assessed on an on-going basis. In addition, income tax rules and regulations are subject to interpretation and the application of those rules and regulations require judgment by the Company and may be challenged by the taxation authorities. The Company follows ASC 740 Income Taxes, which requires the use of a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. Only tax positions that meet the more likely than not recognition threshold are recognized. Refer to Note 12, Income Taxes.
Accumulated other comprehensive income includes foreign currency translation and amortization of amounts related to defined benefit plans.
The Company evaluated subsequent events through October 20, 2015, the date the financial statements were available to be issued. All events that had a material impact on the Companys Combined Financial Statements are disclosed in the notes to the Combined Financial Statements.
On September 23, 2015, UBM plc announced that it is in highly preliminary discussions with a number of parties about a potential sale of the Company.
In March 2014, the Emerging Issues Task Force (EITF) reached a final consensus on Issue 13-D, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period (EITF 13-D). Under EITF 13-D, a performance target that can be achieved after the requisite service period should be treated as a performance condition that affects vesting, rather than a condition that affects grant date fair value. Compensation cost is recognized over the requisite service period if it is probable that the performance condition will be achieved. If necessary, compensation cost is subsequently adjusted, to reflect those awards that ultimately vest. EITF 13-D will be effective, on a prospective basis, for the Company during its first quarter of 2016, with early adoption permitted. The adoption of this standard is not anticipated to have a material impact on the Companys Combined Financial Statements.
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which supersedes the
F-132
revenue recognition requirements in Accounting Standards Codification 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This guidance will be effective beginning in fiscal year 2019 and early adoption is not permitted. The standard allows for either a full retrospective or a modified retrospective transition method. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its Combined Financial Statements, as well as, which transition method it intends to use.
In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements Going Concern (ASU 2014-15). ASU 2014-15 requires that management evaluate at each annual and interim reporting period whether there is a substantial doubt about an entitys ability to continue as a going concern within one year of the date that the financial statements are issued. ASU 2014-15 will be effective for fiscal years and interim periods beginning after December 15, 2016 and early application is permitted. The Company does not expect that the application of ASU 2014-15 will have an impact on the Combined Financial Statements.
In January 2015, the FASB issued Accounting Standards Update 2015-01, Income Statement Extraordinary and Unusual Items (Subtopic 225-20). The objective of this update is to simplify income statement presentation requirements by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will adopt this guidance effective January 1, 2016 and does not believe that it will have a material impact on the Companys Combined Financial Statements.
The following is a summary of property and equipment, at cost less accumulated depreciation:
|
|
|
||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Leasehold improvements and building | $ | 16,404 | $ | 16,178 | ||||
Computer hardware and equipment | 27,274 | 32,826 | ||||||
43,678 | 49,004 | |||||||
Less: accumulated depreciation | (33,091 | ) | (37,124 | ) | ||||
Total property and equipment, net | $ | 10,587 | $ | 11,880 |
Depreciation expense for the years ended December 31, 2014 and December 31, 2013 was $3,128 and $3,545, respectively.
F-133
The following is a summary of computer software, at cost less accumulated mortization:
|
|
|
||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Software | $ | 36,626 | $ | 29,978 | ||||
Less: accumulated amortization | (22,837 | ) | (19,312 | ) | ||||
Total software, net | $ | 13,789 | $ | 10,666 |
Amortization expense for the years ended December 31, 2014 and December 31, 2013 was $5,232 and $6,539, respectively.
Goodwill as of December 31, 2014 and December 31, 2013 was $126,288 and $128,442, respectively. Changes in goodwill were entirely due to changes in foreign currency.
The following is a summary of intangibles, at cost less accumulated amortization:
|
|
|
||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Intangible Assets
|
||||||||
Brands | $ | 9,379 | $ | 9,586 | ||||
Customer Lists | 4,826 | 5,175 | ||||||
Other | 2,287 | 2,481 | ||||||
16,492 | 17,242 | |||||||
Accumulated amortization
|
||||||||
Brands | (6,906 | ) | (6,153 | ) | ||||
Customer Lists | (4,685 | ) | (4,493 | ) | ||||
Other | (2,126 | ) | (2,156 | ) | ||||
(13,717 | ) | (12,802 | ) | |||||
Intangible Assets, net | $ | 2,775 | $ | 4,440 |
Intangible amortization expense for the years ended December 31, 2014, and December 31, 2013 was $1,501 and $2,804, respectively. The estimated annual aggregate amortization expense for the next five succeeding fiscal years is expected to be $944, $831, $470, $171, and $169, respectively.
The Companys investment in unconsolidated affiliated is accounted for by the equity method and consists of a 50% interest in a joint venture with ANP Pers Support B.V. in ANP Pers Support v.o.f. (ANPps).
The Company had revenues of $1,645 and $1,410 for the years ended December 31, 2014 and December 31, 2013, respectively, for billings made to ANPps for international distribution services provided to ANPps. The Company incurred operating expense of $164 and $156 for the years ended December 31, 2014 and December 31, 2013, respectively, for billings from ANPps for distribution services provided by ANPps to the Company for the countries in which ANPps operates.
F-134
Due from Related Parties Current as of December 31, 2014 and December 31, 2013 was $449,218 and $404,089, respectively. Due from Related Parties Current arises principally from daily net cash advances made by the Company to UBM plc and its subsidiaries (UBM) as UBM plc maintains a zero balance cash concentration system in the U.S. and Europe and from revenue for providing services to UBM.
Net cash advances to UBM for the year ended December 31, 2014 and December 31, 2013 were $43,231 and $43,225 respectively. Revenue from the sale of the Companys products and services provided to UBM for the year ended December 31, 2014 and December 31, 2013 were $1,100 and $1,153, respectively.
A summary of Loans to Related Parties Current is as follows:
|
|
|
|
|
||||||||||||
PRN Affiliate | UBM Counterparty | As of December 31, | Stated interest rate | |||||||||||||
2014 | 2013 | |||||||||||||||
PRN Europe Ltd. | Aztecgem Limited | $ | 148,801 | $ | 154,034 | British Pound Sterling LIBOR +2% | ||||||||||
Newsdesk International | United Finance Limited | 7,671 | 8,150 | non-interest bearing | ||||||||||||
OIT Ltd | United Finance Limited | 11,351 | 12,060 | non-interest bearing | ||||||||||||
CNW Group Ltd. | United Finance Ltd. | 3,453 | | Canadian Dollars LIBOR + 2% | ||||||||||||
PRN Europe Ltd. | UBMG Ltd | 2,617 | 2,982 | no interest charged | ||||||||||||
Various | Various | 2,222 | 1,461 | |||||||||||||
Loans to Related Parties Current | $ | 176,115 | $ | 178,687 |
Loans to Related Parties Current arise principally as the Company provides financing to UBM through formal loan agreements. Changes in 2014 resulted from loans of $5,896 made by the Company to UBM, loan repayments of $1,348 from UBM to the Company and foreign currency translation. Changes in 2013 resulted from loans of $2,321 made by the Company to UBM, loan repayments of $1,358 from UBM to the Company and foreign currency translation.
Due to Related Parties Current as of December 31, 2014 and December 31, 2013 was $237,800 and $237,649, respectively. Due to Related Parties Current arises principally from management fees charged to the Company by UBM, costs incurred by UBM on behalf of the Company, cash advances to the Company through the cash concentration system to allow for interest payments to UBM on loans payable by the Company to UBM (see Loans from Related Parties Current) and amounts collected from customers by the Company on behalf of UBM for Company accounts receivable factored to UBM.
Management fees for the years ended December 31, 2014 and December 31, 2013 were $8,764 and $13,848, respectively, and relate to an allocation of corporate services such as accounting, treasury, information technology, legal, executive management and human resources provided by UBM to the Company.
Costs incurred by UBM on behalf of the Company for the years ended December 31, 2014 and December 31, 2013 were $1,969 and $1,690, respectively, and relate to business insurance, payroll services, audit fees and office rent primarily reflected in agreements between UBM and the respective vendors.
Cash advances by UBM to the Company for the year ended December 31, 2014 and December 31, 2013 were $11,439 and $12,127 respectively. Such cash advances are used by PRN Delaware, Inc. to pay interest expense on related party debt with UBM.
F-135
Each month UBM purchases substantially all of the prior months accounts receivable of its U.S. businesses, 15 days after month end at a discount of approximately 2% under a non-recourse arrangement. The discount for the years ended December 31, 2014 and December 31, 2013 was $5,579 and $5,839, respectively. The discount is included in Selling, General and Administrative Expenses in the Combined Statements of Operations. In addition, UBM pays an annual fee to the Company in return for cash collection, cash application and record keeping services. This fee was $2,000 and $2,061 for the years ended December 31, 2014 and December 31, 2013, respectively. Such fee is included in Other Income in the Combined Statements of Operations.
A summary of Loans from Related Parties Short Term is as follows:
|
|
|
|
|
||||||||||||
PRN Affiliate | UBM Counterparty | As of December 31, | Stated interest rate | |||||||||||||
2014 | 2013 | |||||||||||||||
PRN Delaware, Inc. | UBM Finance Sarl | $ | 326,634 | $ | 326,634 | 6 month U.S. Dollars LIBOR + 0.50% | ||||||||||
PRN Delaware, Inc. | United BM (US) Holdings Sarl | 300,000 | 300,000 | 6 month U.S. Dollars LIBOR + 2% | ||||||||||||
PRN Holdings USA Inc. | UBM Finance Inc. | 18,998 | 18,552 | U.S. Dollars LIBOR + 2% | ||||||||||||
Hors Antenne Holdings | UBM CP Holdings No 4 Sarl | 7,359 | 9,296 | EURIBOR plus 2% | ||||||||||||
PRN Benelux Ltd. | United Finance Limited | 6,944 | 7,849 | British Pound Sterling LIBOR +0.5% | ||||||||||||
PRN Europe Ltd. | UBMG Holdings | 6,851 | 7,279 | non-interest bearing | ||||||||||||
PR Newswire Asia Ltd. | United Finance Ltd. | 4,482 | 4,101 | non-interest bearing | ||||||||||||
PRN Europe Ltd. | United Finance Limited | 3,470 | 3,922 | British Pound Sterling LIBOR + 0.5% | ||||||||||||
PRN Europe Ltd. | United Business Information (UK) Ltd | 2,236 | 2,376 | non-interest bearing | ||||||||||||
Various | Various | 463 | 782 | |||||||||||||
Loans from Related Parties Current | $ | 677,437 | $ | 680,791 |
Loans from Related Parties Current arise principally as the Company has received financing from UBM from time to time. Changes in 2014 resulted from loans of $500 made by UBM to the Company, loan repayments of $1,037 from the Company to UBM and foreign currency translation. Changes in 2013 resulted from loans of $301 made by UBM to the Company, loan repayments of $1,462 from the Company to UBM and foreign currency translation.
Loan from Related Party Non-Current as of December 31, 2014 and December 31, 2013 was $25,982 and $28,320, respectively. Loan from Related Party Non-Current arose in connection with financing provided by UBM to the Company in connection with the 2012 purchase by UBM of the non-controlling interest in CNW Group, Ltd. Changes in 2014 and 2013 were entirely due to foreign currency translation. The stated interest rate for this loan is 7%.
Interest income for all related party loans was $4,102 and $4,639 for the years ended December 31, 2014 and December 31, 2013, respectively. Interest expense for all related party loans was $13,941 and $15,433 for the years ended December 31, 2014 and December 31, 2013, respectively.
F-136
The Company has recorded taxes payable by UBM in consolidated tax fillings as deemed capital contributions of $15,349 and $9,732 for the years ended December 31, 2014 and December 31, 2013, respectively.
The following table displays the change in the components of accumulated other comprehensive income (loss), net of tax:
|
|
|
|
|||||||||
Cumulative
Translation Adjustment |
Defined
Benefit Plan Adjustment |
Total
Accumulated Other Comprehensive (Loss) Income |
||||||||||
Balance at January 1, 2013 | $ | 2,926 | $ | (3,623 | ) | $ | (697 | ) | ||||
Foreign Currency Translation | 4,977 | | 4,977 | |||||||||
Defined Benefit Plan Adjustment | | 136 | 136 | |||||||||
Balance at December 31, 2013 | 7,903 | (3,487 | ) | 4,416 | ||||||||
Foreign Currency Translation | (9,361 | ) | | (9,361 | ) | |||||||
Defined Benefit Plan Adjustment | | (45 | ) | (45 | ) | |||||||
Balance at December 31, 2014 | $ | (1,458 | ) | $ | (3,532 | ) | $ | (4,990 | ) |
PRNA employees participate in the UBM 401K savings plan. Under the plan, the Company contributes in cash based on a stated percentage of eligible employee contributions and based on a stated percentage of employee compensation, both subject to a specified ceiling. The expense recognized for the 401K savings plan in the years ended December 31, 2014 and December 31, 2013 was $2,628 and $2,625, respectively.
Certain executives of PRNA participate in a supplemental defined contribution plan. Under the plan the Company contributes in cash up to a set percentage of employee base salary based on the percentage of eligible employee base pay contributed by the employee. Amounts contributed are invested based on the investment choices of Wilmington Trust Company, the Companys appointed trustee. However, the Company is obligated to the employee based on the employees notional investment choice. The plan has been closed to new employees since 2010. As of December 31, 2014, all but one of the plan participants are 100% vested. Plan assets as of December 31, 2014 and December 31, 2013 were $5,630 and $6,110, respectively, and are reflected in Other Assets in the Combined Balance Sheets. Amounts due to employees as of December 31, 2014 and December 31, 2013 were $5,537 and $6,138, respectively and are reflected in Accounts Payable and Accrued Liabilities in the Combined Balance Sheets. The expense recognized for this plan in the years ended December 31, 2014 and December 31, 2013 was $115 and $346, respectively.
Employees of CNW participate in a pension plan which has a defined benefit plan component and defined contribution plan component. CNW also maintains an unfunded defined contribution plan for certain former employees. The defined benefit plan has been closed to new participants since 2006. In addition, CNW maintains a non-registered defined benefit pension plan for a former executive, which provides benefits in excess of those payable from the registered defined benefit plan and the unfunded defined contribution plan.
F-137
The actuarial cost method used for the valuation of the defined benefit post-employment benefits is the present value of the benefits expected to be paid. CNWs contributions to defined contribution plans are expensed as incurred. The expense recognized for CNWs defined contribution plans in the years ended December 31, 2014 and December 31, 2013 was $303 and $320, respectively.
The following table summarizes changes in the benefit obligation, plan assets and the funded status of CNWs two defined benefit plans:
|
|
|
||||||
2014 | 2013 | |||||||
Change in benefit obligation
|
||||||||
Beginning benefit obligation balance | $ | 10,066 | $ | 11,639 | ||||
Service cost | 224 | 276 | ||||||
Interest cost | 521 | 443 | ||||||
Plan participants' contribution | 47 | 64 | ||||||
Actuarial loss (gain) | 1,959 | (1,183 | ) | |||||
Benefits paid | (446 | ) | (290 | ) | ||||
Currency translation | (22 | ) | 23 | |||||
Ending benefit obligation | $ | 12,349 | $ | 10,972 | ||||
Ending accumulated benefit obligation | $ | 10,931 | $ | 9,937 | ||||
Change in plan assets
|
||||||||
Beginning fair value of plan assets | $ | 7,326 | $ | 8,250 | ||||
Return on plan assets | 1,848 | (892 | ) | |||||
Employer contributions | 907 | 853 | ||||||
Plan participants' contributions | 47 | 64 | ||||||
Benefits paid | (446 | ) | (290 | ) | ||||
Ending fair value of plan assets | $ | 9,682 | $ | 7,985 | ||||
Funded status | $ | 2,667 | $ | 2,987 |
The amount recognized in the Combined Balance Sheets as Pension Obligation as of December 31, 2014 and December 31, 2013 was $2,667 and $2,987, respectively. The amount of net actuarial loss recognized in accumulated other comprehensive (loss) income as of December 31, 2014 and December 31, 2013 was $4,220 and $4,428, respectively. The estimated amortization from accumulated comprehensive loss into net periodic benefit cost from actuarial losses for the years ended December 31, 2014 and December 31, 2013 was $187 and $205, respectively.
|
|
|
||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Plans with projected benefit obligations in excess of plan assets
|
||||||||
Projected benefit obligation | $ | 12,349 | $ | 10,972 | ||||
Fair value of plan assets | 9,682 | 7,985 | ||||||
Total | $ | (2,667 | ) | $ | (2,987 | ) | ||
Plans with accumulated benefit obligations in excess of plan
|
||||||||
Accumulated benefit obligation | $ | 10,931 | $ | 9,937 | ||||
Fair value of plan assets | 9,682 | 7,985 | ||||||
Total | $ | (1,249 | ) | $ | (1,952 | ) |
F-138
The following table presents the plan assets by category:
|
|
|
||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Debt instruments | $ | 9,682 | $ | 7,985 |
The following tables present the fair value hierarchy for pension assets measured at fair value on a recurring basis as of December 31, 2014:
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
As of December 31, 2014 | As of December 31, 2013 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Debt instruments | $ | | $ | 9,682 | $ | | $ | 9,682 | $ | | $ | 7,985 | $ | | $ | 7,985 |
The pension assets consist primarily of a pooled fund, which is primarily invested in government and corporate bonds. They are valued using models with inputs including interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable and therefore the assets within the pooled fund have been classified as Level 2. The fair value reflects the proportionate share of the fair value of the investments held in the underlying pooled fund.
Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income (Loss) for the years ended December 31, 2014 and December 31, 2013 are as follows:
|
|
|
||||||
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
Net Periodic Benefit Cost:
|
||||||||
Service cost | $ | 224 | $ | 276 | ||||
Interest cost | 521 | 443 | ||||||
Expected return on plan assets | (162 | ) | (266 | ) | ||||
Amortization of prior service costs | | | ||||||
Amortization of net actuarial loss | 233 | 236 | ||||||
Amortization of transitional asset | (23 | ) | (23 | ) | ||||
Net Periodic Benefit Cost | $ | 793 | $ | 666 |
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income (Loss) for the years ended December 31, 2014 and December 31, 2013 were as follows:
|
|
|
||||||
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
Actuarial loss (gain) | $ | 283 | $ | (7 | ) | |||
Amortization of net actuarial losses | (187 | ) | (205 | ) | ||||
Amortization of transitional asset | (23 | ) | (23 | ) | ||||
Total recognized in other comprehensive income (loss) | 73 | (235 | ) | |||||
Total recognized in net periodic benefit cost and other comprehensive income (loss) | $ | 866 | $ | 431 |
F-139
Weighted-average assumptions used to determine the benefit obligations reflected in the Combined Balance Sheets and the net benefit cost reflected in the Combined Statements of Operations were as follows:
|
|
|
||||||
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
Discount rate | 4.00 | % | 5.00 | % | ||||
Rate of compensation increase | 3.50 | % | 3.50 | % | ||||
Rate of return on plan assets | 2.00 | % | 3.25 | % |
The long-term rates of return are determined based on the nature of each plans investments, an expectation for each plans investment strategies, historical rates of return and current economic forecasts, among other factors, and are evaluated annually and adjusted as necessary.
The CNW defined pension plan is funded via assets held in trust by Manulife and are invested in an ultra-long bond fund. This investment strategy is attempting to minimize interest rate risk in the funded position of the pension plan. The assets of the defined contribution component of the pension plan are selected by members. The other pension plans are unfunded.
The Company expects to make contributions of $630 to defined benefit plans during 2015. Total benefit payments expected to be paid from the plans are as follows:
|
|
|||
2015 | $ | 546 | ||
2016 | $ | 432 | ||
2017 | $ | 432 | ||
2018 | $ | 457 | ||
2019 | $ | 473 | ||
Thereafter | $ | 7,503 |
Employees of PRNE based in the United Kingdom (U.K.) participate in a UBM sponsored pension plan which has a defined benefit and a defined contribution component. The defined benefit plan is closed to new members and currently has four participants who are employees of PRNE. The benefit accrues based on final salary and length of service. All PRNE employees in the U.K. are legally bound to enter the defined contribution plan but have an option to opt out after enrollment. The plan has three tiers. At the basic auto enroll level, employees contribute 2% of salary and the Company contributes 4%. At the Tier 1 level, employees contribute 3% of salary and the Company contributes 6%. At the Tier 2 level, employees contribute 4% of salary and the Company contributes 6%. Employees elect the tier at which they wish to contribute. For the years ended December 31, 2014 and December 31, 2013, the total pension plan expense was $585 and $462, respectively.
F-140
Stock option transactions under the UBM Executive Share Option Scheme for the years ended December 31,2014, and December 31, 2013 are summarized as follows:
|
|
|
||||||
Number
of Options |
Weighted
Average Price |
|||||||
Outstanding at December 31, 2012 | 1,387,571 | 8.71 | ||||||
Granted | 353,850 | 10.91 | ||||||
Exercised | (260,685 | ) | 7.81 | |||||
Forfeited or expired | (52,052 | ) | 9.77 | |||||
Outstanding at December 31, 2013 | 1,428,684 | $ | 9.37 | |||||
Options Excercisable at December 31, 2013 | 332,886 | $ | 8.39 | |||||
Outstanding at December 31, 2013 | 1,428,684 | 9.37 | ||||||
Granted | 346,000 | 11.66 | ||||||
Exercised | (122,666 | ) | 8.78 | |||||
Forfeited or expired | (148,013 | ) | 10.48 | |||||
December 2014 special grant | 435,951 | 7.49 | ||||||
Outstanding at December 31, 2014 | 1,939,956 | $ | 7.47 | |||||
Options Excercisable at December 31, 2014 | 801,107 | $ | 6.59 |
Restricted stock activity during the years ended December 31, 2014, and December 31, 2013, respectively, were as follows:
|
|
|
||||||
Number
of Shares |
Weighted-
Average Grant-Date Fair Value per Share |
|||||||
Non-vested, as of December 31, 2012 | 34,131 | $ | 8.24 | |||||
Granted | 52,376 | 10.91 | ||||||
Vested | (19,000 | ) | 7.35 | |||||
Cancelled and forfeited | | | ||||||
Non-vested, as of December 31, 2013 | 67,507 | $ | 10.57 | |||||
Granted | 30,363 | 9.77 | ||||||
Vested | (9,071 | ) | 10.16 | |||||
Cancelled and forfeited | (11,459 | ) | 9.92 | |||||
December 2014 special grant | 26,493 | 10.94 | ||||||
Non-vested, as of December 31, 2014 | 103,833 | $ | 10.91 |
Stock options and restricted stock awards are typically granted with a three-year vesting period. In December 2014, UBM plc made a special grant of stock options and restricted stock to the Companys employees whereby approximately 0.29 stock options were awarded for every stock option held and approximately 0.29 shares of restricted stock were awarded for every share of restricted stock held. The vesting period for the special grant ranged from zero to 32 months. In connection with the special grant, the exercise price for existing stock options was adjusted such that the revised exercise price was discounted 22.4% from the original exercise price.
F-141
Stock-based compensation expense for the years ended December 31, 2014 and December 31, 2013 was $1,279 and $650, respectively, inclusive of $614 related to the December 2014 special grant and the related stock option repricing.
PRN Delaware, Inc. and its subsidiaries and PR Newswire Europe Ltd. and its subsidiaries are part of the consolidated tax filings of UBM in the U.S. and the United Kingdom. The Company files its own corporate tax returns in other jurisdictions including Canada, France, The Netherlands, China, Hong Kong, Brazil and Mexico. The Companys tax provision has been calculated as if the Company filed separate tax returns for PRN Delaware and PR Newswire Europe Ltd. in the U.S. and the United Kingdom.
The provision for income taxes for the years ended December 31, 2014 and December 31, 2013 is comprised of the following:
|
|
|
||||||
For the years ended
December 31, |
||||||||
2014 | 2013 | |||||||
Current Provision (Benefit)
|
||||||||
U.S. Federal | $ | 9,935 | $ | 6,351 | ||||
U.S. State and Local | 2,386 | 2,327 | ||||||
Foreign:
|
||||||||
Canada | 3,383 | 3,682 | ||||||
Europe and Middle East | 2,680 | 1,866 | ||||||
Latin America | (158 | ) | 27 | |||||
Asia | 433 | (53 | ) | |||||
Current Provision | $ | 18,659 | $ | 14,200 | ||||
Deferred Provision (Benefit)
|
||||||||
U.S. | $ | 2,490 | $ | 1,966 | ||||
Canada | (360 | ) | 18 | |||||
Deferred Provision | $ | 2,130 | $ | 1,984 | ||||
Total Provision for Income Taxes | $ | 20,789 | $ | 16,184 |
The provision for income taxes differs from the amount computed by applying the U.S. statutory federal income tax rate of 35% to income before provision for income taxes due to state and local income taxes, foreign tax rate differentials on non-U.S. income, and non-deductible items such as meals and entertainment expenses.
As of December 31, 2014, the Company has non capital loss carry-forwards in Canada of approximately $8 million for tax purposes, which will be available to offset future taxable income. If not used, these carry-forwards will expire between 2028 and 2033. These losses are subject to a valuation allowance. In addition there are approximately $1.2 million of investment tax credits in Canada. If not used, these credits will expire between 2024 and 2032.
F-142
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Companys deferred tax assets and liabilities are comprised of book-to-tax basis differences in fixed assets, intangibles, and non-deductible accruals and reserves. Deferred tax assets and liabilities as of December 31, 2014 and December 31, 2013 are comprised of the following:
|
|
|
||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Deferred Tax Assets
|
||||||||
Current
|
||||||||
U.S. | $ | 6,338 | $ | 5,820 | ||||
Non-Current
|
||||||||
Canada | 4,988 | 5,068 | ||||||
Europe and Middle East | 331 | 331 | ||||||
Latin America | 167 | 64 | ||||||
Asia | 89 | 289 | ||||||
Valuation Allowance | (3,357 | ) | (3,760 | ) | ||||
Non-Current | 2,218 | 1,992 | ||||||
Deferred Tax Assets | 8,556 | 7,812 | ||||||
Deferred Tax Liabilities Non-Current
|
||||||||
U.S. | (28,213 | ) | (25,204 | ) | ||||
Deferred Tax Liabilities, net | $ | (19,657 | ) | $ | (17,392 | ) |
The Company follows guidance under U.S. GAAP for uncertain tax positions, which provides a comprehensive model for the recognition, measurement and disclosure in the financial statements of uncertain tax positions that the Company has taken or expects to take on an income tax return. There were no uncertain tax positions at December 31, 2014 and December 31, 2013.
The Companys share of undistributed earnings of foreign subsidiaries, amounting to approximately $8,677 and $2,081, is considered to be indefinitely reinvested at December 31, 2014 and December 31, 2013, respectively. Accordingly, no provision has been recorded for U.S. income taxes that might result from repatriation of these earnings.
The Company has leases for office space in the U.S., Canada, Brazil, Great Britain, France, Sweden, Dubai, China, Hong Kong, India, Taiwan, Malaysia and Singapore which expire between 2015 and 2027. The following is a schedule, by year, of the future minimum rental payments under these leases:
|
|
|||
Year ended December 31, | ||||
2015 | $ | 8,079 | ||
2016 | $ | 6,539 | ||
2107 | $ | 5,840 | ||
2018 | $ | 4,048 | ||
2019 | $ | 3,941 | ||
Thereafter | $ | 13,744 |
Rent expense for years ended December 31, 2014 and December 31, 2013 was $9,645 and $9,009, respectively.
F-143
The Company has unconditional purchase obligations relating to certain vendors that provide software and technology oriented services ranging from less than one year to three years. The following is a schedule, by year, of the future minimum payments under these obligations:
|
|
|||
Year ended December 31, | ||||
2015 | $ | 7,337 | ||
2016 | $ | 2,175 | ||
2107 | $ | 972 | ||
2018 | $ | 18 | ||
2019 | $ | | ||
Thereafter | $ | |
The Company is named in various claims and legal actions in the normal course of its activities.
The Company believes that the outcome of such matters is not expected to have a material adverse effect on the Companys results of operations, financial position or cash flows.
The SEC has commenced an inquiry concerning certain aspects of the Companys business that relates to the distribution of issuer press releases. The Company has been fully cooperative with the staff of the SEC Division of Enforcement in this ongoing inquiry. Although the Company cannot predict what the outcome of the inquiry will be, it may result in remedies which could include modifications to the Companys process for disseminating issuer press releases. Based on currently available information, the Company does not expect that the inquiry, or any resolution thereof, will have a material adverse effect on the Companys results of operations, financial position or cash flows.
F-144
The Board of Directors and Stockholders of Vocus, Inc. and Subsidiaries,
We have audited the accompanying consolidated balance sheets of Vocus, Inc. and subsidiaries as of December 31, 2012 and 2013, and the related consolidated statements of operations, comprehensive income (loss), stockholders equity and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the financial statement schedule listed in the index at Item 15(a)2. These financial statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Vocus, Inc. and subsidiaries at December 31, 2012 and 2013, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Vocus, Inc. and subsidiaries internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated March 7, 2014 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
McLean, VA
March 7, 2014
F-145
|
|
|
||||||
December 31, | ||||||||
2012 | 2013 | |||||||
(Dollars in thousands,
except per share data) |
||||||||
Current assets:
|
||||||||
Cash and cash equivalents | $ | 32,107 | $ | 34,740 | ||||
Short-term investments | 662 | | ||||||
Accounts receivable, net of allowance for doubtful accounts of $236 and $234 at December 31, 2012 and December 31, 2013, respectively | 29,841 | 28,862 | ||||||
Current portion of deferred income taxes | 1,478 | 271 | ||||||
Prepaid expenses and other current assets | 2,933 | 4,728 | ||||||
Total current assets | 67,021 | 68,601 | ||||||
Long-term investments | 1,322 | | ||||||
Property, equipment and software, net | 20,068 | 20,134 | ||||||
Intangible assets, net | 26,751 | 14,805 | ||||||
Goodwill | 177,011 | 177,264 | ||||||
Deferred income taxes, net of current portion | | 105 | ||||||
Other assets | 641 | 471 | ||||||
Total assets | $ | 292,814 | $ | 281,380 | ||||
Current liabilities:
|
||||||||
Accounts payable | $ | 4,125 | $ | 1,004 | ||||
Accrued compensation | 5,443 | 5,895 | ||||||
Accrued expenses | 12,133 | 8,900 | ||||||
Current portion of notes payable and capital lease obligations | 854 | 137 | ||||||
Current portion of deferred revenue | 77,098 | 81,675 | ||||||
Total current liabilities | 99,653 | 97,611 | ||||||
Notes payable and capital lease obligations, net of current portion | 751 | 1,218 | ||||||
Other liabilities | 6,786 | 6,371 | ||||||
Deferred income taxes | 5,120 | 4,546 | ||||||
Deferred revenue, net of current portion | 2,235 | 2,842 | ||||||
Total liabilities | 114,545 | 112,588 | ||||||
Commitments and contingencies
|
||||||||
Redeemable convertible preferred stock:
|
||||||||
Series A redeemable convertible preferred stock, $0.01 par value, 1,000,000 shares designated from authorized preferred stock; issued and outstanding at December 31, 2012 and December 31, 2013 | 77,490 | 77,490 | ||||||
Stockholders equity:
|
||||||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized; 1,000,000 shares designated as Series A redeemable convertible preferred stock and issued and outstanding at December 31, 2012 and December 31, 2013; no other shares issued and outstanding at December 31, 2013 | | | ||||||
Common stock, $0.01 par value, 90,000,000 shares authorized; 21,910,301 and 21,949,509 issued at December 31, 2012 and December 31, 2013, respectively; 19,670,168 and 20,207,652 shares outstanding at December 31, 2012 and December 31, 2013, respectively | 219 | 219 | ||||||
Additional paid-in capital | 215,226 | 227,699 | ||||||
Treasury stock, 2,240,133 and 1,741,858 shares at December 31, 2012 and December 31, 2013, respectively, at cost | (41,909 | ) | (42,320 | ) | ||||
Accumulated other comprehensive loss | (426 | ) | (159 | ) | ||||
Accumulated deficit | (72,331 | ) | (94,137 | ) | ||||
Total stockholders equity | 100,779 | 91,302 | ||||||
Total liabilities, redeemable convertible preferred stock and stockholders equity | $ | 292,814 | $ | 281,380 |
See accompanying notes.
F-146
|
|
|
|
|||||||||
Year Ended December 31, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
(Dollars in thousands, except per share data) | ||||||||||||
Revenues | $ | 114,874 | $ | 170,804 | $ | 186,931 | ||||||
Cost of revenues | 21,857 | 33,749 | 38,220 | |||||||||
Gross profit | 93,017 | 137,055 | 148,711 | |||||||||
Operating expenses:
|
||||||||||||
Sales and marketing | 57,543 | 97,873 | 109,768 | |||||||||
Research and development | 7,561 | 13,272 | 10,649 | |||||||||
General and administrative | 30,129 | 40,651 | 40,753 | |||||||||
Amortization of intangible assets | 2,021 | 7,157 | 7,841 | |||||||||
Total operating expenses | 97,254 | 158,953 | 169,011 | |||||||||
Loss from operations | (4,237 | ) | (21,898 | ) | (20,300 | ) | ||||||
Other income (expense):
|
||||||||||||
Interest and other income (expense) | 317 | (41 | ) | (156 | ) | |||||||
Interest expense | (38 | ) | (225 | ) | (145 | ) | ||||||
Total other income (expense) | 279 | (266 | ) | (301 | ) | |||||||
Loss before provision for income taxes | (3,958 | ) | (22,164 | ) | (20,601 | ) | ||||||
Provision for income taxes | 10,619 | 1,427 | 1,205 | |||||||||
Net loss | $ | (14,577 | ) | $ | (23,591 | ) | $ | (21,806 | ) | |||
Net loss per share:
|
||||||||||||
Basic | $ | (0.78 | ) | $ | (1.21 | ) | $ | (1.09 | ) | |||
Diluted | $ | (0.78 | ) | $ | (1.21 | ) | $ | (1.09 | ) | |||
Weighted average shares outstanding used in computing per share amounts:
|
||||||||||||
Basic | 18,743,305 | 19,437,076 | 20,058,231 | |||||||||
Diluted | 18,743,305 | 19,437,076 | 20,058,231 |
See accompanying notes.
F-147
|
|
|
|
|||||||||
Year Ended December 31, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
(Dollars in thousands) | ||||||||||||
Net loss | $ | (14,577 | ) | $ | (23,591 | ) | $ | (21,806 | ) | |||
Other comprehensive income (loss), net of taxes:
|
||||||||||||
Foreign currency translation adjustment | (442 | ) | 189 | 269 | ||||||||
Unrealized net gain (loss) on available-for-sale investments, net of taxes | 10 | (8 | ) | (2 | ) | |||||||
Other comprehensive income (loss), net of taxes | (432 | ) | 181 | 267 | ||||||||
Comprehensive loss | $ | (15,009 | ) | $ | (23,410 | ) | $ | (21,539 | ) |
See accompanying notes.
F-148
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Common Stock |
Additional
Paid-In Capital |
Treasury
Stock |
Accumulated
Other Comprehensive Income (Loss) |
Accumulated
Deficit |
Total
Stockholders Equity |
|||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Balance at January 1, 2011 | 20,374,267 | $ | 204 | $ | 166,985 | $ | (28,417 | ) | $ | (175 | ) | $ | (34,163 | ) | $ | 104,434 | ||||||||||||
Exercise of stock options | 1,219,643 | 12 | 18,940 | | | | 18,952 | |||||||||||||||||||||
Vesting of restricted stock awards | 156,615 | 2 | (2 | ) | | | | | ||||||||||||||||||||
Tax deficiency from equity awards | | | (586 | ) | | | | (586 | ) | |||||||||||||||||||
Repurchase of 978,709 shares of common stock | | | | (20,006 | ) | | | (20,006 | ) | |||||||||||||||||||
Stock-based compensation | | | 14,936 | | | | 14,936 | |||||||||||||||||||||
Net loss | | | | | | (14,577 | ) | (14,577 | ) | |||||||||||||||||||
Other comprehensive income (loss) | | | | | (432 | ) | | (432 | ) | |||||||||||||||||||
Balance at December 31, 2011 | 21,750,525 | 218 | 200,273 | (48,423 | ) | (607 | ) | (48,740 | ) | 102,721 | ||||||||||||||||||
Exercise of stock options | 10,391 | | 72 | | | | 72 | |||||||||||||||||||||
Vesting of restricted stock awards | 149,385 | 1 | (1 | ) | | | | | ||||||||||||||||||||
Issuance of 401,672 shares of common stock from treasury shares for business acquisition | | | | 9,600 | | | 9,600 | |||||||||||||||||||||
Tax deficiency from equity awards | | | (3 | ) | | | | (3 | ) | |||||||||||||||||||
Repurchase of 143,789 shares of common stock | | | | (3,086 | ) | | | (3,086 | ) | |||||||||||||||||||
Stock-based compensation | | | 14,885 | | | | 14,885 | |||||||||||||||||||||
Net loss | | | | | | (23,591 | ) | (23,591 | ) | |||||||||||||||||||
Other comprehensive income (loss) | | | | | 181 | | 181 | |||||||||||||||||||||
Balance at December 31, 2012 | 21,910,301 | 219 | 215,226 | (41,909 | ) | (426 | ) | (72,331 | ) | 100,779 | ||||||||||||||||||
Exercise of stock options | 11,583 | | 85 | | | | 85 | |||||||||||||||||||||
Vesting of restricted stock awards | 27,625 | | | | | | | |||||||||||||||||||||
Issuance of 4,882 shares of common stock from treasury shares | | | | 66 | | | 66 | |||||||||||||||||||||
Repurchase of 35,695 shares of common stock | | | | (477 | ) | | | (477 | ) | |||||||||||||||||||
Stock-based compensation | | | 12,388 | | | | 12,388 | |||||||||||||||||||||
Net loss | | | | | | (21,806 | ) | (21,806 | ) | |||||||||||||||||||
Other comprehensive income (loss) | | | | | 267 | | 267 | |||||||||||||||||||||
Balance at December 31, 2013 | 21,949,509 | $ | 219 | $ | 227,699 | $ | (42,320 | ) | $ | (159 | ) | $ | (94,137 | ) | $ | 91,302 |
See accompanying notes.
F-149
|
|
|
|
|||||||||
Year Ended December 31, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
(Dollars in thousands) | ||||||||||||
Cash flows from operating activities:
|
||||||||||||
Net loss | $ | (14,577 | ) | $ | (23,591 | ) | $ | (21,806 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization of property, equipment and software | 2,655 | 4,844 | 5,501 | |||||||||
Amortization of intangible assets | 2,501 | 10,999 | 12,034 | |||||||||
(Gain) loss on disposal of assets | 68 | 59 | (4 | ) | ||||||||
Impairment of long-lived assets | 100 | 709 | 301 | |||||||||
Stock-based compensation | 14,915 | 14,872 | 12,327 | |||||||||
Common stock issued for consulting services | | 482 | | |||||||||
Adjustments to fair value of contingent consideration | 1,941 | 1,176 | 3,453 | |||||||||
Provision for doubtful accounts | 408 | 408 | 638 | |||||||||
Deferred income taxes | 9,789 | 835 | 505 | |||||||||
Excess tax benefit from equity awards | (34 | ) | | | ||||||||
Payments of contingent consideration for business acquisitions in excess of fair value on acquisition date | (147 | ) | (2,435 | ) | (4,560 | ) | ||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable | (3,081 | ) | (6,558 | ) | 439 | |||||||
Prepaid expenses and other current assets | 1,910 | (307 | ) | (1,723 | ) | |||||||
Other assets | (230 | ) | (120 | ) | (231 | ) | ||||||
Accounts payable | 66 | 2,005 | (3,130 | ) | ||||||||
Accrued compensation | 337 | 353 | 421 | |||||||||
Accrued expenses | 2,173 | 1,215 | (1,827 | ) | ||||||||
Deferred revenue | 6,523 | 14,383 | 4,869 | |||||||||
Other liabilities | 5,827 | (504 | ) | (362 | ) | |||||||
Net cash provided by operating activities | 31,144 | 18,825 | 6,845 | |||||||||
Cash flows from investing activities:
|
||||||||||||
Business acquisitions, net of cash acquired | (6,947 | ) | (79,801 | ) | | |||||||
Purchases of property, equipment and software | (13,758 | ) | (4,695 | ) | (5,193 | ) | ||||||
Software development costs | (305 | ) | (360 | ) | (742 | ) | ||||||
Proceeds from disposal of assets | 14 | 5 | 8 | |||||||||
Purchases of available-for-sale securities | (22,907 | ) | (4,301 | ) | | |||||||
Sales of available-for-sale securities | | 5,835 | 1,328 | |||||||||
Maturities of available-for-sale securities | 18,390 | 6,402 | 651 | |||||||||
Net cash used in investing activities | (25,513 | ) | (76,915 | ) | (3,948 | ) | ||||||
Cash flows from financing activities:
|
||||||||||||
Repurchases of common stock | (20,006 | ) | (3,086 | ) | (477 | ) | ||||||
Proceeds from exercises of stock options | 18,952 | 73 | 85 | |||||||||
Excess tax benefit from equity awards | 34 | | | |||||||||
Payments of contingent consideration for business acquisitions | (1,289 | ) | (5,171 | ) | | |||||||
Proceeds from notes payable | 440 | | 600 | |||||||||
Payments on notes payable and capital lease obligations | (177 | ) | (204 | ) | (850 | ) | ||||||
Net cash used in financing activities | (2,046 | ) | (8,388 | ) | (642 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (219 | ) | 301 | 378 | ||||||||
Net increase (decrease) in cash and cash equivalents | 3,366 | (66,177 | ) | 2,633 | ||||||||
Cash and cash equivalents at beginning of year | 94,918 | 98,284 | 32,107 | |||||||||
Cash and cash equivalents at end of year | $ | 98,284 | $ | 32,107 | $ | 34,740 |
See accompanying notes.
F-150
|
|
|
|
|||||||||
Year Ended December 31, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
(Dollars in thousands) | ||||||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid for interest | $ | 22 | $ | 214 | $ | 101 | ||||||
Cash paid for income taxes, net of refunds | $ | (251 | ) | $ | (399 | ) | $ | (733 | ) | |||
Supplemental disclosure of non-cash investing and financing activities:
|
||||||||||||
Issuance of Series A redeemable convertible preferred stock in connection with acquisition | $ | | $ | 77,490 | $ | | ||||||
Issuance of common stock in connection with acquisition | $ | | $ | 9,118 | $ | | ||||||
Issuance of promissory note in connection with acquisition | $ | | $ | 669 | $ | | ||||||
Assets acquired under capital leases and other financing arrangements | $ | 440 | $ | 106 | $ | |
See accompanying notes.
F-151
Vocus, Inc. (Vocus or the Company) is a provider of cloud marketing and public relations software that enables businesses to acquire and retain customers. The Company offers products and services to help customers attract and engage prospects, capture and keep customers and measure and improve marketing effectiveness. The Companys integrated suites address the key areas of digital marketing and public relations, including social marketing, search marketing, email marketing and publicity. The Company is headquartered in Beltsville, Maryland with sales and other offices in the United States, Europe and Asia.
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and include the accounts of Vocus, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to the allowance for doubtful accounts, software development costs, useful lives of property, equipment and software, intangible assets and goodwill, contingent liabilities, self-insurance, revenue recognition, fair value of stock-based awards and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities as well as the reported amounts of revenues and expenses during the period. Actual results could differ from these estimates.
The Company considers all highly liquid investments with original maturity dates of three months or less at the time of purchase to be cash equivalents.
Management determines the appropriate classification of investments at the time of purchase and evaluates such a determination as of each balance sheet date. The Companys investments were classified as available-for-sale securities and were stated at fair value at December 31, 2012. There were no available-for-sale securities at December 31, 2013. Realized gains and losses are included in other income (expense) based on the specific identification method. Realized gains or losses for the years ended December 31, 2011, 2012, and 2013 were not material. Net unrealized gains and losses on available-for-sale securities are reported as a component of other comprehensive income (loss), net of tax. As of December 31, 2012, the net unrealized gains or losses on available-for-sale securities were not material. The Company regularly monitors and evaluates the fair value of its investments to identify other-than-temporary declines in value.
F-152
The Company measures certain financial assets at fair value pursuant to a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entitys pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels:
Level 1 | Inputs are quoted prices in active markets for identical assets or liabilities. |
Level 2 | Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. |
Level 3 | Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. |
Estimates are used to determine the amount of the allowance for doubtful accounts necessary to reduce accounts receivable to the estimated net realizable value. These estimates are made by analyzing the status of significant past-due receivables and by establishing provisions for estimated losses by analyzing current and historical bad debt trends. Actual collection experience has not varied significantly from prior estimates.
The Company incurs software development costs related to its cloud-based software. Qualifying costs incurred during the application development stage are capitalized. These costs primarily consist of internal labor and are amortized using the straight-line method over the estimated useful life of the software, which is generally two years. All other development costs are expensed as incurred. The Company capitalized the initial costs to acquire and develop its proprietary information database, which consists of media contacts and outlets and other relevant data integrated as part of the Companys cloud-based solutions. These costs are amortized using the straight-line method over the estimated useful lives of nine to thirteen years. Costs to maintain and update the information database are expensed as cost of revenues as incurred. For the years ended December 31, 2011, 2012 and 2013, the Company recorded amortization expense of $581,000, $499,000 and $490,000, respectively.
Property, equipment and software are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: three to five years for purchased software and computer and office equipment and five to seven years for furniture and fixtures. Assets acquired under capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the terms of the leases. Amortization of assets acquired under capital leases is included in depreciation expense. Repairs and maintenance costs are charged to expense as incurred. When assets are retired or otherwise disposed of, the asset and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recorded in the results of operations.
Long-lived assets include property, equipment and software and intangible assets with finite lives. Intangible assets consist of customer relationships, trade names and purchased technology acquired in business combinations. Intangible assets are amortized using the straight-line method over their estimated useful lives ranging from two to seven years. Long-lived assets are reviewed for impairment whenever events or changes
F-153
in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, the Company evaluates recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the estimated fair value of the assets. Impairment charges for long-lived assets for the years ended December 31, 2011 and 2013 were $100,000 and $301,000, respectively. Impairment charges for long-lived assets for the year ended December 31, 2012 were $709,000, which primarily related to leasehold improvements no longer used.
The Company has completed acquisitions of businesses that have resulted in the recording of goodwill and identifiable definite-lived intangible assets. The Company recognizes all of the assets acquired, liabilities assumed and contingent consideration at their fair values on the acquisition date. The Company uses significant estimates and assumptions, including fair value estimates, as of the acquisition date and refines those estimates that are provisional, as necessary, during the measurement period. The measurement period is the period after the acquisition date, not to exceed one year, in which new information may be gathered about facts and circumstances that existed as of the acquisition date to adjust the provisional amounts recognized. Measurement period adjustments are applied retrospectively. All other adjustments are recorded to the consolidated statements of operations. Acquisition-related costs are expensed as incurred separately from the acquisition and generally are included in general and administrative expenses in the consolidated statements of operations.
Goodwill represents the excess of the cost of an acquired entity over the net fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. The Company performs its annual impairment assessment on November 1, or whenever events or circumstances indicate impairment may have occurred. The Company operates under one reporting unit, and as a result, evaluates goodwill impairment based on the fair value of the Company as a whole. When assessing goodwill for impairment, the Company uses an income approach based on discounted cash flows to determine the fair value of its reporting unit. The Companys cash flow assumptions consider historical and forecasted revenue, operating costs and other relevant factors which are consistent with the plans used to manage the Companys operations. Based on the results of the Companys most recent annual assessment performed on November 1, 2013, the Company concluded that the fair value of its reporting unit exceeded its carrying amount. The Company also reviews the carrying amount of the reporting unit to its fair value based on quoted market prices of the Companys common stock, or market capitalization. The market capitalization of the Company exceeded its carrying amount on November 1, 2013. No events or circumstances occurred from the date of the assessments through December 31, 2013 that would impact these conclusions.
The reporting currency for all periods presented is the U.S. dollar. The functional currency for the Companys foreign subsidiaries is the local currency. The financial statements of these subsidiaries are translated into U.S. dollars using exchange rates in effect at the balance sheet date for assets and liabilities and average exchange rates during the period for revenues and expenses. The resulting translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders equity. Transaction gains and losses in currencies other than the functional currency are included in other income (expense) in the consolidated statements of operations. Amounts resulting from foreign currency transactions were not material for the years ended December 31, 2011, 2012 and 2013.
Comprehensive income (loss) includes the Companys net income (loss) as well as other changes in stockholders equity that result from transactions and economic events other than those with stockholders.
F-154
Other comprehensive income (loss) includes foreign currency translation adjustments and net unrealized gains and losses on investments classified as available-for-sale securities.
The Company derives its revenues from subscription arrangements and related services permitting customers to access and utilize the Companys cloud-based software. The Company also derives revenues from news distribution services sold separately from its subscription arrangements. The Company recognizes revenue when there is persuasive evidence of an arrangement, the service has been provided to the customer, the collection of the fee is probable and the amount of the fee to be paid by the customer is fixed or determinable. The Company allocates consideration to each deliverable in multiple element arrangements based on the relative selling prices and recognizes revenue as the respective services are delivered or performed.
The Companys separate units of accounting consist of its subscription services, news distribution services and professional services. These elements generally include access to the Companys cloud-based software, hosting services, content and content updates and customer support. The Companys subscription agreements typically are non-cancelable, though customers have the right to terminate their agreements for cause if the Company materially breaches its obligations under the agreement. Subscription agreements do not provide customers the right to take possession of the software at any time.
The Company also distributes individual news releases to the Internet which are indexed by major search engines and distributed directly to various news sites, journalists and other key constituents. The Company recognizes revenue on a per-transaction basis when the press releases are made available to the public.
The Companys professional services primarily consist of data migration, custom development and training. The Companys cloud-based software does not require significant modification and customization services.
The Company established vendor-specific objective evidence (VSOE) of the fair value for the selling price for certain of its news distribution services as the selling price for a substantial majority of stand-alone sales fall within a narrow range around the median selling price. The Company determined third-party evidence (TPE) of selling price is not available for any of its services due to differences in the features and functionality compared to competitors products. Therefore, the Company uses its estimated selling prices (ESP) for the remaining deliverables by analyzing multiple factors such as historical pricing trends, discounting practices, gross margin objectives and other market conditions.
Sales and other taxes collected from customers to be remitted to government authorities are excluded from revenues.
Deferred revenue consists of payments received from or billings to customers in advance of revenue recognition. Deferred revenue to be recognized in the succeeding twelve month period is included in current deferred revenue with the remaining amounts included in non-current deferred revenue.
Sales commissions are expensed when a subscription agreement is executed by the customer.
The Company expenses advertising costs as incurred. Advertising costs for the years ended December 31, 2011, 2012 and 2013 were $8.9 million, $23.4 million and $22.7 million, respectively.
F-155
The Companys share-based arrangements include stock option awards and restricted stock awards. The Company recognizes compensation expense for its equity awards on a straight-line basis over the requisite service period of the award based on the estimated portion of the award that is expected to vest and applies estimated forfeiture rates based on analyses of historical data, including termination patterns and other factors. The Company uses the quoted closing market price of its common stock on the grant date to measure the fair value of restricted stock awards and the Black-Scholes option pricing model to measure the fair value of stock option awards. The Company uses the daily historical volatility of its stock price over the expected life of the options to calculate the expected volatility. The Company uses a combination of its historical exercise data with expected future exercise patterns using the average midpoint between vesting and the contractual term to determine the expected term of option awards. The risk-free interest rate is based on the rate on U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. The Company has not paid dividends and does not anticipate paying a cash dividend in the foreseeable future and, accordingly, uses an expected dividend yield of zero.
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments and accounts receivable. The Company generally maintains its cash and cash equivalents with various nationally recognized financial institutions. Investments consisted of investment grade, interest bearing securities. Customers are granted credit on an unsecured basis. Management monitors the creditworthiness of its customers and believes that it has adequately provided for any exposure to potential credit losses.
The Company provides cloud-based software and related services to various customers across several industries. As of December 31, 2012 and 2013, no individual customer accounted for 10% or more of net accounts receivable. For the years ended December 31, 2011, 2012 and 2013, no individual customer accounted for 10% or more of revenue. As of December 31, 2012 and 2013, assets located outside the United States were approximately 9% and 10% of total assets, respectively. Revenues from sales to customers outside the United States were approximately 16%, 11%, and 10% of total revenues for the years ended December 31, 2011, 2012 and 2013, respectively.
Income taxes are determined utilizing the asset and liability method whereby deferred tax assets and liabilities are recognized for deductible temporary differences between the respective reported amounts and tax bases of assets and liabilities, as well as for operating loss and tax-credit carryforwards. Net deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Beginning in 2011, based on the operating results and the Companys projections of future losses, the Company established a full valuation allowance on its U.S. federal and state net deferred tax assets because it was able to conclude that it is more likely than not that it will not realize the benefits of its deferred tax assets. The Company historically maintained a full valuation allowance on net deferred tax assets of certain of its foreign subsidiaries because it determined that it is more likely than not that it will not realize the benefits of its foreign deferred tax assets.
The Companys estimates related to liabilities for uncertain tax positions require it to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. If it determines it is more likely than not that a tax position will be sustained based on its technical merits, the Company records the impact of the position in its consolidated financial statements at the largest amount that is greater than fifty percent likely of being realized upon ultimate settlement. The estimates are updated at each reporting
F-156
date based on the facts, circumstances and information available. The Company is also required to assess at each reporting date whether it is reasonably possible that any significant increases or decreases to its unrecognized tax benefits will occur during the next twelve months. The Company files income tax returns in the U.S. federal jurisdictions and various state and foreign jurisdictions and is subject to U.S. federal, state, and foreign tax examinations for years ranging from 2003 to 2013.
Basic net income or loss per share attributable to common stockholders is computed by dividing net income or loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Nonvested shares of restricted stock are not included in the computation of basic net income per share until vested. The Companys outstanding grants of restricted stock do not contain non-forfeitable dividend rights. Diluted net income per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock, nonvested shares of restricted stock and shares of redeemable convertible preferred stock are considered to be common stock equivalents.
As the Company has issued shares of Series A redeemable convertible preferred stock that participate in dividends with the common stock, the Company is required to apply the two-class method to compute the net income per share attributable to common stockholders. In periods of sufficient earnings, the two-class method assumes an allocation of undistributed earnings to both participating stock classes.
For the years ended December 2011, 2012 and 2013, the Company incurred net losses and, therefore, the effect of the Companys outstanding stock options, nonvested shares of restricted stock and redeemable convertible preferred stock was not included in the calculation of diluted loss per share as the effect would be anti-dilutive. For the years ended December 31, 2011, 2012 and 2013, diluted earnings per share excluded the impact of 1,757,240, 2,555,943 and 3,205,153 outstanding stock options, respectively, and 1,282,323, 979,790 and 937,536 nonvested shares of restricted stock, respectively and for the years ended December 31, 2012 and 2013, 1,000,000 shares of Series A redeemable convertible preferred stock as the result would be anti-dilutive.
The Companys chief operating decision maker manages the Companys operations on a consolidated basis for purposes of assessing performance and making operating decisions. Accordingly, the Company reports on its business as one segment.
On February 24, 2012, the Company acquired all of the outstanding shares of capital stock of iContact Corporation (iContact), a privately-held provider of cloud-based email and social marketing software that enables organizations to create and publish professional-quality emails designed to engage, educate and retain customers. The acquisition of iContact added an email capability component to the Companys cloud marketing suite. During the year ended December 31, 2012, the Company incurred acquisition-related transaction costs of $2.9 million, which are included in general and administrative expense in the consolidated statements of operations. During the year ended December 31, 2012, the Company incurred severance costs of $2.1 million, of which $52,000, $691,000, $637,000 and $691,000, were included in cost of revenues, sales and marketing, research and development and general and administrative expenses, respectively, in the consolidated statement of operations. All amounts were paid as of December 31, 2012. The acquisition was accounted for under the purchase method of accounting. The operating results of iContact are included in the accompanying consolidated financial statements from the date of acquisition.
F-157
The purchase consideration consisted of the following (in thousands):
|
|
|||
Cash | $ | 89,801 | ||
Note payable | 669 | |||
Common stock | 9,118 | |||
Series A redeemable convertible preferred stock | 77,490 | |||
Total purchase consideration | $ | 177,078 |
The purchase price consisted of $90.5 million in cash, of which $669,000 was held back in the form of a promissory note, 406,554 shares of the Companys common stock with a deemed value at issuance of $9.1 million and 1,000,000 shares of the Companys newly-created Series A convertible preferred stock with a deemed value at issuance of $77.5 million, aggregating approximately $167.1 million of total consideration, net of $10.0 million cash acquired. For more information about the promissory note, please refer to Note 8, Debt, and for more information about the Series A redeemable convertible preferred stock, please refer to Note 9, Stockholders Equity. At the closing of the acquisition, a portion of the consideration, consisting of 72,656 shares of common stock, 85,090 shares of the Series A redeemable convertible preferred stock, $6.1 million in cash and the $669,000 promissory note, were deposited in escrow for a period of one year to satisfy potential indemnification claims by the Company against iContact with respect to breaches by iContact of its representations, warranties and covenants, or any post-closing purchase price adjustments or outstanding appraisal claims by iContact stockholders. All amounts were released from escrow in the first quarter of 2013.
The purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The identifiable intangible assets include a trade name, customer relationships and purchased technology and are being amortized over three years on a straight-line basis. The Company, with the assistance of a third-party appraiser, assessed the fair value of these assets. The trade name and purchased technology were valued using the relief from royalty method and the customer relationships were valued using a discounted cash flow method. The relief from royalty method assesses the royalty savings an entity realizes since it owns the asset and does not have to pay a license fee to a third-party for its use. These methods require several judgments and assumptions to determine the fair value of the intangible assets including royalty rates, discount rates, customer attrition rates, useful lives of assets and expected levels of cash flows, earnings and revenues. The royalty rates used in the relief from royalty method ranged from 0.7% to 12% based on an analysis of market comparable rates. The discount rate used to estimate future cash flows was approximately 13%. The excess of the purchase price over the net tangible and identifiable intangible assets acquired was recorded as goodwill which is not deductible for tax purposes.
The Company recognized a deferred tax asset in the amount of $20.3 million relating to acquired net operating losses, established a deferred tax liability of $14.0 million relating to the step up in basis of identifiable intangibles and property plant and equipment, and recorded a valuation allowance of $6.3 million. The Company determined that while the acquired net operating loss is subject to the limitation provided in Section 382 of the Internal Revenue Code, this limitation will not preclude the company from fully realizing the acquired net operating losses.
Goodwill was primarily attributable to the assembled work force of iContact and the expected synergies resulting from the transaction.
F-158
The purchase price as of the acquisition date was as follows (in thousands):
|
|
|
||||||
Estimated
Useful Life |
Estimated
Fair Value |
|||||||
Cash and cash equivalents | $ | 10,000 | ||||||
Accounts receivable, net | 96 | |||||||
Prepaid and other current assets | 478 | |||||||
Property, equipment and software, net | 2,625 | |||||||
Trade name | 3 years | 1,400 | ||||||
Customer relationships | 3 years | 19,166 | ||||||
Purchased technology | 3 years | 12,041 | ||||||
Goodwill | 138,860 | |||||||
Accounts payable and accrued liabilities | (5,911 | ) | ||||||
Deferred revenue | (1,645 | ) | ||||||
Other liabilities | (32 | ) | ||||||
Total purchase price | $ | 177,078 |
The following unaudited pro forma consolidated results of operations for years ended December 31, 2011 and 2012 assumes that the iContact acquisition occurred at the beginning of 2011. The unaudited pro forma information combines the historical results for the Company with the historical results for iContact for the same period. The unaudited pro forma financial information for the years ended December 31, 2011 and 2012 includes adjustments for amortization of acquired intangible assets of $10.4 million and $1.5 million, respectively. The unaudited pro forma financial information for the year ended December 31, 2012 excludes acquisition-related transaction and severance costs of $5.0 million and the fair value adjustment for deferred revenue of $2.2 million. The following unaudited pro forma information is not intended to be indicative of future operating results (dollars in thousands, except per share data):
|
|
|
||||||
Year Ended December 31, | ||||||||
2011 | 2012 | |||||||
Pro forma revenues | $ | 162,743 | $ | 180,403 | ||||
Pro forma net loss | $ | (30,883 | ) | $ | (19,279 | ) | ||
Pro forma net loss per share:
|
||||||||
Basic and diluted | $ | (1.61 | ) | $ | (0.99 | ) |
The Company recognized revenue and incurred a net loss from iContact of $41.4 million and $4.5 million, respectively, since the date of acquisition through December 31, 2012.
On February 24, 2011, the Company acquired substantially all of the assets and assumed certain liabilities of North Venture Partners, LLC (North Social), a provider of Facebook applications that enable users to create, manage and promote their business on Facebook. The acquisition of North Social broadened the Companys social media solution. The acquisition was accounted for under the purchase method of accounting. The operating results of North Social are included in the accompanying consolidated financial statements from the date of acquisition.
The purchase consideration at the acquisition date consisted of approximately $7.0 million in cash and $5.1 million of contingent cash consideration for the achievement of certain financial milestones within the following 24 months. In 2012 and 2013, the Company paid $7.0 million and $4.6 million, respectively of contingent consideration for the achievement of certain financial milestones. The Company recorded approximately $101,000 of identifiable intangible assets, $11.9 million of goodwill that is deductible for tax
F-159
purposes, and $78,000 of other net tangible assets. Goodwill was primarily attributable to North Socials knowledge of applications for Facebook and the opportunity to expand into the rapidly growing social media market. Acquisition-related costs associated with the acquisition were not material. For more information about the contingent consideration for the acquisition of North Social, please refer to Note 5, Fair Value Measurements.
The components of cash equivalents and investments at December 31, 2012 were as follows (in thousands):
|
|
|
|
|
||||||||||||
Unrealized |
Fair
Market Value |
|||||||||||||||
Cost | Gains | Losses | ||||||||||||||
Cash equivalents:
|
||||||||||||||||
Money market funds | $ | 11,290 | $ | | $ | | $ | 11,290 | ||||||||
Certificates of deposit | 1,322 | | | 1,322 | ||||||||||||
Short-term investments:
|
||||||||||||||||
Certificates of deposit | 660 | 2 | | 662 | ||||||||||||
Long-term investments:
|
||||||||||||||||
Certificates of deposit | 1,322 | | | 1,322 | ||||||||||||
Total | $ | 14,594 | $ | 2 | $ | | $ | 14,596 |
The components of cash equivalents and investments at December 31, 2013 were as follows (in thousands):
|
|
|
|
|
||||||||||||
Unrealized |
Fair
Market Value |
|||||||||||||||
Cost | Gains | Losses | ||||||||||||||
Cash equivalents:
|
||||||||||||||||
Money market funds | $ | 5,302 | $ | | $ | | $ | 5,302 | ||||||||
Certificates of deposit | 6,907 | | | 6,907 | ||||||||||||
Total | $ | 12,209 | $ | | $ | | $ | 12,209 |
Cash equivalents have original maturity dates of three months or less. Short-term investments have original maturity dates greater than three months but less than one year. Long-term investments have original maturity dates between one and five years.
The fair value measurements of the Companys financial assets and liabilities measured on a recurring basis at December 31, 2012 were as follows (in thousands):
|
|
|
|
|
||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents | $ | 12,612 | $ | 12,612 | $ | | $ | | ||||||||
Short-term investments | 662 | 662 | | | ||||||||||||
Long-term investments | 1,322 | 1,322 | | | ||||||||||||
Total assets measured at fair value | $ | 14,596 | $ | 14,596 | $ | | $ | | ||||||||
Liabilities:
|
||||||||||||||||
Accrued expenses:
|
||||||||||||||||
Accrued contingent consideration, current portion | $ | 1,107 | $ | | $ | | $ | 1,107 | ||||||||
Total liabilities measured at fair value | $ | 1,107 | $ | | $ | | $ | 1,107 |
F-160
The fair value measurements of the Companys financial assets and liabilities measured on a recurring basis at December 31, 2013 were as follows (in thousands):
|
|
|
|
|
||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents | $ | 12,209 | $ | 12,209 | $ | | $ | | ||||||||
Total assets measured at fair value | $ | 12,209 | $ | 12,209 | $ | | $ | |
Cash equivalents and short-term investments are classified within Level 1 of the fair value hierarchy since they are valued using quoted market prices or alternative pricing sources that utilize market observable inputs.
The Company had incurred contingent consideration liabilities in connection with its business acquisitions in 2010 and 2011. Contingent consideration liabilities were classified as Level 3 of the fair value hierarchy since they were valued using unobservable inputs. The contingent consideration liability represented the estimated fair value of the additional cash consideration payable that was contingent upon the achievement of certain financial and performance milestones through respective target dates in 2011 through 2013. The fair value of this Level 3 liability was estimated based on a discounted probability-weighted income approach derived from revenue and earnings estimates and a probability assessment with respect to the likelihood of achieving the milestone criteria. Increases or decreases in the probability of achievement of these certain financial and performance milestones resulted in changes to the estimated fair value. The additional expense of $1.9 million, $1.2 million and $3.5 million was included in general and administrative expenses in the consolidated statements of operations for the years ended December 31, 2011, 2012, and 2013, respectively. During 2013, the fair value of the contingent consideration was adjusted based on the final earn-out calculations which were impacted by higher revenues in the first quarter of 2013 resulting from the increase in the number of North Social subscription customers due to additional marketing efforts near the conclusion of the earn-out period. The remaining liability for contingent consideration was paid in the second quarter of 2013.
The changes in the fair value of the Companys acquisition related contingent consideration for the years ended December 31, 2012 and 2013, were as follows (in thousands):
|
|
|
||||||
December 31, | ||||||||
2012 | 2013 | |||||||
Balance as of beginning of period | $ | 7,537 | $ | 1,107 | ||||
Adjustments to fair value measurements | 1,176 | 3,453 | ||||||
Payment of contingent consideration | (7,606 | ) | (4,560 | ) | ||||
Balance as of end of period | $ | 1,107 | $ | |
Property, equipment and software consisted of the following (in thousands):
|
|
|
||||||
December 31, | ||||||||
2012 | 2013 | |||||||
Purchased software, computer and office equipment | $ | 12,539 | $ | 14,397 | ||||
Furniture and fixtures | 2,030 | 2,397 | ||||||
Leasehold improvements | 11,499 | 13,471 | ||||||
Equipment under capital lease obligations | 569 | 560 | ||||||
Capitalized software development costs | 1,960 | 2,762 | ||||||
Information database costs | 2,839 | 2,839 | ||||||
31,436 | 36,426 | |||||||
Less accumulated depreciation and amortization | (11,368 | ) | (16,292 | ) | ||||
Property, equipment and software, net | $ | 20,068 | $ | 20,134 |
F-161
Depreciation and amortization expense, including depreciation on equipment under capital leases, was $2.7 million, $4.8 million and $5.5 million for the years ended December 31, 2011, 2012 and 2013, respectively.
The changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2013 were as follows (in thousands):
|
|
|
||||||
December 31, | ||||||||
2012 | 2013 | |||||||
Balance as of beginning of period | $ | 38,029 | $ | 177,011 | ||||
Goodwill acquired | 138,860 | | ||||||
Effects of foreign currency translation | 122 | 253 | ||||||
Balance as of end of period | $ | 177,011 | $ | 177,264 |
Intangible assets at December 31, 2012 consisted of the following (in thousands):
|
|
|
|
|
||||||||||||
Weighted-
Average Amortization Period |
Gross
Carrying Amount |
Amortization |
Net
Carrying Amount |
|||||||||||||
Customer relationships | 3.7 | $ | 23,221 | $ | (7,014 | ) | $ | 16,207 | ||||||||
Trade names | 5.9 | 5,686 | (4,192 | ) | 1,494 | |||||||||||
Purchased technology | 3.1 | 13,460 | (4,410 | ) | 9,050 | |||||||||||
Total | $ | 42,367 | $ | (15,616 | ) | $ | 26,751 |
Intangible assets at December 31, 2013 consisted of the following (in thousands):
|
|
|
|
|
||||||||||||
Weighted-
Average Amortization Period |
Gross
Carrying Amount |
Amortization |
Net
Carrying Amount |
|||||||||||||
Customer relationships | 3.7 | $ | 23,376 | $ | (14,074 | ) | $ | 9,302 | ||||||||
Trade names | 5.9 | 5,695 | (5,058 | ) | 637 | |||||||||||
Purchased technology | 3.1 | 13,496 | (8,630 | ) | 4,866 | |||||||||||
Total | $ | 42,567 | $ | (27,762 | ) | $ | 14,805 |
The Companys goodwill and intangible assets for certain of its foreign subsidiaries are recorded in their functional currency, which is their local currency, and therefore are subject to foreign currency translation adjustments.
Amortization expense of intangible assets for the years ended December 31, 2011, 2012 and 2013 was $2.5 million, $11.0 million and $12.0 million, respectively. Future expected amortization of intangible assets at December 31, 2013 was as follows (in thousands):
|
|
|||
2014 | $ | 11,720 | ||
2015 | 2,352 | |||
2016 | 575 | |||
2017 | 158 | |||
Total | $ | 14,805 |
F-162
The Company entered into loan agreements with the State of Maryland in the amounts of $400,000 in 2011 and $500,000 in 2013 with terms ending on December 31, 2020 and with Prince Georges County in the amounts of $40,000 in 2011 with a term ending on December 31, 2020 and $100,000 in 2013 with a term ending on December 31, 2016. The proceeds of the loans were used in the initial renovation and further expansion of its corporate headquarters in Beltsville, Maryland. The borrowings bear interest at 3.0%. The conditions of the loans stipulate that principal and related accrued interest be forgiven if specified employment levels are achieved and maintained and the Company maintains the Beltsville, Maryland location as the corporate headquarters through the end of the loans. As of December 31, 2013, the Company has met the conditions of the loans, however, the conditions are required to be met throughout the term of the loan and, as such, the loans are recorded as long-term liabilities. The outstanding balance of these loans was $1.0 million and is included in notes payable and capital lease obligations, net of current portion. The related accrued interest is included in other liabilities, but was not material as of December 31, 2012 and 2013.
A portion of the purchase consideration for the acquisition of iContact was held back in the form of a promissory note (Escrow Note) in the amount of $669,000. The Escrow Note accrued interest at a rate of 1% per annum and was held in escrow until payment in 2013. As of December 31, 2012 outstanding borrowings were $669,000. The Escrow note and related accrued interest were paid in full in February 2013.
On February 27, 2012, the Company established a $15.0 million revolving credit facility (Revolver) with a major lending institution which was originally available for use until February 27, 2013. In February 2013, the Revolver was amended to extend the availability for use until April 15, 2014. The Revolver is intended to be used for general working capital purposes and to provide increased liquidity and financial flexibility and bears interest equal to the BBA LIBOR Daily Floating Rate plus 2.25%. In addition, the Company pays a monthly fee equal to 0.4% on any unused funds under the revolving facility. As collateral for extension of credit under the facility, the Company and certain of its subsidiaries granted security interests in favor of the institution of substantially all of their assets, and the Company pledged the stock of its directly owned domestic subsidiaries and 65% of the shares of its foreign subsidiaries. As of December 31, 2013, there were no outstanding borrowings, however, the, facility was reduced by the Companys outstanding letters of credit of $1.3 million. As such, the Company had $13.7 million available to borrow under the Revolver.
The Companys Certificate of Incorporation authorizes 10,000,000 undesignated shares of preferred stock. The Companys Board of Directors (Board) is authorized to establish one or more classes or series from the undesignated shares, to designate each share or class or series, and to fix the relative rights and preferences of each class or series, which rights and preferences may be superior to those of any of the common shares. In February 2012, the Board designated 1,000,000 shares of the Companys authorized preferred stock as Series A convertible preferred stock in connection with the acquisition of iContact. On February 24, 2012, the Company issued 1,000,000 shares of Series A Redeemable Convertible Preferred Stock (Series A Preferred Stock). In May 2013, the Board designated 100,000 shares of the Companys authorized preferred stock as Series B Junior Participating Preferred Stock (Series B Preferred Stock), however, no shares of Series B Preferred Stock are issued and outstanding.
F-163
In connection with the acquisition of iContact in February 2012, the Company issued 1,000,000 shares of Series A Preferred Stock with a deemed fair value at issuance of $77.5 million. The Company does not adjust the carrying value to the redemption amount of the convertible preferred stock as the carrying amount exceeds the redemption amount. There have been no changes to the recorded amount of the Series A Preferred Stock since the issuance of the shares.
Each share of the Series A Preferred Stock has a liquidation preference equal to the greater of $77.30 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization affecting the Series A Preferred Stock) or the value of the shares of common stock that would be issued in respect thereof upon conversion of such share of Series A Preferred Stock. The Series A Preferred Stock does not provide for interest and is entitled to participate in any dividends declared on the Companys common stock on an as-converted basis. On February 24, 2017, the Company will be required to redeem each issued and outstanding share of the Series A Preferred Stock for $77.30 per share from its legally available funds, or such lesser amount of shares as it may then redeem under Delaware law. Each share of the Series A Preferred Stock is convertible into shares of the Companys common stock at any time at the option of the holder. For conversions occurring on or before February 24, 2017, each share of Series A Preferred Stock will be convertible into 3.0256 shares of common stock (subject to customary adjustments). On and after February 25, 2017, each share of the Series A Preferred Stock which has not been redeemed will be convertible into 3.3282 shares of common stock (subject to customary adjustments).
The holders of Series A Preferred Stock vote on an as-converted basis with the common stock, voting together as a single class, provided that the holders of the Series A Preferred Stock are entitled to vote separately as a class on certain matters affecting the Series A Preferred Stock. If any shares of Series A Preferred Stock are outstanding on or after February 24, 2017, the holders of the Series A Preferred Stock will have the right to vote separately as a class on additional actions by the Company related to acquisitions, redemptions, dividends, capital stock, and indebtedness. In addition, for so long as the outstanding shares of Series A Preferred Stock continue to represent at least 5% of the total outstanding shares of the Companys common stock, calculated assuming the conversion of all outstanding shares of Series A Preferred Stock into shares of common stock, the holders of the Series A Preferred Stock, voting as a separate class, will have the exclusive right to elect one director to the Companys Board of Directors (Series A Director).
In connection with the acquisition of iContact, the Company also entered into, on February 24, 2012, an Investor Rights Agreement (Investor Rights Agreement) whereby the holders of the Series A Preferred Stock have the right to nominate a director to the Companys Board for as long as they hold 5% or more of the Companys issued and outstanding capital stock (which nominee shall be the Series A Director for so long as the holders of Series A Preferred Stock have the right to elect the Series A Director pursuant to the Certificate of Designation). In addition, subject to the terms and conditions of the Investor Rights Agreement, the holders of the Series A Preferred Stock shall have demand and piggyback registration rights and the right to participate in certain repurchases of common stock by the Company.
On May 13, 2013, the Board authorized and declared a dividend distribution of one preferred stock purchase right (Right) for each outstanding share of the Companys common stock and 3.0256 Rights for each outstanding share of the Companys Series A Convertible Preferred Stock to stockholders of record at the close of business on May 13, 2013.
Each Right entitles registered holders to purchase from the Company one one-thousandth of a share of the Companys Series B Junior Participating Preferred Stock at a price of $46.00 per one one-thousandth of a share, subject to adjustment. The definitive terms of the Rights are set forth in a Rights Agreement, dated May 13, 2013. The Rights will be exercisable only if a person or group acquires 20% or more of the
F-164
Companys outstanding common stock (subject to certain exceptions), or if a person or group announces a tender or exchange offer, resulting in beneficial ownership of 20% or more of the outstanding common stock. The Rights also will be exercisable if a person or group that already beneficially owns or has the right to acquire on May 13, 2013, 20% or more of the Companys outstanding common stock acquires additional shares equal to 1% or more of the Companys then outstanding common stock (except in the case of a certain stockholder who, under limited circumstances, is permitted to beneficially own more than 20%, but less than 25%, of the Companys outstanding common stock, subject to certain exceptions).
The Board can redeem the Rights for $0.0001 per Right at any time prior to the earlier of the occurrence of a trigger event or the expiration date. Additionally, prior to an acquisition of 50% or more of the Companys common stock, the Board may direct the mandatory exchange of the Rights (other than Rights owned by the acquiring person) at an exchange ratio of one newly issued share of common stock for each right.
The Rights will expire on May 13, 2016 or 30 days after the Companys 2014 annual meeting of stockholders if the continuation of the rights plan is not approved by the Companys stockholders at its 2014 annual meeting, if not exercised or redeemed.
In November 2008, the Companys Board of Directors authorized a stock repurchase program for up to $30.0 million of the Companys shares of common stock, and in August 2011 authorized up to an additional $30.0 million. The shares may be purchased from time to time in the open market. During the year ended December 31, 2011, the Company purchased an aggregate of 850,031 shares of its common stock for $16.8 million. The Company did not purchase any shares of its common stock under the stock repurchase program for the years ended December 31, 2012 and 2013. During the years ended December 31, 2011, 2012 and 2013, the Company also purchased 128,678, 143,789 and 35,695 shares of restricted stock for $3.2 million, $3.1 million and $477,000, respectively, which were withheld from employees to satisfy the minimum statutory tax withholding obligations upon the vesting of their restricted stock awards.
The Companys 1999 Stock Option Plan and 2005 Stock Award Plan (the Plans) provide for the grant of stock options, restricted stock, stock appreciation rights and other equity awards to employees, consultants, officers and directors. The 2005 Stock Award Plan was adopted by the Board of Directors and stockholders in November 2005 in conjunction with the Companys initial public offering. Under the 2005 Stock Award Plan, 9,409,919 shares have been reserved for issuance, subject to annual increases. The Plans are administered by the Compensation Committee of the Board of Directors, which has the authority, among other things, to determine which individuals receive awards pursuant to the Plans, and the terms of the awards. Stock options granted under the Plans have a 10-year term and generally vest annually over a four-year period. Restricted stock awards generally vest annually over a four-year period. The Companys outstanding equity awards include stock option awards and restricted stock awards. At December 31, 2013, 714,301 shares were available for future grants. All shares available for future grant are restricted to the 2005 Stock Award Plan.
The following table sets forth the stock-based compensation expense for equity awards recorded in the consolidated statements of operations for the years ended December 31, 2011, 2012 and 2013 (in thousands):
|
|
|
|
|||||||||
Year Ended December 31, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
Cost of revenues | $ | 1,575 | $ | 1,514 | $ | 1,356 | ||||||
Sales and marketing | 4,126 | 4,299 | 3,162 | |||||||||
Research and development | 2,079 | 2,646 | 1,933 | |||||||||
General and administration | 7,135 | 6,413 | 5,876 | |||||||||
Total | $ | 14,915 | $ | 14,872 | $ | 12,327 |
F-165
The following weighted-average assumptions were used in calculating stock-based compensation for stock option awards granted during the years ended December 31, 2011, 2012 and 2013:
|
|
|
|
|||||||||
Year Ended December 31, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
Stock price volatility | 57 | % | 60 | % | 59 | % | ||||||
Expected term (years) | 6.1 | 5.7 | 6.1 | |||||||||
Risk-free interest rate | 2.2 | % | 1.1 | % | 1.2 | % | ||||||
Dividend yield | 0 | % | 0 | % | 0 | % |
The summary of stock option activity for the year ended December 31, 2013 is as follows:
|
|
|
|
|
|
|||||||||||||||
Number of
Options |
Range of
Exercise Prices |
Weighted-
Average Exercise Price per Share |
Weighted-
Average Contractual Term |
Aggregate
Intrinsic Value as of December 31, 2013 (in thousands) |
||||||||||||||||
Balance outstanding at January 1, 2013 | 2,555,943 | $ | 2.46 $35.98 | $ | 15.93 | |||||||||||||||
Granted | 946,355 | 8.22 17.54 | 13.33 | |||||||||||||||||
Exercised | (11,583 | ) | 2.46 9.00 | 7.44 | ||||||||||||||||
Forfeited or cancelled | (285,562 | ) | 2.46 31.03 | 14.37 | ||||||||||||||||
Balance outstanding at December 31, 2013 | 3,205,153 | $ | 3.99 35.98 | $ | 15.33 | 7.0 | $ | 1,202 | ||||||||||||
Vested and expected to vest at December 31, 2013 | 3,124,090 | $ | 3.99 35.98 | $ | 15.37 | 7.0 | $ | 1,189 | ||||||||||||
Balance exercisable at December 31,
2013 |
1,433,554 | $ | 3.99 35.98 | $ | 15.78 | 5.2 | $ | 1,038 |
The weighted-average grant date fair value of stock options granted during the years ended December 31, 2011, 2012 and 2013 was $13.03, $7.36 and $7.29, respectively. The aggregate fair value of stock options that vested during the years ended December 31, 2011, 2012 and 2013 was $4.8 million, $3.5 million and $4.4 million, respectively. As of December 31, 2013, $10.6 million of total unrecognized stock-based compensation cost is related to nonvested stock option awards and is expected to be recognized over a weighted-average period of 2.5 years.
The aggregate intrinsic value in the table above represents the difference between the exercise price of the underlying equity awards and the quoted closing price of the Companys common stock at the last day of the year multiplied by the number of shares that would have been received by the stock option holders had all holders exercised their stock options on the last day of each respective year. The aggregate intrinsic value of options exercised during the years ended December 31, 2011, 2012 and 2013 was $15.5 million, $105,000 and $36,000, respectively.
F-166
The following details the outstanding stock options at December 31, 2013:
|
|
|
|
|
|
|||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||
Range of Exercise Prices |
Outstanding
as of 12/31/13 |
Weighted-
Average Remaining Contractual Term |
Weighted-
Average Exercise Price per Share |
Exercisable
as of 12/31/13 |
Weighted-
Average Exercise Price per Share |
|||||||||||||||
$3.99 $10.00 | 479,193 | 3.1 | $ | 8.88 | 402,729 | $ | 8.81 | |||||||||||||
$10.01 $13.00 | 215,888 | 8.3 | 12.47 | 51,621 | 12.55 | |||||||||||||||
$13.01 $13.25 | 555,962 | 8.1 | 13.25 | 169,311 | 13.24 | |||||||||||||||
$13.26 $14.00 | 675,391 | 9.2 | 13.94 | 12,190 | 13.94 | |||||||||||||||
$14.01 $17.00 | 475,177 | 6.4 | 14.79 | 322,033 | 14.75 | |||||||||||||||
$17.01 $23.00 | 253,996 | 6.4 | 19.03 | 129,996 | 19.58 | |||||||||||||||
$23.01 $35.98 | 549,546 | 6.9 | 24.68 | 345,674 | 25.21 | |||||||||||||||
3,205,153 | 7.0 | $ | 15.33 | 1,433,554 | $ | 15.78 |
The fair value of the restricted stock awards is determined based on the quoted closing market price of the Companys common stock on the grant date.
The summary of restricted stock award activity for the year ended December 31, 2013 is as follows:
|
|
|
||||||
Number of
Shares Underlying Stock Awards |
Weighted-
Average Grant Date Fair Value |
|||||||
Balance nonvested at January 1, 2013 | 979,790 | $ | 17.12 | |||||
Awarded | 654,485 | 13.17 | ||||||
Vested | (556,714 | ) | 16.23 | |||||
Forfeited | (140,025 | ) | 15.19 | |||||
Balance nonvested at December 31, 2013 | 937,536 | $ | 15.18 |
As of December 31, 2013, $10.4 million of total unrecognized stock-based compensation cost is related to nonvested shares of restricted stock and is expected to be recognized over a weighted-average period of 2.4 years.
The Company sponsors defined-contribution, profit-sharing and other benefit plans in the United States, the United Kingdom and France. Total expenses for the plans for the years ended December 31, 2011, 2012 and 2013 were approximately $747,000, $1.0 million and $1.1 million, respectively.
For the years ended December 31, 2011, 2012 and 2013, the U.S. and foreign components of loss before income taxes were as follows (in thousands):
|
|
|
|
|||||||||
2011 | 2012 | 2013 | ||||||||||
Domestic | $ | (4,906 | ) | $ | (20,848 | ) | $ | (17,700 | ) | |||
Foreign | 948 | (1,316 | ) | (2,901 | ) | |||||||
Total loss before income taxes | $ | (3,958 | ) | $ | (22,164 | ) | $ | (20,601 | ) |
F-167
For the years ended December 31, 2011, 2012 and 2013, income tax provision consisted of the following (in thousands):
|
|
|
|
|||||||||
2011 | 2012 | 2013 | ||||||||||
Current expense
|
||||||||||||
Federal | $ | 26 | $ | | $ | | ||||||
State | 6 | 34 | (25 | ) | ||||||||
Foreign | 665 | 696 | 727 | |||||||||
Total current expense | 697 | 730 | 702 | |||||||||
Deferred expense
|
||||||||||||
Federal | 9,282 | 751 | 723 | |||||||||
State | 884 | 94 | 73 | |||||||||
Foreign | (244 | ) | (148 | ) | (293 | ) | ||||||
Total deferred expense | 9,922 | 697 | 503 | |||||||||
Total provision for income taxes | $ | 10,619 | $ | 1,427 | $ | 1,205 |
A reconciliation of the Companys effective tax rate to the statutory federal income tax rate for the years ended December 31, 2011, 2012 and 2013 is as follows:
|
|
|
|
|||||||||
2011 | 2012 | 2013 | ||||||||||
Statutory federal tax rate | 35 | % | 35 | % | 35 | % | ||||||
State income taxes, net of benefit | 6 | 2 | 4 | |||||||||
Effect of foreign losses | (5 | ) | (1 | ) | | |||||||
Non-deductible transaction costs | | (3 | ) | | ||||||||
Non-deductible compensation | (19 | ) | (3 | ) | (1 | ) | ||||||
Other non-deductible expenses | 13 | | (2 | ) | ||||||||
Effect of uncertain tax positions | (5 | ) | (1 | ) | (1 | ) | ||||||
Changes in valuation allowance | (293 | ) | (35 | ) | (41 | ) | ||||||
(268 | )% | (6 | )% | (6 | )% |
The provision for income taxes for the year ended December 31, 2011 differed from the expected tax provision computed by applying the U.S. federal statutory rate to income or loss before income taxes primarily due to the establishment of the valuation allowance and, to a lesser extent, state income taxes and certain non-deductible expenses including stock-based compensation and operating losses in foreign jurisdictions for which no tax benefit is currently available.
In 2011, the Company established a valuation allowance against its U.S. federal and state net deferred tax assets because management concluded that it is more likely than not that it will not realize the tax benefits of its deferred tax assets based on recent operating results and current projections of future losses and, therefore, recorded a valuation allowance to reduce the carrying value of these net deferred tax assets. As a result, the valuation allowance on the Companys net U.S. deferred tax assets increased by $11.8 million during the year ended December 31, 2011. As of December 31, 2011, the Company maintained a net valuation allowance against certain of its foreign deferred tax assets. The Company has historically maintained a net valuation allowance on deferred tax assets of certain of its foreign subsidiaries because management determined that it is more likely than not that it will not realize the tax benefits of its foreign deferred tax assets and, therefore, recorded a valuation allowance to reduce the carrying value of these foreign deferred tax assets to zero.
The provision for income taxes for the year ended December 31, 2012 and 2013 differed from the expected tax provision computed by applying the U.S. federal statutory rate to loss before income taxes primarily due to the recognition of the U.S. valuation allowance, operating losses in foreign jurisdictions for which no tax
F-168
benefit is currently available, non-deductible stock-based compensation, non-deductible acquisition-related transaction costs and to a lesser extent, state income taxes and certain other non-deductible expenses.
As of December 31, 2012 and 2013, the Company maintained a full valuation allowance on its U.S. and certain of its foreign deferred tax assets because management determined that it was more likely than not that it will not realize the tax benefits of these deferred tax assets.
The Companys deferred tax components consisted of the following (in thousands):
|
|
|
||||||
December 31, | ||||||||
2012 | 2013 | |||||||
Deferred tax assets:
|
||||||||
NOL carryforwards | $ | 27,481 | $ | 29,864 | ||||
Allowance for doubtful accounts | 51 | 47 | ||||||
Deferred revenue | 258 | 452 | ||||||
Accrued expenses | 2,188 | 906 | ||||||
Intangible asset amortization | | | ||||||
Stock-based compensation | 6,334 | 7,377 | ||||||
Capital loss carryforward | 1,787 | 1,786 | ||||||
Other | 1,274 | 1,528 | ||||||
Total deferred tax assets | 39,373 | 41,960 | ||||||
Valuation allowance | (31,005 | ) | (39,402 | ) | ||||
Net deferred tax assets | 8,368 | 2,558 | ||||||
Deferred tax liabilities:
|
||||||||
Capitalized software development | (590 | ) | (754 | ) | ||||
Depreciation | (3,048 | ) | (2,280 | ) | ||||
Goodwill and intangible asset amortization | (8,227 | ) | (3,394 | ) | ||||
Other | (143 | ) | (302 | ) | ||||
Total deferred tax liabilities | (12,008 | ) | (6,730 | ) | ||||
Net deferred tax liability | $ | (3,640 | ) | $ | (4,172 | ) |
The Company has not provided for U.S. income taxes on the undistributed earnings and the other outside basis temporary differences of foreign subsidiaries as they are considered indefinitely reinvested outside of the U.S.
At December 31, 2013, the amount of temporary differences related to undistributed earnings of investments in foreign subsidiaries upon which United States income taxes have not been provided was zero.
As of December 31, 2013, the Company had net operating loss (NOL) carryforwards for federal and state tax purposes of approximately $85.0 million and $41.7 million, respectively, which will expire between 2025 and 2033. The Company also has $1.0 million of federal and state R&D tax credit that will expire between 2017 and 2033, $390,000 of non-expiring Alternative Minimum Tax credit and $285,000 of state employment tax credits that will expire between 2014 and 2017. The Companys foreign subsidiaries generated NOL carryforwards of $15.7 million including $14.4 million of non-expiring losses and $1.3 million that will expire between 2020 and 2023. Included in these amounts at December 31, 2013 are approximately $5.4 million in cumulative income tax deductions on the exercise of stock options and the vesting of restricted stock awards. This income tax benefit will be recorded to additional paid-in-capital when realized.
Certain of the Companys federal and state NOL carryforwards are subject to annual limitations under Section 382 of Internal Revenue Code. The limitations imposed under Section 382 will not preclude the
F-169
Company from realizing these NOLs but may operate to limit their utilization of the NOLs in any given tax year in the event that the Companys federal and state taxable income exceeds the limitation imposed by Section 382.
The Company recorded a tax deficiency from equity awards to additional paid-in capital for the years ended December 31, 2011 and 2012, as certain equity awards that vested and were exercised resulted in a shortfall, however, as the Company generated sufficient excess tax benefits in the previous years, the shortfall only reduced the cumulative additional paid-in capital from excess tax benefits. The Company has elected to use the with and without method for recognition of excess tax benefits related to equity awards.
The Company elected not to record the impact of the French 3% dividend withholding tax with respect to its wholly owned French subsidiary deferred tax assets and liabilities as the Company does not anticipate declaring and distributing any dividends out of the available accumulated earnings of its wholly owned French subsidiary. In the event that the Company would cause its wholly owned French subsidiary to declare and distribute a future dividend the Company would record the impact of the French withholding tax that will be due to the French government at the time that it declares and distribute such dividend. The available accumulated earnings that could be distributed by the Companys wholly owned French subsidiary are $5.0 million. In the event that the Company declares and distributes a dividend that equals to the total available accumulated earnings of its wholly owned French subsidiary, the Company would record an additional income tax expense of $150,000. This tax expense will be recorded as a discrete item in the period that the distribution occurs.
As of December 31, 2012 and 2013, the Company had unrecognized tax benefits of $933,000 and $1.1 million, respectively included in other liabilities, including interest and penalties of $492,000 and $567,000, respectively. As of December 31, 2012, the total amount of gross unrecognized tax benefits was $1.1 million, if recognized, would favorably impact the Companys effective tax rate. As of December 31, 2013, the total amount of gross unrecognized tax benefits was $1.3 million if recognized, would favorably impact the Companys effective tax rate. For the years ended December 31, 2012 and 2013, the Company recognized $56,000 and $76,000, respectively of interest expense in connection with tax matters which is included in income tax expense. The Company does not believe its unrecognized tax positions will materially change over the next twelve months.
The change in unrecognized tax benefits, excluding accrued interest, for the years ended December 31, 2012 and 2013, were as follows (in thousands):
|
|
|
||||||
December 31, | ||||||||
2012 | 2013 | |||||||
Balance as of beginning of period | $ | 501 | $ | 585 | ||||
Additions based on tax positions taken in the current year | 80 | 78 | ||||||
Additions for tax positions of prior years | 4 | 76 | ||||||
Balance as of end of period | $ | 585 | $ | 739 |
The Company files income tax returns in U.S. federal jurisdictions and various state and foreign jurisdictions and is subject to U.S. federal, state, and foreign tax examinations for years ranging from 2003 to 2013.
The Company has various non-cancelable operating leases, primarily related to office real estate, that expire through 2023 and generally contain renewal options for up to five years. Lease incentives, payment escalations and rent holidays specified in the lease agreements are accrued or deferred as appropriate as a component of rent expense which is recognized on a straight-line basis over the terms of occupancy. As of December 31, 2012, deferred rent of $752,000 and $5.7 million is included in accrued expenses and other liabilities,
F-170
respectively. As of December 31, 2013, deferred rent of $783,000 and $5.0 million is included in accrued expenses and other liabilities, respectively.
The Company also leases computer and office equipment under non-cancelable capital leases and other financing arrangements that expire through 2017.
Future minimum lease payments under non-cancelable operating and capital leases at December 31, 2013 are as follows (in thousands):
|
|
|
||||||
Operating Leases |
Capital
Leases |
|||||||
2014 | $ | 4,025 | $ | 150 | ||||
2015 | 3,976 | 110 | ||||||
2016 | 3,852 | 83 | ||||||
2017 | 2,722 | 1 | ||||||
2018 | 2,024 | | ||||||
2019 and thereafter | 8,597 | | ||||||
Total future minimum payments | $ | 25,196 | 344 | |||||
Less amount representing interest | (64 | ) | ||||||
Less current portion | (102 | ) | ||||||
Long-term capital lease obligations | $ | 178 |
Rent expense was $2.9 million, $5.0 million and $5.2 million for the years ended December 31, 2011, 2012, and 2013, respectively.
The Company entered into agreements with various vendors in the ordinary course of business. As of December 31, 2013, minimum required payments in future years under these arrangements are $5.8 million, $2.8 million and $1.0 million in 2014, 2015 and 2016, respectively.
As of December 31, 2013, the Company had a total of $1.3 million in letters of credit outstanding substantially in favor of landlords for certain of its office spaces. These letters of credit do not require compensating balances and expire at various dates through May 2023.
In 2011, the Company enrolled in a self-insured plan for a majority of its U.S. employee health insurance costs, including claims filed and claims incurred but not reported (IBNR) subject to certain stop loss provisions. The Company estimates the liability based upon managements judgment, historical data and the assistance of third-party actuaries in determining an adequate liability for self-insurance claims. The Companys IBNR accrual and expenses may fluctuate due to the number of plan participants, claims activity and deductible limits.
On January 23, 2014, North Venture Partners, LLC (NVP) filed a complaint that named the Company as a defendant in a lawsuit in the U.S. District Court for the Northern District of California (Civil Action No. C14-0337). The complaint, which was served to the Company on January 27, 2014, alleges that it failed to pay the full amount of the earn-out payment due under an Asset Purchase Agreement dated February 24, 2011 in which the Company acquired certain assets of NVP. For more information, please refer to Note 14, Subsequent Events .
F-171
The Company from time to time is subject to lawsuits, investigations and claims arising out of the ordinary course of business, including those related to commercial transactions, contracts, government regulation and employment matters. In the opinion of management based on all known facts, all other matters are either without merit or are of such kind, or involve such amounts that would not have a material effect on the financial position or results of operations of the Company if disposed of unfavorably.
On January 23, 2014, NVP filed a complaint that named the Company as a defendant in a lawsuit in the U.S. District Court for the Northern District of California (Civil Action No. C14-0337). The complaint, which was served to the Company on January 27, 2014, alleges that it failed to pay the full amount of the earn-out payment due under an Asset Purchase Agreement dated February 24, 2011 in which the Company acquired certain assets of NVP. NVPs complaint seeks an award for damages of approximately $6.4 million. This litigation is in its early stages, therefore, neither the outcome of this litigation nor an estimate of a probable loss or any reasonably possible losses are determinable at this time. The Company believes it has meritorious defenses and intends to vigorously defend the lawsuit.
On February 4, 2014 the Company decided to discontinue its North Social platform, a stand-alone product that provided Facebook applications for small businesses, because it did not align with the current strategic direction of the Company. The Company is in the process of evaluating the impact to its consolidated financial statements.
Also in February 2014, the Company made a decision to shut-down its sales operations in its Philippines office. As a result, during the next three to six months, the Company is expected to incur estimated expenses totaling $5.0 million for costs relating to the termination of the lease, impairment of assets and severance from the reduction in the workforce.
F-172
|
|
|
||||||
December 31, 2013 | March 31, 2014 | |||||||
(Unaudited) | ||||||||
(Dollars in thousands, except per share data) | ||||||||
Current assets:
|
||||||||
Cash and cash equivalents | $ | 34,740 | $ | 38,878 | ||||
Accounts receivable, net of allowance for doubtful accounts of $234 and $206 at December 31, 2013 and March 31, 2014, respectively | 28,862 | 18,826 | ||||||
Current portion of deferred income taxes | 271 | 215 | ||||||
Prepaid expenses and other current assets | 4,728 | 6,160 | ||||||
Total current assets | 68,601 | 64,079 | ||||||
Property, equipment and software, net | 20,134 | 19,326 | ||||||
Intangible assets, net | 14,805 | 11,868 | ||||||
Goodwill | 177,264 | 177,240 | ||||||
Deferred income taxes, net of current portion | 105 | | ||||||
Other assets | 471 | 406 | ||||||
Total assets | $ | 281,380 | $ | 272,919 | ||||
Current liabilities:
|
||||||||
Accounts payable | $ | 1,004 | $ | 564 | ||||
Accrued compensation | 5,895 | 5,198 | ||||||
Accrued expenses | 8,900 | 8,519 | ||||||
Current portion of notes payable and capital lease obligations | 137 | 121 | ||||||
Current portion of deferred revenue | 81,675 | 78,357 | ||||||
Total current liabilities | 97,611 | 92,759 | ||||||
Notes payable and capital lease obligations, net of current portion | 1,218 | 1,193 | ||||||
Other liabilities | 6,371 | 6,285 | ||||||
Deferred income taxes | 4,546 | 4,663 | ||||||
Deferred revenue, net of current portion | 2,842 | 2,044 | ||||||
Total liabilities | 112,588 | 106,944 | ||||||
Commitments and contingencies
|
||||||||
Redeemable convertible preferred stock:
|
||||||||
Series A redeemable convertible preferred stock, $0.01 par value, 1,000,000 shares designated from authorized preferred stock; issued and outstanding at December 31, 2013 and March 31, 2014 | 77,490 | 77,490 | ||||||
Stockholders equity:
|
||||||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized; 1,000,000 shares designated as Series A redeemable convertible preferred stock and issued and outstanding at December 31, 2013 and March 31, 2014; no other shares issued and outstanding at December 31, 2013 and March 31, 2014 | | | ||||||
Common stock, $0.01 par value, 90,000,000 shares authorized; 21,949,509 and 21,952,447 issued at December 31, 2013 and March 31, 2014, respectively; 20,207,652 and 20,450,457 shares outstanding at December 31, 2013 and March 31, 2014, respectively | 219 | 219 | ||||||
Additional paid-in capital | 227,699 | 231,773 | ||||||
Treasury stock, 1,741,858 and 1,501,991 shares at December 31, 2013 and March 31, 2014, respectively, at cost | (42,320 | ) | (43,252 | ) | ||||
Accumulated other comprehensive loss | (159 | ) | (250 | ) | ||||
Accumulated deficit | (94,137 | ) | (100,005 | ) | ||||
Total stockholders equity | 91,302 | 88,485 | ||||||
Total liabilities, redeemable convertible preferred stock and stockholders equity | $ | 281,380 | $ | 272,919 |
See accompanying notes.
F-173
|
|
|
||||||
Three months ended March 31, | ||||||||
2013 | 2014 | |||||||
(Unaudited) | ||||||||
(Dollars in thousands, except per share data) | ||||||||
Revenues | $ | 46,247 | $ | 45,659 | ||||
Cost of revenues | 9,752 | 10,180 | ||||||
Gross profit | 36,495 | 35,479 | ||||||
Operating expenses:
|
||||||||
Sales and marketing | 26,835 | 25,460 | ||||||
Research and development | 2,998 | 3,020 | ||||||
General and administrative | 12,333 | 10,525 | ||||||
Amortization of intangible assets | 2,020 | 1,880 | ||||||
Total operating expenses | 44,186 | 40,885 | ||||||
Loss from operations | (7,691 | ) | (5,406 | ) | ||||
Other income (expense):
|
||||||||
Interest and other income (expense) | 54 | (30 | ) | |||||
Interest expense | (49 | ) | (30 | ) | ||||
Total other income (expense) | 5 | (60 | ) | |||||
Loss before provision for income taxes | (7,686 | ) | (5,466 | ) | ||||
Provision for income taxes | 439 | 402 | ||||||
Net loss | $ | (8,125 | ) | $ | (5,868 | ) | ||
Net loss per share:
|
||||||||
Basic and diluted | $ | (0.41 | ) | $ | (0.29 | ) | ||
Weighted average shares outstanding used in computing per share amounts:
|
||||||||
Basic and diluted | 19,790,692 | 20,283,643 |
See accompanying notes.
F-174
|
|
|
||||||
Three months ended March 31, | ||||||||
2013 | 2014 | |||||||
(Unaudited) | ||||||||
(Dollars in thousands) | ||||||||
Net loss | $ | (8,125 | ) | $ | (5,868 | ) | ||
Other comprehensive income (loss), net of taxes:
|
||||||||
Foreign currency translation adjustment | (249 | ) | (91 | ) | ||||
Other comprehensive income (loss), net of taxes | (249 | ) | (91 | ) | ||||
Comprehensive loss | $ | (8,374 | ) | $ | (5,959 | ) |
See accompanying notes.
F-175
|
|
|
||||||
Three Months Ended March 31, | ||||||||
2013 | 2014 | |||||||
(Unaudited) | ||||||||
(Dollars in thousands) | ||||||||
Cash flows from operating activities:
|
||||||||
Net loss | $ | (8,125 | ) | $ | (5,868 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||
Depreciation and amortization of property, equipment and software | 1,226 | 1,452 | ||||||
Amortization of intangible assets | 3,071 | 2,929 | ||||||
(Gain) loss on disposal of assets | | 130 | ||||||
Stock-based compensation | 3,690 | 4,017 | ||||||
Adjustment to fair value of accrued contingent consideration | 3,453 | | ||||||
Provision for doubtful accounts | 195 | 108 | ||||||
Deferred income taxes | 186 | 281 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable | 7,903 | 9,948 | ||||||
Prepaid expenses and other current assets | (11 | ) | (1,354 | ) | ||||
Other assets | (478 | ) | (12 | ) | ||||
Accounts payable | 457 | (442 | ) | |||||
Accrued compensation | (289 | ) | (699 | ) | ||||
Accrued expenses | 390 | (388 | ) | |||||
Deferred revenue | (719 | ) | (4,170 | ) | ||||
Other liabilities | (126 | ) | (86 | ) | ||||
Net cash provided by operating activities | 10,823 | 5,846 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases of property, equipment and software | (2,211 | ) | (753 | ) | ||||
Software development costs | (129 | ) | (109 | ) | ||||
Proceeds from disposal of assets | | 104 | ||||||
Sales of available-for-sale securities | 1,328 | | ||||||
Net cash used in investing activities | (1,012 | ) | (758 | ) | ||||
Cash flows from financing activities:
|
||||||||
Repurchases of common stock | (413 | ) | (932 | ) | ||||
Proceeds from the exercise of stock options | | 27 | ||||||
Payments on notes payable and capital lease obligations | (729 | ) | (41 | ) | ||||
Net cash used in financing activities | (1,142 | ) | (946 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (444 | ) | (4 | ) | ||||
Net increase in cash and cash equivalents | 8,225 | 4,138 | ||||||
Cash and cash equivalents, beginning of period | 32,107 | 34,740 | ||||||
Cash and cash equivalents, end of period | $ | 40,332 | $ | 38,878 |
See accompanying notes.
F-176
Vocus, Inc. (Vocus or the Company) is a provider of cloud marketing and public relations software that enables businesses to acquire and retain customers. The Company offers products and services to help customers attract and engage prospects, capture and keep customers and measure and improve marketing effectiveness. The Companys integrated suites address the key areas of digital marketing and public relations, including social marketing, search marketing, email marketing and publicity. The Company is headquartered in Beltsville, Maryland with sales and other offices in the United States, Europe and Asia.
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and include the accounts of Vocus, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The consolidated balance sheet at December 31, 2013 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Companys annual report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 7, 2014.
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to the allowance for doubtful accounts, software development costs, useful lives of property, equipment and software, intangible assets and goodwill, contingent liabilities, self-insurance, revenue recognition, fair value of stock-based awards and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities as well as the reported amounts of revenues and expenses during the period. Actual results could differ from these estimates.
The Company considers all highly liquid investments with original maturity dates of three months or less at the time of purchase to be cash equivalents.
F-177
The Company measures certain financial assets at fair value pursuant to a fair value hierarchy based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entitys pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels:
Level 1 | Inputs are quoted prices in active markets for identical assets or liabilities. |
Level 2 | Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. |
Level 3 | Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. |
Long-lived assets include property, equipment and software and intangible assets with finite lives. Intangible assets consist of customer relationships, trade names and purchased technology acquired in business combinations. Intangible assets are amortized using the straight-line method over their estimated useful lives ranging from two to seven years. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, the Company evaluates recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the estimated fair value of the assets. There were no impairment charges for long-lived assets for the three months ended March 31, 2013 and 2014.
Goodwill represents the excess of the cost of an acquired entity over the net fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. The Company performs its annual impairment assessment on November 1, or whenever events or circumstances indicate impairment may have occurred. The Company operates under one reporting unit, and as a result, evaluates goodwill impairment based on the fair value of the Company as a whole. The Company did not record any impairment charges for goodwill during the three months ended March 31, 2013 and 2014.
The reporting currency for all periods presented is the U.S. dollar. The functional currency for the Companys foreign subsidiaries is the local currency. The financial statements of these subsidiaries are translated into U.S. dollars using exchange rates in effect at the balance sheet date for assets and liabilities and average exchange rates during the period for revenues and expenses. The resulting translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders equity. Transaction gains and losses in currencies other than the functional currency are included in other income (expense) in the consolidated statements of operations. Amounts resulting from foreign currency transactions were not material for the three months ended March 31, 2013 and 2014.
F-178
Comprehensive income (loss) includes the Companys net income (loss) as well as other changes in stockholders equity that result from transactions and economic events other than those with stockholders. Other comprehensive income (loss) includes foreign currency translation adjustments and net unrealized gains and losses on investments classified as available-for-sale securities. Amounts reclassified out of accumulated other comprehensive income (loss) for the three months ended March 31, 2013 were not material.
The Company derives its revenues from subscription arrangements and related services permitting customers to access and utilize the Companys cloud-based software. The Company also derives revenues from news distribution services sold separately from its subscription arrangements. The Company recognizes revenue when there is persuasive evidence of an arrangement, the service has been provided to the customer, the collection of the fee is probable and the amount of the fee to be paid by the customer is fixed or determinable. The Company allocates consideration to each deliverable in multiple element arrangements based on the relative selling prices and recognizes revenue as the respective services are delivered or performed.
The Companys separate units of accounting consist of its subscription services, news distribution services and professional services. The Companys subscription services generally include access to the Companys cloud-based software, hosting services, content and content updates and customer support. The Companys subscription agreements typically are non-cancelable, though customers have the right to terminate their agreements for cause if the Company materially breaches its obligations under the agreement. Subscription agreements do not provide customers the right to take possession of the software at any time.
The Company also distributes individual news releases to the Internet which are indexed by major search engines and distributed directly to various news sites, journalists and other key constituents. The Company recognizes revenue on a per-transaction basis when the press releases are made available to the public.
The Companys professional services primarily consist of data migration, custom development and training. The Companys cloud-based software does not require significant modification and customization services.
The Company established vendor-specific objective evidence (VSOE) of the fair value for the selling price for certain of its news distribution services as the selling price for a substantial majority of stand-alone sales fall within a narrow range around the median selling price. The Company determined third-party evidence (TPE) of selling price is not available for any of its services due to differences in the features and functionality compared to competitors products. Therefore, the Company uses its estimated selling prices (ESP) for the remaining deliverables by analyzing multiple factors such as historical pricing trends, discounting practices, gross margin objectives and other market conditions.
Sales and other taxes collected from customers to be remitted to government authorities are excluded from revenues.
Deferred revenue consists of payments received from or billings to customers in advance of revenue recognition. Deferred revenue to be recognized in the succeeding twelve month period is included in current deferred revenue with the remaining amounts included in non-current deferred revenue.
Sales commissions are expensed when a subscription agreement is executed by the customer.
F-179
The Companys outstanding share-based arrangements include stock option awards, restricted stock awards and restricted stock units. The Company recognizes compensation expense for its stock option and restricted stock awards on a straight-line basis over the requisite service period of the award based on the estimated portion of the award that is expected to vest and applies estimated forfeiture rates based on analyses of historical data, including termination patterns and other factors. The Company recognizes compensation expense for its restricted stock units over an accelerated expense attribution period, which separately recognizes compensation expense for each vesting tranche over its vesting period based on the estimated portion of the award that is expected to vest and applies estimated forfeiture rates based on analyses of historical data, including termination patterns and other factors. Stock options granted have a 10-year term and generally vest annually over a 4-year period. Restricted stock awards generally vest annually over a four-year period. In February 2014, the Company granted restricted stock units to certain members of its executive team which are contingent upon achievement of pre-determined performance-based criteria. The number of units that will vest range from 0% to 200% of the target shares and is also based upon continued employment of the participant over the vesting period which is three years.
The Company uses the Black-Scholes option pricing model to measure the fair value of stock option awards. The Company uses the daily historical volatility of its stock price over the expected life of the options to calculate the expected volatility. The Company uses a combination of its historical exercise data with expected future exercise patterns using the average midpoint between vesting and the contractual term to determine the expected term of option awards. The risk-free interest rate is based on the rate on U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. The Company has not paid dividends and does not anticipate paying a cash dividend in the foreseeable future and, accordingly, uses an expected dividend yield of zero. The Company uses the quoted closing market price of its common stock on the grant date to measure the fair value of restricted stock awards. The Company estimates the fair value of restricted stock units at the date of grant using the quoted closing market price of its common stock on the grant date and the probability that the specified performance criteria will be met, adjusted for estimated forfeitures. Each quarter the Company updates its assessment of the probability that the specified performance criteria will be achieved and adjusts the estimate of the fair value of the performance-based restricted stock units if necessary.
Income taxes are determined utilizing the asset and liability method whereby deferred tax assets and liabilities are recognized for deductible temporary differences between the respective reported amounts and tax bases of assets and liabilities, as well as for operating loss and tax-credit carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
As of December 31, 2013 and March 31, 2014, the Company maintained a full valuation allowance on its U.S. and certain of its foreign deferred tax assets because management determined that it was more likely than not that it will not realize the benefits of its foreign deferred tax assets.
The Companys federal and state NOL carryforwards and tax credits are subject to annual limitations under Sections 382 and 383 of Internal Revenue Code. The limitations imposed under Sections 382 and 383 will not preclude the Company from realizing these NOLs and tax credits but may operate to limit their utilization of the NOLs and tax credits in any given tax year in the event that the Companys federal and state taxable income exceeds the limitation imposed by Sections 382 and 383.
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The Companys estimates related to liabilities for uncertain tax positions require it to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. If it determines it is more likely than not that a tax position will be sustained based on its technical merits, the Company records the impact of the position in its consolidated financial statements at the largest amount that is greater than fifty percent likely of being realized upon ultimate settlement. The estimates are updated at each reporting date based on the facts, circumstances and information available. The Company is also required to assess at each reporting date whether it is reasonably possible that any significant increases or decreases to its unrecognized tax benefits will occur during the next twelve months. The Company files income tax returns in the U.S. federal jurisdictions and various state and foreign jurisdictions and is subject to U.S. federal, state, and foreign tax examinations for years ranging from 2003 to 2013.
Basic net income or loss per share attributable to common stockholders is computed by dividing net income or loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Nonvested shares of restricted stock and restricted stock units are not included in the computation of basic net income per share until vested. The Companys outstanding grants of restricted stock do not contain non-forfeitable dividend rights. Diluted net income per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock, nonvested shares of restricted stock and restricted stock units and shares of redeemable convertible preferred stock are considered to be common stock equivalents.
As the Company has issued shares of Series A redeemable convertible preferred stock that participate in dividends with the common stock, the Company is required to apply the two-class method to compute the net income per share attributable to common stockholders. In periods of sufficient earnings, the two-class method assumes an allocation of undistributed earnings to both participating stock classes.
For the three months ended March 31, 2013 and 2014, the Company incurred net losses and, therefore, the effect of the Companys outstanding stock options, nonvested shares of restricted stock and restricted stock units and redeemable convertible preferred stock was not included in the calculation of diluted loss per share as the effect would be anti-dilutive. For the three months ended March 31, 2013 and 2014, diluted earnings per share excluded the impact of 3,225,334 and 3,060,396 outstanding stock options, respectively, and 1,005,310 and 1,153,268 nonvested shares of restricted stock, respectively and 1,000,000 shares of Series A redeemable convertible preferred stock as the result would be anti-dilutive. For the three months ended March 31, 2014, diluted earnings per share excluded the impact of 317,000 restricted stock units.
The Companys chief operating decision maker manages the Companys operations on a consolidated basis for purposes of assessing performance and making operating decisions. Accordingly, the Company reports on its business as one segment.
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The components of cash equivalents at December 31, 2013 were as follows (in thousands):
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|
|
||||||||||||
Cost | Unrealized |
Fair
Market Value |
||||||||||||||
Gains | Losses | |||||||||||||||
Cash equivalents:
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Money market funds | $ | 5,302 | $ | | $ | | $ | 5,302 | ||||||||
Certificates of deposit | 6,907 | | | 6,907 | ||||||||||||
Total | $ | 12,209 | $ | | $ | | $ | 12,209 |
The components of cash equivalents at March 31, 2014 were as follows (in thousands):
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|
|
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Cost | Unrealized |
Fair
Market Value |
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Gains | Losses | |||||||||||||||
Cash equivalents:
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Money market funds | $ | 5,304 | $ | | $ | | $ | 5,304 | ||||||||
Certificates of deposit | 6,884 | | | 6,884 | ||||||||||||
Total | $ | 12,188 | $ | | $ | | $ | 12,188 |
Cash equivalents have original maturity dates of three months or less.
The fair value measurements of the Companys financial assets and liabilities measured on a recurring basis at December 31, 2013 were as follows (in thousands):
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Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets:
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Cash equivalents | $ | 12,209 | $ | 12,209 | $ | | $ | | ||||||||
Total assets measured at fair value | $ | 12,209 | $ | 12,209 | $ | | $ | |
The fair value measurements of the Companys financial assets and liabilities measured on a recurring basis at March 31, 2014 were as follows (in thousands):
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Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets:
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Cash equivalents | $ | 12,188 | $ | 12,188 | $ | | $ | | ||||||||
Total assets measured at fair value | $ | 12,188 | $ | 12,188 | $ | | $ | |
Cash equivalents are classified within Level 1 of the fair value hierarchy since they are valued using quoted market prices or other readily available market information.
The changes in the carrying amount of goodwill for the three months ended March 31, 2014 were as follows (in thousands):
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Balance at beginning of period | $ | 177,264 | ||
Effects of foreign currency translation | (24 | ) | ||
Balance as of end of period | $ | 177,240 |
F-182
Intangible assets at December 31, 2013 consisted of the following (in thousands):
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Weighted-
Average Amortization Period |
Gross
Carrying Amount |
Accumulated
Amortization |
Net Carrying
Amount |
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Customer relationships | 3.7 | $ | 23,376 | $ | (14,074 | ) | $ | 9,302 | ||||||||
Trade names | 5.9 | 5,695 | (5,058 | ) | 637 | |||||||||||
Purchased technology | 3.1 | 13,496 | (8,630 | ) | 4,866 | |||||||||||
Total | $ | 42,567 | $ | (27,762 | ) | $ | 14,805 |
Intangible assets at March 31, 2014 consisted of the following (in thousands):
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Weighted-
Average Amortization Period |
Gross
Carrying Amount |
Accumulated
Amortization |
Net Carrying
Amount |
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Customer relationships | 3.7 | $ | 23,362 | $ | (15,816 | ) | $ | 7,546 | ||||||||
Trade names | 5.9 | 5,694 | (5,188 | ) | 506 | |||||||||||
Purchased technology | 3.1 | 13,493 | (9,677 | ) | 3,816 | |||||||||||
Total | $ | 42,549 | $ | (30,681 | ) | $ | 11,868 |
The Companys goodwill and intangible assets for certain of its foreign subsidiaries are recorded in their functional currency, which is their local currency, and therefore are subject to foreign currency translation adjustments.
Amortization expense of intangible assets for the three months ended March 31, 2013 and 2014 was $3.1 million and $2.9 million, respectively. Future expected amortization of intangible assets at March 31, 2014 was as follows (in thousands):
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The remainder of 2014 | $ | 8,788 | ||
2015 | 2,349 | |||
2016 | 573 | |||
2017 | 158 | |||
2018 and thereafter | | |||
Total | $ | 11,868 |
On February 27, 2012, the Company established a $15.0 million revolving credit facility (Revolver) with a major lending institution which is available for use until June 30, 2014. The Revolver is intended to be used for general working capital purposes and to provide increased liquidity and financial flexibility and bears interest equal to the BBA LIBOR Daily Floating Rate plus 2.25%. In addition, the Company pays a monthly fee equal to 0.4% on any unused funds under the Revolver. As collateral for extension of this credit, the Company and certain of its subsidiaries granted security interests in favor of the institution of substantially all of their assets, and the Company pledged the stock of its directly owned domestic subsidiaries and 65% of the shares of its foreign subsidiaries. As of March 31, 2014, there were no outstanding borrowings, however, the Revolver was reduced by the Companys outstanding letters of credit of $1.2 million. As such, the Company had $13.8 million available to borrow under the Revolver.
F-183
The Companys Certificate of Incorporation authorizes 10,000,000 undesignated shares of preferred stock. The Companys Board of Directors (Board) is authorized to establish one or more classes or series from the undesignated shares, to designate each share or class or series, and to fix the relative rights and preferences of each class or series, which rights and preferences may be superior to those of any of the common shares. In February 2012, the Board designated 1,000,000 shares of the Companys authorized preferred stock as Series A convertible preferred stock in connection with the acquisition of iContact. On February 24, 2012, the Company issued 1,000,000 shares of Series A Redeemable Convertible Preferred Stock (Series A Preferred Stock). In May 2013, the Board designated 100,000 shares of the Companys authorized preferred stock as Series B Junior Participating Preferred Stock (Series B Preferred Stock), however, no shares of Series B Preferred Stock are issued and outstanding.
In connection with the acquisition of iContact in February 2012, the Company issued 1,000,000 shares of Series A Preferred Stock with a deemed fair value at issuance of $77.5 million. The Company does not adjust the carrying value to the redemption amount of the convertible preferred stock as the carrying amount exceeds the redemption amount. There have been no changes to the recorded amount of the Series A Preferred Stock since the issuance of the shares.
Each share of the Series A Preferred Stock has a liquidation preference equal to the greater of $77.30 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization affecting the Series A Preferred Stock) or the value of the shares of common stock that would be issued in respect thereof upon conversion of such share of Series A Preferred Stock. The Series A Preferred Stock does not provide for interest and is entitled to participate in any dividends declared on the Companys common stock on an as-converted basis. On February 24, 2017, the Company will be required to redeem each issued and outstanding share of the Series A Preferred Stock for $77.30 per share from its legally available funds, or such lesser amount of shares as it may then redeem under Delaware law. Each share of the Series A Preferred Stock is convertible into shares of the Companys common stock at any time at the option of the holder. For conversions occurring on or before February 24, 2017, each share of Series A Preferred Stock will be convertible into 3.0256 shares of common stock (subject to customary adjustments). On and after February 25, 2017, each share of the Series A Preferred Stock which has not been redeemed will be convertible into 3.3282 shares of common stock (subject to customary adjustments).
The holders of Series A Preferred Stock vote on an as-converted basis with the common stock, voting together as a single class, provided that the holders of the Series A Preferred Stock are entitled to vote separately as a class on certain matters affecting the Series A Preferred Stock. If any shares of Series A Preferred Stock are outstanding on or after February 24, 2017, the holders of the Series A Preferred Stock will have the right to vote separately as a class on additional actions by the Company related to acquisitions, redemptions, dividends, capital stock, and indebtedness. In addition, for so long as the outstanding shares of Series A Preferred Stock continue to represent at least 5% of the total outstanding shares of the Companys common stock, calculated assuming the conversion of all outstanding shares of Series A Preferred Stock into shares of common stock, the holders of the Series A Preferred Stock, voting as a separate class, will have the exclusive right to elect one director to the Companys Board of Directors (Series A Director).
In connection with the acquisition of iContact, the Company also entered into, on February 24, 2012, an Investor Rights Agreement (Investor Rights Agreement) whereby the holders of the Series A Preferred Stock have the right to nominate a director to the Companys Board for as long as they hold 5% or more of the Companys issued and outstanding capital stock (which nominee shall be the Series A Director for so long as the holders of Series A Preferred Stock have the right to elect the Series A Director pursuant to the Certificate of Designation). In addition, subject to the terms and conditions of the Investor Rights Agreement, the holders
F-184
of the Series A Preferred Stock shall have demand and piggyback registration rights and the right to participate in certain repurchases of common stock by the Company.
On May 13, 2013, the Board authorized and declared a dividend distribution of one preferred stock purchase right (Right) for each outstanding share of the Companys common stock and 3.0256 Rights for each outstanding share of the Companys Series A Convertible Preferred Stock to stockholders of record at the close of business on May 13, 2013.
Each Right entitles registered holders to purchase from the Company one one-thousandth of a share of the Companys Series B Junior Participating Preferred Stock at a price of $46.00 per one one-thousandth of a share, subject to adjustment. The definitive terms of the Rights are set forth in a Rights Agreement, dated May 13, 2013. The Rights will be exercisable only if a person or group acquires 20% or more of the Companys outstanding common stock (subject to certain exceptions), or if a person or group announces a tender or exchange offer, resulting in beneficial ownership of 20% or more of the outstanding common stock. The Rights also will be exercisable if a person or group that already beneficially owns or has the right to acquire on May 13, 2013, 20% or more of the Companys outstanding common stock acquires additional shares equal to 1% or more of the Companys then outstanding common stock (except in the case of a certain stockholder who, under limited circumstances, is permitted to beneficially own more than 20%, but less than 25%, of the Companys outstanding common stock, subject to certain exceptions).
The Board can redeem the Rights for $0.0001 per Right at any time prior to the earlier of the occurrence of a trigger event or the expiration date. Additionally, prior to an acquisition of 50% or more of the Companys common stock, the Board may direct the mandatory exchange of the Rights (other than Rights owned by the acquiring person) at an exchange ratio of one newly issued share of common stock for each right.
The Rights will expire on the earliest of May 13, 2016, 30 days after the Companys 2014 annual meeting of stockholders if the continuation of the rights plan is not approved by the Companys stockholders at its 2014 annual meeting, or the time immediately prior to the Effective Time as defined by the Merger Agreement, if not exercised or redeemed. For more information pertaining to the Merger Agreement, please refer to Note 10, Subsequent Events.
The Board authorized a stock repurchase program for up to $60.0 million of the Companys shares of common stock. The shares may be purchased from time to time in the open market. The Company did not purchase any shares of its common stock under the stock repurchase program for the three months ended March 31, 2013 and 2014. During the three months ended March 31, 2013 and 2014, the Company repurchased 29,678 and 70,901 shares of restricted stock that were withheld from employees to satisfy the minimum statutory tax withholding obligations of $413,000 and $932,000, respectively, related to the taxable income recognized by these employees upon the vesting of their restricted stock awards.
The following table sets forth the stock-based compensation expense for equity awards recorded in the consolidated statements of operations for the three months ended March 31, 2013 and 2014 (in thousands):
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Three Months Ended
March 31, |
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2013 | 2014 | |||||||
Cost of revenues | $ | 468 | $ | 475 | ||||
Sales and marketing | 934 | 1,340 | ||||||
Research and development | 623 | 494 | ||||||
General and administration | 1,665 | 1,708 | ||||||
Total | $ | 3,690 | $ | 4,017 |
F-185
The following weighted-average assumptions were used in calculating stock-based compensation for stock option awards granted during the three months ended March 31, 2013 and 2014:
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Three Months Ended
March 31, |
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2013 | 2014 | |||||||
Stock price volatility | 58 | % | 60 | % | ||||
Expected term (years) | 6.0 | 6.6 | ||||||
Risk-free interest rate | 1.1 | % | 1.8 | % | ||||
Dividend yield | 0 | % | 0 | % |
The summary of stock option activity for the three months ended March 31, 2014 was as follows:
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Number of
Options |
Weighted-
Average Exercise Price per Share |
Weighted-
Average Contractual Term |
Aggregate
Intrinsic Value as of March 31, 2014 |
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(In thousands) | ||||||||||||||||
Balance outstanding at January 1, 2014 | 3,205,153 | $ | 15.33 | |||||||||||||
Granted | 15,000 | 13.35 | ||||||||||||||
Exercised | (2,938 | ) | 9.23 | |||||||||||||
Forfeited or cancelled | (156,819 | ) | 16.81 | |||||||||||||
Balance outstanding at March 31, 2014 | 3,060,396 | $ | 15.26 | 6.7 | $ | 2,332 | ||||||||||
Options vested and expected to vest at March 31, 2014 | 2,993,502 | $ | 15.29 | 6.7 | $ | 2,296 | ||||||||||
Exercisable at March 31, 2014 | 1,847,715 | $ | 15.81 | 5.6 | $ | 1,868 |
The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2013 and 2014 was $7.72 and $7.82, respectively. The fair value of stock options that vested during the three months ended March 31, 2013 and 2014 was $3.3 million and $4.7 million, respectively. As of March 31, 2014, $8.3 million of total unrecognized stock-based compensation cost is related to nonvested stock option awards and is expected to be recognized over a weighted-average period of 2.3 years.
The aggregate intrinsic value represents the difference between the exercise price of the underlying equity awards and the quoted closing price of the Companys common stock at the last day of each respective quarter multiplied by the number of shares that would have been received by the option holders had all option holders exercised on the last day of each respective quarter. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2013 and 2014 was not material.
The summary of restricted stock award activity for the three months ended March 31, 2014 was as follows:
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Number of
Shares Underlying Stock Awards |
Weighted-
Average Grant-date Fair Value |
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Balance nonvested at January 1, 2014 | 937,536 | $ | 15.18 | |||||
Awarded | 579,750 | 12.25 | ||||||
Vested | (310,768 | ) | 15.80 | |||||
Forfeited | (53,250 | ) | 16.22 | |||||
Balance nonvested at March 31, 2014 | 1,153,268 | $ | 13.49 |
F-186
As of March 31, 2014, $14.4 million of total unrecognized stock-based compensation cost is related to nonvested shares of restricted stock and is expected to be recognized over a weighted-average period of 2.8 years.
The summary of restricted stock unit activity for the three months ended March 31, 2014 was as follows:
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Number of
Shares Underlying Stock Awards |
Weighted-
Average Grant-date Fair Value |
|||||||
Balance nonvested at January 1, 2014 | | $ | | |||||
Awarded | 317,000 | 12.13 | ||||||
Vested | | | ||||||
Forfeited | | | ||||||
Balance nonvested at March 31, 2014 | 317,000 | $ | 12.13 |
As of March 31, 2014, $3.5 million of total unrecognized stock-based compensation cost is related to nonvested shares of restricted stock units and is expected to be recognized over a weighted-average period of 1.9 years.
The Company has various non-cancelable operating leases, primarily related to office real estate, that expire through 2023 and generally contain renewal options for up to five years. Lease incentives, payment escalations and rent holidays specified in the lease agreements are accrued or deferred as appropriate as a component of rent expense which is recognized on a straight-line basis over the terms of occupancy. As of March 31, 2014, deferred rent of $773,000 and $4.9 million is included in accrued expenses and other liabilities, respectively. As of March 31, 2014, minimum required payments in future years under these leases are $2.9 million, $4.0 million, $3.9 million, $2.7 million, $2.0 million and $8.6 million in the remainder of 2014 and in the years 2015, 2016, 2017, 2018, 2019 and thereafter, respectively.
The Company also leases computer and office equipment under non-cancelable capital leases and other financing arrangements that expire through 2017.
The Company has entered into agreements with various vendors in the ordinary course of business. As of March 31, 2014, minimum required payments in future years under these arrangements are $5.5 million, $3.4 million and $1.0 million for the remainder of 2014 and in the years 2015 and 2016, respectively.
As of March 31, 2014, the Company had a total of $1.2 million in letters of credit outstanding substantially in favor of landlords for certain of its office spaces. These letters of credit expire at various dates through May 2023.
On January 23, 2014, North Venture Partners, LLC (NVP) filed a complaint that named the Company as a defendant in a lawsuit in the U.S. District Court for the Northern District of California (Civil Action No. C14-0337). The complaint, which was served to the Company on January 27, 2014, alleges that it failed to pay the full amount of the earn-out payment due under an Asset Purchase Agreement dated February 24,
F-187
2011 in which the Company acquired certain assets of NVP. NVPs complaint seeks an award for damages of approximately $6.4 million. This litigation is in its early stages, therefore, neither the outcome of this litigation nor an estimate of a probable loss or any reasonably possible losses are determinable at this time. The Company believes it has meritorious defenses and intends to vigorously defend the lawsuit.
On April 28, 2014, a purported class action lawsuit was brought against the Company, the members of the Companys Board of Directors, GTCR Valor Merger Sub, Inc. (Purchaser), GTCR Valor Companies, Inc. (Parent) and GTCR, LLC (GTCR), captioned TLC Foundation L.P. v. Vocus, Inc. et al. , which we refer to as the (Delaware action). The Delaware action generally alleges that the individual director defendants breached their fiduciary duties to the Companys public stockholders in connection with Parent and Purchasers proposed acquisition of the Company because, among other things, they allegedly failed to maximize value for the Companys stockholders, including by allegedly pursuing a conflicted sales process, agreeing to unfair deal protections, failing to adequately consider other potential acquirors, and failing to fully disclose all material information necessary for Company stockholders to make an informed decision regarding the acquisition. The Delaware action also generally alleges that the Company, GTCR, Parent and Purchaser aided and abetted those alleged violations. The plaintiffs purport to bring the Delaware action on behalf of a class of Company stockholders, and seek, among other relief (i) to enjoin the acquisition of the Company by Parent and Purchaser, (ii) to rescind or, alternatively, award damages to the Companys stockholders to the extent the acquisition has already been implemented, (iii) to require the individual director defendants to disclose all material information relating to the proposed transaction and (iv) to award plaintiff the fees and costs associated with Delaware action. The litigation is in its early stages, therefore, neither the outcome of this litigation nor an estimate of a probable loss or any reasonably possible losses are determinable at this time. The Company believes that the Delaware action is without merit and intends to defend vigorously against all claims asserted.
The Company from time to time is subject to lawsuits, investigations and claims arising out of the ordinary course of business, including those related to commercial transactions, contracts, government regulation and employment matters. In the opinion of management based on all known facts, all other matters are either without merit or are of such kind, or involve such amounts that would not have a material effect on the financial position or results of operations of the Company if disposed of unfavorably.
On April 6, 2014, the Company entered into an Agreement and Plan of Merger (Merger Agreement) with GTCR Valor Companies, Inc., a Delaware corporation (Parent), and GTCR Valor Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (Purchaser). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, Purchaser has agreed (i) to commence a tender offer (such offer, as amended from time to time as permitted by the Merger Agreement, the Offer) to purchase all of the outstanding shares of the Companys common stock, par value $0.01 per share (Company Common Stock), including the associated rights to purchase Series B Junior Participating Preferred Stock, par value $0.01 per share, of the Company (collectively, the Shares), at a price per Share of $18.00, net to the holder of such Share, in cash, without interest and subject to any applicable tax withholding (the Offer Price) and (ii) following Purchasers acceptance of Shares tendered in the Offer, to be merged (the Merger) with and into the Company, with each outstanding share of Company Common Stock (other than shares owned by Purchaser, Parent or its subsidiaries or held in the Companys treasury and shares as to which appraisal rights have been properly exercised and not withdrawn in accordance with the applicable provisions of the Delaware General Corporation Law) being converted into the right to receive the Offer Price in cash, and the Company surviving the Merger as a wholly owned subsidiary of Parent.
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The Merger Agreement further provides for the acceleration of vesting and cash-out at the Offer Price of (i) all options to acquire shares of Company Common Stock (less the applicable exercise price) and (ii) all restricted stock units with respect to shares of Company Common Stock, in each case outstanding as of the time immediately prior to Purchasers acceptance of Shares tendered in the Offer. In addition, under the agreement, shares of restricted Company Common Stock outstanding as of the time immediately prior to Purchasers acceptance of Shares tendered in the Offer will vest as of such time and be treated in the Merger in the same manner as shares of Company Common Stock.
The Company has also granted to Parent and Purchaser an option (Top-up Option), which Purchaser will, in certain circumstances, be permitted to exercise at or after its acceptance of Shares tendered in the Offer, to purchase a number of newly issued shares of Company Common Stock at the Offer Price which, when added to the shares of Company Common Stock already owned by Parent and Purchaser following such acceptance, will constitute 90% of the shares of Company Common Stock then outstanding after giving effect to the issuance of shares pursuant to the Top-up Option. If Purchaser acquires at least 90% of the outstanding shares of Company Common Stock, including through exercise of the Top-up Option, Purchaser is required under the Merger Agreement to complete the Merger through the short form procedures available under Delaware law.
The Board of Directors of the Company approved the Merger Agreement and the transactions contemplated by the agreement, including the Offer and the Merger, and determined that the Merger Agreement and the transactions contemplated by the agreement, including the Offer and the Merger, are fair to, and advisable and in the best interests of the Company and its stockholders, and the Company filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the U.S. Securities and Exchange Commission (SEC) on April 18, 2014 recommending that holders of Company Common Stock tender their Shares into the Offer.
Purchasers acceptance of Shares tendered in the Offer is subject to customary conditions set forth in the Merger Agreement, including without limitation (i) that Company stockholders validly tender (and not properly withdraw) a minimum number of Shares that number of Shares (without regard to Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee) which, together with the number of Shares, if any, then owned, directly or indirectly, by Parent or Purchaser or their respective subsidiaries (which does not include shares of Company Common Stock issuable upon conversion of the Companys Series A Convertible Preferred Stock contemplated under the Merger Agreement to be purchased by Purchaser) represents at least 90% of the then outstanding shares of Company Common Stock (assuming the purchase of shares of Company Common Stock by Purchaser pursuant to the Top-up Option has occurred and including shares of Company Common Stock issuable upon exercise of Company stock options as to which valid notices of exercise have been received and shares of Company Common Stock have not yet been issued prior to the expiration time of the Offer), (ii) the expiration or termination of the waiting period applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) Parent (either directly or through its subsidiaries) having received the required amount of the proceeds of its debt financing or, alternatively, the debt financing lenders having confirmed the availability of the debt financing and (iv) certain conditions relating to Purchasers purchase of the outstanding Series A Convertible Preferred Stock from JMI Equity Fund VI, L.P. (JMI) immediately following Purchasers acceptance of Shares tendered in the Offer.
The Company has made customary representations, warranties and covenants in the Merger Agreement, including, without limitation, covenants to provide required information to regulatory agencies, to provide other requested cooperation and assistance in connection with the Merger Agreement and the transactions contemplated by it and to conduct its business in all material respects in the ordinary course consistent with past practice, including not taking certain specified actions, prior to the earliest of the first date on which Purchasers designees are elected or appointed to the Companys Board of Directors pursuant to the Merger Agreement, the consummation of the Merger and the termination of the Merger Agreement. Parent and Purchaser also have made customary representations, warranties and covenants in the Merger Agreement.
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The Company has also agreed not to solicit or initiate discussions with third parties regarding other acquisition proposals regarding the Company and has agreed to certain restrictions on its ability to respond to such proposals, provided that the Company may enter into discussions concerning, or provide confidential information to persons making, certain unsolicited proposals if the Companys Board of Directors determines that it would be inconsistent with its fiduciary duties not to do so. The Merger Agreement contains certain termination rights for the Company and Parent, including the right of the Company, in certain circumstances, to terminate the Merger Agreement and accept a Superior Proposal, as that term is defined in the Merger Agreement. The Company will be required to pay Parent a termination fee equal to $13 million if, among other reasons, the Merger Agreement is terminated (i) by the Company to enter into an acquisition agreement that constitutes a Superior Proposal or (ii) by Parent because the Board of Directors of the Company adversely changes its recommendation to stockholders to accept the Offer and tender their Shares to Purchaser in the Offer. If the Company terminates the Merger Agreement under certain circumstances, Parent will be required to pay the Company a reverse termination fee equal to $29 million.
Concurrently with entering into the Merger Agreement, Parent and Purchaser entered into separate tender and support agreements (Support Agreements) with Okumus Fund Management Ltd., Richard Rudman, Chairman and Chief Executive Officer of the Company, and Stephen Vintz, the Companys Executive Vice President, Chief Financial Officer and Treasurer, together representing 27.7% of the outstanding Shares. Under the Support Agreements, Okumus Fund Management, Mr. Rudman and Mr. Vintz each agreed to tender all of their respective Shares in the Offer.
Also concurrently with entering into the Merger Agreement, Parent and Purchaser entered into a separate stock purchase, non-tender and support agreement (Series A Purchase Agreement) with JMI pursuant to which Purchaser agreed to purchase, following Purchasers acceptance of Shares tendered in the Offer, all of JMIs shares of the Companys Series A Convertible Preferred Stock, par value $0.01 per share, including the associated rights to purchase Series B Junior Participating Preferred Stock (Series A Purchase).
Parent and Purchaser have obtained equity and debt financing commitments which Parent and Purchaser have represented to the Company are sufficient for Purchaser to pay (and Parent to cause Purchaser to pay) the aggregate consideration in respect of the Shares in the Offer, the Series A Purchase and the Merger and all related fees and expenses. GTCR FUND X/A AIV LP (Fund) delivered to Parent a letter dated the date of the Merger Agreement in which the Fund committed, subject to the conditions set forth in the letter, to purchase equity or debt securities of Parent in an aggregate amount of up to $30 million to allow Parent, together with its debt financing, to pay the amounts required to be paid by Parent and Purchaser in connection with the consummation of the Offer, the Series A Purchase and the Merger. The Fund also irrevocably and unconditionally guaranteed the payment of the reverse termination fee and certain indemnification and reimbursement obligations under the Merger Agreement with respect to Parents debt financing.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached to this Quarterly Report on Form 10-Q as Exhibit 2.1, and is incorporated into this report by reference.
On April 6, 2014, prior to the execution of the Merger Agreement, the Board approved an amendment (Rights Amendment) to the Rights Agreement, dated as of May 13, 2013, by and between the Company and American Stock Transfer & Trust Company, LLC, as rights agent (Rights Agreement). The Rights Amendment, among other things, (i) defines Parent, Purchaser and certain related parties as Exempt Persons, as that term is defined in the Rights Agreement, to the extent that any of them would become an Acquiring Person solely as a result of (A) the execution, delivery or performance of the Merger Agreement and the Series A Purchase Agreement, (B) their acquisition of Company stock as a result of the execution of the Merger Agreement and the Series A Purchase Agreement and (C) the consummation of the transactions contemplated by the Merger Agreement, including the Offer and the Merger and the Series A Purchase; and (ii) provides that none of the approval,
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execution, delivery or performance of the Merger Agreement and the Series A Purchase Agreement or the consummation of the Offer or the Merger would result in a Stock Acquisition Date or a Distribution Date, as those terms are defined in the Rights Agreement. The Rights Amendment also provides that the Rights Agreement shall expire and terminate immediately prior to the effective time of the Merger.
The foregoing description of the Rights Amendment does not purport to be complete and is qualified in its entirety by reference to the Rights Amendment, a copy of which is attached to this Quarterly Report on Form 10-Q as Exhibit 4.4, and is incorporated into this report by reference.
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ANNEX A
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EXHIBITS | ||||
Exhibit A Form of Registration Rights Agreement | ||||
Exhibit B Form of Nominating Agreement | ||||
Exhibit C Form of Certificate of Merger | ||||
Exhibit D Form of Amended and Restated Memorandum and Articles of Association of Holdings |
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This Agreement and Plan of Merger (this Agreement ), dated as of March 19, 2017, is entered into by and among CAPITOL ACQUISITION CORP. III, a Delaware corporation ( Acquiror ), CAPITOL ACQUISITION HOLDING COMPANY LTD., an exempted company incorporated in the Cayman Islands with limited liability ( Holdings ), CAPITOL ACQUISITION MERGER SUB, INC., a Delaware corporation ( Merger Sub ), CANYON HOLDINGS (CAYMAN) L.P., a Cayman Islands exempted limited partnership) (the Cision Owner ), and CANYON HOLDINGS S.À: R.L., a Luxembourg private limited liability company ( société à responsabilité limitée ), having its registered office at 6D, L-2633 Senningerberg, Grand Duchy of Luxembourg and registered with the RCS under number B 184599 (the Company ). Except as otherwise indicated, capitalized terms used but not defined herein shall have the meanings set forth in Article I of this Agreement.
WHEREAS, prior to the Closing, the Cision Owner, the Company and certain of its owners are to consummate the steps set forth in Schedule 1.01(a) (the Pre-Closing Restructuring );
WHEREAS, following the Pre-Closing Restructuring and immediately prior to the Merger, the Cision Owner is to contribute 100% of the share capital and CPECs of the Company issued and outstanding as of immediately prior to the Merger to Holdings in exchange for (i) the Exchange Shares and the Exchange Warrants and (ii) the right to receive the Earnout Shares, in each case on the terms and subject to the conditions and limitations set forth herein;
WHEREAS, Acquiror is a blank check company incorporated to acquire one or more operating businesses through a Business Combination;
WHEREAS, Holdings is a newly formed, wholly owned, direct subsidiary of Acquiror, and was formed for the purpose of the Transactions, and the parties hereto have agreed that it is desirable to utilize Holdings to effectuate the Contribution and Exchange and the Merger and for Holdings to register with the SEC to become a publicly traded company;
WHEREAS, Merger Sub is a newly formed, wholly owned, direct subsidiary of Holdings, and was formed for the sole purpose of the Merger;
WHEREAS, subject to the terms and conditions hereof, Merger Sub is to merge with and into Acquiror pursuant to the Merger, with Acquiror surviving as the Surviving Company;
WHEREAS, in connection with the Transactions, the Cision Owner and Holdings are to enter into the Registration Rights Agreement at Closing in the form attached hereto as Exhibit A (the Registration Rights Agreement );
WHEREAS, in connection with the Transactions, the Cision Owner and Holdings are to enter into the Nominating Agreement at Closing in the form attached hereto as Exhibit B (the Nominating Agreement );
WHEREAS, the respective boards of directors or similar governing bodies of each of Acquiror, Holdings, Merger Sub, the Company and the Cision Owner have each approved and declared advisable the Transactions upon the terms and subject to the conditions of this Agreement and in accordance with, as applicable, the Delaware General Corporation Law (the DGCL ), the Luxembourg law of 10 August 1915 on commercial companies, as amended (the Luxembourg Company Law ), and the Companies Law of the Cayman Islands Law ( Cayman Law and, together with the DGCL and Luxembourg Company Law, Applicable Organization Law );
WHEREAS, in furtherance of the Transactions, Acquiror shall provide an opportunity to its stockholders to have their Acquiror Common Stock redeemed for the consideration, and on the terms and subject to the conditions and limitations, set forth in this Agreement, the Acquiror Organizational Documents, the Trust Agreement, and the Proxy Statement/Prospectus in conjunction with, inter alia , obtaining approval from the stockholders of Acquiror for the Business Combination (the Offer );
WHEREAS, each of the parties intends that, for U.S. federal income tax purposes, (i) this Agreement is intended to constitute a plan of reorganization within the meaning of Section 368 of the Code and Treasury
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Regulations promulgated thereunder and (ii) the Merger, taken together with the Contribution and Exchange, shall constitute a transaction that qualifies under Section 351 of the Code (clause (ii), the Intended Tax Treatment ).
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, and intending to be legally bound hereby, Acquiror, Holdings, Merger Sub, the Company and the Cision Owner agree as follows:
1.01 Definitions . As used herein, the following terms shall have the following meanings:
Acquiror has the meaning specified in the preamble hereto.
Acquiror Board means the board of directors of Acquiror.
Acquiror Common Share has the meaning specified in Section 4.01(a) .
Acquiror Common Stock means Acquirors common stock, par value $0.0001 per share.
Acquiror Cure Period has the meaning specified in Section 12.01(c) .
Acquiror Deadline has the meaning specified in Section 12.01(b) .
Acquiror Organizational Documents means the Certificate of Incorporation and Acquirors bylaws.
Acquiror Representations means the representations and warranties of Acquiror, Holdings and Merger Sub expressly and specifically set forth in Article VII of this Agreement, as qualified by the Schedules. For the avoidance of doubt, the Acquiror Representations are solely made by Acquiror, Holdings and Merger Sub.
Acquiror Stockholder means a holder of Acquiror Common Stock.
Acquiror Stockholder Approval has the meaning specified in Section 7.02(b) .
Acquiror Warrant means a warrant entitling the holder to purchase one share of Acquiror Common Stock per warrant.
Acquisition Transaction has the meaning specified in Section 10.03(a) .
Action means any claim, action, suit, assessment, arbitration, proceeding or investigation, in each case that is by or before any Governmental Authority.
Affiliate means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, through one or more intermediaries or otherwise.
Affiliate Agreement has the meaning specified in Section 5.21 .
Affiliated Group means an affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under state, local or foreign income Tax law) of which the Company or any of its Subsidiaries is or has been a member.
Agreement has the meaning specified in the preamble hereto.
Annual Meeting means a meeting of the holders of Acquiror Common Stock to be held for the purpose of approving the Proposals.
Anti-Corruption Laws means any applicable Laws relating to anti-bribery or anti-corruption (governmental or commercial), including Laws that prohibit the corrupt payment, offer, promise, or authorization of the payment or transfer of anything of value (including gifts or entertainment), directly or indirectly, to any representative of a foreign Governmental Authority or commercial entity to obtain a business advantage, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010, and all national and international Laws enacted to implement the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions.
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Applicable Organization Law has the meaning specified in the Recitals hereto.
Audited Financial Statements has the meaning specified in Section 5.08 .
Available Closing Date Cash means, as of immediately prior to the Closing, an aggregate amount equal to the result of (without duplication) (i) the cash available to be released from the Trust Account, minus (ii) the sum of all payments to be made as a result of the completion of the Offer and any redemptions or conversions of Acquiror Common Stock by any Converting Stockholders, minus (iii) the Outstanding Acquiror Expenses, minus (iv) to the extent not included in the Outstanding Acquiror Expenses, the sum of all outstanding deferred, unpaid or contingent underwriting, brokers or similar fees, commissions or expenses owed by the Acquiror, the Sponsors or their respective Affiliates (to the extent Acquiror, Holdings or Merger Sub is responsible for or obligated to reimburse or repay any such amounts), minus (v) the aggregate amount outstanding under all Stockholder Notes. For the avoidance of doubt, Available Closing Date Cash shall not be reduced by the Outstanding Company Expenses to be paid in accordance with Section 4.07(a) .
Business Combination has the meaning ascribed to such term in the Certificate of Incorporation.
Business Combination Proposal has the meaning set forth in Section 10.03(b) .
Business Day means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York or Luxembourg, Grand Duchy of Luxembourg are authorized or required by Law to close.
Cayman Law has the meaning specified in the Recitals hereto.
Certificate has the meaning specified in Section 4.02(a) .
Certificate of Incorporation means the Amended and Restated Certificate of Incorporation of Acquiror, filed with the Secretary of State of the State of Delaware on October 13, 2015.
Certificate of Merger has the meaning specified in Section 3.01 .
Change in Control means the occurrence of the following event: any one Person (other than the Cision Owner or its Affiliates), or more than one Person that are Affiliates or that are acting as a group (excluding the Cision Owner or its Affiliates), acquiring ownership of equity securities of Holdings which, together with the equity securities held by such Person, such Person and its Affiliates or such group, constitutes more than 50% of the total voting power or economic rights of the equity securities of Holdings; provided , that to the extent such Person(s) acquire(s) ownership of more than 50% of the total voting power or economic rights of the equity securities of Holdings through one or more transactions, the price per share paid or payable to the stockholders of Holdings for purposes of Sections 2.02(b)(i) (iii) shall be the last price per share paid by such Person(s) in connection with all such transactions.
Cision Owner has the meaning specified in the preamble hereto.
Cision Owner Organizational Documents means the Sixth Amended and Restated Limited Partnership Agreement, dated June 16, 2016, of Cision Owner, as amended and/or restated from time to time.
Cision Owner Specified Representations has the meaning specified in Section 11.02(a)(i) .
Cision Owner Representations means the representations and warranties of the Cision Owner expressly and specifically set forth in Article VI of this Agreement, as qualified by the Schedules. For the avoidance of doubt, the Cision Owner Representations are solely made by the Cision Owner.
Claim means any demand, claim, action, legal, judicial or administrative proceeding (whether at law or in equity) or arbitration.
Closing has the meaning specified in Section 3.03 .
Closing Date has the meaning specified in Section 3.03 .
Closing Date Certificate has the meaning specified in Section 2.01 .
Code has the meaning specified in the Recitals hereto.
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Company has the meaning specified in the preamble hereto.
Company Benefit Plan has the meaning specified in Section 5.13(a) .
Company Cure Period has the meaning specified in Section 12.01(b) .
Company Representations means the representations and warranties of the Company expressly and specifically set forth in Article V of this Agreement, as qualified by the Schedules. For the avoidance of doubt, the Company Representations are solely made by the Company.
Company Share means an ordinary share, par value $0.001 per share, of the Company.
Company Specified Representations has the meaning specified in Section 11.02(a)(i) .
Confidentiality Agreement has the meaning specified in Section 13.09 .
Contracts means any legally binding contracts, agreements, subcontracts, leases, and purchase orders.
Contribution and Exchange has the meaning specified in Section 2.01 .
Converting Stockholder means an Acquiror Stockholder who demands that Acquiror convert its Acquiror Common Stock into cash in connection with the transactions contemplated hereby and in accordance with the Acquiror Organizational Documents.
CPEC means a series 1.1 convertible preferred equity certificate, having a par value of $1.00, issued by the Company and governed by terms and conditions of series 1.1 convertible preferred equity certificates, dated April 1, 2014, as amended.
DGCL has the meaning specified in the Recitals hereto.
Earnout Period has the meaning specified in Section 2.02(a) .
Earnout Shares has the meaning specified in Section 2.02(a) .
Effective Date means the effective date of the Form S-4.
Effective Time has the meaning specified in Section 3.01 .
Environmental Laws means any and all applicable Laws relating to pollution or protection of the environment (including natural resources) or the use, storage, emission, disposal or release of Hazardous Materials, each as in effect on and as interpreted as of the date hereof.
Equity Value means $805,000,000.00.
ERISA has the meaning specified in Section 5.13(a) .
Exchange Act means the Securities Exchange Act of 1934, as amended.
Exchange Shares means an aggregate number of Holdings Common Shares equal to the sum of (i)(x) the Equity Value, divided by (y) $10, plus (ii) 1,600,000 (subject to adjustment pursuant to the terms of the Sponsor Agreement).
Exchange Warrants means Holdings Warrants to acquire 2,000,000 Holdings Common Shares (subject to adjustment pursuant to the terms of the Sponsor Agreement). For so long as they are held, directly or indirectly, by the Cision Owner or its Affiliates or their respective permitted transferees, the Exchange Warrants shall be on substantially the same terms and shall have the same rights as the Sponsor Warrants, including with respect to the cashless exercise thereof.
Excluded Shares means shares of Acquiror Common Stock, if any, (i) held in the treasury of Acquiror, (ii) for which a Converting Stockholder has demanded that Acquiror convert or redeem such shares of Acquiror Common Stock or (iii) which are Sponsor Shares to be cancelled pursuant to Section 2.03 .
Financial Derivative/Hedging Arrangement means any transaction (including an agreement with respect thereto) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign
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exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any combination of these transactions.
Financial Statements has the meaning specified in Section 5.08 .
First Lien Credit Agreement means that certain first lien credit agreement, dated as of June 16, 2016, entered into by and between, amongst others, Canyon Companies S.à r.l. as holdings, Canyon Group S.à r.l. as intermediate Lux holdings, GTCR Valor Holdings, Inc. as intermediate U.S. holdings, GTCR Valor Companies, Inc. as borrower, and Deutsche Bank AG New York Branch as administrative agent, as amended or modified from time to time.
Foreign Subsidiary has the meaning specified in Section 5.15(m) .
Form S-4 means the registration statement on Form S-4 of Holdings with respect to registration of the Holdings Common Shares and Holdings Warrants to be issued in connection with the Merger.
GAAP means United States generally accepted accounting principles, consistently applied.
Governmental Authority means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal.
Governmental Order means any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any Governmental Authority.
Hazardous Material means material, substance or waste that is listed, regulated, or otherwise defined as hazardous, toxic, or radioactive, or as a pollutant or contaminant (or words of similar intent or meaning) under applicable Environmental Law as in effect as of the date hereof, including but not limited to petroleum, petroleum by-products, asbestos or asbestos-containing material, polychlorinated biphenyls, flammable or explosive substances, or pesticides.
Holdings has the meaning specified in the preamble hereto.
Holdings Board has the meaning specified in Section 9.05 .
Holdings Common Share means one ordinary share, par value $0.0001 per share, of Holdings.
Holdings Common Share Price means, on any date after the Closing, the closing sale price per Holdings Common Share reported as of 4:00 p.m., New York, New York time on such date by Bloomberg, or if not available on Bloomberg, as reported by Morningstar.
Holdings Warrant means a warrant entitling the holder to purchase such number of Holdings Common Share(s) per warrant as set forth therein.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
Indebtedness means, with respect to any Person, without duplication, any obligations (whether or not contingent) consisting of (a) the outstanding principal amount of and accrued and unpaid interest on, and other payment obligations for, borrowed money, or payment obligations issued or incurred in substitution or exchange for payment obligations for borrowed money, (b) amounts owing as deferred purchase price for property or services, including earnout payments, (c) payment obligations evidenced by any promissory note, bond, debenture, mortgage or other debt instrument or debt security, (d) commitments or obligations by which such Person assures a creditor against loss, including contingent reimbursement obligations with respect to letters of credit (to the extent drawn), bankers acceptance or similar facilities, (e) payment obligations secured by (or for which the holder of such payment obligations has an existing right, contingent or otherwise, to be secured by) any Lien, other than a Permitted Lien, on assets or properties of such Person, whether or not the obligations secured thereby have been assumed, (f) obligations under capitalized leases, (g) obligations under any Financial Derivative/Hedging Arrangement, (h) guarantees, make-whole agreements, hold harmless agreements or other similar arrangements with respect to any amounts of a type described in clauses (a) through (h) above and (i) with respect to each of the foregoing, any unpaid interest, breakage costs,
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prepayment or redemption penalties or premiums, or other unpaid fees or obligations; provided , however , that Indebtedness shall not include accounts payable to trade creditors and accrued expenses arising in the ordinary course of business consistent with past practice.
Information or Document Request means any request or demand for the production, delivery or disclosure of documents or other evidence, or any request or demand for the production of witnesses for interviews or depositions or other oral or written testimony, by any Regulatory Consent Authority relating to the transactions contemplated hereby or by any third party challenging the transactions contemplated hereby, including any so called second request for additional information or documentary material or any civil investigative demand made or issued by the Antitrust Division of the United States Department of Justice or the United States Federal Trade Commission or any subpoena, interrogatory or deposition.
Intellectual Property means all intellectual property rights created, arising, or protected under applicable Law, including all: (i) patents and patent applications, (ii) trademarks, service marks and trade names, (iii) copyrights, (iv) internet domain names and (v) trade secrets.
Intended Tax Treatment has the meaning specified in the Recitals hereto.
Interim Period has the meaning specified in Section 8.01 .
Law means any statute, law, ordinance, rule, regulation or Governmental Order, in each case, of any Governmental Authority.
Leased Real Property means all real property leased by the Company or its Subsidiaries, the lease of which may not be terminated at will, or by giving notice of 90 days or less, without cost or penalty.
Letter of Transmittal has the meaning specified in Section 4.02(a) .
Lien means any mortgage, deed of trust, pledge, hypothecation, encumbrance, security interest or other lien of any kind.
Luxembourg means the Grand Duchy of Luxembourg.
Material Adverse Effect means, with respect to the Company, a material adverse effect on (i) the business, results of operations or financial condition of the Company and its Subsidiaries, taken as a whole; provided , however , that in no event would any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect on the business, results of operations or financial condition of the Company and its Subsidiaries, taken as a whole: (a) any change in applicable Laws or GAAP or any interpretation thereof, (b) any change in interest rates or economic, political, business, financial, commodity, currency or market conditions generally, (c) the announcement or the execution of this Agreement, the pendency or consummation of the Merger or the performance of this Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, licensors, distributors, partners, providers and employees ( provided that the exceptions in this clause (c) shall not be deemed to apply to references to Material Adverse Effect in the representations and warranties set forth in Section 5.04 and, to the extent related thereto, the condition in Section 9.02(a) ), (d) any change generally affecting any of the industries or markets in which the Company or its Subsidiaries operate or the economy as a whole, (e) the compliance with the terms of this Agreement or the taking of any action required or contemplated by this Agreement or with the prior written consent of Acquiror ( provided that the exceptions in this clause (e) shall not be deemed to apply to references to Material Adverse Effect in the representations and warranties set forth in Section 5.04 and, to the extent related thereto, the condition in Section 9.02(a) ), (f) any earthquake, hurricane, tsunami, tornado, flood, mudslide, wild fire or other natural disaster, act of God or other force majeure event, (g) any national or international political or social conditions in countries in which, or in the proximate geographic region of which, the Company operates, including the engagement by the United States or such other countries in hostilities or the escalation thereof, whether or not pursuant to the declaration of a national emergency or war, or the occurrence or the escalation of any military or terrorist attack upon the United States or such other country, or any territories, possessions, or diplomatic or consular offices of the United States or such other countries or upon any United States or such other country military installation, equipment or personnel or (h) any failure of the Company and its Subsidiaries, taken as a whole, to meet any projections,
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forecasts or budgets; provided , that clause (h) shall not prevent or otherwise affect a determination that any change or effect underlying such failure to meet projections or forecasts has resulted in, or contributed to, or would reasonably be expected to result in or contribute to, a Material Adverse Effect (to the extent such change or effect is not otherwise excluded from this definition of Material Adverse Effect), except in the case of clause (a), (b), (d), (f) and (g) to the extent that such change does not have a disproportionate impact on the Company and its Subsidiaries, taken as a whole, as compared to other industry participants or (ii) the ability of the Company to consummate the transactions contemplated hereby in accordance with the terms hereof.
Material Permits has the meaning specified in Section 5.24 .
Maximum Target has the meaning specified in Section 2.02(a)(iii) .
Median Target has the meaning specified in Section 2.02(a)(ii) .
Merger has the meaning specified in in Section 3.01 .
Merger Sub has the meaning specified in the preamble hereto.
Minimum Target has the meaning specified in Section 2.02(a)(i) .
Multiemployer Plan has the meaning specified in Section 5.13(e) .
Nasdaq means the Nasdaq Stock Market.
Nominating Agreement has the meaning specified in the Recitals hereto.
Offer has the meaning specified in the Recitals hereto.
Outstanding Acquiror Expenses has the meaning specified in Section 4.07(b) .
Outstanding Company Expenses has the meaning specified in Section 4.07(a) .
Owned Real Property has the meaning specified in Section 5.18(a) .
Per Share Merger Consideration means one Holdings Common Share.
Permits means all permits, licenses, certificates of authority, authorizations, approvals, registrations and other similar consents issued by or obtained from a Governmental Authority.
Permitted Liens means (i) statutory or common law Liens of mechanics, materialmen, warehousemen, landlords, carriers, repairmen, construction contractors and other similar Liens that arise in the ordinary course of business, that relate to amounts not yet delinquent or that are being contested in good faith through appropriate Actions, in each case only to the extent reflected or reserved against in the balance sheet included in the Unaudited Financial Statements, (ii) Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business, (iii) Liens for Taxes not yet due and payable or which are being contested in good faith through appropriate Actions, in each case, for which appropriate reserves have been established in accordance with GAAP, (iv) Liens, encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record) that (A) are matters of record, (B) would be disclosed by a current, accurate survey or physical inspection of such real property, or (C) do not materially interfere with the present uses of such real property and (v) Liens described on Schedule 1.01(d) .
Person means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental agency or instrumentality or other entity of any kind.
PIPE Investment means one or more equity investments made in accordance with the consent requirements of Section 9.09 .
Pre-Closing Restructuring has the meaning specified in the Recitals hereto.
Proposals has the meaning specified in Section 10.02(c) .
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Proxy Statement means the proxy statement filed by Acquiror on Schedule 14A with respect to the Annual Meeting to approve the Proposals.
Proxy Statement/Prospectus means the proxy statement/prospectus included in the Form S-4, including the Proxy Statement, relating to the transactions contemplated by this Agreement which shall constitute a proxy statement of the Acquiror to be used for the Annual Meeting to approve the Proposals (which shall also provide the Acquiror Stockholders with the opportunity to redeem their shares of Acquiror Common Stock in conjunction with a stockholder vote on the Business Combination) and a prospectus with respect to the Holdings Common Shares to be offered and issued to the Acquiror Stockholders (other than Mark Ein and his Affiliated entities) and the effect of the Transactions on the Acquiror Warrants pursuant to Section 4.04 , in all cases in accordance with and as required by the Acquiror Organizational Documents, applicable Law, and the rules and regulations of the Nasdaq.
Real Estate Lease Documents has the meaning specified in Section 5.18(b) .
Real Property has the meaning specified in Section 5.18(a) .
Registered Intellectual Property has the meaning specified in Section 5.23(a) .
Registration Rights Agreement has the meaning specified in the Recitals hereto.
Regulatory Consent Authorities means the Antitrust Division of the United States Department of Justice or the United States Federal Trade Commission, as applicable.
Representative means, as to any Person, any of the officers, directors, managers, employees, counsel, accountants, financial advisors, lenders, debt financing sources and consultants of such Person.
SEC means the United States Securities and Exchange Commission.
SEC Clearance Date means the date on which the SEC has declared the Form S-4 effective and has confirmed that it has no further comments on the Proxy Statement.
SEC Reports has the meaning specified in Section 7.08(a) .
Securities Act means the Securities Act of 1933, as amended.
Securities Laws means the securities laws of any state, federal or foreign entity and the rules and regulations promulgated thereunder.
Shareholders Agreement means the Investment Agreement, dated December 22, 2014, governed by the laws of England and Wales and entered into by and among the Company, Cision Owner, and the other parties as specified therein.
Significant Subsidiary means any direct or indirect Subsidiary of the Company which would qualify as a significant subsidiary pursuant to Rule 1-02(w) of Regulation S-X.
Sponsor Agreement means that certain Sponsor Support Agreement, dated as of the date hereof, by and among the Sponsors, Acquiror, the Company, Holdings and the Cision Owner, as amended or modified from time to time.
Sponsor Share means a share of Acquiror Common Stock held by any of the Sponsors as of immediately prior to the Effective Time.
Sponsor Warrant means an Acquiror Warrant held by any of the Sponsors as of immediately prior to the Effective Time.
Sponsors means Capitol Acquisition Management 3 LLC, Capitol Acquisition Founder 3 LLC, Richard C. Donaldson, Piyush Sodha, Lawrence Calcano, Derek Apfel and Alfheidur H. Saemundsson.
Stockholder Note means a promissory note, loan note or similar instrument of indebtedness issued by Acquiror or its Subsidiaries to any Sponsor, Acquiror Stockholder or director, officer, employee or Affiliate of any Sponsor or Acquiror or their respective Subsidiaries (other than any such note or instrument between Acquiror and any of its Subsidiaries).
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Subsidiary means, with respect to a Person, any corporation or other organization (including a limited liability company or a partnership), whether incorporated or unincorporated, of which such Person directly or indirectly owns or controls a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization or any organization of which such Person or any of its Subsidiaries is, directly or indirectly, a general partner or managing member.
Surviving Company has the meaning specified in Section 3.01 .
Surviving Provisions has the meaning specified in Section 12.02 .
Tax means any federal, state, provincial, territorial, local, foreign and other net income tax, alternative or add-on minimum tax, franchise tax, gross income, adjusted gross income or gross receipts tax, employment related tax (including employee withholding or employer payroll tax, FICA, or FUTA) ad valorem, transfer, franchise, license, excise, severance, stamp, occupation, premium, personal property, real property, capital stock, profits, disability, registration, value added, estimated, customs duties, escheat, and sales or use tax, or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount imposed with respect thereto by a Governmental Authority, whether as a primary obligor or as a result of being a transferee or successor of another Person or a member of an affiliated, consolidated, unitary, combined or other group or pursuant to Law, Contract or otherwise.
Tax Return means any return, report, statement, refund, claim, declaration, information return, statement, estimate or other document filed or required to be filed with respect to Taxes, including any schedule or attachment thereto and including an amendments thereof.
Terminating Acquiror Breach has the meaning specified in Section 12.01(c) .
Terminating Company Breach has the meaning specified in Section 12.01(b) .
Termination Date has the meaning specified in Section 12.01(b) .
Transactions means the transactions contemplated by this Agreement to occur at the Closing, including the Contribution and Exchange and the Merger.
Treasury Regulations means the regulations promulgated under the Code.
Trust Account has the meaning specified in Section 7.06(a) .
Trust Agreement has the meaning specified in Section 7.06(a) .
Trustee has the meaning specified in Section 7.06(a) .
Unaudited Financial Statements has the meaning specified in Section 5.08 .
Warrant Agreement means that certain Warrant Agreement, dated as of October 13, 2015, between Acquiror and Continental Stock Transfer & Trust Company, a New York corporation.
(a) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words using the singular or plural number also include the plural or singular number, respectively, (iii) the terms hereof, herein, hereby, hereto and derivative or similar words refer to this entire Agreement, (iv) the terms Article, Section, Schedule, Exhibit and Annex refer to the specified Article, Section, Schedule, Exhibit or Annex of or to this Agreement unless otherwise specified, (v) the word including shall mean including without limitation and (vi) the word or shall be disjunctive but not exclusive.
(b) Unless the context of this Agreement otherwise requires, references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto.
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(c) Unless the context of this Agreement otherwise requires, references to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.
(d) The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent and no rule of strict construction shall be applied against any party.
(e) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day.
(f) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.
(g) The phrases provided to, furnished to, made available and phrases of similar import when used herein, unless the context otherwise requires, means that a copy of the information or material referred to has been provided no later than 9:00 a.m. on March 17, 2017 to the party to which such information or material is to be provided or furnished (i) in the virtual data room set up by the Company in connection with this Agreement or (ii) by delivery to such party or its legal counsel via electronic mail or hard copy form.
1.03 Knowledge . As used herein, the phrase to the knowledge of any Person shall mean the actual knowledge of, in the case of the Company, Kevin Akeroyd, Jack Pearlstein and Kristie Scott, and, in the case of Acquiror, Mark Ein and Dyson Dryden.
1.04 Equitable Adjustments . If, between the date of this Agreement and the Closing, the outstanding Holdings Common Shares or shares of Acquiror Common Stock shall have been changed into a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, or any similar event shall have occurred, then any number, value (including dollar value) or amount contained herein which is based upon the number of Holdings Common Shares or shares of Acquiror Common Stock will be appropriately adjusted to provide to the Cision Owner and the holders of Acquiror Common Stock the same economic effect as contemplated by this Agreement prior to such event; provided , however , that this Section 1.04 shall not be construed to permit Acquiror, Holdings or Merger Sub to take any action with respect to their respective securities that is prohibited by the terms and conditions of this Agreement.
2.01 Contribution and Exchange Transaction . No sooner than five or later than three Business Days prior to the Closing, Acquiror shall deliver to the Cision Owner a certificate (the Closing Date Certificate ), duly executed and certified by an executive officer of Acquiror, which sets forth Acquirors good faith calculation of the Available Closing Date Cash (including supporting detail thereof) and the number of Exchange Shares and Exchange Warrants, in each case determined in accordance with the definitions set forth in this Agreement (subject to adjustment pursuant to the terms of the Sponsor Agreement). Acquiror shall consider in good faith the Cision Owners comments to the Closing Date Certificate delivered to Acquiror no less than two Business Days prior to the Closing. At the Closing and immediately prior to the Merger, subject to the terms and conditions set forth herein, the Cision Owner shall (and, subject only to the consummation of the Closing, hereby does) contribute to Holdings all right, title and interest in and to all of the Company Shares and CPECs held by the Cision Owner, free and clear of all Liens other than applicable federal and state securities law restrictions, and, in exchange therefor, (a) Holdings shall (and, subject only to the consummation of the Closing, hereby does) issue to the Cision Owner, the Exchange Shares and the Exchange Warrants, in each case fully paid and free and clear of all Liens other than applicable federal and state securities law restrictions and (b) the Cision Owner shall have the right to be issued the Earnout Shares when and as required by Section 2.02 as additional consideration for the transactions contemplated herein (and without the need for additional consideration from the Cision Owner), free and clear of all Liens other than
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applicable federal and state securities law restrictions and any Contract with Holdings or any of its Subsidiaries to which Cision Owner might then be a party. The transactions described in the foregoing sentence are referred to as the Contribution and Exchange . On the Closing Date, (A) Cision Owner and Acquiror shall deliver to the Company a notification letter in relation to the transfer of the Company Shares and CPECs, (B) the Company shall deliver a certified copy of the updated registers of (1) shareholders and (2) CPEC holders of the Company, in each case, reflecting the contribution of all Company Shares and CPECs to Holdings and (C) Holdings shall deliver to Cision Owner (x) a certified consolidated fully signed pdf copy of the board resolutions of Holdings (as certified as a true copy by a director of Holdings) approving, inter alia (1) the execution by Holdings of this Agreement, (2) the issuance of the Exchange Shares and (3) the issuance of the Exchange Warrants and the execution of all required instruments in respect thereof, (y) a certified copy of the updated Register of Members of Holdings reflecting the issuance of the Exchange Shares (as certified as a true copy by a director of Holdings or the applicable registrar or transfer agent), and (z) executed counterpart instrument(s) in respect of the Exchange Warrants.
(a) From and after the Closing until the fifth anniversary of the Closing Date (the Earnout Period ), promptly (but in any event within five Business Days) after the occurrence of any of the following (any one or more of which may occur at the same time), Holdings shall issue, up to an additional 6,000,000 Holdings Common Shares (the Earnout Shares ) to the Cision Owner as additional consideration for the Contribution and Exchange (and without the need for additional consideration from the Cision Owner), fully paid and free and clear of all Liens other than applicable federal and state securities law restrictions and any Contract with Holdings or any of its Subsidiaries to which Cision Owner might then be a party:
(i) if the Holdings Common Share Price is greater than $13.00 (such share price as adjusted pursuant to this Section 2.02 , the Minimum Target ) for any period of 20 trading days out of 30 consecutive trading days, 2,000,000 Holdings Common Shares;
(ii) if the Holdings Common Share Price is greater than $16.00 (such share price as adjusted pursuant to this Section 2.02 , the Median Target ) for any period of 20 trading days out of 30 consecutive trading days, 2,000,000 Holdings Common Shares plus the amount of Holdings Common Shares issuable pursuant to Section 2.02(a)(i) if not previously issued; and
(iii) if the Holdings Common Share Price is greater than $19.00 (such share price as adjusted pursuant to this Section 2.02 , the Maximum Target ) for any period of 20 trading days out of 30 consecutive trading days, 2,000,000 Holdings Common Shares plus the amount of Holdings Common Shares issuable pursuant to Section 2.02(a)(i) and Section 2.02(a)(ii) , in each case if not previously issued.
(b) Upon the first Change in Control to occur during the Earnout Period, Holdings shall, no later than immediately prior to the consummation of such Change in Control, issue to the Cision Owner as additional consideration for the Contribution and Exchange (and without the need for additional consideration from the Cision Owner), free and clear of all Liens other than applicable federal and state securities law restrictions and any Contract with Holdings or any of its Subsidiaries to which Cision Owner might then be a party, a number of Earnout Shares equal to the following:
(i) if the price per share paid or payable to the stockholders of Holdings in connection with such Change in Control is equal to or greater than the Minimum Target but less than the Median Target, 2,000,000 Holdings Common Shares less any Holdings Common Shares previously issued pursuant to Section 2.02(a)(i) ;
(ii) if the price per share paid or payable to the stockholders of Holdings in connection with such Change in Control is equal to or greater than the Median Target but less than the Maximum Target, 4,000,000 Holdings Common Shares less any Holdings Common Shares previously issued pursuant to Section 2.02(a)(i) or Section 2.02(a)(ii) ; and
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(iii) if the price per share paid or payable to the stockholders of Holdings in connection with such Change in Control is equal to or greater than the Maximum Target, 6,000,000 Holdings Common Shares less any Holdings Common Shares previously issued pursuant to Section 2.02(a)(i) , Section 2.02(a)(ii) or Section 2.02(a)(iii) .
For the avoidance of doubt, if the price per share paid or payable to the stockholders of Holdings in connection with the first Change in Control to occur during the Earnout Period is less than the Minimum Target, then no Earnout Shares shall be issuable pursuant to this Section 2.02(b) .
(c) At all times during the Earnout Period, Holdings shall keep available for issuance a sufficient number of unissued Holdings Common Shares to permit Holdings to satisfy its issuance obligations set forth in this Section 2.02 and shall take all actions required to increase the authorized number of Holdings Common Shares if at any time there shall be insufficient unissued Holdings Common Shares to permit such reservation.
(d) Holdings shall take such actions as are reasonably requested by the Cision Owner to evidence the issuances pursuant to this Section 2.02 , including through the provision of a certified updated Register of Members showing such issuances (as certified by a director of Holdings or the applicable registrar or transfer agent) and, if requested, through the delivery of duly and validly executed certificates or instruments representing the Earnout Shares.
(e) In the event Holdings shall at any time during the Earnout Period pay any dividend on Holdings Common Shares by the issuance of additional Holdings Common Shares, or effect a subdivision or combination or consolidation of the outstanding Holdings Common Shares (by reclassification or otherwise) into a greater or lesser number of Holdings Common Shares, then in each such case, (i) the number of Earnout Shares shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of Holdings Common Shares (including any other shares so reclassified as Holdings Common Shares) outstanding immediately after such event and the denominator of which is the number of Holdings Common Shares that were outstanding immediately prior to such event and (ii) the Holdings Common Share Price values set forth in Sections 2.02(a)(i) (iii) above shall be appropriately adjusted to provide to the Cision Owner the same economic effect as contemplated by this Agreement prior to such event.
(f) During the Earnout Period, Holdings shall take all reasonable efforts for (i) Holdings to remain listed as a public company on, and for the Holdings Common Shares (including, when issued, the Earnout Shares) to be tradable over, the Nasdaq and (ii) the Earnout Shares, when issued, to be approved for listing on the Nasdaq; provided , however , the foregoing shall not limit Holdings from consummating a Change in Control or entering into a Contract that contemplates a Change in Control. Upon the consummation of any Change in Control during the Earnout Period, other than as set forth in Section 2.02(b) above, Holdings shall have no further obligations pursuant to this Section 2.02(f) .
2.03 Cancellation of Sponsor Shares and Sponsor Warrants . Pursuant to the terms of and as further specified in the Sponsor Agreement, at the Closing and concurrent with the consummation of the Contribution and Exchange, but in any event prior to the Effective Time, Acquiror and the Sponsors shall irrevocably cause to be terminated, forfeited and cancelled, for no consideration and without further right, obligation or liability of any kind or nature on the part of Acquiror, Holdings, Merger Sub, the Surviving Company or the Sponsors: (i) 1,600,000 Sponsor Shares (subject to adjustment pursuant to the terms of the Sponsor Agreement); and (ii) 2,000,000 Sponsor Warrants (subject to adjustment pursuant to the terms of the Sponsor Agreement).
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3.01 Merger . Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, immediately following the consummation of the Contribution and Exchange, the ordinary share issued by Holdings to the Acquiror shall be surrendered for nil consideration by the Acquiror and the Acquiror, Holdings and Merger Sub shall cause Merger Sub to be merged with and into Acquiror (the Merger ), with Acquiror being the surviving corporation (which is sometimes hereinafter referred to for the periods at and after the Effective Time as the Surviving Company ) following the Merger and the separate corporate existence of Merger Sub shall cease. The Merger shall be consummated in accordance with this Agreement and Applicable Organization Law and evidenced by a Certificate of Merger between Merger Sub and Acquiror in the form of Exhibit C (the Certificate of Merger ), such Merger to be consummated immediately upon filing of the Certificate of Merger or at such later time as may be agreed by Acquiror and the Company in writing and specified in the Certificate of Merger (the Effective Time ).
3.02 Effects of the Merger . The Merger shall have the effects set forth in this Agreement and Applicable Organization Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Merger Sub shall vest in the Surviving Company, and all debts, liabilities and duties of Merger Sub shall become the debts, liabilities and duties of the Surviving Company.
3.03 Closing . Subject to the terms and conditions of this Agreement, the closing of the Contribution and Exchange and the Merger (the Closing ) shall take place at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022, commencing at 10:00 a.m. on the date which is three Business Days after the date on which all conditions set forth in Article XI shall have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof) or such other time and place as Acquiror and the Company may mutually agree in writing. The date on which the Closing actually occurs is referred to in this Agreement as the Closing Date . Subject to the satisfaction or waiver of all of the conditions set forth in Article XI of this Agreement, and provided this Agreement has not theretofore been terminated pursuant to its terms, on the Closing Date, Acquiror, Holdings and Merger Sub shall cause the Certificate of Merger to be executed, acknowledged and filed with the Secretary of State of the State of Delaware as provided in Sections 251 and 103 of the DGCL.
3.04 Certificate of Formation and Bylaws of the Surviving Company . At the Effective Time, (i) the certificate of incorporation of Acquiror as in effect immediately prior to the Effective Time shall be amended and restated as set forth in the Certificate of Merger, until thereafter amended in accordance with its terms and as provided by Applicable Organization Law, and (ii) the bylaws of Acquiror as in effect immediately prior to the Effective Time shall be amended and restated to be identical to the bylaws of Merger Sub in effect immediately prior to the Effective Time, except that references to the name of Merger Sub shall be replaced with references to the name of Acquiror, until thereafter amended as provided therein or by Applicable Organization Law.
3.05 Directors and Officers of the Surviving Company . Immediately prior to the Effective Time, each of Holdings and Merger Sub shall cause the individuals set forth on Schedule 3.05 to be designated or appointed as the directors and officers of Merger Sub immediately prior to the Effective Time, and such individuals shall be the directors and officers of the Surviving Company until the earlier of their resignation or removal or until their respective successors are duly elected and qualified.
4.01 Conversion of Shares of Acquiror Common Stock and Merger Sub Stock .
(a) At the Effective Time, by virtue of the Merger and without any action on the part of any Acquiror Stockholder, each share of Acquiror Common Stock (an Acquiror Common Share ) that is issued and outstanding immediately prior to the Effective Time (other than any Excluded Shares, which shall not constitute Acquiror Common Shares hereunder), shall thereupon be converted into, and the holder of such Acquiror Common Share shall be entitled to receive, the Per Share Merger Consideration for such Acquiror Common Share. All of the shares of Acquiror Common Stock converted into the right
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to receive the Per Share Merger Consideration pursuant to this Article IV shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a Certificate previously representing any such shares of Acquiror Common Stock shall thereafter cease to have any rights with respect to such securities, except the right to receive the Per Share Merger Consideration into which such shares of Acquiror Common Stock shall have been converted in the Merger.
(b) At the Effective Time, by virtue of the Merger and without any action on the part of Holdings or Merger Sub, each share of common stock, par value $0.01 per share, of Merger Sub shall no longer be outstanding and shall thereupon be converted into and become one share of common stock, par value $0.0001 per share, of the Surviving Company.
(c) At the Effective Time, by virtue of the Merger and without any action on the part of any holder of Excluded Shares, each Excluded Share shall be surrendered and cancelled and shall cease to exist and no consideration shall be delivered or deliverable in exchange therefor.
4.02 Delivery of Per Share Merger Consideration .
(a) As promptly as reasonably practicable after the Effective Time, Holdings shall cause to be mailed to each holder of record of Acquiror Common Shares a letter of transmittal in customary form to be approved by Acquiror (such approval not to be unreasonably withheld, conditioned, or delayed) prior to the Closing (the Letter of Transmittal ), which shall have customary representations and warranties as to title, authorization, execution and delivery and shall specify that delivery shall be effected, and risk of loss and title to the Acquiror Common Shares shall pass, only upon delivery of the Acquiror Common Shares to Holdings (including all certificates representing Acquiror Common Shares (each, a Certificate and, collectively, the Certificates ), to the extent such Acquiror Common Shares are certificated), together with instructions thereto.
(b) Upon the receipt of a Letter of Transmittal (accompanied with all Certificates representing Acquiror Common Shares of the holder of such Acquiror Common Shares, to the extent such Acquiror Common Shares are certificated) duly, completely and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required by Holdings, the holder of such Acquiror Common Shares shall be entitled to receive in exchange therefor (i) the Per Share Merger Consideration into which such Acquiror Common Shares have been converted pursuant to Section 4.01(a) and (ii) any cash in lieu of fractional shares which the holder has the right to receive pursuant to Section 4.06 plus dividends declared after the Effective Time which are unpaid, if any. Until surrendered as contemplated by this Section 4.02(b) , each Acquiror Common Share shall be deemed at any time from and after the Effective Time to represent only the right to receive upon such surrender the Per Share Merger Consideration which the holders of Acquiror Common Shares were entitled to receive in respect of such shares pursuant to this Section 4.02(b) (and cash in lieu of fractional shares pursuant to Section 4.06 plus any dividends declared after the Effective Time which are unpaid, if any).
4.03 Lost Certificate . In the event any Certificate has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Holdings, the provision by such Person of a customary indemnity against any claim that may be made against Holdings with respect to such Certificate, and Holdings shall issue in exchange for such lost, stolen or destroyed Certificate the Per Share Merger Consideration, deliverable in respect thereof as determined in accordance with this Article IV .
4.04 Acquiror Warrants . At the Effective Time, by virtue of the Merger and without any action on the part of any holder of Acquiror Warrants, each Acquiror Warrant that is outstanding immediately prior to the Effective Time shall, pursuant to and in accordance with Section 4.05 of the Warrant Agreement, automatically and irrevocably be modified to provide that such Acquiror Warrant shall no longer entitle the holder thereof to purchase the amount of share(s) of Acquiror Common Stock set forth therein and in substitution thereof such Acquiror Warrant shall entitle the holder thereof to acquire such equal number of Holdings Common Share(s) per Acquiror Warrant.
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4.05 Withholding . Each of Acquiror, Holdings, the Company, the Surviving Company and their respective Affiliates shall be entitled to deduct and withhold from any cash amounts otherwise deliverable under this Agreement, and from any other consideration otherwise paid or delivered in connection with the transactions contemplated by this Agreement, such amounts that any such Persons are required to deduct and withhold with respect to any of the deliveries and payments contemplated by this Agreement under the Code or any applicable provision of state, local or foreign Law. To the extent that Acquiror, Holdings, the Company, the Surviving Company or their respective Affiliates withholds such amounts with respect to any Person and properly remits such withheld amounts to the applicable Governmental Authority, such withheld amounts shall be treated as having been paid to or on behalf of such Person. In the case of any such payment payable to employees of the Company or its Affiliates prior to the Contribution and Exchange treated as compensation, the parties shall cooperate to pay such amounts through the Companys or its Subsidiarys payroll to facilitate applicable withholding.
4.06 Fractional Shares . No certificate or scrip representing fractional Holdings Common Shares shall be issued upon the surrender for exchange of Certificates of Acquiror Common Stock, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of Holdings. Notwithstanding any other provision of this Agreement, each holder of Acquiror Common Shares converted pursuant to the Merger who would otherwise have been entitled to receive a fraction of Holdings Common Share shall receive, in lieu thereof, cash, without interest, in an amount equal to such fractional part of a Holdings Common Share multiplied by ten U.S. dollars ($10).
(a) On or prior to the Closing Date, the Company shall provide to Acquiror a written report setting forth a list of the following fees and expenses incurred by the Company or the Cision Owner in connection with the preparation, negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby (together with written invoices and wire transfer instructions for the payment thereof), solely to the extent such fees and expenses are incurred and unpaid as of the close of business on the Business Day immediately preceding the Closing Date: (i) the fees and disbursements of outside counsel to the Company, the Cision Owner and Company management incurred in connection with the transactions contemplated hereby and (ii) the fees and expenses of any other agents, advisors, consultants, experts and financial advisors employed by the Company in connection with the Transactions (collectively, the Outstanding Company Expenses ). On the Closing Date following the Closing, Acquiror shall pay or cause to be paid by wire transfer of immediately available funds all such Outstanding Company Expenses.
(b) On or prior to the Closing Date, Acquiror shall provide to the Company a written report setting forth a list of all fees and disbursements of Acquiror, Holdings and Merger Sub for outside counsel and fees and expenses of Acquiror for any other agents, advisors, consultants, experts and financial advisors employed in connection with the Merger, the Contribution and Exchange or any PIPE Investment (together with written invoices and wire transfer instructions for the payment thereof) (collectively, the Outstanding Acquiror Expenses ). On the Closing Date, Acquiror shall pay or cause to be paid by wire transfer of immediately available funds all such Outstanding Acquiror Expenses.
Except as set forth in the Schedules to this Agreement (each of which qualifies (a) the correspondingly numbered representation, warranty or covenant if specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent), the Company represents and warrants to Acquiror, Holdings and Merger Sub as follows:
5.01 Corporate Organization of the Company .
(a) The Company has been duly incorporated and is validly existing as a private limited liability company under the Laws of the Grand Duchy of Luxembourg and has the corporate power and authority to own, lease and operate its assets and properties and to conduct its business as it is now being
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conducted. The copies of the notarial deed of incorporation and the articles of association of the Company previously made available by the Company to Acquiror are true, correct and complete and are in effect as of the date of this Agreement.
(b) The Company is duly incorporated and validly existing under the Laws of the Grand Duchy of Luxembourg, licensed or qualified and in good standing as a foreign corporation in each jurisdiction in which the ownership of its property or the character of its activities is such as to require it to be so licensed or qualified or in good standing, except where the failure to be so licensed or qualified has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(a) The Significant Subsidiaries of the Company as of the date hereof are set forth on Schedule 5.02 , including, as of such date, a description of the capitalization of each such Significant Subsidiary and the names of the beneficial owners of all securities and other equity interests in each Significant Subsidiary. Each Significant Subsidiary has been duly formed or organized and is validly existing under the Laws of its jurisdiction of incorporation or organization and has the organizational power and authority to own, lease and operate its assets and properties and to conduct its business as it is now being conducted. Each Significant Subsidiary is duly licensed or qualified and in good standing as a foreign corporation (or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified or in good standing, as applicable, except where the failure to be so licensed or qualified has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) As of the date hereof, except for the Companys or any of its Subsidiaries ownership interest in such Subsidiaries, neither the Company nor its Subsidiaries own any capital stock or any other equity interests in any other Person or has any right, option, warrant, conversion right, stock appreciation right, redemption right, repurchase right, agreement, arrangement or commitment of any character under which a Person is or may become obligated to issue or sell, or give any right to subscribe for or acquire, or in any way dispose of, any shares of the capital stock or other equity interests, or any securities or obligations exercisable or exchangeable for or convertible into any shares of the capital stock or other equity interests, of such Person.
5.03 Due Authorization . The Company has all requisite corporate power and authority to execute, deliver and perform this Agreement and (subject to the approvals described in Section 5.05 ) to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by the board of managers ( gérants ) of the Company and by the sole shareholder of the Company (after the Pre-Closing Restructuring), and no other corporate proceeding on the part of the Company is necessary to authorize this Agreement or the Companys performance hereunder. This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization and execution by each other party hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors rights generally and subject, as to enforceability, to general principles of equity.
5.04 No Conflict . Subject to the receipt of the consents, approvals, authorizations and other requirements set forth in Section 5.05 or on Schedule 5.05 , the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby do not and will not (a) conflict with or violate any provision of, or result in the breach of, the certificate of formation, bylaws or other organizational documents of the Company or its Subsidiaries, (b) conflict with or result in any violation of any provision of any Law, Permit or Governmental Order applicable to the Company or its Subsidiaries, or any of their respective properties or assets, (c) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the termination or acceleration of, or a right of termination, cancellation, modification, acceleration or amendment under, accelerate the performance required
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by, or result in the acceleration or trigger of any payment, posting of collateral (or right to require the posting of collateral), time of payment, vesting or increase in the amount of any compensation or benefit payable pursuant to, any of the terms, conditions or provisions of any Contract of the type described in Section 5.12(a) , whether or not set forth on Schedule 5.12(a) , to which the Company or its Subsidiaries is a party or by which any of them or any of their respective assets or properties may be bound or affected or (d) result in the creation of any Lien upon any of the properties, equity interests or assets of the Company or its Subsidiaries, except (in the case of clauses (b), (c) or (d) above) for such violations, conflicts, breaches or defaults which, individually or in the aggregate, would not (i) be material to the Company and its Subsidiaries, taken as a whole, or (ii) materially adversely affect the ability of the Company to perform or comply with on a timely basis any material obligation under this Agreement or to consummate the Transactions.
5.05 Governmental Authorities; Consents . No consent, approval or authorization of, or designation, declaration or filing with, any Governmental Authority or notice, approval, consent waiver or authorization from any Governmental Authority is required on the part of the Company with respect to the Companys execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby, except for (a) applicable requirements of the HSR Act, (b) any consents, approvals, authorizations, designations, declarations, waivers or filings, the absence of which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Company to perform or comply with on a timely basis any material obligation under this Agreement or to consummate the transactions contemplated hereby in accordance with the terms hereof and (c) as otherwise disclosed on Schedule 5.05 .
(a) As of the date hereof, the share capital of the Company is set at $27,469.429 and consists of (i) 6,448 class A-1 shares, (ii) 6,448 class B-1 shares, (iii) 1,957,845 class C-1 shares, (iv) 5,498,688 class C2 shares and (v) 20,000,000 class V shares, all in registered form and having a nominal value of $0.001, each, issued and outstanding as of the date of this Agreement. Set forth on Schedule 5.06(a) is a true, correct and complete list of each holder of shares or other equity interests of the Company and the number of shares or other equity interests held by each such holder as of the date hereof. Except as set forth on Schedule 5.06(a) , as of the date hereof there are no other shares of common stock, preferred stock or other equity interests of the Company authorized, reserved, issued or outstanding. As of the date hereof, 417,479,759 CPECs have been issued and are held by Cision Owner.
(b) As of the date hereof there are (i) no subscriptions, calls, options, warrants, rights or other securities convertible into or exchangeable or exercisable for Company Shares or the equity interests of the Company (except for the CPECs), or any other Contracts to which the Company is a party or by which the Company is bound obligating the Company to issue or sell any shares of capital stock of, other equity interests in or debt securities of, the Company and (ii) no equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in the Company. As of the date hereof, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any securities or equity interests of the Company. Except as set forth on Schedule 5.06(b) , there are no outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which the Companys stockholders may vote. Except for the Shareholders Agreement, as of the date hereof the Company is not party to any stockholders agreement, voting agreement or registration rights agreement relating to its equity interests.
(c) As of the date hereof, the outstanding shares of capital stock or other equity interests of the Companys Significant Subsidiaries (i) have been duly authorized and validly issued and are fully paid and nonassessable, (ii) were issued in compliance in all material respects with applicable Law and (iii) were not issued in breach or violation of any preemptive rights or Contract. As of the date hereof, there are (A) no subscriptions, calls, rights or other securities convertible into or exchangeable or exercisable for the equity interests of the Companys Significant Subsidiaries (including any convertible preferred equity certificates), or any other Contracts to which any of the Companys Subsidiaries is a party or by which any of the Companys Significant Subsidiaries is bound obligating such Significant
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Subsidiaries to issue or sell any shares of capital stock of, other equity interests in or debt securities of, such Significant Subsidiaries, and (B) no equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in the Companys Significant Subsidiaries. As of the date hereof, there are no outstanding contractual obligations of the Companys Significant Subsidiaries to repurchase, redeem or otherwise acquire any securities or equity interests of the Companys Significant Subsidiaries. Except as set forth on Schedule 5.06(c) , there are no outstanding bonds, debentures, notes or other indebtedness of the Companys Subsidiaries having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which the such Subsidiaries stockholders may vote. Except as forth on Schedule 5.06(c) , the Companys Subsidiaries are not party to any stockholders agreement, voting agreement or registration rights agreement relating to the equity interests of the Companys Subsidiaries.
(d) As of the date hereof, the Company is the direct or indirect owner of, and has good and marketable direct or indirect title to, all the issued and outstanding shares of capital stock or equity interests of its Significant Subsidiaries free and clear of any Liens other than Permitted Liens. There are no options or warrants convertible into or exchangeable or exercisable for the equity interests of the Companys Significant Subsidiaries.
5.07 Post-Restructuring Capitalization . Following the consummation of the Pre-Closing Restructuring, as of immediately prior to the Contribution and Exchange:
(a) The share capital of the Company shall be set at $27,469.429 and consist of 47,469,429, shares issued and outstanding as of the consummation of the Contribution and Exchange. All of the issued and outstanding Company Shares (i) shall have been duly authorized and validly issued and will be fully paid and nonassessable, (ii) will have been issued in compliance in all material respects with applicable Law and (iii) will not have been issued in breach or violation of any preemptive rights or Contract. Set forth on Schedule 5.07(a) is a true, correct and complete list of each holder of shares or other equity interests of the Company and the number of shares or other equity interests held by each such holder after consummation of the Pre-Closing Restructuring and immediately prior to the Contribution and Exchange. Except as set forth on Schedule 5.07(a) , there shall be no other shares of common stock, preferred stock or other equity interests of the Company authorized, reserved, issued or outstanding. The number of issued CPECs are 436,482,259.
(b) There shall be (i) no subscriptions, calls, options, warrants, rights or other securities convertible into or exchangeable or exercisable for Company Shares or the equity interests of the Company (except for the CPECs), or any other Contracts to which the Company is a party or by which the Company is bound obligating the Company to issue or sell any shares of capital stock of, other equity interests in or debt securities of, the Company and (ii) no equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in the Company. There shall be no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any securities or equity interests of the Company. There shall be no outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which the Companys stockholders may vote. Except for the Shareholders Agreement, the Company shall not be party to any stockholders agreement, voting agreement or registration rights agreement relating to its equity interests.
(c) The outstanding shares of capital stock or other equity interests of the Companys Significant Subsidiaries (i) have been duly authorized and validly issued and are fully paid and nonassessable, (ii) were issued in compliance in all material respects with applicable Law and (iii) were not issued in breach or violation of any preemptive rights or Contract. There are no outstanding contractual obligations of the Companys Significant Subsidiaries to repurchase, redeem or otherwise acquire any securities or equity interests of the Companys Significant Subsidiaries. Except as forth on Schedule 5.07(c) , the Companys Subsidiaries are not party to any stockholders agreement, voting agreement or registration rights agreement relating to the equity interests of the Companys Subsidiaries.
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(d) The Company is the direct or indirect owner of, and has good and marketable direct or indirect title to, all the issued and outstanding shares of capital stock or equity interests of its Significant Subsidiaries free and clear of any Liens other than Permitted Liens. Except as set forth on Schedule 5.07(d) , there are no outstanding bonds, debentures, notes or other indebtedness of the Companys Subsidiaries having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which the such Subsidiaries stockholders may vote. There are (i) no subscriptions, calls, rights or other securities convertible into or exchangeable or exercisable for the equity interests of the Companys Significant Subsidiaries (including any convertible preferred equity certificates), or any other Contracts to which any of the Companys Subsidiaries is a party or by which any of the Companys Significant Subsidiaries is bound obligating such Significant Subsidiaries to issue or sell any shares of capital stock of, other equity interests in or debt securities of, such Significant Subsidiaries, and (ii) no equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in the Companys Significant Subsidiaries.
5.08 Financial Statements . Attached as Schedule 5.08(a) are (a) the audited consolidated balance sheets of the Cision Owner and its Subsidiaries (including the Company) as of December 31, 2014 and as of December 31, 2015 and the audited consolidated statements of operations, cash flow and partners equity of the Cision Owner and its Subsidiaries (including the Company) for the period February 11, 2014 to December 31, 2014 and the year ended December 31, 2015, together with the auditors reports thereon (the Audited Financial Statements ) and (b) the unaudited consolidated balance sheets of the Cision Owner and its Subsidiaries (including the Company) as of December 31, 2016 and the unaudited consolidated statements of operations, cash flow and shareholders equity of the Cision Owner and its Subsidiaries (including the Company) for the year ended December 31, 2016 (the Unaudited Financial Statements and, together with the Audited Financial Statements, the Financial Statements ). The Financial Statements present fairly, in all material respects, the consolidated financial position, results of operations, changes in stockholders equity and cash flows of the Cision Owner, the Company and its Subsidiaries as of the dates and for the periods indicated in such Financial Statements in conformity with GAAP consistently applied and in accordance with past practice (except, in the case of the Unaudited Financial Statements, for the absence of footnotes and other presentation items, in each case the impact of which is not material) and were derived from, and accurately reflect in all material respects, the books and records of the Cision Owner, the Company and its Subsidiaries.
5.09 Undisclosed Liabilities . There is no liability, debt or obligation against the Company or its Subsidiaries that would be required to be set forth or reserved for on a balance sheet of the Company and its Subsidiaries (and the notes thereto) prepared in accordance with GAAP consistently applied and in accordance with past practice, except for liabilities and obligations (a) reflected or reserved for on the Financial Statements or disclosed in the notes thereto (other than any such liabilities not reflected, reserved or disclosed as are not and would not be, in the aggregate, material to the Company and its Subsidiaries, taken as a whole), (b) that have arisen since the date of the most recent balance sheet included in the Unaudited Financial Statements in the ordinary course of the operation of business of the Company and its Subsidiaries, (c) disclosed in the Schedules or (d) arising under this Agreement and/or the performance by the Company or the Cision Owner of their respective obligations hereunder.
5.10 Litigation and Proceedings . There are no pending or, to the knowledge of the Company, threatened, Actions against the Company or its Subsidiaries, or otherwise affecting the Company or its Subsidiaries or their assets, including any condemnation or similar proceedings, that, individually or in the aggregate, would be material to the Company and its Subsidiaries, taken as a whole. Neither the Company nor its Subsidiaries or any property, asset or business of the Company or its Subsidiaries is subject to any Governmental Order, or, to the knowledge of the Company, any continuing investigation by, any Governmental Authority, in each case that, individually or in the aggregate, would be material to the Company and its Subsidiaries, taken as a whole. There is no unsatisfied judgment or any open injunction binding upon the Company or its Subsidiaries which would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Company or its Subsidiaries to enter into and perform its obligations under this Agreement.
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(a) Except (i) compliance with Environmental Laws (as to which certain representations and warranties are made pursuant to Section 5.19 ), (ii) compliance with Tax Laws (as to which certain representations and warranties are made pursuant to Section 5.13 and Section 5.15 ), and (iii) where the failure to be, or to have been, in compliance with such Laws would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries are, and since April 14, 2014 have been, in compliance in all material respects with all applicable Laws. Neither of the Company nor its Subsidiaries has received any written notice from any Governmental Authority of a violation of any applicable Law by the Company or its Subsidiaries at any time since January 1, 2015, which violation would be material to the Company and its Subsidiaries, taken as a whole.
(b) Since April 14, 2014, and except where the failure to be, or to have been, in compliance with such Laws would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole, (i) there has been no action taken by the Company, its Subsidiaries, or, to the knowledge of the Company, any officer, director, manager ( gérant ), employee, agent, representative or sales intermediary of the Company or its Subsidiaries, in each case, acting on behalf of the Company or its Subsidiaries, in violation of any applicable Anti-Corruption Law, (ii) neither the Company nor its Subsidiaries has been convicted of violating any Anti-Corruption Laws or subjected to any investigation by a Governmental Authority for violation of any applicable Anti-Corruption Laws, (iii) neither the Company nor its Subsidiaries has conducted or initiated any internal investigation or made a voluntary, directed, or involuntary disclosure to any Governmental Authority regarding any alleged act or omission arising under or relating to any noncompliance with any Anti-Corruption Law and (iv) neither the Company nor its Subsidiaries has received any written notice or citation from a Governmental Authority for any actual or potential noncompliance with any any applicable Anti-Corruption Law.
(a) Schedule 5.12(a) contains a listing of all Contracts (other than purchase orders) described in clauses (i) through (xi) below to which, as of the date of this Agreement, the Company or one or more of its Subsidiaries is a party or by which any of their respective assets are bound. True, correct and complete copies of the Contracts listed on Schedule 5.12(a) have been delivered to or made available to Acquiror or its agents or representatives.
(i) any Contract with an employee or independent contractor of the Company or its Subsidiaries who resides primarily in the United States which, upon the consummation of the transactions contemplated by this Agreement, will (either alone or upon the occurrence of any additional acts or events) result in any payment or benefits (whether of severance pay or otherwise) becoming due, or the acceleration or vesting of any rights to any payment or benefits, from the Company or its Subsidiaries;
(ii) each employment, severance, retention, change in control or other Contract (excluding customary form offer letters entered into in the ordinary course of business) with any employee or other individual service provider of the Company or its Subsidiaries that provides for annual base cash compensation in excess of $250,000;
(iii) each employee collective bargaining Contract;
(iv) any Contract pursuant to which the Company or its Subsidiaries licenses from a third party Intellectual Property that is material to the business of the Company and its Subsidiaries, taken as a whole, other than click-wrap, shrink-wrap and off-the-shelf software licenses, and any other software licenses that are commercially available on reasonable terms to the public generally with license, maintenance, support and other fees less than $100,000 per year;
(v) any Contract which restricts in any material respect or contains any material limitations on the ability of the Company or its Subsidiaries to compete in any line of business or in any geographic territory;
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(vi) any Contract under which the Company or its Subsidiaries has (A) created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) Indebtedness, in each case, in an amount in excess of $2,500,000 of committed credit, (B) granted a Lien on its assets, whether tangible or intangible, to secure any Indebtedness, or (C) extended credit to any Person (other than (1) intercompany loans and advances and (2) customer payment terms in the ordinary course of business), in each case, in an amount in excess of $2,500,000 of committed credit;
(vii) other than the Shareholders Agreement or any employment agreement set forth on Schedule 5.13(a) , any Contract between the Company or its Subsidiaries, on the one hand, and any Cision Owner or their Affiliates, on the other hand;
(viii) each Contract entered into in connection with a completed material acquisition by the Company or its Subsidiaries since April 14, 2014 of any Person or other business organization, division or business of any Person (including through merger or consolidation or the purchase of a controlling equity interest in or substantially all of the assets of such Person or by any other manner);
(ix) any Contract with outstanding obligations for the sale or purchase of personal property, fixed assets or real estate having a value individually, with respect to all sales or purchases thereunder, in excess of $500,000 or, together with all related Contracts, in excess of $1,000,000, in each case, other than sales or purchases in the ordinary course of business consistent with past practices and sales of obsolete equipment;
(x) any Contract not made in the ordinary course of business and not disclosed pursuant to any other clause under this Section 5.12(a) and expected to result in revenue or require expenditures in excess of $1,000,000 in any calendar year or which resulted in revenue or expenditures during the fiscal year ended December 31, 2016, in excess of $1,000,000; and
(xi) any Contract establishing any joint venture, partnership, strategic alliance or other collaboration that is material to the business of the Company and its Subsidiaries taken as a whole.
(b) Except for any Contract that has terminated or will terminate upon the expiration of the stated term thereof prior to the Closing Date, with respect to any Contract of the type described in Section 5.12(a) , whether or not set forth on Schedule 5.12(a) , (i) such Contracts are in full force and effect and represent the legal, valid and binding obligations of the Company or its Subsidiaries party thereto and, to the knowledge of the Company, represent the legal, valid and binding obligations of the other parties thereto, and, to the knowledge of the Company, are enforceable by the Company or its Subsidiaries to the extent a party thereto in accordance with their terms, subject in all respects to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws relating to or affecting creditors rights generally and general equitable principles (whether considered in a proceeding in equity or at law), (ii) none of the Company, its Subsidiaries or, to the knowledge of the Company, any other party thereto is in material breach of or material default (or would be in material breach, violation or default but for the existence of a cure period) under any such Contract, (iii) since December 31, 2015, neither the Company nor its Subsidiaries has received any written, or to the knowledge of the Company, oral claim or notice of material breach of or material default under any such Contract, (iv) to the knowledge of the Company, no event has occurred which individually or together with other events, would reasonably be expected to result in a material breach of or a material default under any such Contract by the Company or its Subsidiaries or to the knowledge of the Company any other party thereto (in each case, with or without notice or lapse of time or both), and (v) since December 31, 2015, neither the Company nor its Subsidiaries has received written notice from any other party to any such Contract that such party intends to terminate or not renew any such Contract.
(a) Schedule 5.13(a) sets forth a complete list of each material Company Benefit Plan, other than any Company Benefit Plan that is maintained outside of the United States or pursuant to Laws outside of the United States or in which employees or service providers of the Company or any of its Subsidiaries who reside primarily outside of the United States participate. Company Benefit Plan means any
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employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ), and any other material, written plan, policy, program, arrangement or agreement (other than standard employment agreements that can be terminated at any time without severance or termination pay and upon notice of not more than 60 days or such longer period as may be required by applicable law) providing compensation or benefits to any current or former director, officer, employee, independent contractor or other service provider, in each case that is maintained, sponsored or contributed to by the Company or its Subsidiaries or under which the Company or its Subsidiaries has or could reasonably be expected to have any obligation or liability, including, without limitation, all incentive, bonus, deferred compensation, vacation, holiday, cafeteria, medical, disability, stock purchase, stock option, stock appreciation, phantom stock, restricted stock or other stock-based compensation plans, policies, programs, practices or arrangements, but not including any plan, policy, program, arrangement or agreement that covers only former directors, officers, employees, independent contractors and service providers and with respect to which the Company and its Subsidiaries have no remaining obligations or liabilities. For the avoidance of doubt, Company Benefit Plan includes plans maintained outside of the United States.
(b) With respect to each Company Benefit Plan maintained in the United States and each other Company Benefit Plan that is material to the Company and its Subsidiaries taken as a whole, the Company has delivered or made available to Acquiror correct and complete copies of, if applicable (i) the current plan document and any trust agreement, (ii) the most recent summary plan description, (iii) the most recent annual report on Form 5500 filed with the Internal Revenue Service (or, with respect to non-U.S. plans, any comparable annual or periodic report), (iv) the most recent actuarial valuation, (v) the most recent determination or opinion letter issued by the Internal Revenue Service (or applicable comparable Governmental Authority), and (vi) all non-routine filings made with any Governmental Authorities since January 1, 2015.
(c) Except as would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole, each Company Benefit Plan has been administered in material compliance with its terms and all applicable Laws, including ERISA and the Code and all contributions required to be made under the terms of any Company Benefit Plan as of the date this representation is made have been timely made or, if not yet due, have been properly reflected in the Companys financial statements.
(d) Each Company Benefit Plan that is intended to be qualified within the meaning of Section 401(a) of the Code (i) has received a favorable determination or opinion letter as to its qualification, (ii) has been established under a standardized master and prototype or volume submitter plan for which a current favorable Internal Revenue Service advisory letter or opinion letter has been obtained by the plan sponsor and is valid as to the adopting employer, or (iii) has time remaining under applicable Laws to apply for a determination or opinion letter or to make any amendments necessary to obtain a favorable determination or opinion letter. To the knowledge of the Company, no event has occurred that would reasonably be expected to result in the loss of the tax-qualified status of such plans. Each Company Benefit Plan maintained outside of the United States that is intended to be qualified or registered under applicable Law has been so qualified or registered and, to the Knowledge of the Company, no event has occurred that would reasonably be expected to result in the loss of such qualification or registration.
(e) Neither the Company nor any of its Subsidiaries sponsored or was required to contribute to, at any point during the six year period prior to the date hereof, a multiemployer pension plan (as defined in Section 3(37) of ERISA) (a Multiemployer Plan ) or other pension plan, in each case, that is subject to Title IV of ERISA. No circumstance or condition exists that would reasonably be expected to result in an actual obligation of the Company or any of its Subsidiaries to pay money on account of any Multiemployer Plan or other pension plan that is subject to Title IV of ERISA and that is maintained by an ERISA Affiliate of the Company. For purposes of this Agreement, ERISA Affiliate means any entity (whether or not incorporated) other than the Company or a Subsidiary of the Company that, together with the Company, is considered under common control and treated as one employer under Section 414(b), (c), (m) or (o) of the Code.
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(f) Except as would not be reasonably expected to result in material liability to the Company and its Subsidiaries, taken as a whole, (i) no event has occurred and no condition exists that would subject the Company or any of its Subsidiaries to any tax, fine, lien, or penalty imposed by ERISA or the Code with respect to any Company Benefit Plan and (ii) no nonexempt prohibited transaction (as such term is defined in Section 406 of ERISA and Section 4975 of the Code or Section 502 of ERISA) has occurred with respect to any Company Benefit Plan.
(g) Except as would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole, with respect to the Company Benefit Plans, no administrative investigation, audit or other administrative proceeding by the Department of Labor, the PBGC, the Internal Revenue Services or other Governmental Authorities are pending, or, to the knowledge of the Company, threatened.
(h) Neither the execution and delivery of this Agreement by the Company nor the consummation of the transactions contemplated by this Agreement (either alone or in combination with another event) will result in the acceleration, vesting or creation of any rights of any director, officer or employee of the Company or its Subsidiaries to payments or benefits or increases in any existing payments or benefits or any loan forgiveness, in each case, from the Company or any of its Subsidiaries.
(i) No amount or benefit that could be, or has been, received (whether in cash or property or the vesting of property or the cancellation of indebtedness) by any current or former employee, officer or director of the Company or any Subsidiary of the Company who is a disqualified individual within the meaning of Section 280G of the Code could reasonably be expected to be characterized as an excess parachute payment (as defined in Section 280G(b)(1) of the Code) as a result of the consummation of the transactions contemplated by this Agreement.
(j) Each Company Benefit Plan that is a nonqualified deferred compensation plan within the meaning of Section 409A(d)(1) of the Code has been operated in all material respects in good faith compliance with Section 409A of the Code since January 1, 2005 or its inception (whichever is later), and all applicable regulations and notices issued thereunder. No Company Benefit Plan or award thereunder provides to any service provider (within the meaning of Section 409A of the Code) of the Company or its Subsidiaries any compensation or benefits which has subjected or could reasonably be expected in the future to subject such service provider to gross income inclusion or additional Tax pursuant to Section 409A(a)(1) of the Code.
(k) No Company Benefit Plan provides for the gross-up of any Taxes imposed by Section 4999 or 409A of the Code.
(a) (i) Neither the Company nor its Subsidiaries is a party to or bound by any labor agreement, collective bargaining agreement, or any other labor-related agreements or arrangements with any labor union, labor organization or works council and no such agreements or arrangements are currently being negotiated by the Company or its Subsidiaries, (ii) no labor union or organization, works council or group of employees of the Company or its Subsidiaries has made a pending demand for recognition or certification, and (iii) there are no representation or certification proceedings or petitions seeking a representation proceeding pending or, to the knowledge of the Company, threatened to be brought or filed with the National Labor Relations Board or any other applicable labor relations authority.
(b) Except as would not be material, individually or in the aggregate, to the Company and its Subsidiaries, taken as a whole, each of the Company and its Subsidiaries (i) is in compliance with all applicable Laws regarding employment and employment practices, including, without limitation, all laws respecting terms and conditions of employment, health and safety, employee classification, non-discrimination, wages and hours, immigration, disability rights or benefits, equal opportunity, plant closures and layoffs, affirmative action, workers compensation, labor relations, employee leave issues, the proper classification of employees and independent contractors, the proper classification of exempt and non-exempt employees, and unemployment insurance, (ii) has not committed any unfair labor practice as defined by the National Labor Relations Act or received written notice of any unfair labor practice
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complaint against it pending before the National Labor Relations Board that remains unresolved, and (iii) since March 4, 2013, has not experienced any actual or, to the knowledge of the Company, threatened arbitrations, grievances, labor disputes, strikes, lockouts, picketing, hand billing, slow-downs or work stoppages against or affecting the Company or its Subsidiaries.
(c) Except as would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries are not delinquent in payments to any employees or former employees for any services or amounts required to be reimbursed or otherwise paid.
(d) To the knowledge of the Company, no employee of the Company or its Subsidiaries is in any material respect in violation of any term of any employment agreement, nondisclosure agreement, non-competition agreement, restrictive covenant or other obligation: (i) to the Company or its Subsidiaries or (ii) to a former employer of any such employee relating (A) to the right of any such employee to be employed by the Company or its Subsidiaries or (B) to the knowledge or use of trade secrets or proprietary information.
(e) As of the date hereof, the Company has no knowledge that any current employee of the Company or its Subsidiaries above the level of senior manager presently intends to terminate his or her employment.
(a) All material Tax Returns required by Law to be filed by the Company or its Subsidiaries have been timely filed, and all such Tax Returns are true, correct and complete in all material respects.
(b) All material amounts of Taxes due and owing by the Company and its Subsidiaries have been paid, and since the date of the most recent balance sheet included in the Unaudited Financial Statements neither the Company nor any of its Subsidiaries have incurred any material Tax liability outside the ordinary course of business.
(c) Each of the Company and its Subsidiaries has (i) withheld all material amounts required to have been withheld by it in connection with amounts paid or owed to any employee, independent contractor, creditor, shareholder or any other third party, (ii) remitted, or will remit on a timely basis, such amounts to the appropriate Governmental Authority; and (iii) complied in all material respects with applicable Law with respect to Tax withholding.
(d) Neither the Company nor its Subsidiaries is engaged in any material audit or other administrative proceeding with a taxing authority or any judicial proceeding with respect to Taxes. Neither the Company nor its Subsidiaries has received any written notice from a taxing authority of a dispute or claim with respect to a material amount of Taxes, other than disputes or claims that have since been resolved, and to the knowledge of the Company, no such claims have been threatened. No written claim has been made, and to the Companys knowledge, no oral claim has been made, since April 14, 2014 by any Governmental Authority in a jurisdiction where the Company or any of its Subsidiaries does not file a Tax Return that such entity is or may be subject to Taxes by that jurisdiction in respect of Taxes that would be the subject of such Tax Return. There are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period for the collection or assessment or reassessment of, material Taxes of the Company or its Subsidiaries and no written request for any such waiver or extension is currently pending. No issues relating to Taxes of the Company or its Subsidiaries were raised in any completed audit that would reasonably be expected to result in a material amount of Taxes in a later taxable period.
(e) Neither the Company nor its Subsidiaries (or any predecessor thereof) has constituted either a distributing corporation or a controlled corporation in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (or so much of Section 356 of the Code as relates to Section 355 of the Code) in the prior two years.
(f) Neither the Company nor its Subsidiaries has been a party to any reportable transaction within the meaning of Treasury Regulation Section 1.6011-4(b).
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(g) Neither the Company nor its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting for a taxable period (or portion thereof) ending on or prior to the Closing Date and made prior to the Closing; (B) any written agreement with a Governmental Authority executed on or prior to the Closing; (C) installment sale or open transaction disposition made on or prior to the Closing; (D) prepaid amount received on or prior to the Closing; (E) any election under Section 108(i) of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law); or (F) to the knowledge of the Company, intercompany transaction or excess loss accounts described in the Treasury Regulations promulgated under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law) that existed prior to the Closing.
(h) There are no Liens with respect to Taxes on any of the assets of the Company or its Subsidiaries, other than Liens for Taxes not yet due and payable.
(i) Neither the Company nor its Subsidiaries has any liability for the Taxes of any Person (other than the Company or its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) or as a transferee or successor, by contract or otherwise.
(j) Neither the Company nor any of its Subsidiaries is a party to, or bound by, or has any obligation to any Governmental Authority or other Person under any Tax allocation, Tax sharing, Tax indemnification or similar agreements.
(k) Neither the Company nor its Subsidiaries has granted any power of attorney which is currently in force with respect to any material Taxes or material Tax Returns.
(l) Each subsidiary of the Company is not and has never been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code.
(m) Neither the Company nor any of the Companys Subsidiaries that is organized under the laws of a country other than the United States (a Foreign Subsidiary ) (i) has an investment in U.S. property within the meaning of Section 956 of the Code, (ii) is engaged in a United States trade or business for U.S. federal income tax purposes, (iii) is a surrogate foreign corporation within the meaning of Section 7874(a)(2)(B) of the Code or is treated as a U.S. corporation under Section 7874(b) of the Code or (iv) has elected under Section 897(i) of the Code to be treated as a domestic corporation. The Company is not a passive foreign investment company within the meaning of Section 1297 of the Code. Neither the Company nor Acquiror or any of their Affiliates would be required to include a material amount in gross income with respect to any Foreign Subsidiary pursuant to Section 951 of the Code if the taxable year of such Foreign Subsidiary were deemed to end on the day after the Closing Date.
(n) Neither the Company nor any of its Subsidiaries has made an entity classification election pursuant to Treasury Regulation Section 301.7701-3 to be classified as other than such entitys default classification pursuant to Treasury Regulation Section 301.7701-3(b) for U.S. federal income tax purposes.
(o) Neither the Company nor any of its Subsidiaries has taken or agreed to take any action not contemplated by this Agreement and/or any related ancillary documents that could reasonably be expected to prevent the Merger and the Contribution and Exchange from qualifying for the Intended Tax Treatment. Neither the Company nor any of its Subsidiaries has any knowledge of any fact or circumstance that could reasonably be expected to prevent the Merger and the Contribution and Exchange from qualifying for the Intended Tax Treatment. The Company or a qualified subsidiary or qualified partnership (each as defined in Treasury Regulations Section 1.367(a)-3(c)(5)) with respect to the Company has been engaged in an active trade or business outside the United States as described in Treasury Regulations Section 1.367(a)-3(c)(3) and 1.367(a)-2(d) for the past 36 months and will continue to be so engaged through the Closing Date and, to the knowledge of the Company, neither the Company nor any applicable Subsidiary of the Company has any plan or intention to substantially dispose of or discontinue such trade or business. Neither the Company nor any of its Subsidiaries has any knowledge of any fact or circumstance that could reasonably be expected to prevent the transfer of Acquiror stock
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pursuant to the Merger from qualifying for the exception to the application of Section 367(a)(1) of the Code set forth in Treasury Regulations Section 1.367(a)-3(c) (assuming the requirements of Treasury Regulations Section 1.367(a)-3(c)(1)(iii) are met). To the knowledge of the Company, there is no plan or intention to liquidate the Company or Acquiror (including a liquidation for Tax purposes) following the Transactions.
5.16 Brokers Fees . No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by the Company, its Subsidiaries or any of their Affiliates for which the Company or any of its Subsidiaries has any obligation.
5.17 Insurance . Schedule 5.17 contains a list of all material policies or programs of self-insurance of property, fire and casualty, product liability, workers compensation, and other forms of insurance held by, or for the benefit of, the Company or its Subsidiaries as of the date of this Agreement. True, correct and complete copies or comprehensive summaries of such insurance policies have been made available to Acquiror. With respect to each such insurance policy required to be listed on Schedule 5.17 , except as would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole: (i) all premiums due have been paid, (ii) the policy is legal, valid, binding and enforceable in accordance with its terms and, except for policies that have expired under their terms in the ordinary course, is in full force and effect, (iii) neither the Company nor its Subsidiaries is in breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice), and, to the Companys knowledge, no event has occurred which, with notice or the lapse of time or both, would constitute such a breach or default, or permit termination or modification, under the policy, and to the knowledge of the Company, no such action has been threatened, (iv) as of the date hereof, no written notice of cancellation, non-renewal, disallowance or reduction in coverage or claim or termination has been received other than in connection with ordinary renewals.
(a) PR Newswire S. de RL de CV, a limited liability company organized under the laws of Mexico, is the sole and legal owner of the real property listed on Schedule 5.18(a) (the Owned Real Property and, together with the Leased Real Property, the Real Property ), free and clear of all Liens, except for Permitted Liens. Except as set forth on Schedule 5.18(a) , neither the Company nor any other Subsidiary of the Company owns any real property. Neither the Company nor any of its Subsidiaries is a party to any agreement or option to purchase any real property or interest therein.
(b) Schedule 5.18(b) contains a true, correct and complete list of all Leased Real Property. The Company has made available to Acquiror true, correct and complete copies of the material leases, subleases and occupancy agreements (including all modifications, amendments, supplements, waivers and side letters thereto) for the Leased Real Property to which the Company or its Subsidiaries is a party (the Real Estate Lease Documents ), and such deliverables comprise all Real Estate Lease Documents relating to the Leased Real Property.
(c) Each Real Estate Lease Document (i) is a legal, valid, binding and enforceable obligation of the Company or its Subsidiaries, as applicable, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors rights generally and subject, as to enforceability, to general principles of equity, and each such lease is in full force and effect, (ii) has not been amended or modified except as reflected in the modifications, amendments, supplements, waivers and side letters thereto made available to Acquiror and (iii) except as would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole, covers the entire estate it purports to cover, and, subject to securing the consents or approvals, if any, required under the Real Estate Lease Documents to be obtained from any landlord, or lender to landlord (as applicable), in connection with the execution and delivery of this Agreement by the Company or the consummation of the transaction contemplated hereby by the Company, upon the consummation of the transactions contemplated by this Agreement, will entitle the Surviving Company (or its Subsidiaries) to the exclusive use (subject to the terms of the respective Real Estate Lease Documents in effect with respect to the
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Leased Real Property), occupancy and possession of the premises specified in the Real Estate Lease Documents for the purpose specified in the Real Estate Lease Documents.
(d) No material default by (i) the Company or its Subsidiaries or (ii) to the knowledge of the Company, any landlord or sub-landlord, as applicable, presently exists under any Real Estate Lease Documents. Neither the Company nor its Subsidiaries has received written or, to the knowledge of the Company, oral notice of material default under any Real Estate Lease Document which default has not been cured. To the knowledge of the Company, no event has occurred that, and no condition exists which, with notice or lapse of time or both, would constitute a material default under any Real Estate Lease Document by the Company or its Subsidiaries (as tenant, subtenant or sub-subtenant, as applicable) or by the other parties thereto. Neither the Company nor its Subsidiaries has subleased or otherwise granted any Person the right to use or occupy any Leased Real Property which is still in effect. Neither the Company nor its Subsidiaries has collaterally assigned or granted any other security interest in the Real Property or any interest therein which is still in effect. Except for the Permitted Liens, there exist no Liens affecting the Real Property created by, through or under the Company or its Subsidiaries.
(e) With respect to each Real Estate Lease Document:
(i) since April 14, 2014, to the knowledge of the Company, no security deposit or portion thereof deposited under such Real Estate Lease Document has been applied in respect of a breach or default under such Real Estate Lease Document which has not (A) if and as required by the applicable landlord, been redeposited in full or (B) been disclosed to Acquiror in writing; and
(ii) neither the Company nor its Subsidiaries holds a contractual right or obligation to purchase or acquire any material real estate interest.
(f) Neither the Company nor its Subsidiaries has received any written notice that remains outstanding as of the date of this Agreement that the current use and occupancy of the Real Property and the improvements thereon (i) are prohibited by any Lien or law or (ii) are in material violation of any of the recorded covenants, conditions, restrictions, reservations, easements or agreements applicable to such Real Property.
(g) Except for Permitted Liens and licenses of Intellectual Property, the Company and its Subsidiaries have good and valid title to the assets of the Company and its Subsidiaries.
5.19 Environmental Matters . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:
(a) the Company and its Subsidiaries are and, during the last three years, have been in compliance with all Environmental Laws;
(b) there has been no release of any Hazardous Materials by the Company or its Subsidiaries at, in, on or under any Leased Real Property or in connection with the Companys or its Subsidiaries operations off-site of the Leased Real Property or, to the knowledge of the Company, at, in, on or under any formerly owned or leased real property during the time that the Company owned or leased such property;
(c) neither the Company nor its Subsidiaries is subject to any current Governmental Order relating to any non-compliance with Environmental Laws by the Company or its Subsidiaries or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Materials; and
(d) no Action is pending or, to the knowledge of the Company, threatened with respect to the Companys or its Subsidiaries compliance with or liability under Environmental Law.
(a) From the date of the most recent balance sheet included in the Unaudited Financial Statements to the date of this Agreement, there has not been any change, development, condition, occurrence, event or effect relating to the Company or its Subsidiaries that, individually or in the aggregate, resulted in, or would reasonably be expected to result in, a Material Adverse Effect.
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(b) From December 31, 2016 through the date of this Agreement, the Company and its Subsidiaries (i) have, in all material respects, conducted their business and operated their properties in the ordinary course of business consistent with past practices and (ii) have not taken any action that (A) would require the consent of the Acquiror pursuant to Section 8.01 if such action had been taken after the date hereof and (B) is material to the Company and its Subsidiaries, taken as a whole.
5.21 Affiliate Agreements . Other than any Company Benefit Plan (including any employment or option agreements entered into in the ordinary course of business by the Company or its Subsidiaries), none of the Affiliates, officers or directors of the Company or its Subsidiaries is a party to any Contract or business arrangement with the Company or its Subsidiaries (each such Contract or business arrangement, an Affiliate Agreement ).
5.22 Internal Controls . The Company maintains a system of internal accounting controls designed to provide reasonable assurance that: (a) transactions are executed in accordance with managements general or specific authorizations; (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (c) access to assets is permitted only in accordance with managements general or specific authorization; and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(a) Schedule 5.23(a) sets forth a true and complete list of all material registered Intellectual Property that is owned by the Company or its Subsidiaries (the Registered Intellectual Property ). No Action is pending or, to knowledge of the Company, is threatened, that challenges the validity or enforceability of any Registered Intellectual Property (other than office actions issued in the ordinary course of prosecution by an applicable Governmental Authority).
(b) To the knowledge of the Company, neither the Company nor its Subsidiaries is infringing, misappropriating, diluting or otherwise violating any third partys Intellectual Property rights, except for such infringements, misappropriations, dilutions, or other violations that would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. No Action is pending or, to the knowledge of the Company has been threatened since April 14, 2014, alleging any such infringement, misappropriation, dilution or violation. To the knowledge of the Company, no third party is infringing, misappropriating, diluting or otherwise violating the Intellectual Property owned by the Company or its Subsidiaries in any manner that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
5.24 Permits . Each of the Company and its Subsidiaries has all material Permits (the Material Permits ) that are required to own, lease or operate its properties and assets and to conduct its business as currently conducted, except where the failure to obtain the same would not, individually or in the aggregate, reasonably be expected to be material to (i) such ownership, lease, operation or conduct or (ii) the Company and its Subsidiaries, taken as a whole. Except as would not, individually or in the aggregate, be expected to be material to the Company and its Subsidiaries, taken as a whole, (a) each Material Permit is in full force and effect in accordance with its terms, (b) no outstanding written notice of revocation, cancellation or termination of any Material Permit has been received by the Company or its Subsidiaries, (c) to the knowledge of the Company, none of such Permits upon its termination or expiration in the ordinary due course will not be renewed or reissued in the ordinary course of business upon terms and conditions substantially similar to its existing terms and conditions, (d) there are no Actions pending or, to the knowledge of the Company, threatened, that seek the revocation, cancellation, limitation, restriction or termination of any Material Permit, and (e) each of the Company and its Subsidiaries is in compliance with all Material Permits applicable to the Company or its Subsidiaries.
5.25 Proxy Statement/Prospectus. None of the information relating to the Company or its Subsidiaries supplied by the Company, or by any other Person acting on behalf of the Company, in writing specifically for inclusion in the Proxy Statement/Prospectus will, as of the date the Proxy Statement/Prospectus (or any amendment or supplement thereto) is first mailed to Acquirors stockholders, at the time of the Annual
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Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
5.26 No Additional Representations and Warranties . Except as provided in this Article V and Article VI , neither the Company nor any of its Affiliates, nor any of their respective directors, officers, employees, stockholders, partners, members or representatives has made, or is making, any representation or warranty whatsoever to Acquiror or Merger Sub or their Affiliates and no such party shall be liable in respect of the accuracy or completeness of any information provided to Acquiror or Merger Sub or their Affiliates.
Except as set forth in the Schedules to this Agreement (each of which qualifies (a) the correspondingly numbered representation, warranty or covenant if specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent), the Cision Owner represents and warrants to Acquiror, Holdings and Merger Sub as follows:
6.01 Organization and Entity Power . The Cision Owner is a Cayman Islands exempted limited partnership duly organized, validly existing and in good standing under the Laws of the Cayman Islands, with full limited partnership power and authority to enter into this Agreement and perform its obligations hereunder.
6.02 Due Authorization . The Cision Owner has all requisite entity power and authority to execute and deliver this Agreement and to perform its obligations hereunder and thereunder and the execution, delivery and performance of this Agreement by the Cision Owner and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite action, and no other proceedings on the Cision Owners part are necessary to authorize the execution, delivery or performance of this Agreement. Assuming that this Agreement is a valid and binding obligation of the other parties hereto, this Agreement constitutes, a valid and binding obligation of the Cision Owner, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors rights and general principles of equity affecting the availability of specific performance and other equitable remedies.
6.03 Title to Common Stock . Following the consummation of the Pre-Closing Restructuring and immediately prior to the Contribution and Exchange, the Cision Owner will be the sole lawful record and beneficial owner of the Company Shares and shall have title to the Company Shares free and clear of all Liens other than applicable federal and state securities law restrictions. Other than this Agreement, such Company Shares are not subject to any voting trust agreement or any other Contract restricting or otherwise relating to the voting, dividend rights or disposition of such Company Shares.
6.04 No Violation . The execution, delivery and performance of this Agreement by the Cision Owner and the consummation of the transactions contemplated hereby do not and will not (a) conflict with or violate any provision of, or result in the breach of the Cision Owner Organizational Documents, (b) conflict with or result in any violation of any provision of any Law or Governmental Order applicable to the Cision Owner, or any of its respective properties or assets, (c) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the termination or acceleration of, or a right of termination, cancellation, modification, acceleration or amendment under, accelerate the performance required by, or result in the acceleration or trigger of any payment, posting of collateral (or right to require the posting of collateral), time of payment, vesting or increase in the amount of any compensation or benefit payable pursuant to, any of the terms, conditions or provisions of any Contract to which the Cision Owner is a party or by which it or its assets or properties may be bound or affected, or (d) result in the creation of any Lien upon any of the properties or assets of the Cision Owner, except (in the case of clauses (b), (c) or (d) above) for such violations, conflicts, breaches or defaults which would not, individually or in the aggregate,
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reasonably be expected to have a material adverse effect on the ability of the Cision Owner to enter into and perform its obligations under this Agreement.
6.05 Governmental Authorities; Consents . No consent, approval or authorization of, or designation, declaration or filing with, any Governmental Authority or notice, approval, consent waiver or authorization from any Governmental Authority is required on the part of the Cision Owner with respect to the Cision Owners execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby, except for (a) applicable requirements of the HSR Act, (b) any consents, approvals, authorizations, designations, declarations, waivers or filings, the absence of which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Cision Owner to perform or comply with on a timely basis any material obligation under this Agreement or to consummate the transactions contemplated hereby in accordance with the terms hereof and (c) as otherwise disclosed on Schedule 6.05 .
6.06 Litigation and Proceedings . There are no pending or, to the knowledge of the Cision Owner, threatened, Actions against the Cision Owner, or otherwise affecting the Cision Owner, that (x) could reasonably be expected to adversely affect the ability of the Cision Owner to consummate the transactions contemplated by this Agreement or (y) challenge or that could reasonably be expected to prevent, impede, hinder, delay, make illegal, impose limitations or conditions on, or otherwise interfere with, any of the transactions contemplated by this Agreement. The Cision Owner is not subject to any Action that relates to the business of, or any assets owned or used by, the Company or any of its Subsidiaries.
6.07 Tax Matters . The Cision Owner has not taken or agreed to take any action not contemplated by this Agreement and/or any related ancillary documents that could reasonably be expected to prevent the Merger and the Contribution and Exchange from qualifying for the Intended Tax Treatment. The Cision Owner does not have any knowledge of any fact or circumstance that could reasonably be expected to prevent the Merger and the Contribution and Exchange from qualifying for the Intended Tax Treatment. The Cision Owner does not have any knowledge of any fact or circumstance that could reasonably be expected to prevent the transfer of Acquiror stock pursuant to the Merger from qualifying for the exception to the application of Section 367(a)(1) of the Code set forth in Treasury Regulations Section 1.367(a)-3(c) (assuming the requirements of Treasury Regulations Section 1.367(a)-3(c)(1)(iii) are met). To the knowledge of the Cision Owner, there is no plan or intention to liquidate the Company or Acquiror (including a liquidation for Tax purposes) following the Transactions.
6.08 Proxy Statement/Prospectus . None of the information relating to the Cision Owner or its Affiliates (excluding the Company and its Subsidiaries) supplied by the Cision Owner, or by any other Person acting on behalf of the Cision Owner, in writing specifically for inclusion in the Proxy Statement/Prospectus will, as of the date the Proxy Statement/Prospectus (or any amendment or supplement thereto) is first mailed to Acquirors stockholders, at the time of the Annual Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
6.09 Brokers Fees . No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by the Cision Owner or any of its Affiliates for which the Company or any of its Subsidiaries has any obligation.
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Except as set forth in the Schedules to this Agreement (each of which qualifies (a) the correspondingly numbered representation, warranty or covenant if specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent) or in the SEC Reports filed or furnished by Acquiror prior to the date hereof (excluding (x) any disclosures in such SEC Reports under the headings Risk Factors, Forward-Looking Statements or Qualitative Disclosures About Market Risk and other disclosures that are predictive, cautionary or forward looking in nature and (y) any exhibits or other documents appended thereto) (it being acknowledged that nothing disclosed in such a SEC Report will be deemed to modify or qualify the representations and warranties set forth in Section 7.04 (Litigation and Proceedings); Section 7.06 (Financial Ability; Trust Account); Section 7.12 (Tax Matters); and Section 7.13 (Capitalization)), Acquiror, Holdings and Merger Sub represent and warrant to the Company and the Cision Owner as follows:
7.01 Corporate Organization . Each of Acquiror, Holdings and Merger Sub has been duly incorporated or organized and is validly existing as a corporation or an exempted company with limited liability, as applicable, in good standing under the Laws of the state or jurisdiction of its incorporation or formation and has the corporate power and authority to own, lease or operate its assets and properties and to conduct its business as it is now being conducted. The copies of the organizational documents of each of Acquiror, Holdings and Merger Sub, respectively, previously delivered by Acquiror to the Company, are true, correct and complete and are in effect as of the date of this Agreement. Each of Acquiror, Holdings and Merger Sub is, and at all times has been, in compliance in all material respects with all restrictions, covenants, terms and provisions set forth in its respective organizational documents. Each of Acquiror, Holdings and Merger Sub is duly licensed or qualified and in good standing as a foreign corporation in all jurisdictions in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified, except where failure to be so licensed or qualified has not and would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Acquiror, Holdings or Merger Sub to enter into this Agreement or consummate the transactions contemplated hereby.
(a) Each of Acquiror, Holdings and Merger Sub has all requisite corporate or entity power and authority to execute, deliver and perform this Agreement and, upon receipt of the Acquiror Stockholder Approval, to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly, validly and unanimously authorized and approved by the board of directors or similar governing body of Acquiror, Holdings and Merger Sub and, except for the Acquiror Stockholder Approval, no other corporate or equivalent proceeding on the part of Acquiror, Holdings or Merger Sub is necessary to authorize this Agreement or the Transactions (other than the adoption by Acquiror in its capacity as the sole member of Holdings of the amended and restated memorandum and articles of association of Holdings in the form attached hereto as Exhibit D and the adoption of this Agreement by Holdings in its capacity as the sole stockholder of Merger Sub, which adoptions will occur immediately following execution of this Agreement). This Agreement has been duly and validly executed and delivered by each of Acquiror, Holdings and Merger Sub and assuming due authorization and execution by each other party hereto, this Agreement constitutes a legal, valid and binding obligation of each of Acquiror, Holdings and Merger Sub, enforceable against Acquiror, Holdings and Merger Sub in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors rights generally and subject, as to enforceability, to general principles of equity.
(b) The affirmative vote of holders of a majority of the outstanding shares of Acquiror Common Stock entitled to vote at the Annual Meeting, assuming a quorum is present, to approve the Proposals are the only votes of any of Acquirors capital stock necessary in connection with the entry into this Agreement by Acquiror, Holdings and Merger Sub, and the consummation of the transactions contemplated hereby, including the Closing (the Acquiror Stockholder Approval ).
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(c) At a meeting duly called and held, the Acquiror Board has unanimously: (i) determined that this Agreement and the transactions contemplated hereby are fair to and in the best interests of Acquirors stockholders; (ii) determined that the fair market value of the Company is equal to at least 80% of the amount held in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned) as of the date hereof; (iii) approved the transactions contemplated by this Agreement as a Business Combination; and (iv) resolved to recommend to the stockholders of Acquiror approval of the transactions contemplated by this Agreement.
7.03 No Conflict . The execution, delivery and performance of this Agreement by Acquiror, Holdings and Merger Sub and, upon receipt of the Acquiror Stockholder Approval, the consummation of the transactions contemplated hereby do not and will not (a) conflict with or violate any provision of, or result in the breach of the Acquiror Organizational Documents or any organizational documents of any Subsidiaries of Acquiror (including Holdings and Merger Sub), (b) conflict with or result in any violation of any provision of any Law or Governmental Order applicable to Acquiror, Holdings or Merger Sub, or any of their respective properties or assets, (c) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the termination or acceleration of, or a right of termination, cancellation, modification, acceleration or amendment under, accelerate the performance required by, or result in the acceleration or trigger of any payment, posting of collateral (or right to require the posting of collateral), time of payment, vesting or increase in the amount of any compensation or benefit payable pursuant to, any of the terms, conditions or provisions of any Contract to which Acquiror or any Subsidiaries of Acquiror (including Holdings and Merger Sub) is a party or by which any of them or any of their respective assets or properties may be bound or affected, or (d) result in the creation of any Lien upon any of the properties or assets of Acquiror (including Holdings or Merger Sub), except (in the case of clauses (b), (c) or (d) above) for such violations, conflicts, breaches or defaults which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Acquiror, Holdings or Merger Sub to enter into and perform its respective obligations under this Agreement.
7.04 Litigation and Proceedings . There are no pending or, to the knowledge of Acquiror, threatened, Actions against Acquiror, Holdings or Merger Sub, or otherwise affecting Acquiror, Holdings or Merger Sub or their assets, including any condemnation or similar proceedings, which, if determined adversely, could, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Acquiror, Holdings or Merger Sub to enter into and perform its respective obligations under this Agreement. There is no unsatisfied judgment or any open injunction binding upon Acquiror, Holdings or Merger Sub which could, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Acquiror, Holdings or Merger Sub to enter into and perform its respective obligations under this Agreement.
7.05 Governmental Authorities; Consents . Subject to receipt of the Acquiror Stockholder Approval, no consent, approval or authorization of, or designation, declaration or filing with, any Governmental Authority is required on the part of Acquiror, Holdings or Merger Sub with respect to Acquiror, Holdings or Merger Subs execution or delivery of this Agreement or the consummation of the transactions contemplated hereby, except for applicable requirements of the HSR Act, Securities Laws and the Nasdaq.
7.06 Financial Ability; Trust Account .
(a) As of the date hereof, there is at least $325,000,000 invested in a trust account at J.P. Morgan Securities LLC (the Trust Account ), maintained by Continental Stock Transfer & Trust Company, a New York corporation, acting as trustee (the Trustee ), pursuant to the Investment Management Trust Agreement, dated October 13, 2015, by and between Acquiror and the Trustee (the Trust Agreement ). Prior to the Closing, none of the funds held in the Trust Account may be released except in accordance with the Trust Agreement, Acquiror Organizational Documents and Acquirors final prospectus dated October 13, 2015. Amounts in the Trust Account are invested in United States Government securities or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended. Acquiror has performed all material obligations required to be performed by it to date under, and is not in material default, breach or delinquent in performance or any
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other respect (claimed or actual) in connection with, the Trust Agreement, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default or breach thereunder. As of the date hereof, there are no claims or proceedings pending with respect to the Trust Account. Since October 13, 2015 through the date hereof, Acquiror has not released any money from the Trust Account (other than interest income earned on the principal held in the Trust Account as permitted by the Trust Agreement). As of the Effective Time, the obligations of Acquiror to dissolve or liquidate pursuant to the Acquiror Organizational Documents shall terminate, and as of the Effective Time, Acquiror shall have no obligation whatsoever pursuant to the Acquiror Organizational Documents to dissolve and liquidate the assets of Acquiror by reason of the consummation of the transactions contemplated hereby. To Acquirors knowledge, as of the date hereof, following the Effective Time, no Acquiror Stockholder shall be entitled to receive any amount from the Trust Account except to the extent such Acquiror Stockholder is a Converting Stockholder or is seeking repayment of any Stockholder Notes.
(b) As of the date hereof, assuming the accuracy of the representations and warranties of the Company and the Cision Owner contained herein and the compliance by the Company and the Cision Owner with their respective obligations hereunder, neither Acquiror, nor Holdings or Merger Sub has any reason to believe that any of the conditions to the use of funds in the Trust Account will not be satisfied or funds available in the Trust Account will not be available to Acquiror, Holdings and Merger Sub on the Closing Date.
(c) As of the date hereof, neither Acquiror, nor Holdings or Merger Sub have, or have any present intention, agreement, arrangement or understanding to enter into or incur, any obligations with respect to or under any Indebtedness other than pursuant to the Stockholder Notes.
7.07 Brokers Fees . Except fees described on Schedule 7.07 (including the amounts owed with respect thereto), no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by Acquiror or any of its Affiliates, including the Sponsors.
7.08 SEC Reports; Financial Statements; Sarbanes-Oxley Act; Undisclosed Liabilities .
(a) Acquiror has filed in a timely manner all required registration statements, reports, schedules, forms, statements and other documents required to be filed by it with the SEC since October 13, 2015 (collectively, as they have been amended since the time of their filing and including all exhibits thereto, the SEC Reports ). As of the date hereof, Acquiror meets the issuer requirements for use of Form S-3 (or its equivalent) under the Securities Act. None of the SEC Reports, as of their respective dates (or if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The audited financial statements and unaudited interim financial statements (including, in each case, the notes and schedules thereto) included in the SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited interim financial statements included therein, to normal year-end adjustments and the absence of complete footnotes) in all material respects the financial position of Acquiror as of the respective dates thereof and the results of their operations and cash flows for the respective periods then ended.
(b) Acquiror has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to Acquiror is made known to Acquirors principal executive officer and its principal financial officer, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. To Acquirors knowledge, such disclosure controls and procedures
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are effective in timely alerting Acquirors principal executive officer and principal financial officer to material information required to be included in Acquirors periodic reports required under the Exchange Act.
(c) Acquiror has established and maintained a system of internal controls. To Acquirors knowledge, such internal controls are sufficient to provide reasonable assurance regarding the reliability of Acquirors financial reporting and the preparation of Acquirors financial statements for external purposes in accordance with GAAP.
(d) There are no outstanding loans or other extensions of credit made by Acquiror to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of Acquiror. Acquiror has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
(e) Neither Acquiror (including any employee thereof) nor Acquirors independent auditors has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by Acquiror, (ii) any fraud, whether or not material, that involves Acquirors management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by Acquiror or (iii) any claim or allegation regarding any of the foregoing.
(f) To the Knowledge of Acquiror, as of the date hereof, there are no outstanding SEC comments from the SEC with respect to the SEC Reports. To the Knowledge of Acquiror, none of the SEC Reports filed on or prior to the date hereof is subject to ongoing SEC review or investigation as of the date hereof.
(a) Since its respective organization, neither Acquiror, nor Holdings or Merger Sub has conducted any business activities other than activities directed toward the accomplishment of a Business Combination. Except as set forth in the Acquiror Organizational Documents, there is no agreement, commitment, or Governmental Order binding upon Acquiror, Holdings or Merger Sub or to which Acquiror, Holdings or Merger Sub is a party which has or would reasonably be expected to have the effect of prohibiting or impairing any business practice of Acquiror, Holdings or Merger Sub or any acquisition of property by Acquiror, Holdings or Merger Sub or the conduct of business by Acquiror, Holdings or Merger Sub as currently conducted or as contemplated to be conducted as of the Closing other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a material adverse effect on the ability of Acquiror, Holdings or Merger Sub to enter into and perform their obligations under this Agreement.
(b) Except for Holdings or Merger Sub, Acquiror does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, joint venture, business, trust or other entity. Except for this Agreement and the Transactions, Acquiror has no interests, rights, obligations or liabilities with respect to, and is not party to, bound by or has its assets or property subject to, in each case whether directly or indirectly, any Contract or transaction which is, or could reasonably be interpreted as constituting, a Business Combination. Except for Merger Sub and the transactions contemplated herein, Holdings does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, joint venture, business, trust or other entity. Merger Sub does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, joint venture, business, trust or other entity.
(c) Each of Holdings and Merger Sub was formed solely for the purpose of effecting the transactions contemplated by this Agreement and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated hereby and has no, and at all times prior to the Effective Time except as expressly contemplated by this Agreement, will have no, assets, liabilities or obligations of any kind or nature whatsoever other than those incident to its formation.
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(d) Except for this Agreement, the Stockholder Notes, and the agreements expressly contemplated hereby (including any agreements permitted by Section 9.03 ) or as set forth on Schedule 7.09(d) , neither Acquiror, nor Holdings or Merger Sub is, or at any time has been, party to any Contract with any other Person that would require payments by Acquiror in excess of $10,000 monthly, $100,000 in the aggregate with respect to any individual Contract or more than $500,000 in the aggregate when taken together with all other Contracts (other than this Agreement, the Stockholder Notes, and the agreements expressly contemplated hereby (including any agreements permitted by Section 9.03 ) and Contracts set forth on Schedule 7.09(d) ).
(e) There is no liability, debt or obligation against the Acquiror, Holdings, Merger Sub or their respective Subsidiaries, except for liabilities and obligations (i) reflected or reserved for on Acquirors consolidated balance sheet for the year ended December 31, 2016 as reported on Form 10-K or disclosed in the notes thereto (other than any such liabilities not reflected, reserved or disclosed as are not and would not be, in the aggregate, material to Acquiror and its Subsidiaries, taken as a whole), (ii) that have arisen since the date of Acquirors consolidated balance sheet for the year ended December 31, 2016 as reported on Form 10-K in the ordinary course of the operation of business of the Acquiror and its Subsidiaries, (iii) disclosed in the Schedules or (iv) incurred in connection with or contemplated by this Agreement and/or the Transactions.
7.10 Form S-4 and Proxy Statement/Prospectus. On the Effective Date, the Form S-4, and when first filed in accordance with Rule 424(b) and/or filed pursuant to Section 14A, the Proxy Statement/Prospectus (or any amendment or supplement thereto), shall comply in all material respects with the applicable requirements of the Securities Act and the Exchange Act. On the Effective Date, the Form S-4 will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. On the date of any filing pursuant to Rule 424(b), the date the Proxy Statement/Prospectus is first mailed to Acquirors stockholders, and at the time of the Annual Meeting, the Proxy Statement/Prospectus (together with any amendments or supplements thereto) will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided , however , that Acquiror makes no representations or warranties as to the information contained in or omitted from the Form S-4 or the Proxy Statement/Prospectus in reliance upon and in conformity with information furnished in writing to the Acquiror by or on behalf of the Company or the Cision Owner specifically for inclusion in the Form S-4 or the Proxy Statement/Prospectus.
7.11 No Outside Reliance . Notwithstanding anything contained in this Article VII or any other provision hereof, each of Acquiror, Holdings and Merger Sub, and any of their respective directors, officers, employees, stockholders, partners, members or representatives, acknowledge and agree that Acquiror has made its own investigation of the Company and that neither the Company nor any of its Affiliates, agents or representatives is making any representation or warranty whatsoever, express or implied, beyond those expressly given by the Company in Article V or by the Cision Owner in Article VI , including any implied warranty or representation as to condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of the Company or its Subsidiaries. Without limiting the generality of the foregoing, it is understood that any cost estimates, financial or other projections or other predictions that may be contained or referred to in the Schedules or elsewhere, as well as any information, documents or other materials (including any such materials contained in any data room (whether or not accessed by Acquiror or its representatives) or reviewed by Acquiror pursuant to the Confidentiality Agreement) or management presentations that have been or shall hereafter be provided to Acquiror or any of its Affiliates, agents or representatives are not and will not be deemed to be representations or warranties of the Company or the Cision Owner, and no representation or warranty is made as to the accuracy or completeness of any of the foregoing except as may be expressly set forth in Article V or Article VI of this Agreement. Except as otherwise expressly set forth in this Agreement, Acquiror understands and agrees that any assets, properties and business of the Company and its Subsidiaries are furnished as is, where is and subject to and except as otherwise provided in the representations and warranties contained in Article V or any certificate delivered in accordance with Section 11.02(c) , with all faults and without any other representation or warranty of any nature whatsoever.
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(a) All material Tax Returns required by Law to be filed by Acquiror and its Subsidiaries have been timely filed, and all such Tax Returns are true, correct and complete in all material respects.
(b) All material amounts of Taxes due and owing by Acquiror and its Subsidiaries have been paid.
(c) There are no material written Tax deficiencies outstanding, proposed or assessed against Acquiror, nor has Acquiror executed any agreements waiving the statute of limitations on or extending the period for the assessment or collection of any material Tax, in each case, which have not since expired.
(d) To the knowledge of Acquiror, no material audit or other examination of any Tax Return of Acquiror by any Tax authority is presently in progress, nor has Acquiror been notified in writing of any request for such an audit or other examination.
(e) Neither Acquiror, nor Holdings or Merger Sub (or any of their Subsidiaries) has taken or agreed to take any action not contemplated by this Agreement and/or any related ancillary documents that could reasonably be expected to prevent the Merger and the Contribution and Exchange from qualifying for the Intended Tax Treatment. To the knowledge of Acquiror there is no fact or circumstance that could reasonably be expected to prevent the Merger and the Contribution and Exchange from qualifying for the Intended Tax Treatment.
(a) The authorized capital stock of Acquiror consists of (i) 1,000,000 shares of preferred stock, of which no shares of preferred stock are issued and outstanding as of the date of this Agreement, (ii) 120,000,000 shares of Acquiror Common Stock, of which (A) 40,625,000 shares of Acquiror Common Stock are issued and outstanding as of the date of this Agreement and (B) 24,500,000 Acquiror Warrants are issued and outstanding as of the date of this Agreement. All of the issued and outstanding shares of Acquiror Common Stock and Acquiror Warrants (i) have been duly authorized and validly issued and are fully paid and nonassessable, (ii) were issued in compliance in all material respects with applicable Law, (iii) were not issued in breach or violation of any preemptive rights or Contract, and (iv) are fully vested and not otherwise subject to a substantial risk of forfeiture within the meaning of Code Section 83, except as disclosed in the SEC Reports with respect to certain Acquiror Common Stock held by the Sponsors.
(b) Except for the Acquiror Warrants and Stockholder Notes, as of the date hereof, there are (i) no subscriptions, calls, options, warrants, rights or other securities convertible into or exchangeable or exercisable for shares of Acquiror Common Stock or the equity interests of Acquiror, or any other Contracts to which Acquiror is a party or by which Acquiror is bound obligating Acquiror to issue or sell any shares of capital stock of, other equity interests in or debt securities of, Acquiror, and (ii) no equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in Acquiror. Except as disclosed in the SEC Reports, the Acquiror Organizational Documents or in agreements with the Cision Owner, there are no outstanding contractual obligations of Acquiror to repurchase, redeem or otherwise acquire any securities or equity interests of Acquiror. There are no outstanding bonds, debentures, notes or other indebtedness of Acquiror having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which Acquirors stockholders may vote. Except as disclosed in the SEC Reports, Acquiror is not a party to any stockholders agreement, voting agreement or registration rights agreement relating to Acquiror Common Stock or any other equity interests of Acquiror.
(c) As of the date hereof, the authorized share capital of Holdings consists of 500,000,000 ordinary shares, of which 1 ordinary share is issued and outstanding and beneficially held by Acquiror as of the date of this Agreement. All of such issued and outstanding shares (i) have been duly authorized and validly issued and are fully paid and nonassessable, (ii) were issued in compliance in all material respects with applicable Law, (iii) were not issued in breach or violation of any preemptive rights or Contract, and (iv) are fully vested and not otherwise subject to a substantial risk of forfeiture within the meaning of
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Code Section 83. Except for this Agreement and the transactions contemplated hereby, as of the date hereof, there are (i) no subscriptions, calls, options, warrants, rights or other securities convertible into or exchangeable or exercisable for shares of the common stock or the equity interests of Holdings, or any other Contracts to which Holdings is a party or by which Holdings is bound obligating Holdings to issue or sell any shares of capital stock of, other equity interests in or debt securities of, Holdings, and (ii) no equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in Holdings. There are no outstanding contractual obligations of Holdings to repurchase, redeem or otherwise acquire any securities or equity interests of Holdings. There are no outstanding bonds, debentures, notes or other indebtedness of Holdings having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which Holdings stockholders may vote. Except for this Agreement and the Transactions, Holdings is not a party to any stockholders agreement, voting agreement or registration rights agreement relating to the common stock or any other equity interests of Holdings.
(d) The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, of which 1,000 shares are issued and outstanding and beneficially held by Holdings as of the date of this Agreement. All of such issued and outstanding shares (i) have been duly authorized and validly issued and are fully paid and nonassessable, (ii) were issued in compliance in all material respects with applicable Law, (iii) were not issued in breach or violation of any preemptive rights or Contract, and (iv) are fully vested and not otherwise subject to a substantial risk of forfeiture within the meaning of Code Section 83. Except for this Agreement and the Transactions, there are (i) no subscriptions, calls, options, warrants, rights or other securities convertible into or exchangeable or exercisable for shares of the common stock or the equity interests of Merger Sub, or any other Contracts to which Merger Sub is a party or by which Merger Sub is bound obligating Merger Sub to issue or sell any shares of capital stock of, other equity interests in or debt securities of, Merger Sub, and (ii) no equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in Merger Sub. There are no outstanding contractual obligations of Merger Sub to repurchase, redeem or otherwise acquire any securities or equity interests of Merger Sub. There are no outstanding bonds, debentures, notes or other indebtedness of Merger Sub having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which Merger Subs stockholders may vote. Except for this Agreement and the transactions contemplated hereby, Merger Sub is not a party to any stockholders agreement, voting agreement or registration rights agreement relating to the common stock or any other equity interests of Merger Sub.
(e) The Holdings Common Shares to be issued in the Contribution and Exchange and the Merger will, upon issuance, (i) be duly authorized and validly issued, and fully paid and nonassessable, (ii) be issued in compliance in all material respects with applicable Law, (iii) not be issued in breach or violation of any preemptive rights or Contract, (iv) be fully vested and not otherwise subject to a substantial risk of forfeiture within the meaning of Code Section 83 and (v) be issued free and clear of all Liens other than restrictions in the organizational documents of Holdings and applicable federal and state securities law restrictions and other than any Contracts in effect between any shareholder receiving such Holdings Common Shares and Holdings or any of its Subsidiaries.
7.14 Nasdaq Stock Market Quotation . The issued and outstanding shares of Acquiror Common Stock are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq under the symbol CLAC. The issued and outstanding Acquiror Warrants are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq under the symbol CLACW. Acquiror is in compliance with the rules of the Nasdaq and there is no action or proceeding pending or, to the knowledge of Acquiror, threatened against Acquiror by the Nasdaq or the SEC with respect to any intention by such entity to deregister the Acquiror Common Stock or Acquiror Warrants or terminate the listing of Acquiror Common Stock or Acquiror Warrants on the Nasdaq. None of Acquiror, Holdings, Merger Sub or their respective Affiliates has taken any action in an attempt to terminate the registration of the Acquiror Common Stock or Acquiror Warrants under the Exchange Act except as contemplated by this Agreement.
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8.01 Conduct of Business . From the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms (the Interim Period ), the Company shall, and shall cause its Subsidiaries to, except as expressly contemplated by this Agreement or as consented to by Acquiror in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied), (i) use commercially reasonable efforts to operate its business in the ordinary course consistent with past practice and (ii) continue to accrue and collect accounts receivable, accrue and pay accounts payable and other expenses, establish reserves for uncollectible accounts and manage inventory in accordance with past custom and practice. Without limiting the generality of the foregoing, except as set forth on Schedule 8.01 , as contemplated by the Pre-Closing Restructuring or as consented to by Acquiror in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied), the Company shall not, and the Company shall cause its Subsidiaries not to, except as otherwise contemplated by this Agreement:
(a) change or amend the certificate of incorporation, bylaws or other organizational documents of the Company or its Subsidiaries;
(b) (i) make, declare or pay any dividend or distribution to the stockholders of the Company in their capacities as stockholders, (ii) effect any recapitalization, reclassification, split or other change in its capitalization, (iii) authorize for issuance, issue, sell, transfer, pledge, encumber, dispose of or deliver any additional shares of its capital stock or securities convertible into or exchangeable for shares of its capital stock, or issue, sell, transfer, pledge, encumber or grant any right, option or other commitment for the issuance of shares of its capital stock, or split, combine or reclassify any shares of its capital stock or (iv) repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any shares of its capital stock or other equity interests;
(c) enter into, assume, assign, partially or completely amend any material term of, modify any material term of or terminate (excluding any expiration in accordance with its terms) any Contract of a type required to be listed on Schedule 5.12(a) , any lease related to the Leased Real Property or any collective bargaining or similar agreement (including agreements with works councils and trade unions and side letters) to which the Company or its Subsidiaries is a party or by which it is bound, other than entry into such agreements in the ordinary course consistent with past practice or as required by Law;
(d) sell, transfer, lease, pledge or otherwise encumber, abandon, cancel or convey or dispose of any assets, properties or business of the Company and its Subsidiaries, taken as a whole, except for sales or dispositions of items or materials in an amount not in excess of $1,000,000 in the aggregate, other than customary pledges of such assets in connection with the First Lien Credit Agreement;
(e) except as otherwise required by Law or existing Company Benefit Plans, policies or Contracts of the Company or its Subsidiaries in effect on the date of this Agreement, (i) grant any material increase in compensation, benefits or severance to any employee or manager of the Company or its Subsidiaries, except in the ordinary course of business consistent with past practice for any employee of the Company with annual base compensation less than $200,000, (ii) adopt, enter into or materially amend any Company Benefit Plan, (iii) grant or provide any severance or termination payments or benefits to any employee or manager of the Company or its Subsidiaries, except in connection with the promotion, hiring or firing of any employee (to the extent permitted by clause (iv) of this paragraph) in the ordinary course of business consistent with past practice, or (v) hire any employee of the Company or its Subsidiaries or any other individual who is providing or will provide services to the Company or its Subsidiaries other than any employee with annual base compensation of less than $200,000 in the ordinary course of business consistent with past practice;
(f) (i) fail to maintain its existence or acquire by merger or consolidation with, or merge or consolidate with, or purchase substantially all of the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof, (ii) make any acquisition of any assets, business, stock or other properties in excess of $2,500,000 individually or $10,000,000 in the aggregate, (iii) sell, transfer, license, assign or otherwise dispose of or encumber any of the material assets or Intellectual Property pertaining to the business of the Company and its Subsidiaries with a value in
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excess of $2,500,000, or acquire any assets in excess of $2,500,000, other than (A) customary pledges of such assets or Intellectual Property in connection with the Companys existing credit facility, (B) licenses of Intellectual Property granted in the ordinary course of business, and (C) the expiration of Intellectual Property in accordance with the applicable statutory term, or (iv) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or its Subsidiaries (other than the Merger);
(g) make any capital expenditures (or commitment to make any capital expenditures) that in the aggregate exceed $1,000,000, other than any capital expenditure (or series of related capital expenditures) consistent in all material respects with the Companys annual capital expenditure budget for periods following the date hereof, made available to Acquiror;
(h) make any loans or advances to any Person, except for advances to employees or officers of the Company or its Subsidiaries in the ordinary course of business consistent with past practice;
(i) make or change any material Tax election or adopt or change any material Tax accounting method, file any amendment to a material Tax Return, enter into any agreement with a Governmental Authority with respect to Taxes, settle or compromise any claim or assessment in respect of material Taxes, or consent to any extension or waiver of the statutory period of limitations applicable to any claim or assessment in respect of Taxes, enter into any Tax sharing or similar agreement, or take or fail to take any similar action relating to Taxes, if such election, change, amendment, agreement, settlement, consent or other action would have the effect of materially increasing the present or future Tax liability or materially decreasing any present or future Tax asset of Acquiror and its Affiliates (including the Company and its Subsidiaries) after the Closing;
(j) take any action, or knowingly fail to take any action, which action or failure to act prevents or impedes, or could reasonably be expected to prevent or impede, the Intended Tax Treatment;
(k) enter into any agreement that restricts the ability of the Company or its Subsidiaries to engage or compete in any line of business, or enter into any agreement that restricts the ability of the Company or its Subsidiaries to enter a new line of business;
(l) (i) enter into, renew or amend in any material respect any Affiliate Agreement or (ii) make any change, waive, terminate or modify any agreement set forth on Schedule 8.01(l) ;
(m) waive, release, compromise, settle or satisfy any pending or threatened material claim (which shall include, but not be limited to, any pending or threatened Action) or compromise or settle any liability, other than in the ordinary course of business or that otherwise do not exceed $2,500,000 in the aggregate (net of insurance recoveries);
(n) incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any Indebtedness, other than in connection with borrowings, extensions of credit and other financial accommodations under the Companys and Subsidiaries existing credit facilities (including the First Lien Credit Agreement), provided, that, in no event shall any such borrowing, extension of credit or other financial accommodation be subject to any prepayment fee or penalty or similar arrangement or amend, restate or modify any terms of or any agreement with respect to any outstanding Indebtedness, other than pursuant to the First Lien Credit Agreement;
(o) make any change in financial accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except insofar as may have been required by a change in GAAP or Law;
(p) voluntarily fail to maintain, cancel or materially change coverage under any insurance policy in form and amount equivalent in all material respects to the insurance coverage currently maintained with respect to the Company and its Subsidiaries and their assets and properties; and
(q) enter into any agreement to do any action prohibited under this Section 8.01 .
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8.02 Inspection . Subject to confidentiality obligations and similar restrictions that may be applicable to information furnished to the Company or its Subsidiaries by third parties that may be in the Companys or its Subsidiaries possession from time to time, and except for any information which in the opinion of legal counsel of the Company would result in the loss of attorney-client privilege or other privilege from disclosure, the Company shall, and shall cause its Subsidiaries to, afford to Acquiror and its Representatives reasonable access during the Interim Period, during normal business hours and with reasonable advance notice, in such manner as to not interfere with the normal operation of the Company and its Subsidiaries, to all of their respective properties, books, Contracts, commitments, Tax Returns, records and appropriate officers and employees of the Company and its Subsidiaries, and shall furnish such Representatives with all financial and operating data and other information concerning the affairs of the Company and its Subsidiaries that are in the possession of the Company or its Subsidiaries as such Representatives may reasonably request. The parties shall use commercially reasonable efforts to make alternative arrangements for such disclosure where the restrictions in the preceding sentence apply. All information obtained by Acquiror, Holdings, Merger Sub and their respective Representatives under this Agreement shall be subject to the Confidentiality Agreement prior to the Effective Time.
8.03 HSR Act and Regulatory Approvals . In connection with the transactions contemplated by this Agreement, the Company shall (and, to the extent required, shall cause its Affiliates, including GTCR Fund X/A AIV LP, to) comply promptly but in no event later than ten Business Days after the date hereof with the notification and reporting requirements of the HSR Act. The Company shall (i) substantially comply with any Information or Document Requests and (ii) request early termination of any waiting period under the HSR Act. The Company shall promptly furnish to Acquiror copies of any notices or written communications received by the Company or any of its Affiliates from any third party or any Governmental Authority with respect to the transactions contemplated by this Agreement, and the Company shall permit counsel to Acquiror an opportunity to review in advance, and the Company shall consider in good faith the views of such counsel in connection with, any proposed written communications by the Company and/or its Affiliates to any Governmental Authority concerning the transactions contemplated by this Agreement; provided , that the Company shall not extend any waiting period or comparable period under the HSR Act or enter into any agreement with any Governmental Authority without the written consent of Acquiror. The Company agrees to provide, to the extent permitted by the applicable Governmental Authority, Acquiror and its counsel the opportunity, on reasonable advance notice, to participate in any substantive meetings or discussions, either in person or by telephone, between the Company and/or any of its Affiliates, agents or advisors, on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the transactions contemplated hereby.
8.04 Termination of Certain Agreements . On and as of the Closing, the Company shall take all actions necessary to cause the Contracts listed on Schedule 8.04 to be terminated without any further force and effect without any cost or other liability or obligation to the Company or its Subsidiaries, and there shall be no further obligations of any of the relevant parties thereunder following the Closing.
8.05 No Acquiror Common Stock Transactions . From and after the date of this Agreement until the Effective Time, except as otherwise contemplated by this Agreement, including the Contribution and Exchange, neither the Company nor any of its controlling Affiliates, directly or indirectly, shall engage in any transactions involving the securities of Acquiror without the prior consent of Acquiror. The Company shall use commercially reasonable efforts to require each of its controlled Affiliates, to comply with the foregoing sentence.
8.06 No Claim Against the Trust Account . Each of the Company and the Cision Owner acknowledges that it has read Acquirors final prospectus, dated October 13, 2015 and other SEC Reports, the Acquiror Organizational Documents, and the Trust Agreement and understands that Acquiror has established the Trust Account described therein for the benefit of Acquirors public stockholders and that disbursements from the Trust Account are available only in the limited circumstances set forth therein. Each of the Company and the Cision Owner further acknowledges that, if the transactions contemplated by this Agreement, or, in the event of termination of this Agreement, another Business Combination, are not consummated by October 19, 2017 or such later date as approved by the shareholders of Acquiror to complete a Business Combination, Acquiror will be obligated to return to its stockholders the amounts being held in the Trust Account. Accordingly, each
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of the Company and the Cision Owner on behalf of itself and its Affiliates hereby waives any past, present or future claim of any kind against, and any right to access, the Trust Account, any trustee of the Trust Account and Acquiror to collect from the Trust Account any monies that may be owed to them by Acquiror or any of its Affiliates for any reason whatsoever, and will not seek recourse against the Trust Account at any time for any reason whatsoever. This Section 8.06 shall survive the termination of this Agreement for any reason.
8.07 Proxy Solicitation; Other Actions .
(a) The Company agrees to use commercially reasonable efforts to (i) promptly provide Acquiror with the information and financial statements listed on Schedule 8.07 to be included in the Proxy Statement/Prospectus and (ii) provide Acquiror, (A) no later than April 15, 2017, audited financial statements, including consolidated balance sheets, statements of operations, statements of cash flows, and statements of stockholders equity of the Company and its Subsidiaries as of and for the year ended December 31, 2016 prepared in accordance with GAAP and Regulation S-X and (B) no later than May 15, 2017, unaudited financial statements for PRN Group for the interim periods ended March 31, 2015 and March 31, 2016 prepared in accordance with GAAP and Rule 3-05 of Regulation S-X. The Company shall be available to, and the Company and its Subsidiaries shall use reasonable best efforts to make their officers and employees available to, in each case, during normal business hours and upon reasonable advanced notice, Acquiror and its counsel in connection with (i) the drafting of the Proxy Statement/Prospectus and (ii) responding in a timely manner to comments on the Proxy Statement/Prospectus from the SEC. Without limiting the generality of the foregoing, the Company shall reasonably cooperate with Acquiror in connection with the preparation for inclusion in the Proxy Statement/Prospectus of pro forma financial statements that comply with the requirements of Regulation S-X under the rules and regulations of the SEC (as interpreted by the staff of the SEC).
(b) From and after the date on which the Proxy Statement/Prospectus is mailed to Acquirors stockholders, the Company will give Acquiror prompt written notice of any action taken or not taken by the Company or its Subsidiaries or of any development regarding the Company or its Subsidiaries, in any such case which is known by the Company, that would cause the Proxy Statement/Prospectus to contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in light of the circumstances under which they were made, not misleading; provided , that , if any such action shall be taken or fail to be taken or such development shall otherwise occur, Acquiror and the Company shall cooperate fully to cause an amendment or supplement to be made promptly to the Proxy Statement/Prospectus or, to the extent required by Securities Laws, a post-effective amendment to the Form S-4, such that the Form S-4 and the Proxy Statement/Prospectus no longer contain an untrue statement of a material fact or omit to state to state a material fact necessary in order to make the statements, in light of the circumstances under which they were made, not misleading; provided , further , however , that no information received by Acquiror pursuant to this Section 8.07 shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the party who disclosed such information, and no such information shall be deemed to change, supplement or amend the Schedules.
8.08 Pre-Closing Restructuring . The Company and the Cision Owner shall, and shall cause their respective Subsidiaries and Affiliates to, effectuate and consummate the Pre-Closing Restructuring prior to the Closing in accordance with the terms set forth on Schedule 1.01(a) .
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9.01 HSR Act and Regulatory Approvals .
(a) In connection with the transactions contemplated by this Agreement, Acquiror shall (and, to the extent required, shall cause its Affiliates to) comply promptly but in no event later than ten Business Days after the date hereof with the notification and reporting requirements of the HSR Act. Acquiror shall substantially comply with any Information or Document Requests.
(b) Acquiror shall request early termination of any waiting period under the HSR Act and exercise its commercially reasonable efforts to (i) obtain termination or expiration of the waiting period under the HSR Act, (ii) prevent the entry in any Action brought by a Regulatory Consent Authority or any other Person of any Governmental Order which would prohibit, make unlawful or delay the consummation of the transactions contemplated by this Agreement and (iii) if any such Governmental Order is issued in any such Action, cause such Governmental Order to be lifted.
(c) Acquiror shall cooperate in good faith with the Regulatory Consent Authorities and undertake promptly any and all action required to complete lawfully the transactions contemplated by this Agreement as soon as practicable (but in any event prior to the Termination Date) and any and all action necessary or advisable to avoid, prevent, eliminate or remove the actual or threatened commencement of any proceeding in any forum by or on behalf of any Regulatory Consent Authority or the issuance of any Governmental Order that would delay, enjoin, prevent, restrain or otherwise prohibit the consummation of the Merger, including (i) proffering and consenting and/or agreeing to a Governmental Order or other agreement providing for (A) the sale, licensing or other disposition, or the holding separate, of particular assets, categories of assets or lines of business of the Company or Acquiror or (B) the termination, amendment or assignment of existing relationships and contractual rights and obligations of the Company or Acquiror and (ii) promptly effecting the disposition, licensing or holding separate of assets or lines of business or the termination, amendment or assignment of existing relationships and contractual rights, in each case, at such time as may be necessary to permit the lawful consummation of the transactions contemplated hereby on or prior to the Termination Date. The entry by any Governmental Authority in any Action of a Governmental Order permitting the consummation of the transactions contemplated hereby but requiring any of the assets or lines of business of Acquiror to be sold, licensed or otherwise disposed or held separate thereafter (including the business and assets of the Company and its Subsidiaries) shall not be deemed a failure to satisfy any condition specified in Article XI .
(d) Acquiror shall promptly furnish to the Company copies of any notices or written communications received by Acquiror or any of its Affiliates from any third party or any Governmental Authority with respect to the transactions contemplated by this Agreement, and Acquiror shall permit counsel to the Company an opportunity to review in advance, and Acquiror shall consider in good faith the views of such counsel in connection with, any proposed written communications by Acquiror and/or its Affiliates to any Governmental Authority concerning the transactions contemplated by this Agreement; provided , that Acquiror shall not extend any waiting period or comparable period under the HSR Act or enter into any agreement with any Governmental Authority without the written consent of the Company. Acquiror agrees to provide the Company and its counsel the opportunity, on reasonable advance notice, to participate in any substantive meetings or discussions, either in person or by telephone, between Acquiror and/or any of its Affiliates, agents or advisors, on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the transactions contemplated hereby.
(e) Each of the Company and Acquiror shall pay 50% of all filing fees payable to the Regulatory Consent Authorities in connection with the transactions contemplated by this Agreement.
9.02 Indemnification and Insurance .
(a) From and after the Effective Time, Holdings and the Surviving Company agree that they shall indemnify and hold harmless each present and former director and officer of the Company and Acquiror and each of their respective Subsidiaries against any costs or expenses (including reasonable attorneys fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any Action,
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whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that the Company, Acquiror or their respective Subsidiaries, as the case may be, would have been permitted under applicable Law and its respective certificate of incorporation, bylaws or other organizational documents in effect on the date of this Agreement to indemnify such Person (including the advancing of expenses as incurred to the fullest extent permitted under applicable Law). Without limiting the foregoing, Holdings shall, and shall cause the Surviving Company and its Subsidiaries to (i) maintain for a period of not less than six years from the Effective Time provisions in its certificate of incorporation (if applicable), bylaws and other organizational documents concerning the indemnification and exoneration (including provisions relating to expense advancement) of the Surviving Companys and its Subsidiaries former and current officers, directors, employees, and agents that are no less favorable to those Persons than the provisions of the certificates of incorporation (if applicable), bylaws and other organizational documents of the Company, Acquiror or their respective Subsidiaries, as applicable, in each case, as of the date of this Agreement and (ii) not amend, repeal or otherwise modify such provisions in any respect that would adversely affect the rights of those Persons thereunder, in each case, except as required by Law. Holdings shall assume, and be liable for, and shall cause the Surviving Company and its Subsidiaries to honor, each of the covenants in this Section 9.02 .
(b) For a period of six years from the Effective Time, Holdings shall cause the Surviving Company to maintain in effect directors and officers liability insurance covering those Persons who are currently covered by the Companys or its Subsidiaries directors and officers liability insurance policies (true, correct and complete copies of which have been heretofore made available to Acquiror or its agents or representatives) on terms not less favorable than the terms of such current insurance coverage, except that in no event shall Holdings be required to pay an annual premium for such insurance in excess of 300% of the aggregate annual premium payable by the Company for such insurance policy for the year ended December 31, 2016; provided , however , that (i) Holdings or the Surviving Company may cause coverage to be extended under the current directors and officers liability insurance by obtaining a six-year tail policy containing terms not materially less favorable than the terms of such current insurance coverage with respect to claims existing or occurring at or prior to the Effective Time and (ii) if any claim is asserted or made within such six-year period, any insurance required to be maintained under this Section 9.02 shall be continued in respect of such claim until the final disposition thereof.
(c) Notwithstanding anything contained in this Agreement to the contrary, this Section 9.02 shall survive the consummation of the Merger indefinitely and shall be binding, jointly and severally, on Holdings and the Surviving Company and all successors and assigns of Holdings and the Surviving Company. In the event that Holdings or the Surviving Company or any of their respective successors or assigns consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, Holdings and the Surviving Company shall ensure that proper provision shall be made so that the successors and assigns of Holdings or the Surviving Company, as the case may be, shall succeed to the obligations set forth in this Section 9.02 .
(d) On the Closing Date, Holdings shall enter into customary indemnification agreements reasonably satisfactory to the Cision Owner with the individuals set forth on Schedule 9.05(i) and Schedule 9.05(ii) , which indemnification agreements shall continue to be effective following the Closing.
9.03 Conduct of Acquiror During the Interim Period .
(a) During the Interim Period, except as set forth on Schedule 9.03 or as contemplated by this Agreement or as consented to by the Company in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied), each of Acquiror, Holdings and Merger Sub shall not and each shall not permit any of its Subsidiaries to:
(i) change, modify or amend the Trust Agreement, the Acquiror Organizational Documents or the certificate of incorporation, bylaws or other organizational documents of Holdings or Merger Sub;
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(ii) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, Acquiror, Holdings or Merger Sub; (B) split, combine or reclassify any capital stock of, or other equity interests in, Acquiror, Holdings or Merger Sub; or (C) other than in connection with the Offer or as otherwise required by Acquirors Organizational Documents in order to consummate the transactions contemplated hereby, repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, Acquiror, Holdings or Merger Sub;
(iii) make or change any material Tax election or adopt or change any material Tax accounting method, file any amendment to a material Tax Return, enter into any agreement with a Governmental Authority with respect to Taxes, settle or compromise any claim or assessment in respect of material Taxes, or consent to any extension or waiver of the statutory period of limitations applicable to any claim or assessment in respect of Taxes, enter into any Tax sharing or similar agreement, or take or fail to take any similar action relating to Taxes, if such election, change, amendment, agreement, settlement, consent or other action would have the effect of materially increasing the present or future Tax liability or materially decreasing any present or future Tax asset of Holdings, the Company, the Surviving Company or their respective Affiliates and Subsidiaries after the Closing;
(iv) take any action, or knowingly fail to take any action, which action or failure to act prevents or impedes, or could reasonably be expected to prevent or impede the Intended Tax Treatment;
(v) other than as expressly permitted pursuant to the provisos of Section 9.03(a)(vii) , enter into, renew or amend in any material respect, any transaction or Contract with an Affiliate of Acquiror, Holdings or Merger Sub (including, for the avoidance of doubt, (x) the Sponsors or anyone related by blood, marriage or adoption to any Sponsor and (y) any Person in which any Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater);
(vi) waive, release, compromise, settle or satisfy any pending or threatened material claim (which shall include, but not be limited to, any pending or threatened Action) or compromise or settle any liability;
(vii) incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any Indebtedness (including pursuant to any Stockholder Notes); provided that, Acquiror shall be permitted to issue Stockholder Notes (solely and exclusively to the extent issued to the Sponsors) as necessary to permit the Acquiror to fund or pay for (A) any ordinary course out-of-pocket expenses incurred in support of the transactions contemplated hereby and/or (B) any fees, costs or expenses which would constitute Outstanding Acquiror Expenses; provided further that; any Stockholder Note issued pursuant to the foregoing proviso shall (x) be on terms and conditions reasonably satisfactory to the Company and (y) not contain any right, term, provision, covenant or agreement which permits or requires, and shall expressly forbid, that such Stockholder Note be converted into any equity securities or warrants of Acquiror, Holdings or Merger Sub;
(viii) permit to be converted, redeemed, replaced or otherwise discharged, except by repayment with cash, any Stockholder Note; or
(ix) (A) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, Acquiror, Holdings, Merger Sub or any of their respective Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than in connection with the exercise of any Acquiror Warrants outstanding on the date hereof or (B) amend, modify or waive any of the terms or rights set forth in, any Acquiror Warrant or the Warrant Agreement, including any amendment, modification or reduction of the warrant price set forth therein.
(b) During the Interim Period, Acquiror shall, and shall cause its Subsidiaries (including Holdings and Merger Sub) to comply with, and continue performing under, as applicable, the Acquiror Organizational Documents, the Trust Agreement and all other agreements or Contracts to which Acquiror or its Subsidiaries may be a party.
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9.04 Trust Account . Prior to or at the Closing (subject to the satisfaction or waiver of the conditions set forth in Article XI) , Acquiror shall make appropriate arrangements to cause the funds in the Trust Account to be disbursed in accordance with the Trust Agreement for the following: (a) the redemption of any shares of Acquiror Common Stock in connection with the Offer; (b) the payment of the Outstanding Company Expenses and Outstanding Acquiror Expenses pursuant to Section 4.07 ; and (c) the balance of the assets in the Trust Account, if any, after payment of the amounts required under the foregoing clauses (a) and (b), to be disbursed to Acquiror.
9.05 Director & Officer Appointments . Except as otherwise agreed in writing by the Company and Acquiror prior to the Closing, and conditioned upon the occurrence of the Closing, Acquiror and Holdings shall take all actions necessary or appropriate to cause (a) all of the members of the Holdings board of directors (the Holdings Board ) to resign effective as of the Closing, (b) the number of directors constituting the Holdings Board to be such number as is specified on Schedule 9.05(i) and (c) the individuals set forth on Schedule 9.05(i) to be elected as members of the Holdings Board, effective as of the Closing. Except as otherwise specified in writing by the Company prior to the Closing, and conditioned upon the occurrence of the Closing, Holdings and the Holdings Board shall take all actions necessary or appropriate to cause (x) all of the officers of Holdings to resign effective as of the Closing and (y) the individuals set forth on Schedule 9.05(ii) to have been appointed as the officers of Holdings in the positions specified opposite such individuals names on Schedule 9.05(ii) , effective as of the Closing.
9.06 Inspection . Subject to confidentiality obligations and similar restrictions that may be applicable to information furnished to Acquiror or its Subsidiaries by third parties that may be in Acquirors or its Subsidiaries possession from time to time, and except for any information which in the opinion of legal counsel of Acquiror would result in the loss of attorney-client privilege or other privilege from disclosure, Acquiror, Holdings and Merger Sub afford to the Company, the Cision Owner and their respective Representatives reasonable access during the Interim Period, during normal business hours and with reasonable advance notice, to all of their respective properties, books, Contracts, commitments, Tax Returns, records and appropriate officers and employees of Acquiror, Holdings and Merger Sub, and shall furnish such Representatives with all financial and operating data and other information concerning the affairs of Acquiror, Holdings and Merger Sub that are in the possession of Acquiror, Holdings or Merger Sub as such Representatives may reasonably request. The parties shall use commercially reasonable efforts to make alternative arrangements for such disclosure where the restrictions in the preceding sentence apply. All information obtained by the Company, the Cision Owner and their respective Representatives under this Agreement shall be subject to the Confidentiality Agreement prior to the Effective Time.
9.07 Nasdaq Listing . From the date hereof through the Closing, Acquiror shall take reasonable efforts (a) to ensure Acquiror remains listed as a public company on, and for shares of Acquiror Common Stock and Acquiror Warrants to be listed on, the Nasdaq and (b) to cause the Holdings Common Shares and Holdings Warrants to be issued in connection with the Contribution and Exchange and the Merger to be approved for listing on the Nasdaq as of the Closing Date.
9.08 Acquiror Public Filings . From the date hereof through the Closing, Acquiror will keep current and timely file all reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations under applicable Securities Laws.
9.09 PIPE Investment . The Company shall reasonably cooperate and provide reasonable assistance and information (subject to the terms, conditions and limitations in Section 8.02 herein) as reasonably requested by Acquiror in connection with any PIPE Investment. None of Acquiror, Holdings, Merger Sub or any of their respective Affiliates or Subsidiaries shall enter into or consummate a PIPE Investment without the prior written consent of the Cision Owner and, if such consent is given, the PIPE Investment shall only be consummated on terms reasonably satisfactory to the Cision Owner.
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9.10 Incentive Equity Plan . Prior to the Closing Date, Acquiror, in its capacity as the sole stockholder of Holdings, shall approve, and shall cause Holdings to adopt, a management incentive equity plan, the form of which shall be prepared and delivered by the Cision Owner to Acquiror no later than ten Business Days prior to the Closing Date; provided that, such management incentive equity plan shall be consistent with the Intended Tax Treatment (assuming, solely for purposes of such determination, that all grants with respect to Holdings equity made pursuant to such management incentive equity plan shall be considered made in connection with the transactions contemplated hereby).
10.01 Support of Transaction . Without limiting any covenant contained in Article VIII or Article IX , including the obligations of the Company and Acquiror with respect to the notifications, filings, reaffirmations and applications described in Section 8.03 and Section 9.01 , respectively, which obligations shall control to the extent of any conflict with the succeeding provisions of this Section 10.01 , Acquiror and the Company shall each, and shall each cause their respective Subsidiaries to: (a) use commercially reasonable efforts to assemble, prepare and file any information (and, as needed, to supplement such information) as may be reasonably necessary to obtain as promptly as practicable all governmental and regulatory consents required to be obtained in connection with the transactions contemplated hereby, (b) use commercially reasonable efforts to obtain all material consents and approvals of third parties that any of Acquiror, the Company, or their respective Affiliates are required to obtain in order to consummate the Merger, including any required approvals of parties to material Contracts with the Company or its Subsidiaries, and (c) take such other action as may reasonably be necessary or as another party may reasonably request to satisfy the conditions of Article XI or otherwise to comply with this Agreement and to consummate the transaction contemplated hereby as soon as practicable. Notwithstanding the foregoing, in no event shall Acquiror, Merger Sub, the Company or its Subsidiaries be obligated to bear any expense or pay any fee or grant any concession in connection with obtaining any consents, authorizations or approvals pursuant to the terms of any Contract to which the Company or its Subsidiaries is a party in connection with the consummation of the Merger.
10.02 Preparation of Form S-4 & Proxy Statement; Annual Meeting .
(a) As promptly as practicable following the execution and delivery of this Agreement, Acquiror and the Company shall use reasonable best efforts to prepare and mutually agree upon (such agreement not to be unreasonably withheld or delayed), and Acquiror shall use reasonable best efforts to cause Holdings to file with the SEC, the Form S-4 (it being understood that the Form S-4 shall include the Proxy Statement/Prospectus which will be included therein as a prospectus and which will be used as a proxy statement for the Annual Meeting with respect to the Proposals (as defined below)).
(b) Each of Acquiror and the Company shall cooperate and mutually agree upon (such agreement not to be unreasonably withheld or delayed), any response to comments of the SEC or its staff with respect to the Form S-4 or Proxy Statement/Prospectus and any amendment to the Form S-4 or Proxy Statement filed in response thereto. If either Acquiror or the Company becomes aware that any information contained in the Form S-4 or Proxy Statement/Prospectus shall have become false or misleading in any material respect or that the Form S-4 or Proxy Statement/Prospectus is required to be amended in order to comply with applicable Law, then (i) such party shall promptly inform the other and (ii) Acquiror and the Company shall cooperate and mutually agree upon (such agreement not to be unreasonably withheld or delayed) an amendment or supplement to the Form S-4 and Proxy Statement/Prospectus. Acquiror and the Company shall use reasonable best efforts to cause the Proxy Statement/Prospectus as so amended or supplemented, to be filed with the SEC and to be disseminated to the holders of shares of Acquiror Common Stock, as applicable, in each case pursuant to applicable Law and subject to the terms and conditions of this Agreement and the Acquiror Organizational Documents. Each of the Company and Acquiror shall provide the other party with copies of any written comments, and shall inform such other party of any oral comments, that Acquiror receives from the SEC or its staff with respect to the Form S-4 or Proxy Statement promptly after the receipt of such comments and shall give the other party a reasonable opportunity to review and comment on any proposed written or oral responses to such comments prior to responding to the SEC or its staff. Acquiror and the Company shall use reasonable best efforts to cause the Form S-4 to be declared effective as promptly as practicable after
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it is filed with the SEC and to keep the Form S-4 effective through the Closing in order to permit the consummation of the transactions contemplated hereby.
(c) Acquiror shall file the Proxy Statement on Schedule 14A in accordance with the rules and regulations of the Exchange Act. Acquiror agrees to include provisions in the Proxy Statement and to take reasonable action related thereto, with respect to (i) the adoption and approval of this Agreement, (ii) the approval of the Merger; (iii) the approval of the issuance of the Exchange Shares for purposes of complying with regulations of the Nasdaq, (iv) the election of directors effective as of the Closing and (v) approval of any other proposals reasonably agreed by Acquiror and the Company to be necessary or appropriate in connection with the transaction contemplated hereby (collectively, the Proposals ). Without the prior written consent of the Company, the Proposals shall be the only matters (other than procedural matters) which Acquiror shall propose to be acted on by Acquirors stockholders at the Annual Meeting.
(d) Acquiror and the Company shall use reasonable best efforts to, as promptly as practicable (and in any event, within seven Business Days after the SEC Clearance Date), (i) cause the Proxy Statement/Prospectus to be disseminated to Acquirors stockholders in compliance with applicable Law, (ii) establish the record date for, duly call, give notice of, convene and hold the Annual Meeting in accordance with the DGCL for a date no later than thirty days following the SEC Clearance Date and (iii) solicit proxies from the holders of Acquiror Common Stock to vote in favor of each of the Proposals. Acquiror shall, through the Acquiror Board, recommend to its stockholders that they approve the Proposals and shall include such recommendation in the Proxy Statement/Prospectus. Notwithstanding the foregoing provisions of this Section 10.02(d) , if on a date for which the Annual Meeting is scheduled, Acquiror has not received proxies representing a sufficient number of shares of Acquiror Common Stock to obtain the Acquiror Stockholder Approval, whether or not a quorum is present, Acquiror shall have the right to make one or more successive postponements or adjournments of the Annual Meeting, provided that the Annual Meeting (x) is not postponed or adjourned to a date that is more than 45 days after the date for which the Annual Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law) and (y) is held no later than three Business Days prior to the Termination Date.
(a) During the Interim Period, each of the Company and the Cision Owner shall not take, nor shall it permit any of its Affiliates or Representatives to take, whether directly or indirectly any action to solicit, initiate or engage in discussions or negotiations with, or enter into any agreement with, or encourage, or provide information to, any Person (other than Acquiror, Holdings, Merger Sub and/or any of their Affiliates) concerning any purchase of any of the Companys equity securities or the issuance and sale of any securities of, or membership interests in, the Company or its Subsidiaries (other than any purchases of equity securities by the Company from employees of the Company or its Subsidiaries) or any merger or sale of substantial assets involving the Company or its Subsidiaries, other than immaterial assets or assets sold in the ordinary course of business (each such acquisition transaction, an Acquisition Transaction ); provided , however , that Acquiror, Holdings and Merger Sub hereby acknowledge that prior to the date of this Agreement, the Company has provided information relating to the Company and its Subsidiaries and has afforded access to, and engaged in discussions with, other Persons in connection with a proposed Acquisition Transaction and that such information, access and discussions could reasonably enable another Person to form a basis for a proposal to engage in an Acquisition Transaction without any breach by the Company of this Section 10.03(a) ; provided , further , however, that the foregoing acknowledgement shall not in any way diminish the obligations of the Company, the Cision Owner, and their respective Affiliates and Representatives pursuant to this sentence and, for the avoidance of doubt, the Company shall not enter into any further discussions or negotiations or provide any further information in respect of, or enter into any agreement or arrangement with respect to, any such proposal. Notwithstanding the foregoing, the Company may respond to any unsolicited proposal regarding an Acquisition Transaction by indicating only that the Company is subject to an exclusivity agreement and is unable to provide any information related to the Company and its Subsidiaries or entertain any proposals or offers or engage in any negotiations or discussions concerning an Acquisition Transaction for as long
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as that exclusivity agreement remains in effect and, in such event, the Company shall notify Acquiror of such facts and circumstances. Each of the Company and the Cision Owner shall, and each shall cause its respective Affiliates and Representatives to, immediately cease any and all existing discussions or negotiations with any Person conducted prior to the date hereof with respect to, or which is reasonably likely to give rise to or result in, an Acquisition Transaction.
(b) During the Interim Period, none of Acquiror, Holdings or Merger Sub shall take, nor shall they permit any of their respective Affiliates or Representatives to take, whether directly or indirectly, any action to solicit, initiate, continue or engage in discussions or negotiations with, or enter into any agreement with, or encourage, respond, provide information to or commence due diligence with respect to, any Person (other than the Company, the Cision Owner and/or any of their Affiliates), concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry, proposal or indication of interest, written or oral relating to any Business Combination (a Business Combination Proposal ) other than with the Company, the Cision Owner and their respective Affiliates and Representatives. Each of Acquiror, Holdings and Merger Sub shall, and each shall cause its respective Affiliates and Representatives to, immediately cease any and all existing discussions or negotiations with any Person conducted prior to the date hereof with respect to, or which is reasonably likely to give rise to or result in, a Business Combination Proposal.
(a) Transfer Taxes . Notwithstanding anything to the contrary contained herein, the Company shall pay all transfer, documentary, sales, use, stamp, registration, value added or other similar Taxes incurred in connection with the Merger and the other transactions contemplated hereby. The Company shall, at its own expense, file all necessary Tax Returns with respect to all such Taxes, and, if required by applicable Law, Acquiror and the Cision Owner will join in the execution of any such Tax Returns.
(b) Tax Treatment .
(i) Acquiror, Holdings, Merger Sub, the Company and Cision Owner intend that the Merger, taken together with the Contribution and Exchange, shall constitute a transaction that qualifies under Section 351 of the Code, and each shall, and shall cause its respective Affiliates to, use its reasonable best efforts to so qualify and shall file all Tax Returns consistent with, and take no position inconsistent with (whether in audits, Tax Returns or otherwise) such treatment unless required to do so by applicable Law or as required in good faith to settle a dispute with a Governmental Authority. Each of the parties agrees to promptly notify all other parties of any challenge to the Intended Tax Treatment by any Governmental Authority.
(c) The Company, Acquiror, Holdings and Merger Sub hereby adopt this Agreement as a plan of reorganization within the meaning of Treasury Regulation Sections 1.368-2(g) and 1.368-3(a).
(d) The parties hereto shall cooperate in connection with fulfilling Tax reporting requirements of the Surviving Company or its Affiliates in connection with the transactions contemplated hereby, including any and all applicable reporting requirements described in Treasury Regulations Section 1.367(a)-3(c)(6).
10.05 Confidentiality; Publicity .
(a) Acquiror acknowledges that the information being provided to it in connection with this Agreement and the consummation of the transactions contemplated hereby is subject to the terms of the Confidentiality Agreement, the terms of which are incorporated herein by reference. At the Effective Time, the Confidentiality Agreement shall terminate with respect to information relating to the Company and its Subsidiaries.
(b) None of Acquiror, the Company or any of their respective Affiliates shall make any public announcement or issue any public communication regarding this Agreement or the transactions contemplated hereby, or any matter related to the foregoing, without first obtaining the prior consent of the Company or Acquiror, as applicable (which consent shall not be unreasonably withheld, conditioned or delayed), except if such announcement or other communication is required by applicable Law or legal process (including pursuant to the Securities Law or the rules of any national securities exchange), in
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which case Acquiror or the Company, as applicable, shall use their commercially reasonable efforts to coordinate such announcement or communication with the other party, prior to announcement or issuance; provided , however , that, subject to this Section 10.05 , each party hereto and its Affiliates may make announcements regarding this Agreement and the transactions contemplated hereby to their and their Affiliates respective directors, officers, employees, direct and indirect limited partners and investors without the consent of the other party hereto; and provided , further , that subject to Section 8.02 and this Section 10.05 , the foregoing shall not prohibit any party hereto from communicating with third parties to the extent necessary for the purpose of seeking any third party consent.
10.06 Post-Closing Cooperation; Further Assurances . Each party shall, on the request of any other party, execute such further documents, and perform such further acts, as may be reasonably necessary or appropriate to give full effect to the allocation of rights, benefits, obligations and liabilities contemplated by this Agreement and the transactions contemplated hereby.
11.01 Conditions to Obligations of All Parties . The obligations of the parties hereto to consummate, or cause to be consummated, the Transactions are subject to the satisfaction of the following conditions, any one or more of which may be waived (if legally permitted) in writing by all of such parties:
(a) All necessary permits, approvals, clearances, and consents of or filings with any Regulatory Consent Authorities or listed on Schedule 11.01(a) shall have been procured or made, as applicable.
(b) There shall not be in force any Governmental Order, statute, rule or regulation enjoining or prohibiting the consummation of the Transactions.
(c) The Offer shall have been completed in accordance with the terms hereof and the Proxy Statement/Prospectus.
(d) Acquiror shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining after the closing of the Offer.
(e) The memorandum and articles of association of Holdings shall have been amended and restated in their entirety in the form attached hereto as Exhibit D .
(f) The Form S-4 shall have become effective in accordance with the provisions of the Securities Act, no stop order shall have been issued by the SEC which remains in effect with respect to the Form S-4, and no proceeding seeking such a stop order shall have been threatened or initiated by the SEC which remains pending.
11.02 Conditions to Obligations of Acquiror, Holdings and Merger Sub . The obligations of Acquiror, Holdings and Merger Sub to consummate, or cause to be consummated, the Transactions are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by Acquiror:
(a) Representations and Warranties .
(i) Each of the representations and warranties (A) of the Company contained in the first sentence of Section 5.01(a) (Due Incorporation), Section 5.03 (Due Authorization), Section 5.06(d) (Current Capitalization), Sections 5.07(c) (Post-Restructuring Capitalization) and Section 5.16 (Brokers Fees) (the Company Specified Representations ) and (B) of the Cision Owner contained in Section 6.01 (Organization and Entity Power), Section 6.02 (Due Authorization), Section 6.03 (Title to Common Stock) and Section 6.09 (Brokers Fees) (the Cision Owner Specified Representations ), in each case shall be true and correct (without giving any effect to any limitation as to materiality or Material Adverse Effect or any similar limitation set forth therein) in all material respects as of the Closing Date as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date).
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(ii) The representations and warranties of the Company contained in Sections 5.07(a) , (b) and (d) (Post-Restructuring Capitalization) shall be true and correct other than de minimis inaccuracies, as of the Closing Date, as if made anew at and as of that time.
(iii) The representations and warranties of the Company contained in Section 5.01(b) (Due Incorporation) and Section 5.20(a) (No Material Adverse Effect) shall be true and correct in all respects as of the date that they expressly speak.
(iv) Each of the representations and warranties of the Company and the Cision Owner contained in this Agreement (other than the Company Specified Representations and the representations and warranties contained in Section Sections 5.07(a) , (b) and (d) (Post-Restructuring Capitalization), the Cision Owner Specified Representations and other than the representation and warranty of the Company contained in Section 5.20(a) ) shall be true and correct (without giving any effect to any limitation as to materiality or Material Adverse Effect or any similar limitation set forth therein) as of the Closing Date as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date), except, in either case, where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to result in, a Material Adverse Effect.
(b) Each of the covenants of the Company and the Cision Owner to be performed as of or prior to the Closing shall have been performed in all material respects.
(c) The Company shall have delivered to Acquiror a certificate signed by an officer of the Company and with regard only to the representations, warranties and covenants of the Cision Owner an officer of the Cision Owner, dated the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Section 11.02(a) and Section 11.02(b) have been fulfilled.
(d) The Acquiror Stockholder Approval shall have been obtained.
11.03 Conditions to the Obligations of the Company and the Cision Owner . The obligation of the Company and the Cision Owner to consummate the Transactions is subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by the Cision Owner:
(a) Each of the representations and warranties of Acquiror, Holdings and Merger Sub contained in this Agreement (other than the representations and warranties of the Acquiror contained in Section 7.13 (Capitalization)) (without giving effect to any materiality qualification therein) shall be true and correct in all material respects as of the Closing Date, as if made anew at and as of that time, except with respect to representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct in all material respects at and as of such date.
(b) The representations and warranties of the Acquiror, Holdings and Merger Sub contained in Section 7.13 (Capitalization) shall be true and correct other than de minimis inaccuracies, as of the Closing Date, as if made anew at and as of that time.
(c) Each of the covenants of Acquiror, Holdings and Merger Sub to be performed as of or prior to the Closing shall have been performed in all material respects.
(d) Holdings shall have executed and delivered the Registration Rights Agreement.
(e) Holdings shall have executed and delivered the Nominating Agreement.
(f) Each of the covenants of each Sponsor required under such Sponsors Sponsor Agreement to be performed as of or prior to the Closing shall have been performed in all material respects.
(g) The Holdings Common Shares to be issued pursuant to this Agreement shall have been approved for listing on Nasdaq, subject only to official notice of issuance thereof.
(h) The Available Closing Date Cash shall not be less than $225,000,000.00.
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(i) Acquiror shall have delivered to the Company and the Cision Owner a certificate signed by an officer of Acquiror, dated the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Section 11.03(a) , Section 11.03(b) , Section 11.03(c) and Section 11.03(h) have been fulfilled.
12.01 Termination . This Agreement may be terminated and the transactions contemplated hereby abandoned:
(a) by written consent of the Company and Acquiror;
(b) prior to the Closing, by written notice to the Company from Acquiror if (i) there is any breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, such that the conditions specified in Section 11.02(a) or Section 11.02(b) would not be satisfied at the Closing (a Terminating Company Breach ), except that, if such Terminating Company Breach is curable by the Company through the exercise of its commercially reasonable efforts, then, for a period of up to 30 days (or any shorter period of the time that remains between the date Acquiror provides written notice of such violation or breach and the Termination Date) after receipt by the Company of notice from Acquiror of such breach, but only as long as the Company continues to use its commercially reasonable efforts to cure such Terminating Company Breach (the Company Cure Period ), such termination shall not be effective, and such termination shall become effective only if the Terminating Company Breach is not cured within the Company Cure Period, (ii) the Closing has not occurred on or before the later of (A) October 19, 2017 or (B) to the extent Acquiror Stockholders duly approve a later date (the Acquiror Deadline ) for completion of a Business Combination, the earlier of (x) such later Acquiror Deadline and (y) December 19, 2017 (the Termination Date ), or (iii) the consummation of the Merger or the Contribution and Exchange is permanently enjoined or prohibited by the terms of a final, non-appealable Governmental Order or a statute, rule or regulation; provided , that the right to terminate this Agreement under subsection (ii) or (iii) shall not be available if Acquirors, Holdings or Merger Subs failure to fulfill any obligation under this Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on or before such date;
(c) prior to the Closing, by written notice to Acquiror from the Company if (i) there is any breach of any representation, warranty, covenant or agreement on the part of Acquiror or Merger Sub set forth in this Agreement, such that the conditions specified in Section 11.03(a) , Section 11.03(b) or Section 11.03(c) would not be satisfied at the Closing (a Terminating Acquiror Breach ), except that, if any such Terminating Acquiror Breach is curable by Acquiror through the exercise of its commercially reasonable efforts, then, for a period of up to 30 days (or any shorter period of the time that remains between the date Acquiror provides written notice of such violation or breach and the Termination Date) after receipt by Acquiror of notice from the Company of such breach, but only as long as Acquiror continues to exercise such commercially reasonable efforts to cure such Terminating Acquiror Breach (the Acquiror Cure Period ), such termination shall not be effective, and such termination shall become effective only if the Terminating Acquiror Breach is not cured within the Acquiror Cure Period, (ii) the Closing has not occurred on or before the Termination Date, or (iii) the consummation of the Merger or the Contribution and Exchange is permanently enjoined or prohibited by the terms of a final, non-appealable Governmental Order or a statute, rule or regulation; provided , that the right to terminate this Agreement under subsection (ii) or (iii) shall not be available if the Companys failure to fulfill any obligation under this Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on or before such date; or
(d) by written notice from either the Company or Acquiror to the other party if this Agreement shall fail to receive the Acquiror Stockholder Approval at the Annual Meeting (subject to any adjournment or recess of the meeting).
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12.02 Effect of Termination . Except as otherwise set forth in this Section 12.02 or Section 13.14 , in the event of the termination of this Agreement pursuant to Section 12.01 , this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or its respective Affiliates, officers, directors or stockholders, other than liability of any party hereto for any intentional and willful breach of this Agreement by such party occurring prior to such termination. The provisions of Sections 8.06 , 12.02 , 13.02 , 13.03 , 13.04 , 13.05 , 13.06 , 13.13 , 13.15 and 13.17 (collectively, the Surviving Provisions ) and the Confidentiality Agreement, and any other Section or Article of this Agreement referenced in the Surviving Provisions which are required to survive in order to give appropriate effect to the Surviving Provisions, shall in each case survive any termination of this Agreement.
13.01 Waiver . Any party to this Agreement may, at any time prior to the Closing, by action taken by its board of directors, or officers thereunto duly authorized, waive any of the terms or conditions of this Agreement or agree to an amendment or modification to this Agreement in the manner contemplated by Section 13.10 and by an agreement in writing executed in the same manner (but not necessarily by the same Persons) as this Agreement.
13.02 Notices . All notices and other communications among the parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service) or (iv) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:
(a) If to Acquiror or Merger Sub or, prior to the Closing, Holdings, to:
Capitol Acquisition Corp. III
509 7
th
Street, N.W.
Washington, DC 20004
Attn: Mark D. Ein, Chairman & CEO, and Dyson Dryden, CFO
Facsimile: (202) 654-7070
E-mail: mark@capitolacquisition.com
dyson@capitolacquisition.com
with a copy to:
Latham & Watkins LLP
555 Eleventh Street, N.W.
Washington, DC 20004
Attention: Paul Sheridan
Facsimile: (202) 637-2201
E-mail: paul.sheridan@lw.com
(b) If to, or concerning, the Cision Owner, the Company, the Surviving Company or, following the Closing, Holdings to:
Cision US, Inc.
130 East Randolph St. 7
th
Floor
Chicago, IL 60601
Attention: Jack Pearlstein
Facsimile: (301) 459-2827
E-mail: jack.pearlstein@cision.com
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with a copy to:
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
Attention: Stephen L. Ritchie, P.C. and Mark A. Fennell, P.C.
Facsimile: (312) 862-2200
E-mail: sritchie@kirkland.com
mfennell@kirkland.com
or to such other address or addresses as the parties may from time to time designate in writing. Notwithstanding anything to the contrary, for purposes of obtaining Acquirors prior written consent pursuant to Section 8.01 , an email from either Mark D. Ein or L. Dyson Dryden expressly consenting to the matter or action in question will suffice.
13.03 Assignment . No party hereto shall assign this Agreement or any part hereof without the prior written consent of the other parties; provided , that Acquiror, Holdings and/or Merger Sub may assign this Agreement and its rights hereunder without the prior written consent of the Company to any of the financing sources of Acquiror, Holdings and/or Merger Sub to the extent necessary for purposes of creating a security interest herein or otherwise assigning as collateral in respect of any debt financing in connection herewith; provided further , that the Company and/or the Cision Owner may (a) delegate the performance of its obligations or assign its rights hereunder in part or in whole to any Affiliate of the Company or the Cision Owner so long as the Company or the Cision Owner, as applicable, remains fully responsible for the performance of the delegated obligations (if any), (b) following the Closing, assign to any acquirer of the equity or all or substantially all of the assets of the Company, the Cision Owner or any of their respective Affiliates, including the Surviving Company and its Subsidiaries (whether such sale is structure as a sale of stock, a sale of assets, a merger or otherwise) and (c) assign its rights, in whole or in part, to receive the Earnout Shares to any Person or Persons. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Any attempted assignment in violation of the terms of this Section 13.03 shall be null and void, ab initio .
13.04 Rights of Third Parties . Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto, any right or remedies under or by reason of this Agreement; provided , however , that, notwithstanding the foregoing (i) in the event the Closing occurs, the present and former officers and directors of the Company (and their successors, heirs and representatives) are intended third-party beneficiaries of, and may enforce, Section 9.02 , (ii) from and after the Effective Time, the Cision Owner (and their successors, heirs and representatives) shall be intended third-party beneficiaries of, and may enforce, Article III , Article IV and Article X , (iii) the past, present and future directors, officers, employees, incorporators, members, partners, stockholders, Affiliates, agents, attorneys, advisors and representatives of the parties, and any Affiliate of any of the foregoing (and their successors, heirs and representatives), are intended third-party beneficiaries of, and may enforce, Sections 13.15 and 13.16 .
13.05 Expenses . Except as otherwise provided herein (including Section 4.07, Section 9.01(e) and Section 12.02 ), each party hereto shall bear its own expenses incurred in connection with this Agreement and the transactions herein contemplated whether or not such transactions shall be consummated, including all fees of its legal counsel, financial advisers and accountants.
13.06 Governing Law . This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
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13.07 Captions; Counterparts . The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. 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.
13.08 Schedules and Exhibits . The Schedules and Exhibits referenced herein are a part of this Agreement as if fully set forth herein. All references herein to Schedules and Exhibits shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. Any disclosure made by a party in the Schedules with reference to any section or schedule of this Agreement shall be deemed to be a disclosure with respect to all other sections or schedules to which such disclosure may apply solely to the extent the relevance of such disclosure is reasonably apparent on the face of the disclosure in such Schedule. Certain information set forth in the Schedules is included solely for informational purposes.
13.09 Entire Agreement . This Agreement (together with the Schedules and Exhibits to this Agreement) and that certain Confidentiality Agreement, dated as of November 18, 2016 by and between Acquiror and the Cision Owner (the Confidentiality Agreement ), constitute the entire agreement among the parties relating to the transactions contemplated hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the parties hereto or any of their respective Subsidiaries relating to the transactions contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated by this Agreement exist between the parties except as expressly set forth or referenced in this Agreement and the Confidentiality Agreement.
13.10 Amendments . This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed in the same manner as this Agreement and which makes reference to this Agreement. The approval of this Agreement by the stockholders of any of the parties shall not restrict the ability of the board of directors of any of the parties to terminate this Agreement in accordance with Section 12.01 or to cause such party to enter into an amendment to this Agreement pursuant to this Section 13.10 .
13.11 Publicity . All press releases or other public communications of any nature whatsoever relating to the transactions contemplated by this Agreement, and the method of the release for publication thereof, shall prior to the Closing be subject to the prior mutual approval of Acquiror and the Company which approval shall not be unreasonably withheld by any party.
13.12 Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties.
13.13 Jurisdiction; WAIVER OF TRIAL BY JURY . Any Action based upon, arising out of or related to this Agreement or the transactions contemplated hereby may be brought in federal and state courts located in the State of Delaware, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such Action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the Action shall be heard and determined only in any such court, and agrees not to bring any Action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Action brought pursuant to this Section 13.13 . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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13.14 Enforcement . The parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties do not perform their obligations under the provisions of this Agreement (including failing to take such actions as are required of them hereunder to consummate this Agreement) in accordance with its specified terms or otherwise breach such provisions. The parties acknowledge and agree that (a) the parties shall be entitled to an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without proof of damages, prior to the valid termination of this Agreement in accordance with Section 12.01 , this being in addition to any other remedy to which they are entitled under this Agreement, and (b) the right of specific enforcement is an integral part of the transactions contemplated by this Agreement and without that right, none of the parties would have entered into this Agreement. Each party agrees that it will not oppose the granting of specific performance and other equitable relief on the basis that the other parties have an adequate remedy at Law or that an award of specific performance is not an appropriate remedy for any reason at Law or equity. The parties acknowledge and agree that any party seeking an injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section shall not be required to provide any bond or other security in connection with any such injunction.
13.15 Non-Recourse . This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby may only be brought against, the entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect to such party. Except to the extent a named party to this Agreement (and then only to the extent of the specific obligations undertaken by such named party in this Agreement), (i) no past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative or Affiliate of any named party to this Agreement and (ii) no past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative or Affiliate of any of the foregoing shall have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of the Company, the Cision Owner, Acquiror, Holdings or Merger Sub under this Agreement of or for any claim based on, arising out of, or related to this Agreement or the transactions contemplated hereby.
13.16 Nonsurvival of Representations, Warranties and Covenants . None of the representations, warranties, covenants, obligations or other agreements in this Agreement or in any certificate, statement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and other provisions, shall survive the Closing and shall terminate and expire upon the occurrence of the Effective Time (and there shall be no liability after the Closing in respect thereof), except for (a) those covenants and agreements contained herein that by their terms expressly apply in whole or in part after the Closing and then only with respect to any breaches occurring after the Closing and (b) this Article XIII .
(a) Each of the parties acknowledges and agrees (on its own behalf and on behalf of its respective Affiliates and its and their respective Representatives) that: (i) it has conducted its own independent investigation of the financial condition, results of operations, assets, liabilities, properties and projected operations of the other parties (and their respective Subsidiaries) and has been afforded satisfactory access to the books and records, facilities and personnel of the other parties (and their respective Subsidiaries) for purposes of conducting such investigation; (ii) the Company Representations constitute the sole and exclusive representations and warranties of the Company in connection with the transactions contemplated hereby; (iii) the Cision Owner Representations constitute the sole and exclusive representations and warranties of the Cision Owner in connection with the transactions contemplated by this Agreement; (iv) the Acquiror Representations constitute the sole and exclusive representations and warranties of Acquiror, Holdings and Merger Sub; (v) except for the Company Representations by the Company, the Cision Owner Representations by the Cision Owner, and the Acquiror Representations by Acquiror, Holdings and Merger Sub, none of the parties hereto or any other Person makes, or has made, any other express or implied representation or warranty with respect to any party hereto (or any partys
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Subsidiaries) or the transactions contemplated by this Agreement and all other representations and warranties of any kind or nature expressed or implied (including (x) regarding the completeness or accuracy of, or any omission to state or to disclose, any information, including in the estimates, projections or forecasts or any other information, document or material provided to or made available to any party hereto or their respective Affiliates or Representatives in certain data rooms, management presentations or in any other form in expectation of the Transactions, including meetings, calls or correspondence with management of any party hereto (or any partys Subsidiaries), and (y) any relating to the future or historical business, condition (financial or otherwise), results of operations, prospects, assets or liabilities of any party hereto (or its Subsidiaries), or the quality, quantity or condition of any partys or its Subsidiaries assets) are specifically disclaimed by all parties hereto and their respective Subsidiaries and all other Persons (including the Representatives and Affiliates of any party hereto or its Subsidiaries); and (vi) each party hereto and its respective Affiliates are not relying on any representations and warranties in connection with the Transactions except the Company Representations by the Company, the Cision Owner Representations by the Cision Owner and the Acquiror Representations by Acquiror, Holdings and Merger Sub.
(b) Effective upon Closing, each of the parties hereto waives, on its own behalf and on behalf of its respective Affiliates and Representatives, to the fullest extent permitted under applicable Law, any and all rights, Claims and causes of action it may have against any other party hereto or their respective Subsidiaries and any of their respective current or former Affiliates or Representatives relating to the operation of any party hereto or its Subsidiaries or their respective businesses or relating to the subject matter of this Agreement, the Schedules, or the Exhibits to this Agreement, whether arising under or based upon any federal, state, local or foreign statute, Law, ordinance, rule or regulation or otherwise. Each party hereto acknowledges and agrees that it will not assert, institute or maintain any Action, suit, Claim, investigation, or proceeding of any kind whatsoever, including a counterclaim, cross-claim, or defense, regardless of the legal or equitable theory under which such liability or obligation may be sought to be imposed, that makes any claim contrary to the agreements and covenants set forth in this Section 13.17 . Notwithstanding anything herein to the contrary, nothing in this Section 13.17(b) shall preclude any party from seeking any remedy for actual and intentional fraud by a party hereto solely and exclusively with respect to the making of any representation or warranty by it in Article V , Article VI or Article VII (as applicable). Each party hereto shall have the right to enforce this Section 13.17 on behalf of any Person that would be benefitted or protected by this Section 13.17 if they were a party hereto. The foregoing agreements, acknowledgements, disclaimers and waivers are irrevocable. For the avoidance of doubt, nothing in this Section 13.17 shall limit, modify, restrict or operate as a waiver with respect to, any rights any party hereto may have under any written agreement entered into in connection with the transactions that are contemplated by this Agreement, including the Nominating Agreement, the Registration Rights Agreement and the Sponsor Agreement.
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IN WITNESS WHEREOF the parties have hereunto caused this Agreement to be duly executed as of the date hereof.
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CAPITOL ACQUISITION CORP. III | ||
By:
/s/ Mark D. Ein
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Name: Mark D. Ein
Title: Chief Executive Officer |
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CAPITOL ACQUISITION HOLDING COMPANY LTD. | ||
By:
/s/ Mark D. Ein
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||
Name: Mark D. Ein
Title: Authorized Signatory |
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CAPITOL ACQUISITION MERGER SUB, INC. | ||
By:
/s/ Mark D. Ein
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Name: Mark D. Ein
Title: President |
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CANYON HOLDINGS (CAYMAN) L.P. | ||
By: Canyon Partners, Ltd.
Its: General Partner |
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By:
/s/ Jack Pearlstein
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Name: Jack Pearlstein
Title: Chief Financial Officer |
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CANYON HOLDINGS S.À: R.L. | ||
By:
/s/ Jeffrey Wright
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Name: Jeffrey Wright
Title: Class A Manager |
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By:
/s/ Paul Brogan
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Name: Paul Brogan
Title: Class B Manager |
[Signature page to Merger Agreement]
This AMENDMENT NO. 1 (this Amendment ) to the Merger Agreement (defined below) is entered into as of April 7, 2017, by and among CAPITOL ACQUISITION CORP. III, a Delaware corporation ( Acquiror ), CAPITOL ACQUISITION HOLDING COMPANY LTD., an exempted company incorporated in the Cayman Islands with limited liability ( Holdings ), CAPITOL ACQUISITION MERGER SUB, INC., a Delaware corporation ( Merger Sub ), CANYON HOLDINGS (CAYMAN), L.P., a Cayman Islands exempted limited partnership (the Cision Owner ), and CANYON HOLDINGS S.À: R.L., a Luxembourg private limited liability company (société à responsabilité limitée, having its registered office at 6D, L-2633 Senningerberg, Grand Duchy of Luxembourg and registered with the RCS under number B 184599 (the Company ).
A. Acquiror, Holdings, Merger Sub, the Cision Owner and the Company entered into that certain Agreement and Plan of Merger, dated as of March 19, 2017 (the Merger Agreement ). All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Merger Agreement.
B. In accordance with Section 13.10 of the Merger Agreement, Acquiror, Holdings, Merger Sub, the Cision Owner and the Company desire to amend certain terms of the Merger Agreement as expressly provided in this Amendment.
In consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby acknowledge and agree as follows:
1. | Article I Certain Definitions . |
(A) | Article I of the Merger Agreement is hereby amended by inserting the following new definition after the definition of Applicable Organization Law and before the definition of Audited Financial Statements: |
Approved Stock Exchange means Nasdaq, the New York Stock Exchange (NYSE) or any other national securities exchange that may be agreed upon by the parties hereto.
(B) | The definition of Proxy Statement/Prospectus included in Article I of the Merger Agreement is hereby amended to insert at the end of such definition the words or any other Approved Stock Exchange on which the Holdings Common Shares are intended to be listed, as applicable. |
2. Section 2.02(f) . Section 2.02(f) of the Merger Agreement is hereby amended by replacing the words the Nasdaq in clauses (i) and (ii) with the words an Approved Stock Exchange.
3. Section 7.05 . Section 7.05 of the Merger Agreement is hereby amended by replacing the words and the Nasdaq with , the Nasdaq and any other Approved Stock Exchange on which the Holdings Common Shares are intended to be listed.
4. Section 9.07 . Section 9.07 of the Merger Agreement is hereby amended and restated by deleting in its entirety all of the text of such section and replacing such text with the following:
9.07 Stock Exchange Listing . From the date hereof through the Closing, Acquiror shall take reasonable efforts (a) to ensure Acquiror remains listed as a public company on, and for shares of Acquiror Common Stock and Acquiror Warrants to be listed on, the Nasdaq and (b) to cause the Holdings Common Shares and Holdings Warrants to be issued in connection with the Contribution and Exchange and the Merger to be approved for listing on an Approved Stock Exchange as of the Closing Date.
5. Section 10.02(c) . Section 10.02(c) of the Merger Agreement is hereby amended by replacing the words the Nasdaq in clause (iii) with the words the Approved Stock Exchange on which the Exchange Shares are intended to be listed.
6. Section 11.03(g) . Section 11.03(g) of the Merger Agreement is hereby amended by replacing the words the Nasdaq with the words an Approved Stock Exchange.
7. Amendments to Nominating Agreement .
(A) | Section 3 of the Nominating Agreement is hereby amended by inserting the following new definition after the definition of Agreement and before the definition of Beneficially Own: |
Approved Stock Exchange means the Nasdaq Stock Market, the New York Stock Exchange (NYSE) or any other national securities exchange that may be agreed upon by the parties hereto.
(B) | Section 3 of the Nominating Agreement is hereby amended by deleting the defined term NASDAQ and the definition thereof. |
(C) | Section 1(l) of the Nominating Agreement is hereby amended and restated by deleting in its entirety all of the text of such section and replacing such text with the following: |
The Nominees may, but do not need to, qualify as independent pursuant to listing standards of the Approved Stock Exchange on which the Ordinary Shares are listed. All other Directors of the Board other than the [Chief Executive Officer] of the Company shall qualify as independent pursuant to listing standards of such Approved Stock Exchange.
8. Effect of Amendment . This Amendment shall not constitute an amendment or waiver of any provision of the Merger Agreement not expressly amended or waived herein and shall not be construed as an amendment, waiver or consent to any action that would require an amendment, waiver or consent except as expressly stated herein. The Merger Agreement, as amended by this Amendment, is and shall continue to be in full force and effect and is in all respects ratified and confirmed hereby.
9. References . On and after the date hereof, each reference in the Merger Agreement to this Agreement, hereunder, hereof, herein or words of like import referring to the Merger Agreement, and each reference in any other document relating to the Agreement and Plan of Merger, Merger Agreement, Agreement, thereunder, thereof or words of like import referring to the Merger Agreement, means and references the Merger Agreement as amended hereby.
10. Miscellaneous . The provisions contained in Sections 13.06, 13.07, 13.08 13.10, 13.12, 13.13 and 13.14 of the Merger Agreement are incorporated by reference in this Amendment mutatis mutandis .
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF the parties have hereunto caused this Amendment to be duly executed as of the date hereof.
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CAPITOL ACQUISITION CORP. III | ||
By:
/s/ Mark D. Ein
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Name: Mark D. Ein
Title: Chief Executive Offer |
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CAPITOL ACQUISITION HOLDING COMPANY LTD. | ||
By:
/s/ Mark D. Ein
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Name: Mark D. Ein
Title: Authorized Signatory |
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CAPITOL ACQUISITION MERGER SUB, INC. | ||
By:
/s/ Mark D. Ein
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Name: Mark D. Ein
Title: President |
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[Signature Page to Amendment to the Merger Agreement]
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CANYON HOLDINGS (CAYMAN), L.P. | ||
By: Canyon Partners, Ltd. |
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Its: General Partner |
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By:
/s/ Jack Pearlstein
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Name: Jack Pearlstein
Title: Chief Financial Officer |
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CANYON HOLDINGS S.À: R.L. | ||
By:
/s/ Jeff Wright
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Name: Jeff Wright
Title: Class A Manager |
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By:
/s/ Paul Brogan
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Name: Paul Brogan
Title: Class B Manager |
[Signature Page to Amendment to the Merger Agreement]
ANNEX B
1. | The name of the Company is Cision Ltd. |
2. | The Registered Office of the Company shall be at the offices of Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands, or at such other place as the Directors may from time to time decide. |
3. | The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Companies Law (2016 Revision) or as the same may be revised from time to time, or any other law of the Cayman Islands. |
4. | The liability of each Member is limited to the amount from time to time unpaid on such Members shares. |
5. | The share capital of the Company is US$50,000 divided into 480,000,000 Ordinary Shares of a par value of US $0.0001 each and 20,000,000 Preferred Shares of nominal or par value of $0.0001 each. |
6. | The Company has the power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands. |
7. | Capitalised terms that are not defined in this Amended and Restated Memorandum of Association bear the same meaning as those given in the Amended and Restated Articles of Association of the Company. |
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B-ii
1. | Interpretation |
1.1. | In these Articles, unless otherwise defined, the defined terms shall have the meanings assigned to them as follows: |
Affiliate means (i) in the case of a natural person, such persons parents, parents-in-law, spouse, children or grandchildren, a trust for the benefit of any of the foregoing, a company, partnership or any natural person or entity wholly or jointly owned by such person or any of the foregoing, and (ii) in the case of a corporation, partnership or other entity or any natural person or entity which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such entity. The term control shall mean the ownership, directly or indirectly, of shares possessing more than fifty per cent (50%) of the voting power of the corporation, or the partnership or other entity (other than, in the case of a corporation, shares having such power only by reason of the happening of a contingency), or having the power to control the management or elect a majority of members to the board of directors or equivalent decision-making body of such corporation, partnership or other entity.
Articles means the Amended and Restated Articles of Association of the Company, as from time to time altered or added to in accordance with the Statute and these Articles.
Business Day means a day, excluding Saturdays or Sundays, on which banks in New York, New York, United States of America are open for general banking business throughout their normal business hours.
Cision Owner means the Shareholder, as such term is defined in the Director Nomination Agreement, provided that (for the avoidance of doubt) such Shareholder holds shares in the Company.
Cision Owner Designee means an individual elected to the board of Directors that has been nominated by Cision Owner pursuant to the Director Nomination Agreement.
Cision Owner Requisition means a requisition of Cision Owner.
Commission means the Securities and Exchange Commission of the United States of America or any other federal agency for the time being administering the Securities Act.
Company means Cision Ltd., a Cayman Islands exempted company limited by shares.
Companys Website means the website of the Company, the address or domain name of which has been notified to Members.
Controlled Company has the meaning given to it in the rules of the Designated Stock Exchange.
Designated Stock Exchange means the New York Stock Exchange, Nasdaq Stock Market or any other stock exchange or automated quotation system on which the Companys securities are then traded.
Dividend means any dividend (whether interim or final) resolved to be paid on shares pursuant to these Articles.
Director Nomination Agreement means that certain Director Nomination Agreement, dated [] 2017, by and among Cision Owner, the Company and the other parties thereto.
Directors means the directors of the Company for the time being, or as the case may be, the Directors assembled as a board or as a committee thereof.
electronic has the meaning given to it in the Electronic Transactions Law (2003 Revision) of the Cayman Islands and any amendment thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefor.
electronic record has the meaning given to it in the Electronic Transactions Law (2003 Revision) of the Cayman Islands and any amendment thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefor.
electronic communication means electronic transmission to any number, address or internet website or other electronic delivery methods as otherwise decided and approved by not less than a majority vote of the Directors.
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Exchange Act means the United States Securities Exchange Act of 1934, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.
Market Price means for any given day, the price quoted in respect of the Ordinary Shares on the Designated Stock Exchange of the close of trading on such day, or if such day is not a date on which the Designated Stock Exchange is open, then the close of trading on the previous trading day.
Member means a person whose name is entered in the Register of Members as the holder of a share or shares.
Memorandum of Association means the Memorandum of Association of the Company, as amended and restated from time to time.
month means a calendar month.
Nominating Member means (i) the Member providing the notice of the nomination proposed to be made at a general meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at any general meeting is made, and (iii) any affiliate or associate of such stockholder or beneficial owner.
Ordinary Resolution means (i) a resolution passed by a simple majority of votes cast by such Members as, being entitled to do so, vote in person or, in the case of any Member being an organisation, by its duly authorised representative or, where proxies are allowed, by proxy at a general meeting of the Company or (ii) a unanimous written resolution.
Ordinary Shares means an Ordinary Share in the capital of the Company of US$0.0001 nominal or par value designated as Ordinary Shares, and having the rights provided for in these Articles.
Preferred Shares means shares in the capital of the Company of US$0.0001 nominal or par value designated as Preferred Shares, and having the rights provided for in these Articles.
Register of Members means the register maintained by the Company in accordance with section 40 of the Statute or any modification or re-enactment thereof for the time being in force.
Registered Office means the registered office for the time being of the Company.
Seal means the common seal of the Company including any facsimile thereof.
Securities Act means the Securities Act of 1933 of the United States of America, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.
share means any share in the capital of the Company, including the Ordinary Shares, Preferred Shares and shares of other classes.
signed means a signature or representation of a signature affixed by mechanical means or an electronic symbol or process attached to or logically associated with an electronic communication and executed or adopted by a person with the intent to sign the electronic communication.
Special Resolution means (i) a resolution passed by not less than two-thirds of votes cast by such Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution, has been duly given or (ii) a unanimous written resolution.
Statute means the Companies Law (2016 Revision) of the Cayman Islands and any statutory amendment or re-enactment thereof.
Treasury Share means a share held in the name of the Company as a treasury share in accordance with the Statute.
year means a calendar year.
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1.2. | In these Articles, save where the context requires otherwise: |
(a) | words importing the singular number shall include the plural number and vice versa; |
(b) | words importing the masculine gender only ( i.e. , he and his) shall include the feminine gender ( i.e. , her, and hers) and shall include references to entities without gender ( i.e. , it and its); |
(c) | words importing persons only shall include companies or associations or bodies of persons, whether corporate or not; |
(d) | may shall be construed as permissive and shall shall be construed as imperative; |
(e) | a reference to a dollar or dollars (or $) is a reference to dollars of the United States of America; |
(f) | references to a statutory enactment shall include reference to any amendment or re-enactment thereof for the time being in force; |
(g) | any phrase introduced by the terms including, include, in particular or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; |
(h) | Section 8 and 19(3) of the Electronic Transactions Law (2003 Revision) shall not apply; |
(i) | written and in writing means all modes of representing or reproducing words in visible form, including in the form of an electronic record and any requirements as to delivery under these Articles include delivery in the form of an electronic record; where used in connection with a notice served by the Company on Members or other persons entitled to receive notices hereunder, such writing shall also include a record maintained in an electronic medium which is accessible in visible form so as to be useable for subsequent reference; |
(j) | any requirements as to execution or signature under these Articles can be satisfied in the form of an electronic signature as defined in the Electronic Transactions Law (2003 Revision); |
(k) | the term clear days in relation to the period of a notice means that period excluding the day when the notice is received or deemed to be received and the day for which it is given or on which it is to take effect; and |
(l) | the term holder in relation to a share means a person whose name is entered in the Register of Members as the holder of such share. |
1.3. | Subject to the last two preceding Articles, any words defined in the Statute shall, if not inconsistent with the subject or context, bear the same meaning in these Articles. |
2. | Preliminary |
2.1. | The business of the Company may be commenced as soon after incorporation as the Directors see fit, notwithstanding that only part of the shares may have been allotted or issued. |
2.2. | The registered office of the Company shall be at such address in the Cayman Islands as the Directors shall from time to time determine. The Company may in addition establish and maintain such other offices and places of business and agencies in such places as the Directors may from time to time determine. |
3. | Issue of Shares |
3.1. | Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general meeting), the Directors may, in their absolute discretion and without approval of the holders of Ordinary Shares, allot, issue, grant options over or otherwise dispose of shares (including fractions of a share) with or without preferred, deferred or other rights or restrictions, whether in regard to Dividend or other distribution, voting, return of capital or otherwise, any or all of which may be greater than the powers and rights associated with the Ordinary Shares, to such persons, |
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at such times and on such other terms as they think proper, which shall be conclusively evidenced by their approval of the terms thereof, and may also (subject to the Statute and these Articles) vary such rights. |
3.2. | The Company shall not issue shares in bearer form and shall only issue shares as fully paid. |
4. | Ordinary Shares |
4.1. | The holders of the Ordinary Shares shall be: |
(a) | entitled to dividends in accordance with the relevant provisions of these Articles; |
(b) | entitled to and are subject to the provisions in relation to winding up of the Company provided for in these Articles; |
(c) | entitled to attend general meetings of the Company and shall be entitled to one vote for each Ordinary Share registered in the name of such holder in the Register of Members, both in accordance with the relevant provisions of these Articles. |
4.2. | All Ordinary Shares shall rank pari passu with each other in all respects. |
5. | Preferred Shares |
5.1. | Preferred Shares may be issued from time to time in one or more series, each of such series to have such voting powers (full or limited or without voting powers), designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as are stated and expressed, or in any resolution or resolutions providing for the issue of such series adopted by the Directors as hereinafter provided. |
5.2. | Authority is hereby granted to the Directors, subject to the provisions of the Memorandum, these Articles and applicable law, to create one or more series of Preferred Shares and, with respect to each such series, to fix by resolution or resolutions, without any further vote or action by the Members of the Company providing for the issue of such series: |
(a) | the number of Preferred Shares to constitute such series and the distinctive designation thereof; |
(b) | the dividend rate on the Preferred Shares of such series, the dividend payment dates, the periods in respect of which dividends are payable ( Dividend Periods ), whether such dividends shall be cumulative and, if cumulative, the date or dates from which dividends shall accumulate; |
(c) | whether the Preferred Shares of such series shall be convertible into, or exchangeable for, Shares of any other class or classes or any other series of the same or any other class or classes of Shares and the conversion price or prices or rate or rates, or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided in such resolution or resolutions; |
(d) | the preferences, if any, and the amounts thereof, which the Preferred Shares of such series shall be entitled to receive upon the winding up of the Company; |
(e) | the voting power, if any, of the Preferred Shares of such series; |
(f) | transfer restrictions and rights of first refusal with respect to the Preferred Shares of such series; and |
(g) | such other terms, conditions, special rights and provisions as may seem advisable to the Directors. |
5.3. | Notwithstanding the fixing of the number of Preferred Shares constituting a particular series upon the issuance thereof, the Directors at any time thereafter may authorise the issuance of additional Preferred Shares of the same series subject always to the Statute and the Memorandum. |
5.4. | No dividend shall be declared and set apart for payment on any series of Preferred Shares in respect of any Dividend Period unless there shall likewise be or have been paid, or declared and set apart for |
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payment, on all Preferred Shares of each other series entitled to cumulative dividends at the time outstanding which rank senior or equally as to dividends with the series in question, dividends rateably in accordance with the sums which would be payable on the said Preferred Shares through the end of the last preceding Dividend Period if all dividends were declared and paid in full. |
5.5. | If, upon the winding up of the Company, the assets of the Company distributable among the holders of any one or more series of Preferred Shares which (a) are entitled to a preference over the holders of the Ordinary Shares upon such winding up; and (b) rank equally in connection with any such distribution, shall be insufficient to pay in full the preferential amount to which the holders of such Preferred Shares shall be entitled, then such assets, or the proceeds thereof, shall be distributed among the holders of each such series of the Preferred Shares rateably in accordance with the sums which would be payable on such distribution if all sums payable were discharged in full. |
6. | Register of Members and Share Certificates |
6.1. | The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute. |
6.2. | The Directors may determine that the Company shall maintain one or more branch registers of Members in accordance with the Statute. The Directors may also determine which register of Members shall constitute the principal register and which shall constitute the branch register or registers, and to vary such determination from time to time. |
6.3. | Shares shall be held in uncertificated, book entry form, unless the Directors resolve that share certificates shall be issued. Every person whose name is entered as a Member in the Register of Members and whose shares are to be held in certificated form shall, upon request and without payment, be entitled to a certificate within 30 days after allotment or transfer (or within such other period as the conditions of issue shall provide) in the form determined by the Directors. |
6.4. | All certificates shall specify the share or shares held by that person and the amount paid up thereon, provided that in respect of a share or shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. In the event that shares are held jointly by several persons, any request may be made by any one of the joint holders and if so made shall be binding on all of the joint holders. |
6.5. | If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate. |
6.6. | All certificates for shares shall be delivered personally or sent through the post addressed to the member entitled thereto at the Members registered address as appearing in the Register of Members. Every share certificate sent in accordance with these Articles will be sent at the risk of the Member or other person entitled to the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery. |
6.7. | Every share certificate of the Company shall bear any legends required under applicable laws, including the Securities Act. |
7. | Transfer of Shares |
7.1. | Subject to these Articles and the rules or regulations of the Designated Stock Exchange or any relevant securities laws (including, but not limited to the Exchange Act), any Member may transfer all or any of his shares by an instrument of transfer in the usual or common form or in a form prescribed by the Designated Stock Exchange or in any other form approved by the Directors acting reasonably and may be under hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the Directors may approve from time to time. |
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7.2. | The instrument of transfer shall be executed by or on behalf of the transferor. Without prejudice to the last preceding Article, the Directors may also resolve, either generally or in any particular case, upon request by the transferor or transferee to accept mechanically executed transfers. The transferor shall be deemed to remain the holder of the share until the name of the transferee in entered into the Register of Members in respect thereof. |
7.3. | The Directors may decline to recognise any instrument of transfer unless: |
(a) | the instrument of transfer is in respect of only one class of share; |
(b) | the instrument of transfer is lodged at the Registered Office or such other place as the Register of Members is kept in accordance with the Statute accompanied by the relevant share certificate(s) (if any) or such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do); and |
(c) | the instrument of transfer is duly and properly signed and endorsed or accompanied by an indemnity. |
7.4. | The Directors in so far as permitted by any applicable law and rules of the Designated Stock Exchange may, in their absolute discretion, at any time and from time to time transfer any share upon the Register of Members to any branch register or any share on any branch register to the Register of Members or any other branch register. In the event of any such transfer, the Member requesting such transfer shall bear the cost of effecting such transfer unless the Directors otherwise determine. |
8. | Redemption, Purchase and Surrender of Shares, Treasury Shares |
8.1. | Subject to the provisions, if any, in these Articles, the Memorandum, applicable law, including the Statute, and the rules of the Designated Stock Exchange, the Company may: |
(a) | issue shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company or the Member on such terms and in such manner as the Directors may, before the issue of such shares, determine; and |
(b) | purchase its own shares (including any redeemable shares) in such manner and on such other terms as the Directors may agree with the relevant Member, provided that the manner of purchase is in accordance with any applicable requirements imposed from time to time by the Commission or the Designated Stock Exchange; |
8.2. | The Company may make a payment in respect of the redemption or purchase of its own shares in any manner permitted by the Statute, including out of capital. |
8.3. | The Directors may accept the surrender for no consideration of any fully paid share. |
8.4. | The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a Treasury Share. |
8.5. | The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper (including, without limitation, for nil consideration). |
9. | Variation of Rights Attaching to Shares |
9.1. | If at any time the share capital of the Company is divided into different classes of shares, all or any of the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued shares of that class where such variation is considered by the Directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent in writing of the holders of not less than two thirds of the issued shares of that class, or with the sanction of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the shares of that class. For the avoidance of doubt, the Directors reserve the right, notwithstanding that any such variation may not have a material adverse effect, to obtain consent from the holders of shares of the relevant class. To any such meeting all the provisions |
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of these Articles relating to general meetings shall apply mutatis mutandis , except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued shares of the class and that any holder of shares of the class present in person or by proxy may demand a poll. |
9.2. | For the purposes of a separate class meeting, the Directors may treat two or more or all the classes of Shares as forming one class of shares if the Directors consider that such class of Shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of shares. |
9.3. | The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking in priority to or pari passu therewith. |
10. | Commission on Sale of Shares |
10.1. | The Company may, in so far as the Statute permits, pay a commission to any person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) or procuring or agreeing to procure subscriptions (whether absolutely or conditionally) for any shares. Such commissions may be satisfied by the payment of cash and/or the issue of fully or partly paid-up shares. The Company may also on any issue of shares pay such brokerage as may be lawful. |
11. | Non-Recognition of Trusts |
11.1. | The Company shall not be bound by or compelled to recognise in any way (even when notified) any equitable, contingent, future or partial interest in any share, or (except only as is otherwise provided by these Articles or the Statute) any other rights in respect of any share other than an absolute right to the entirety thereof in the holder. |
12. | Transmission of Shares |
12.1. | If a Member dies, the survivor or survivors (where he was a joint holder) or his legal personal representatives (where he was a sole holder), shall be the only persons recognised by the Company as having any title to his shares. The estate of a deceased Member is not thereby released from any liability in respect of any share, for which he was a joint or sole holder. |
12.2. | Any person becoming entitled to a share in consequence of the death or bankruptcy, liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may be required by the Directors, elect, by a notice in writing sent by him to the Company, either to become the holder of such share or to have some person nominated by him registered as the holder of such share. If he elects to have another person registered as the holder of such share he shall sign an instrument of transfer of that share to that person. The Directors shall, in either case, have the same right to decline registration as they would have had in the case of a transfer of the share by the relevant Member before his death or bankruptcy, liquidation or dissolution, as the case may be. |
12.3. | A person becoming entitled to a share by reason of the death or bankruptcy or liquidation or dissolution of a Member (or in any other case than by transfer) shall be entitled to the same Dividends, other distributions and other advantages to which he would be entitled if he were the holder of such share. However, he shall not, before becoming a Member in respect of a share, be entitled in respect of it to exercise any right conferred by membership in relation to general meetings of the Company and the Directors may at any time give notice requiring any such person to elect either to be registered himself or to have some person nominated by him be registered as the holder of the share (but the Directors shall, in either case, have the same right to decline registration as they would have had in the case of a transfer of the share by the relevant Member before his death or bankruptcy or liquidation or dissolution or any other case than by transfer, as the case may be). If the notice is not complied with within ninety days of being received or deemed to be received (as determined pursuant to these Articles) the Directors may thereafter withhold payment of all Dividends, other distributions, bonuses or other monies payable in respect of the share until the requirements of the notice have been complied with. |
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13. | Alteration of Capital |
13.1. | Subject to these Articles, the Company may from time to time by Ordinary Resolution increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe. |
13.2. | Subject to these Articles, the Company may by Ordinary Resolution: |
(a) | consolidate and divide all or any of its share capital into shares of larger amount than its existing shares, provided that any fractions of a share that result from such a consolidation or division of its share capital shall be automatically repurchased by the Company at (i) the Market Price on the date of such consolidation or division, in the case of any shares listed on a Designated Stock Exchange and (ii) a price to be agreed between the Company and the applicable Member in the case of any shares not listed on a Designated Stock Exchange; |
(b) | sub-divide its existing shares, or any of them into shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; |
(c) | divide shares into multiple classes; or |
(d) | cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled. |
13.3. | All new shares created hereunder shall be subject to the same provisions with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the shares in the original share capital. |
13.4. | Subject to these Articles, the Company may by Special Resolution: |
(a) | change its name; |
(b) | alter or add to these Articles; |
(c) | alter or add to the Memorandum of Association with respect to any objects, powers or other matters specified therein; or |
(d) | reduce its share capital and any capital redemption reserve in any manner authorised by law. |
14. | Closing Register of Members or Fixing Record Date |
14.1. | The Directors shall prepare, or cause to be prepared, at least ten (10) days before every general meeting, a complete list of the Members entitled to vote at such meeting, arranged in alphabetical order, and showing the address of each Member and the number of shares registered in the name of each Member. Such list shall be open to the examination of any Member, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the principal executive office of the Company. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any Member who is present. |
14.2. | The Directors may fix in advance or arrears a date as the record date for any such determination of Members entitled to notice of, attend or to vote at a meeting of the Members or any adjournment thereof, or for the purpose of determining those Members that are entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose. |
14.3. | If no record date is fixed for the determination of Members entitled to receive notice of, attend or to vote at a meeting of Members or those Members that are entitled to receive payment of a Dividend or other distribution, the record date for such determination of Members shall be at the close of business on the Business Day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the Business Day next preceding the day on which the meeting is held. When a |
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determination of those Members that are entitled to receive notice of, attend or vote at a meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment thereof. |
15. | General Meetings |
15.1. | All general meetings of the Company other than annual general meetings shall be called extraordinary general meetings. |
15.2. | For so long as the Companys securities are traded on a Designated Stock Exchange, the Company shall in each year hold a general meeting as its annual general meeting at such time and place as may be determined by the Directors. |
15.3. | Extraordinary general meetings may be called by a majority of the Directors or by the chairman of the board of Directors. If an extraordinary general meeting is called by the Directors, such extraordinary general meeting shall be held at such time and place as may be determined by the Directors, and if an extraordinary general meeting is called by the chairman of the board of Directors, such extraordinary general meeting shall be held at such time and place as may be determined by the chairman of the board of Directors. |
15.4. | For so long as Cision Owner beneficially owns at least 10% of the issued Ordinary Shares, the Directors shall on a Cision Owner Requisition forthwith proceed to convene an extraordinary general meeting of the Company. |
15.5. | The Cision Owner Requisition must state the objects of the meeting and must be signed by Cision Owner and deposited at the Registered Office. |
15.6. | If there are no Directors as at the date of the deposit of the Cision Owner Requisition or if the Directors do not within twenty-one days from the date of the deposit of the Cision Owner Requisition duly proceed to convene a general meeting to be held within a further twenty-one days, Cision Owner (for so long as it holds at least 10% of the issued Ordinary Shares) may itself convene a general meeting, but any meeting so convened shall be held no later than the day which falls three months after the expiration of the said twenty-one day period. |
15.7. | A general meeting convened as aforesaid by Cision Owner shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors. |
15.8. | A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting. |
16. | Notice of General Meetings |
16.1. | At least ten (10) calendar days notice (but not more than sixty (60) calendar days notice) shall be given for any general meeting. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and shall specify the place, the day and the hour of the meeting, the matters that are intended to be presented, and, in the case of annual general meetings, the name of any nominee who the Directors intend to present for election, and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this regulation has been given and whether or not the provisions of Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed: |
(a) | in the case of an annual general meeting, by all the Members (or their proxies) entitled to attend and vote thereat; and |
(b) | in the case of an extraordinary general meeting, by the Members (or their proxies) having a right to attend and vote at the meeting, together holding not less than a majority of the shares giving that right. |
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16.2. | The notice convening an annual general meeting shall specify the meeting as such, and the notice convening a meeting to pass a Special Resolution shall specify the intention to propose the resolution as a Special Resolution. Notice of every general meeting shall be given to all Members other than such as, under the provisions hereof or the terms of issue of the shares they hold, are not entitled to receive such notice from the Company. |
16.3. | In cases where instruments of proxy are sent out with a notice of general meeting, the accidental omission to send such instrument of proxy to, or the non-receipt of any such instrument of proxy by, any person entitled to receive notice shall not invalidate any resolution passed or any proceeding at any such meeting. |
16.4. | No business may be transacted at any general meeting, other than business that is either (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Directors (or any duly authorised committee thereof), (B) otherwise properly brought before an annual general meeting by or at the direction of the Directors (or any duly authorised committee thereof) or (C) otherwise properly brought before an annual general meeting by any Member of the Company who (1) is a Member of record on both (x) the date of the giving of the notice by such Member provided for in this Article and (y) the record date for the determination of Members entitled to vote at such annual general meeting and (2) complies with the notice procedures set forth in this Article. |
(a) | In addition to any other applicable requirements, for business to be brought properly before an annual general meeting by a Member, such Member must have given timely notice thereof in proper written form to the Secretary of the Company and comply with Article 16.4(c) and (f). |
(b) | All notices of general meetings shall be sent or otherwise given in accordance with this Article not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall specify the place, date and hour of the meeting and (i) in the case of an extraordinary general meeting, the purpose or purposes for which the meeting is called (no business other than that specified in the notice may be transacted) or (ii) in the case of the annual general meeting, those matters which the Directors, at the time of giving the notice, intends to present for action by the members (but any proper matter may be presented at the meeting for such action). The notice of any meeting at which Directors are to be elected shall include the name of any nominee or nominees who, at the time of the notice, the Directors intend to present for election. |
(c) | For matters other than for the nomination for election of a Director to be made by a Member, to be timely, such Members notice shall be delivered to the Company at the principal executive offices of the Company not less than ninety (90) days and not more than one hundred twenty (120) days prior to the one-year anniversary of the preceding years annual general meeting; provided, however, that if the Companys annual general meeting occurs on a date more than thirty (30) days earlier or later than the Companys prior years annual general meeting, then the Directors shall determine a date a reasonable period prior to the Companys annual general meeting by which date the Members notice must be delivered and publicise such date in a filing pursuant to the Exchange Act, or via press release. Such publication shall occur at least ten (10) days prior to the date set by the Directors. Cision Owner shall have the right (but not the obligation) to nominate at any time persons to be elected to the board of Directors pursuant to the terms of the Director Nomination Agreement in accordance with the provisions of these Articles for the election of Directors. |
(d) | To be in proper written form, a Members notice to the Company must set forth as to such matter such Member proposes to bring before the annual general meeting: |
(i) | a reasonably brief description of the business desired to be brought before the annual general meeting, including the text of the proposal or business, and the reasons for conducting such business at the annual general meeting; |
(ii) | the name and address, as they appear on the Companys Register of Members, of the Member proposing such business and any Member Associated Person (as defined below); |
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(iii) | the class or series and number of shares of the Company that are held of record or are beneficially owned by such Member or any Member Associated Person and any derivative positions held or beneficially held by the Member or any Member Associated Person; |
(iv) | whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of such Member or any Member Associated Person with respect to any securities of the Company, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, such Member or any Member Associated Person with respect to any securities of the Company; |
(v) | any material interest of the Member or a Member Associated Person in such business, including a reasonably detailed description of all agreements, arrangements and understandings between or among any of such Members or between or among any proposing Members and any other person or entity (including their names) in connection with the proposal of such business by such Member; and |
(vi) | a statement as to whether such Member or any Member Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the Companys voting shares required under applicable law and the rules of the Designated Stock Exchange to carry the proposal. |
For purposes of this Article 16.4(d), a Member Associated Person of any Member shall mean (x) any Affiliate; or person acting in concert with, such Member, (y) any beneficial owner of shares of the Company owned of record or beneficially by such Member and on whose behalf the proposal or nomination, as the case may be, is being made, or (z) any person controlling, controlled by or under common control with such person referred to in the preceding clauses (x) and (y).
(e) | In addition to any other applicable requirements and subject to Article 16.5, for a nomination for election of a Director to be made by a Member of the Company (other than Directors to be nominated by any series of Preferred Shares, voting separately as a class), such Member must (A) be a Member of record on both (x) the date of the giving of the notice by such Member provided for in this Article and (y) the record date for the determination of Members entitled to vote at such annual general meeting, and on each such date beneficially owns more than 15% of the issued Ordinary Shares (unless otherwise provided in the Exchange Act or the rules and regulations of the Commission) and (B) have given timely notice thereof in proper written form to the Secretary of the Company. If a Member is entitled to vote only for a specific class or category of Directors at a meeting of the Members, such Members right to nominate one or more persons for election as a director at the meeting shall be limited to such class or category of Directors. |
(f) | To be timely for purposes of Article 16.4(e), a Members notice shall be delivered to or mailed and received at the principal executive offices of the Company not less than ninety (90) nor more than one hundred twenty (120) days prior to the meeting; provided, however, that in the event less than one hundred thirty (130) days notice or prior public disclosure of the date of the meeting is given or made to Members, notice by the Member to be timely must be so received not later than the close of business on the tenth (10 th ) day following the earlier of the day on which such notice of the date of the meeting was mailed or such public disclosure was made. |
(g) | To be in proper written form for purposes of Article 16.4(f), a Members notice to the Secretary must be set forth: |
(i) | as to each Nominating Member: |
(A) | the information that is requested in Article 16.4(d)(ii)-(vi); and |
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(B) | any other information relating to such Member that would be required to be disclosed pursuant to any applicable law and rules of the Commission or of the Designated Stock Exchange. |
(ii) | as to each person whom the Member proposes to nominate for election as a director: |
(A) | all information that would be required by Article 16.4(d)(ii)-(vi) if such nominee was a Nominating Member, except such information shall also include the business address and residence address of the person; |
(B) | the principal occupation or employment of the person; |
(C) | all information relating to such person that is required to be disclosed in solicitations of proxies for appointment of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act or any successor provisions thereto, and any other information relating to the person that would be required to be disclosed pursuant to any applicable law and rules of the Commission or of the Designated Stock Exchange; and |
(D) | a description of all direct and indirect compensation and other material monetary arrangements and understandings during the past three years, and any other material relationship, between or among any Nominating Member and his Affiliates and associates, on the one hand, and each proposed nominee, his respective Affiliates and associates, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K of the Exchange Act if such Nominating Member were the registrant for purposes of such rule and the proposed nominee were a director or executive officer of such registrant. |
Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. The Company may require any proposed nominee to furnish such other information as may be reasonably required by the Company to determine the eligibility of such proposed nominee to serve as an independent director of the Company in accordance with the rules of the Designated Stock Exchange.
(h) | Unless otherwise provided by the terms of these Articles, any series of Preferred Shares or any agreement among Members or other agreement approved by the Directors, only persons who are nominated in accordance with the procedures set forth above shall be eligible to serve as Directors. If the chairman of a general meeting determines that a proposed nomination was not made in compliance with these Articles, he or she shall declare to the general meeting that nomination is defective and such defective nomination shall be disregarded. Notwithstanding the foregoing provisions of these Articles, if the Nominating Member (or a qualified representative of the Nominating Member) does not appear at the general meeting to present the nomination, such nomination shall be disregarded. |
(i) | Notwithstanding anything herein to the contrary, Cision Owner and its Affiliates who are Members (including, specifically, Canyon Partners, Ltd., GTCR Fund X/A AIV LP, GTCR Fund X/C AIV LP, GTCR Co-Invest X AIV LP, GTCR Partners X/A&C AIV LP and GTCR Investment X AIV Ltd.) shall not be required to comply with the advance notice or 15% ownership threshold requirements, as applicable, set forth in Articles 16.4(c), 16.4(e) and 16.4(f) for so long as they beneficially own (directly or indirectly) at least 5% of the total issued Ordinary Shares, but shall provide any such notice to the Company at least ten (10) days prior to the applicable general meeting. |
16.5. | Notwithstanding any provision of these Articles to the contrary, Cision Owner shall have the rights set forth in the Director Nomination Agreement. |
16.6. | The Directors will ensure that the Cision Owner Designees nominated in accordance with Article 16.5 are included in the notice of meeting for the next available annual general meeting or any |
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extraordinary general meeting at which directors are to be elected, noting that a general meeting will only be the next available annual general meeting if the advance notice requirements of these Articles can be complied with. |
16.7. | Subject to Article 16.5, the Company may by Ordinary Resolution appoint any person to be a Director. |
16.8. | Subject to these Articles, a Director shall hold office until the expiry of his or her term as contemplated by Article 21.2 or, until such time as he or she vacates office in accordance with Article 24.1. |
16.9. | No person shall be eligible for election as a director of the Company unless nominated in accordance with the procedures set forth in this Article. If the chairman of an annual general meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. This Article 16 shall not apply to any nomination of a director in an election in which only the holders of one or more series of Preferred Shares of the Company are entitled to vote (unless otherwise provided in the terms of such series of Preferred Shares). |
16.10. | The accidental omission to give notice of a meeting to or the non-receipt of a properly sent notice of a meeting by any Member shall not invalidate the proceedings at any meeting. |
17. | Proceedings at General Meetings |
17.1. | No business shall be transacted at any general meeting unless a quorum of Members is present at the time when the meeting proceeds to business. Members holding in aggregate not less than a simple majority of all voting share capital of the Company in issue present in person or by proxy and entitled to vote shall be a quorum, provided that for so long as the Company is a Controlled Company, a general meetings shall not be quorate unless Cision Owner is in attendance (provided that Cision Owner holds shares in the Company). A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting. If, however, such quorum is not present or represented at any general meeting, then either (i) the chairman of the meeting or (ii) the Members entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting. |
17.2. | When a meeting is adjourned to another time and place, unless these Articles otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Company may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Member of record entitled to vote at the meeting. |
17.3. | A determination of the Members of record entitled to notice of or to vote at a general meeting shall apply to any adjournment of such meeting unless the Directors fix a new record date for the adjourned meeting, but the Directors shall fix a new record date if the meeting is adjourned for more than thirty (30) days from the date set for the original meeting. |
17.4. | The chairman of the board of Directors shall preside as chairman at every general meeting of the Company. If at any meeting the chairman of the board of Directors is not present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman, the Directors present shall elect one of their number as chairman of the meeting or if all the Directors present decline to take the chair, the Members present shall choose one of their own number to be the chairman of the meeting. |
17.5. | At any general meeting a resolution put to the vote of the meeting shall be decided on a poll. |
17.6. | A poll shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting. |
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17.7. | In the case of an equality of votes, the chairman of the meeting shall not be entitled to a second or casting vote. |
18. | Votes of Members |
18.1. | Subject to any rights and restrictions for the time being attached to any class or classes of shares, every Member present in person and every person representing a Member by proxy at a general meeting of the Company shall have one vote for each share registered in such Members name in the Register of Members. No cumulative voting shall be allowed. |
18.2. | In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members. |
18.3. | A Member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote on a poll by his committee, or other person in the nature of a committee appointed by that court, and any such committee or other person, may on a poll, vote by proxy. |
18.4. | No Member shall be entitled to vote at any general meeting unless all sums presently payable by him in respect of shares in the Company have been paid. |
18.5. | On a poll, votes may be given either personally or by proxy. |
18.6. | The instrument appointing a proxy shall be in writing (whether by manual signature, typewriting, telegraphic transmission, telefacsimile or otherwise) under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is an entity, either under seal or under the hand of an officer or attorney duly authorised in that behalf provided however, that a Member may also authorise the casting of a vote by proxy pursuant to telephonic or electronically transmitted instructions (including, without limitation, instructions transmitted over the internet) obtained pursuant to procedures approved by the Directors which are reasonably designed to verify that such instructions have been authorised by such Member. A proxy need not be a Member of the Company. Notwithstanding the foregoing, no proxy shall be voted or acted upon after three (3) years from its date unless the proxy provides for a longer period. |
18.7. | An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve. |
18.8. | The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. |
18.9. | Shares that are beneficially owned by the Company shall not be voted, directly or indirectly, at any general meeting and shall not be counted in determining the total number of issued Shares at any given time. |
19. | Corporations Acting by Representatives at Meeting |
19.1. | Any corporation or other entity which is a Member may, by resolution of its directors, other governing body or authorised individual(s), authorise such person as it thinks fit to act as its representative at any general meeting of the Company or of any class of Members, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Member. |
20. | Clearing Houses |
20.1. | If a clearing house or depository (or its nominee) is a Member it may, by resolution of its directors, other governing body or authorised individual(s) or by power of attorney, authorise such person or persons as it thinks fit to act as its representative or representatives at any general meeting of the Company or at any general meeting of any class of Members; provided that, if more than one person is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person so authorised pursuant to this provision shall be entitled to |
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exercise the same powers on behalf of the clearing house (or its nominee) which he represents as that clearing house (or its nominee) could exercise if it were an individual member of the Company holding the number and class of shares specified in such authorisation. |
21. | Directors |
21.1. | There shall be a board of Directors consisting of eight (8) Directors, unless increased or decreased from time to time by the Directors or the Company in general meeting, provided that, for so long as Cision Owner has the right to nominate any Director for election pursuant to Article 16.5, the size of the board of Directors shall not be increased or decreased without the prior written consent of Cision Owner. So long as Shares are listed on the Designated Stock Exchange, the board of Directors shall include such number of independent directors as the relevant rules applicable to the listing of any Shares on the Designated Stock Exchange require (subject to any applicable exceptions for Controlled Companies). |
21.2. | The Directors shall be divided into three (3) classes designated as Class I, Class II and Class III, respectively. Directors shall initially be assigned to each class in accordance with the Director Nomination Agreement. At the 2018 annual general meeting of Members, the term of office of the Class I Directors shall expire and Class I Directors shall be elected for a full term of three (3) years. At the 2019 annual general meeting of Members, the term of office of the Class II Directors shall expire and Class II Directors shall be elected for a full term of three (3) years. At the 2020 annual general meeting of Members, the term of office of the Class III Directors shall expire and Class III Directors shall be elected for a full term of three (3) years. At each succeeding annual general meeting of Members, Directors shall be elected for a full term of three (3) years to succeed the Directors of the class whose terms expire at such annual general meeting. Notwithstanding the foregoing provisions of this Article, each Director shall hold office until the expiration of his term, until his successor shall have been duly elected and qualified or until his earlier death, resignation or removal. No decrease in the number of Directors constituting the Directors shall shorten the term of any incumbent Director. |
21.3. | The Directors by the affirmative vote of a simple majority of the remaining Directors present and voting at a meeting of the Directors, even if less than a quorum, shall have the power from time to time and at any time to appoint any person as a Director to fill a casual vacancy on the board of Directors or as an addition to the existing board of Directors, subject to these Articles (including Article 16.5), the terms of the Director Nomination Agreement, applicable law and the listing rules of the Designated Stock Exchange; provided that, subject to the terms of the Director Nomination Agreement, any vacancy not filled by the Directors may be filled by the Members by Ordinary Resolution at the next annual general meeting or extraordinary general meeting called for that purpose; provided further, that, subject to the terms of the Director Nomination Agreement, whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more Directors by the provisions of these Articles, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the Directors elected by such class or classes or series thereof then in office, or by a sole remaining Director so elected or by the Members holding such class or classes of shares or series thereof in accordance with these Articles. Any Director so appointed shall hold office until the expiration of the term of such class of Directors or until his earlier death, resignation or removal. |
21.4. | A Director may be removed from office by the Members by Special Resolution only for cause (cause for removal of a Director shall be deemed to exist only if (a) the Director whose removal is proposed has been convicted of a felony by a court of competent jurisdiction and such conviction is no longer subject to direct appeal; (b) such Director has been found by the affirmative vote of a majority of the Directors then in office at any regular or special meeting of the board of Directors called for that purpose, or by a court of competent jurisdiction, to have been guilty of wilful misconduct in the performance of such Directors duties to the Company in a matter of substantial importance to the Company; or (c) such Director has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects such directors ability to perform his or her obligations as a Director) at any time before the expiration of his term notwithstanding anything in these Articles or in any agreement between the Company and such Director (but without prejudice |
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to any claim for damages under such agreement); provided that, (x) until the date of the 2020 annual general meeting of Members (and not thereafter), any Director may be removed with or without cause upon the affirmative vote of the Cision Owner if the Cision Owner and its Affiliates beneficially own at least 50% of the issued Ordinary Shares and (y) any Director who was nominated for election by the Cision Owner may be removed with or without cause upon the affirmative vote of the Cision Owner for so long as the Cision Owner has the right to nominate such Director for election pursuant to Article 16.5; provided further , the Cision Owner shall not have the right to remove without cause pursuant to clause (x) (A) any Class I Director prior to the 2018 annual general meeting of Members and (B) any Class III Director prior to the 2020 annual general meeting of Members. A vacancy on the board of Directors created by the removal of a Director under the provisions of these Articles may be filled by the election or appointment by Ordinary Resolution at the general meeting at which such Director is removed or by the affirmative vote of a simple majority of the remaining Directors present and voting at a meeting of the Directors, subject to these Articles, applicable law and the listing rules of the Designated Stock Exchange, provided that if any Director so removed is a Cision Owner Designee, the Company shall use its best efforts to cause the vacancy caused by such removal to be filled, as soon as possible, by a new designee of Cision Owner pursuant to the rights set forth in Article 16.5, and the Company shall take, to the fullest extent permitted by law, at any time and from time to time, all actions necessary to accomplish the same. A Director appointed to fill a vacancy in accordance with this Article shall be of the same Class of Director as the Director he or she replaced and the term of such appointment shall terminate in accordance with that Class of Director. |
21.5. | The Directors may, from time to time, and except as required by applicable law or the listing rules of the Designated Stock Exchange, adopt, institute, amend, modify or revoke the corporate governance policies or initiatives, which shall be intended to set forth the policies of the Company and the Directors on various corporate governance related matters, as the Directors shall determine by resolution from time to time. |
21.6. | A Director shall not be required to hold any shares in the Company by way of qualification. A Director who is not a member of the Company shall nevertheless be entitled to receive notice of and to attend and speak at general meetings of the Company and all classes of shares of the Company. |
22. | Directors Fees and Expenses |
22.1. | The Directors may receive such remuneration as the Directors may from time to time determine. The Directors may be entitled to be repaid all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred by him in attending meetings of the Directors or committees of the Directors or general meetings or separate meetings of any class of securities of the Company or otherwise in connection with the discharge of his duties as a Director. |
22.2. | Any Director who performs services which in the opinion of the Directors go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Directors may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration provided for, by or pursuant to any other Article. |
23. | Powers and Duties of Directors |
23.1. | Subject to the provisions of the Statute, these Articles and to any resolutions made in a general meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering the Company and may exercise all powers of the Company. No resolution made by the Company in a general meeting shall invalidate any prior act of the Directors that would have been valid if that resolution had not been made. |
23.2. | The Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit, subject to Article 23.3; provided that any committee so formed shall include amongst its members at least two Directors unless otherwise required by applicable law, rules and regulations and the rules of the Designated Stock Exchange; provided further that no committee shall have the power of authority to (a) recommend to the Members an amendment of these Articles |
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(except that a committee may, to the extent authorised in the resolution or resolutions providing for the issuance of shares adopted by the Directors as provided under the laws of the Cayman Islands, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Company or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of shares of the Company); (b) adopt an agreement of merger or consolidation; (c) recommend to the Members the sale, lease or exchange of all or substantially all of the Companys property and assets; (d) recommend to the Members a dissolution of the Company or a revocation of a dissolution; (e) recommend to the Members an amendment of the Memorandum of Association of the Company; or (f) declare a dividend or authorise the issuance of shares unless the resolution establishing such committee (or the charter of such committee approved by the Directors) or the Memorandum of Association or these Articles so provide. Any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors. The Directors may also delegate to any Director holding any executive office such of their powers as they consider desirable to be exercised by him or her. Any such delegation may be made subject to any conditions the Directors may impose, and either collaterally with or to the exclusion of their own powers, and may be revoked or altered. |
23.3. | To the extent requested by Cision Owner, each committee of the board of Directors shall include at least one Cision Owner Designee as requested pursuant to Article 16.5 to be appointed as a member of each such committee of the board of Directors unless such designation would violate any legal restrictions on such committees composition or the rules and regulations of any applicable exchange on which the Companys Ordinary Shares may be listed (subject in each case to any applicable exceptions, including those for controlled companies and any applicable phase-in periods) so long as Cision Owner and its Affiliates hold at least 5% of the total issued Ordinary Shares. |
23.4. | The Directors may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorise any such attorney to delegate all or any of the powers, authorities and discretion vested in him. |
23.5. | The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the following paragraphs shall be without prejudice to the general powers conferred by this paragraph. |
23.6. | The Directors from time to time and at any time may establish any advisory committees, local boards or agencies for managing any of the affairs of the Company and may appoint any persons to be members of such advisory committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any of the aforesaid. |
23.7. | The Directors from time to time and at any time may delegate to any such advisory committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorise the members for the time being of any such local board, or any of them to fill up any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any person so appointed and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby. |
23.8. | Any such delegates as aforesaid may be authorised by the Directors to sub-delegate all or any of the powers, authorities, and discretions for the time being vested to them. |
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23.9. | The Directors may elect, by the affirmative vote of a majority of the Directors then in office, a chairman. The chairman of the board of Directors may be a director or an officer of the Company. Subject to the provisions of these Articles and the direction of the Directors, the chairman of the board of Directors shall perform all duties and have all powers which are commonly incident to the position of chairman of a board or which are delegated to him or her by the Directors, preside at all general meetings and meetings of the Directors at which he or she is present and have such powers and perform such duties as the Directors may from time to time prescribe. |
24. | Disqualification of Directors |
24.1. | Subject to these Articles, the office of Director shall be vacated, if the Director: |
(a) | becomes bankrupt or makes any arrangement or composition with his creditors; |
(b) | dies or is found to be or becomes of unsound mind; |
(c) | resigns his office by notice in writing to the Company; |
(d) | is prohibited by applicable law or the Designated Stock Exchange from being a director; |
(e) | without special leave of absence from the Directors, is absent from meetings of the Directors for six consecutive months and the Directors resolve that his office be vacated; or |
(f) | if he or she shall be removed from office pursuant to these Articles. |
25. | Proceedings of Directors |
25.1. | Subject to these Articles, the Directors may meet together for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit. Such meetings may be held at any place within or outside the Cayman Islands that has been designated by the Directors. In the absence of such a designation, meetings of the Directors shall be held at the principal executive office of the Company. Questions arising at any meeting of the Directors shall be decided by the method set forth in Article 25.4. |
25.2. | The chairman of the board of Directors or the Secretary on request of a Director, may, at any time summon a meeting of the Directors by twenty-four (24) hour notice to each Director in person, by telephone, facsimile, electronic email, or in such other manner as the Directors may from time to time determine, which notice shall set forth the general nature of the business to be considered unless notice is waived by all the Directors either at, before or after the meeting is held. Notice of a meeting need not be given to any Director (i) who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or (ii) who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such Directors. All such waivers, consents, and approvals shall be filed with the corporate records or made part of the minutes of the meeting. A waiver of notice need not specify the purpose of any regular or special meeting of the Directors. |
25.3. | A Director or Directors may participate in any meeting of the Directors, or of any committee appointed by the Directors of which such Director or Directors are members, by means of telephone or similar communication equipment by way of which all persons participating in such meeting can hear each other and such participation shall be deemed to constitute presence in person at the meeting. |
25.4. | The quorum necessary for the transaction of the business of the Directors shall be a majority of the authorised number of Directors. If at any time there is only a sole Director, the quorum shall be one (1) Director. Every act or decision done or made by a majority of the Directors present at a duly held meeting at which a quorum is present shall be regarded as the act of the Directors, subject to the provisions of these Articles and other applicable law. In the case of an equality of votes, the chairman shall not have an additional tie-breaking vote. |
25.5. | A meeting of the Directors may be held by means of telephone or teleconferencing or any other telecommunications facility provided that all participants are thereby able to communicate immediately by voice with all other participants. |
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25.6. | Subject to these Articles, a Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company shall declare the nature of his interest at a meeting of the Directors. A general notice given to the Directors by any Director to the effect that he is a member of any specified company or firm and is to be regarded as interested in any contract which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made. A Director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of the Directors at which any such contract or proposed contract or arrangement shall come before the meeting for consideration. |
25.7. | A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested, be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. A Director, notwithstanding his interest, may be counted in the quorum present at any meeting whereat he or any other Director is appointed to hold any such office or place of profit under the Company or whereat the terms of any such appointment are arranged and he may vote on any such appointment or arrangement. Any Director who enters into a contract or arrangement or has a relationship that is reasonably likely to be implicated under this Article 25.7 or that would reasonably be likely to affect a Directors status as an Independent Director under applicable law or the rules of the Designated Stock Exchange shall disclose the nature of his or her interest in any such contract or arrangement in which he is interested or any such relationship. Without limiting the generality of the foregoing: |
(a) | the Cision Owner Designee may hold any position of any kind whatsoever with Cision Owner and/or any of its Affiliates and may maintain any interest of any kind whatsoever, whether directly or indirectly, in Cision Owner and/or any of its Affiliates and/or any Cision Owner Opportunity (as defined below) (such positions and/or interests, as the case may be, hereinafter, together, Cision Owner Interests); |
(b) | no Cision Owner Interests shall disqualify the Cision Owner Designee from the office of Director, nor shall any contract, transaction or arrangement entered into by or on behalf of the Company in respect of which any Cision Owner Interests may subsist, whether directly or indirectly, be or be liable to be avoided, nor shall the Cision Owner Designee be liable to account to the Company for any profit or other gain arising by reason of any Cision Owner Interest and/or any contract, transaction or arrangement entered into by or on behalf of the Company in respect of which any Cision Owner Interest may subsist, whether directly or indirectly; |
(c) | the Cision Owner Designee shall be at liberty to vote in respect of any contract, transaction or arrangement in which any Cision Owner Interest may subsist, whether directly or indirectly; |
(d) | the Cision Owner Interests shall be deemed to have been disclosed by the Cision Owner Designee upon his or her appointment as a Director of the Company and shall be deemed to be sufficient disclosure of the Cision Owner Interests as required under these Articles: thereafter it shall not be necessary for the Cision Owner Designee to give special or particularized notice of any Cision Owner Interests in respect of any transaction which may involve the Company. |
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25.8. | To the maximum extent permitted by applicable law: |
(a) | the Company renounces and waives: |
a. | any interest or expectancy in, or in being offered or presented with an opportunity to participate in; or |
b. | any right to be informed of: |
any business or corporate opportunity that may from time to time be of interest to or known to or be or have been presented to Cision Owner and/or any of its Affiliates and/or any of their officers, directors, agents, stockholders, members, partners and subsidiaries (including specifically, without limiting the generality of the foregoing, the Cision Owner Designee) (such opportunity, hereinafter, the Cision Owner Opportunity ) whether or not such Cision Owner Opportunity is or may be pursued by Cision Owner and or its Affiliates and whether or not such Cision Owner Opportunity may be a business or corporate opportunity the Company might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so;
(b) | no Director, officer or employee of the Company (including specifically, without limiting the generality of the foregoing, the Cision Owner Designee) (each of such persons, hereinafter, a Relevant Person ) shall: |
a. | be required or be under any duty (whether fiduciary or otherwise) to present to or make known to the Company any Cision Owner Opportunity or refrain from, whether directly or indirectly, pursuing, participating in the pursuit of, exploiting or acquiring, any Cision Owner Opportunity; or |
b. | be liable to the Company for any breach of any fiduciary or other duty, whether as a Director, officer or employee of the Company or otherwise, by reason of the fact that such Relevant Person, whether directly or indirectly, acting in good faith, pursues, participates in the pursuit of, exploits or acquires any Cision Owner Opportunity, directs any Cision Owner Opportunity to another person or fails to present any Cision Owner Opportunity, or information regarding any Cision Owner Opportunity, to the Company: |
unless such Cision Owner Opportunity is, or has been, expressly offered to the Relevant Person solely in their capacity as Director, officer and/or employee of the Company;
(c) | neither Cision Owner nor any of its Affiliates has any duty to refrain from engaging or investing directly or indirectly in the same or similar business activities or lines of business as the Company or any of its subsidiaries. |
25.9. | Any Director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to reasonable expense reimbursement consistent with the Companys policies in connection with such Directors service in his official capacity; provided that nothing herein contained shall authorise a Director or his firm to act as auditor to the Company. |
25.10. | The Directors shall cause minutes to be made in books or loose-leaf folders provided for the purpose of recording: |
(a) | all appointments of officers made by the Directors; |
(b) | the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and |
(c) | all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors. |
25.11. | When the chairman of a meeting of the Directors signs the minutes of such meeting the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may have been a technical defect in the proceedings. |
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25.12. | A resolution signed by all the Directors shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted. When signed, a resolution may consist of several documents each signed by one or more of the Directors. |
25.13. | The continuing Directors may act notwithstanding any vacancy in their body but if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number, or of summoning a general meeting of the Company, but for no other purpose. |
25.14. | A committee appointed by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting. |
25.15. | A committee appointed by the Directors may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the committee members present and in case of an equality of votes the chairman shall not have a second or casting vote. |
25.16. | Meetings and actions of committees of the Directors shall be governed by, and held and taken in accordance with, the provisions of Article 25.1 (place of meetings), Article 25.2 (notice), Article 25.3 (telephonic meetings), and Article 25.4 (quorum), with such changes in the context of these Articles as are necessary to substitute the committee and its members for the Directors; provided, however, that the time of regular meetings of committees may be determined either by resolution of the Directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the Directors, and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Directors may adopt rules for the government of any committee not inconsistent with the provisions of these Articles. |
25.17. | All acts done by any meeting of the Directors or of a committee of Directors, or by any person acting as a Director, shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director. |
26. | Presumption of Assent |
26.1. | A Director of the Company who is present at a meeting of the Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent or abstention shall be entered in the Minutes of the meeting or unless he shall file his written dissent or abstention from such action with the person acting as the chairman or Secretary of the meeting before the adjournment thereof or shall forward such dissent or abstention by registered post to such person immediately after the adjournment of the meeting. Such right to dissent or abstain shall not apply to a Director who voted in favour of such action. |
27. | Dividends, Distributions and Reserve |
27.1. | Subject to any rights and restrictions for the time being attached to any class or classes of shares and these Articles, the Directors may from time to time declare dividends (including interim dividends) and other distributions on shares in issue and authorise payment of the same out of the funds of the Company lawfully available therefor. All dividends unclaimed for one (1) year after having been declared may be invested or otherwise made use of by the Directors for the benefit of the Company until claimed. Subject to any applicable unclaimed property or other laws, any dividend unclaimed after a period of six (6) years from the date of declaration shall be forfeited and shall revert to the Company. The payment by the Directors of any unclaimed dividend or other sums payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof. |
27.2. | The Directors may, before recommending or declaring any dividend, set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors be applicable for meeting contingencies, or for equalising dividends or for |
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any other purpose to which those funds be properly applied and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company) as the Directors may from time to time think fit. The Directors shall establish an account to be called the Share Premium Account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any share in the Company. Unless otherwise provided by the provisions of these Articles, the Directors may apply the share premium account in any manner permitted by the Statute and the rules of the Designated Stock Exchange. The Company shall at all times comply with the provisions of these Articles, the Statute and the rules of the Designated Stock Exchange in relation to the share premium account. |
27.3. | Any dividend may be paid by cheque or warrant sent through the post to the registered address of the Member or person entitled thereto, or in the case of joint holders, to any one of such joint holders at his registered address or to such person and such address as the Member or person entitled, or such joint holders as the case may be, may direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to the order of such other person as the Member or person entitled, or such joint holders as the case may be, may direct. Notwithstanding the foregoing, dividends may also be paid electronically to the account of the Members or persons entitled thereto or in such other manner approved by the Directors. |
27.4. | The Directors when paying dividends to the Members in accordance with the foregoing provisions may make such payment either in cash or in specie. |
27.5. | No dividend shall be paid otherwise than out of profits or, subject to the restrictions of the Statute, the share premium account. |
27.6. | Subject to the rights of persons, if any, entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid or credited as fully paid on the shares, but if and so long as nothing is paid up on any of the shares in the Company dividends may be declared and paid according to the amounts of the shares. No amount paid on a share in advance of calls shall, while carrying interest, be treated for the purposes of this Article as paid on the share. |
27.7. | If several persons are registered as joint holders of any share, any of them may give effectual receipts for any dividend or other moneys payable on or in respect of the share. |
27.8. | No dividend shall bear interest against the Company. |
28. | Book of Accounts |
28.1. | The books of account relating to the Companys affairs shall be kept in such manner as may be determined from time to time by the Directors. |
28.2. | The books of account shall be kept at such place or places as the Directors think fit, and shall always be open to the inspection of the Directors. |
28.3. | Except as provided in Article 14.1, the Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors, and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Statute or authorised by the Directors. |
28.4. | The accounts relating to the Companys affairs shall be audited in such manner and with such financial year end as may be determined from time to time by the Directors or failing any determination as aforesaid shall not be audited. |
29. | Audit |
29.1. | The Directors or, if authorised to do so, the audit committee of the Directors, may appoint an auditor of the Company who shall hold office until removed from office by a resolution of the Directors and may fix his or their remuneration. |
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29.2. | Every auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the auditors. |
29.3. | Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members. |
30. | The Seal |
30.1. | The Seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the Directors, provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be in general form confirming a number of affixings of the Seal. The Seal shall be affixed in the presence of any one or more persons as the Directors may appoint for the purpose and every person as aforesaid shall sign every instrument to which the Seal of the Company is so affixed in their presence. |
30.2. | The Company may maintain a facsimile of its Seal in such countries or places as the Directors may appoint and such facsimile Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of such facsimile Seal and if given after may be in general form confirming a number of affixings of such facsimile Seal. The facsimile Seal shall be affixed in the presence of such person or persons as the Directors shall for this purpose appoint and such person or persons as aforesaid shall sign every instrument to which the facsimile Seal of the Company is so affixed in their presence of and the instrument signed by a Director or the Secretary (or an Assistant Secretary) of the Company or in the presence of any one or more persons as the Directors may appoint for the purpose. |
30.3. | Notwithstanding the foregoing, a Director shall have the authority to affix the Seal, or the facsimile Seal, to any instrument for the purposes of attesting authenticity of the matter contained therein but which does not create any obligation binding on the Company. |
31. | Officers |
31.1. | Subject to these Articles, the Directors may from time to time appoint any person, whether or not a director of the Company, to hold the office of the Chief Executive Officer, the President, the Chief Financial Officer, one or more Vice Presidents or such other officers as the Directors may think necessary for the administration of the Company, for such term and at such remuneration (whether by way of salary or commission or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. |
32. | Register of Directors and Officers |
32.1. | The Company shall cause to be kept in one or more books at its office a Register of Directors and Officers in which there shall be entered the full names and addresses of the Directors and Officers and such other particulars as required by the Statute. The Company shall send to the Registrar of Companies in the Cayman Islands a copy of such register, and shall from time to time notify the said Registrar of any change that takes place in relation to such Directors and Officers as required by the Statute. |
33. | Capitalisation of Profits |
33.1. | Subject to the Statute and these Articles, the Directors may capitalise any sum standing to the credit of any of the Companys reserve accounts (including a share premium account or a capital redemption reserve fund) or any sum standing to the credit of profit and loss account or otherwise available for distribution and to appropriate such sum to Members in the proportions in which such sum would have |
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been divisible amongst them had the same been a distribution of profits by way of dividend and to apply such sum on their behalf in paying up in full unissued shares for allotment and distribution credited as fully paid up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power to the Directors to make such provisions as they think fit for the case of shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned. |
34. | Notices |
34.1. | Except as otherwise provided in these Articles, any notice or document may be served by the Company or by the person entitled to give notice to any Member either personally, by facsimile or by sending it through the post in a prepaid letter or via a recognised courier service, fees prepaid, addressed to the Member at his address as appearing in the Register of Members or, to the extent permitted by all applicable laws and regulations, by electronic means by transmitting it to any electronic number or address or website supplied by the Member to the Company or by placing it on the Companys Website, provided that, (i) with respect to notification via electronic means, the Company has obtained the Members prior express positive confirmation in writing to receive or otherwise have made available to him notices in such fashion, and (i) with respect to posting to Companys Website, notification of such posting is provided to such Member. In the case of joint holders of a share, all notices shall be given to that one of the joint holders whose name stands first in the Register of Members in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders. |
34.2. | An affidavit of the mailing or other means of giving any notice of any general meeting, executed by the Secretary, Assistant Secretary or any transfer agent of the Company giving the notice, shall be prima facie evidence of the giving of such notice. |
34.3. | Any Member present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened. |
34.4. | Any notice or other document, if served by (a) post, shall be deemed to have been served when the letter containing the same is posted, or (b) facsimile, shall be deemed to have been served upon confirmation of successful transmission, or (c) recognised courier service, shall be deemed to have been served when the letter containing the same is delivered to the courier service and in proving such service it shall be sufficient to provide that the letter containing the notice or documents was properly addressed and duly posted or delivered to the courier, or (d) electronic means as provided herein shall be deemed to have been served and delivered on the day on which it is successfully transmitted or at such later time as may be prescribed by any applicable laws or regulations. |
34.5. | Any notice or document delivered or sent to any Member in accordance with the terms of these Articles shall notwithstanding that such Member be then dead or bankrupt, and whether or not the Company has notice of his death or bankruptcy, be deemed to have been duly served in respect of any share registered in the name of such Member as sole or joint holder, unless his name shall at the time of the service of the notice or document, have been removed from the Register of Members as the holder of the share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share. |
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34.6. | Notice of every general meeting shall be given to: |
(a) | all Members who have supplied to the Company an address for the giving of notices to them, except that in case of joint holders, the notice shall be sufficient if given to the joint holder first named in the Register of Members; and |
(b) | each Director. |
34.7. | No other person shall be entitled to receive notices of general meetings. |
35. | Information |
35.1. | No Member shall be entitled to require discovery of any information in respect of any detail of the Companys trading or any information which is or may be in the nature of a trade secret or secret process which may relate to the conduct of the business of the Company and which in the opinion of the Directors would not be in the interests of the members of the Company to communicate to the public. |
35.2. | The Directors shall be entitled (but not required, except as provided by law) to release or disclose any information in its possession, custody or control regarding the Company or its affairs to any of its Members including, without limitation, information contained in the Register of Members and transfer books of the Company. |
36. | Indemnity |
36.1. | The Company shall indemnify every Director and officer of the Company or any predecessor to the Company (which for the avoidance of doubt, shall not include auditors of the Company), together with every former Director and former officer of the Company or any predecessor to the Company, and may indemnify any person (other than current and former Directors and officers) (any such Director, officer or other person, an Indemnified Person ), out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions in connection with the Company other than such liability (if any) that they may incur by reason of their own actual fraud or wilful default. No Indemnified Person shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud or wilful default of such Indemnified Person. No person shall be found to have committed actual fraud or wilful default under this Article unless or until a court of competent jurisdiction shall have made a finding to that effect. Each Member agrees to waive any claim or right of action he or she might have, whether individually or by or in the right of the Company, against any Director on account of any action taken by such Director, or the failure of such Director to take any action in the performance of his duties with or for the Company; provided that such waiver shall not extend to any matter in respect of any actual fraud or wilful default which may attach to such Director. |
36.2. | The Company shall advance to each Indemnified Person reasonable attorneys fees and other costs and expenses incurred in connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person shall execute an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article. If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person. |
36.3. | The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or other officer of the Company against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company. |
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36.4. | Neither any amendment nor repeal of these Articles set forth under this heading of Indemnity (the Indemnification Articles ), nor the adoption of any provision of the Companys Articles or Memorandum of Association inconsistent with the Indemnification Articles, shall eliminate or reduce the effect of the Indemnification Articles, in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for these Indemnification Articles, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. |
37. | Financial Year |
37.1. | Unless the Directors otherwise prescribe, the financial year of the Company shall begin on January 1 in each year and shall end on December 31 in such year. |
38. | Winding Up |
38.1. | If the Company shall be wound up the liquidator shall apply the assets of the Company in satisfaction of creditors claims in such manner and order as such liquidator thinks fit. Subject to the rights attaching to any shares, in a winding up: |
(a) | if the assets available for distribution amongst the Members shall be insufficient to repay the whole of the Companys issued share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the shares held by them; or |
(b) | if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the Companys issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the shares held by them at the commencement of the winding up subject to a deduction from those shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise. |
38.2. | If the Company shall be wound up the liquidator may, subject to the rights attaching to any shares and with the sanction of a Special Resolution of the Company and any other sanction required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether such assets shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like sanction, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability. |
39. | Amendment of Memorandum and Articles of Association and Name of Company |
39.1. | Subject to the provisions of the Statute and the provisions of these Articles as regards the matters to be dealt with by Ordinary Resolution, the Company may by Special Resolution: |
(a) | change its name; |
(b) | alter or add to these Articles; |
(c) | alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and |
(d) | reduce its share capital or any capital redemption reserve fund. |
40. | Registration by Way of Continuation |
40.1. | Subject to these Articles, the Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company. |
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41. | Mergers and Consolidations |
41.1. | The Company shall, with the approval of a Special Resolution, have the power to merge or consolidate with one or more constituent companies (as defined in the Statute), upon such terms as the Directors may determine. |
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ANNEX C
The purpose of this Cision Ltd. 2017 Omnibus Incentive Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer Eligible Individuals cash and stock-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Companys stockholders. The Plan is effective as of the date set forth in Article XV.
For purposes of the Plan, the following terms shall have the following meanings:
2.1 Affiliate means each of the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade or business (including, without limitation, a partnership or limited liability company) which is directly or indirectly controlled 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) by the Company or one of its Affiliates; (d) any trade or business (including, without limitation, a partnership or limited liability company) which directly or indirectly controls 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) of the Company; and (e) any other entity in which the Company or any of its Affiliates has a material equity interest and which is designated as an Affiliate by resolution of the Committee; provided that, unless otherwise determined by the Committee, the Common Stock subject to any Award constitutes service recipient stock for purposes of Section 409A of the Code or otherwise does not subject the Award to Section 409A of the Code.
2.2 Award means any award under the Plan of any Stock Option, Stock Appreciation Right, Restricted Stock Award, Performance Award, Other Stock-Based Award or Other Cash-Based Award. All Awards shall be granted by, confirmed by, and subject to the terms of, a written agreement executed by the Company and the Participant.
2.3 Award Agreement means the written or electronic agreement setting forth the terms and conditions applicable to an Award.
2.4 Board means the Board of Directors of the Company.
2.5 Cause means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participants Termination of Employment or Termination of Consultancy, the following: (a) in the case where there is no employment, consulting, change in control or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define cause (or words of like import)), termination due to a Participants insubordination, dishonesty, fraud, incompetence, moral turpitude, willful misconduct, refusal to perform the Participants duties or responsibilities (for any reason other than illness or incapacity) or materially unsatisfactory performance of the Participants duties for the Company or an Affiliate, in each case, as determined by the Committee in its good faith discretion; or (b) in the case where there is an employment, consulting, change in control or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines cause (or words of like import), cause as defined under such agreement; provided, however, that with regard to any agreement under which the definition of cause only applies on occurrence of a change in control, such definition of cause shall not apply until a Change in Control actually takes place and then only with regard to a termination thereafter. With respect to a Participants Termination of Directorship, cause means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law.
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2.6 Change in Control has the meaning set forth in 11.2.
2.7 Change in Control Price has the meaning set forth in Section 11.1.
2.8 Code means the Internal Revenue Code of 1986, as amended. Any reference to any section of the Code shall also be a reference to any successor provision and any treasury regulation promulgated thereunder.
2.9 Committee means any committee of the Board duly authorized by the Board to administer the Plan. If no committee is duly authorized by the Board to administer the Plan, the term Committee shall be deemed to refer to the Board for all purposes under the Plan.
2.10 Common Stock means the ordinary shares, par value $0.0001 per share, of the Company.
2.11 Company means Cision Ltd., an exempted company incorporated in the Cayman Islands with limited liability, and its successors by operation of law.
2.12 Consultant means any Person who is an advisor or consultant to the Company or its Affiliates.
2.13 Disability means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participants Termination, a permanent and total disability as defined in Section 22(e)(3) of the Code. A Disability shall only be deemed to occur at the time of the determination by the Committee of the Disability. Notwithstanding the foregoing, for Awards that are subject to Section 409A of the Code, Disability shall mean that a Participant is disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.
2.14 Effective Date means the effective date of the Plan as defined in Article XV.
2.15 Eligible Employee means each employee of the Company or an Affiliate.
2.16 Eligible Individual means an Eligible Employee, independent Non-Employee Director, or Consultant who is designated by the Committee in its discretion as eligible to receive Awards subject to the conditions set forth herein.
2.17 Exchange Act means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the Exchange Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
2.18 Fair Market Value means, for purposes of the Plan, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder, as of any date and except as provided below, the last sales price reported for the Common Stock on the applicable date: (a) as reported on the principal national securities exchange in the United States on which it is then traded, or (b) if the Common Stock is not traded, listed or otherwise reported or quoted, the Committee shall determine in good faith the Fair Market Value in whatever manner it considers appropriate taking into account the requirements of Section 409A of the Code. For purposes of any Award granted in connection with the Registration Date, the Fair Market Value shall be the public offering price in the initial public offering as set forth on the cover of the prospectus. For purposes of the exercise of any Award, the applicable date shall be the date a notice of exercise is received by the Committee or, if not a day on which the applicable market is open, the next day that it is open.
2.19 Family Member means the Participants child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participants household (other than a tenant or employee), a trust in which these persons have more than fifty percent (50%) of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent (50%) of the voting interests.
2.20 Incentive Stock Option means any Stock Option awarded to an Eligible Employee of the Company, its Subsidiaries and its Parents (if any) under the Plan intended to be and designated as an Incentive Stock Option within the meaning of Section 422 of the Code.
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2.21 Lead Underwriter has the meaning set forth in Section 14.19.
2.22 Lock-Up Period has the meaning set forth in Section 14.19.
2.23 Non-Employee Director means a director or a member of the Board or the board of directors of any Affiliate who is not an active employee of the Company or any Affiliate.
2.24 Non-Qualified Stock Option means any Stock Option awarded under the Plan that is not an Incentive Stock Option.
2.25 Non-Tandem Stock Appreciation Right means the right to receive an amount in cash and/or stock equal to the difference between (a) the Fair Market Value of a share of Common Stock on the date such right is exercised, and (b) the aggregate exercise price of such right, otherwise than on surrender of a Stock Option.
2.26 Other Cash-Based Award means an Award granted pursuant to Section 10.3 of the Plan and payable in cash at such time or times and subject to such terms and conditions as determined by the Committee in its sole discretion.
2.27 Other Stock-Based Award means an Award under Article X of the Plan that is valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock, including, without limitation, an Award valued by reference to an Affiliate.
2.28 Parent means any parent corporation of the Company within the meaning of Section 424(e) of the Code.
2.29 Participant means an Eligible Individual to whom an Award has been granted pursuant to the Plan.
2.30 Performance Award means an Award granted to a Participant pursuant to Article IX hereof contingent upon achieving certain Performance Goals.
2.31 Performance Goals means goals established by the Committee as contingencies for Awards to vest and/or become exercisable or distributable based on one or more of the performance goals set forth in Exhibit A hereto.
2.32 Performance Period means the designated period during which the Performance Goals must be satisfied with respect to the Award to which the Performance Goals relate.
2.33 Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a government or any branch, department, agency, political subdivision or official thereof.
2.34 Plan means this Cision Ltd. 2017 Omnibus Incentive Plan, as amended from time to time.
2.35 Proceeding has the meaning set forth in Section 14.8.
2.36 Reference Stock Option has the meaning set forth in Section 7.1.
2.37 Registration Date means the date on which the Company consummates the sale of its Common Stock in a bona fide, firm commitment underwriting pursuant to a registration statement under the Securities Act.
2.38 Reorganization has the meaning set forth in Section 4.2(b)(ii).
2.39 Restricted Stock means an Award of shares of Common Stock under the Plan that is subject to restrictions under Article VIII.
2.40 Restriction Period has the meaning set forth in Section 8.3(a) with respect to Restricted Stock.
2.41 Rule 16b-3 means Rule 16b-3 under Section 16(b) of the Exchange Act as then in effect or any successor provision.
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2.42 Section 162(m) of the Code means the exception for performance-based compensation under Section 162(m) of the Code and any applicable treasury regulations thereunder.
2.43 Section 409A of the Code means the nonqualified deferred compensation rules under Section 409A of the Code and any applicable treasury regulations and other official guidance thereunder.
2.44 Securities Act means the Securities Act of 1933, as amended and all rules and regulations promulgated thereunder. Reference to a specific section of the Securities Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
2.45 Stock Appreciation Right means the right pursuant to an Award granted under Article VII.
2.46 Stock Option or Option means any option to purchase shares of Common Stock granted to Eligible Individuals granted pursuant to Article VI.
2.47 Subsidiary means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.
2.48 Tandem Stock Appreciation Right means the right to surrender to the Company all (or a portion) of a Stock Option in exchange for an amount in cash and/or stock equal to the difference between (a) the Fair Market Value on the date such Stock Option (or such portion thereof) is surrendered, of the Common Stock covered by such Stock Option (or such portion thereof), and (b) the aggregate exercise price of such Stock Option (or such portion thereof).
2.49 Ten Percent Stockholder means a Person owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, its Subsidiaries or its Parent.
2.50 Termination means a Termination of Consultancy, Termination of Directorship or Termination of Employment, as applicable.
2.51 Termination of Consultancy means: (a) that the Consultant is no longer acting as a consultant to the Company or an Affiliate; or (b) when an entity which is retaining a Participant as a Consultant ceases to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, a Consultant to the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that a Consultant becomes an Eligible Employee or a Non-Employee Director upon the termination of such Consultants consultancy, unless otherwise determined by the Committee, in its sole discretion, no Termination of Consultancy shall be deemed to occur until such time as such Consultant is no longer a Consultant, an Eligible Employee or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Consultancy in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Consultancy thereafter, provided that any such change to the definition of the term Termination of Consultancy does not subject the applicable Award to Section 409A of the Code.
2.52 Termination of Directorship means that the Non-Employee Director has ceased to be a director or member of the Board and the board of directors of any affiliate of the Company; provided that if a Non-Employee Director becomes an Eligible Employee or a Consultant upon the termination of such Non-Employee Directors directorship, such Non-Employee Directors ceasing to be a director or member of the Board and the board of directors of any affiliate of the Company shall not be treated as a Termination of Directorship unless and until the Participant has a Termination of Employment or Termination of Consultancy, as the case may be.
2.53 Termination of Employment means: (a) a termination of employment (for reasons other than a military or personal leave of absence granted by the Company) of a Participant from the Company and its Affiliates; or (b) when an entity which is employing a Participant ceases to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, employed by the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that an Eligible Employee becomes a Consultant or a Non-Employee Director upon the termination of such Eligible Employees employment, unless otherwise determined by the Committee, in its sole discretion, no Termination of Employment shall be deemed to occur
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until such time as such Eligible Employee is no longer an Eligible Employee, a Consultant or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Employment in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Employment thereafter, provided that any such change to the definition of the term Termination of Employment does not subject the applicable Award to Section 409A of the Code.
2.54 Transfer means: (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance of equity in any entity), whether for value or no value and whether voluntary or involuntary (including by operation of law), and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including the issuance of equity in any entity) whether for value or for no value and whether voluntarily or involuntarily (including by operation of law). Transferred and Transferable shall have a correlative meaning.
3.1 The Committee . The Plan shall be administered and interpreted by the Committee. To the extent required by applicable law, rule or regulation, it is intended that each member of the Committee shall qualify as (a) a non-employee director under Rule 16b-3, (b) an outside director under Section 162(m) of the Code and (c) an independent director under the rules of any national securities exchange or national securities association, as applicable. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify.
3.2 Grants of Awards . The Committee shall have full authority to grant, pursuant to the terms of the Plan, to Eligible Individuals: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock Awards, (iv) Performance Awards; (v) Other Stock-Based Awards; and (vi) Other Cash-Based Awards. In particular, the Committee shall have the authority:
(a) to select the Eligible Individuals to whom Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Awards, or any combination thereof, are to be granted hereunder to one or more Eligible Individuals;
(c) to determine the number of shares of Common Stock to be covered by each Award granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder (including, but not limited to, the exercise or purchase price (if any), any restriction or limitation, any vesting schedule or acceleration thereof, or any forfeiture restrictions or waiver thereof, regarding any Award and the shares of Common Stock relating thereto, based on such factors, if any, as the Committee shall determine, in its sole discretion);
(e) to determine the amount of cash to be covered by each Award granted hereunder;
(f) to determine whether, to what extent and under what circumstances grants of Options and other Awards under the Plan are to operate on a tandem basis and/or in conjunction with or apart from other awards made by the Company outside of the Plan;
(g) to determine whether and under what circumstances a Stock Option may be settled in cash, Common Stock and/or Restricted Stock under Section 6.4(d);
(h) to determine whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock Option;
(i) to determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of shares acquired pursuant to the exercise of an Award for a period of time as determined by the Committee, in its sole discretion, following the date of the acquisition of such Award;
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(j) to modify, extend or renew an Award, subject to Article XII and Section 6.4(l), provided, however, that such action does not subject the Award to Section 409A of the Code without the consent of the Participant; and
(k) solely to the extent permitted by applicable law, to determine whether, to what extent and under what circumstances to provide loans (which may be on a recourse basis and shall bear interest at the rate the Committee shall provide) to Participants in order to exercise Options under the Plan.
3.3 Guidelines . Subject to Article XII hereof, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by applicable law and applicable stock exchange rules), as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special guidelines and provisions for Persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities laws of such domestic or foreign jurisdictions. Notwithstanding the foregoing, no action of the Committee under this Section 3.3 shall impair the rights of any Participant without the Participants consent. To the extent applicable, the Plan is intended to comply with the applicable requirements of Rule 16b-3, and with respect to Awards intended to be performance-based, the applicable provisions of Section 162(m) of the Code, and the Plan shall be limited, construed and interpreted in a manner so as to comply therewith.
3.4 Decisions Final . Any decision, interpretation or other action made or taken in good faith by or at the direction of the Company, the Board or the Committee (or any of its members) arising out of or in connection with the Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors and assigns.
3.5 Procedures . If the Committee is appointed, the Board shall designate one of the members of the Committee as chairman and the Committee shall hold meetings, subject to the By-Laws of the Company, at such times and places as it shall deem advisable, including, without limitation, by telephone conference or by written consent to the extent permitted by applicable law. A majority of the Committee members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all of the Committee members in accordance with the By-Laws of the Company, shall be fully effective as if it had been made by a vote at a meeting duly called and held. The Committee shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.
3.6 Designation of Consultants/Liability .
(a) The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan and (to the extent permitted by applicable law and applicable exchange rules) may grant authority to officers to grant Awards and/or execute agreements or other documents on behalf of the Committee. In the event of any designation of authority hereunder, subject to applicable law, applicable stock exchange rules and any limitations imposed by the Committee in connection with such designation, such designee or designees shall have the power and authority to take such actions, exercise such powers and make such determinations that are otherwise specifically designated to the Committee hereunder.
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(b) The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant or agent shall be paid by the Company. The Committee, its members and any Person designated pursuant to Section 3.6(a) shall not be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent permitted by applicable law, no officer of the Company or member or former member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it.
3.7 Indemnification . To the maximum extent permitted by applicable law and the Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance directly insuring such Person, each officer or employee of the Company or any Affiliate and member or former member of the Committee or the Board shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel reasonably acceptable to the Committee) or liability (including any sum paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of such officers, employees, members or former members own fraud or bad faith. Such indemnification shall be in addition to any right of indemnification the employees, officers, directors or members or former officers, directors or members may have under applicable law or under the Certificate of Incorporation or By-Laws of the Company or any Affiliate. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to such individual under the Plan.
4.1 Shares . (a) The aggregate number of shares of Common Stock that may be issued or used for reference purposes or with respect to which Awards may be granted under the Plan shall not exceed 6,100,000 shares (subject to any increase or decrease pursuant to Section 4.2), which may be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury of the Company or both. The maximum number of shares of Common Stock with respect to which Incentive Stock Options may be granted under the Plan shall be 6,100,000 shares. With respect to Options and Stock Appreciation Rights settled in Common Stock, upon settlement, only the number of shares of Common Stock delivered to a Participant (based on the difference between the Fair Market Value of the shares of Common Stock subject to such Stock Appreciation Right on the date such Stock Appreciation Right is exercised and the exercise price of each Stock Appreciation Right on the date such Stock Appreciation Right was awarded) shall count against the aggregate and individual share limitations set forth under Sections 4.1(a) and 4.1(b). If any Option, Stock Appreciation Right or Other Stock-Based Awards granted under the Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of Common Stock underlying any unexercised Award shall again be available for the purpose of Awards under the Plan. If any shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock awarded under the Plan to a Participant are forfeited for any reason, the number of forfeited shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock shall again be available for purposes of Awards under the Plan. If any shares of Common Stock are withheld to satisfy tax withholding obligations on an Award issued under the Plan, the number of shares of Common Stock withheld shall again be available for purposes of Awards under the Plan. If a Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is granted in tandem with an Option, such grant shall only apply once against the maximum number of shares of Common Stock which may be issued under the Plan. Any Award under the Plan settled in cash shall not be counted against the foregoing maximum share limitations. The maximum number of shares of Common Stock subject to any Award of Stock Options, or Stock Appreciation Rights which may be granted under the Plan during any fiscal year of the Company to any Participant shall be 6,100,000 shares (which shall be subject to any further increase or decrease pursuant to Section 4.2). The maximum grant date fair value of any Award granted to any director during any calendar year shall not exceed $500,000.
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(b) Individual Participant Limitations . To the extent required by Section 162(m) of the Code for Awards under the Plan to qualify as performance-based compensation, the following individual Participant limitations shall apply:
(i) The maximum number of shares of Common Stock subject to any Award of Stock Options, or Stock Appreciation Rights, or shares of Restricted Stock, or Other Stock-Based Awards for which the grant of such Award or the lapse of the relevant Restriction Period is subject to the attainment of Performance Goals in accordance with Section 8.3(a)(ii) which may be granted under the Plan during any fiscal year of the Company to any Participant shall be 3,000,000 shares per type of Award (which shall be subject to any further increase or decrease pursuant to Section 4.2), provided that the maximum number of shares of Common Stock for all types of Awards does not exceed 3,000,000 shares (which shall be subject to any further increase or decrease pursuant to Section 4.2) during any fiscal year of the Company. If a Tandem Stock Appreciation Right is granted or a Limited Stock Appreciation Right is granted in tandem with a Stock Option, it shall apply against the Participants individual share limitations for both Stock Appreciation Rights and Stock Options.
(ii) There are no annual individual share limitations applicable to Participants on Restricted Stock or Other Stock-Based Awards for which the grant, vesting or payment (as applicable) of any such Award is not subject to the attainment of Performance Goals.
(iii) The maximum number of shares of Common Stock subject to any Performance Award which may be granted under the Plan during any fiscal year of the Company to any Participant shall be 3,000,000 shares (which shall be subject to any further increase or decrease pursuant to Section 4.2) with respect to any fiscal year of the Company.
(iv) The maximum value of a cash payment made under a Performance Award which may be granted under the Plan with respect to any fiscal year of the Company to any Participant shall be $5,000,000.
(v) The individual Participant limitations set forth in this Section 4.1(b) (other than Section 4.1(b)(iii)) shall be cumulative; that is, to the extent that shares of Common Stock for which Awards are permitted to be granted to a Participant during a fiscal year are not covered by an Award to such Participant in a fiscal year, the number of shares of Common Stock available for Awards to such Participant shall automatically increase in the subsequent fiscal years during the term of the Plan until used.
(c) Annual Non-Employee Director Award Limitation . The aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted under the Plan to any individual Non-Employee Director in any fiscal year of the Company (excluding Awards made pursuant to deferred compensation arrangements in lieu of all or a portion of cash retainers and any stock dividends payable in respect of outstanding Awards) shall not exceed $500,000.
4.2 Changes .
(a) The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board, the Committee or the stockholders of the Company to make or authorize (i) any adjustment, recapitalization, reorganization, stock split, or other change in the Companys capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate or (vi) any other corporate act or proceeding.
(b) Subject to the provisions of Section 11.1:
(i) If the Company at any time subdivides (by any split, recapitalization or otherwise) the outstanding Common Stock into a greater number of shares of Common Stock, or combines (by reverse split, combination or otherwise) its outstanding Common Stock into a lesser number of shares of Common Stock, then the respective exercise prices for outstanding Awards that provide for
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a Participant elected exercise and the number of shares of Common Stock covered by outstanding Awards shall be appropriately adjusted by the Committee to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan.
(ii) Excepting transactions covered by Section 4.2(b)(i), if the Company effects any merger, consolidation, statutory exchange, spin-off, reorganization, sale or transfer of all or substantially all the Companys assets or business, or other corporate transaction or event in such a manner that the Companys outstanding shares of Common Stock are converted into the right to receive (or the holders of Common Stock are entitled to receive in exchange therefor), either immediately or upon liquidation of the Company, securities or other property of the Company or other entity (each, a Reorganization ), then, subject to the provisions of Section 11.1, (A) the aggregate number or kind of securities that thereafter may be issued under the Plan, (B) the number or kind of securities or other property (including cash) to be issued pursuant to Awards granted under the Plan (including as a result of the assumption of the Plan and the obligations hereunder by a successor entity, as applicable), or (C) the purchase price thereof, shall be appropriately adjusted by the Committee to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan.
(iii) If there shall occur any change in the capital structure of the Company other than those covered by Section 4.2(b)(i) or 4.2(b)(ii), including by reason of any extraordinary dividend (whether cash or equity), any conversion, any adjustment, any issuance of any class of securities convertible or exercisable into, or exercisable for, any class of equity securities of the Company, then the Committee may adjust any Award and make such other adjustments to the Plan to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan.
(iv) Any such adjustment determined by the Committee pursuant to this Section 4.2(b) shall be final, binding and conclusive on the Company and all Participants and their respective heirs, executors, administrators, successors and permitted assigns. Any adjustment to, or assumption or substitution of, an Award under this Section 4.2(b) shall be intended to comply with the requirements of Section 409A of the Code and Treasury Regulation §1.424-1 (and any amendments thereto), to the extent applicable. Except as expressly provided in this Section 4.2 or in the applicable Award Agreement, a Participant shall have no additional rights under the Plan by reason of any transaction or event described in this Section 4.2.
(v) Fractional shares of Common Stock resulting from any adjustment in Awards pursuant to Section 4.2(a) or this Section 4.2(b) shall be aggregated until, and eliminated at, the time of exercise or payment by rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater than one-half. No cash settlements shall be required with respect to fractional shares eliminated by rounding. Notice of any adjustment shall be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan.
4.3 Minimum Purchase Price . Notwithstanding any provision of the Plan to the contrary, if authorized but previously unissued shares of Common Stock are issued under the Plan, such shares shall not be issued for a consideration that is less than as permitted under applicable law.
5.1 General Eligibility . All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the Plan shall be determined by the Committee in its sole discretion.
5.2 Incentive Stock Options . Notwithstanding the foregoing, only Eligible Employees of the Company, its Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock Options under the Plan. Eligibility for the grant of an Incentive Stock Option and actual participation in the Plan shall be determined by the Committee in its sole discretion.
5.3 General Requirement . The vesting and exercise of Awards granted to a prospective Eligible Individual are conditioned upon such individual actually becoming an Eligible Employee, Consultant or
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Non-Employee Director, respectively.
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6.1 Options . Stock Options may be granted alone or in addition to other Awards granted under the Plan. Each Stock Option granted under the Plan shall be of one of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock Option.
6.2 Grants . The Committee shall have the authority to grant to any Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options. The Committee shall have the authority to grant any Consultant or Non-Employee Director one or more Non-Qualified Stock Options. To the extent that any Stock Option does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such Stock Option or the portion thereof which does not so qualify shall constitute a separate Non-Qualified Stock Option.
6.3 Incentive Stock Options . Notwithstanding anything in the Plan to the contrary, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of the Participants affected, to disqualify any Incentive Stock Option under such Section 422.
6.4 Terms of Options . Options granted under the Plan shall be subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Exercise Price . The exercise price per share of Common Stock subject to a Stock Option shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Stock Option shall not be less than 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of the Common Stock at the date of grant.
(b) Stock Option Term . The term of each Stock Option shall be fixed by the Committee, provided that no Stock Option shall be exercisable more than 10 years after the date the Option is granted; and provided further that the term of an Incentive Stock Option granted to a Ten Percent Stockholder shall not exceed five years.
(c) Exercisability . Unless otherwise provided by the Committee in accordance with the provisions of this Section 6.4, Stock Options granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant. If the Committee provides, in its discretion, that any Stock Option is exercisable subject to certain limitations (including, without limitation, that such Stock Option is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the exercisability at any time at or after the time of grant in whole or in part (including, without limitation, waiver of the installment exercise provisions or acceleration of the time at which such Stock Option may be exercised), based on such factors, if any, as the Committee shall determine, in its sole discretion.
(d) Method of Exercise . Subject to whatever installment exercise and waiting period provisions apply under Section 6.4(c), to the extent vested, Stock Options may be exercised in whole or in part at any time during the Option term, by giving written notice of exercise to the Company specifying the number of shares of Common Stock to be purchased. Such notice shall be accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) solely to the extent permitted by applicable law, if the Common Stock is traded on a national securities exchange, and the Committee authorizes, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company an amount equal to the purchase price; (iii) having the Company withhold shares of Common Stock issuable upon exercise of the Stock Option, or by payment in full or in part in the form of Common Stock owned by the Participant, based on the Fair Market Value of the Common Stock on the payment date as determined by the Committee; or (iv) on such other terms and conditions as may be acceptable to the Committee (including, without limitation having the Company withhold shares of Common Stock issuable upon exercise of the Stock Option, or by payment in full or in part in
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the form of Common Stock owned by the Participant, based on the Fair Market Value of the Common Stock on the payment date as determined by the Committee). No shares of Common Stock shall be issued until payment therefor, as provided herein, has been made or provided for.
(e) Non-Transferability of Options . No Stock Option shall be Transferable by the Participant other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Participants lifetime, only by the Participant. Notwithstanding the foregoing, the Committee may determine, in its sole discretion, at the time of grant or thereafter that a Non-Qualified Stock Option that is otherwise not Transferable pursuant to this Section is Transferable to a Family Member in whole or in part and in such circumstances, and under such conditions, as specified by the Committee. A Non-Qualified Stock Option that is Transferred to a Family Member pursuant to the preceding sentence (i) may not be subsequently Transferred other than by will or by the laws of descent and distribution and (ii) remains subject to the terms of the Plan and the applicable Award Agreement. Any shares of Common Stock acquired upon the exercise of a Non-Qualified Stock Option by a permissible transferee of a Non-Qualified Stock Option or a permissible transferee pursuant to a Transfer after the exercise of the Non-Qualified Stock Option shall be subject to the terms of the Plan and the applicable Award Agreement.
(f) Termination by Death or Disability . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participants Termination is by reason of death or Disability, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participants Termination may be exercised by the Participant (or in the case of the Participants death, by the legal representative of the Participants estate) at any time within a period of one year from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options; provided, however, that, in the event of a Participants Termination by reason of Disability, if the Participant dies within such exercise period, all unexercised Stock Options held by such Participant shall thereafter be exercisable, to the extent to which they were exercisable at the time of death, for a period of one year from the date of such death, but in no event beyond the expiration of the stated term of such Stock Options.
(g) Involuntary Termination Without Cause . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participants Termination is by involuntary termination by the Company without Cause, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participants Termination may be exercised by the Participant at any time within a period of 90 days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.
(h) Voluntary Resignation . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participants Termination is voluntary (other than a voluntary termination described in Section 6.4(i)(ii) hereof), all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participants Termination may be exercised by the Participant at any time within a period of 90 days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.
(i) Termination for Cause . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participants Termination (i) is for Cause or (ii) is a voluntary Termination (as provided in Section 6.4(h)) after the occurrence of an event that would be grounds for a Termination for Cause, all Stock Options, whether vested or not vested, that are held by such Participant shall thereupon terminate and expire as of the date of such Termination.
(j) Unvested Stock Options . Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, Stock Options that are not vested as of the date of a Participants Termination for any reason shall terminate and expire as of the date of such Termination.
(k) Incentive Stock Option Limitations . To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year under the Plan
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and/or any other stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options. In addition, if an Eligible Employee does not remain employed by the Company, any Subsidiary or any Parent at all times from the time an Incentive Stock Option is granted until three months prior to the date of exercise thereof (or such other period as required by applicable law), such Stock Option shall be treated as a Non-Qualified Stock Option. Should any provision of the Plan not be necessary in order for the Stock Options to qualify as Incentive Stock Options, or should any additional provisions be required, the Committee may amend the Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company.
(l) Form, Modification, Extension and Renewal of Stock Options . Subject to the terms and conditions and within the limitations of the Plan, Stock Options shall be evidenced by such form of agreement or grant as is approved by the Committee, and the Committee may (i) modify, extend or renew outstanding Stock Options granted under the Plan (provided that the rights of a Participant are not reduced without such Participants consent and provided further that such action does not subject the Stock Options to Section 409A of the Code without the consent of the Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to the extent not theretofore exercised). Notwithstanding the foregoing, an outstanding Option may not be modified to reduce the exercise price thereof nor may a new Option at a lower price be substituted for a surrendered Option (other than adjustments or substitutions in accordance with Section 4.2), unless such action is approved by the stockholders of the Company.
(m) Deferred Delivery of Common Stock . The Committee may in its discretion permit Participants to defer delivery of Common Stock acquired pursuant to a Participants exercise of an Option in accordance with the terms and conditions established by the Committee in the applicable Award Agreement, which shall be intended to comply with the requirements of Section 409A of the Code.
(n) Early Exercise . The Committee may provide that a Stock Option include a provision whereby the Participant may elect at any time before the Participants Termination to exercise the Stock Option as to any part or all of the shares of Common Stock subject to the Stock Option prior to the full vesting of the Stock Option and such shares shall be subject to the provisions of Article VIII and be treated as Restricted Stock. Unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Committee determines to be appropriate.
(o) Other Terms and Conditions . The Committee may include a provision in an Award Agreement providing for the automatic exercise of a Non-Qualified Stock Option on a cashless basis on the last day of the term of such Option if the Participant has failed to exercise the Non-Qualified Stock Option as of such date, with respect to which the Fair Market Value of the shares of Common Stock underlying the Non-Qualified Stock Option exceeds the exercise price of such Non-Qualified Stock Option on the date of expiration of such Option, subject to Section 14.4. Stock Options may contain such other provisions, which shall not be inconsistent with any of the terms of the Plan, as the Committee shall deem appropriate.
7.1 Tandem Stock Appreciation Rights . Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option (a Reference Stock Option ) granted under the Plan ( Tandem Stock Appreciation Rights ). In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of the grant of such Reference Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of the grant of such Reference Stock Option.
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7.2 Terms and Conditions of Tandem Stock Appreciation Rights . Tandem Stock Appreciation Rights granted hereunder shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, and the following:
(a) Exercise Price . The exercise price per share of Common Stock subject to a Tandem Stock Appreciation Right shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Tandem Stock Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.
(b) Term . A Tandem Stock Appreciation Right or applicable portion thereof granted with respect to a Reference Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the Reference Stock Option, except that, unless otherwise determined by the Committee, in its sole discretion, at the time of grant, a Tandem Stock Appreciation Right granted with respect to less than the full number of shares covered by the Reference Stock Option shall not be reduced until, and then only to the extent that the exercise or termination of the Reference Stock Option causes, the number of shares covered by the Tandem Stock Appreciation Right to exceed the number of shares remaining available and unexercised under the Reference Stock Option.
(c) Exercisability . Tandem Stock Appreciation Rights shall be exercisable only at such time or times and to the extent that the Reference Stock Options to which they relate shall be exercisable in accordance with the provisions of Article VI, and shall be subject to the provisions of Section 6.4(c).
(d) Method of Exercise . A Tandem Stock Appreciation Right may be exercised by the Participant by surrendering the applicable portion of the Reference Stock Option. Upon such exercise and surrender, the Participant shall be entitled to receive an amount determined in the manner prescribed in this Section 7.2. Stock Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent that the related Tandem Stock Appreciation Rights have been exercised.
(e) Payment . Upon the exercise of a Tandem Stock Appreciation Right, a Participant shall be entitled to receive up to, but no more than, an amount in cash and/or Common Stock (as chosen by the Committee in its sole discretion) equal in value to the excess of the Fair Market Value of one share of Common Stock over the Option exercise price per share specified in the Reference Stock Option agreement multiplied by the number of shares of Common Stock in respect of which the Tandem Stock Appreciation Right shall have been exercised, with the Committee having the right to determine the form of payment.
(f) Deemed Exercise of Reference Stock Option . Upon the exercise of a Tandem Stock Appreciation Right, the Reference Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Article IV of the Plan on the number of shares of Common Stock to be issued under the Plan.
(g) Non-Transferability . Tandem Stock Appreciation Rights shall be Transferable only when and to the extent that the underlying Stock Option would be Transferable under Section 6.4(e) of the Plan.
7.3 Non-Tandem Stock Appreciation Rights . Non-Tandem Stock Appreciation Rights may also be granted without reference to any Stock Options granted under the Plan.
7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights . Non-Tandem Stock Appreciation Rights granted hereunder shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, and the following:
(a) Exercise Price . The exercise price per share of Common Stock subject to a Non-Tandem Stock Appreciation Right shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Non-Tandem Stock Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.
(b) Term . The term of each Non-Tandem Stock Appreciation Right shall be fixed by the Committee, but shall not be greater than 10 years after the date the right is granted.
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(c) Exercisability . Unless otherwise provided by the Committee in accordance with the provisions of this Section 7.4, Non-Tandem Stock Appreciation Rights granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant. If the Committee provides, in its discretion, that any such right is exercisable subject to certain limitations (including, without limitation, that it is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the exercisability at any time at or after grant in whole or in part (including, without limitation, waiver of the installment exercise provisions or acceleration of the time at which such right may be exercised), based on such factors, if any, as the Committee shall determine, in its sole discretion.
(d) Method of Exercise . Subject to whatever installment exercise and waiting period provisions apply under Section 7.4(c), Non-Tandem Stock Appreciation Rights may be exercised in whole or in part at any time in accordance with the applicable Award Agreement, by giving written notice of exercise to the Company specifying the number of Non-Tandem Stock Appreciation Rights to be exercised.
(e) Payment . Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant shall be entitled to receive, for each right exercised, up to, but no more than, an amount in cash and/or Common Stock (as chosen by the Committee in its sole discretion) equal in value to the excess of the Fair Market Value of one share of Common Stock on the date that the right is exercised over the Fair Market Value of one share of Common Stock on the date that the right was awarded to the Participant.
(f) Termination . Unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, subject to the provisions of the applicable Award Agreement and the Plan, upon a Participants Termination for any reason, Non-Tandem Stock Appreciation Rights will remain exercisable following a Participants Termination on the same basis as Stock Options would be exercisable following a Participants Termination in accordance with the provisions of Sections 6.4(f) through 6.4(j).
(g) Non-Transferability . No Non-Tandem Stock Appreciation Rights shall be Transferable by the Participant other than by will or by the laws of descent and distribution, and all such rights shall be exercisable, during the Participants lifetime, only by the Participant.
7.5 Limited Stock Appreciation Rights . The Committee may, in its sole discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either as a general Stock Appreciation Right or as a Limited Stock Appreciation Right. Limited Stock Appreciation Rights may be exercised only upon the occurrence of a Change in Control or such other event as the Committee may, in its sole discretion, designate at the time of grant or thereafter. Upon the exercise of Limited Stock Appreciation Rights, except as otherwise provided in an Award Agreement, the Participant shall receive in cash and/or Common Stock, as determined by the Committee, an amount equal to the amount (i) set forth in Section 7.2(e) with respect to Tandem Stock Appreciation Rights, or (ii) set forth in Section 7.4(e) with respect to Non-Tandem Stock Appreciation Rights.
7.6 Other Terms and Conditions . The Committee may include a provision in an Award Agreement providing for the automatic exercise of a Stock Appreciation Right on a cashless basis on the last day of the term of such Stock Appreciation Right if the Participant has failed to exercise the Stock Appreciation Right as of such date, with respect to which the Fair Market Value of the shares of Common Stock underlying the Stock Appreciation Right exceeds the exercise price of such Stock Appreciation Right on the date of expiration of such Stock Appreciation Right, subject to Section 14.4. Stock Appreciation Rights may contain such other provisions, which shall not be inconsistent with any of the terms of the Plan, as the Committee shall deem appropriate.
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8.1 Awards of Restricted Stock . Shares of Restricted Stock may be issued either alone or in addition to other Awards granted under the Plan. The Committee shall determine the Eligible Individuals, to whom, and the time or times at which, grants of Restricted Stock shall be made, the number of shares to be awarded, the price (if any) to be paid by the Participant (subject to Section 8.2), the time or times within which such Awards may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards.
The Committee may condition the grant or vesting of Restricted Stock upon the attainment of specified performance targets (including the Performance Goals) or such other factor as the Committee may determine in its sole discretion, including to comply with the requirements of Section 162(m) of the Code.
8.2 Awards and Certificates . Eligible Individuals selected to receive Restricted Stock shall not have any right with respect to such Award, unless and until such Participant has delivered a fully executed copy of the agreement evidencing the Award to the Company, to the extent required by the Committee, and has otherwise complied with the applicable terms and conditions of such Award. Further, such Award shall be subject to the following conditions:
(a) Purchase Price . The purchase price of Restricted Stock shall be fixed by the Committee. Subject to Section 4.3, the purchase price for shares of Restricted Stock may be zero to the extent permitted by applicable law, and, to the extent not so permitted, such purchase price may not be less than par value.
(b) Acceptance . Awards of Restricted Stock must be accepted within a period of 60 days (or such shorter period as the Committee may specify at grant) after the grant date, by executing a Restricted Stock agreement and by paying whatever price (if any) the Committee has designated thereunder.
(c) Legend . Each Participant receiving Restricted Stock shall be issued a stock certificate in respect of such shares of Restricted Stock, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and shall, in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:
The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance or charge of the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Cision Ltd. (the Company) 2017 Omnibus Incentive Plan (the Plan) and an Agreement entered into between the registered owner and the Company dated . Copies of such Plan and Agreement are on file at the principal office of the Company.
(d) Custody . If stock certificates are issued in respect of shares of Restricted Stock, the Committee may require that any stock certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any grant of Restricted Stock, the Participant shall have delivered a duly signed stock power or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares subject to the Restricted Stock Award in the event that such Award is forfeited in whole or part.
8.3 Restrictions and Conditions . The shares of Restricted Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions:
(a) Restriction Period . (i) The Participant shall not be permitted to Transfer shares of Restricted Stock awarded under the Plan during the period or periods set by the Committee (the Restriction Period ) commencing on the date of such Award, as set forth in the Restricted Stock Award Agreement and such agreement shall set forth a vesting schedule and any event that would accelerate vesting of the shares of Restricted Stock. Within these limits, based on service, attainment of Performance Goals
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pursuant to Section 8.3(a)(ii) and/or such other factors or criteria as the Committee may determine in its sole discretion, the Committee may condition the grant or provide for the lapse of such restrictions in installments in whole or in part, or may accelerate the vesting of all or any part of any Restricted Stock Award and/or waive the deferral limitations for all or any part of any Restricted Stock Award.
(ii) If the grant of shares of Restricted Stock or the lapse of restrictions is based on the attainment of Performance Goals, the Committee shall establish the objective Performance Goals and the applicable vesting percentage of the Restricted Stock applicable to each Participant or class of Participants in writing prior to the beginning of the applicable fiscal year or at such later date as otherwise determined by the Committee and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. With regard to a Restricted Stock Award that is intended to comply with Section 162(m) of the Code, to the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect.
(b) Rights as a Stockholder . Except as provided in Section 8.3(a) and this Section 8.3(b) or as otherwise determined by the Committee in an Award Agreement, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a holder of shares of Common Stock of the Company, including, without limitation, the right to receive dividends, the right to vote such shares and, subject to and conditioned upon the full vesting of shares of Restricted Stock, the right to tender such shares. The Committee may, in its sole discretion, determine at the time of grant that the payment of dividends shall be deferred until, and conditioned upon, the expiration of the applicable Restriction Period.
(c) Termination . Unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, subject to the applicable provisions of the Award Agreement and the Plan, upon a Participants Termination for any reason during the relevant Restriction Period, all Restricted Stock still subject to restriction will be forfeited in accordance with the terms and conditions established by the Committee at grant or thereafter.
(d) Lapse of Restrictions . If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock, the certificates for such shares shall be delivered to the Participant. All legends shall be removed from said certificates at the time of delivery to the Participant, except as otherwise required by applicable law or other limitations imposed by the Committee.
9.1 Performance Awards . The Committee may grant a Performance Award to a Participant payable upon the attainment of specific Performance Goals. The Committee may grant Performance Awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code, as well as Performance Awards that are not intended to qualify as performance-based compensation under Section 162(m) of the Code. If the Performance Award is payable in shares of Common Stock, such shares shall be transferable to the Participant only upon attainment of the relevant Performance Goal in accordance with Article VIII. If the Performance Award is payable in cash, it may be paid upon the attainment of the relevant Performance Goals either in cash or in shares of Common Stock (based on the then current Fair Market Value of such shares), as determined by the Committee, in its sole and absolute discretion. Each Performance Award shall be evidenced by an Award Agreement in such form that is not inconsistent with the Plan and that the Committee may from time to time approve. With respect to Performance Awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code, the Committee shall condition the right to payment of any Performance Award upon the attainment of objective Performance Goals established pursuant to Section 9.2(c).
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9.2 Terms and Conditions . Performance Awards awarded pursuant to this Article IX shall be subject to the following terms and conditions:
(a) Earning of Performance Award . At the expiration of the applicable Performance Period, the Committee shall determine the extent to which the Performance Goals established pursuant to Section 9.2(c) are achieved and the percentage of each Performance Award that has been earned.
(b) Non-Transferability . Subject to the applicable provisions of the Award Agreement and the Plan, Performance Awards may not be Transferred during the Performance Period.
(c) Objective Performance Goals, Formulae or Standards . With respect to Performance Awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code, the Committee shall establish the objective Performance Goals for the earning of Performance Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. To the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to Performance Awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code.
(d) Dividends . Unless otherwise determined by the Committee at the time of grant, amounts equal to dividends declared during the Performance Period with respect to the number of shares of Common Stock covered by a Performance Award will not be paid to the Participant.
(e) Payment . Following the Committees determination in accordance with Section 9.2(a), the Company shall settle Performance Awards, in such form (including, without limitation, in shares of Common Stock or in cash) as determined by the Committee, in an amount equal to such Participants earned Performance Awards. With respect to any Award that is intended to qualify as performance-based compensation under Section 162(m) of the Code, the Committee shall be precluded from having discretion to increase the amount of compensation payable under the terms of such Award.
(f) Termination . Subject to the applicable provisions of the Award Agreement and the Plan, upon a Participants Termination for any reason during the Performance Period for a given Performance Award, the Performance Award in question will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant.
(g) Accelerated Vesting . Based on service, performance and/or such other factors or criteria, if any, as the Committee may determine, the Committee may, at or after grant, accelerate the vesting of all or any part of any Performance Award.
10.1 Other Stock-Based Awards . The Committee is authorized to grant to Eligible Individuals Other Stock-Based Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Common Stock, including but not limited to, shares of Common Stock awarded purely as a bonus and not subject to restrictions or conditions, shares of Common Stock in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or an Affiliate, stock equivalent units, restricted stock units, and Awards valued by reference to book value of shares of Common Stock. Other Stock-Based Awards may be granted either alone or in addition to or in tandem with other Awards granted under the Plan.
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Subject to the provisions of the Plan, the Committee shall have authority to determine the Eligible Individuals, to whom, and the time or times at which, such Awards shall be made, the number of shares of Common Stock to be awarded pursuant to such Awards, and all other conditions of the Awards. The Committee may also provide for the grant of Common Stock under such Awards upon the completion of a specified Performance Period.
The Committee may condition the grant or vesting of Other Stock-Based Awards upon the attainment of specified Performance Goals as the Committee may determine, in its sole discretion; provided that to the extent that such Other Stock-Based Awards are intended to comply with Section 162(m) of the Code, the Committee shall establish the objective Performance Goals for the grant or vesting of such Other Stock-Based Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. To the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to Performance Awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code.
10.2 Terms and Conditions . Other Stock-Based Awards made pursuant to this Article X shall be subject to the following terms and conditions:
(a) Non-Transferability . Subject to the applicable provisions of the Award Agreement and the Plan, shares of Common Stock subject to Awards made under this Article X may not be Transferred prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.
(b) Dividends . Unless otherwise determined by the Committee at the time of Award, subject to the provisions of the Award Agreement and the Plan, the recipient of an Award under this Article X shall not be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents in respect of the number of shares of Common Stock covered by the Award.
(c) Vesting . Any Award under this Article X and any Common Stock covered by any such Award shall vest or be forfeited to the extent so provided in the Award Agreement, as determined by the Committee, in its sole discretion.
(d) Price . Common Stock issued on a bonus basis under this Article X may be issued for no cash consideration. Common Stock purchased pursuant to a purchase right awarded under this Article X shall be priced, as determined by the Committee in its sole discretion.
10.3 Other Cash-Based Awards . The Committee may from time to time grant Other Cash-Based Awards to Eligible Individuals in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by applicable law, as it shall determine in its sole discretion. Other Cash-Based Awards may be granted subject to the satisfaction of vesting conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and if subject to vesting conditions, the Committee may accelerate the vesting of such Awards at any time in its sole discretion. The grant of an Other Cash-Based Award shall not require a segregation of any of the Companys assets for satisfaction of the Companys payment obligation thereunder.
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11.1 Benefits . In the event of a Change in Control of the Company (as defined below), and except as otherwise provided by the Committee in an Award Agreement, a Participants unvested Award shall not vest automatically and a Participants Award shall be treated in accordance with one or more of the following methods as determined by the Committee:
(a) Awards, whether or not then vested, shall be continued, assumed, or have new rights substituted therefor, as determined by the Committee in a manner consistent with the requirements of Section 409A of the Code, and restrictions to which shares of Restricted Stock or any other Award granted prior to the Change in Control are subject shall not lapse upon a Change in Control and the Restricted Stock or other Award shall, where appropriate in the sole discretion of the Committee, receive the same distribution as other Common Stock on such terms as determined by the Committee; provided that the Committee may decide to award additional Restricted Stock or other Awards in lieu of any cash distribution. Notwithstanding anything to the contrary herein, for purposes of Incentive Stock Options, any assumed or substituted Stock Option shall comply with the requirements of Treasury Regulation Section 1.424-1 (and any amendment thereto).
(b) The Committee, in its sole discretion, may provide for the purchase of any Awards by the Company or an Affiliate for an amount of cash equal to the excess (if any) of the Change in Control Price (as defined below) of the shares of Common Stock covered by such Awards, over the aggregate exercise price of such Awards. For purposes hereof, Change in Control Price shall mean the highest price per share of Common Stock paid in any transaction related to a Change in Control of the Company.
(c) The Committee may, in its sole discretion, terminate all outstanding and unexercised Stock Options, Stock Appreciation Rights, or any Other Stock-Based Award that provides for a Participant elected exercise, effective as of the date of the Change in Control, by delivering notice of termination to each Participant at least 10 days prior to the date of consummation of the Change in Control, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Change in Control, each such Participant shall have the right to exercise in full all of such Participants Awards that are then outstanding (without regard to any limitations on exercisability otherwise contained in the Award Agreements), but any such exercise shall be contingent on the occurrence of the Change in Control, and, provided that, if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void.
(d) Notwithstanding any other provision herein to the contrary, the Committee may, in its sole discretion, provide for accelerated vesting or lapse of restrictions, of an Award at any time.
11.2 Change in Control . Unless otherwise determined by the Committee in the applicable Award Agreement or other written agreement with a Participant approved by the Committee, a Change in Control shall be deemed to occur if:
(a) any person, as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, the Investors, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Stock of the Company), becoming the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Companys then outstanding securities;
(b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in paragraph (a), (c), or (d) of this Section 11.2 or a director whose initial assumption of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) whose election by the Board or nomination for election by the
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Companys stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board;
(c) a merger, reorganization or consolidation of the Company with any other corporation, other than (i) a merger, reorganization or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger, reorganization or consolidation; or (ii) a merger, reorganization or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than those covered by the exceptions in Section 11.2(a)) acquires more than 50% of the combined voting power of the Companys then outstanding securities; or
(d) a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Companys assets other than the sale or disposition of all or substantially all of the assets of the Company to a Person or Persons who beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale.
Notwithstanding the foregoing, with respect to any Award that is characterized as nonqualified deferred compensation within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the Plan for purposes of payment of such Award unless such event is also a change in ownership, a change in effective control or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A of the Code.
11.3 Escrow and Withholding of Proceeds. To the extent the Board determines that the escrow or withholding of any proceeds with respect to any Awards is in the best interest of the Company in connection with a transaction that would result in a Change in Control, the Board shall, in its good faith, make any such determination, taking into account the requirements of Section 409A of the Code, and such determination shall be final, binding and conclusive. The Board may make any such determination with respect to any Awards and shall not be required to treat all Awards in the same manner.
11.4 Initial Public Offering not a Change in Control . Notwithstanding the foregoing, for purposes of the Plan, the occurrence of the Registration Date or any change in the composition of the Board within one year following the Registration Date shall not be considered a Change in Control.
Notwithstanding any other provision of the Plan, the Board may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of the Plan (including any amendment deemed necessary to ensure that the Company may comply with any regulatory requirement referred to in Article XIV or Section 409A of the Code), or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension or termination, may not be impaired without the consent of such Participant and, provided further, that without the approval of the holders of the Companys Common Stock entitled to vote in accordance with applicable law, no amendment may be made that would (a) increase the aggregate number of shares of Common Stock that may be issued under the Plan (except by operation of Section 4.2); (b) increase the maximum individual Participant limitations for a fiscal year under Section 4.1(b) (except by operation of Section 4.2); (c) change the classification of individuals eligible to receive Awards under the Plan; (d) decrease the minimum option price of any Stock Option or Stock Appreciation Right; (e) extend the maximum option period under Section 6.4; (f) alter the Performance Goals for Restricted Stock, Performance Awards or Other Stock-Based Awards as set forth in Exhibit A hereto; (g) award any Stock Option or Stock Appreciation Right in replacement of a canceled Stock Option or Stock Appreciation Right with a higher exercise price than the replacement award; or (h) require stockholder approval in order for the Plan to continue to comply with the applicable provisions of Section 162(m) of the Code or, to the extent applicable to Incentive Stock Options, Section 422 of the Code. In no event may the
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Plan be amended without the approval of the stockholders of the Company in accordance with the applicable laws of the State of Delaware to increase the aggregate number of shares of Common Stock that may be issued under the Plan, decrease the minimum exercise price of any Award, or to make any other amendment that would require stockholder approval under Financial Industry Regulatory Authority (FINRA) rules and regulations or the rules of any exchange or system on which the Companys securities are listed or traded at the request of the Company. Notwithstanding anything herein to the contrary, the Board may amend the Plan or any Award Agreement at any time without a Participants consent to comply with applicable law including Section 409A of the Code. The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Article IV or as otherwise specifically provided herein, no such amendment or other action by the Committee shall impair the rights of any holder without the holders consent.
The Plan is intended to constitute an unfunded plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any right that is greater than those of a general unsecured creditor of the Company.
14.1 Legend . In addition to any legend required by the Plan, the certificates for such shares may include any legend that the Committee deems appropriate to reflect any restrictions on Transfer. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed or any national securities exchange system upon whose system the Common Stock is then quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
14.2 Other Plans . Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.
14.3 No Right to Employment/Directorship/Consultancy . Neither the Plan nor the grant of any Option or other Award hereunder shall give any Participant or other employee, Consultant or Non-Employee Director any right with respect to continuance of employment, consultancy or directorship by the Company or any Affiliate, nor shall there be a limitation in any way on the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate such employment, consultancy or directorship at any time.
14.4 Withholding of Taxes . The Company shall have the right to deduct from any payment to be made pursuant to the Plan, or to otherwise require, prior to the issuance or delivery of shares of Common Stock or the payment of any cash hereunder, payment by the Participant of, any federal, state or local taxes required by law to be withheld. Upon the vesting of Restricted Stock (or other Award that is taxable upon vesting), or upon making an election under Section 83(b) of the Code, a Participant shall pay all required withholding to the Company. Any minimum statutorily required withholding obligation with regard to any Participant may be satisfied, subject to the consent of the Committee, by reducing the number of shares of Common Stock otherwise deliverable or by delivering shares of Common Stock already owned. Furthermore, at the discretion of the Committee, any additional tax obligations of a Participant with respect to an Award may be satisfied by further reducing the number of shares of Common Stock, otherwise deliverable with respect to such Award, to the extent that such reductions do not result in any adverse accounting implications to the company, as determined by the Committee. Any fraction of a share of Common Stock required to satisfy such tax obligations shall be disregarded and the amount due shall be paid instead in cash by the Participant.
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14.5 No Assignment of Benefits . No Award or other benefit payable under the Plan shall, except as otherwise specifically provided by law or permitted by the Committee, be Transferable in any manner, and any attempt to Transfer any such benefit shall be void, and any such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any Person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such Person.
14.6 Listing and Other Conditions .
(a) Unless otherwise determined by the Committee, as long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association, the issuance of shares of Common Stock pursuant to an Award shall be conditioned upon such shares being listed on such exchange or system. The Company shall have no obligation to issue such shares unless and until such shares are so listed, and the right to exercise any Option or other Award with respect to such shares shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion that any sale or delivery of shares of Common Stock pursuant to an Option or other Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on the Company under the statutes, rules or regulations of any applicable jurisdiction, the Company shall have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to shares of Common Stock or Awards, and the right to exercise any Option or other Award shall be suspended until, in the opinion of said counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension under this Section 14.6, any Award affected by such suspension which shall not then have expired or terminated shall be reinstated as to all shares available before such suspension and as to shares which would otherwise have become available during the period of such suspension, but no such suspension shall extend the term of any Award.
(d) A Participant shall be required to supply the Company with certificates, representations and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent or approval the Company deems necessary or appropriate.
14.7 Governing Law . The Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).
14.8 Jurisdiction; Waiver of Jury Trial . Any suit, action or proceeding with respect to the Plan or any Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of any thereof, shall be resolved only in the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, the Company and each Participant shall irrevocably and unconditionally (a) submit in any proceeding relating to the Plan or any Award Agreement, or for the recognition and enforcement of any judgment in respect thereof (a Proceeding ), to the exclusive jurisdiction of the courts of the State of Delaware, the court of the United States of America for the District of Delaware, and appellate courts having jurisdiction of appeals from any of the foregoing, and agree that all claims in respect of any such Proceeding shall be heard and determined in such Delaware State court or, to the extent permitted by law, in such federal court, (b) consent that any such Proceeding may and shall be brought in such courts and waive any objection that the Company and each Participant may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agree not to plead or claim the same, (c) waive all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to the Plan or any Award Agreement, (d) agree that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Participant, at the Participants address shown in the books and records of the Company or, in the case of the Company, at the Companys principal offices, attention General Counsel,
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and (e) agree that nothing in the Plan shall affect the right to effect service of process in any other manner permitted by the laws of the State of Delaware.
14.9 Construction . Wherever any words are used in the Plan in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. Additionally, the words include, includes and including shall be deemed to be followed by the phrase without limitation.
14.10 Other Benefits . No Award granted or paid out under the Plan shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its Affiliates nor affect any benefit under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation.
14.11 Costs . The Company shall bear all expenses associated with administering the Plan, including expenses of issuing Common Stock pursuant to Awards hereunder.
14.12 No Right to Same Benefits . The provisions of Awards need not be the same with respect to each Participant, and such Awards to individual Participants need not be the same in subsequent years.
14.13 Death/Disability . The Committee may in its discretion require the transferee of a Participant to supply it with written notice of the Participants death or Disability and to supply it with a copy of the will (in the case of the Participants death) or such other evidence as the Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require that the agreement of the transferee to be bound by all of the terms and conditions of the Plan.
14.14 Section 16(b) of the Exchange Act . All elections and transactions under the Plan by Persons subject to Section 16 of the Exchange Act involving shares of Common Stock are intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Exchange Act, as it may deem necessary or proper for the administration and operation of the Plan and the transaction of business thereunder.
14.15 Section 409A of the Code . The Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. Notwithstanding anything herein to the contrary, any provision in the Plan that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with Section 409A of the Code and to the extent such provision cannot be amended to comply therewith, such provision shall be null and void. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee or the Company and, in the event that any amount or benefit under the Plan becomes subject to penalties under Section 409A of the Code, responsibility for payment of such penalties shall rest solely with the affected Participants and not with the Company. Notwithstanding any contrary provision in the Plan or Award Agreement, any payment(s) of nonqualified deferred compensation (within the meaning of Section 409A of the Code) that are otherwise required to be made under the Plan to a specified employee (as defined under Section 409A of the Code) as a result of such employees separation from service (other than a payment that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such separation from service (or, if earlier, the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period.
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14.16 Successor and Assigns . The Plan shall be binding on all successors and permitted assigns of a Participant, including, without limitation, the estate of such Participant and the executor, administrator or trustee of such estate.
14.17 Severability of Provisions . If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included.
14.18 Payments to Minors, Etc . Any benefit payable to or for the benefit of a minor, an incompetent Person or other Person incapable of receipt thereof shall be deemed paid when paid to such Persons guardian or to the party providing or reasonably appearing to provide for the care of such Person, and such payment shall fully discharge the Committee, the Board, the Company, its Affiliates and their employees, agents and representatives with respect thereto.
14.19 Lock-Up Agreement . As a condition to the grant of an Award, if requested by the Company and the lead underwriter of any public offering of the Common Stock (the Lead Underwriter ), a Participant shall irrevocably agree not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of, any interest in any Common Stock or any securities convertible into, derivative of, or exchangeable or exercisable for, or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during such period of time following the effective date of a registration statement of the Company filed under the Securities Act that the Lead Underwriter shall specify (the Lock-Up Period ). The Participant shall further agree to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agree that the Company may impose stop-transfer instructions with respect to Common Stock acquired pursuant to an Award until the end of such Lock-Up Period.
14.20 Headings and Captions . The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.
14.21 Section 162(m) of the Code . Notwithstanding any other provision of the Plan to the contrary, the provisions of the Plan requiring compliance with Section 162(m) of the Code shall not apply to Awards granted under the Plan that are not intended to qualify as performance-based compensation under Section 162(m) of the Code.
14.22 Company Recoupment of Awards . A Participants rights with respect to any Award hereunder shall in all events be subject to (a) any right that the Company may have under any Company recoupment policy or other agreement or arrangement with a Participant, or (b) any right or obligation that the Company may have regarding the clawback of incentive-based compensation under Section 10D of the Exchange Act and any applicable rules and regulations promulgated thereunder from time to time by the U.S. Securities and Exchange Commission.
The Plan shall become effective on [], 2017, which is the date of its adoption by the Board, subject to the approval of the Plan by the stockholders of the Company in accordance with the requirements of the laws of the State of Delaware.
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No Award shall be granted pursuant to the Plan on or after the tenth anniversary of the earlier of the date that the Plan is adopted or the date of stockholder approval, but Awards granted prior to such tenth anniversary may extend beyond that date; provided that no Award (other than a Stock Option or Stock Appreciation Right) that is intended to be performance-based compensation under Section 162(m) of the Code shall be granted on or after the fifth anniversary of the stockholder approval of the Plan unless the Performance Goals are re-approved (or other designated Performance Goals are approved) by the stockholders no later than the first stockholder meeting that occurs in the fifth year following the year in which stockholders approve the Performance Goals.
The Plan shall be known as the Cision Ltd. 2017 Omnibus Incentive Plan.
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To the extent permitted under Section 162(m) of the Code, performance goals established for purposes of Awards intended to be performance-based compensation under Section 162(m) of the Code, shall be based on the attainment of certain target levels of, or a specified increase or decrease (as applicable) in one or more of the following performance goals:
| earnings per share; |
| operating income; |
| gross income; |
| net income (before or after taxes); |
| cash flow; |
| gross profit; |
| gross profit return on investment; |
| gross margin return on investment; |
| gross margin; |
| operating margin; |
| working capital; |
| earnings before interest and taxes; |
| earnings before interest, tax, depreciation and amortization; |
| adjusted earnings before interest, tax, depreciation and amortization; |
| return on equity; |
| return on assets; |
| return on capital; |
| return on invested capital; |
| net revenues; |
| gross revenues; |
| net recurring revenues; |
| revenue growth; |
| annual recurring revenues; |
| recurring revenues; |
| license revenues; |
| sales or market share; |
| total shareholder return; |
| economic value added; |
| revenue and Adjusted EBITDA growth excluding the impact of acquisitions; |
| revenue and Adjusted EBITDA of specific business units; |
| customer/recurring revenue retention rates; |
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| product development milestone; |
| sales performance (i.e., new recurring revenue added in the period); |
| specified objectives with regard to limiting the level of increase in all or a portion of the Companys bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of cash balances and/or other offsets and adjustments as may be established by the Committee in its sole discretion; |
| the fair market value of a share of Common Stock; |
| the growth in the value of an investment in the Common Stock assuming the reinvestment of dividends; |
| reduction in operating expenses; |
| cash earnings per share; |
| adjusted net income; |
| adjusted net income per share; |
| volume/volume growth; |
| in year volume; |
| merchant account production; |
| distribution partner account production; |
| new merchant locations; |
| new merchant locations using a particular product; |
| calculated attrition; |
| product revenue; |
| goals based on product performance; |
| annual cash adjusted earnings per share growth; |
| annual stock price growth; |
| diluted earnings per share; |
| total shareholder return positioning within a comparator group; or |
| adjusted cash net income per share. |
With respect to Awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code, to the extent permitted under Section 162(m) of the Code, the Committee may, in its sole discretion, also exclude, or adjust to reflect, the impact of an event or occurrence that the Committee determines should be appropriately excluded or adjusted, including:
(a) restructurings, discontinued operations, extraordinary items or events, and other unusual or non-recurring charges as described in Accounting Standards Codification 225-20, Extraordinary and Unusual Items, and/or managements discussion and analysis of financial condition and results of operations appearing or incorporated by reference in the Companys Form 10-K for the applicable year;
(b) an event either not directly related to the operations of the Company or not within the reasonable control of the Companys management; or
(c) a change in tax law or accounting standards required by generally accepted accounting principles.
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Performance goals may also be based upon individual participant performance goals, as determined by the Committee, in its sole discretion. In addition, Awards that are not intended to qualify as performance-based compensation under Section 162(m) of the Code may be based on the performance goals set forth herein or on such other performance goals as determined by the Committee in its sole discretion.
In addition, such performance goals may be based upon the attainment of specified levels of Company (or subsidiary, division, other operational unit, administrative department or product category of the Company) performance under one or more of the measures described above relative to the performance of other corporations. With respect to Awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code, to the extent permitted under Section 162(m) of the Code, but only to the extent permitted under Section 162(m) of the Code (including, without limitation, compliance with any requirements for stockholder approval), the Committee may also:
(a) designate additional business criteria on which the performance goals may be based; or
(b) adjust, modify or amend the aforementioned business criteria.
C-29
Until [], 2017, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
Cayman Islands law does not limit the extent to which a companys memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against fraud or willful default or the consequences of committing a crime. Holdings memorandum and articles of association provides for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud, or willful default.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is theretofore unenforceable.
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Exhibit No. | Description | Included | Form | Filing Date | ||||||
2.1 | Agreement and Plan of Merger, dated as of March 19, 2017, by and among Capitol Acquisition Corp. III, Capitol Acquisition Holding Company Ltd., Capitol Acquisition Merger Sub, Inc., Canyon Holdings (Cayman) L.P. and Canyon Holdings S.a r.l. | Annex A | | | ||||||
2.2 | Amendment No. 1 to Agreement and Plan of Merger, dated as of April 7, 2017, by and among Capitol Acquisition Corp. III, Capitol Acquisition Holding Company Ltd., Capitol Acquisition Merger Sub, Inc., Canyon Holdings (Cayman) L.P. and Canyon Holdings S.a r.l. | Annex A | | | ||||||
3.1 | Memorandum and Articles of Association of Capitol Acquisition Holding Company Ltd. | Herewith | | | ||||||
3.2 | Amended and Restated Certificate of Incorporation of Capitol Acquisition Corp. III. | By Reference | 8-K | October 15, 2015 | ||||||
3.3 | Bylaws of Capitol Acquisition Corp. III. | By Reference | S-1/A | September 17, 2015 | ||||||
3.4 | Form of Amended and Restated Memorandum and Articles of Association of Cision Ltd. to be in effect upon closing of the Transactions. | Annex B | | | ||||||
4.1 | Specimen Unit Certificate of Capitol Acquisition Corp. III. | By Reference | S-1/A | September 17, 2015 | ||||||
4.2 | Specimen Common Stock Certificate of Capitol Acquisition Corp. III. | By Reference | S-1/A | September 17, 2015 | ||||||
4.3 | Specimen Warrant Certificate of Capitol Acquisition Corp. III. | By Reference | S-1/A | October 7, 2015 |
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Exhibit No. | Description | Included | Form | Filing Date | ||||
4.4 | Specimen Ordinary Share Certificate of Capitol Acquisition Holding Company Ltd. | Herewith | | | ||||
4.5 | Form of Assignment and Assumption Agreement between Continental Stock Transfer & Trust Company, Capitol Acquisition Corp. III and Capitol Acquisition Holding Company Ltd. | Herewith | | | ||||
5.1 | Form of Opinion of Walkers Global | Herewith | | | ||||
10.1 | Letter Agreement signed by each of Capitol Acquisition Management 3 LLC and Mark D. Ein. | By Reference | 8-K | October 15, 2015 | ||||
10.2 | Letter Agreement signed by each of Capitol Acquisition Founder 3 LLC and L. Dyson Dryden. | By Reference | 8-K | October 15, 2015 | ||||
10.3 |
Form of Letter Agreement signed by each
of Lawrence Calcano, Piyush Soda and Richard C. Donaldson. |
By Reference | 8-K | October 15, 2015 | ||||
10.4 | Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and Capitol Acquisition Corp. III. | By Reference | 8-K | October 15, 2015 | ||||
10.5 | Stock Escrow Agreement between Capitol Acquisition Corp. III, Continental Stock Transfer & Trust Company and each of Capitol Acquisition Management 3 LLC, Capitol Acquisition Founder 3 LLC, Lawrence Calcano, Richard C. Donaldson and Piyush Sodha. | By Reference | 8-K | October 15, 2015 | ||||
10.6 | Registration Rights Agreement among Capitol Acquisition Corp. III and each of Capitol Acquisition Management 3 LLC, Capitol Acquisition Founder 3 LLC, Lawrence Calcano, Richard C. Donaldson and Piyush Sodha. | By Reference | 8-K | October 15, 2015 | ||||
10.7 | Administrative Services Agreement between Capitol Acquisition Corp. III, Venturehouse Group, LLC and Dryden Capital Management, LLC. | By Reference | 8-K | October 15, 2015 | ||||
10.8 | Form of Subscription Agreement for founders warrants. | By Reference | S-1/A | September 17, 2015 | ||||
10.9 | Form of promissory note issued to officers and directors. | By Reference | 8-K | August 17, 2016 | ||||
10.10 | Form of commitment letter | By Reference | 8-K | November 10, 2016 | ||||
10.13 | Form of Registration Rights Agreement between Capitol Acquisition Holding Company Ltd. and certain holders identified therein. | Previously filed | | | ||||
10.14 | Form of Nominating Agreement | Previously filed | | | ||||
10.15 | 2017 Omnibus Incentive Agreement | Annex C | | |
II-2
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Exhibit No. | Description | Included | Form | Filing Date | ||||
10.16 | Form of Non-Equity Incentive Plan | Herewith | | | ||||
10.17 | Form of Director and Officer Indemnification Agreements | Herewith | | | ||||
10.18 | Form of Management Employment Agreement | To be filed by Amendment | | | ||||
10.19 | Form of Management Equity Agreement | To be filed by Amendment | | | ||||
10.20 | First Lien Credit Agreement | Herewith | | | ||||
10.21 | Amendment to First Lien Credit Agreement | Herewith | | | ||||
10.22 | Second Lien Credit Agreement | Herewith | | | ||||
10.23 | Support Agreement | Herewith | | | ||||
21.1 | Subsidiaries of the Registrant | Herewith | | | ||||
23.1 | Consent of PricewaterhouseCoopers, Certified Public Accountants | Herewith | | | ||||
23.2 | Consent of Marcum LLP | Herewith | | | ||||
23.3 | Consent of Walkers Global | Included within exhibit 5.1 | | | ||||
23.4 | Consent of Ernst & Young LLP (with respect to Vocus, Inc. financial statements) | Herewith | | | ||||
23.5 | Consent of Ernst & Young LLP (with respect to PRN Group) | Herewith | | | ||||
99.1 | Consent of Stephen P. Master (Director nominee) | Herewith | | | ||||
99.2 | Consent of Stuart Yarbrough (Director nominee) | Herewith | | | ||||
99.3 | Consent of Kevin Akeroyd (Director nominee) | Herewith | | | ||||
99.4 | Consent of Mark M. Anderson (Director nominee) | Herewith | | | ||||
99.5 | Consent of Philip A. Canfield (Director nominee) | Herewith | | | ||||
99.6 | Form of Preliminary Proxy Card | Herewith | | |
The undersigned registrant hereby undertakes:
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
i. | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
ii. | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to |
II-3
Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement. |
iii. | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
The registrant undertakes that every prospectus: (1) that is filed pursuant to the immediately preceding paragraph, or (2) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
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Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Washington, D.C., on the 15 th day of May, 2017.
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CAPITOL ACQUISITION HOLDING COMPANY LTD.
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By:
/s/ Mark D. Ein
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KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark D. Ein acting singly, his true and lawful attorney-in-fact, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments including post-effective amendments to this proxy statement/prospectus and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
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Name | Title | Date | ||
By: /s/ Mark D. Ein
Mark D. Ein |
President and Director
(Principal Executive Officer and Principal Financial and Accounting Officer) |
May 15, 2017 | ||
By: /s/ L. Dyson Dryden
L. Dyson Dryden |
Director | May 15, 2017 |
Pursuant to the requirements of the Securities Act of 1933, as amended, Capitol Acquisition Holding Company Ltd. has duly caused this registration statement to be signed by the following duly authorized representative in the United States:
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Date: May 15, 2017 |
By: /s/ Mark D. Ein
Name: Mark D. Ein Title: Authorized Representative in the United States |
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Exhibit 3.1
THE COMPANIES LAW (AS AMENDED)
COMPANY LIMITED BY SHARES
Memorandum OF association
of
Capitol Acquisition Holding Company Ltd.
Ref: AB/jjC5999-144342
THE COMPANIES LAW (AS AMENDED)
COMPANY LIMITED BY SHARES
MEMORANDUM of ASSOCIATION
OF
Capitol Acquisition Holding Company Ltd.
1. | The name of the company is Capitol Acquisition Holding Company Ltd. (the " Company "). |
2. | The registered office of the Company will be situated at the offices of Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands or at such other location as the Directors may from time to time determine. |
3. | The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by any law as provided by Section 7(4) of the Companies Law (as amended) of the Cayman Islands (the " Companies Law "). |
4. | The Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit as provided by Section 27(2) of the Companies Law. |
5. | The Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this section shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands. |
6. | The liability of the shareholders of the Company is limited to the amount, if any, unpaid on the shares respectively held by them. |
7. | The capital of the Company is US$50,000 divided into 500,000,000 shares of a nominal or par value of US$0.0001 each provided always that subject to the Companies Law and the Articles of Association the Company shall have power to redeem or purchase any of its shares and to sub-divide or consolidate the said shares or any of them and to issue all or any part of its capital whether original, redeemed, increased or reduced with or without any preference, priority, special privilege or other rights or subject to any postponement of rights or to any conditions or restrictions whatsoever and so that unless the conditions of issue shall otherwise expressly provide every issue of shares whether stated to be ordinary, preference or otherwise shall be subject to the powers on the part of the Company hereinbefore provided. |
8. | The Company may exercise the power contained in Section 206 of the Companies Law to deregister in the Cayman Islands and be registered by way of continuation in some other jurisdiction. |
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The undersigned, whose name, address and description are set out below, wishes the Company to be incorporated as a company in the Cayman Islands in accordance with this Memorandum of Association, and agrees to take the number of shares in the capital of the Company as set out opposite the undersigned's name.
NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER |
NUMBER OF SHARES TAKEN BY SUBSCRIBER |
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Walkers Nominees Limited, 190 Elgin Avenue, George Town, Grand Cayman KY1-9001, Cayman Islands | ONE SHARE | |
Andrew Barker as Authorised Signatory of Walkers Nominees Limited |
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Dated: 9 March 2017 |
Signature of Witness | ||
Name: | Julieann Jack | |
Address: | 190 Elgin Avenue, George Town, Grand Cayman KY1-9001, Cayman Islands | |
Occupation: | Secretary |
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THE COMPANIES LAW (AS AMENDED)
COMPANY LIMITED BY SHARES
Articles OF association
of
Capitol Acquisition Holding Company Ltd.
Ref: AB/jjC5999-144342
TABLE OF CONTENTS
CLAUSE | PAGE |
TABLE A | 1 |
Interpretation | 1 |
Preliminary | 4 |
Shares | 4 |
Modification Of Rights | 5 |
Certificates | 5 |
Fractional Shares | 5 |
Lien | 6 |
Calls On Shares | 6 |
Forfeiture Of Shares | 7 |
Transfer Of Shares | 8 |
Transmission Of Shares | 8 |
Alteration Of SHARE Capital | 9 |
Redemption, Purchase and Surrender Of Shares | 9 |
Treasury Shares | 10 |
General Meetings | 11 |
Notice Of General Meetings | 11 |
Proceedings At General Meetings | 12 |
Votes Of shareholders | 13 |
Corporations Acting By Representatives At Meetings | 14 |
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COMPANIES LAW (AS AMENDED)
Company Limited by Shares
ARTICLES OF ASSOCIATION
OF
Capitol Acquisition Holding Company Ltd.
TABLE A
The Regulations contained or incorporated in Table 'A' in the First Schedule of the Companies Law shall not apply to Capitol Acquisition Holding Company Ltd. (the " Company ") and the following Articles shall comprise the Articles of Association of the Company.
Interpretation
1. | In these Articles the following defined terms will have the meanings ascribed to them, if not inconsistent with the subject or context: |
" Articles " means these articles of association of the Company, as amended or substituted from time to time.
" Branch Register " means any branch Register of such category or categories of Members as the Company may from time to time determine.
" Class " or " Classes " means any class or classes of Shares as may from time to time be issued by the Company.
" Companies Law " means the Companies Law (as amended) of the Cayman Islands.
" Directors " means the directors of the Company for the time being, or as the case may be, the directors assembled as a board or as a committee thereof.
" Memorandum of Association " means the memorandum of association of the Company, as amended or substituted from time to time.
" Office " means the registered office of the Company as required by the Companies Law.
" Officers " means the officers for the time being and from time to time of the Company.
" Ordinary Resolution " means a resolution:
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(a) | passed by a simple majority of such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Shareholder is entitled; or |
(b) | approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments, if more than one, is executed. |
" paid up " means paid up as to the par value in respect of the issue of any Shares and includes credited as paid up.
" Person " means any natural person, firm, company, joint venture, partnership, corporation, association or other entity (whether or not having a separate legal personality) or any of them as the context so requires, other than in respect of a Director or Officer in which circumstances Person shall mean any person or entity permitted to act as such in accordance with the laws of the Cayman Islands.
" Principal Register ", where the Company has established one or more Branch Registers pursuant to the Companies Law and these Articles, means the Register maintained by the Company pursuant to the Companies Law and these Articles that is not designated by the Directors as a Branch Register.
" Register " means the register of Members of the Company required to be kept pursuant to the Companies Law and includes any Branch Register(s) established by the Company in accordance with the Companies Law.
" Seal " means the common seal of the Company (if adopted) including any facsimile thereof.
" Secretary " means any Person appointed by the Directors to perform any of the duties of the secretary of the Company.
" Share " means a share in the capital of the Company. All references to "Shares" herein shall be deemed to be Shares of any or all Classes as the context may require. For the avoidance of doubt in these Articles the expression "Share" shall include a fraction of a Share.
" Shareholder " or " Member " means a Person who is registered as the holder of Shares in the Register and includes each subscriber to the Memorandum of Association pending entry in the Register of such subscriber.
" Share Premium Account " means the share premium account established in accordance with these Articles and the Companies Law.
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" signed " means bearing a signature or representation of a signature affixed by mechanical means.
" Special Resolution " means a special resolution of the Company passed in accordance with the Companies Law, being a resolution:
(a) | passed by a majority of not less than two-thirds of such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Shareholder is entitled; or |
(b) | approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments, if more than one, is executed. |
" Treasury Shares " means Shares that were previously issued but were purchased, redeemed, surrendered or otherwise acquired by the Company and not cancelled.
2. | In these Articles, save where the context requires otherwise: |
(a) | words importing the singular number shall include the plural number and vice versa; |
(b) | words importing the masculine gender only shall include the feminine gender and any Person as the context may require; |
(c) | the word "may" shall be construed as permissive and the word "shall" shall be construed as imperative; |
(d) | reference to a dollar or dollars or USD (or $) and to a cent or cents is reference to dollars and cents of the United States of America; |
(e) | reference to a statutory enactment shall include reference to any amendment or re-enactment thereof for the time being in force; |
(f) | reference to any determination by the Directors shall be construed as a determination by the Directors in their sole and absolute discretion and shall be applicable either generally or in any particular case; and |
(g) | reference to "in writing" shall be construed as written or represented by any means reproducible in writing, including any form of print, lithograph, email, facsimile, photograph or telex or represented by any other substitute or format for storage or transmission for writing or partly one and partly another. |
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3. | Subject to the preceding Articles, any words defined in the Companies Law shall, if not inconsistent with the subject or context, bear the same meaning in these Articles. |
Preliminary
4. | The business of the Company may be commenced at any time after incorporation. |
5. | The Office shall be at such address in the Cayman Islands as the Directors may from time to time determine. The Company may in addition establish and maintain such other offices and places of business and agencies in such places as the Directors may from time to time determine. |
6. | The expenses incurred in the formation of the Company and in connection with the offer for subscription and issue of Shares shall be paid by the Company. Such expenses may be amortised over such period as the Directors may determine and the amount so paid shall be charged against income and/or capital in the accounts of the Company as the Directors shall determine. |
7. | The Directors shall keep, or cause to be kept, the Register at such place or (subject to compliance with the Companies Law and these Articles) places as the Directors may from time to time determine. In the absence of any such determination, the Register shall be kept at the Office. The Directors may keep, or cause to be kept, one or more Branch Registers as well as the Principal Register in accordance with the Companies Law, provided always that a duplicate of such Branch Register(s) shall be maintained with the Principal Register in accordance with the Companies Law. |
Shares
8. | Subject to these Articles, all Shares for the time being unissued shall be under the control of the Directors who may: |
(a) | issue, allot and dispose of the same to such Persons, in such manner, on such terms and having such rights and being subject to such restrictions as they may from time to time determine; and |
(b) | grant options with respect to such Shares and issue warrants or similar instruments with respect thereto; |
and, for such purposes, the Directors may reserve an appropriate number of Shares for the time being unissued.
9. | The Directors, or the Shareholders by Ordinary Resolution, may authorise the division of Shares into any number of Classes and sub-classes and the different Classes and sub-classes shall be authorised, established and designated (or re-designated as the case may be) and the variations in the relative rights (including, without limitation, voting, dividend and redemption rights), restrictions, preferences, privileges and payment obligations as between the different Classes (if any) may be fixed and determined by the Directors or the Shareholders by Ordinary Resolution. |
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10. | The Company may insofar as may be permitted by law, pay a commission to any Person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares. Such commissions may be satisfied by the payment of cash or the lodgement of fully or partly paid-up Shares or partly in one way and partly in the other. The Company may also pay such brokerage as may be lawful on any issue of Shares. |
11. | The Directors may refuse to accept any application for Shares, and may accept any application in whole or in part, for any reason or for no reason. |
Modification Of Rights
12. | Whenever the capital of the Company is divided into different Classes (and as otherwise determined by the Directors) the rights attached to any such Class may, subject to any rights or restrictions for the time being attached to any Class only be materially adversely varied or abrogated with the consent in writing of the holders of not less than two-thirds of the issued Shares of the relevant Class, or with the sanction of a resolution passed at a separate meeting of the holders of the Shares of such Class by a majority of two-thirds of the votes cast at such a meeting. To every such separate meeting all the provisions of these Articles relating to general meetings of the Company or to the proceedings thereat shall, mutatis mutandis , apply, except that the necessary quorum shall be one or more Persons at least holding or representing by proxy one-third in nominal or par value amount of the issued Shares of the relevant Class (but so that if at any adjourned meeting of such holders a quorum as above defined is not present, those Shareholders who are present shall form a quorum) and that, subject to any rights or restrictions for the time being attached to the Shares of that Class, every Shareholder of the Class shall on a poll have one vote for each Share of the Class held by him. For the purposes of this Article the Directors may treat all the Classes or any two or more Classes as forming one Class if they consider that all such Classes would be affected in the same way by the proposals under consideration , but in any other case shall treat them as separate Classes. The Directors may vary the rights attaching to any Class without the consent or approval of Shareholders provided that the rights will not, in the determination of the Directors, be materially adversely varied or abrogated by such action. |
Certificates
13. | No Person shall be entitled to a certificate for any or all of his Shares, unless the Directors shall determine otherwise. |
Fractional Shares
14. | The Directors may issue fractions of a Share and, if so issued, a fraction of a Share shall be subject to and carry the corresponding fraction of liabilities (whether with respect to nominal or par value, premium, contributions, calls or otherwise), limitations, preferences, privileges, qualifications, restrictions, rights (including, without prejudice to the generality of the foregoing, voting and participation rights) and other attributes of a whole Share. If more than one fraction of a Share of the same Class is issued to or acquired by the same Shareholder such fractions shall be accumulated. |
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Lien
15. | The Company has a first and paramount lien on every Share (whether or not fully paid) for all amounts (whether presently payable or not) payable at a fixed time or called in respect of that Share. The Company also has a first and paramount lien on every Share (whether or not fully paid) registered in the name of a Person indebted or under liability to the Company (whether he is the sole registered holder of a Share or one of two or more joint holders) for all amounts owing by him or his estate to the Company (whether or not presently payable). The Directors may at any time declare a Share to be wholly or in part exempt from the provisions of this Article. The Company's lien on a Share extends to any amount payable in respect of it. |
16. | The Company may sell, in such manner as the Directors may determine, any Share on which the Company has a lien, but no sale shall be made unless an amount in respect of which the lien exists is presently payable nor until the expiration of fourteen days after a notice in writing, demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the Share, or the Persons entitled thereto by reason of his death or bankruptcy. |
17. | For giving effect to any such sale the Directors may authorise some Person to transfer the Shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the Shares comprised in any such transfer and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. |
18. | The proceeds of the sale after deduction of expenses, fees and commission incurred by the Company shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue shall (subject to a like lien for sums not presently payable as existed upon the Shares prior to the sale) be paid to the Person entitled to the Shares immediately prior to the sale. |
Calls On Shares
19. | The Directors may from time to time make calls upon the Shareholders in respect of any moneys unpaid on their Shares, and each Shareholder shall (subject to receiving at least fourteen days' notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on such Shares. |
20. | The joint holders of a Share shall be jointly and severally liable to pay calls in respect thereof. |
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21. | If a sum called in respect of a Share is not paid before or on the day appointed for payment thereof, the Person from whom the sum is due shall pay interest upon the sum at the rate of eight percent per annum from the day appointed for the payment thereof to the time of the actual payment, but the Directors shall be at liberty to waive payment of that interest wholly or in part. |
22. | The provisions of these Articles as to the liability of joint holders and as to payment of interest shall apply in the case of non-payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the amount of the Share, or by way of premium, as if the same had become payable by virtue of a call duly made and notified. |
23. | The Directors may make arrangements on the issue of partly paid Shares for a difference between the Shareholders, or the particular Shares, in the amount of calls to be paid and in the times of payment. |
24. | The Directors may, if they think fit, receive from any Shareholder willing to advance the same all or any part of the moneys uncalled and unpaid upon any partly paid Shares held by him, and upon all or any of the moneys so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without the sanction of an Ordinary Resolution, eight percent per annum) as may be agreed upon between the Shareholder paying the sum in advance and the Directors. |
Forfeiture Of Shares
25. | If a Shareholder fails to pay any call or instalment of a call in respect of any Shares on the day appointed for payment, the Directors may, at any time thereafter during such time as any part of such call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued. |
26. | The notice shall name a further day (not earlier than the expiration of fourteen days from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time appointed the Shares in respect of which the call was made will be liable to be forfeited. |
27. | If the requirements of any such notice as aforesaid are not complied with, any Share in respect of which the notice has been given may at any time thereafter, before the payment required by notice has been made, be forfeited by a resolution of the Directors to that effect. |
28. | A forfeited Share may be sold or otherwise disposed of on such terms and in such manner as the Directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors think fit. |
29. | A Person whose Shares have been forfeited shall cease to be a Shareholder in respect of the forfeited Shares, but shall, notwithstanding, remain liable to pay to the Company all moneys which at the date of forfeiture were payable by him to the Company in respect of the Shares forfeited, but his liability shall cease if and when the Company receives payment in full of the amount unpaid on the Shares forfeited. |
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30. | A statutory declaration in writing that the declarant is a Director, and that a Share has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts in the declaration as against all Persons claiming to be entitled to the Share. |
31. | The Company may receive the consideration, if any, given for a Share on any sale or disposition thereof pursuant to the provisions of these Articles as to forfeiture and may execute a transfer of the Share in favour of the Person to whom the Share is sold or disposed of and that Person shall be registered as the holder of the Share, and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the disposition or sale. |
32. | The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which by the terms of issue of a Share becomes due and payable, whether on account of the amount of the Share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified. |
Transfer Of Shares
33. | The instrument of transfer of any Share shall be in any usual or common form or such other form as the Directors may determine and be executed by or on behalf of the transferor and if in respect of a nil or partly paid up Share, or if so required by the Directors, shall also be executed on behalf of the transferee and shall be accompanied by the certificate (if any) of the Shares to which it relates and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The transferor shall be deemed to remain a Shareholder until the name of the transferee is entered in the Register in respect of the relevant Shares. |
34. | Subject to the terms of issue thereof, the Directors may determine to decline to register any transfer of Shares without assigning any reason therefor. |
35. | The registration of transfers may be suspended at such times and for such periods as the Directors may from time to time determine. |
36. | All instruments of transfer that are registered shall be retained by the Company, but any instrument of transfer that the Directors decline to register shall (except in any case of fraud) be returned to the Person depositing the same. |
Transmission Of Shares
37. | The legal personal representative of a deceased sole holder of a Share shall be the only Person recognised by the Company as having any title to the Share. In the case of a Share registered in the name of two or more holders, the survivors or survivor, or the legal personal representatives of the deceased holder of the Share, shall be the only Person recognised by the Company as having any title to the Share. |
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38. | Any Person becoming entitled to a Share in consequence of the death or bankruptcy of a Shareholder shall upon such evidence being produced as may from time to time be required by the Directors, have the right either to be registered as a Shareholder in respect of the Share or, instead of being registered himself, to make such transfer of the Share as the deceased or bankrupt Person could have made; but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the deceased or bankrupt Person before the death or bankruptcy. |
39. | A Person becoming entitled to a Share by reason of the death or bankruptcy of a Shareholder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered Shareholder, except that he shall not, before being registered as a Shareholder in respect of the Share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company. |
Alteration Of SHARE Capital
40. | The Company may from time to time by Ordinary Resolution increase the share capital by such sum, to be divided into Shares of such Classes and amount, as the resolution shall prescribe. |
41. | The Company may by Ordinary Resolution: |
(a) | consolidate and divide all or any of its share capital into Shares of a larger amount than its existing Shares; |
(b) | convert all or any of its paid up Shares into stock and reconvert that stock into paid up Shares of any denomination; |
(c) | subdivide its existing Shares, or any of them into Shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced Share shall be the same as it was in case of the Share from which the reduced Share is derived; and |
(d) | cancel any Shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any Person and diminish the amount of its share capital by the amount of the Shares so cancelled. |
42. | The Company may by Special Resolution reduce its share capital and any capital redemption reserve in any manner authorised by law. |
Redemption, Purchase and Surrender Of Shares
43. | Subject to the Companies Law, the Company may: |
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(a) | issue Shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company or the Shareholder on such terms and in such manner as the Directors may determine; |
(b) | purchase its own Shares (including any redeemable Shares) on such terms and in such manner as the Directors may determine and agree with the Shareholder; |
(c) | make a payment in respect of the redemption or purchase of its own Shares in any manner authorised by the Companies Law, including out of its capital; and |
(d) | accept the surrender for no consideration of any paid up Share (including any redeemable Share) on such terms and in such manner as the Directors may determine. |
44. | Any Share in respect of which notice of redemption has been given shall not be entitled to participate in the profits of the Company in respect of the period after the date specified as the date of redemption in the notice of redemption. |
45. | The redemption, purchase or surrender of any Share shall not be deemed to give rise to the redemption, purchase or surrender of any other Share. |
46. | The Directors may when making payments in respect of redemption or purchase of Shares, if authorised by the terms of issue of the Shares being redeemed or purchased or with the agreement of the holder of such Shares, make such payment either in cash or in specie including, without limitation, interests in a special purpose vehicle holding assets of the Company or holding entitlement to the proceeds of assets held by the Company or in a liquidating structure. |
Treasury Shares
47. | Shares that the Company purchases, redeems or acquires (by way of surrender or otherwise) may, at the option of the Company, be cancelled immediately or held as Treasury Shares in accordance with the Companies Law. In the event that the Directors do not specify that the relevant Shares are to be held as Treasury Shares, such Shares shall be cancelled. |
48. | No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the Company's assets (including any distribution of assets to members on a winding up) may be declared or paid in respect of a Treasury Share. |
49. | The Company shall be entered in the Register as the holder of the Treasury Shares provided that: |
(a) | the Company shall not be treated as a member for any purpose and shall not exercise any right in respect of the Treasury Shares, and any purported exercise of such a right shall be void; |
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(b) | a Treasury Share shall not be voted, directly or indirectly, at any meeting of the Company and shall not be counted in determining the total number of issued shares at any given time, whether for the purposes of these Articles or the Companies Law, save that an allotment of Shares as fully paid bonus shares in respect of a Treasury Share is permitted and Shares allotted as fully paid bonus shares in respect of a treasury share shall be treated as Treasury Shares. |
50. | Treasury Shares may be disposed of by the Company on such terms and conditions as determined by the Directors. |
General Meetings
51. | The Directors may, whenever they think fit, convene a general meeting of the Company. |
52. | The Directors may cancel or postpone any duly convened general meeting at any time prior to such meeting, except for general meetings requisitioned by the Shareholders in accordance with these Articles, for any reason or for no reason at any time prior to the time for holding such meeting or, if the meeting is adjourned, the time for holding such adjourned meeting. The Directors shall give Shareholders notice in writing of any cancellation or postponement. A postponement may be for a stated period of any length or indefinitely as the Directors may determine. |
53. | General meetings shall also be convened on the requisition in writing of any Shareholder or Shareholders entitled to attend and vote at general meetings of the Company holding at least ten percent of the paid up voting share capital of the Company deposited at the Office specifying the objects of the meeting by notice given no later than 21 days from the date of deposit of the requisition signed by the requisitionists, and if the Directors do not convene such meeting for a date not later than 45 days after the date of such deposit, the requisitionists themselves may convene the general meeting in the same manner, as nearly as possible, as that in which general meetings may be convened by the Directors, and all reasonable expenses incurred by the requisitionists as a result of the failure of the Directors to convene the general meeting shall be reimbursed to them by the Company. |
54. | If at any time there are no Directors, any two Shareholders (or if there is only one Shareholder then that Shareholder) entitled to vote at general meetings of the Company may convene a general meeting in the same manner as nearly as possible as that in which general meetings may be convened by the Directors. |
Notice Of General Meetings
55. | At least seven clear days' notice in writing counting from the date service is deemed to take place as provided in these Articles specifying the place, the day and the hour of the meeting and the general nature of the business, shall be given in the manner hereinafter provided or in such other manner (if any) as may be prescribed by the Company by Ordinary Resolution to such Persons as are, under these Articles, entitled to receive such notices from the Company, but with the consent of all the Shareholders entitled to receive notice of some particular meeting and attend and vote thereat, that meeting may be convened by such shorter notice or without notice and in such manner as those Shareholders may think fit. |
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56. | The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any Shareholder shall not invalidate the proceedings at any meeting. |
Proceedings At General Meetings
57. | All business carried out at a general meeting shall be deemed special with the exception of sanctioning a dividend, the consideration of the accounts, balance sheets, any report of the Directors or of the Company's auditors, and the fixing of the remuneration of the Company's auditors. No special business shall be transacted at any general meeting without the consent of all Shareholders entitled to receive notice of that meeting unless notice of such special business has been given in the notice convening that meeting. |
58. | No business shall be transacted at any general meeting unless a quorum of Shareholders is present at the time when the meeting proceeds to business. Save as otherwise provided by these Articles, one or more Shareholders holding at least a majority of the paid up voting share capital of the Company present in person or by proxy and entitled to vote at that meeting shall form a quorum. |
59. | If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Shareholders, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week, at the same time and place, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting the Shareholder or Shareholders present and entitled to vote shall form a quorum. |
60. | If the Directors wish to make this facility available for a specific general meeting or all general meetings of the Company, participation in any general meeting of the Company may be by means of a telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting. |
61. | The chairman, if any, of the Directors shall preside as chairman at every general meeting of the Company. |
62. | If there is no such chairman, or if at any general meeting he is not present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman, any Director or Person nominated by the Directors shall preside as chairman, failing which the Shareholders present in person or by proxy shall choose any Person present to be chairman of that meeting. |
63. | The chairman may adjourn a meeting from time to time and from place to place either: |
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(a) | with the consent of any general meeting at which a quorum is present (and shall if so directed by the meeting); or |
(b) | without the consent of such meeting if, in his sole opinion, he considers it necessary to do so to: |
(i) | secure the orderly conduct or proceedings of the meeting; or |
(ii) | give all persons present in person or by proxy and having the right to speak and / or vote at such meeting, the ability to do so, |
but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting, or adjourned meeting, is adjourned for fourteen days or more, notice of the adjourned meeting shall be given in the manner provided for the original meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
64. | At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman or one or more Shareholders present in person or by proxy entitled to vote, and unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution. |
65. | If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. |
66. | In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a second or casting vote. |
67. | A poll demanded on the election of a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the meeting directs. |
Votes Of shareholders
68. | Subject to any rights and restrictions for the time being attached to any Share, on a show of hands every Shareholder present in person and every Person representing a Shareholder by proxy shall, at a general meeting of the Company, each have one vote and on a poll every Shareholder and every Person representing a Shareholder by proxy shall have one vote for each Share of which he or the Person represented by proxy is the holder. |
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69. | In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register. |
70. | A Shareholder of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote in respect of Shares carrying the right to vote held by him, whether on a show of hands or on a poll, by his committee, or other Person in the nature of a committee appointed by that court, and any such committee or other Person, may vote in respect of such Shares by proxy. |
71. | No Shareholder shall be entitled to vote at any general meeting of the Company unless all calls, if any, or other sums presently payable by him in respect of Shares carrying the right to vote held by him have been paid. |
72. | On a poll votes may be given either personally or by proxy. |
73. | The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under Seal or under the hand of an Officer or attorney duly authorised. A proxy need not be a Shareholder. |
74. | An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve. |
75. | The instrument appointing a proxy shall be deposited at the Office or at such other place as is specified for that purpose in the notice convening the meeting no later than the time for holding the meeting or, if the meeting is adjourned, the time for holding such adjourned meeting. |
76. | The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. |
77. | A resolution in writing signed by all the Shareholders for the time being entitled to receive notice of and to attend and vote at general meetings of the Company (or being corporations by their duly authorised representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held. |
Corporations Acting By Representatives At Meetings
78. | Any corporation which is a Shareholder or a Director may by resolution of its directors or other governing body authorise such Person as it thinks fit to act as its representative at any meeting of the Company or of any meeting of holders of a Class or of the Directors or of a committee of Directors, and the Person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Shareholder or Director. |
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Directors
79. | The name(s) of the first Director(s) shall either be determined in writing by a majority (or in the case of a sole subscriber that subscriber) of, or elected at a meeting of, the subscribers of the Memorandum of Association. |
80. | The Company may by Ordinary Resolution appoint any Person to be a Director. |
81. | Subject to these Articles, a Director shall hold office until such time as he is removed from office by Ordinary Resolution. |
82. | The Company may by Ordinary Resolution from time to time fix the maximum and minimum number of Directors to be appointed but unless such numbers are fixed as aforesaid the minimum number of Directors shall be one and the maximum number of Directors shall be unlimited. |
83. | The remuneration of the Directors may be determined by the Directors or by Ordinary Resolution. |
84. | There shall be no shareholding qualification for Directors unless determined otherwise by Ordinary Resolution. |
85. | The Directors shall have power at any time and from time to time to appoint any Person to be a Director, either as a result of a casual vacancy or as an additional Director, subject to the maximum number (if any) imposed by Ordinary Resolution. |
Alternate Director
86. | Any Director may in writing appoint another Person to be his alternate and, save to the extent provided otherwise in the form of appointment, such alternate shall have authority to sign written resolutions on behalf of the appointing Director, but shall not be authorised to sign such written resolutions where they have been signed by the appointing Director, and to act in such Director's place at any meeting of the Directors. Every such alternate shall be entitled to attend and vote at meetings of the Directors as the alternate of the Director appointing him and where he is a Director to have a separate vote in addition to his own vote. A Director may at any time in writing revoke the appointment of an alternate appointed by him. Such alternate shall not be an Officer solely as a result of his appointment as an alternate other than in respect of such times as the alternate acts as a Director. The remuneration of such alternate shall be payable out of the remuneration of the Director appointing him and the proportion thereof shall be agreed between them. |
Powers And Duties Of Directors
87. | Subject to the Companies Law, these Articles and to any resolutions passed in a general meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering the Company and may exercise all powers of the Company. No resolution passed by the Company in general meeting shall invalidate any prior act of the Directors that would have been valid if that resolution had not been passed. |
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88. | The Directors may from time to time appoint any Person, whether or not a Director to hold such office in the Company as the Directors may think necessary for the administration of the Company, including but not limited to, the office of president, one or more vice-presidents, treasurer, assistant treasurer, manager or controller, and for such term and at such remuneration (whether by way of salary or commission or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. Any Person so appointed by the Directors may be removed by the Directors or by the Company by Ordinary Resolution. The Directors may also appoint one or more of their number to the office of managing director upon like terms, but any such appointment shall ipso facto terminate if any managing director ceases from any cause to be a Director, or if the Company by Ordinary Resolution resolves that his tenure of office be terminated. |
89. | The Directors may appoint any Person to be a Secretary (and if need be an assistant Secretary or assistant Secretaries) who shall hold office for such term, at such remuneration and upon such conditions and with such powers as they think fit. Any Secretary or assistant Secretary so appointed by the Directors may be removed by the Directors or by the Company by Ordinary Resolution. |
90. | The Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors. |
91. | The Directors may from time to time and at any time by power of attorney (whether under Seal or under hand) or otherwise appoint any company, firm or Person or body of Persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys or authorised signatory (any such person being an " Attorney " or " Authorised Signatory ", respectively) of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of Persons dealing with any such Attorney or Authorised Signatory as the Directors may think fit, and may also authorise any such Attorney or Authorised Signatory to delegate all or any of the powers, authorities and discretion vested in him. |
92. | The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the three next following Articles shall not limit the general powers conferred by this Article. |
93. | The Directors from time to time and at any time may establish any committees, local boards or agencies for managing any of the affairs of the Company and may appoint any Person to be a member of such committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any such Person. |
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94. | The Directors from time to time and at any time may delegate to any such committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorise the members for the time being of any such local board, or any of them to fill any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any Person so appointed and may annul or vary any such delegation, but no Person dealing in good faith and without notice of any such annulment or variation shall be affected thereby. |
95. | Any such delegates as aforesaid may be authorised by the Directors to sub-delegate all or any of the powers, authorities, and discretion for the time being vested in them. |
96. | The Directors may agree with a Shareholder to waive or modify the terms applicable to such Shareholder's subscription for Shares without obtaining the consent of any other Shareholder; provided that such waiver or modification does not amount to a variation or abrogation of the rights attaching to the Shares of such other Shareholders. |
Borrowing Powers Of Directors
97. | The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof, or to otherwise provide for a security interest to be taken in such undertaking, property or uncalled capital, and to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party. |
The Seal
98. | The Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be in general form confirming a number of affixings of the Seal. The Seal shall be affixed in the presence of a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose and every Person as aforesaid shall sign every instrument to which the Seal is so affixed in their presence. |
99. | The Company may maintain a facsimile of the Seal in such countries or places as the Directors may appoint and such facsimile Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of such facsimile Seal and if given after may be in general form confirming a number of affixings of such facsimile Seal. The facsimile Seal shall be affixed in the presence of such Person or Persons as the Directors shall for this purpose appoint and such Person or Persons as aforesaid shall sign every instrument to which the facsimile Seal is so affixed in their presence and such affixing of the facsimile Seal and signing as aforesaid shall have the same meaning and effect as if the Seal had been affixed in the presence of and the instrument signed by a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose. |
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100. | Notwithstanding the foregoing, a Secretary or any assistant Secretary shall have the authority to affix the Seal, or the facsimile Seal, to any instrument for the purposes of attesting authenticity of the matter contained therein but which does not create any obligation binding on the Company. |
Disqualification Of Directors
101. | The office of Director shall be vacated, if the Director: |
(a) | becomes bankrupt or makes any arrangement or composition with his creditors; |
(b) | dies or is found to be or becomes of unsound mind; |
(c) | resigns his office by notice in writing to the Company; |
(d) | is removed from office by Ordinary Resolution; |
(e) | is removed from office by notice addressed to him at his last known address and signed by all of his co-Directors (not being less than two in number); or |
(f) | is removed from office pursuant to any other provision of these Articles. |
Proceedings Of Directors
102. | The Directors may meet together (either within or outside the Cayman Islands) for the despatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes the chairman shall have a second or casting vote. A Director may, and a Secretary or assistant Secretary on the requisition of a Director shall, at any time summon a meeting of the Directors. |
103. | A Director may participate in any meeting of the Directors, or of any committee appointed by the Directors of which such Director is a member, by means of telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting. |
104. | The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed, if there be two or more Directors the quorum shall be two, and if there be one Director the quorum shall be one. A Director represented by an alternate Director at any meeting shall be deemed to be present for the purposes of determining whether or not a quorum is present. |
105. | A Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company shall declare the nature of his interest at a meeting of the Directors. A general notice given to the Directors by any Director to the effect that he is to be regarded as interested in any contract or other arrangement which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made. A Director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of the Directors at which any such contract or proposed contract or arrangement shall come before the meeting for consideration. |
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106. | A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested, be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. A Director, notwithstanding his interest, may be counted in the quorum present at any meeting of the Directors whereat he or any other Director is appointed to hold any such office or place of profit under the Company or whereat the terms of any such appointment are arranged and he may vote on any such appointment or arrangement. |
107. | Any Director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a Director; provided that nothing herein contained shall authorise a Director or his firm to act as auditor to the Company. |
108. | The Directors shall cause minutes to be made in books or loose-leaf folders provided for the purpose of recording: |
(a) | all appointments of Officers made by the Directors; |
(b) | the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and |
(c) | all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors. |
109. | When the chairman of a meeting of the Directors signs the minutes of such meeting the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may have been a technical defect in the proceedings. |
110. | A resolution in writing signed by all the Directors or all the members of a committee of Directors entitled to receive notice of a meeting of Directors or committee of Directors, as the case may be (an alternate Director, subject as provided otherwise in the terms of appointment of the alternate Director, being entitled to sign such a resolution on behalf of his appointer), shall be as valid and effectual as if it had been passed at a duly called and constituted meeting of Directors or committee of Directors, as the case may be. When signed a resolution may consist of several documents each signed by one or more of the Directors or his duly appointed alternate. |
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111. | The continuing Directors may act notwithstanding any vacancy in their body but if and for so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number, or of summoning a general meeting of the Company, but for no other purpose. |
112. | The Directors may elect a chairman of their meetings and determine the period for which he is to hold office but if no such chairman is elected, or if at any meeting the chairman is not present within fifteen minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be chairman of the meeting. |
113. | Subject to any regulations imposed on it by the Directors, a committee appointed by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not present within fifteen minutes after the time appointed for holding the meeting, the committee members present may choose one of their number to be chairman of the meeting. |
114. | A committee appointed by the Directors may meet and adjourn as it thinks proper. Subject to any regulations imposed on it by the Directors, questions arising at any meeting shall be determined by a majority of votes of the committee members present and in case of an equality of votes the chairman shall have a second or casting vote. |
115. | All acts done by any meeting of the Directors or of a committee of Directors, or by any Person acting as a Director, shall notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Director or Person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such Person had been duly appointed and was qualified to be a Director. |
Dividends
116. | Subject to any rights and restrictions for the time being attached to any Shares, or as otherwise provided for in the Companies Law and these Articles, the Directors may from time to time declare dividends (including interim dividends) and other distributions on Shares in issue and authorise payment of the same out of the funds of the Company lawfully available therefor. |
117. | Subject to any rights and restrictions for the time being attached to any Shares, the Company by Ordinary Resolution may declare dividends, but no dividend shall exceed the amount recommended by the Directors. |
118. | The Directors may determine, before recommending or declaring any dividend, to set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall be applicable for meeting contingencies, or for equalising dividends or for any other purpose to which those funds may be properly applied and pending such application may, at the determination of the Directors, either be employed in the business of the Company or be invested in such investments as the Directors may from time to time think fit. |
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119. | Any dividend may be paid in any manner as the Directors may determine. If paid by cheque it will be sent through the post to the registered address of the Shareholder or Person entitled thereto, or in the case of joint holders, to any one of such joint holders at his registered address or to such Person and such address as the Shareholder or Person entitled, or such joint holders as the case may be, may direct. Every such cheque shall be made payable to the order of the Person to whom it is sent or to the order of such other Person as the Shareholder or Person entitled, or such joint holders as the case may be, may direct. |
120. | The Directors when paying dividends to the Shareholders in accordance with the foregoing provisions of these Articles may make such payment either in cash or in specie and may determine the extent to which amounts may be withheld therefrom (including, without limitation, any taxes, fees, expenses or other liabilities for which a Shareholder (or the Company, as a result of any action or inaction of the Shareholder) is liable). |
121. | Subject to any rights and restrictions for the time being attached to any Shares, all dividends shall be declared and paid according to the amounts paid up on the Shares, but if and for so long as nothing is paid up on any of the Shares dividends may be declared and paid according to the par value of the Shares. |
122. | If several Persons are registered as joint holders of any Share, any of them may give effectual receipts for any dividend or other moneys payable on or in respect of the Share. |
123. | No dividend shall bear interest against the Company. |
Accounts, Audit and annual return and declaration
124. | The books of account relating to the Company's affairs shall be kept in such manner as may be determined from time to time by the Directors. |
125. | The books of account shall be kept at the Office, or at such other place or places as the Directors think fit, and shall always be open to the inspection of the Directors. |
126. | The Directors may from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Shareholders not being Directors, and no Shareholder (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by law or authorised by the Directors or by Ordinary Resolution. |
127. | The accounts relating to the Company's affairs shall only be audited if the Directors so determine, in which case the financial year end and the accounting principles will be determined by the Directors. |
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128. | The Directors in each year shall prepare, or cause to be prepared, an annual return and declaration setting forth the particulars required by the Companies Law and deliver a copy thereof to the Registrar of Companies in the Cayman Islands. |
Capitalisation Of reserves
129. | Subject to the Companies Law and these Articles, the Directors may: |
(a) | resolve to capitalise an amount standing to the credit of reserves (including a Share Premium Account, capital redemption reserve and profit and loss account), whether or not available for distribution; |
(b) | appropriate the sum resolved to be capitalised to the Shareholders in proportion to the nominal amount of Shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards: |
(i) | paying up the amounts (if any) for the time being unpaid on Shares held by them respectively, or |
(ii) | paying up in full unissued Shares or debentures of a nominal amount equal to that sum, |
and allot the Shares or debentures, credited as fully paid, to the Shareholders (or as they may direct) in those proportions, or partly in one way and partly in the other, but the Share Premium Account, the capital redemption reserve and profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued Shares to be allotted to Shareholders credited as fully paid;
(c) | make any arrangements they think fit to resolve a difficulty arising in the distribution of a capitalised reserve and in particular, without limitation, where Shares or debentures become distributable in fractions the Directors may deal with the fractions as they think fit; |
(d) | authorise a Person to enter (on behalf of all the Shareholders concerned) into an agreement with the Company providing for either: |
(i) | the allotment to the Shareholders respectively, credited as fully paid, of Shares or debentures to which they may be entitled on the capitalisation, or |
(ii) | the payment by the Company on behalf of the Shareholders (by the application of their respective proportions of the reserves resolved to be capitalised) of the amounts or part of the amounts remaining unpaid on their existing Shares, |
and any such agreement made under this authority being effective and binding on all those Shareholders; and
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(e) | generally do all acts and things required to give effect to any of the actions contemplated by this Article. |
Share Premium Account
130. | The Directors shall in accordance with the Companies Law establish a Share Premium Account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any Share. |
131. | There shall be debited to any Share Premium Account on the redemption or purchase of a Share the difference between the nominal value of such Share and the redemption or purchase price provided always that at the determination of the Directors such sum may be paid out of the profits of the Company or, if permitted by the Companies Law, out of capital. |
Notices
132. | Any notice or document may be served by the Company or by the Person entitled to give notice to any Shareholder either personally, or by posting it airmail or air courier service in a prepaid letter addressed to such Shareholder at his address as appearing in the Register, or by electronic mail to any electronic mail address such Shareholder may have specified in writing for the purpose of such service of notices, or by facsimile should the Directors deem it appropriate. In the case of joint holders of a Share, all notices shall be given to that one of the joint holders whose name stands first in the Register in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders. |
133. | Any Shareholder present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened. |
134. | Any notice or other document, if served by: |
(a) | post, shall be deemed to have been served five clear days after the time when the letter containing the same is posted; |
(b) | facsimile, shall be deemed to have been served upon production by the transmitting facsimile machine of a report confirming transmission of the facsimile in full to the facsimile number of the recipient; |
(c) | recognised courier service, shall be deemed to have been served 48 hours after the time when the letter containing the same is delivered to the courier service; or |
(d) | electronic mail, shall be deemed to have been served immediately upon the time of the transmission by electronic mail. |
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In proving service by post or courier service it shall be sufficient to prove that the letter containing the notice or documents was properly addressed and duly posted or delivered to the courier service.
135. | Any notice or document delivered or sent in accordance with the terms of these Articles shall notwithstanding that such Shareholder be then dead or bankrupt, and whether or not the Company has notice of his death or bankruptcy, be deemed to have been duly served in respect of any Share registered in the name of such Shareholder as sole or joint holder, unless his name shall at the time of the service of the notice or document, have been removed from the Register as the holder of the Share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all Persons interested (whether jointly with or as claiming through or under him) in the Share. |
136. | Notice of every general meeting of the Company shall be given to: |
(a) | all Shareholders holding Shares with the right to receive notice and who have supplied to the Company an address for the giving of notices to them; and |
(b) | every Person entitled to a Share in consequence of the death or bankruptcy of a Shareholder, who but for his death or bankruptcy would be entitled to receive notice of the meeting. |
No other Person shall be entitled to receive notices of general meetings.
Indemnity
137. | Every Director (including for the purposes of this Article any alternate Director appointed pursuant to the provisions of these Articles), Secretary, assistant Secretary, or other Officer (but not including the Company's auditors) and the personal representatives of the same (each an " Indemnified Person ") shall be indemnified and secured harmless against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such Indemnified Person, other than by reason of such Indemnified Person's own dishonesty, wilful default or fraud as determined by a court of competent jurisdiction, in or about the conduct of the Company's business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such Indemnified Person in defending (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere. |
138. | No Indemnified Person shall be liable: |
(a) | for the acts, receipts, neglects, defaults or omissions of any other Director or Officer or agent of the Company; or |
(b) | for any loss on account of defect of title to any property of the Company; or |
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(c) | on account of the insufficiency of any security in or upon which any money of the Company shall be invested; or |
(d) | for any loss incurred through any bank, broker or other similar Person; or |
(e) | for any loss occasioned by any negligence, default, breach of duty, breach of trust, error of judgement or oversight on such Indemnified Person's part; or |
(f) | for any loss, damage or misfortune whatsoever which may happen in or arise from the execution or discharge of the duties, powers, authorities, or discretions of such Indemnified Person's office or in relation thereto; |
unless the same shall happen through such Indemnified Person's own dishonesty, wilful default or fraud as determined by a court of competent jurisdiction.
Non-Recognition Of Trusts
139. | Subject to the proviso hereto, no Person shall be recognised by the Company as holding any Share upon any trust and the Company shall not, unless required by law, be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any Share or (except only as otherwise provided by these Articles or as the Companies Law requires) any other right in respect of any Share except an absolute right to the entirety thereof in each Shareholder registered in the Register, provided that, notwithstanding the foregoing, the Company shall be entitled to recognise any such interests as shall be determined by the Directors. |
Winding Up
140. | If the Company shall be wound up the liquidator shall apply the assets of the Company in such manner and order as he thinks fit in satisfaction of creditors' claims. |
141. | If the Company shall be wound up, the liquidator may, with the sanction of an Ordinary Resolution divide amongst the Shareholders in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Shareholders or different Classes. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Shareholders as the liquidator, with the like sanction shall think fit, but so that no Shareholder shall be compelled to accept any assets whereon there is any liability. |
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Amendment Of Articles Of Association
142. | Subject to the Companies Law and the rights attaching to the various Classes, the Company may at any time and from time to time by Special Resolution alter or amend these Articles in whole or in part. |
Closing of register or fixing record date
143. | For the purpose of determining those Shareholders that are entitled to receive notice of, attend or vote at any meeting of Shareholders or any adjournment thereof, or those Shareholders that are entitled to receive payment of any dividend, or in order to make a determination as to who is a Shareholder for any other purpose, the Directors may provide that the Register shall be closed for transfers for a stated period which shall not exceed in any case 40 days. If the Register shall be so closed for the purpose of determining those Shareholders that are entitled to receive notice of, attend or vote at a meeting of Shareholders the Register shall be so closed for at least ten days immediately preceding such meeting and the record date for such determination shall be the date of the closure of the Register. |
144. | In lieu of or apart from closing the Register, the Directors may fix in advance a date as the record date for any such determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of the Shareholders and for the purpose of determining those Shareholders that are entitled to receive payment of any dividend the Directors may, at or within 90 days prior to the date of declaration of such dividend, fix a subsequent date as the record date for such determination. |
145. | If the Register is not so closed and no record date is fixed for the determination of those Shareholders entitled to receive notice of, attend or vote at a meeting of Shareholders or those Shareholders that are entitled to receive payment of a dividend, the date on which notice of the meeting is posted or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of Shareholders has been made as provided in this Article, such determination shall apply to any adjournment thereof. |
Registration By Way Of Continuation
146. | The Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company. |
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Mergers and Consolidation
147. | The Company may merge or consolidate in accordance with the Companies Law. |
148. | To the extent required by the Companies Law, the Company may by Special Resolution resolve to merge or consolidate the Company. |
disclosure
149. | The Directors, or any authorised service providers (including the Officers, the Secretary and the registered office agent of the Company), shall be entitled to disclose to any regulatory or judicial authority, or to any stock exchange on which the Shares may from time to time be listed, any information regarding the affairs of the Company including, without limitation, information contained in the Register and books of the Company. |
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NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER |
Walkers Nominees Limited, 190 Elgin Avenue, George Town, Grand Cayman KY1-9001, Cayman Islands | ||
Andrew Barker as Authorised Signatory for and on behalf of Walkers Nominees Limited |
||
Dated: 9 March 2017 |
Signature of Witness | ||
Name: | Julieann Jack | |
Address | 190 Elgin Avenue, George Town, Grand Cayman KY1-9001, Cayman Islands | |
Occupation: | Secretary |
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Exhibit 4.4
NUMBER | SHARES |
CISION LTD.
AN EXEMPTED COMPANY INCORPORATED UNDER THE LAWS OF THE CAYMAN ISLANDS
ORDINARY SHARES
SEE REVERSE FOR
CERTAIN DEFINITIONS
This Certifies that | CUSIP __________ |
is the owner of
FULLY PAID AND NON-ASSESSABLE ORDINARY SHARES OF THE PAR VALUE OF $0.0001 EACH OF
CISION LTD.
transferable on the books of the Company in person or by duly authorized attorney upon surrender of this certificate properly endorsed.
This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers.
Dated:
Director |
|
Director/Secretary |
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM – | as tenants in common | UNIF GIFT MIN ACT - | _____ Custodian ______ |
TEN ENT – | as tenants by the entireties | (Cust) (Minor) | |
JT TEN – | as joint tenants with right of survivorship | under Uniform Gifts to Minors | |
and not as tenants in common | Act ______________ | ||
(State) |
Additional Abbreviations may also be used though not in the above list.
Cision Ltd.
The Company will furnish without charge to each shareholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of shares or series thereof of the Company and the qualifications, limitations, or restrictions of such preferences and/or rights. This certificate and the shares represented thereby are issued and shall be held subject to all the provisions of the Amended and Restated Memorandum and Articles of Association and all amendments thereto and resolutions of the Board of Directors providing for the issue of shares (copies of which may be obtained from the secretary of the Company), to all of which the holder of this certificate by acceptance hereof assents.
For value received, ___________________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE) | |
shares |
of the capital of the Company represented by the within Certificate.
Dated _________________
Notice: | The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever. |
Signature(s) Guaranteed:
_____________________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM,
PURSUANT TO S.E.C. RULE 17Ad-15).
Exhibit 4.5
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the “ Agreement ”) is entered into and effective as of __________, 2017 by and among Capitol Acquisition Corp. III, a Delaware corporation (“ Capitol ”), Capitol Acquisition Holding Company Ltd., an exempted company incorporated in the Cayman Islands with limited liability (to be renamed “[Cision, Ltd.]” effective as the Closing (as defined below)) (“ Holdings ”), and Continental Stock Transfer & Trust Company, a New York corporation (“ Continental ”).
WHEREAS , Capitol and Continental have previously entered into a warrant agreement, dated as of October 13, 2015 (the “ Warrant Agreement ”) governing the terms of Capitol’s 24,500,000 outstanding warrants to purchase shares of common stock of Capitol (the “ Warrants ”); and
WHEREAS , Capitol has entered into an Agreement and Plan of Merger, dated as of March 19, 2017 and amended as of April 7, 2017 (the “ Merger Agreement ”), by and among Capitol, Holdings, Capitol Acquisition Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Holdings (“ Merger Sub ”), Canyon Holdings (Cayman) L.P. (“ Cision Owner ”) and Canyon Holdings S.a r.l., pursuant to which, among other things, upon the closing of the transactions contemplated by the Merger Agreement (“ Closing ”), Merger Sub will merge with and into Capitol, with Capitol being the surviving corporation, which will result in Capitol becoming a wholly owned subsidiary of Holdings (the “ Merger ”);
WHEREAS , effective upon the Merger, holders of the Common Stock of Capitol will receive ordinary shares, par value $0.0001 per share (“ Ordinary Shares ”), of Holdings in exchange for the Common Stock; and
WHEREAS , pursuant to Section 4.5 of the Warrant Agreement, upon Closing, the Warrants will represent the right of the holders thereof to purchase Ordinary Shares; and
WHEREAS , pursuant to the Merger Agreement, Holdings will issue an aggregate of 2,000,000 warrants (“ New Warrants ”) to Cision Owner in exchange for certain property contributed by Cision Owner to Holdings, subject to adjustment pursuant to the terms of the Sponsor Agreement (as defined in the Merger Agreement); and
WHEREAS , as a result of the foregoing, the parties hereto wish (i) for Holdings to become a party to the Warrant Agreement so that the New Warrants are governed by the Warrant Agreement and (ii) for Capitol to assign to Holdings all of Capitol’s rights and interests and obligations in and under the Warrant Agreement and for Holdings to accept such assignment, and assume all of Capitol’s obligations thereunder, in each case, effective upon the closing of the Merger;
NOW , THEREFORE , for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereby agree as follows:
1. Assignment and Assumption of Warrant Agreement . Capitol hereby assigns, and Holdings hereby agrees to accept and assume, effective as of the Closing, all of Capitol’s rights, interests and obligations in, and under the Warrant Agreement and Warrants. Unless the context otherwise requires, from and after the Closing, any references in the Warrant Agreement or the Warrants to: (i) the “Company” shall mean Holdings; (ii) “Stock,” “Common Stock” or “Shares” shall mean the Ordinary Shares; (iii) the “Founders’ Warrants” shall include the New Warrants; and (iv) the “Board of Directors” or the “Board” or any committee thereof shall mean the board of directors of Holdings or any committee thereof.
2. Replacement Instruments . Following the Closing, upon request by any holder of a Warrant, Holdings shall issue a new instrument for such Warrant reflecting the adjustment to the terms and conditions described herein and in Section 4.5 of the Warrant Agreement.
3. Amendment to Warrant Agreement . To the extent required by this Agreement, the Warrant Agreement is hereby deemed amended pursuant to Section 9.8 thereof to reflect the subject matter contained herein, effective as of the Closing.
4. Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, as such laws are applied to contracts entered into and performed in such State without resort to that State’s conflict-of-laws rules.
5. Counterpart . This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. Execution and delivery of this Agreement by email or exchange of facsimile copies bearing the facsimile signature of a party hereto shall constitute a valid and binding execution and delivery of this Agreement by such party.
6. Successors and Assigns . All the covenants and provisions of this Agreement shall bind and inure to the benefit of each party’s respective successors and assigns.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date and year first written above.
CAPITOL ACQUISITION CORP. III | ||
By: | ||
Name: | ||
Title: | ||
CAPITOL ACQUISITION HOLDING COMPANY LTD. | ||
By: | ||
Name: | ||
Title: | ||
CONTINENTAL STOCK TRANSFER & TRUST COMPANY | ||
By: | ||
Name: | ||
Title: |
Exhibit 5.1
__________ 2017 | Our Ref: RDL/AB/144342 |
Capitol Acquisition Holding Company Ltd. c/o Walkers Corporate Limited Cayman Corporate Centre 27 Hospital Road George Town Grand Cayman KY1-9008 Cayman Islands |
Dear Sirs
CAPITOL ACQUISITION HOLDING COMPANY LTD.
We have been asked to provide this legal opinion to you with regard to the laws of the Cayman Islands in connection with the registration of a public offering by Capitol Acquisition Holding Company Ltd. (the " Company "), of certain ordinary shares, par value $0.0001 per share in the capital of the Company (the " Offered Shares "), including certain shares to be issued following the exercise of certain warrants, in each case under the United States Securities Act of 1933, as amended (the " Securities Act ") and in each case pursuant to or as more fully described in the Registration Statement (as defined in Schedule 1).
For the purposes of giving this opinion, we have examined and relied upon the originals or copies of the documents listed in Schedule 1.
We are Cayman Islands Attorneys at Law and express no opinion as to any laws other than the laws of the Cayman Islands in force and as interpreted at the date of this opinion.
Based upon the foregoing examinations and the assumptions and qualifications set out below and having regard to legal considerations which we consider relevant, and under the laws of the Cayman Islands, we give the following opinion in relation to the matters set out below.
The Offered Shares, as contemplated by the Registration Statement and the Prospectus, have been duly authorised by all necessary corporate action of the Company and upon the issue of the Offered Shares (by the entry of the name of the registered owner thereof in the Register of Members of the Company confirming that such Offered Shares have been issued credited as fully paid), delivery and payment therefore by the purchaser in accordance with the Memorandum and Articles of Association (as defined in Schedule 1) and in the manner contemplated by the Registration Statement and the Prospectus (as defined in Schedule 1), the Offered Shares will be validly created, legally issued, fully paid and non-assessable (meaning that no additional sums may be levied on the holder thereof by the Company).
The foregoing opinion is given based on the following assumptions.
1. | The originals of all documents examined in connection with this opinion are authentic. The signatures, initials and seals on the Documents are genuine and are those of a person or persons given power to execute the Documents under the Resolutions (as defined in Schedule 1). All documents purporting to be sealed have been so sealed. All copies are complete and conform to their originals. The Documents conform in every material respect to the latest drafts of the same produced to us and, where provided in successive drafts, have been marked up to indicate all changes to such Documents. |
WALKERS |
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2. | We have relied upon the statements and representations of directors, officers and other representatives of the Company as to factual matters. |
3. | The Company will receive consideration in money or money’s worth for each Offered Share offered by the Company when issued at the agreed issue price as per the terms of the Registration Statement and the Prospectus, such price in any event not being less than the stated par or nominal value of each Offered Share. |
4. | There are no provisions of the laws of any jurisdiction outside the Cayman Islands which would be contravened by issuance and allotment of the Offered Shares and, insofar as any obligation expressed to be incurred under any of the Documents is to be performed in or is otherwise subject to the laws of any jurisdiction outside the Cayman Islands, its performance will not be illegal by virtue of the laws of that jurisdiction. |
This opinion is limited to the matters referred to herein and shall not be construed as extending to any other matter or document not referred to herein. This opinion is given solely for your benefit and the benefit of your legal advisers acting in that capacity in relation to this transaction and may not be relied upon by any other person, other than persons entitled to rely upon it pursuant to the provisions of the Securities Act, without our prior written consent.
This opinion shall be construed in accordance with the laws of the Cayman Islands.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. We also hereby consent to the reference to this firm in the Prospectus.
Yours faithfully
WALKERS
Schedule 1
LIST OF DOCUMENTS EXAMINED
1. | The Certificate of Incorporation dated 9 March 2017 and the Amended and Restated Memorandum and Articles of Association, filed as Exhibit 3.1 to the Registration Statement, to be in effect upon the consummation of the sale of the Offered Shares. |
2. | Copies of the executed written resolutions of the Directors of the Company approving the offering for sale of the Offered Shares (the " Resolutions ") and the corporate records of the Company maintained at its registered office in the Cayman Islands. |
3. | Copies of the following documents (the " Documents "): |
(a) | the Registration Statement on Form S-4 (Registration No. 333- 217256) originally filed on April 11, 2017 by the Company with the SEC registering the Offered Shares under the Securities Act (as filed and amended, the " Registration Statement "); |
(b) | the draft prospectus of the Company (the " Prospectus ") to be filed by the Company with the United States Offered Shares Exchange Commission (" SEC ") in respect of the initial public offering and sale by the Company of the Offered Shares; and |
(c) | such other documents as we have deemed necessary to render the opinions set forth herein. |
Exhibit 10.16
Summary Description of Non-Equity Incentive Plan
Cision Ltd. (“Cision”) generally enters into employment agreements with its Named Executive Officers and certain other executive officers (collectively, “Managers”), which provide that such Managers are eligible to receive cash bonuses based on their performance and the performance of Cision and its subsidiaries. Each employment agreement typically specifies a target bonus amount, which may be fixed or based on a percentage of such Manager’s salary, as the same may be adjusted by the board of directors of Cision (the “Board”) in accordance with the terms of the applicable employment agreement. Bonuses are determined based on the fulfilment of performance targets, which are generally communicated to each Manager at the beginning of the calendar year. Following the combination of Cision and Capitol Acquisition Corp. III, it is expected that the Compensation Committee of the Board will set the performance bonus targets applicable to each Manager at the beginning of each calendar year and determine whether such targets have been met following the end of each calendar year. Performance bonus targets are generally based on a combination of metrics that includes revenue and EBITDA components.
Exhibit 10.17
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this “ Agreement ”) is made and entered into as of [ ], 20[ ] between Cision Ltd., an exempted company incorporated in the Cayman Islands (the “ Company ”), and [ ] (“ Indemnitee ”).
WITNESSETH THAT:
WHEREAS, Indemnitee is either a member of the board of directors of the Company (the “ Board ”) or an officer of the Company, or both, and in such capacity or capacities is performing a valuable service for the Company;
WHEREAS, the Company is aware that competent and experienced persons are increasingly reluctant to serve as directors or officers of corporations or other business entities unless they are protected by comprehensive indemnification and liability insurance, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and because the exposure frequently bears no reasonable relationship to the compensation of such directors and officers;
WHEREAS, the Board of the Company has concluded that, to retain and attract talented and experienced individuals to serve or continue to serve as officers or directors of the Company, and to encourage such individuals to take the business risks necessary for the success of the Company, it is necessary for the Company contractually to indemnify directors and officers and to assume for itself to the fullest extent permitted by law expenses and damages related to claims against such officers and directors in connection with their service to the Company;
WHEREAS, the laws of the Cayman Islands, under which the Company is organized, permit the Company to indemnify by agreement its officers, directors, employees and agents, and persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations or enterprises;
WHEREAS, the Company desires and has requested the Indemnitee to serve or continue to serve as a director or officer of the Company free from undue concern for claims for damages arising out of or related to such services to the Company; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he or she be indemnified as herein provided;
WHEREAS, this Agreement is a supplement to and in furtherance of the Amended and Restated Memorandum and Articles of Association of the Company (the “ Charter ”) and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
WHEREAS, it is intended that Indemnitee shall be paid promptly by the Company all amounts necessary to effectuate in full the indemnity provided herein; and
[WHEREAS, Indemnitee has certain rights to indemnification and/or insurance provided by GTCR LLC (“ GTCR ”) or affiliates of GTCR that Indemnitee and GTCR intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgment of an agreement to the foregoing being a material condition to Indemnitee’s willingness to serve as a director or in any other capacity for the Company and its subsidiaries.] 1
NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a director or officer from and after the date hereof, the parties hereto agree as follows:
1. 1. Indemnity of Indemnitee . Subject to the provisions of Section 9 , the Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time, if Indemnitee was or is, or is threatened to be made, a party to, or otherwise becomes involved in, any Proceeding (as hereinafter defined) by reason of Indemnitee’s Corporate Status (as hereinafter defined). In furtherance of the foregoing indemnification, and without limiting the generality thereof:
(a) Proceedings Other Than Proceedings by or in the Right of the Company . Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant, or otherwise becomes involved, in any Proceeding other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a) , Indemnitee shall be indemnified against all Liabilities and Expenses (each as hereinafter defined) actually and reasonably incurred by or on behalf of Indemnitee, in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.
(b) Proceedings by or in the Right of the Company . Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b) , Indemnitee shall be indemnified against all Liabilities and Expenses actually and reasonably incurred by or on behalf of Indemnitee, in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided , however , if applicable law so provides, no indemnification against such Liabilities or Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company unless and only to the extent that the court in which the Proceeding was brought shall determine that Indemnitee is fairly and reasonably entitled to indemnification.
1 | Bracketed provisions apply only to GTCR directors. |
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(c) Indemnification for Expenses of a Party Who is Wholly or Partly Successful . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to or participant in and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, Indemnitee shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with each successfully resolved claim, issue or matter. For purposes of this Section 1(c) and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
2. Additional Indemnity . In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee against all Liabilities and Expenses actually and reasonably incurred by or on behalf of Indemnitee if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement, other than those set forth in Section 9 hereof, shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.
3. Contribution .
(a) Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permitted by applicable law, the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such Proceeding without requiring Indemnitee to contribute to such payment and the Company hereby irrevocably waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not, without the Indemnitee’s prior written consent, enter into any such settlement of any action, suit or proceeding (in whole or in part) unless such settlement (i) provides for a full and final release of all claims asserted against Indemnitee and (ii) does not impose any Expense, judgment, fine, penalty or limitation on Indemnitee.
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(b) Without diminishing or impairing the obligations of the Company set forth in Section 3(a) , if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permitted by applicable law, the Company shall contribute to the amount of Liabilities and Expenses actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided , however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Liabilities or Expenses, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.
(c) To the fullest extent permitted by applicable law, the Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by directors, officers or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.
(d) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for Liabilities and/or for Expenses, in connection with any claim relating to a Proceeding under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding, and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
4. Indemnification for Expenses of a Witness . Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, or is made (or asked) to respond to discovery requests, or is otherwise asked to participate, in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection therewith.
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5. Advancement of Expenses . Notwithstanding any other provision of this Agreement (other than Section 7(c) and Section 9 ), the Company shall advance, to the extent not prohibited by law, all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding (or part of any Proceeding) by reason of Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall, if and to the extent required by applicable law, include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. In accordance with Sections 7(d) and 7(e) of this Agreement, advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed.
6. Procedures and Presumptions for Determination of Entitlement to Indemnification . It is the intent of the parties to this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted by applicable law. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:
(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.
(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board: (1) by a majority vote of the Disinterested Directors (as hereinafter defined), even though less than a quorum, (2) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum, (3) if there are no Disinterested Directors, or if the Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (4) if so directed by the Board, by the stockholders of the Company; provided , however , that if a Change in Control has occurred, the determination with respect to Indemnitee’s entitlement to indemnification shall be made by Independent Counsel.
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(c) In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected as provided in this Section 6(c) . If a Change in Control has not occurred, the Independent Counsel shall be selected by the Board (including a vote of a majority of the Disinterested Directors if obtainable), and the Company shall give written notice to the Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected. Indemnitee may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 12 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the Person (as hereinafter defined) so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If a Change in Control has occurred, the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and approved by the Board within twenty (20) days after notification by Indemnitee. If (i) an Independent Counsel is to make the determination of entitlement pursuant to this Section 6 , and (ii) within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof (including as a result of an objection to the selected Independent Counsel), no Independent Counsel shall have been selected, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a Person selected by the court or by such other Person as the court shall designate, and the Person with respect to whom all objections are so resolved or the Person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c) , regardless of the manner in which such Independent Counsel was selected or appointed.
(d) In making a determination with respect to entitlement to indemnification hereunder, the Person making such determination shall, to the fullest extent permitted by law, presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the Company (including by its directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors, Independent Counsel or stockholders) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
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(e) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers, directors, managers, employees, agents or representatives of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
(f) If the Person empowered or selected under this Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within forty-five (45) days (or in the case of an advancement of Expenses in accordance with Section 4 , twenty (20) days; provided that Indemnitee has, if and to the extent required by applicable law, delivered the undertaking contemplated in Section 4 ) after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent permitted by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law, and such right to indemnification shall be enforceable by Indemnitee in any court of competent jurisdiction; provided , however, that such 45-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the Person making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.
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(g) Indemnitee shall reasonably cooperate with the Person making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such Person upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board or shareholder of the Company shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement. Any Expenses incurred by Indemnitee in so cooperating with the Person making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(h) With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof the Company will be entitled to participate therein at its own expense. The Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee; provided , however , that the Company shall not be entitled to assume the defense of any Proceeding if there has been a Change in Control or if Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee with respect to such Proceeding. After notice from the Company to Indemnitee of its election to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any Expenses subsequently incurred by Indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ Indemnitee’s own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless:
(i) the employment of counsel by Indemnitee has been authorized by the Company;
(ii) Indemnitee shall have reasonably concluded that counsel engaged by the Company may not adequately represent Indemnitee due to, among other things, actual or potential differing interests; or
(iii) the Company shall not in fact have employed counsel to assume the defense in such Proceeding or shall not in fact have assumed such defense and be acting in connection therewith with reasonable diligence; in each of which cases the fees and expenses of such counsel shall be at the expense of the Company.
(i) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall, to the fullest extent permitted by law, be presumed that Indemnitee has been successful on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. The Company shall not settle any Proceeding in any manner unless such settlement (i) provides for a full and final release of all claims against Indemnitee and (ii) does not impose any penalty or limitation on Indemnitee without Indemnitee’s written consent.
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(j) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
7. Remedies of Indemnitee .
(a) Subject to Section 9 , in the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within forty-five (45) days (or in the case of an advancement of Expenses in accordance with Section 4 , twenty (20) days; provided that Indemnitee has, if and to the extent required by applicable law, delivered the undertaking contemplated in Section 4 ) after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification, contribution or advancement of Expenses. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7 ; provided , however , that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 1(c) of this Agreement. Except as set forth herein, the provisions of Delaware law (without regard to its conflict-of-law rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b) . In any judicial proceeding or arbitration commenced pursuant to this Section 7 , Indemnitee shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any determination pursuant to Section 6(b) of this Agreement adverse to Indemnitee for any purpose other than to establish its compliance with the terms of this Agreement. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 7 and it is determined in such judicial proceeding or arbitration that Indemnitee must reimburse the Company for advance of expenses, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 5 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).
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(c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 7 , absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading, in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this Section 7 , seeks a judicial adjudication or arbitration proceeding or otherwise of Indemnitee’s rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on Indemnitee’s behalf, in advance, any and all Expenses (of the types described in the definition of Expenses in Section 12 of this Agreement) actually and reasonably incurred by Indemnitee in such efforts, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery, to the fullest extent permitted by applicable law.
(e) The Company shall, to the extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that, to the fullest extent permitted by applicable law, Indemnitee not be required to incur Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall advance, to the extent not prohibited by law and in accordance with Section 5 of this Agreement, such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.
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(f) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.
8. Non-Exclusivity; Survival of Rights; Insurance; [Primacy of Indemnification;] 2 Subrogation .
(a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter, any agreement, a vote of shareholders, a resolution of directors or otherwise, of the Company. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Charter and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b)
(i) The Company shall, if commercially reasonable, obtain and maintain in effect during the entire period described in Section 10 for which the Company is obligated to indemnify Indemnitee under this Agreement, one or more policies of insurance with reputable insurance companies to provide the directors and officers of the Company with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations under this Agreement (“ D&O Insurance ”); provided , that in connection with a Change of Control that occurs prior to the termination of the period described in Section 10 for which the Company is obligated to indemnify Indemnitee, the Company shall instead purchase a six (6) year pre-paid “tail policy” (a “ Tail Policy ”) on terms and conditions (in both amount and scope) providing substantially equivalent benefits to Indemnitee as the D&O Insurance in effect as of the closing of the Change of Control (the “ Change of Control Closing Date ”) with respect to matters arising on or prior to the earlier of (i) the Change of Control Closing Date and (ii) the date on which Indemnitee ceased serving as a director, officer or fiduciary of the Company, any direct or indirect subsidiary of the Company or of any other corporation, partnership, joint venture, trust or other enterprise at the express written consent of the Company.
2 | Bracketed provisions apply only to GTCR directors. |
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(ii) Indemnitee shall be covered by such D&O Policies (including any Tail Policy) in accordance with its or their terms to the maximum extent of the coverage available for any such officer or director under such D&O Policies. In all such D&O Policies, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee with the same rights and benefits as are accorded to the most favorably insured of the Company’s directors and officers. At the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective D&O Policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such D&O Policies.
(c) [The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by GTCR and certain of GTCR’s affiliates and related funds that, directly or indirectly, (i) are controlled by, (ii) control or (iii) are under common control with, GTCR (collectively, the “ Fund Indemnitors ”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance Expenses or to provide indemnification for the same Liabilities or Expenses incurred by Indemnitee is secondary), (ii) that it shall be required to advance the full amount of Expenses actually incurred by Indemnitee and shall be liable for the full amount of all Liabilities and Expenses to the extent legally permitted and as required by the terms of this Agreement and the Charter (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 8(c) .] 3
(d) [Except as provided in Section 8(c) above,] 4 in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee [(other than against the Fund Indemnitors)], who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
3 | Bracketed provisions apply only to GTCR directors. |
4 | Bracketed provisions apply only to GTCR directors. |
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(e) [Except as provided in Section 8(c) above,] 5 the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(f) [Except as provided in Section 8(c) above,] 6 the Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.
9. Exception to Right of Indemnification . Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity or advancement of expenses in connection with any claim made against Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision;
(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as hereinafter defined), or similar provisions of state statutory law or common law;
(c) for reimbursement to the Company of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company in each case as required under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) or Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act in connection with an accounting restatement of the Company or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act;
(d) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Company has joined in or the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law, or (iii) the Proceeding is one to enforce Indemnitee’s rights under this Agreement; or
5 | Bracketed provisions apply only to GTCR directors. |
6 | Bracketed provisions apply only to GTCR directors. |
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(e) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act.
10. Non−Disclosure of Payments . Except as expressly required by the securities laws of the United States of America, neither party shall disclose any payments under this Agreement unless prior approval of the other party is obtained. If any payment information must be disclosed, the Company shall afford the Indemnitee an opportunity to review all such disclosures and, if requested, to explain in such statement any mitigating circumstances regarding the events to be reported.
11. Duration of Agreement . All agreements and obligations of the Company contained herein shall continue until and terminate upon the later of (i) ten (10) years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which Indemnitee served at the request of the Company, and (ii) one (1) year after the final termination of any Proceeding (including any rights of appeal thereto) in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee pursuant to Section 7 of this Agreement relating thereto (including any rights of appeal of any Section 7 Proceeding).
12. Security . To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.
13. Definitions . For purposes of this Agreement:
(a) “ Change in Control ” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
(i) Acquisition of Stock or Shares by Third Party . Any Person, other than GTCR or any of its respective affiliates and other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities, unless the change in relative “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act) of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding securities entitled to vote generally in the election of directors;
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(ii) Change in Board of Directors . During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Section 13(b)(i) , 13(b)(iii) or 13(b)(iv) ) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved or who was otherwise nominated by GTCR or any of its respective affiliates, cease for any reason to constitute at least a majority of the members of the Board;
(iii) Corporate Transactions . The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity; and
(iv) Liquidation . The approval by the shareholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions.
(b) “ Corporate Status ” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company, any direct or indirect subsidiary of the Company, or of any other corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, that such person is or was serving at the request of the Company; provided , that any person that serves as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, of at least 50% of whose equity interests are owned by the Company, shall be conclusively presumed to be serving in such capacity at the request of the Company.
(c) “ Disinterested Director ” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
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(d) “ Enterprise ” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, trustee, partner, managing member, employee, agent or fiduciary.
(e) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
(f) “ Expenses ” shall include all reasonable direct and indirect costs, including attorneys’ fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, out-of-pocket expenses and other disbursements and expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, responding to, or objecting to, a request to provide discovery in any Proceeding, or, to the fullest extent permitted by applicable law, successfully establishing a right to indemnification under this Agreement, whether in whole or part. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include any Liabilities.
(g) “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporate law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any Person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and disbursements of the Independent Counsel referred to above and to fully indemnify such counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(h) “ Liabilities ” shall mean damages, losses and liabilities of any type whatsoever, including, but not limited to, any judgments, fines, Employee Retirement Income Security Act excise taxes and penalties, penalties and amounts paid in settlement (including all interest assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties or amounts paid in settlement) of any Proceeding.
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(i) “ Person ” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided , however , that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company.
(j) “ Proceeding ” includes any actual, threatened, pending or completed action, suit, claim, counterclaim, cross-claim, mediation, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened, pending or completed proceeding, and any appeal thereof, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the Corporate Status of Indemnitee, by reason of any action taken by Indemnitee or of any inaction on Indemnitee’s part while acting in such Corporate Status, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise; in each case whether or not Indemnitee is acting or serving in any such capacity at the time any Liability or Expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement.
14. Severability . If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality, and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the fullest extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.
15. Enforcement and Binding Effect .
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer or key employee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or key employee of the Company.
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(b) Without limiting any of the rights of Indemnitee under the Charter as it may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.
(c) The indemnification and advancement of expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
(d) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
(e) The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. The Company and Indemnitee further agree that Indemnitee shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by the court, and the Company hereby waives any such requirement of such a bond or undertaking.
16. Modification and Waiver . No supplement, modification, waiver, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
17. Notice By Indemnitee . Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.
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18. Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:
(a) To Indemnitee at the address set forth below Indemnitee’s signature hereto.
(b) To the Company at:
Cision Ltd.
c/o Cision US, Inc.
130 E. Randolph St., 7th Floor
Chicago, IL 60601
Attention: Jack Pearlstein
Facsimile: (301) 459-2827
or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
19. 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 Agreement. This Agreement may also be executed and delivered by facsimile signature and 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.
20. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
21. Governing Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict-of-laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 7 of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “ Delaware Court ”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) agree that service of process in any such action or proceeding may be effected by notice given pursuant to Section 18 of this Agreement, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum. The foregoing consent to jurisdiction shall not constitute general consent to service of process in the state for any purpose except as provided above, and shall not be deemed to confer rights on any Person other than the parties to this Agreement.
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22. Further Action . The parties shall execute and deliver all documents, provide all information, and take or refrain from taking such actions as may be necessary or appropriate to achieve the purposes of this Agreement.
[Signature page follows]
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IN WITNESS WHEREOF , the parties hereto have executed this Agreement on and as of the day and year first written above.
CISION LTD. | ||
By: | ||
Name: | ||
Title: |
INDEMNITEE | ||
Name: | ||
Address: | ||
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Exhibit 10.20
EXECUTION VERSION
FIRST
LIEN CREDIT AGREEMENT
dated as of
June 16, 2016
among
CANYON COMPANIES S.À R.L.,
as Holdings,
CANYON
GROUP S.À R.L.,
as Intermediate Lux Holdings,
GTCR VALOR
HOLDINGS, INC.,
as Intermediate U.S. Holdings,
GTCR VALOR
COMPANIES, INC.,
as Borrower,
the Lenders and Issuing Banks party hereto
and
DEUTSCHE BANK AG NEW YORK BRANCH
as Administrative Agent
___________________________
DEUTSCHE BANK SECURITIES INC.,
BARCLAYS BANK PLC and
RBC CAPITAL MARKETS,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page | ||
Article I DEFINITIONS | 2 | |
SECTION 1.01 | Defined Terms | 2 |
SECTION 1.02 | Classification of Loans and Borrowings | 88 |
SECTION 1.03 | Terms Generally | 89 |
SECTION 1.04 | Accounting Terms; GAAP | 89 |
SECTION 1.05 | Effectuation of Transactions | 89 |
SECTION 1.06 | Limited Condition Transactions | 90 |
SECTION 1.07 | Additional Alternative Currencies | 90 |
SECTION 1.08 | Currency Equivalents Generally | 91 |
SECTION 1.09 | Change in Currency | 92 |
SECTION 1.10 | Guaranty and Security Principles | 93 |
SECTION 1.11 | Luxembourg Terms | 93 |
SECTION 1.12 | Dutch Terms | 94 |
Article II THE CREDITS | 95 | |
SECTION 2.01 | Commitments | 95 |
SECTION 2.02 | Loans and Borrowings | 95 |
SECTION 2.03 | Requests for Borrowings | 96 |
SECTION 2.04 | [Reserved | 97 |
SECTION 2.05 | Letters of Credit | 97 |
SECTION 2.06 | Funding of Borrowings | 105 |
SECTION 2.07 | Interest Elections | 106 |
SECTION 2.08 | Termination and Reduction of Commitments | 107 |
SECTION 2.09 | Repayment of Loans; Evidence of Debt | 108 |
i |
Page | ||
SECTION 2.10 | Amortization of Term Loans | 108 |
SECTION 2.11 | Prepayment of Loans | 110 |
SECTION 2.12 | Fees | 123 |
SECTION 2.13 | Interest | 124 |
SECTION 2.14 | Alternate Rate of Interest | 125 |
SECTION 2.15 | Increased Costs | 126 |
SECTION 2.16 | Break Funding Payments | 128 |
SECTION 2.17 | Taxes | 128 |
SECTION 2.18 | Payments Generally; Pro Rata Treatment; Sharing of Setoffs | 133 |
SECTION 2.19 | Mitigation Obligations; Replacement of Lenders | 134 |
SECTION 2.20 | Incremental Credit Extensions | 135 |
SECTION 2.21 | Refinancing Amendments | 139 |
SECTION 2.22 | Defaulting Lenders | 140 |
SECTION 2.23 | Illegality | 142 |
SECTION 2.24 | Loan Modification Offers | 143 |
Article III REPRESENTATIONS AND WARRANTIES | 144 | |
SECTION 3.01 | Organization; Powers | 144 |
SECTION 3.02 | Authorization; Enforceability | 145 |
SECTION 3.03 | Governmental Approvals; No Conflicts | 145 |
SECTION 3.04 | Financial Condition; No Material Adverse Effect | 145 |
SECTION 3.05 | Properties | 146 |
SECTION 3.06 | Litigation and Environmental Matters | 146 |
SECTION 3.07 | Compliance with Laws and Agreements | 146 |
SECTION 3.08 | Investment Company Status | 147 |
ii |
Page | ||
SECTION 3.09 | Taxes | 147 |
SECTION 3.10 | ERISA | 147 |
SECTION 3.11 | Disclosure | 148 |
SECTION 3.12 | Subsidiaries | 148 |
SECTION 3.13 | Intellectual Property; Licenses, Etc. | 148 |
SECTION 3.14 | Solvency | 149 |
SECTION 3.15 | Federal Reserve Regulations | 149 |
SECTION 3.16 | USA PATRIOT Act; OFAC and FCPA | 149 |
Article IV CONDITIONS | 150 | |
SECTION 4.01 | Effective Date | 150 |
SECTION 4.02 | Each Credit Event | 153 |
Article V AFFIRMATIVE COVENANTS | 154 | |
SECTION 5.01 | Financial Statements and Other Information | 154 |
SECTION 5.02 | Notices of Material Events | 157 |
SECTION 5.03 | Information Regarding Collateral | 158 |
SECTION 5.04 | Existence; Conduct of Business | 158 |
SECTION 5.05 | Payment of Taxes, etc. | 158 |
SECTION 5.06 | Maintenance of Properties | 158 |
SECTION 5.07 | Insurance | 159 |
SECTION 5.08 | Books and Records; Inspection and Audit Rights | 160 |
SECTION 5.09 | Compliance with Laws | 160 |
SECTION 5.10 | Use of Proceeds and Letters of Credit | 160 |
SECTION 5.11 | Additional Subsidiaries | 161 |
SECTION 5.12 | Further Assurances | 161 |
SECTION 5.13 | Designation of Subsidiaries | 162 |
iii |
Page | ||
SECTION 5.14 | Certain Post-Closing Obligations | 163 |
SECTION 5.15 | Maintenance of Rating of Facilities | 163 |
SECTION 5.16 | Lines of Business | 163 |
SECTION 5.17 | Fiscal Periods | 163 |
SECTION 5.18 | Lender Calls | 163 |
Article VI NEGATIVE COVENANTS | 163 | |
SECTION 6.01 | Indebtedness; Certain Equity Securities | 163 |
SECTION 6.02 | Liens | 172 |
SECTION 6.03 | Fundamental Changes; Holdings Covenant | 176 |
SECTION 6.04 | Investments, Loans, Advances, Guarantees and Acquisitions | 178 |
SECTION 6.05 | Asset Sales | 183 |
SECTION 6.06 | [Reserved] | 186 |
SECTION 6.07 | Restricted Payments; Certain Payments of Indebtedness | 186 |
SECTION 6.08 | Transactions with Affiliates | 193 |
SECTION 6.09 | Restrictive Agreements | 194 |
SECTION 6.10 | Amendment of Junior Financing | 196 |
SECTION 6.11 | Financial Performance Covenant | 196 |
Article VII EVENTS OF DEFAULT | 197 | |
SECTION 7.01 | Events of Default | 197 |
SECTION 7.02 | Right to Cure | 201 |
SECTION 7.03 | Application of Proceeds | 202 |
Article VIII ADMINISTRATIVE AGENT | 203 | |
SECTION 8.01 | Appointment and Authority | 203 |
SECTION 8.02 | Rights as a Lender | 204 |
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SECTION 8.03 | Exculpatory Provisions | 204 |
SECTION 8.04 | Reliance by Administrative Agent | 205 |
SECTION 8.05 | Delegation of Duties | 206 |
SECTION 8.06 | Resignation of Administrative Agent | 206 |
SECTION 8.07 | Non-Reliance on Administrative Agent and Other Lenders | 207 |
SECTION 8.08 | No Other Duties, Etc. | 208 |
SECTION 8.09 | Administrative Agent May File Proofs of Claim | 208 |
SECTION 8.10 | No Waiver; Cumulative Remedies; Enforcement | 209 |
Article IX MISCELLANEOUS | 209 | |
SECTION 9.01 | Notices | 209 |
SECTION 9.02 | Waivers; Amendments | 211 |
SECTION 9.03 | Expenses; Indemnity; Damage Waiver | 214 |
SECTION 9.04 | Successors and Assigns | 217 |
SECTION 9.05 | Survival | 225 |
SECTION 9.06 | Counterparts; Integration; Effectiveness | 226 |
SECTION 9.07 | Severability | 226 |
SECTION 9.08 | Right of Setoff | 226 |
SECTION 9.09 | Governing Law; Jurisdiction; Consent to Service of Process | 227 |
SECTION 9.10 | WAIVER OF JURY TRIAL | 228 |
SECTION 9.11 | Headings | 228 |
SECTION 9.12 | Confidentiality | 229 |
SECTION 9.13 | USA PATRIOT Act | 230 |
SECTION 9.14 | Release of Liens and Guarantees | 230 |
SECTION 9.15 | No Advisory or Fiduciary Responsibility | 232 |
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SECTION 9.16 | Interest Rate Limitation | 232 |
SECTION 9.17 | Judgment Currency | 233 |
SECTION 9.18 | Intercreditor Agreement | 233 |
SECTION 9.19 | Cashless Settlement | 233 |
SECTION 9.20 | Acknowledgement and Consent to Bail-In of EEA Financial Institutions | 234 |
vi |
SCHEDULES:
Schedule 1.01 |
— | Excluded Subsidiaries |
Schedule 1.12 | — | Guaranty and Security Principles |
Schedule 2.01 | — | Commitments and Loans |
Schedule 2.05 | — | Letter of Credit Co mmitments |
Schedule 3.03 | — | Government Approvals; No Conflicts |
Schedule 3.06 | — | Litigation and Environmental Matters |
Schedule 3.12 | — | Subsidiaries |
Schedule 5.14 | — | Certain Post-Closing Obligations |
Schedule 6.01 | — | Existing Indebtedness |
Schedule 6.02 | — | Existing Liens |
Schedule 6.04 | — | Existing Investments |
Schedule 6.08 | — | Existing Affiliate Transactions |
Schedule 6.09 | — | Existing Restrictions |
Schedule 9.01 | — | Notices |
EXHIBITS:
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FIRST LIEN CREDIT AGREEMENT dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”) among Canyon Companies S.à r.l., a private limited liability company ( société à responsabilité limitée ) organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand and ten United States Dollars ($20,010) and registered with the Luxembourg Register of Commerce and Companies under number B 187.216 (“ Holdings ”), Canyon Group S.à r.l., a private limited liability company ( société à responsabilité limitée ) organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand United States Dollars ($20,000) and registered with the Luxembourg Register of Commerce and Companies under number B 202.299 (“ Intermediate Lux Holdings ”), GTCR Valor Holdings, Inc., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR Valor Companies, Inc., a Delaware corporation (the “ Borrower ”), the Lenders and Issuing Banks party hereto and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent.
Preliminary Statements :
WHEREAS, Holdings and certain of its Subsidiaries intend to acquire the Acquired Companies pursuant to the Acquisition Agreement;
WHEREAS, in order to finance the Debt Repayment and the Acquisition and to provide for the working capital needs and general corporate requirements (including to finance permitted Investments, acquisitions, capital expenditures and Restricted Payments) of Holdings and its Restricted Subsidiaries after giving effect to the Acquisition, the Borrower has requested that (i) the Lenders extend credit in the form of (a) Initial Term Loans in an aggregate principal amount of $1,100,000,000 on the Effective Date and (b) Revolving Loans at any time and from time to time prior to the Revolving Loan Maturity Date in an aggregate principal amount of up to $75,000,000 and (ii) certain other lenders extend credit in the form of Second Lien Term Loans in an aggregate principal amount of $370,000,000 pursuant to the Second Lien Credit Agreement on the Effective Date.
WHEREAS, the proceeds of the Loans borrowed on the Effective Date and the Second Lien Term Loans borrowed on the Effective Date, together with the proceeds of the Equity Financing, will be used to fund (w) any original issue discount or upfront fees in connection with the Loans and the Second Lien Term Loans, (x) the purchase price for the Acquisition, (y) the Debt Repayment and (z) the Transaction Costs.
WHEREAS, the Borrower has requested that the Issuing Lenders issue Letters of Credit to support certain obligations incurred by Holdings and its Restricted Subsidiaries.
WHEREAS, the Lenders and the Issuing Lenders are willing to extend credit to the Borrower on the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
Article I
DEFINITIONS
SECTION 1.01 Defined Terms .
As used in this Agreement, the following terms have the meanings specified below:
“ ABR ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the (i) Alternate Base Rate (in the case of Loans denominated in Dollars) or (ii) Canadian Base Rate (in the case of Loans denominated in Canadian Dollars).
“ Acceptable Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(2).
“ Acceptable Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“ Acceptance and Prepayment Notice ” means an irrevocable written notice from a Term Lender accepting a Solicited Discounted Prepayment Offer to make a Discounted Term Loan Prepayment at the Acceptable Discount specified therein pursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit M.
“ Acceptance Date ” has the meaning specified in Section 2.11(a)(ii)(D)(2).
“ Accepting Lenders ” has the meaning specified in Section 2.24(a).
“ Acquired Companies ” means the PRN Companies, the PRN Company Subsidiaries and the PRN India Business, each as defined in the Acquisition Agreement.
“ Acquired EBITDA ” means, with respect to any Acquired Entity or Business or any Converted Restricted Subsidiary (any of the foregoing, a “ Pro Forma Entity ”) for any period, the amount for such period of Consolidated EBITDA of such Pro Forma Entity (determined as if references to Holdings, the Borrower and the Restricted Subsidiaries in the definition of “Consolidated EBITDA” were references to such Pro Forma Entity and its subsidiaries that will become Restricted Subsidiaries), all as determined on a consolidated basis for such Pro Forma Entity.
“ Acquired Entity or Business ” has the meaning given such term in the definition of “Consolidated EBITDA.”
“ Acquisition ” means the acquisition pursuant to the terms of the Acquisition Agreement.
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“ Acquisition Agreement ” means that Purchase and Sale Agreement, dated as of December 14, 2015 (as amended, restated, supplemented or otherwise modified), by and among PWW Acquisition LLC, a Delaware limited liability company, and UBM plc, a public limited company organized in Jersey (the “ Seller ”).
“ Acquisition Documents ” means the Acquisition Agreement, all other agreements to be entered into between or among the Seller or its Affiliates and Holdings or its Affiliates in connection with the Acquisition and all schedules, exhibits and annexes to each of the foregoing and all side letters, instruments and agreements affecting the terms of the foregoing or entered into in connection therewith.
“ Acquisition Transaction ” means any acquisition by Holdings, the Borrower or any Restricted Subsidiary that (x) is not permitted by the terms of this Agreement immediately prior to the consummation of such acquisition or (y) if permitted by the terms of this Agreement immediately prior to the consummation of such acquisition, would not provide Holdings, the Borrower and the other Restricted Subsidiaries with adequate flexibility under this Agreement for the continuation and/or expansion of their combined operations following such acquisition, as determined by the Borrower acting in good faith.
“ Additional Lender ” means any Additional Revolving Lender or any Additional Term Lender, as applicable.
“ Additional Revolving Lender ” means, at any time, any bank, financial institution or other institutional lender or investor (other than any natural person) that agrees to provide any portion of any (a) Incremental Revolving Commitment Increase or Additional/Replacement Revolving Commitments pursuant to an Incremental Facility Amendment in accordance with Section 2.20 or (b) Credit Agreement Refinancing Indebtedness pursuant to a Refinancing Amendment in accordance with Section 2.21; provided that each Additional Revolving Lender shall be subject to the approval of the Administrative Agent (and, if such Additional Revolving Lender will provide an Incremental Revolving Commitment Increase or any Additional/Replacement Revolving Commitment and each Issuing Bank), in each case only if such consent would be required under Section 9.04(b) for an assignment of Revolving Loans or Revolving Commitments, as applicable, to such bank, financial institution or other institutional lender or investor (such approval in each case not to be unreasonably withheld, conditioned or delayed) and the Borrower.
“ Additional Term Lender ” means, at any time, any bank, financial institution or other institutional lender or investor (other than any natural person) that agrees to provide any portion of any (a) Incremental Term Loans pursuant to an Incremental Facility Amendment in accordance with Section 2.20 or (b) Credit Agreement Refinancing Indebtedness pursuant to a Refinancing Amendment in accordance with Section 2.21; provided that each Additional Term Lender shall be subject to the approval of the Administrative Agent if such consent would be required under Section 9.04(b) for an assignment of Term Loans or Term Commitments, as applicable, to such bank, financial institution or other institutional lender or investor (such approval in each case not to be unreasonably withheld, conditioned or delayed) and the Borrower.
“ Additional/Replacement Revolving Commitment ” has the meaning assigned to such term in Section 2.20(a).
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“ Adjusted BA Rate ” means, with respect to any Eurodollar Borrowing denominated in Canadian Dollars for any Interest Period, an interest rate per annum equal to (i) the BA Rate for such Interest Period multiplied by (ii) the Statutory Reserve Rate.
“ Adjusted EURIBOR ” means, with respect to any Eurodollar Borrowing denominated in Euros for any Interest Period, an interest rate per annum equal to (i) EURIBOR for such Interest Period multiplied by (ii) the Statutory Reserve Rate.
“ Adjusted LIBO Rate ” means, with respect to any Eurodollar Borrowing denominated in Dollars or an Alternative Currency (other than Canadian Dollars or Euros) for any Interest Period, an interest rate per annum equal to (i) the LIBO Rate for such Interest Period multiplied by (ii) the Statutory Reserve Rate; provided that, (x) with respect to the Initial Term Loans only, the Adjusted LIBO Rate for any Interest Period shall not be less than 1.00% per annum and (y) in no event shall the Adjusted LIBO Rate be less than 0%.
“ Administrative Agent ” means Deutsche Bank AG New York Branch, in its capacity as administrative agent hereunder and under the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“ Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 9.01, or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
“ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.
“ Affected Class ” has the meaning specified in Section 2.24(a).
“ Affiliate ” means, with respect to a specified Person, another Person that directly or indirectly Controls or is Controlled by or is under common Control with the Person specified.
“ Affiliated Debt Fund ” means any Affiliated Lender that is a bona fide debt fund or an investment vehicle that is engaged in the making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course and whose managers have fiduciary duties to the third-party investors in such fund or investment vehicle independent of their duties to Holdings or the Sponsor.
“ Affiliated Lender ” means, at any time, any Lender that is any Person (other than Holdings or any of its Subsidiaries) contemplated by the definition of Sponsor at such time.
“ Agent ” means any of the Administrative Agent, the Collateral Agent, each Joint Lead Arranger, any successors and assigns of the foregoing in such capacity, and “ Agents ” means two or more of them.
“ Agent Parties ” has the meaning given to such term in Section 9.01(c).
“ Agreement ” has the meaning given to such term in the preliminary statements hereto.
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“ Agreement Currency ” has the meaning assigned to such term in Section 9.17.
“ Alternate Base Rate ” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1.00% and (c) the Adjusted LIBO Rate for the applicable Loan on such day (or if such day is not a Business Day, the immediately preceding Business Day) for a deposit in Dollars with a maturity of one month plus 1.00%; provided that, solely for purposes of the foregoing, the Adjusted LIBO Rate for any day shall be calculated using the LIBO Rate on such day at approximately 11:00 a.m. (New York City time) for a deposit in Dollars with a maturity of one month. If 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 or the Adjusted LIBO Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition of Federal Funds Effective Rate, the Alternate Base Rate shall be determined without regard to clause (b) or (c), as applicable, of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively. Notwithstanding the foregoing, with respect to the Initial Term Loans only, the Alternate Base Rate will be deemed to be 2.00% per annum if the Alternate Base Rate calculated pursuant to the foregoing provisions would otherwise be less than 2.00% per annum.
“ Alternative Currency ” means Canadian Dollars, Euros, Sterling and each other currency (other than Dollars) that is requested by the Borrower and approved in accordance with Section 1.07.
“ Alternative Currency Equivalent ” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the relevant Issuing Bank, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date or other applicable date of determination) for the purchase of such Alternative Currency with Dollars.
“ Applicable Account ” means, with respect to any payment to be made to the Administrative Agent hereunder, the account specified by the Administrative Agent from time to time for the purpose of receiving payments of such type.
“ Applicable Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“ Applicable Fronting Exposure ” means, with respect to any Person that is an Issuing Bank at any time, the sum of (a) the aggregate amount of all Letters of Credit issued by such Person in its capacity as an Issuing Bank (if applicable) that remains available for drawing at such time and (b) the aggregate amount of all LC Disbursements made by such Person in its capacity as an Issuing Bank (if applicable) that have not yet been reimbursed by or on behalf of the Borrower at such time.
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“ Applicable Percentage ” means, at any time with respect to any Revolving Lender, the percentage of the aggregate Revolving Commitments represented by such Lender’s Revolving Commitment at such time (or, if the Revolving Commitments have terminated or expired, such Lender’s share of the total Revolving Exposure at that time); provided that, with respect to Letters of Credit, LC Disbursements and LC Exposure, “Applicable Percentage” shall mean the percentage of the aggregate Revolving Commitments represented by such Lender’s Revolving Commitment at such time (or, if the Revolving Commitments have terminated or expired, such Lender’s share of the total Revolving Exposure at that time); provided further that, at any time any Revolving Lender shall be a Defaulting Lender, “Applicable Percentage” shall mean the percentage of the total Revolving Commitments (disregarding any such Defaulting Lender’s Revolving Commitment) represented by such Lender’s Revolving Commitment. If the Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Revolving Commitments most recently in effect, giving effect to any assignments pursuant to this Agreement and to any Lender’s status as a Defaulting Lender at the time of determination.
“ Applicable Rate ” means, for any day, (a) with respect to any Initial Term Loan, (i) 5.00% per annum, in the case of an ABR Loan, or (ii) 6.00% per annum, in the case of a Eurodollar Loan, and (b) with respect to any Revolving Loan that is an ABR Loan or Eurodollar Loan, the applicable rate per annum set forth below under the caption “ABR Spread”, “Adjusted LIBO Rate or Adjusted BA Rate Spread” or “Adjusted EURIBOR Spread” as the case may be, based upon the Senior Secured First Lien Net Leverage Ratio as of the end of the fiscal quarter of Holdings for which consolidated financial statements have theretofore been most recently delivered pursuant to Section 5.01(a) or 5.01(b); provided that, for purposes of clause (b) above, until the date of the delivery of the consolidated financial statements pursuant to Section 5.01(b) as of and for the fiscal quarter ended September 30, 2016, the Applicable Rate shall be based on the rates per annum set forth in Category 1:
Senior Secured First Lien
Net Leverage Ratio: |
ABR Spread |
Adjusted LIBO
Rate or Adjusted BA Rate Spread |
Adjusted
EURIBOR Spread |
|||||||||
Category 1
Greater than 3.50 to 1.00 |
4.75 | % | 5.75 | % | 5.75 | % | ||||||
Category 2
Less than or equal to 3.50 to 1.00 |
4.50 | % | 5.50 | % | 5.50 | % |
For purposes of the foregoing, each change in the Applicable Rate resulting from a change in the Senior Secured First Lien Net Leverage Ratio shall be effective during the period commencing on and including the Business Day following the date of delivery to the Administrative Agent pursuant to Section 5.01(a) or 5.01(b) of the consolidated financial statements and related Compliance Certificate indicating such change and ending on the date immediately preceding the effective date of the next such change. Notwithstanding the foregoing, the Applicable Rate, at the option of the Administrative Agent or the Required Revolving Lenders, commencing upon written notice to the Borrower, shall be based on the rates per annum set forth in Category 1 (i) at any time that an Event of Default under Section 7.01(a) has occurred and is continuing and shall continue to so apply to but excluding the date on which such Event of Default shall cease to be continuing (and thereafter, the Category otherwise determined in accordance with this definition shall apply) or (ii) if the Borrower fails to deliver the consolidated financial statements required to be delivered pursuant to Section 5.01(a) or 5.01(b) or any Compliance Certificate required to be delivered pursuant hereto, in each case within the time periods specified herein for such delivery, during the period commencing on and including the day of the occurrence of a Default resulting from such failure and until the delivery thereof.
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“ Approved Bank ” has the meaning assigned to such term in the definition of the term “Permitted Investments.”
“ Approved Foreign Bank ” has the meaning assigned to such term in the definition of “Permitted Investments.”
“ Approved Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any Person whose consent is required by Section 9.04(b)), substantially in the form of Exhibit A or any other form reasonably approved by the Administrative Agent.
“ Auction Agent ” means (a) the Administrative Agent or (b) any other financial institution or advisor employed by the Borrower (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any Discounted Term Loan Prepayment pursuant to Section 2.11(a)(ii)(A); provided that the Borrower shall not designate the Administrative Agent as the Auction Agent without the written consent of the Administrative Agent (it being understood that the Administrative Agent shall be under no obligation to agree to act as the Auction Agent).
“ Audited Financial Statements ” means the Holdings Audited Financial Statements and the PRN Audited Financial Statements.
“ Available Amount ” means, as of any date of determination, a cumulative amount equal to (without duplication):
(a) $50,000,000 (the “ Starter Basket ”), plus
(b) the sum of an amount (which amount shall not be less than zero) equal to 50% of Consolidated Net Income of Holdings and its Restricted Subsidiaries for the period (treated as one accounting period) from January 1, 2016 to the end of the most recently ended Test Period as of such date, plus
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(c) to the extent not included in Consolidated Net Income, returns, profits, distributions and similar amounts received in cash or Permitted Investments by Holdings and its Restricted Subsidiaries on Investments made using the Available Amount and cash received from the sale of Investments made using the Available Amount or pursuant to Section 6.04(o) or (cc), plus
(d) Investments of Holdings, the Borrower or any of the Restricted Subsidiaries in any Unrestricted Subsidiary, non-Subsidiary joint venture or minority investment made using the Available Amount that has been re-designated as a Restricted Subsidiary or that has been merged, amalgamated or consolidated with or into Holdings, the Borrower or any Restricted Subsidiary, or the assets of which has been transferred to a Loan Party or any of its Restricted Subsidiaries (up to the fair market value determined in good faith by the Borrower of the Investments of Holdings, the Borrower and the Restricted Subsidiaries in such Unrestricted Subsidiary at the time of such re-designation or merger or consolidation), plus
(e) to the extent not included in Consolidated Net Income, the Net Proceeds of a sale or other Disposition of any Unrestricted Subsidiary (including the issuance of stock of an Unrestricted Subsidiary), non-Subsidiary joint venture or minority investment received by Holdings, the Borrower or any Restricted Subsidiary (or the fair market value of the assets thereof that have been transferred to Holdings, the Borrower or any Restricted Subsidiary), plus
(f) to the extent not included in Consolidated Net Income, dividends, profits, or other distributions, returns on capital or similar amounts received by Holdings, the Borrower or any Restricted Subsidiary from an Unrestricted Subsidiary, non-Subsidiary joint venture or minority investment (or from the sale of the assets thereof), plus
(g) to the extent not included in Consolidated Net Income, the aggregate proceeds and the fair market value (as reasonably determined by the Borrower) of marketable securities or other property received by Holdings, the Borrower or a Restricted Subsidiary since the Effective Date from any Person other than the Borrower or a Restricted Subsidiary, plus
(h) the aggregate amount of any Retained Declined Proceeds since the Effective Date, to the extent not applied to prepay the Second Lien Term Loans or any other Junior Financing, as contemplated by Section 2.11(e) and Section 6.07(b).
“ Available Equity Amount ” means a cumulative amount equal to (without duplication):
(a) the Net Proceeds of new public or private issuances of Qualified Equity Interests (excluding Qualified Equity Interests the proceeds of which will be applied as Cure Amounts) in Holdings or any parent of Holdings which are contributed to the Holdings or the Borrower, plus
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(b) capital contributions received by Holdings or the Borrower after the Effective Date in cash or Permitted Investments (other than in respect of any Disqualified Equity Interest), plus
(c) the net cash proceeds received by Holdings, the Borrower or any Restricted Subsidiary from Indebtedness and Disqualified Equity Interest issuances issued after the Effective Date and which have been exchanged or converted into Qualified Equity Interests, plus
(d) returns, profits, distributions and similar amounts received in cash or Permitted Investments by Holdings, the Borrower or any Restricted Subsidiary on Investments made using the Available Equity Amount.
“ BA Rate ” means, for any Interest Period with respect to a Eurodollar Borrowing denominated in Canadian Dollars, the rate per annum equal to the average discount rate for Canadian Dollar bankers’ acceptances of the appropriate face amount for such Interest Period as quoted on the Reuters Screen CDOR page (or such other page as is a replacement page for such bankers’ acceptances) as of 10:00 a.m., Toronto, Ontario time, on the date of determination; provided that the BA Rate, if negative, shall be deemed to be 0.00%.
“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“ Bankruptcy Code ” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.
“ Basel III ” means: (A) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; and (B) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011 as amended, supplemented or restated; and (C) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.
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“ Board of Directors ” means, with respect to any Person, (a) in the case of any corporation, the board of directors of such Person or any committee thereof duly authorized to act on behalf of such board, (b) in the case of any limited liability company, the board of managers, board of directors, manager or managing member of such Person or the functional equivalent of the foregoing or any committee thereof duly authorized to act on behalf of such board, manager or managing member, (c) in the case of any partnership, the board of directors or board of managers of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.
“ Board of Governors ” means the Board of Governors of the Federal Reserve System of the United States of America.
“ Borrower ” has the meaning assigned to such term in the preliminary statements hereto.
“ Borrower Materials ” has the meaning assigned to such term in Section 5.01.
“ Borrower Offer of Specified Discount Prepayment ” means the offer by the Borrower to make a voluntary prepayment of Term Loans at a Specified Discount to par pursuant to Section 2.11(a)(ii)(B).
“ Borrower Solicitation of Discount Range Prepayment Offers ” means the solicitation by the Borrower of offers for, and the corresponding acceptance by a Term Lender of, a voluntary prepayment of Term Loans at a specified range at a discount to par pursuant to Section 2.11(a)(ii)(C).
“ Borrower Solicitation of Discounted Prepayment Offers ” means the solicitation by the Borrower of offers for, and the subsequent acceptance, if any, by a Term Lender of, a voluntary prepayment of Term Loans at a discount to par pursuant to Section 2.11(a)(ii)(D).
“ Borrowing ” means Loans of the same Class, Type and currency, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.
“ Borrowing Minimum ” means (w) in the case of a Borrowing denominated in Dollars or any Alternative Currency (other than Canadian Dollars, Euros or Sterling), (i) in the case of a Eurodollar Revolving Borrowing, the lesser of $500,000 and the remaining Commitments of the applicable Class and (ii) in the case of an ABR Revolving Borrowing, the lesser of $250,000 and the remaining Commitments of the applicable Class, (x) in the case of a Borrowing denominated in Canadian Dollars, (i) in the case of a Eurodollar Revolving Borrowing, the lesser of CAD$500,000 and the remaining Commitments of the applicable Class and (ii) in the case of an ABR Revolving Borrowing, the lesser of CAD$250,000 and the remaining Commitments of the applicable Class, (y) in the case of a Borrowing denominated in Euro, the lesser of €500,000 and the remaining Commitments of the applicable Class and (z) in the case of a Borrowing denominated in Sterling, the lesser of ₤500,000 and the remaining Commitments of the applicable Class.
“ Borrowing Multiple ” means (w) in the case of a Borrowing denominated in Dollars or any Alternative Currency (other than Canadian Dollars, Euros or Sterling), (i) in the case of a Eurodollar Revolving Borrowing, $500,000 and (ii) in the case of an ABR Revolving Borrowing, $250,000, (x) in the case of a Borrowing denominated in Canadian Dollars, (i) in the case of a Eurodollar Revolving Borrowing, CAD$500,000 and (ii) in the case of an ABR Revolving Borrowing, CAD$250,000, (y) in the case of a Borrowing denominated in Euro, €500,000 and (z) in the case of a Borrowing denominated in Sterling, of ₤500,000.
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“ Borrowing Request ” means a request by the Borrower for a Borrowing in accordance with Section 2.03.
“ Business Day ” means (i) subject to clauses (ii) and (iii) below, any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or in Luxembourg are authorized or required by Requirements of Law to remain closed, (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on or with respect to Loans denominated in Euros or Sterling, any day that is a Business Day described in clause (i) and that is also (a) a day for trading by and between banks in the London interbank market and which shall not be a legal holiday or a day on which banking institutions are authorized or required by Requirements of Law or other government action to remain closed in London, England and (b) in relation to any payment in Euros, a TARGET Day and (iii) with respect to all notices and determinations in connection with, and payments of principal and interest on or with respect to, Loans denominated in any other Alternative Currency, any day that is a Business Day described in clauses (i) and (ii) and that is also a day which is not a legal holiday or a day on which banking institutions are authorized or required by Requirements of Law or other government action to remain closed in the country of issuance of the applicable currency.
“ Canadian Base Rate ” means, for any day, a rate per annum equal to the rate which the principal office of the Administrative Agent in Toronto, Ontario then quotes, publishes and refers to as its “prime rate” and which is its reference rate of interest for loans in Canadian Dollars made in Canada to commercial borrowers, adjusted automatically with each quoted, published or displayed change in such rate, all without necessity of any notice to the Borrower or any other Person.
“ Canadian Dollars ” or “ CAD$ ” means the lawful money of Canada.
“ Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP; provided that all obligations of any Person that are or would be characterized as an operating lease as determined in accordance with GAAP as in effect on the Effective Date (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capitalized Lease) for purposes of this Agreement regardless of any change in GAAP following the Effective Date that would otherwise require such obligation to be recharacterized as a Capital Lease Obligation, to the extent that financial reporting shall not be affected hereby or thereby. For purposes of Section 6.02, a Capital Lease Obligation shall be deemed to be secured by a Lien on the property being leased and such property shall be deemed to be owned by the lessee.
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“ Capitalized Leases ” means all leases that have been or should be, in accordance with GAAP as in effect on the Effective Date, recorded as capitalized leases; provided that for all purposes hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for as a liability in accordance with GAAP; provided further that all obligations of any Person that are or would be characterized as an operating lease as determined in accordance with GAAP as in effect on the Effective Date (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capitalized Lease) for purposes of this Agreement regardless of any change in GAAP following the Effective Date that would otherwise require such obligation to be recharacterized as a Capital Lease.
“ Capitalized Software Expenditures ” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by Holdings and its Restricted Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of Holdings and its Restricted Subsidiaries.
“ Cash Management Obligations ” means (a) obligations of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services or any automated clearing house transfers of funds and (b) other obligations in respect of netting services, employee credit or purchase card programs and similar arrangements.
“ Cash Management Services ” has the meaning assigned to such term in the definition of “Secured Cash Management Obligations.”
“ Casualty Event ” means any event that gives rise to the receipt by Holdings, the Borrower or any Subsidiary of any insurance proceeds or condemnation awards in an amount in excess of $25,000,000 in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
“ CFC ” means a “controlled foreign corporation” within the meaning of Sections 956 and 957 of the Code.
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“ Change in Control ” means (a) the failure of Holdings prior to an IPO, or, after the IPO, the IPO Entity, directly or indirectly through wholly owned subsidiaries, to own all of the Equity Interests of each of (x) the Borrower and (y) GTCR Canyon UK Investments Ltd., (b) prior to an IPO, the failure by the Permitted Holders to own, directly or indirectly through one or more holding company parents of Holdings, beneficially and of record, Equity Interests in Holdings representing at least a majority of the aggregate ordinary voting power for the election of members of the Board of Directors of Holdings represented by the issued and outstanding Equity Interests in Holdings, unless the Permitted Holders otherwise have the right (pursuant to contract, proxy, ownership of Equity Interests or otherwise), directly or indirectly, to designate, nominate or appoint (and do so designate, nominate or appoint) a majority of the Board of Directors of Holdings, (c) after an IPO, the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group, other than the Permitted Holders (directly or indirectly, including through one or more holding companies), of Equity Interests representing 40% or more of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests in the IPO Entity and the percentage of the aggregate ordinary voting power so held is greater than the percentage of the aggregate ordinary voting power represented by the Equity Interests in the IPO Entity held by the Permitted Holders, unless the Permitted Holders (directly or indirectly, including through one of more holding companies) otherwise have the right (pursuant to contract, proxy or otherwise), directly or indirectly, to designate, nominate or appoint (and do so designate, nominate or appoint) a majority of the Board of Directors of Holdings the IPO Entity or (d) the occurrence of a “Change of Control” (or similar event, however denominated), as defined in the Second Lien Credit Agreement, the documentation governing any Incremental Equivalent Debt, Junior Financing or other unsecured Indebtedness, in each case, that is Material Indebtedness.
For purposes of this definition, (i) “beneficial ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act, (ii) the phrase Person or “group” is within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and (iii) if any Person or “group” includes one or more Permitted Holders, the issued and outstanding Equity Interests of Holdings, the IPO Entity or the Borrower, as applicable, directly or indirectly owned by the Permitted Holders that are part of such Person or “group” shall not be treated as being owned by such Person or “group” for purposes of determining whether clause (c) of this definition is triggered.
“ Change in Law ” means: (a) the adoption of any rule, regulation, treaty or other law after the date of this Agreement, (b) any change in any rule, regulation, treaty or other law or in the administration, interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided , that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or by the United States, Canada, the European Union, United Kingdom or other foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” to the extent enacted, adopted, promulgated or issued after the date of this Agreement, but only to the extent such rules, regulations, or published interpretations or directives are applied to Holdings and its Subsidiaries by the Administrative Agent or any Lender in substantially the same manner as applied to other similarly situated borrowers under comparable syndicated credit facilities, including, without limitation, for purposes of Section 2.15.
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“ Class ” when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Other Revolving Loans, Term Loans, Incremental Term Loans or Other Term Loans, (b) any Commitment, refers to whether such Commitment is a Revolving Commitment, Additional/Replacement Revolving Commitment, Other Revolving Commitment, Term Commitment or Other Term Commitment and (c) any Lender, refers to whether such Lender has a Loan or Commitment with respect to a particular Class of Loans or Commitments. Other Term Commitments, Other Term Loans, Other Revolving Commitments (and the Other Revolving Loans made pursuant thereto), Additional/Replacement Revolving Commitments and Incremental Term Loans that have different terms and conditions shall be construed to be in different Classes.
“ Closing Date Intercreditor Agreement ” means the Closing Date Intercreditor Agreement dated as of the Closing Date, substantially in the form of Exhibit E-2, between the Administrative Agent and the Second Lien Administrative Agent (and each other Senior Representative for holders of Indebtedness permitted by this Agreement to be secured by the Collateral), that becomes party thereto after the Effective Date.
“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
“ Collateral ” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Security Documents as security for the Secured Obligations.
“ Collateral Agent ” has the meaning given to such term in Section 8.01(b) and its successors in such capacity as provided in Article VIII.
“ Collateral Agreement ” means the Collateral Agreement among the Loan Parties party thereto and the Collateral Agent, substantially in the form of Exhibit D.
“ Collateral and Guarantee Requirement ” means, at any time, the requirement that:
(a) the Administrative Agent shall have received from (i) Holdings, any Intermediate Parent, the Borrower and each of the Restricted Subsidiaries (other than any Excluded Subsidiary) either (x) a counterpart of the Guarantee Agreement duly executed and delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including by ceasing to be an Excluded Subsidiary), a supplement to the Guarantee Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person and (ii) Holdings, any Intermediate Parent, the Borrower and each Subsidiary Loan Party either (x) a counterpart of each applicable Security Document duly executed and delivered on behalf of such Person or (y) in the case of any Person that becomes a Subsidiary Loan Party after the Effective Date (including by ceasing to be an Excluded Subsidiary), either (A) to the extent applicable, a supplement to each applicable Security Document, substantially the form specified therein, duly executed and delivered on behalf of such Person or (B) a Security Document, in each case under this clause (a) together with, in the case of any such Loan Documents executed and delivered after the Effective Date, to the extent reasonably requested by the Administrative Agent, documents of the type referred to in Section 4.01(d) within the time periods set forth in Sections 5.11 and 5.12;
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(b) all outstanding Equity Interests of the Borrower, any Intermediate Parent and each Restricted Subsidiary (other than any Equity Interests constituting Excluded Assets) owned by or on behalf of any Loan Party, shall have been pledged, charged or otherwise made subject to security pursuant to the applicable Security Document, and the Administrative Agent shall have received certificates, if any, representing all such Equity Interests to the extent constituting “certificated securities”, together with all certificates, documents of title and other documentary evidence of ownership and undated stock powers or other instruments of transfer with respect thereto endorsed in blank, in each case, to the extent required to perfect the security interest therein in the jurisdiction of the issuer and, solely with respect to any Foreign Loan Party, all other documents required to enable: (x) the Collateral Agent (or its nominee) to perfect its security interest in such Equity Interests or (y) the Collateral Agent (or, upon enforcement, any purchaser) to be registered as the owner of, or otherwise to obtain legal title to, such Equity Interests pursuant to the applicable Security Documents;
(c) if any Indebtedness for borrowed money of Holdings, any Intermediate Parent, the Borrower or any Subsidiary in a principal amount of $25,000,000 or more is owing by such obligor to any Loan Party and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged or otherwise secured pursuant to the applicable Security Document, and the Administrative Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided , however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by all Loan Parties as payees and all such obligors as payors;
(d) all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Intellectual Property Security Agreements with respect to any Trademarks, Patents and Copyrights that are registered, issued or applied-for in the United States and that constitute Collateral, for the filing with the United States Patent or Trademark Office and the United States Copyright Office to the extent required by this Agreement, the Security Documents, Requirements of Law and as reasonably requested by the Administrative Agent to be filed, delivered, registered or recorded to create the Liens intended to be created by the Security Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement, the Security Documents and the other provisions of the term “Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording; and
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(e) the Administrative Agent shall have received (i) counterparts of a Mortgage with respect to each Material Real Property duly executed and delivered by the record owner of such Mortgaged Property (if the Mortgaged Property is in a jurisdiction that imposes a mortgage recording or similar tax is imposed on the amount secured by such Mortgage, then the amount secured by such Mortgage shall be limited to the fair market value of such Mortgaged Property, as reasonably determined by Holdings), (ii) a policy or policies of title insurance (or marked unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien of each such Mortgage as a first priority Lien on the Mortgaged Property described therein, free of any other Liens except as expressly permitted by Section 6.02, together with such endorsements (other than a creditor’s rights endorsement) as the Administrative Agent may reasonably request to the extent available in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Administrative Agent shall accept zoning reports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in an amount equal to the fair market value of such Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower be required to obtain independent appraisals of such Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination with respect to each Mortgaged Property, and if any Mortgaged Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be located in special flood hazard area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance as provided in Section 5.07(b), (iv) in each case if reasonably requested by the Administrative Agent, a customary legal opinion with respect to each such Mortgage, from counsel qualified to opine in each jurisdiction (i) where a Mortgaged Property is located regarding the enforceability of the Mortgage and (ii) where the applicable Loan Party granting the Mortgage on said Mortgaged Property is organized or incorporated, regarding the due authorization, execution and delivery of such Mortgage, and in each case, such other customary matters as may be in form and substance reasonably satisfactory to the Administrative Agent, (v) a survey or existing survey together with a no change affidavit of such Mortgaged Property, in compliance with the 2011 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys and otherwise reasonably satisfactory to the Administrative Agent, and (vi) evidence of payment of title insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording the Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s).
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Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the terms of the Security Documents to be entered into by the Foreign Loan Parties and each other guaranty and security document delivered or to be delivered under this Agreement by a Foreign Loan Party and any obligation to enter into or perfect or otherwise carry out any action in connection with such document or obligation by any Foreign Loan Party shall be subject in all respects to the Guaranty and Security Principles, (b) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, particular assets of the Loan Parties, or the provision of Guarantees by any Subsidiary, if, and for so long as the Administrative Agent and the Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets, or providing such Guarantees (taking into account any adverse tax consequences to Holdings and its Affiliates (including the imposition of withholding or other material taxes)), is excessive in relation to the benefits to be obtained by the Lenders therefrom or, in the case of a Foreign Loan Party, is not customary in the jurisdiction of incorporation of that Loan Party; (c) Liens required to be granted from time to time pursuant to the term “Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in this Agreement and the Security Documents; (d) in no event shall control agreements or other control or similar arrangements be required with respect to cash, Permitted Investments, other deposit accounts, securities and commodities accounts (including securities entitlements and related assets), letter of credit rights or other assets requiring perfection by control (but not, for avoidance of doubt, possession); (e) in no event shall any Loan Party be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of a Covered Jurisdiction (or, with respect to Intellectual Property, in any jurisdiction outside the United States or United Kingdom) or outside of the country where such Loan Party is formed or incorporated (except that perfection action may be required in the jurisdiction of incorporation of any Foreign Loan Party in relation to security granted over its equity interests held by another Foreign Loan Party incorporated in a different jurisdiction), and no actions in any non-Covered Jurisdiction (or, with respect to Intellectual Property, in any jurisdiction outside the United States or United Kingdom) or required by the laws of any non-Covered Jurisdiction (or, with respect to Intellectual Property, by the laws of any jurisdiction outside the United States or United Kingdom) shall be required to be taken to create any security interests in assets located or titled outside of any Covered Jurisdiction (including in any Equity Interests of Subsidiaries organized outside of a Covered Jurisdiction), or in any Intellectual Property governed by, arising, existing, registered or applied-for under the laws of any jurisdiction other than the United States or United Kingdom, or to perfect or make enforceable any security interests in any such assets (it being understood that (i) all security granted by a Domestic Loan Party (other than Mortgages) shall be governed by the law of the state of New York, (ii) all security granted by a Foreign Loan Party (other than share security over its subsidiaries that are Loan Parties) shall be governed by the law of the country of incorporation of such Loan Party and (iii) all share security granted by a Loan Party over the shares in a subsidiary that is located in a Covered Jurisdiction shall be governed by the law of the country of incorporation of such subsidiary); (f) in no event shall any Loan Party be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements (and, if applicable, corresponding or customary filings in the country of organization of any other Loan Party); (g) other than the filing of UCC financing statements (and, if applicable, corresponding or customary filings in the country of organization of any other Loan Party), no perfection shall be required with respect to promissory notes evidencing debt for borrowed money in a principal amount of less than $25,000,000; (h) in no event shall any Domestic Loan Party be required to complete any filings or other action (including entering into any source code escrow arrangements or seeking registration of any Copyrights) with respect to security interests in Intellectual Property beyond the filing of Intellectual Property Security Agreements with the United States Patent and Trademark Office and the United States Copyright Office; (i) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements (and, if applicable, corresponding or customary filings in the country of organization of any other Loan Party)); (j) in no event shall environmental reports be required to be delivered to the Administrative Agent or the Lenders; and (k) in no event shall the Collateral include any Excluded Assets. The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets or the provision of any Guarantee by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) and any other obligations under this definition where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement (including as set forth on Schedule 5.14) or the Security Documents.
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Notwithstanding the foregoing provisions of this definition or any other Loan Document to the contrary, to the extent necessary in connection with an IPO Reorganization Transaction, Holdings and any Intermediate Parent may release the guarantees, pledges and Collateral so long as (i) no Change of Control shall have occurred after giving effect to such IPO Reorganization Transaction, (ii) the IPO entity or other Loan Party shall provide a pledge of the stock of 100% of the Equity Interests of (x) the Borrower or Intermediate U.S. Holdings and (y) GTCR Canyon UK Investments Ltd and (iii) the other conditions set forth in the definition of “IPO Reorganization Transaction” are satisfied.
“ Commitment ” means with respect to any Lender, its Revolving Commitment, Other Revolving Commitment of any Class, Term Commitment, Other Term Commitment of any Class or any combination thereof (as the context requires).
“ Commitment Fee Percentage ” means, for any day, the applicable percentage set forth below under the caption “Commitment Fee Percentage” based upon the Senior Secured First Lien Net Leverage Ratio as of the end of the fiscal quarter of Holdings for which consolidated financial statements have theretofore been most recently delivered pursuant to Section 5.01(a) or 5.01(b); provided that, until the date of the delivery of the consolidated financial statements pursuant to Section 5.01(b) as of and for the fiscal quarter ended September 30, 2016, the Commitment Fee Percentage shall be based on the rates per annum set forth in Category 1:
Senior Secured First Lien Net
Leverage Ratio |
Commitment Fee
Percentage |
|||
Category 1
|
0.50 | % | ||
Greater than or equal to 3.50 to 1.00 | ||||
Category 2 | 0.375 | % | ||
Less than 3.50 to 1.00 |
For purposes of the foregoing, each change in the Commitment Fee Percentage resulting from a change in the Senior Secured First Lien Net Leverage Ratio shall be effective during the period commencing on and including the Business Day following the date of delivery to the Administrative Agent pursuant to Section 5.01(a) or 5.01(b) of the consolidated financial statements and related Compliance Certificate indicating such change and ending on the date immediately preceding the effective date of the next such change. Notwithstanding the foregoing, the Commitment Fee Percentage, at the option of the Administrative Agent or the Required Revolving Lenders, commencing upon written notice to the Borrower, shall be based on the rates per annum set forth in Category 1 (i) at any time that an Event of Default under Section 7.01(a) has occurred and is continuing and shall continue to so apply to but excluding the date on which such Event of Default shall cease to be continuing (and thereafter, the Category otherwise determined in accordance with this definition shall apply) or (ii) if the Borrower fails to deliver the consolidated financial statements required to be delivered pursuant to Section 5.01(a) or 5.01(b) or any Compliance Certificate required to be delivered pursuant hereto, in each case within the time periods specified herein for such delivery, during the period commencing on and including the day of the occurrence of a Default resulting from such failure and until the delivery thereof.
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“ Commitment Letter ” means the commitment letter among the Borrower, the Joint Lead Arrangers, the Joint Lead Arrangers’ respective Affiliates party thereto, and the other parties thereto dated as of December 14, 2015.
“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq .), as amended from time to time, and any successor statute.
“ Compliance Certificate ” means the certificate required to be delivered pursuant to Section 5.01(d).
“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“ Consolidated EBITDA ” means, for any period, Consolidated Net Income for such period, plus :
(a) without duplication and to the extent deducted (and not added back), other than with respect to clauses (xvi), (xx) and (xxi), in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) total interest expense and, to the extent not reflected in such total interest expense, the sum of (A) premium payments, debt discount, fees, charges and related expenses incurred in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets plus (B) the portion of rent expense with respect to such period under Capitalized Leases that is treated as interest expense in accordance with GAAP plus (C) the implied interest component of synthetic leases with respect to such period plus (D) any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such hedging obligations or such derivative instruments plus (E) bank and letter of credit fees and banker’s acceptance fees and costs of surety bonds in connection with financing activities, plus (F) any commissions, discounts, yield and other fees and charges (including any interest expense) related to any Qualified Securitization Facility;
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(ii) provision for taxes based on income, profits or capital and sales taxes, including federal, foreign, state, franchise, excise, and similar taxes paid or accrued during such period (including in respect of repatriated funds) including penalties and interest related to such taxes or arising from any tax examinations;
(iii) Non-Cash Charges as elected by the Borrower;
(iv) operating expenses incurred on or prior to the Effective Date attributable to (A) salary obligations paid to employees terminated prior to the Effective Date and (B) wages paid to executives in excess of the amounts the Acquired Companies and its Subsidiaries are required to pay pursuant to any employment agreements;
(v) extraordinary charges, expenses or losses in accordance with GAAP;
(vi) unusual or non-recurring charges, expenses or losses (including any unusual or non-recurring operating expenses directly attributable to the implementation of cost savings initiatives), integration costs, severance, relocation costs, office and facilities’ opening costs and other business optimization expenses (including related to new product introductions and new system design and implementation costs), recruiting costs and fees, signing fees, expenses, costs and bonuses, retention or completion bonuses, contract termination costs, transaction fees and expenses, transition costs, systems establishment costs, costs related to closure/consolidation of office and facilities, costs related to the implementation of operational and reporting systems and technology initiatives, consulting fees and expenses, any one time expense relating to enhanced accounting function or other transaction costs (including those associated with becoming a standalone entity or a public company), costs incurred in connection with acquisitions and non-recurring intellectual property development, internal costs in respect of strategic initiatives and curtailments or modifications to pension and post-retirement employee benefit plans (including any settlement of pension liabilities), project start up costs or any other costs incurred in connection with any of the foregoing;
(vii) restructuring costs, charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves), whether or not classified as restructuring expense on the consolidated financial statements;
(viii) the amount of any non-controlling interest consisting of income attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary deducted (and not added back in such period) in calculating Consolidated Net Income;
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(ix) (A) transaction fees and expenses and management fees, indemnities and expenses paid pursuant to the Sponsor Management Agreement and the amount of management, monitoring, consulting and advisory fees, indemnities and related expenses paid or accrued in such period to (or on behalf of) the Sponsor (including any termination fees payable in connection with the early termination of management and monitoring agreements) and (B) the amount of expenses relating to payments made to option holders of Holdings or any Holdings Parent in connection with, or as a result of, any distribution being made to shareholders of such Person or its direct or indirect parent companies, which payments are being made to compensate such option holders as though they were shareholders at the time of, and entitled to share in, such distribution, in each case to the extent permitted by the Loan Documents;
(x) losses on asset sales, disposals or abandonments (other than asset sales, disposals or abandonments in the ordinary course of business);
(xi) any non-cash loss attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging but only to the extent the cash impact resulting from such loss has not been realized);
(xii) any loss relating to amounts paid in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income for such period;
(xiii) any gain relating to hedging obligations associated with transactions realized in the current period that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clauses (d)(iv) and (d)(v) below;
(xiv) any costs or expenses incurred by Holdings, the Borrower or any Restricted Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, any severance agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are non-cash or otherwise funded with cash proceeds contributed to the capital of Holdings or Net Proceeds of an issuance of Equity Interests of Holdings (other than Disqualified Equity Interests);
(xv) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of FASB Accounting Standards Codification 715, and any other items of a similar nature;
(xvi) any other add-backs and adjustments previously identified and agreed to by the Administrative Agent, including all such add-backs and adjustments set forth in the Sponsor Model or the Information Memorandum;
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(xvii) the amount of losses on Dispositions of accounts receivable, Securitization Assets and related assets incurred in connection with a Qualified Securitization Facility;
(xviii) any increase in expenses resulting from the revaluation of inventory (including any impact of changes of inventory valuation policy methods including changes in capitalization of variances) or other inventory adjustments;
(xix) charges, losses or expenses to the extent indemnified or insured or reimbursed by a third party;
(xx) solely for purposes of determining compliance with the Financial Performance Covenant in respect of any period which includes the exercise of a Cure Right (but not for the determination of the Senior Secured Net Leverage Ratio or the Total Net Leverage Ratio for any other purposes), any Cure Amount; and
(xxi) to the extent that any Holdings Parent Specified Expenses would have been added back to Consolidated EBITDA pursuant to clauses (a)(i) through (xx) above had such charge, tax or expense been incurred directly by Holdings, such Holdings Parent Specified Expenses;
plus
(b) without duplication, the amount of “run rate” cost savings, operating expense reductions, other operating improvements and “run rate” synergies related to the Transactions, any Specified Transaction, any restructuring, cost saving initiative or other initiative projected by the Borrower in good faith to result from actions (including the Acquisition) taken, committed to be taken or expected to be taken, in each case on or prior to the date that is 18 months after the end of the relevant Test Period (including actions initiated prior to the Effective Date) (which cost savings, operating expense reductions, other operating improvements and synergies shall be added to Consolidated EBITDA until fully realized and calculated on a pro forma basis as though such cost savings, operating expense reductions, other operating improvements and synergies had been realized on the first day of the relevant period), net of the amount of actual benefits realized from such actions; provided that (A) a Financial Officer of the Borrower shall certify in a Compliance Certificate that such cost savings are reasonably identifiable and factually supportable and (B) no cost savings, operating expense reductions, other operating improvements or synergies shall be added pursuant to this clause (b) to the extent duplicative of any expenses or charges relating to such cost savings, operating expense reductions or synergies that are included in clauses (a)(vi) and (a)(vii) above or in the definition of “Pro Forma Adjustment” (it being understood and agreed that “run rate” shall mean the full recurring benefit that is associated with any action taken); provided further that such anticipated “run rate” cost savings and synergies added back pursuant to this clause (b) only (together with any anticipated “run rate” synergies added to the calculation of Consolidated EBITDA pursuant to the definition of “Pro Forma Adjustment”), in each case solely in respect of Acquisitions and Dispositions, and together with the anticipated “run rate” synergies from other actions described in this clause (b) or the definition of Pro Forma Adjustment, shall not exceed, in the aggregate for such period, 20% of Consolidated EBITDA (determined after giving effect to all such amounts added pursuant to this clause (b) and the definition or “Pro Forma Adjustment”); provided , further that, for the avoidance of doubt, the amount of any such (x) items that would be permitted to be included in financial statements prepared in accordance with Regulation S-X and (y) items resulting from, or in connection with, the Transactions, in either case, shall not be subject to or included in the calculation of such 20% limitation.
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plus
(c) to the extent covered by business interruption insurance and actually reimbursed or otherwise paid in cash, expenses or losses relating to business interruption or, so long as Holdings or the Borrower has made a determination that a reasonable basis exists for indemnification or reimbursement and only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days);
less
(d) without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) extraordinary gains and unusual or non-recurring gains;
(ii) non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated Net Income or Consolidated EBITDA in any prior period);
(iii) gains on asset sales, disposals or abandonments (other than asset sales, disposals or abandonments in the ordinary course of business);
(iv) any non-cash gain attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging but only to the extent the cash impact resulting from such gain has not been realized);
(v) any gain relating to amounts received in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income in such period; and
(vi) any loss relating to hedging obligations associated with transactions realized in the current period that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clauses (a)(xii) and (a)(xiii) above; plus
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in each case, as determined on a consolidated basis for Holdings and the Restricted Subsidiaries in accordance with GAAP; provided that:
(I) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting from the application of Financial Accounting Standards Codification No. 815—Derivatives and Hedging,
(II) there shall be included in determining Consolidated EBITDA for any period, without duplication, (A) to the extent not included in Consolidated Net Income, the Acquired EBITDA of any Person, property, business, line of business, division, business unit or asset acquired by Holdings, the Borrower or any Restricted Subsidiary during such period (other than any Unrestricted Subsidiary) to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of any related Person, property, business, line of business, division, business unit or assets to the extent not so acquired) (each such Person, property, business, line of business, division, business unit or asset acquired, including pursuant to the Transactions or pursuant to a transaction consummated prior to the Effective Date, and not subsequently so disposed of, an “ Acquired Entity or Business ”), and the Acquired EBITDA of any Unrestricted Subsidiary that is converted into a Restricted Subsidiary during such period (each, a “ Converted Restricted Subsidiary ”), in each case based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portion thereof occurring prior to such acquisition or conversion) determined on a historical Pro Forma Basis and (B) an adjustment equal to the amount of the Pro Forma Adjustment for such period (including the portion thereof occurring prior to such acquisition or conversion);
(III) there shall be (A) to the extent included in Consolidated Net Income, excluded in determining Consolidated EBITDA for any period the Disposed EBITDA of any Person, property, business, line of business, division, business unit or asset (other than any Unrestricted Subsidiary) sold, transferred or otherwise disposed of, closed or classified as discontinued operations in accordance with GAAP (other than (x) if so classified on the basis that it is being held for sale unless such sale has actually occurred during such period and (y) for periods prior to the applicable sale, transfer or other disposition, if the Disposed EBITDA of such Person, property, business, line of business, division, business unit or asset is positive (i.e., if such Disposed EBITDA is negative, it shall be added back in determining Consolidated EBITDA for any period)) by Holdings, the Borrower or any Restricted Subsidiary during such period (each such Person, property, business, line of business, division, business unit or asset so sold, transferred or otherwise disposed of, closed or classified, a “ Sold Entity or Business ”), and the Disposed EBITDA of any Restricted Subsidiary that is converted into an Unrestricted Subsidiary during such period (each, a “ Converted Unrestricted Subsidiary ”), in each case based on the Disposed EBITDA of such Sold Entity or Business or Converted Unrestricted Subsidiary for such period (including the portion thereof occurring prior to such sale, transfer, disposition, closure, classification or conversion) determined on a historical Pro Forma Basis and (B) to the extent not included in Consolidated Net Income, included in determining Consolidated EBITDA for any period in which a Sold Entity or Business is disposed, an adjustment equal to the Pro Forma Disposal Adjustment with respect to such Sold Entity or Business (including the portion thereof occurring prior to such disposal);
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(IV) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA any expense (or income) as a result of adjustments recorded to contingent consideration liabilities relating to the Transaction or any Permitted Acquisition (or other Investment permitted hereunder); and
(V) to the extent not already included in Consolidated Net Income, Consolidated EBITDA shall include the amount of proceeds received or due from reimbursement of expenses and charges pursuant to indemnification and other reimbursement provisions in connection with any acquisition or other Investment or any disposition of any asset permitted hereunder.
For the purposes of determining the Senior Secured First Lien Net Leverage Ratio, the Senior Secured Net Leverage Ratio or the Total Net Leverage Ratio for any relevant Test Period, Consolidated EBITDA shall be deemed to equal (a) $66,599,000 for the fiscal quarter ended March 31, 2015, (b) $75,384,000 for the fiscal quarter ended June 30, 2015, (c) $68,756,000 for the fiscal quarter ended September 30, 2015 and (d) $72,598,000 for the fiscal quarter ended December 31, 2015 (it being understood that such amounts are subject to adjustments, as and to the extent otherwise contemplated in this Agreement, in connection with any Pro Forma Adjustment or any calculation on a Pro Forma Basis).
“ Consolidated Net Income ” means, for any period, the net income (loss) of Holdings and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication,
(a) extraordinary items for such period,
(b) the cumulative effect of a change in accounting principles during such period,
(c) any Transaction Costs incurred during such period ,
(d) any accruals, payments, fees, costs and expenses (including rationalization, legal, tax, structuring, financial advisory, investment banking, any transaction or retention bonus or similar payment and fees, costs and expenses of any counsel, consultants or other advisors and other costs and expenses) incurred during such period, or any amortization thereof for such period, in connection with the Transactions, any Specified Transactions, any non-recurring costs to acquire equipment to the extent not capitalized in accordance with GAAP, Investments (including any earn-outs), Restricted Payments, Dispositions, recapitalization, issuances of Indebtedness or Equity Interests (including any initial public offering) or repayment of debt, refinancing transactions or amendment or other modification of any debt instrument, and restructurings, workouts and extensions and refinancings of any of the foregoing, non-competition agreements, one-time accruals, up-front fees, financing fees, commitment fees, costs, expenses or premiums related to any repayment of debt, issuance of equity securities, refinancing transaction or amendment or other modification of or waiver or consent relating to any debt instrument (in each case, including the Transaction Costs and any such transaction consummated prior to the Effective Date and any such transaction undertaken but not completed and including costs and expenses of the Administrative Agent and Lenders that are reimbursed and fees paid to the Permitted Holders) and any charges or non-recurring merger or amalgamation costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt, the effects of expensing all transaction-related expenses in accordance with FASB Accounting Standards Codification 805 and gains or losses associated with FASB Accounting Standards Codification 460),
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(e) any income (loss) for such period attributable to the early extinguishment of Indebtedness, hedging agreements or other derivative instruments,
(f) accruals and reserves that are established or adjusted as a result of the Transactions or any Permitted Acquisition or other Investment not prohibited under this Agreement in accordance with GAAP (including any adjustment of estimated payouts on earn-outs) or changes as a result of the adoption or modification of accounting policies during such period;
(g) stock-based award compensation expenses,
(h) any income (loss) attributable to deferred compensation plans or trusts,
(i) the amount of any expense required to be recorded as compensation expense related to contingent transaction consideration, and
(j) currency translation gains and losses related to currency remeasurements of assets, liabilities or indebtedness (including the net loss or gain resulting from hedging agreements for currency exchange risk and revaluations of intercompany balances),
There shall be included in Consolidated Net Income, without duplication, (i) the amount of any cash tax benefits related to the tax amortization of intangible assets in such period, (ii) any dividends or other distributions received in cash or other Permitted Investments from Unrestricted Subsidiaries and (iii) the effects from applying acquisition method accounting, including applying acquisition method accounting to inventory, property and equipment, loans and leases, software and other intangible assets and deferred revenue (including deferred costs related thereto) required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to Holdings and its Restricted Subsidiaries), as a result of the Transactions, any acquisition or Investment consummated prior to the Effective Date and any Permitted Acquisitions (or other Investment not prohibited hereunder) or the amortization or write-off of any amounts thereof.
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“ Consolidated Senior Secured First Lien Net Indebtedness ” means, as of any date of determination, the aggregate amount of Senior Secured First Lien Indebtedness of Holdings and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, consisting only of Senior Secured First Lien Indebtedness for borrowed money, drawn but unreimbursed obligations under letters of credit (and in the case of trade letters of credit, unreimbursed for more than three (3) Business Days and the principal portion of obligations in respect of Capitalized Leases but excluding any obligations under or in respect of Qualified Securitization Facilities), minus the lesser of (x) the aggregate amount of cash and Permitted Investments of Holdings and its Restricted Subsidiaries (excluding cash and Permitted Investments that are listed as “restricted” on the consolidated balance sheet of Holdings and its Restricted Subsidiaries as of such date) and (y) $100,000,000.
“ Consolidated Senior Secured Net Indebtedness ” means, as of any date of determination, the aggregate amount of Senior Secured Indebtedness of Holdings and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, consisting only of Senior Secured Indebtedness for borrowed money, drawn but unreimbursed obligations under letters of credit (and in the case of trade letters of credit, unreimbursed for more than three (3) Business Days) and the principal portion of obligations in respect of Capitalized Leases, but excluding any obligations under or in respect of Qualified Securitization Facilities, minus the lesser of (x) the aggregate amount of cash and Permitted Investments of Holdings and its Restricted Subsidiaries (excluding cash and Permitted Investments that are listed as “restricted” on the consolidated balance sheet of Holdings and its Restricted Subsidiaries as of such date) and (y) $100,000,000.
“ Consolidated Total Net Indebtedness ” means, as of any date of determination, the aggregate amount of Indebtedness of Holdings and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, consisting only of Indebtedness for borrowed money, drawn but unreimbursed obligations under letters of credit (and in the case of trade letters of credit, unreimbursed for more than three (3) Business Days) and the principal portion of obligations in respect of Capitalized Leases, but excluding any obligations under or in respect of Qualified Securitization Facilities, minus the lesser of (x) the aggregate amount of cash and Permitted Investments of Holdings and its Restricted Subsidiaries (excluding cash and Permitted Investments that are listed as “restricted” on the consolidated balance sheet of Holdings and its Restricted Subsidiaries as of such date) and (y) $100,000,000.
“ Consolidated Working Capital ” means, at any date, the excess (which may be negative) of (a) the sum of all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries at such date, excluding the current portion of deferred income taxes over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries on such date, but excluding, without duplication, (i) the current portion of any Funded Debt, (ii) all Indebtedness consisting of Loans, Second Lien Term Loans and obligations under Letters of Credit and Capital Lease Obligations to the extent otherwise included therein, (iii) the current portion of interest, (iv) the current portion of current and deferred income taxes, (v) accrual of any costs or expenses related to restructuring reserves, (vi) the current portion of pension liabilities and (vii) deferred revenue; provided that, for purposes of calculating Excess Cash Flow, increases or decreases in working capital (A) arising from acquisitions or dispositions by Holdings and its Restricted Subsidiaries shall be measured from the date on which such acquisition or disposition occurred until the first anniversary of such acquisition or disposition with respect to the Person subject to such acquisition or disposition and (B) shall exclude (I) the impact of non-cash adjustments contemplated in the Excess Cash Flow calculation, (II) the impact of adjusting items in the definition of Consolidated Net Income and (III) any changes in current assets or current liabilities as a result of (x) the effect of fluctuations in the amount of accrued or contingent obligations, assets or liabilities under hedging agreements or other derivative obligations or (y) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent.
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“ Contract Consideration ” has the meaning assigned to such term in the definition of “Excess Cash Flow.”
“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.
“ Converted Restricted Subsidiary ” has the meaning given such term in the definition of “Consolidated EBITDA.”
“ Converted Unrestricted Subsidiary ” has the meaning given such term in the definition of “Consolidated EBITDA.”
“ Copyright ” has the meaning assigned to such term in the Collateral Agreement.
“ Core Acquisition ” means the acquisition by Holdings or certain of its Subsidiaries of the issued and outstanding equity interests of each Core PRN Company (as defined in the Acquisition Agreement), all of the PRN India Purchased Assets (as defined in the Acquisition Agreement) and the assumption by Holdings or certain of its Subsidiaries of the PRN India Assumed Liabilities (as defined in the Acquisition Agreement) pursuant to the terms of the Acquisition Agreement.
“ Covered Elective Jurisdiction ” has the meaning assigned to such term in the definition of “Covered Jurisdiction”.
“ Covered Jurisdiction ” means each of (a) the United States (or any state, commonwealth or territory thereof or the District of Columbia), (b) the United Kingdom, (c) the Netherlands, (d) Luxembourg and (e) Ireland. Furthermore, from time to time after the Effective Date, the Borrower may elect (by written notice to the Administrative Agent) that one or more additional jurisdictions be added to the list of Covered Jurisdictions. In such event, such elective jurisdictions (“ Covered Elective Jurisdictions ”) shall be added to (and thereafter form part of) the list of Covered Jurisdictions. The Borrower may at any time elect to release the guarantees of any entity in a Covered Elective Jurisdiction and/or remove such jurisdiction from the list of Covered Jurisdictions upon notice to the Administrative Agent; provided that (a) no Event of Default shall have occurred and be continuing or would result therefrom and (b) the release of guarantees of any entity shall constitute (i) the incurrence by such entity of any Investment, Indebtedness or Liens of such entity existing at such time that were incurred when such entity was a Loan Party, tested for such entity’s revised status as a non-Loan Party and (ii) an Investment by Holdings in such entity at the date of release in an amount equal to the fair market value (as determined in good faith by the Borrower) of Holdings’ or its Subsidiary’s (as applicable) investment therein made while such entity was a Loan Party.
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“ Credit Agreement Refinancing Indebtedness ” means Indebtedness issued, incurred or otherwise obtained by the Borrower (including by means of the extension or renewal of existing Indebtedness) in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Term Loans, Revolving Loans (or unused Revolving Commitments), (“ Refinanced Debt ”); provided that such exchanging, extending, renewing, replacing or refinancing Indebtedness (a) is in an original aggregate principal amount not greater than the aggregate principal amount of the Refinanced Debt (plus any premium, original issue discount and upfront fees, accrued interest and fees and expenses incurred in connection with such exchange, extension, renewal, repayment, replacement or refinancing and the incurrence of such new Credit Agreement Refinancing Indebtedness) plus additional amounts to the extent otherwise permitted to be incurred under this Agreement (which additional amounts, for the avoidance of doubt, do not constitute Credit Agreement Refinancing Indebtedness), (b) (i) (except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature prior to the maturity date of the Refinanced Debt) does not mature earlier than or, except in the case of Revolving Commitments, have a Weighted Average Life to Maturity shorter than the Refinanced Debt and (ii) if such Indebtedness is unsecured or secured by the Collateral on a junior lien basis to the Secured Obligations, does not have scheduled amortization or required payments of principal prior to the maturity date of the Refinanced Debt (except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature prior to the maturity date of the Refinanced Debt) (except for customary payments in respect of asset sales, insurance and condemnation proceeds events, change of control or similar events and AHYDO catch up payments and offers to purchase upon an event of default), (c) shall not be guaranteed by any entity that is not, or that does not substantially concurrently become, a Loan Party, (d) in the case of any secured Indebtedness that is (i) not secured by any assets not securing the Secured Obligations and (ii) subject to the relevant Intercreditor Agreement(s) and (e) has covenants and events of default (excluding, for the avoidance of doubt, pricing, interest rate margins, rate floors, discounts, fees, collateral, guarantees, premiums and prepayment or redemption provisions) that are not materially more favorable (when taken as a whole) to the lenders or investors providing such Indebtedness than the covenants and events of default of this Agreement (when taken as a whole) are to the Lenders (unless (x) such covenants or other provisions are applicable only to periods after the maturity date of the Refinanced Debt at the time of such refinancing, (y) the Revolving Lenders or the Lenders under the Initial Term Loans, as applicable, also receive the benefit of such more favorable covenants and events of default (together with, at the election of the Borrower, any applicable “equity cure” provisions with respect to any financial maintenance covenant) (it being understood that, to the extent that any covenant, event of default or guarantee is added or modified for the benefit of any such Indebtedness, no consent shall be required by the Administrative Agent or any of the Lenders if such covenant, event of default or guarantee is (i) also added or modified for the benefit of any corresponding Loans remaining outstanding after the issuance or incurrence of such Indebtedness, (ii) with respect to any “springing” financial maintenance covenant or other covenant only applicable to, or for the benefit of, a revolving credit facility, also added for the benefit of each revolving credit facility hereunder (and not for the benefit of any term loan facility hereunder) or (iii) only applicable after the Latest Maturity Date at the time of such refinancing) or (z) such terms and conditions are reasonably satisfactory to the Administrative Agent. For the avoidance of doubt, it is understood and agreed that (x) notwithstanding anything in this Agreement to the contrary, in the case of any Indebtedness incurred to modify, refinance, refund, extend, renew or replace Indebtedness initially incurred in reliance on and measured by reference to a percentage of Consolidated EBITDA at the time of incurrence, and such modification, refinancing, refunding, extension, renewal or replacement would cause the percentage of Consolidated EBITDA to be exceeded if calculated based on the percentage of Consolidated EBITDA on the date of such modification, refinancing, refunding, extension, renewal or replacement, such percentage of Consolidated EBITDA restriction shall not be deemed to be exceeded so long as such incurrence otherwise constitutes “Credit Agreement Refinancing Indebtedness” and (y) such Credit Agreement Refinancing Indebtedness shall not be subject to any “most favored nation” pricing provisions.
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“ Cure Amount ” has the meaning assigned to such term in Section 7.02(a).
“ Cure Right ” has the meaning assigned to such term in Section 7.02(a).
“ Cure Termination Date ” has the meaning assigned to such term in Section 7.02(a).
“ Debt Repayment ” means the repayment, refinancing, roll over, termination, discharge, defeasance or release, or the arrangement for the repayment, refinancing, roll over, termination, discharge, defeasance or release in a manner reasonably satisfactory to the Administrative Agent of: (i) all Indebtedness and guaranties and security granted by Holdings and its Subsidiaries under the credit facilities evidenced by the First Lien Credit Agreement, dated as of May 30, 2014 (as amended, restated, supplemented or otherwise modified), among the Borrower, Intermediate U.S. Holdings, Holdings, Jefferies Finance LLC, as administrative agent and collateral agent, and each lender from time to time party thereto, (ii) all Indebtedness and guaranties and security granted by Holdings and its Subsidiaries under the credit facilities evidenced by the Second Lien Credit Agreement, dated as of May 30, 2014 (as amended, restated, supplemented or otherwise modified), among the Borrower, Intermediate U.S. Holdings, Holdings, Jefferies Finance LLC, as administrative agent and collateral agent, and each lender from time to time party thereto, (iii) all obligations of the Acquired Companies under any Indebtedness (other than Indebtedness contemplated to remain outstanding under the Acquisition Agreement or which the Joint Lead Arrangers otherwise permit to remain outstanding) owed to the Seller or its subsidiaries which will remain subsidiaries of Seller (and not Holdings) following the Acquisition, and (iv) all Indebtedness and guaranties and security granted under the Note Purchase Agreement, dated as of January 26, 2015 (as amended, restated supplemented or otherwise modified), among Canyon Investments S.à r.l., a Luxembourg private limited liability company (société à responsabilité limitée), Canyon Holdings S.à r.l., a Luxembourg private limited liability company (société à responsabilité limitée), and the holders from time to time party thereto.
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“ Debtor Relief Laws ” means the Bankruptcy Code, the Insolvency Act of 1986 of the United Kingdom and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, examinership or similar debtor relief laws of the United States, the United Kingdom, Luxembourg, the Netherlands or other applicable jurisdictions (domestic or foreign) from time to time in effect and affecting the rights of creditors generally.
“ Default ” means any event or condition that constitutes an Event of Default or that, upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“ Defaulting Lender ” means, subject to Section 2.22(b), any Lender that (a) has failed to perform any of its funding obligations hereunder (or otherwise failed to pay over to the Administrative Agent any amounts owed by such Lender hereunder), including in respect of its Loans or participations in respect of Letters of Credit, within one (1) Business Days of the date required to be funded by it hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, (b) has notified the Borrower, the Administrative Agent, any Issuing Bank or any Lender that it does not intend to comply with its funding obligations or has made a public statement or provided any written notification to any Person to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after request by the Administrative Agent (whether acting on its own behalf or at the reasonable request of the Borrower (it being understood that the Administrative Agent shall comply with any such reasonable request)) or any Issuing Bank, to confirm in a manner satisfactory to the Administrative Agent, such Issuing Bank and the Borrower that it will comply with its funding obligations (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become or is insolvent (or has admitted in writing that it is insolvent), (ii) become the subject of a proceeding under any Debtor Relief Law, (iii) had a receiver, conservator, trustee, administrator, examiner, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a substantial part of its assets or a custodian appointed for it or a substantial part of its assets, (iv) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment or (v) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority, where such ownership interest or proceeding does not result in or provide such Lender or Person with immunity from the jurisdiction of courts within the United States of America or from the enforcement of judgments or writs of attachment on its assets or permit such Lender or Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Lender or Person.
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“ Defaulting Lender Fronting Exposure ” means, at any time there is a Defaulting Lender, with respect to any Issuing Bank, such Defaulting Lender’s Applicable Percentage of the Loan Document Obligations with respect to the Letters of Credit issued by such Issuing Bank other than Loan Document Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or cash collateralized in accordance with the terms hereof.
“ Designated Non-Cash Consideration ” means the fair market value of non-cash consideration received by the Borrower or a Subsidiary in connection with a Disposition pursuant to Section 6.05(k) that is designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer of the Borrower, setting forth the basis of such valuation (which amount will be reduced by the fair market value of the portion of the non-cash consideration converted to cash within 180 days following the consummation of the applicable Disposition).
“ Discount Prepayment Accepting Lender ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(2).
“ Discount Range ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ Discount Range Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ Discount Range Prepayment Notice ” means a written notice of a Borrower Solicitation of Discount Range Prepayment Offers made pursuant to Section 2.11(a)(ii)(C) substantially in the form of Exhibit I.
“ Discount Range Prepayment Offer ” means the irrevocable written offer by a Term Lender, substantially in the form of Exhibit J, submitted in response to an invitation to submit offers following the Auction Agent’s receipt of a Discount Range Prepayment Notice.
“ Discount Range Prepayment Response Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ Discount Range Proration ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“ Discounted Prepayment Determination Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“ Discounted Prepayment Effective Date ” means in the case of a Borrower Offer of Specified Discount Prepayment, Borrower Solicitation of Discount Range Prepayment Offer or Borrower Solicitation of Discounted Prepayment Offers, five (5) Business Days following the receipt by each relevant Term Lender of notice from the Auction Agent in accordance with Section 2.11(a)(ii)(B), Section 2.11(a)(ii)(C) or Section 2.11(a)(ii)(D), as applicable unless a shorter period is agreed to between the Borrower and the Auction Agent.
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“ Discounted Term Loan Prepayment ” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
“ Dispose ” and “ Disposition ” each have the meaning assigned to such term in Section 6.05.
“ Disposed EBITDA ” means, with respect to any Sold Entity or Business or Converted Unrestricted Subsidiary for any period through (but not after) the date of such disposition, the amount for such period of Consolidated EBITDA of such Sold Entity or Business or Converted Unrestricted Subsidiary (determined as if references to Holdings and its Restricted Subsidiaries in the definition of the term “Consolidated EBITDA” (and in the component financial definitions used therein) were references to such Sold Entity or Business and its subsidiaries or to such Converted Unrestricted Subsidiary and its subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business or Converted Unrestricted Subsidiary.
“ Disqualified Equity Interest ” means, with respect to any Person, any Equity Interest in such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:
(a) matures or is mandatorily redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise;
(b) is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Indebtedness or Equity Interests (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests); or
(c) is redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by such Person or any of its Affiliates, in whole or in part, at the option of the holder thereof;
in each case, on or prior to the date ninety-one (91) days after the Latest Maturity Date; provided , however , that (i) an Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest upon the occurrence of an “asset sale” or a “change in control” or similar event shall not constitute a Disqualified Equity Interest if any such requirement becomes operative only after the Termination Date and (ii) if an Equity Interest in any Person is issued pursuant to any plan for the benefit of employees of Holdings (or any direct or indirect parent thereof) or any of its Subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by Holdings (or any direct or indirect parent company thereof) or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations of such Person or as a result of such employee’s termination, death or disability.
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“ Disqualified Lenders ” means (i) those Persons identified by the Borrower to the Joint Lead Arrangers in writing prior to December 14, 2015 as being “Disqualified Lenders”, (ii) those Persons who are competitors of Holdings and its Subsidiaries and are identified by the Sponsor or the Borrower to the Administrative Agent from time to time in writing, which designation shall not apply retroactively to disqualify any Persons that previously acquired an assignment or participation interest in any Loan prior to such designation, (iii) Excluded Affiliates and (iv) in the case of each Person identified pursuant to clauses (i) or (ii) above, any of their Affiliates that are either (x) identified in writing by the Sponsor or the Borrower to the Administrative Agent from time to time or (y) known or reasonably identifiable as an Affiliate of any such Person. Upon inquiry by any Lender to the Administrative Agent as to whether a specified potential assignee or prospective participant is a Disqualified Lender, the Administrative Agent shall be permitted to disclose to such Lender and such specific potential assignee (x) whether such specific potential assignee or prospective participant is a Disqualified Lender or (y) the identity of any other Disqualified Lender which the Administrative Agent reasonably believes may be an Affiliate of such specified potential assignee or prospective participant.
“ Dollar Amount ” means, at any time:
(a) with respect to an amount denominated in Dollars, such amount;
(b) with respect to any amount denominated in a currency other than Dollars, where a determination of such amount is required to be made under any Loan Document by the Administrative Agent or any Issuing Bank, the equivalent amount thereof in Dollars as determined by the Administrative Agent or such Issuing Bank, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date or other applicable date of determination) for the purchase of Dollars with such alternative currency; and
(c) with respect to any amount denominated in a currency other than Dollars, where a determination of such amount is required to be made under any Loan Document by Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, the equivalent amount thereof in Dollars as determined on the basis of the Exchange Rate for such currency and as determined in accordance with Section 1.08.
“ Dollars ” or “ $ ” refers to lawful money of the United States of America.
“ Domestic Loan Party ” means any Loan Party organized or incorporated in the United States (or any state thereof or the District of Columbia).
“ Domestic Subsidiary ” means any Subsidiary of Holdings organized or incorporated in the United States (or any state, thereof or the District of Columbia).
“ Dutch Loan Guarantor ” means a Loan Guarantor incorporated under Netherlands law.
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“ Dutch Omnibus Pledge Deed ” means the substantially all assets pledge deed governed by Dutch law and entered into by each Foreign Loan Party incorporated in the Netherlands.
“ Dutch Security Documents ” means the Dutch Omnibus Pledge Deed and the Dutch Share Pledge Deed.
“ Dutch Share Pledge Deed ” means each pledge over shares governed by Dutch law and entered into in respect of the Equity Interests in any Foreign Loan Party incorporated in the Netherlands in favor of the Collateral Agent.
“ ECF Percentage ” means, with respect to the prepayment required by Section 2.11(d) with respect to any fiscal year of Holdings, if the Senior Secured First Lien Net Leverage Ratio (after giving effect to the applicable prepayment pursuant to Section 2.11(d), and after giving effect to any voluntary prepayments made pursuant to Section 2.11(a) prior to the date of such prepayment) as of the end of such fiscal year is (a) greater than 3.50 to 1.00, 75% of Excess Cash Flow for such fiscal year, (b) greater than 3.00 to 1.00 but less than or equal to 3.50 to 1.00, 50% of Excess Cash Flow for such fiscal year, (c) greater than 2.50 to 1.00 but less than or equal to 3.00 to 1.00, 25% of Excess Cash Flow for such fiscal year and (d) less than or equal to 2.50 to 1.00, 0% of Excess Cash Flow for such fiscal year.
“ EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent;
“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“ EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“ Effective Date ” means June 16, 2016.
“ Effective Date Loan Parties ” means (i) Holdings, (ii) each Domestic Loan Party that was a Restricted Subsidiary of Holdings (including the Borrower) on or prior to the Effective Date and (iii) each other Subsidiary of Holdings that is a Loan Party as of the Effective Date (if any).
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“ Effective Yield ” means, as to any Indebtedness, the effective yield on such Indebtedness in the reasonable determination of the Administrative Agent and the Borrower and consistent with generally accepted financial practices, taking into account the applicable interest rate margins, any interest rate floors (the effect of which floors shall be determined in a manner set forth in the proviso below) or similar devices and all fees , including upfront or similar fees or original issue discount (amortized over the shorter of (a) the remaining Weighted Average Life to Maturity of such Indebtedness and (b) the four years following the date of incurrence thereof) payable generally to lenders or other institutions providing such Indebtedness, but excluding any arrangement, syndication, commitment, prepayment, structuring, ticking or other similar fees payable in connection therewith that are not generally shared with all relevant syndicate Lenders and, if applicable, consent fees for an amendment paid generally to consenting Lenders; provided that with respect to any Indebtedness that includes a “LIBOR floor” or “Base Rate floor,” (i) to the extent that the LIBO Rate or Alternate Base Rate (without giving effect to any floors in such definitions), as applicable, on the date that the Effective Yield is being calculated is less than such floor, the amount of such difference shall be deemed added to the interest rate margin for such Indebtedness for the purpose of calculating the Effective Yield and (ii) to the extent that the LIBO Rate or Alternate Base Rate (without giving effect to any floors in such definitions), as applicable, on the date that the Effective Yield is being calculated is greater than such floor, then the floor shall be disregarded in calculating the Effective Yield.
“ Electing Guarantor ” any Excluded Subsidiary organized in a Covered Jurisdiction that, at the option and in the sole discretion of the Borrower, has been designated a Subsidiary Loan Party.
“ Eligible Assignee ” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than Holdings, any Intermediate Parent, the Borrower or any of their respective Affiliates), other than, in each case, (i) a natural person, (ii) a Defaulting Lender or (iii) a Disqualified Lender. Notwithstanding the foregoing, each Loan Party and the Lenders acknowledge and agree that the Administrative Agent shall have no responsibility or liability for monitoring or enforcing the list of Disqualified Lenders or for any assignment made to a Disqualified Lender unless (A) such assignment resulted from the Administrative Agent’s gross negligence, bad faith or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable judgment) or (B) such assignment resulted from a material breach of the Loan Documents by the Administrative Agent (as determined by a court of competent jurisdiction in a final and non-appealable judgment).
“ EMU Legislation ” means the legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency.
“ Environmental Laws ” means all applicable treaties, rules, regulations, codes, ordinances, judgments, orders, decrees and other applicable Requirements of Law, and all applicable injunctions or binding agreements issued, promulgated or entered into by or with any Governmental Authority, in each instance relating to the protection of the environment, to preservation or reclamation of natural resources, to Release or threatened Release of any Hazardous Material or to the extent relating to exposure to Hazardous Materials, to health or safety matters.
“ Environmental Liability ” means any liability, obligation, loss, claim, action, order or cost, contingent or otherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration, administrative oversight costs, consultants’ fees, fines, penalties and indemnities) directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, or treatment of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
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“ Equity Financing ” means the contribution by the Sponsor, the Management Investors and the other Investors on or prior to the Effective Date, directly or indirectly of cash equity contributions to Holdings or, solely to the extent used on the Effective Date for the purposes described in clause (iv) of the definition of “Debt Repayment,” a Holdings Parent.
“ Equity Interests ” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person (whether evidenced by share certificates (or similar) or not).
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or 414(c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“ ERISA Event ” means (a) any “reportable event,” as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived; (c) 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 Plan; (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (e) the incurrence by a Loan Party or any ERISA Affiliate of any liability under Title IV of ERISA (other than premiums due and not delinquent under Section 4007 of ERISA) with respect to the termination of any Plan or by application of Section 4069 of ERISA with respect to any terminated plan; (f) the receipt by a Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or to an intention to terminate or to appoint a trustee to administer any plan or plans in respect of which such Loan Party or ERISA Affiliate would be deemed to be an employer under Section 4069 of ERISA; (g) the incurrence by a Loan Party or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by a Loan Party or any ERISA Affiliate 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 the failure of a Loan Party or any ERISA Affiliate to pay when due, after the expiration of any applicable grace period, any installment payment with respect to any Withdrawal Liability; or (i) the withdrawal of a Loan Party or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA.
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“ Escrowed Proceeds ” means the proceeds from the offering of any debt securities or other Indebtedness paid into an escrow account with an independent escrow agent on the date of the applicable offering or incurrence pursuant to escrow arrangements that permit the release of amounts on deposit in such escrow account upon satisfaction of certain conditions or the occurrence of certain events. The term “Escrowed Proceeds” shall include any interest earned on the amounts held in escrow.
“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“ EURIBOR ” means, for any Interest Period with respect to a Eurodollar Borrowing denominated in Euros, the rate per annum equal to (i) the Euro interbank offered rate administered by the European Money Markets Institute (or such other commercially available source providing quotations of that rate as may be designated by the Administrative Agent from time to time, including any Person that takes over administration of the rate) displayed on page EURIBOR01 of the Thomson Reuters screen (or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters) at approximately 11:00 a.m., Brussels time, two TARGET Days prior to the commencement of such Interest Period, for Euro deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or (ii) if such published rate is not available at such time for any reason, then the “EURIBOR” for such Interest Period shall be the Interpolated Rate.
“ Euro ” or “ € ” means the lawful single currency of the Participating Member States.
“ Eurodollar ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to (i) the Adjusted LIBO Rate (in the case of Loans denominated in Dollars or any Alternative Currency other than Canadian Dollars and Euros), (ii) the Adjusted BA Rate (in the case of Revolving Loans denominated in Canadian Dollars) or (iii) Adjusted EURIBOR (in the case of Revolving Loans denominated in Euros).
“ Event of Default ” has the meaning assigned to such term in Section 7.01.
“ Excess Cash Flow ” means, for any period, an amount equal to the excess of:
(a) the sum, without duplication, of:
(i) Consolidated Net Income for such period,
(ii) an amount equal to the amount of all Non-Cash Charges to the extent deducted in arriving at such Consolidated Net Income,
(iii) decreases in Consolidated Working Capital, and
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(iv) an amount equal to the aggregate net non-cash loss on dispositions by Holdings and its Restricted Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income; less
(b) the sum, without duplication, of:
(i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income (including any amounts included in Consolidated Net Income of proceeds received or due from business interruption insurance or reimbursement of expenses and charges pursuant to indemnification and other reimbursement provisions in connection with any acquisition or other Investment or any disposition of any asset permitted under this Agreement to the extent such amounts are due but not received during such period) and cash charges, expenditures and losses added to (or excluded from the determination of) Consolidated Net Income pursuant to clauses (a) through (k) of the definition of “Consolidated Net Income” (other than cash charges in respect of Transaction Costs paid on or about the Effective Date to the extent financed with the proceeds of long-term Indebtedness incurred on the Effective Date),
(ii) without duplication of amounts deducted pursuant to clause (xii) below in prior fiscal years, the amount of capital expenditures and intellectual property development expenditures made in cash or accrued during such period, except to the extent that such expenditures were financed with the proceeds of long-term Indebtedness of Holdings and its Restricted Subsidiaries,
(iii) the aggregate amount of all principal payments of Indebtedness (including (1) Second Lien Term Loans, (2) the principal component of payments in respect of Capitalized Leases and (3) the amount of any mandatory prepayment of Loans to the extent required due to a Disposition that resulted in an increase to Consolidated Net Income and not in excess of the amount of such increase, but excluding all other prepayments of Term Loans or other Senior Secured First Lien Indebtedness and all prepayments of revolving loans (including Revolving Loans (except to the extent the prepayment thereof reduces the Borrower’s prepayment obligation pursuant to clause (i) of the proviso to the first sentence of Section 2.11(d)) made during such period, other than (A) in respect of any revolving credit facility except to the extent there is an equivalent permanent reduction in commitments thereunder and (B) to the extent financed with the proceeds of other long-term Indebtedness of Holdings or its Restricted Subsidiaries,
(iv) an amount equal to the aggregate net non-cash gain on dispositions by Holdings and its Restricted Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income,
(v) increases in Consolidated Working Capital for such period,
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(vi) cash payments by Holdings and its Restricted Subsidiaries during such period in respect of long-term liabilities of Holdings and its Restricted Subsidiaries other than Indebtedness,
(vii) without duplication of amounts deducted pursuant to clause (xii) below in prior fiscal years, the amount of Investments (other than Investments in Permitted Investments) and acquisitions made in accordance with Section 6.04 (other than Investments pursuant to Section 6.04(a), (c), (e)(ii), (g), (k), (o), (p), (q) or (hh)) to the extent that such Investments and acquisitions were not financed with the proceeds of long-term Indebtedness of Holdings or its Restricted Subsidiaries,
(viii) the amount of dividends and other Restricted Payments (including the amount of Tax Distributions made by the Borrower during such period or payable after such period in respect of income generated during such period) pursuant to Section 6.07(a) (other than pursuant to Section 6.07(a)(i), (a)(ii), (a)(vi), (a)(viii), (a)(xiii), (a)(xv) or (a)(xvii)), in each case to the extent not deducted in arriving at Consolidated Net Income) and paid in cash during such period or payable in respect of such period, to the extent such dividends and Restricted Payments were not financed with the proceeds of long-term Indebtedness of Holdings or its Restricted Subsidiaries; provided that any amount deducted for such period in respect of amounts payable during a subsequent period shall not be deducted in any subsequent period and, to the extent not actually paid during such subsequent period, shall be added to Excess Cash Flow for such subsequent period;
(ix) the aggregate amount of payments and expenditures actually made by Holdings and its Restricted Subsidiaries in cash during such period (including expenditures for the payment of financing fees and restructuring charges) to the extent that such payments and expenditures are not expensed during such period,
(x) cash payments by Holdings and its Restricted Subsidiaries during such period in respect of Non-Cash Charges included in the calculation of Consolidated Net Income in any prior period,
(xi) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by Holdings and its Restricted Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness, in each case to the extent not deducted in determining Consolidated Net Income,
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(xii) at the option of the Borrower, and without duplication of amounts deducted from Excess Cash Flow in prior periods, (1) the aggregate consideration required to be paid in cash by the Borrower or any of the Restricted Subsidiaries pursuant to binding contracts, commitments, letters of intent or purchase orders (the “ Contract Consideration ”), in each case, entered into prior to or during such period, or at the option of the Borrower, after the applicable period and prior to the applicable Excess Cash Flow due date, and (2) to the extent set forth in a certificate of a Financial Officer delivered to the Administrative Agent at or before the time the Compliance Certificate for the period ending simultaneously with such Test Period is required to be delivered pursuant to Section 5.01(d) (which shall be satisfied if such certification is included in the Compliance Certificate), the aggregate amount of cash that is reasonably expected to be paid in respect of planned cash expenditures by the Borrower or any of the Restricted Subsidiaries (the “ Planned Expenditures ”), in the case of each of clauses (1) and (2), relating to Permitted Acquisitions, other Investments (other than Investments in Permitted Investments pursuant to Section 6.04(a) and Investments pursuant to Section 6.04(a), (c), (e)(ii), (g), (k), (o), (p), (q) or (hh)), restructuring charges, or capital expenditures (including Capitalized Software Expenditures or other purchases or development of Intellectual Property) to be consummated or made during a subsequent Test Period (and in the case of Planned Expenditures, the immediately succeeding fiscal year); provided , that to the extent the aggregate amount of internally generated cash actually utilized to finance such Permitted Acquisitions, Investments, restructuring charges or capital expenditures during such Test Period is less than the Contract Consideration and Planned Expenditures, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such Test Period, and
(xiii) the amount of taxes (including penalties and interest) paid in cash and/or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period; and
(xiv) the aggregate amount of Transaction Costs incurred during such period.
“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended from time to time.
“ Exchange Rate ” means, on any day, for purposes of determining the Dollar Amount of any currency, the currency exchange rate at which such other currency may be exchanged into Dollars at the time of determination based on such rate in effect on the First Business Day of the Fiscal Quarter of Holdings in which such determination occurs or in respect of which such determination is made, for the most recently ended fiscal month of Holdings, as reasonably determined in good faith by the Borrower based on commonly used financial reporting sources; provided further that, if an amount that is to otherwise be converted using the foregoing methodology has been hedged, swapped or otherwise effectively converted into another currency pursuant to a Swap Agreement to which any Loan Party is a party, the currency exchange rate so utilized for that amount shall be as set forth in such Swap Agreement (copies of which shall be made available to the Administrative Agent upon request).
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“ Excluded Affiliates ” means any employees of (a) any Affiliate of any Joint Lead Arranger that are engaged as principals primarily in private equity, mezzanine financing or venture capital transactions and (b) any Joint Lead Arranger engaged directly or indirectly in the sale of the Acquired Companies as representatives of the Acquired Companies (other than, in the case of clauses (a) and (b) above, (x) such employees that are required, in accordance with industry regulations or such Joint Lead Arranger’s (or its Affiliate’s) internal policies and procedures, to act in a supervisory capacity or (y) such Joint Lead Arranger’s (or its Affiliate’s) internal legal, compliance, risk management, credit or investment committee members).
“ Excluded Assets ” means (a) any fee-owned real property that is not Material Real Property and all leasehold (including ground lease) interests in real property (including requirements to deliver landlord lien waivers, estoppels and collateral access letters), (b) motor vehicles and other assets subject to certificates of title or ownership, (c) letter of credit rights (except to the extent constituting supporting obligations (as defined under the UCC) in which a security interest can be perfected with the filing of a UCC-1 financing statement or similar financing statements in the jurisdiction of organization of a Foreign Loan Party), (d) commercial tort claims, (e) Excluded Equity Interests, (f) any lease, contract, license, sublicense, other agreement or document, government approval, charter, authorization or franchise (or any asset subject to such agreement or arrangement) with any Person if, to the extent and for so long as, the grant of a Lien thereon to secure the Secured Obligations would require the consent of a third party (unless such consent has been received) or violate or invalidate, constitute a breach of or a default under, or create a right of termination in favor of any party (other than any Loan Party) to, such lease, contract, license, sublicense, other agreement or document, government approval, charter, authorization or franchise (but after giving effect to the applicable anti-non-assignment provisions of the Uniform Commercial Code, or any other applicable Requirements of Law), (g) any asset subject to a Lien of the type permitted by Section 6.02(iv) (whether or not incurred pursuant to such Section) or a Lien permitted by Section 6.02(xi), in the case of Liens permitted by Section 6.02(xi) if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, any agreement pursuant to which such Lien has been created (but after giving effect to the applicable anti-non-assignment provisions of the Uniform Commercial Code, or any other applicable Requirements of Law), (h) any intent-to-use trademark applications filed in the United States Patent and Trademark Office, pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the accepted filing of a “Statement of Use” and issuance of a “Certificate of Registration” pursuant to Section 1(d) of the Lanham Act or an accepted filing of an “Amendment to Allege Use” whereby such intent-to-use trademark application is converted to a “use in commerce” application pursuant to Section 1(c) of the Lanham Act and any other Intellectual Property in any jurisdiction where such pledge or security interest would cause the invalidation or abandonment of such Intellectual Property under applicable law, (i) any asset (including Equity Interests) if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations is prohibited by any Requirements of Law, rule or regulation, contractual obligation existing on the Effective Date (or, if later, the date the Person owning the asset becomes a Restricted Subsidiary, so long as the applicable contractual obligation was not entered into in contemplation of such Person becoming a Restricted Subsidiary) or agreements with any Governmental Authority (other than to the extent that any such prohibition would be rendered ineffective pursuant to the applicable anti-non-assignment provisions of the Uniform Commercial Code, or any other applicable Requirements of Law) or which would require consent, approval, license or authorization from any Governmental Authority or regulatory authority (provided that there shall be no requirement to obtain the consent of any governmental authority or third party, including, without limitation, no requirement to comply with the Federal Assignment of Claims Act or any similar statute), unless such consent, approval, license or authorization has been received, (j) margin stock (within the meaning of Regulation U of the Board of Governors, as in effect from time to time) and pledges and security interests prohibited by applicable law, rule or regulation or agreements with any Governmental Authority, (k) Securitization Assets, (l) cash and Permitted Investments (other than cash and Permitted Investments representing proceeds of other “Collateral”), any Deposit Account (as defined in the Collateral Agreement), Securities Account (as defined in the Collateral Agreement), commodities account or similar account (including securities entitlements and related assets) (except in each case to the extent perfected solely through the filing of a UCC financing statement or similar financing statement in the applicable Covered Jurisdiction) and any other assets requiring perfection through control agreements or perfection by “control”, (m) other than with respect to the pledge of Equity Interests by a Loan Party (in the case of a Foreign Loan Party, to the extent required by the Guaranty and Security Principles), any assets located or titled outside of such Loan Party’s jurisdiction of organization, (n) any assets to the extent that the granting of a Lien thereon to secure the Secured Obligations could reasonably be expected to result in adverse (other than de minimis consequences) tax consequences or adverse regulatory consequences, in each case, as reasonably determined by the Borrower; and (o) any assets with respect to which, in the reasonable judgment of the Administrative Agent and the Borrower (as agreed to in writing), the cost or other consequences (including adverse tax consequences of pledging such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom).
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“ Excluded Equity Interests ” means Equity Interests in any (a) Unrestricted Subsidiary, (b) Immaterial Subsidiary, (c) Subsidiary of a Domestic Subsidiary that is a CFC (except that up to 65% of the equity interests of any CFC that is owned directly and indirectly by Loan Parties that are not CFCs, other than a U.S. Loan Party described in clause (e) of this definition of “Excluded Equity Interests,” shall not be Excluded Equity Interests), (d) joint ventures and Non-Wholly Owned Subsidiaries, (e) any Domestic Subsidiary that has no material assets other than the equity and/or debt of one or more CFCs and cash or cash equivalents (except that up to 65% of the equity interests of any such Subsidiary shall not be Excluded Equity Interests), (f) not-for-profit Subsidiary, captive insurance company or special purpose securitization vehicle (or similar entity), including any Securitization Subsidiary.
“ Excluded Information ” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
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“ Excluded Subsidiary ” means (a) any Subsidiary that is not a Wholly Owned Subsidiary of Holdings, (b) each Subsidiary listed on Schedule 1.01, (c) any Subsidiary that is prohibited by applicable law, rule or regulation or contractual obligation existing on the Effective Date or, if later, the date such Subsidiary first becomes a Restricted Subsidiary (but, in the case of a contractual obligation, to the extent not incurred in contemplation of such Subsidiary becoming a Restricted Subsidiary), from guaranteeing the Secured Obligations or which would require any governmental or regulatory consent, or third party consent, approval, license or authorization to do so, unless such consent, approval, license or authorization has been obtained, (d) any Immaterial Subsidiary, (e) any Subsidiary to the extent the provision of a Guarantee by such Subsidiary could reasonably be expected to result in adverse (other than a de minimis consequence) tax consequences as reasonably determined by the Borrower, (f) any Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and the Borrower (as agreed in writing), the cost, burden or other consequences of providing the Guarantee shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (g) any Subsidiary that is (or, if it were a Loan Party, would be) an “investment company” under the Investment Company Act of 1940, as amended, (h) any not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries, (i) any Subsidiary that is organized under the laws of a jurisdiction other than any Covered Jurisdiction, (j) any direct or indirect Subsidiary of a CFC that is a direct or indirect Subsidiary of Intermediate U.S. Holdings, the Borrower or any other Domestic Subsidiary), (k) any direct or indirect Foreign Subsidiary of Intermediate U.S. Holdings or of any other Domestic Subsidiary that is a CFC, (l) any special purpose securitization vehicle (or similar entity), including any Securitization Subsidiary, (m) any Domestic Subsidiary that has no material assets other than the equity and/or debt of one or more CFCs and cash or cash equivalents, (n) each Unrestricted Subsidiary, (o) any Subsidiary for which the providing of a Guarantee could reasonably be expected to result in any violation or breach of, or conflict with, fiduciary duties of such Subsidiary’s officers, directors (or other governing body) or managers and (p) any Restricted Subsidiary acquired pursuant to a Permitted Acquisition (or other Investment not prohibited by this Agreement) financed with Indebtedness permitted under Section 6.01 hereof as assumed Indebtedness and any Restricted Subsidiary thereof that Guarantees such Indebtedness, in each case to the extent such Indebtedness prohibits such Subsidiary from becoming a Loan Guarantor; provided that any Immaterial Subsidiary that is a signatory to any Collateral Agreement or the Guarantee Agreement shall be deemed not to be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents unless the Borrower has otherwise notified the Administrative Agent.
“ Excluded Swap Obligation ” means, with respect to any Loan Guarantor at any time, any Secured Swap Obligation under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act, if, and to the extent that, all or a portion of the guarantee of such Loan Guarantor of, or the grant by such Loan Guarantor of a security interest to secure, such Secured 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 thereof) by virtue of such Loan Guarantor’s failure for any reason to constitute an “eligible contract participant,” as defined in the Commodity Exchange Act (determined after giving effect to any “Keepwell”, support or other agreement for the benefit of such Loan Guarantor, at the time such guarantee or grant of a security interest becomes effective with respect to such related Secured Swap Obligation). If a Secured Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Secured Swap Obligation that is attributable to swaps that are or would be rendered illegal due to such guarantee or security interest.
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“ Excluded Taxes ” means, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, (a) Taxes imposed on (or measured by) such recipient’s net income (however denominated) and franchise Taxes imposed on it (in lieu of net income Taxes) by a jurisdiction (i) as a result of such recipient being organized or having its principal office or, in the case of any Lender, its applicable lending office in such jurisdiction, or (ii) Other Connection Taxes, (b) any branch profits tax imposed under Section 884(a) of the Code, or any similar Tax, imposed by any jurisdiction described in clause (a) above, (c) any withholding Tax imposed pursuant to FATCA, (d) any withholding Tax that is attributable to a Lender’s failure to comply with Section 2.17(e) and (e) except in the case of an assignee pursuant to a request by the Borrower under Section 2.19 hereto, any withholding Taxes imposed on amounts payable to a Lender pursuant to a Requirement of Law in effect at the time such Lender becomes a party hereto (or designates a new lending office), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts with respect to such withholding Tax under Section 2.17(a).
“ FATCA ” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable thereto), any current or future Treasury regulations thereunder or other official administrative interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code as of the date of this Agreement (or any amended or successor version described above) and any intergovernmental agreements implementing the foregoing or any treaty, regulation or law implementing any such intergovernmental agreement.
“ FCPA ” has the meaning specified in Section 3.16(a).
“ Federal Funds Effective Rate ” means, for any day, 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 that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it; provided that the Federal Funds Effective Rate, if negative, shall be deemed to be 0.00%.
“ Fee Letter ” means the fee letter among the Borrower, the Joint Lead Arrangers, the Joint Lead Arrangers’ respective Affiliates party thereto, and the other parties thereto dated as of December 14, 2015.
“ Financial Officer ” means the chief financial officer, principal accounting officer, treasurer or corporate controller of Holdings or the Borrower, as applicable.
“ Financial Performance Covenant ” means the covenant set forth in Section 6.11.
“ Financing Transactions ” means (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party, (b) the borrowing of Loans hereunder and the use of the proceeds thereof, (c) the execution, delivery and performance by each Loan Party of the Second Lien Loan Documents to which it is to be a party, (d) the borrowing of the Second Lien Term Loans and the use of proceeds thereof, (e) the issuance, amendment or extension of Letters of Credit hereunder and the use of proceeds thereof and (f) the Equity Financing.
“ FIRREA ” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
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“ Flood Insurance Laws ” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“ Foreign Lender ” means a Lender that is not a United States Person (as defined in Section 7701(a)(30) of the Code).
“ Foreign Loan Party ” means any Loan Party other than a Domestic Loan Party.
“ Foreign Security Documents ” means (a) the Dutch Security Documents; (b) the Luxembourg Share Pledge Agreement; (c) the UK Security Documents; (d) the Irish Security Documents; and (e) such other documents as are customary for the jurisdiction of incorporation of the Foreign Loan Parties and the location of the assets of the Foreign Loan Parties.
“ Foreign Subsidiary ” means any Restricted Subsidiary of Holdings other than a Domestic Subsidiary.
“ Fronting Exposure Cap ” means, with respect to each Issuing Bank, the product of (i) the Letter of Credit Sublimit multiplied by (ii) the Applicable Percentage of such Issuing Bank (or its affiliated Revolving Lender). The initial amount of each Issuing Bank’s Fronting Exposure Cap is set forth on Schedule 2.01(C).
“ Funded Debt ” means all Indebtedness of Holdings and its Restricted Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within one year from such date that is renewable or extendable, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including Indebtedness in respect of the Loans.
“ GAAP ” means generally accepted accounting principles in the United States of America, as in effect from time to time; provided , however , that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, (a) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB Accounting Standards Codification 825-Financial Instruments, or any successor thereto (including pursuant to the FASB Accounting Standards Codification), to value any Indebtedness of any subsidiary at “fair value,” as defined therein and (b) the amount of any Indebtedness under GAAP with respect to Capital Lease Obligations shall be determined in accordance with the definition of Capital Lease Obligations.
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“ Governmental Approvals ” means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, Governmental Authorities.
“ Governmental Authority ” means the government of the United States of America, Luxembourg, the United Kingdom, the Netherlands, Ireland, any other nation or any political subdivision thereof, whether federal, state, provincial, territorial, local or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government in any jurisdiction (including any supra national bodies such as the European Union or the European Central Bank).
“ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined in good faith by a Financial Officer. The term “Guarantee” as a verb has a corresponding meaning.
“ Guarantee Agreement ” means the Master Guarantee Agreement among the Loan Parties and the Administrative Agent, substantially in the form of Exhibit B.
“ Guaranty and Security Principles ” means the Guaranty and Security Principles set forth on Schedule 1.12.
“ Hazardous Materials ” means all explosive, radioactive, hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum by-products or distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other hazardous or toxic substances, wastes, chemicals, pollutants, contaminants of any nature and in any form regulated pursuant to any Environmental Law.
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“ Holdings ” has the meaning given to such term in the preliminary statements hereto; provided that upon and after an IPO, if the IPO Entity is Holdings or any Person of which Holdings is a wholly-owned Subsidiary, “Holdings” shall mean the IPO Entity.
“ Holdings Audited Financial Statements ” means the audited consolidated balance sheet and the related consolidated statements of income and retained earnings and statement of cash flows of Holdings and its subsidiaries for the fiscal year ending December 31, 2015.
“ Holdings Parent ” means any direct or indirect parent company of Holdings.
“ Holdings Parent Specified Expenses ” shall mean any charge, tax or expense incurred or accrued by any Holdings Parent during any period to the extent that Holdings has made a Restricted Payment (or has made any Investment in lieu thereof pursuant to Section 6.04(l)) to any Holdings Parent in respect thereof pursuant to Section 6.07(a)(vii), but in each case limited to the amount of such Restricted Payment or Investment.
“ ICE LIBOR ” has the meaning assigned to such term in the definition of “Alternate Base Rate.”
“ Identified Participating Lenders ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“ Identified Qualifying Lenders ” has the meaning specified in Section 2.11(a)(ii)(D)(3).
“ Immaterial Subsidiary ” means any Subsidiary other than a Material Subsidiary.
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“ Incremental Cap ” means, as of any date of determination, the sum of (I)(a) $100,000,000 ( minus amounts incurred prior to the date of determination in respect of all Incremental Facilities, Incremental Equivalent Debt and Indebtedness incurred under Section 6.01(a)(xx)(B), in each case, incurred in reliance on this clause (a), and all amounts incurred pursuant to clause (A)(I)(x) of Section 6.01(a)(xv) or clause (A)(I)(x) of Section 6.01(a)(xvi)), provided that the maximum amount deducted pursuant to this clause (I)(a) shall not exceed $100,000,000), plus (b)(i) the aggregate principal amount of all Term Loans voluntarily prepaid pursuant to Section 2.11(a)(i), (ii) the aggregate amount of all Term Loans repurchased and prepaid pursuant to Section 2.11(a)(ii) or otherwise in a manner not prohibited by Section 9.04(g), (iii) all reductions of Revolving Commitments pursuant to Section 2.08(b) and (iv) the aggregate principal amount of all Incremental Facilities and Incremental Equivalent Debt and all “Incremental Facilities” and “Incremental Equivalent Debt” under and as defined in the Second Lien Loan Documents voluntarily prepaid or repurchased, in each case prior to such date (other than, in each case, prepayments, repurchases and commitment reductions (A) made with the proceeds of the incurrence of Credit Agreement Refinancing Indebtedness or other long-term Indebtedness or (B) of Incremental Facilities or Incremental Equivalent Debt (or “Incremental Facilities” and “Incremental Equivalent Debt” under and as defined in the Second Lien Loan Documents) that had been incurred in reliance on the following clause (II) or in reliance on the corresponding ratio-based basket in the Second Lien Credit Agreement) (the sum of the amounts set forth in this clause (b), the “ Voluntary Prepayment Amount ”) ( minus the amount of all Incremental Facilities and all Incremental Equivalent Debt incurred in reliance on the this clause (b)) plus (II) the maximum aggregate principal amount that can be incurred without causing the Senior Secured First Lien Net Leverage Ratio, after giving effect to the incurrence of any such Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) (which shall assume that the full amount of any Incremental Revolving Commitment Increase and Additional/Replacement Revolving Commitments being established at such time are fully drawn and without deducting in calculating the numerator of such Senior Secured First Lien Net Leverage Ratio any cash proceeds thereof, provided that to the extent the proceeds of any such Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) are to be used to repay Indebtedness it shall not limit the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis”) and the use of proceeds thereof, on a Pro Forma Basis (but without giving effect to any simultaneous incurrence of any Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) made pursuant to the foregoing clause (I)), to exceed 3.90 to 1.00 for the most recent Test Period ended; provided , that in the case of an Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) that is secured by the Collateral on a junior lien basis to the Secured Obligations, in lieu of complying with the Senior Secured First Lien Net Leverage Ratio set forth above in this clause (II), the Senior Secured Net Leverage Ratio, after giving effect to the incurrence of such junior lien Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) (without deducting in calculating the numerator of such Senior Secured Net Leverage Ratio any cash proceeds thereof, provided that to the extent the proceeds of any such Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) are to be used to repay Indebtedness it shall not limit the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis”) and the use of proceeds thereof, shall not exceed 5.20 to 1.00 on a Pro Forma Basis for the most recent Test Period ended; provided , further , that if such Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) is unsecured, in lieu of complying with the Senior Secured First Lien Net Leverage Ratio set forth above in this clause (II), the Total Net Leverage Ratio, after giving effect to the incurrence of such unsecured Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) (without deducting in calculating the numerator of such Total Net Leverage Ratio any cash proceeds thereof, provided that to the extent the proceeds of any such Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) are to be used to repay Indebtedness it shall not limit the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis”) and the use of proceeds thereof, shall not exceed 5.20 to 1.00 on a Pro Forma Basis for the most recent Test Period ended. Any ratio calculated for purposes of determining the “Incremental Cap” shall be calculated on a Pro Forma Basis for the most recent Test Period ended and subject to Section 1.06 to the extent applicable and, at the option of the Borrower, any unfunded Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) may be tested at the time of the initial funding in lieu of the time of establishment. Loans may be incurred under both clauses (I) and (II), and proceeds from any such incurrence may be utilized in a single transaction by first calculating the incurrence under clause (II) above and then calculating the incurrence under clause (I) above) (if any) and, for the avoidance of doubt, the Senior Secured First Lien Net Leverage Ratio, Senior Secured Net Leverage Ratio or Total Net Leverage Ratio, as applicable shall be permitted to exceed the maximum ratio set forth in clause (II) above to the extent of such amounts incurred in reliance on clause (I) at substantially the same time. Unless the Borrower otherwise elects in writing to the Administrative Agent, the Borrower shall be deemed to have used amounts, if any, that are available under clause (II) above prior to the utilization of amounts under clause (I) above.
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“ Incremental Equivalent Debt ” has the meaning assigned to such term in Section 6.01(a)(xxiii).
“ Incremental Facility ” has the meaning assigned to such term in Section 2.20(a).
“ Incremental Facility Amendment ” has the meaning assigned to such term in Section 2.20(d).
“ Incremental Loan ” has the meaning assigned to such term in Section 2.20(a).
“ Incremental Revolving Commitment Increase ” has the meaning assigned to such term in Section 2.20(a).
“ Incremental Term Facility ” has the meaning assigned to such term in Section 2.20(a).
“ Incremental Term Increase ” has the meaning assigned to such term in Section 2.20(a).
“ Incremental Term Loan ” means any Term Loan provided under any Incremental Facility.
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“ Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (x) trade accounts payable in the ordinary course of business, (y) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and if not paid after being due and payable and (z) expenses accrued in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances; provided that the term “Indebtedness” shall not include (i) deferred or prepaid revenue, deferred tax liabilities, liabilities associated with customer prepayments and deposits and any such obligations incurred under ERISA and other accrued obligations (including transfer pricing), and customary obligations under employment agreements and deferred compensation, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty, indemnity or other unperformed obligations of the seller, or other contingent post-closing purchase price adjustments, non-compete or consulting obligations, (iii) any obligations attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto, (iv) Indebtedness of any Person that is a Holdings Parent appearing on the balance sheet of Holdings or the Borrower, or solely by reason of push down accounting under GAAP, or (v) for the avoidance of doubt, any Qualified Equity Interests issued by Holdings or the Borrower. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith. For all purposes hereof, the Indebtedness of the Borrower and the Restricted Subsidiaries shall exclude intercompany liabilities arising from their cash management, tax, and accounting operations and intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any rollover or extensions of terms) and made in the ordinary course of business.
“ Indemnified Taxes ” means all Taxes, other than Excluded Taxes and Other Taxes.
“ Indemnitee ” has the meaning assigned to such term in Section 9.03(b).
“ Information ” has the meaning assigned to such term in Section 9.12(a).
“ Information Memorandum ” means the Confidential Information Memorandum dated April 28, 2016, relating to Holdings and the Transactions.
“ Initial Term Loans ” means the Loans made pursuant to Section 2.01(a).
“ Intellectual Property ” has the meaning assigned to such term in the Collateral Agreement.
“ Intellectual Property Security Agreements ” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Trademarks, Patents and Copyrights that are registered, issued or applied-for in the United States and that constitute Collateral.
“ Intercompany License Agreement ” means any cost sharing agreement, commission or royalty agreement, license or sub-license agreement, distribution agreement, services agreement, intellectual property rights transfer agreement or any related agreements, in each case where all the parties to such agreement are one or more of Holdings or a Restricted Subsidiary.
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“ Intercreditor Agreement ” means the Pari Passu Intercreditor Agreement, the Closing Date Intercreditor Agreement or the Junior Intercreditor Agreement, as applicable.
“ Interest Election Request ” means a request by the Borrower to convert or continue a Revolving Borrowing or Term Borrowing in accordance with Section 2.07.
“ Interest Payment Date ” means (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last Business Day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.
“ Interest Period ” means, with respect to any Eurodollar Borrowing, the period commencing on the date such Borrowing is disbursed or converted to or continued as a Eurodollar Borrowing and ending on the date that is one, two, three or six months thereafter as selected by the Borrower in its Borrowing Request (or, if available to each Lender participating therein, twelve months or any shorter period as the Borrower may elect); provided that (a) 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 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, (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month at the end of such Interest Period and (c) no Interest Period shall extend beyond (i) in the case of Term Loans, the Term Maturity Date and (ii) in the case of Revolving Loans, the Revolving Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“ Intermediate Lux Holdings ” has the meaning given to such term in the preliminary statements hereto.
“ Intermediate Parent ” means any Subsidiary of Holdings of which the Borrower is a subsidiary.
“ Intermediate U.S. Holdings ” has the meaning given to such term in the preliminary statements hereto.
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“ Interpolated Rate ” means (a) in relation to the “LIBO Rate” for any Loan, the rate which results from interpolating on a linear basis between: (i) the rate displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or on any successor or substitute page of such service) for the longest period (for which that rate is available) which is less than the Interest Period and (ii) the rate displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or on any successor or substitute page of such service) for the shortest period (for which that rate is available) which exceeds the Interest Period, each as of approximately 11:00 A.M., London, England time, two (2) Business Days prior to the commencement of such Interest Period or (b) in relation to “EURIBOR” for any Loan, the rate which results from interpolating on a linear basis between: (i) the rate displayed on page EURIBOR01 of the Thomson Reuters screen (or on any successor or substitute page of such service) for the longest period (for which that rate is available) which is less than the Interest Period and (ii) the rate displayed on page EURIBOR01 of the Thomsen Reuters screen (or on any successor or substitute page of such service) for the shortest period (for which that rate is available) which exceeds the Interest Period, each as of approximately 11:00 A.M., London, England time, two (2) Business Days prior to the commencement of such Interest Period; provided that the Interpolated Rate, if negative, shall be deemed to be 0.00%.
“ Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person (excluding, in the case of Holdings and its Subsidiaries (i) intercompany advances arising from their cash management, tax, and accounting operations and (ii) intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business) or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person; provided that, in the event that any Investment is made by Holdings or any Restricted Subsidiary in any Person through one or more other substantially concurrent interim transfers of any amount through any other Restricted Subsidiaries, then such other substantially concurrent interim transfers shall be disregarded for purposes of Section 6.04. The amount, as of any date of determination, of (a) any Investment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, minus any cash payments actually received by such investor representing interest in respect of such Investment (to the extent any such payment to be deducted does not exceed the remaining principal amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any adjustment for write-downs or write-offs (including as a result of forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (b) any Investment in the form of a Guarantee shall be equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof, as determined in good faith by a Financial Officer, (c) any Investment in the form of a transfer of Equity Interests or other non-cash property by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair market value (as determined in good faith by a Financial Officer) of such Equity Interests or other property as of the time of the transfer, minus any payments actually received by such investor representing a return of capital of, or dividends or other distributions in respect of, such Investment (to the extent such payments do not exceed, in the aggregate, the original amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment, and (d) any Investment (other than any Investment referred to in clause (a), (b) or (c) above) by the specified Person in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Indebtedness or other securities of any other Person shall be the original cost of such Investment (including any Indebtedness assumed in connection therewith), plus (i) the cost of all additions thereto and minus (ii) the amount of any portion of such Investment that has been repaid to the investor in cash as a repayment of principal or a return of capital, and of any cash payments actually received by such investor representing interest, dividends or other distributions in respect of such Investment (to the extent the amounts referred to in clause (ii) do not, in the aggregate, exceed the original cost of such Investment plus the costs of additions thereto and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. For purposes of Section 6.04, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall be allocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to be so allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Financial Officer.
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“ Investor ” means a holder of Equity Interests in Holdings (or any direct or indirect parent thereof) (including, for the avoidance of doubt, the Sponsor).
“ Irish Debenture ” means the all asset debenture governed by Irish law and entered into by each Foreign Loan Party incorporated in Ireland in favor of the Collateral Agent.
“ Irish Legal Reservations ” means (i) the principle that equitable remedies may be granted or refused at the discretion of the court, the limitation on enforcement by laws relating to bankruptcy, insolvency, liquidation, reorganization, resolution, court schemes, moratoria, administration and other laws generally affecting the rights of creditors; (ii) the time barring of claims under the Statute of Limitations Act 1957 (as amended) of Ireland and defences of set-off or counterclaims and (iii) any other matters which are set out as qualifications or reservations as to matters of Irish law in any legal opinion delivered to the Administrative Agent or the Collateral Agent under any provision of or otherwise in connection with any Loan Document.
“ Irish Loan Guarantor ” means a Loan Guarantor incorporated under the laws of Ireland.
“ Irish Perfection Requirements ” shall mean the making of the appropriate registrations, filings or notifications of each Security Document entered into by any Irish Loan Guarantor and each Irish Security Document as specifically set out in the relevant Security Document or in any related legal opinion.
“ Irish Security Document ” means each of (a) the Irish Debenture, (b) each Irish Share Charge and (c) the Irish Security Trust Deed.
“ Irish Security Trust Deed ” means the substantially all assets trust deed governed by Irish law and entered into by, among others, each Foreign Loan Party incorporated in Ireland and the Collateral Agent.
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“ Irish Share Charge ” means each charge over shares governed by Irish law and entered into in respect of the Equity Interests in any Irish Loan Guarantor in favor of the Collateral Agent.
“ IPO ” means the initial underwritten public offering (other than a public offering pursuant to a registration statement on Form S-8) of common Equity Interests in the IPO Entity.
“ IPO Entity ” means, at any time upon and after an IPO, Holdings, a Holdings Parent or an Intermediate Parent, as the case may be, the Equity Interests of which were issued or otherwise sold pursuant to the IPO; provided that, immediately following the IPO, each of (x) the Borrower and (y) GTCR Canyon UK Investments Ltd. is a Wholly Owned Subsidiary of such IPO Entity and such IPO Entity owns, directly or through its subsidiaries, substantially all the businesses and assets owned or conducted, directly or indirectly, by the Borrower and GTCR Canyon UK Investments Ltd. immediately prior to the IPO.
“ IPO Reorganization Transaction ” means any re-organization or other similar activities among Holdings, the Borrower and the Restricted Subsidiaries in connection with and reasonably related to consummating an IPO, so long as, after giving effect thereto, (a) the Loan Parties are in compliance with the Collateral and Guarantee Requirement and Sections 5.11 and 6.12, (b) taken as a whole, the value of the Collateral securing the Secured Obligations and the Guarantees by the Guarantors of the Secured Obligations are not materially reduced or impaired and (c) the Liens in favor of the Administrative Agent for the benefit of the Secured Parties under the Security Documents are not materially impaired.
“ ISP ” means, with respect to any standby Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be reasonably acceptable to the applicable Issuing Bank and in effect at the time of issuance of such Letter of Credit).
“ Issuing Bank ” means each of (a) the Administrative Agent, (b) each other Revolving Lender as of Effective Date and (c) each Revolving Lender that shall have become an Issuing Bank hereunder as provided in Section 2.05(k) (other than any Person that shall have ceased to be an Issuing Bank as provided in Section 2.05(l)), each in its capacity as an issuer of Letters of Credit hereunder. Each Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates or branches of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate or such branch with respect to Letters of Credit issued by such Affiliate or such branch.
“ Joint Lead Arranger ” means each of Deutsche Bank Securities Inc., Barclays Bank PLC and RBC Capital Markets, each in their capacity as joint lead arranger and joint bookrunner, and any permitted successors and assigns of the foregoing.
“ Judgment Currency ” has the meaning assigned to such term in Section 9.17.
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“ Junior Financing ” means (a) any Indebtedness (other than (i) any permitted intercompany Indebtedness owing to Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary or any Permitted Unsecured Refinancing Debt or (ii) any Indebtedness in an aggregate principal amount not exceeding $25,000,000) that is subordinated in right of payment to the Loan Document Obligations or that is secured by the Collateral on a junior lien basis relative to the liens granted pursuant to the Loan Documents securing the Secured Obligations (including, for the avoidance of doubt, the Second Lien Term Loans) and (b) any Permitted Refinancing in respect of the foregoing.
“ Junior Intercreditor Agreement ” means the Junior Intercreditor Agreement substantially in the form of Exhibit E-3 among the Administrative Agent and one or more Senior Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral on a junior basis, with such modifications thereto as the Administrative Agent and the Borrower may reasonably agree.
“ Latest Maturity Date ” means, at any date of determination, the latest maturity or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any Other Term Loan, any Other Term Commitment, any Other Revolving Loan or any Other Revolving Commitment, in each case as extended in accordance with this Agreement from time to time.
“ LC Disbursement ” means an honoring of a drawing by an Issuing Bank pursuant to a Letter of Credit.
“ LC Exposure ” means, at any time, the sum of (a) the aggregate amount of all Letters of Credit that remains available for drawing at such time and (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.13 or 3.14 of the ISP or for any Letter of Credit issued with the exclusion of Article 36 of the UCP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided that with respect to any Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
“ LCT Election ” has the meaning assigned to such term in Section 1.06.
“ LCT Test Date ” has the meaning assigned to such term in Section 1.06.
“ Lenders ” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, an Incremental Facility Amendment, a Loan Modification Agreement or a Refinancing Amendment, in each case, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
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“ Letter of Credit ” means any letter of credit issued pursuant to this Agreement other than any such letter of credit that shall have ceased to be a “Letter of Credit” outstanding hereunder pursuant to Section 9.05.
“ Letter of Credit Request ” has the meaning assigned to such term in Section 2.05(b).
“ Letter of Credit Sublimit ” means $25,000,000.
“ LIBO Rate ” means, for any Interest Period with respect to a Eurodollar Borrowing denominated in Dollars or any Alternative Currency (other than Canadian Dollars and Euros), the rate per annum equal to (i) the London interbank offered rate administered by ICE Benchmark Administration Limited (or such other commercially available source providing quotations of that rate as may be designated by the Administrative Agent from time to time, including any Person that takes over administration of the rate) displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters) at approximately 11:00 a.m., London, England time, two (2) London Banking Days prior to the commencement of such Interest Period, for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or (ii) if such published rate is not available at such time for any reason, then the “LIBO Rate” for such Interest Period shall be the Interpolated Rate; provided that the LIBO Rate, if negative, shall be deemed to be 0.00%.
“ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, assignment by way of security, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“ Limited Condition Transaction ” means any investment or acquisition, including by way of merger or amalgamation, by Holdings, the Borrower or any Restricted Subsidiary permitted pursuant to this Agreement whose consummation is not conditioned upon the availability of, or on obtaining, third party financing.
“ Loan Document Obligations ” means the due and punctual payment by the Borrower of (i) the principal of the Loans and LC Disbursements, and all accrued and unpaid interest thereon at the applicable rate or rates provided in this Agreement (including interest accruing during the pendency of any bankruptcy, insolvency, examinership, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of the Borrower under or pursuant to this Agreement and each of the other Loan Documents, including obligations to pay fees, expenses, reimbursement obligations and indemnification obligations and obligations to provide cash collateral, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, examinership, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding); provided that for the avoidance of doubt, the “Loan Document Obligations” of any Loan Party shall not include any Excluded Swap Obligation of such Loan Party.
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“ Loan Documents ” means this Agreement, any Refinancing Amendment, any Modification Agreement, any Incremental Facility Amendment, the Guarantee Agreement, the Collateral Agreement, the other Security Documents, the Closing Date Intercreditor Agreement and any other Intercreditor Agreement (if applicable), except for purposes of Section 9.02, any Note delivered pursuant to Section 2.09(e), and any other document entered into or delivered by a Loan Party in connection with the foregoing and designated by the Borrower as a Loan Document therein for purposes of this Agreement.
“ Loan Guarantors ” means Holdings, Intermediate Lux Holdings, Intermediate U.S. Holdings, any Intermediate Parent and the Subsidiary Loan Parties, in each case to the extent such entity provides a guaranty of the Secured Obligations.
“ Loan Modification Agreement ” means a Loan Modification Agreement, among the Borrower, and one or more Accepting Lenders, and acknowledged by the Administrative Agent, effecting one or more Permitted Amendments and such other amendments hereto and to the other Loan Documents as are contemplated by Section 2.24.
“ Loan Modification Offer ” has the meaning specified in Section 2.24(a).
“ Loan Parties ” means the Loan Guarantors and the Borrower.
“ Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
“ London Banking Day ” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.
“ Luxembourg ” shall mean the Grand Duchy of Luxembourg.
“ Luxembourg Loan Party ” means any Loan Party incorporated in Luxembourg.
“ Luxembourg Security Documents ” means the Luxembourg Share Pledge Agreement.
“ Majority in Interest ”, when used in reference to Lenders of any Class, means, at any time, (a) in the case of the Revolving Lenders, Lenders having Revolving Exposures and unused Revolving Commitments representing more than 50% of the sum of the aggregate Revolving Exposures and the unused aggregate Revolving Commitments at such time and (b) in the case of the Term Lenders of any Class, Lenders holding outstanding Term Loans of such Class representing more than 50% of all Term Loans of such Class outstanding at such time; provided that whenever there are one or more Defaulting Lenders, the total outstanding Term Loans and Revolving Exposures of, and the unused Revolving Commitments of, each Defaulting Lender shall be excluded for purposes of making a determination of the Majority in Interest.
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“ Management Investors ” means the members of the Board of Directors, officers and employees of Holdings, the Borrower and/or their respective Subsidiaries who are (directly or indirectly through one or more investment vehicles) investors in Holdings or any Holdings Parent and, in each case, each of their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees.
“ Master Agreement ” has the meaning assigned to such term in the definition of “Swap Agreement.”
“ Material Adverse Effect ” means (i) on the Effective Date, a PRN Material Adverse Effect and (ii) after the Effective Date, (a) a material adverse effect on the business, financial condition or results of operations of the Loan Parties and their Subsidiaries, taken as a whole or (b) a material adverse effect on the material rights and remedies of the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders under the Loan Documents.
“ Material Indebtedness ” means Indebtedness for borrowed money (other than the Loan Document Obligations), Capital Lease Obligations, unreimbursed obligations for letter of credit drawings and financial guarantees (other than ordinary course of business contingent reimbursement obligations) or obligations in respect of one or more Swap Agreements, of any one or more of Holdings and its Restricted Subsidiaries in an aggregate principal amount exceeding $50,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Restricted Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
“ Material Non-Public Information ” means (a) if Holdings is a public reporting company, material non-public information with respect to Holdings or its Subsidiaries, or the respective securities of any of the foregoing, and (b) if Holdings is not a public reporting company, information that is (i) of a type that would not be publicly available if Holdings were a public reporting company and (ii) material with respect to Holdings or its Subsidiaries or any of their respective securities for purposes of United States Federal and state and applicable foreign securities laws.
“ Material Real Property ” means any real property (including fixtures) located in the United States of America and owned in fee by any Loan Party with a fair market value, as reasonably determined by the Borrower in good faith, greater than or equal to $15,000,000.
“ Material Subsidiary ” means each Intermediate Parent or Wholly Owned Restricted Subsidiary that, as of the last day of the fiscal quarter of Holdings most recently ended, had net revenues or total assets for such quarter in excess of 3.0% of the consolidated net revenues or consolidated total assets of Holdings and its Restricted Subsidiaries for such quarter; provided that in the event that the Immaterial Subsidiaries, taken together, had as of the last day of the fiscal quarter of Holdings’ most recently ended net revenues or total assets in excess of 7.5% of the consolidated net revenues or consolidated total assets of Holdings and its Restricted Subsidiaries for such quarter, as applicable, the Borrower shall designate in writing one or more Immaterial Subsidiaries to be a Material Subsidiary within 10 Business Days of the delivery of financial statements in accordance with Section 5.01(a) or (b) as may be necessary such that the foregoing 7.5% limit shall not be exceeded, and any such Subsidiary shall thereafter be deemed to be an Material Subsidiary hereunder and shall comply with the requirements set forth in Section 5.11 within the time periods set forth therein; provided further that the Borrower may re-designate Material Subsidiaries as Immaterial Subsidiaries so long as the Borrower is in compliance with the foregoing.
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“ Maximum Rate ” has the meaning assigned to such term in Section 9.16.
“ Moody’s ” means Moody’s Investors Service, Inc. and any successor to its rating agency business.
“ Mortgage ” means a mortgage, charge, deed of trust, assignment of leases and rents or other security document granting a Lien on any Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. Each Mortgage shall be in form and substance reasonably satisfactory to the Administrative Agent and the Borrower.
“ Mortgaged Property ” means each parcel of Material Real Property with respect to which a Mortgage will (or is required to be) be granted pursuant to the Collateral and Guarantee Requirement, Section 5.11, Section 5.12 or Section 5.14 (if any).
“ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“ Net Proceeds ” means, with respect to any event, (a) the proceeds received in respect of such event in cash or Permitted Investments, including (i) any cash or Permitted Investments received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment or earn-out, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds that are actually received, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments that are actually received, minus (b) the sum of (i) all fees and out-of-pocket expenses paid by Holdings, any Intermediate Parent, the Borrower and any Restricted Subsidiaries in connection with such event (including attorney’s fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, underwriting discounts and commissions, other customary expenses and brokerage, consultant, accountant and other customary fees), (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), (x) the amount of all payments that are permitted hereunder and are made by Holdings, any Intermediate Parent, the Borrower and the Restricted Subsidiaries as a result of such event to repay Indebtedness (other than the Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, (y) the pro rata portion of net cash proceeds thereof (calculated without regard to this clause (y)) attributable to minority interests and not available for distribution to or for the account of Holdings, any Intermediate Parent, the Borrower or the Restricted Subsidiaries as a result thereof and (z) the amount of any liabilities directly associated with such asset and retained by the Borrower or any Restricted Subsidiary and (iii) the amount of all taxes paid (or reasonably estimated to be payable), the amount of dividends and other restricted payments that Holdings, any Intermediate Parent, the Borrower and/or its Restricted Subsidiaries may make pursuant to Section 6.07(a)(vii)(A) or (B) as a result of such event, and the amount of any reserves established by Holdings, any Intermediate Parent, the Borrower and the Restricted Subsidiaries to fund contingent liabilities reasonably estimated to be payable, that are directly attributable to such event, provided that any reduction at any time in the amount of any such reserves (other than as a result of payments made in respect thereof) shall be deemed to constitute the receipt by the Borrower at such time of Net Proceeds in the amount of such reduction.
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“ New Project ” shall mean (a) each facility which is either a new facility, branch or office or an expansion, relocation, remodeling or substantial modernization of an existing facility, branch or office owned by Holdings or its Subsidiaries which in fact commences operations and (b) each creation (in one or a series of related transactions) of a business unit to the extent such business unit commences operations or each expansion (in one or a series of related transactions) of business into a new market.
“ Non-Accepting Lender ” has the meaning assigned to such term in Section 2.24(c).
“ Non-Cash Charges ” means (a) any impairment charge or asset write-off or write-down related to intangible assets (including goodwill), long-lived assets, and Investments in debt and equity securities pursuant to GAAP, (b) all losses from Investments recorded using the equity method, (c) all Non-Cash Compensation Expenses, (d) depreciation and amortization including amortization or impairment of intangibles (including goodwill) (including, without limitation, as they relate to amortization of deferred financing fees or costs, Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pension and other post-employment benefits) and (f) other non-cash charges, expenses and losses, including, without limitation, any non-cash translation loss and non-cash expense relating to the vesting of warrants, non-cash asset write-offs or write-downs, non-cash write offs of debt discounts and debt incurrences, non-cash costs and commissions, non-cash discounts and other non-cash fees and charges with respect to Indebtedness, interest rate protection and other Hedging Agreements, provided , in each case, that if any non-cash charges added back pursuant to clause (iii) of the definition of Consolidated EBITDA represent an accrual or reserve for potential cash items in any future period to the extent the Borrower elects to include such non-cash charges, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent.
“ Non-Cash Compensation Expense ” means any non-cash expenses and costs that result from the issuance of stock-based awards, partnership interest-based awards and similar incentive based compensation awards or arrangements.
“ Non-Consenting Lender ” has the meaning assigned to such term in Section 9.02(c).
“ Non-Refinancing Lender ” has the meaning assigned to such term in Section 2.21(b).
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“ Non-Wholly Owned Subsidiary ” of any Person means any subsidiary of such Person other than a Wholly Owned Subsidiary.
“ Not Otherwise Applied ” means, with reference to the Available Amount or the Available Equity Amount, as applicable, that such amount was not previously applied pursuant to Sections 6.01(a)(xvii), 6.04(m), 6.07(a)(viii) and 6.07(b)(iv).
“ Note ” means a promissory note of the Borrower, in substantially the form of Exhibit O, payable to a Lender in a principal amount equal to the principal amount of the Revolving Commitment or Term Loans, as applicable, of such Lender.
“ OFAC ” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“ Offered Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“ Offered Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“ Organizational Documents ” means, with respect to any Person, the charter, articles or certificate of organization or incorporation and bylaws or other organizational, constitutional or governing documents of such Person (including any certificates of incorporation and/or certificates of incorporation on a change of name).
“ Other Connection Taxes ” means, with respect to any recipient, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“ Other Revolving Commitments ” means one or more Classes of Revolving Commitments hereunder or extended Revolving Commitments that result from a Refinancing Amendment or a Loan Modification Agreement.
“ Other Revolving Loans ” means one or more classes of Revolving Loans made pursuant to any Other Revolving Commitment or a Loan Modification Agreement.
“ Other Taxes ” means any and all present or future recording, stamp, registration duties, documentary, excise, transfer, sales, property or similar Taxes, charges or levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.
“ Other Term Commitments ” means one or more Classes of term loan commitments hereunder that result from a Refinancing Amendment or a Loan Modification Agreement.
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“ Other Term Loans ” means one or more Classes of Term Loans that result from a Refinancing Amendment or a Loan Modification Agreement.
“ Pari Passu Intercreditor Agreement ” means the Pari Passu Intercreditor Agreement substantially in the form of Exhibit E-1 among the Administrative Agent and one or more Senior Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral on a pari passu basis (but without regard to the control of remedies), with such modifications thereto as the Administrative Agent and the Borrower may reasonably agree.
“ Participant ” has the meaning assigned to such term in Section 9.04(c)(i).
“ Participant Register ” has the meaning assigned to such term in Section 9.04(c)(ii).
“ Participating Lender ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“ Participating Member State ” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
“ Patent ” has the meaning assigned to such term in the Collateral Agreement.
“ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“ Permitted Acquisition ” means the purchase or other acquisition, by merger, amalgamation, consolidation or otherwise, by Holdings, Borrower or any Subsidiary of any Equity Interests in, or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of), any Person; provided that (a) in the case of any purchase or other acquisition of Equity Interests in a Person, (i) such Person, upon the consummation of such purchase or acquisition, will be a Subsidiary (including as a result of a merger, amalgamation or consolidation between any Subsidiary and such Person), or (ii) such Person is merged or amalgamated into or consolidated with a Subsidiary and such Subsidiary is the surviving entity of such merger, amalgamation or consolidation, (b) the business of such Person, or such assets, as the case may be, constitute a business permitted by Section 5.16, (c) with respect to each such purchase or other acquisition, all actions required to be taken with respect to such newly created or acquired Subsidiary (including each subsidiary thereof) or assets in order to satisfy the requirements set forth in clauses (a), (b), (c) and (d) of the definition of the term “Collateral and Guarantee Requirement” to the extent applicable shall have been taken (or arrangements for the taking of such actions after the consummation of the Permitted Acquisition shall have been made that are reasonably satisfactory to the Administrative Agent) (unless such newly created or acquired Subsidiary is designated as an Unrestricted Subsidiary pursuant to Section 5.13 or is otherwise an Excluded Subsidiary), (d) the Consolidated EBITDA of such Person (after giving effect to any adjustments and add-backs in accordance the definition of “Consolidated EBITDA”, “Consolidated Net Income” and “Pro Forma Adjustment”) shall be greater than $0, and (e) after giving effect to any such purchase or other acquisition, no Specified Event of Default shall have occurred and be continuing (at the time of execution of a binding agreement in respect thereof).
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“ Permitted Amendment ” means an amendment to this Agreement and, if applicable the other Loan Documents, effected in connection with a Loan Modification Offer pursuant to Section 2.24, providing for an extension of a maturity date applicable to the Loans and/or Commitments of the Accepting Lenders and, in connection therewith, (a) a change in the Applicable Rate with respect to the Loans and/or Commitments of the Accepting Lenders, and/or (b) a change in the fees payable to, or the inclusion of new fees to be payable to, the Accepting Lenders, and/or (c) a change in Sections 2.08(b), 2.08(c), 2.10(c), 2.11(a), 2.11(e) and/or 2.11(f) with respect to the Loans and/or Commitments of the Accepting Lenders and/or (d) additional or modified covenants, events of default, or guarantees or other provisions (it being understood that to the extent that any covenant, event of default, guarantee or such other provision is added or modified for the benefit of any such Loans and/or Commitments, no consent shall be required by the Administrative Agent or any of the Lenders if such covenant, event of default, guarantee or other provision is either (i) also added or modified for the benefit of any corresponding Loans remaining outstanding after the issuance or incurrence of such Loans and/or Commitments, (ii) only applicable after the Latest Maturity Date at the time of such Loan Modification Offer or (iii) in the aggregate, not materially more restrictive to the Loan Parties (as determined in good faith by the Borrower) when taken as a whole, than the terms of the Loans hereunder).
“ Permitted Encumbrances ” means:
(a) Liens for Taxes, assessments or governmental charges that are not overdue for a period of more than 30 days or that are not required to be paid pursuant to Section 5.05 (assuming Section 5.05 were applicable thereto);
(b) Liens with respect to outstanding motor vehicle fines and carriers’, warehousemen’s, mechanics’, materialmen’s, landlord’s, repairmen’s or construction contractors’ Liens and other similar Liens, imposed by law or Contract (to the extent providing for Liens that are similar in scope to the foregoing), arising in the ordinary course of business that secure amounts not overdue for a period of more than 30 days, or, if more than 30 days overdue, are unfiled and no other action has been taken to enforce such Lien or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP, or so long as such Liens do not individually or in the aggregate have a Material Adverse Effect;
(c) Liens incurred or deposits made in the ordinary course of business (i) in connection with workers’ compensation, unemployment insurance, social security, retirement and other similar legislation or (ii) securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instrument for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Restricted Subsidiary or otherwise supporting the payment of items set forth in the foregoing clause (i);
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(d) Liens incurred or deposits made to secure the performance of bids, trade contracts, governmental contracts and leases, statutory obligations, surety, stay, customs and appeal bonds, performance bonds, bankers acceptance facilities and other obligations of a like nature (including those to secure health, safety and environmental obligations) and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, in each case incurred in the ordinary course of business or consistent with past practices;
(e) minor survey exceptions, minor encumbrances, covenants, conditions, easements, rights-of-way, restrictions, encroachments, protrusions, by-law, regulation or zoning restrictions, reservations of or rights of others for sewers, electric lines, telegraph and telephone lines and other similar purposes and other similar encumbrances and minor title defects or irregularities affecting real property, that, in the aggregate, do not materially interfere with the ordinary conduct of the business of Holdings and its Restricted Subsidiaries, taken as a whole, or which are set forth in the title insurance policy delivered with respect to the Mortgaged Property and are “insured over” in such insurance policy;
(f) Liens securing, or otherwise arising from, judgments not constituting an Event of Default under Section 7.01(j);
(g) Liens on goods the purchase price of which is financed by a documentary or trade letter of credit issued for the account of the Borrower or any of its Restricted Subsidiaries or Liens on bills of lading, drafts or other documents of title arising by operation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and other similar instruments; provided that such Lien secures only the obligations of the Borrower or such Subsidiaries in respect of such letter of credit to the extent such obligations are permitted by Section 6.01;
(h) the filing of UCC or PPSA (or equivalent) financing statements solely as a precautionary measure or required notice in connection with operating leases or consignment of goods;
(i) rights of recapture of unused real property (other than any Mortgaged Property) in favor of the seller of such property set forth in customary purchase agreements and related arrangements with any Governmental Authority;
(j) Liens in favor of deposit banks or securities intermediaries securing customary fees, expenses or charges in connection with the establishment, operation or maintenance of deposit accounts or securities accounts;
(k) Liens in favor of obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by Holdings, the Borrower or any of the Restricted Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;
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(l) Liens arising from grants of licenses or sublicenses of Intellectual Property made in the ordinary course of business or that do not interfere in any material respect with the business of Holdings and its Restricted Subsidiaries, taken as a whole; provided that such Liens do not secure any Indebtedness;
(m) rights of setoff, banker’s lien, netting agreements and other Liens arising by operation of law or by of the terms of documents of banks or other financial institutions in relation to the maintenance of administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments;
(n) Liens arising from the right of distress enjoyed by landlords or Liens otherwise granted to landlords, in either case, to secure the payment of arrears of rent in respect of leased properties, so long as such Liens are not exercised;
(o) securities to public utilities or to any Governmental Authority when required by the utility or other authority in connection with the supply of services or utilities to the Borrower and any Restricted Subsidiaries;
(p) servicing agreements, development agreements, site plan agreements and other agreements with any Governmental Authority pertaining to the use or development of any of the assets of the Person, provided same are complied with in all material respects and do not materially reduce the value of the assets of the Person or materially interfere with the use of such assets in the operation of the business of such Person;
(q) any security or quasi-security arising under any retention-of-title arrangement ( eigendomsvoorbehoud );
(r) any security interest or right to set-off arising under article 24 or 25 respectively of the general terms and conditions ( algemene voorwaarden ) of any member of the Dutch Bankers’ Association ( Nederlandse Vereniging van Banken );
(s) customary rights of first refusal or first offer, and tag, drag and similar rights in joint venture agreements;
(t) Liens arising from Permitted Investments described in clause (e) of the definition hereof; and
(u) with respect to any Foreign Subsidiary, other Liens and privileges arising mandatorily by any Requirements of Law in the ordinary course of business.
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“ Permitted First Priority Refinancing Debt ” means any secured Indebtedness incurred by the Borrower and/or any Subsidiary Loan Party (and any Guarantee thereof by Holdings or any Intermediate Parent) in the form of one or more series of senior secured notes or senior secured loans (or revolving commitments in respect thereof, with revolving commitments deemed loans in the full amount of such commitment); provided that (i) such Indebtedness is secured by the Collateral (and no other assets which are not Collateral) on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness or a Permitted Refinancing of Incremental Equivalent Debt, (iii) such Indebtedness does not have mandatory redemption features (other than customary asset sale, insurance and condemnation proceeds events, change of control offers, AHYDO catch up payments or offers upon an event of default) that could result in redemptions of such Indebtedness prior to the maturity of the Refinanced Debt, (iv) such Indebtedness is not guaranteed by an entity that is not a Loan Party and (v) a Senior Representative acting on behalf of the holders of such Indebtedness shall have become party to the Pari Passu Intercreditor Agreement and, if applicable, the Closing Date Intercreditor Agreement and/or Junior Intercreditor Agreement; provided that if such Indebtedness is the initial Permitted First Priority Refinancing Debt incurred by the Borrower, then the Borrower, the other Loan Parties, the Administrative Agent and the Senior Representative for such Indebtedness shall have executed and delivered a customary intercreditor agreement with the Administrative Agent and/or Collateral Agent substantially in the form of the Pari Passu Intercreditor Agreement, together with (A) any immaterial changes and (B) material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not less than five Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agent’s and/or Collateral Agent’s entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agent’s and/or Collateral Agent’s execution thereof, in each case in form and substance reasonably satisfactory to the Administrative Agent and/or Collateral Agent (it being understood that junior Liens are not required to be pari passu with other junior Liens, and that Indebtedness secured by junior Liens may secured by Liens that are pari passu with, or junior in priority to, other Liens that are junior to the Liens securing the Obligations) to provide for the sharing of the Collateral on a pari passu basis among the holders of the Secured Obligations and the holders of such Permitted First Priority Refinancing Debt. Permitted First Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“ Permitted Guarantee ” means any guarantee or joint or several liability arising under a Dutch fiscal unity or a statement as referred to in Article 2:403 of the Dutch Civil Code (and any residual liability ( overblijvende aansprakelijkheid ) under such statement arising pursuant to Article 2:404(2) of the Dutch Civil Code).
“ Permitted Holders ” means (a) the Sponsor Group and (b) any other holder of a direct or indirect equity interest in Holdings or any Holdings Parent that becomes a holder of such interest prior to the ninetieth (90th) day after the Effective Date that was identified in writing to the Joint Lead Arrangers prior to the Effective Date.
“ Permitted Investments ” means any of the following, to the extent owned by Holdings or any Restricted Subsidiary:
(a) Dollars, Euros, Canadian Dollars, Sterling, or such other currencies held by it from time to time in the ordinary course of business;
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(b) readily marketable obligations issued or directly and fully guaranteed or insured by the government or any agency or instrumentality of (i) the United States, (ii) Canada, (iii) Switzerland, (iv) United Kingdom, or (v) any member state of the European Union rated A (or the equivalent thereof) or better by S&P and A2 (or the equivalent thereof) or better by Moody’s, having average maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of such country or such member state of the European Union is pledged in support thereof;
(c) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) is a Lender or (ii) has combined capital and surplus of at least (x) $250,000,000 in the case of U.S. banks or (y) $100,000,000 in the case of non-U.S. banks, or the U.S. dollar equivalent (any such bank in the foregoing clauses (i) or (ii) being an “ Approved Bank ”), in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(d) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(e) repurchase agreements entered into by any Person with an Approved Bank, a bank or trust company (including any of the Lenders) or recognized securities dealer, in each case, having capital and surplus in excess of $250,000,000 or its equivalent for direct obligations issued by or fully guaranteed or insured by the government or any agency or instrumentality of (i) the United States, (ii) Canada, (iii) Switzerland, (iv) United Kingdom, or (v) any member state of the European Union rated A (or the equivalent thereof) or better by S&P and A2 (or the equivalent thereof) or better by Moody’s, in which such Person shall have a perfected first priority security interest (subject to no other Liens) or title to which shall have been transferred to such Person and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations;
(f) marketable short-term money market and similar highly liquid funds either (i) having assets in excess of $250,000,000 or its equivalent, or (ii) having a rating of at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);
(g) securities with average maturities of 12 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, Canada, Switzerland, United Kingdom, a member of the European Union or by any political subdivision or taxing authority of any such state, member, commonwealth or territory having an investment grade rating from either S&P or Moody’s (or the equivalent thereof);
(h) investments with average maturities of 12 months or less from the date of acquisition in mutual funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s;
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(i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in euros or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized or incorporated in such jurisdiction;
(j) investments, classified in accordance with GAAP as current assets of the Borrower or any Subsidiary, in money market investment programs that are registered under the Investment Company Act of 1940 or that are administered by financial institutions having capital of at least $250,000,000 or its equivalent, and, in either case, the portfolios of which are limited such that substantially all of such investments are of the character, quality and maturity described in clauses (a) through (i) of this definition;
(k) with respect to Holdings or any Foreign Subsidiary: (i) obligations of the national government of the country in which Holdings or such Subsidiary maintains its chief executive office and principal place of business; provided such country is a member of the Organization for Economic Cooperation and Development, in each case maturing within one year after the date of investment therein, (ii) certificates of deposit of, bankers acceptances of, or time deposits with, any commercial bank which is organized and existing under the laws of the country in which such Subsidiary maintains its chief executive office and principal place of business; provided such country is a member of the Organization for Economic Cooperation and Development, and whose short-term commercial paper rating from S&P is at least “A-2” or the equivalent thereof or from Moody’s is at least “P-2” or the equivalent thereof (any such bank being an “ Approved Foreign Bank ”), and in each case with maturities of not more than 24 months from the date of acquisition and (iii) the equivalent of demand deposit accounts which are maintained with an Approved Foreign Bank; and
(l) investment funds investing at least 90% of their assets in securities of the types described in clauses (a) through (k) above.
“ Permitted Junior Priority Refinancing Debt ” means any secured Indebtedness incurred by the Borrower and/or any Subsidiary Loan Party (and any Guarantee thereof by Holdings or any Intermediate Parent) in the form of one or more series of junior lien secured notes or junior lien secured loans (or revolving commitments in respect thereof, with revolving commitments deemed to be loans in the full amount of such commitments); provided that (i) such Indebtedness is secured by the Collateral on a junior lien basis to the Initial Term Loans and/or Initial Revolving Commitments and the obligations in respect of any Permitted First Priority Refinancing Debt, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness or a Permitted Refinancing of Incremental Equivalent Debt, (iii) such Indebtedness does not have mandatory redemption features (other than customary asset sale, insurance and condemnation proceeds events, change of control offers, AHYDO catch up payments, offers upon an event of default or excess cash flow payments (subject to the prior payment of the Obligations or the prior offer thereof to prepay the Obligations)) that could result in redemptions of such Indebtedness prior to the maturity of the Refinanced Debt, (iv) such Indebtedness is not guaranteed by any entity that is not a Loan Party and (v) a Senior Representative acting on behalf of the holders of such Indebtedness shall have become party to the Closing Date Intercreditor Agreement and/or Junior Intercreditor Agreement, as applicable; provided that if such Indebtedness is the initial Permitted Junior Priority Refinancing Debt incurred by the Borrower, then the Borrower, the other Loan Parties, the Administrative Agent and the Senior Representatives for such Indebtedness shall have executed and delivered the Closing Date Intercreditor Agreement and/or Junior Intercreditor Agreement, as applicable. Permitted Junior Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
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“ Permitted Refinancing ” means, with respect to any Person, any modification, refinancing, refunding, renewal or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended except by an amount equal to unpaid accrued interest and premium thereon plus other amounts paid, and fees (including original issue discount and fees incurred in connection with the resulting Indebtedness) and expenses incurred, in connection with such modification, refinancing, refunding, renewal or extension and by an amount equal to any existing commitments unutilized thereunder; provided that the principal amount (or accreted value, if applicable) may exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended to the extent such excess amount (and the terms thereof) is otherwise permitted to be incurred under Section 6.01, (b) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to Section 6.01(a)(v), (a)(vii) or (a)(viii) (or except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature prior to the maturity date of the Indebtedness being modified, refinanced, refunded, renewed or extended), Indebtedness resulting from such modification, refinancing, refunding, renewal or extension has a final maturity date equal to or later than the final maturity date of, and (except in the case of Revolving Commitments) has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed or extended and (c) if the Indebtedness being modified, refinanced, refunded, renewed or extended is subordinated in right of payment to the Loan Document Obligations, Indebtedness resulting from such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Loan Document Obligations on terms (taken as a whole) at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed or extended (as determined by the Borrower in good faith) or otherwise reasonably satisfactory to the Administrative Agent. For the avoidance of doubt, it is understood and agreed that (x) notwithstanding anything in this Agreement to the contrary, in the case of any Indebtedness incurred to modify, refinance, refund, extend, renew or replace Indebtedness initially incurred in reliance on and measured by reference to a percentage of Consolidated EBITDA at the time of incurrence, and such modification, refinancing, refunding, extension, renewal or replacement would cause the percentage of Consolidated EBITDA to be exceeded if calculated based on the percentage of Consolidated EBITDA on the date of such modification, refinancing, refunding, extension, renewal or replacement, such percentage of Consolidated EBITDA restriction shall not be deemed to be exceeded so long as such incurrence otherwise constitutes a “Permitted Refinancing” and (y) a Permitted Refinancing includes successive Permitted Refinancings of the same Indebtedness.
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“ Permitted Reorganization ” means any re-organization or other similar activities among Holdings, the Borrower and the Restricted Subsidiaries related to Tax planning and re-organization, so long as, after giving effect thereto, (a) the Loan Parties are in compliance with the Collateral and Guarantee Requirement and Sections 5.11 and 6.12, (b) taken as a whole, the value of the Collateral securing the Secured Obligations and the Guarantees by the Guarantors of the Secured Obligations are not materially reduced and (c) the Liens in favor of the Administrative Agent for the benefit of the Secured Parties under the Security Documents are not materially impaired.
“ Permitted Unsecured Refinancing Debt ” means any unsecured Indebtedness incurred by the Borrower and/or any Loan Party in the form of one or more series of unsecured notes or unsecured loans (or revolving commitments in respect thereof, with revolving commitments deemed to be loans in the full amount of such commitments); provided that (i) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness or a Permitted Refinancing of Incremental Equivalent Debt, (ii) such Indebtedness does not have mandatory redemption features (other than customary asset sale, insurance and condemnation proceeds events, change of control offers, AHYDO catch up payments or offers upon an event of default) that could result in redemptions of such Indebtedness prior to the maturity of the Refinanced Debt, (iii) such Indebtedness is not guaranteed by any entity that is not a Loan Party, and (iv) such Indebtedness is not secured by any Lien on any property or assets of Holdings, Intermediate Parent, the Borrower or any Restricted Subsidiary. Permitted Unsecured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“ Person ” means any natural person, corporation, limited or unlimited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“ Plan ” means any employee pension benefit plan as such term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which a Loan Party or any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA.
“ Planned Expenditures ” has the meaning assigned to such term in clause (b) of the definition of “Excess Cash Flow”.
“ Platform ” has the meaning assigned to such term in Section 5.01.
“ Prepayment Event ” means:
(a) (i) any sale, transfer or other disposition of any property or asset of Holdings or any of its Restricted Subsidiaries permitted by Section 6.05(k) other than dispositions resulting in aggregate Net Proceeds not exceeding (A) $15,000,000 in the case of any single transaction or series of related transactions and (B) $30,000,000 for all such transactions during any fiscal year of Holdings and (ii) any Casualty Event; or
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(b) the incurrence by the Borrower or any of its Restricted Subsidiaries of any Indebtedness, other than Indebtedness permitted under Section 6.01 or permitted by the Required Lenders pursuant to Section 9.02.
“ Prime Rate ” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate at its principal office in New York City and notified to the Borrower; each change in the Prime Rate shall be effective from and including the date change is publicly announced as being effective.
“ PRN Audited Financial Statements ” means the audited combined statement of financial position and the related combined statements of comprehensive income and statement of cash flows of the Acquired Companies and their subsidiaries for the year ended December 31, 2015.
“ PRN Material Adverse Effect ” means a “Material Adverse Effect” as defined in the Acquisition Agreement.
“ Pro Forma Adjustment ” means, for any Test Period with respect to the Acquired EBITDA of the applicable Pro Forma Entity or the Consolidated EBITDA of Holdings, the pro forma increase in such Acquired EBITDA or such Consolidated EBITDA, as the case may be, projected by the Borrower in good faith to be reasonably anticipated to be realizable within eighteen (18) months following any applicable acquisition (including the Transactions), Specified Transactions, dispositions, operational change or initiative as a result of actions taken or expected to be taken or a plan for realization shall have been established, for the purposes of realizing cost savings, operating expense reductions or other operating improvements and synergies; provided that (A) such calculation shall be made on a Pro Forma Basis as though such cost savings, operating expense reduction, other operating improvements and synergies (on a “run rate” basis) had been realized on the first day of such period and, for purposes of projecting such pro forma increase to such Acquired EBITDA or such Consolidated EBITDA, as the case may be, such calculation shall be made on a Pro Forma Basis as though such cost savings, operating expense reductions, other operating improvements and “run rate” synergies had been realized commencing on the first day of such period and that such cost savings, operating expense reductions, other operating improvements and synergies were realized on a “run rate” basis during the entirety of such Test Period, (B) any Pro Forma Adjustment to Consolidated EBITDA shall be certified by a Financial Officer, the chief executive officer or president of the Borrower in the Compliance Certificate and (C) any such pro forma increase or decrease to such Acquired EBITDA or such Consolidated EBITDA, as the case may be, shall be without duplication for cost savings, operating expense reductions, other operating improvements and synergies or additional costs already included in such Acquired EBITDA or such Consolidated EBITDA, as the case may be, for such Test Period.
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“ Pro Forma Basis ,” “ Pro Forma Compliance ” and “ Pro Forma Effect ” mean, with respect to compliance with any test, financial ratio or covenant hereunder required by the terms of this Agreement to be made on a Pro Forma Basis or after giving Pro Forma Effect thereto, that (a) to the extent applicable, the Pro Forma Adjustment and the Pro Forma Disposal Adjustment shall have been made and (b) the Transactions, all Specified Transactions, operational changes or initiatives described in the definition of “Pro Forma Adjustment” or “Consolidated EBITDA” and the following transactions in connection therewith that have been made during the applicable period of measurement or subsequent to such period and prior to or simultaneously with the event for which the calculation is made shall be deemed to have occurred as of the first day of the applicable period of measurement in such test, financial ratio or covenant: (i) income statement items (whether positive or negative) attributable to the property or Person subject to such Transaction, Specified Transaction, operational change or initiative (A) in the case of a Disposition of all or substantially all Equity Interests in any subsidiary of Holdings or any division, product line, or facility used for operations of Holdings, the Borrower or any of their respective Subsidiaries, shall be excluded and (B) in the case of a Permitted Acquisition or Investment described in the definition of “Specified Transaction,” shall be included, (ii) any retirement of Indebtedness, and (iii) any Indebtedness incurred or assumed by Holdings, the Borrower or any of their respective Subsidiaries in connection therewith and if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate that is or would be in effect with respect to such Indebtedness as at the relevant date of determination and interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period; provided that, without limiting the application of the Pro Forma Adjustment pursuant to clause (a) above, the foregoing pro forma adjustments may be applied to any such test or covenant solely to the extent that such adjustments are consistent with the definition of Consolidated EBITDA and give effect to operating expense reductions that are (i) (x) directly attributable to such transaction, (y) expected to have a continuing impact on Holdings, the Borrower or any of their respective Subsidiaries and (z) factually supportable or (ii) otherwise consistent with the definition of Pro Forma Adjustment.
“ Pro Forma Disposal Adjustment ” means, for any Test Period with respect to any Sold Entity or Business, the pro forma increase or decrease in Consolidated EBITDA projected by the Borrower in good faith to be realizable within eighteen (18) months following the date the applicable Person, property, business, line of business, division, business unit or asset becomes a Sold Entity or Business as a result of contractual arrangements between the Borrower or any Restricted Subsidiary entered into with such Sold Entity or Business at the time of its disposal which represent an increase or decrease in Consolidated EBITDA which is incremental to the Disposed EBITDA of such Sold Entity or Business for the most recent Test Period prior to its disposal. Any such pro forma increase or decrease in Consolidated EBITDA shall be certified by a Financial Officer, the chief executive officer or president of the Borrower in the Compliance Certificate.
“ Pro Forma Entity ” has the meaning given to such term in the definition of “Acquired EBITDA.”
“ Pro Forma Financial Statements ” means the unaudited consolidated pro forma balance sheet of Holdings and its Subsidiaries as of March 31, 2016, and the related unaudited pro forma consolidated statement of income of Holdings and its Subsidiaries as of and for the twelve-month period then ended, prepared after giving effect to the Transactions (and which may exclude, at the Borrower’s option, the impact of purchase accounting effects required by GAAP) as if the Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such statement of income) and any other adjustments as agreed by the Sponsor and the Joint Lead Arrangers (which need not be prepared in compliance with Regulations S-X of the Securities Act of 1933, as amended, or (at the option of the Borrower) include adjustments for purchase accounting).
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“ Proposed Change ” has the meaning assigned to such term in Section 9.02(c).
“ Public Lender ” has the meaning assigned to such term in Section 5.01.
“ Qualified Equity Interests ” means Equity Interests of Holdings or the Borrower other than Disqualified Equity Interests.
“ Qualified Securitization Facility ” means any Securitization Facility that meets the following conditions: (a) the board of directors of the Borrower shall have determined in good faith that such Securitization Facility (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Borrower and the applicable Securitization Subsidiary and (b) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Borrower).
“ Qualifying Lender ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“ Refinanced Debt ” has the meaning assigned to such term in the definition of “Credit Agreement Refinancing Indebtedness.”
“ Refinancing Amendment ” means an amendment to this Agreement in form reasonably satisfactory to the Administrative Agent and the Borrower executed by each of (a) the Borrower and Holdings, (b) the Administrative Agent and (c) each Additional Lender and Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 2.21.
“ Register ” has the meaning assigned to such term in Section 9.04(b)(iv).
“ Registered Equivalent Notes ” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same Guarantees) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
“ Reimbursement Date ” has the meaning assigned to such term in Section 2.05(f).
“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, controlling persons, trustees, administrators, managers, advisors and representatives of such Person and of each of such Person’s Affiliates and permitted successors and assigns of each of the foregoing.
“ Release ” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) and including the environment within any building, or any occupied structure, facility or fixture.
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“ Removal Effective Date ” has the meaning assigned to such term in Section 8.06.
“ Repricing Transaction ” means (a) the incurrence by the Borrower or any Loan Guarantor of any Indebtedness in the form of long-term syndicated secured term bank debt financing (i) for the primary purpose of reducing the Effective Yield for the respective Type of such Indebtedness to less than the Effective Yield for the Term Loans of the respective equivalent Type, but excluding Indebtedness incurred in connection with (A) a Change in Control, (B) an Acquisition Transaction or (C) an IPO, and (ii) the proceeds of which are used to prepay (or, in the case of a conversion, deemed to prepay or replace), in whole or in part, outstanding principal of Initial Term Loans or (b) any effective reduction in the Effective Yield for the Initial Term Loans (e.g., by way of amendment, waiver or otherwise), except for a reduction in connection with (A) a Change in Control, (B) an Acquisition Transaction or (C) an IPO. Any determination by the Administrative Agent with respect to whether a Repricing Transaction shall have occurred shall be conclusive and binding on all Lenders holding the Initial Term Loans.
“ Required Additional Debt Terms ” means with respect to any Indebtedness, (a) such Indebtedness does not mature earlier than the Latest Maturity Date for the Initial Term Loans (except in the case of customary bridge loans which subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature earlier than the Latest Maturity Date for the Initial Term Loans), (b) such Indebtedness does not have a shorter Weighted Average Life to Maturity than the Initial Term Loans, (c) if such Indebtedness is unsecured or secured by the Collateral on a junior lien basis to the Secured Obligations, such Indebtedness does not have scheduled amortization or mandatory redemption features (other than customary asset sale, insurance and condemnation proceeds events, change of control offers, AHYDO catch up payments, offers upon an event of default or, in the case of junior lien secured debt, excess cash flow payments (subject to the prior prepayment of the Obligations or the prior offer thereof to prepay the Obligations)) that could result in redemptions of such Indebtedness prior to the Latest Maturity Date, (d) such Indebtedness is not guaranteed by any entity that is not a Loan Party, (e) such Indebtedness that is secured (i) is not secured by any assets not securing the Secured Obligations and (ii) is subject to the relevant Intercreditor Agreement, (f) the terms and conditions of such Indebtedness (excluding pricing, interest rate margins, rate floors, discounts, fees, collateral, guarantees, premiums and prepayment or redemption provisions) are not materially more favorable (when taken as a whole) to the lenders or investors providing such Indebtedness than the terms and conditions of this Agreement (when taken as a whole) are to the Lenders (unless (x) such terms and conditions are applicable only to periods after the Latest Maturity Date at such time, (y) the Lenders also receive the benefit of such more favorable terms and conditions or (z) such terms are reasonably satisfactory to the Administrative Agent) (together with, at the election of the Borrower, any applicable “equity cure” provisions with respect to any financial covenant) (it being understood that, to the extent that any covenant, event of default, guarantee or other provision is added or modified for the benefit of any such Indebtedness, no consent shall be required by the Administrative Agent or any of the Lenders if such covenant, event of default or guarantee is either (i) also added or modified for the benefit of any corresponding Loans remaining outstanding after the issuance or incurrence of any such Indebtedness in connection therewith or (ii) only applicable after the Latest Maturity Date at such time); provided that the Borrower may, in its sole discretion, deliver a certificate of a Responsible Officer of the Borrower to the Administrative Agent at least five (5) Business Days prior to the incurrence of such indebtedness, together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement, and such certificate shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Administrative Agent notifies the Borrower within such five (5) Business Day period that it disagrees with such determination (including a reasonable description of the basis upon which it disagrees) and (g) if such Indebtedness (regardless of form) is secured on a pari passu basis with the Initial Term Loans and ranks pari passu with the Initial Term Loans in right of payment (a “ Loan Equivalent ”), in the event that the Effective Yield for any such Loan Equivalent is greater than the Effective Yield for the Initial Term Loans by more than 0.50% per annum, then the Effective Yield for the Initial Term Loans shall be increased (without the requirement for any Lender consent) to the extent necessary so that the Effective Yield for the Initial Term Loans is equal to the Effective Yield for such Loan Equivalent minus 0.50% per annum; provided that if such Loan Equivalent includes an interest rate floor greater than the applicable interest rate floor under the Initial Term Loans, such differential between interest rate floors shall be equated to the applicable interest rate margin for purposes of determining whether an increase to the interest rate margin under the Initial Term Loans shall be required, but only to the extent an increase in the interest rate floor in the Initial Term Loans would cause an increase in the interest rate then in effect thereunder, and in such case, the interest rate floor (but not the interest rate margin) applicable to the Initial Term Loans shall be increased to the extent of such differential between interest rate floors.
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“ Required Lenders ” means, at any time, Lenders having Revolving Exposures, Term Loans and unused Commitments representing more than 50% of the aggregate Revolving Exposures, outstanding Term Loans and unused Commitments at such time; provided that to the extent set forth in Section 9.02 or Section 9.04 whenever there are one or more Defaulting Lenders, the total outstanding Term Loans and Revolving Exposures of, and the unused Revolving Commitments of, each Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“ Required Revolving Lenders ” means, at any time, Revolving Lenders having Revolving Exposures and unused Commitments representing more than 50.0% of the aggregate Revolving Exposures and unused Commitments at such time; provided that to the extent set forth in Section 9.02 or Section 9.04 whenever there are one or more Defaulting Lenders, the total outstanding Revolving Exposures of, and the unused Revolving Commitments of, each Defaulting Lender, shall be excluded for purposes of making a determination of Required Revolving Lenders.
“ Requirements of Law ” means, with respect to any Person, any statutes, laws, treaties, rules, regulations, statutory instruments, orders, decrees, writs, injunctions or determinations of any arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
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“ Resignation Effective Date ” has the meaning assigned to such term in Section 8.06.
“ Responsible Officer ” means the chief executive officer, president, vice president, chief financial officer, treasurer or assistant treasurer, director, company secretary or other similar officer, manager or a member of the Board of Directors of a Loan Party and with respect to certain limited liability companies, partnerships or Foreign Loan Parties that do not have officers, any authorized signatory, director, manager, sole member, managing member or general partner thereof, and as to any document delivered on the Effective Date or thereafter pursuant to paragraph (a)(i) of the definition of the term “Collateral and Guarantee Requirement,” any secretary or assistant secretary of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in Holdings, the Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in Holdings, the Borrower or any Restricted Subsidiary or any option, warrant or other right to acquire any such Equity Interests in Holdings, the Borrower or any Restricted Subsidiary.
“ Restricted Prepayment Event ” has the meaning assigned to such term in Section 2.11(g).
“ Restricted Subsidiary ” means, unless otherwise specified, any Subsidiary of Holdings, other than an Unrestricted Subsidiary.
“ Retained Declined Proceeds ” has the meaning assigned to such term in Section 2.11(e).
“ Revaluation Date ” means (a) the date of delivery of each Revolving Borrowing Request, (b) the date of issuance, extension or renewal of any Letter of Credit denominated in an Alternative Currency, in each case at the discretion of the Administrative Agent and/or any Issuing Bank or (c) the date of conversion or continuation of any Revolving Borrowing denominated in an Alternative Currency pursuant to Section 2.02.
“ Revolving Availability Period ” means the period from and including the Effective Date to but excluding the earlier of the Revolving Maturity Date and the date of termination of the Revolving Commitments.
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“ Revolving Commitment ” means, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum possible aggregate amount of such Lender’s Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to (i) assignments by or to such Lender pursuant to an Assignment and Assumption, (ii) a Refinancing Amendment, (iii) an Incremental Revolving Commitment Increase, (iv) a Loan Modification Agreement or (v) an Additional/Replacement Revolving Commitment. The initial amount of each Lender’s Revolving Commitment is set forth on Schedule 2.01(A) or, in each case, in the Assignment and Assumption, Loan Modification Agreement, Incremental Facility Amendment or Refinancing Amendment pursuant to which such Lender shall have assumed its Revolving Commitment, as the case may be. As of the Effective Date, the initial aggregate amount of the Lenders’ Revolving Commitments is $75,000,000.
“ Revolving Exposure ” means, with respect to any Revolving Lender at any time, the sum of the outstanding principal amount of such Revolving Lender’s Revolving Loans and its LC Exposure at such time.
“ Revolving Lender ” means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure.
“ Revolving Loan ” mean a Loan made by a Revolving Facility Lender pursuant to Section 2.01.
“ Revolving Maturity Date ” means (i) June 16, 2021 (or if such day is not a Business Day, the immediately preceding Business Day) or (ii) with respect to any Revolving Lender that has extended its Revolving Commitment pursuant to a Permitted Amendment and with respect to any Issuing Bank that has consented to such extension, the extended maturity date set forth in any such Loan Modification Agreement.
“ S&P ” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor to its rating agency business.
“ Sanctions ” means any economic sanctions administered or enforced by the United States Government (including without limitation, OFAC).
“ Sanctioned Country ” means, at any time, a country or territory which is the target of any comprehensive Sanctions (as of the date of this Agreement, the Crimea Republic of Ukraine, Cuba, Iran, North Korea, Sudan and Syria).
“ SEC ” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“ Second Lien Administrative Agent ” has the meaning assigned to such term in the definition of “Second Lien Credit Agreement.”
“ Second Lien Credit Agreement ” means the Second Lien Credit Agreement, dated as of the Effective Date (as amended, restated, supplemented, extended, increased, renewed, refunded, replaced, restructured or refinanced or otherwise modified, in each case to the extent not prohibited by the Closing Date Intercreditor Agreement), among the Borrower, Holdings, Intermediate Lux Holdings, Intermediate U.S. Holdings, Deutsche Bank AG New York Branch, as administrative agent (the “ Second Lien Administrative Agent ”) and collateral agent and the other lenders and financial institutions party thereto.
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“ Second Lien Loan Documents ” means the Second Lien Credit Agreement and all security agreements, guarantees, pledge agreements, notes and other agreements or instruments executed in connection therewith, including all “Loan Documents” (or any comparable term) (as defined in the Second Lien Credit Agreement).
“ Second Lien Term Loans ” means the “Term Loans” as defined in the Second Lien Credit Agreement.
“ Secured Cash Management Obligations ” means the due and punctual payment and performance of all obligations of Holdings, the Borrower and any Restricted Subsidiaries in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services, corporate credit and purchasing cards and related programs or any automated clearing house transfers of funds (collectively, “ Cash Management Services ”) provided to Holdings, the Borrower or any Restricted Subsidiary (whether absolute or contingent and howsoever and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor)) that are (a) owed to the Administrative Agent or any of its Affiliates, (b) owed on the Effective Date to a Person that is a Lender or an Affiliate of a Lender as of the Effective Date or (c) owed to a Person that is an Agent, a Lender or an Affiliate of an Agent or Lender at the time such obligations are incurred.
“ Secured Obligations ” means (a) the Loan Document Obligations, (b) the Secured Cash Management Obligations and (c) the Secured Swap Obligations (excluding with respect to any Loan Guarantor, Excluded Swap Obligations of such Loan Guarantor).
“ Secured Parties ” means (a) each Lender, (b) each Issuing Bank, (c) the Administrative Agent, (d) the Collateral Agent, (e) each Joint Lead Arranger, (f) each Person to whom any Secured Cash Management Obligations are owed, (g) each counterparty to any Swap Agreement the obligations under which constitute Secured Swap Obligations, (h) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (i) the permitted successors and assigns of each of the foregoing.
“ Secured Swap Obligations ” means the due and punctual payment and performance of all obligations of Holdings and its Restricted Subsidiaries under each Swap Agreement that (a) is with a counterparty that is the Administrative Agent or any of its Affiliates, (b) is in effect on the Effective Date with a counterparty that is a Lender, an Agent or an Affiliate of a Lender or an Agent as of the Effective Date or (c) is entered into after the Effective Date with any counterparty that is a Lender, an Agent or an Affiliate of a Lender or an Agent at the time such Swap Agreement is entered into.
“ Securitization Assets ” means the accounts receivable, royalty and other similar rights to payment and any other assets related thereto subject to a Qualified Securitization Facility that are customarily sold or pledged in connection with securitization transactions and the proceeds thereof.
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“ Securitization Facility ” means any of one or more receivables securitization financing facilities as amended, supplemented, modified, extended, renewed, restated or refunded from time to time, the obligations of which are non-recourse (except for customary representations, warranties and indemnities made in connection with such facilities) to Holdings, the Borrower or any Restricted Subsidiary (other than a Securitization Subsidiary) pursuant to which Holdings, the Borrower or any Restricted Subsidiary sells or grants a security interest in its accounts receivable or assets related thereto that are customarily sold or pledged in connection with securitization transactions to either (a) a Person that is not a Restricted Subsidiary or (b) a Securitization Subsidiary that in turn sells its accounts receivable to a Person that is not a Restricted Subsidiary.
“ Securitization Fees ” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Securitization Subsidiary in connection with, any Qualified Securitization Facility.
“ Securitization Subsidiary ” means any Subsidiary formed for the purpose of, and that solely engages only in one or more Qualified Securitization Facilities and other activities reasonably related thereto.
“ Security Documents ” means the Collateral Agreement, the Mortgages, the Foreign Security Documents and each other security agreement or pledge agreement executed and delivered pursuant to the Collateral and Guarantee Requirement, Sections 5.11, 5.12 or 5.14 to secure any of the Secured Obligations.
“ Security Trust Deeds ” means the Irish Security Trust Deed and the UK Security Trust Deed.
“ Seller ” has the meaning assigned to such term in the definition of “Acquisition Agreement.”
“ Senior Representative ” means, with respect to any series of Indebtedness permitted by this Agreement to be secured on the Collateral on a pari passu or junior basis, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.
“ Senior Secured First Lien Indebtedness ” means any Indebtedness of Holdings and its Restricted Subsidiaries that is secured by a Lien on any asset of Holdings or any of the Restricted Subsidiaries other than the Second Lien Term Loans and any other such Indebtedness to the extent secured on a junior basis to the Liens granted under the Security Documents in favor of the Collateral Agent for the benefit of the Secured Parties in respect of the Initial Term Loans.
“ Senior Secured First Lien Net Leverage Ratio ” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Senior Secured First Lien Net Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
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“ Senior Secured Indebtedness ” means any Indebtedness of Holdings and its Restricted Subsidiaries that is secured by a Lien on any asset of Holdings or any of the Restricted Subsidiaries.
“ Senior Secured Net Leverage Ratio ” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Senior Secured Net Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“ Settlement ” means the transfer of cash or other property with respect to any credit or debit card charge, check or other instrument, electronic funds transfer, or other type of paper-based or electronic payment, transfer, or charge transaction for which a Person acts as a processor, remitter, funds recipient or funds transmitter in the ordinary course of its business.
“ Settlement Asset ” means any cash, receivable or other property, including a Settlement Receivable, due or conveyed to a Person in consideration for a Settlement made or arranged, or to be made or arranged, by such Person or an Affiliate of such Person.
“ Settlement Indebtedness ” means any payment or reimbursement obligation in respect of a Settlement Payment.
“ Settlement Lien ” means any Lien relating to any Settlement or Settlement Indebtedness (and may include, for the avoidance of doubt, the grant of a Lien in or other assignment of a Settlement Asset in consideration of a Settlement Payment, Liens securing intraday and overnight overdraft and automated clearing house exposure, and similar Liens).
“ Settlement Payment ” means the transfer, or contractual undertaking (including by automated clearing house transaction) to effect a transfer, of cash or other property to effect a Settlement.
“ Settlement Receivable ” means any general intangible, payment intangible, or instrument representing or reflecting an obligation to make payments to or for the benefit of a Person in consideration for a Settlement made or arranged, or to be made or arranged, by such Person.
“ Sold Entity or Business ” has the meaning assigned to such term in the definition of the term “Consolidated EBITDA.”
“ Solicited Discount Proration ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“ Solicited Discounted Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“ Solicited Discounted Prepayment Notice ” means an irrevocable written notice of a Borrower Solicitation of Discounted Prepayment Offers made pursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit K.
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“ Solicited Discounted Prepayment Offer ” means the irrevocable written offer by each Term Lender, substantially in the form of Exhibit L, submitted following the Administrative Agent’s receipt of a Solicited Discounted Prepayment Notice.
“ Solicited Discounted Prepayment Response Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“ Specified Acquisition Agreement Representations ” means such of the representations made by the Seller with respect to the Acquired Companies and their subsidiaries in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that the Borrower or its applicable affiliates have the right (determined without regard to any notice provisions but taking into account any applicable cure provisions) to terminate its (or their) obligations under the Acquisition Agreement or decline to consummate the Acquisition as a result of a breach of one or more of such representations in the Acquisition Agreement.
“ Specified Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“ Specified Discount Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“ Specified Discount Prepayment Notice ” means an irrevocable written notice of the Borrower of Specified Discount Prepayment made pursuant to Section 2.11(a)(ii)(B) substantially in the form of Exhibit G.
“ Specified Discount Prepayment Response ” means the irrevocable written response by each Term Lender, substantially in the form of Exhibit H, to a Specified Discount Prepayment Notice.
“ Specified Discount Prepayment Response Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“ Specified Discount Proration ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(3).
“ Specified Event of Default ” means an Event of Default under Section 7.01(a), (b), (h) or (i).
“ Specified Representations ” means the representations and warranties made by the Borrower and, and to the extent applicable, the Effective Date Loan Parties, set forth in (i) Section 3.01, Section 3.02 (with respect to authorization, execution, delivery and performance and enforceability of the Loan Documents), Section 3.03(b)(i) (with respect to entering into and performance of the Loan Documents by the Borrower and the Effective Date Loan Parties), Section 3.08, Section 3.14, Section 3.15 and Section 3.16(a) of this Agreement and (ii) Sections 2.03(f) and 3.02(c) of the Collateral Agreement.
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“ Specified Transaction ” means any Investment, acquisition (including the commitment of activities constituting such business), sale, transfer or other disposition of assets, incurrence or repayment of Indebtedness, Restricted Payment, subsidiary designation, commencement of a New Project or other event that by the terms of the Loan Documents requires “Pro Forma Compliance” with a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis after giving Pro Forma Effect thereto.
“ Sponsor ” means GTCR LLC, GTCR Fund X/A AIV L.P., GTCR Co-Invest X/C, AIV, L.P., GTCR Fund X/C AIV, LP, and their respective associated funds and each of their respective Affiliates (other than any portfolio companies of any of the foregoing).
“ Sponsor Group ” means the Sponsor and limited partners of the Sponsor and the Management Investors.
“ Sponsor Management Agreement ” means that certain Amended and Restated Professional Services Agreement, dated as of May 30, 2014, by and among GTCR LLC, a Delaware limited liability company, GTCR Management X LP, a Delaware limited partnership, GTCR Canyon Holdings (Cayman), L.P., a Cayman Islands exempted limited partnership (by its general partner, GTCR Canyon Partners, Ltd.), and the Borrower, as such agreement may be amended, restated, supplemented or otherwise modified from time to time; provided that in no event shall any such amendment, restatement, supplement or modification increase the compensation or other amounts payable thereunder (other than payments in the form of Qualified Equity Interests of Holdings or any parent of Holdings) without the consent of the Required Lenders.
“ Sponsor Model ” means the Sponsor model delivered to the Joint Lead Arrangers on November 19, 2015 (together with any updates or modifications thereto mutually agreed between the Sponsor and the Joint Lead Arrangers prior to April 26, 2016).
“ Spot Rate ” means, on any day, with respect to any currency other than Dollars (for purposes of determining the Dollar Amount thereof) or Dollars (for purposes of determining the Alternative Currency Equivalent thereof), the rate at which such currency may be exchanged into Dollars or the applicable Alternative Currency, as the case may be, as set forth at approximately 11:00 a.m., New York City time, two (2) Business Days prior to such date on the applicable Bloomberg Key Cross Currency Rates Page. In the event that any such rate does not appear on any Bloomberg Key Cross Currency Rates Page, the Spot Rate shall be determined by reference to such other publicly available service for displaying exchange rates selected by the Administrative Agent for such purpose, or, at the discretion of the Administrative Agent, such Spot Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 10:00 a.m., local time in such market, two (2) Business Days prior to such date for the purchase of Dollars or the applicable Alternative Currency, as the case may be, for delivery two (2) Business Days later; provided that, if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any other reasonable method it deems appropriate to determine such rate, and such determination shall be presumed correct absent manifest error.
“ Starter Basket ” has the meaning assigned to such term in the definition of “Available Amount.”
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“ Statutory Reserve Rate ” means 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, liquid asset or similar percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority to be applicable to any member bank of the Federal Reserve System in respect of Eurocurrency funding or liabilities. Such reserve, liquid asset or similar percentages shall include those imposed pursuant to Regulation D of the Board of Governors. Eurodollar Loans shall be deemed to be subject to such reserve, liquid asset or similar requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any other Requirements of Law. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“ Sterling ” or “ £ ” means the lawful currency for the time being of the United Kingdom.
“ Submitted Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ Submitted Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ subsidiary ” means, with respect to any Person (the “ parent ”) at any date (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more subsidiaries of such Person and (ii) any partnership, limited liability company, association, or other similar non-corporate entity in which such Person and/or one or more subsidiaries of such Person owns more than a 50% equity interest at the time.
“ Subsidiary ” means any subsidiary of Holdings (unless otherwise specified).
“ Subsidiary Loan Party ” means each Restricted Subsidiary of Holdings (other than the Borrower) that is a party to the Guarantee Agreement.
“ Successor Borrower ” has the meaning assigned to such term in Section 6.03(a)(iv).
“ Swap Agreement ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.
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“ TARGET Day ” means any day on which the Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) payment system (or, if such payment system ceases to be operative, such other payment system (if any) determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euros.
“ Target Person ” has the meaning assigned to such term in Section 6.04.
“ Tax Distributions ” has the meaning assigned to such term in Section 6.07(a)(vii)(A).
“ Tax Group ” has the meaning assigned to such term in Section 6.07(a)(vii)(A).
“ Taxes ” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“ Term Commitment ” means, with respect to each Lender, the commitment, if any, of such Lender to make a Term Loan hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term Loan to be made by such Lender hereunder. The amount of each Lender’s Term Commitment as of the Effective Date is set forth on Schedule 2.01. As of the Effective Date, the total Term Commitment is $1,100,000,000.
“ Term Lender ” means a Lender with a Term Commitment or an outstanding Term Loan.
“ Term Loans ” means Initial Term Loans, Other Term Loans and Incremental Term Loans, as the context requires.
“ Term Maturity Date ” means June 16, 2023 (or, with respect to any Term Lender that has extended the maturity date of its Term Loans in accordance with the terms of this Agreement, the extended maturity date set forth in the applicable Loan Modification Agreement, Refinancing Amendment or other amendment hereto).
“ Termination Date ” means the date on which all Commitments have expired or been terminated, all Secured Obligations have been paid in full in cash (other than (x) Secured Swap Obligations not yet due and payable, (y) Secured Cash Management Obligations not yet due and payable and (z) contingent obligations not yet accrued and payable) and all Letters of Credit have expired or been terminated (other than Letters of Credit that have been cash collateralized or backstopped by an institution and otherwise pursuant to arrangements reasonably satisfactory to the applicable Issuing Bank).
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“ Test Period ” means, at any date of determination, the period of four consecutive fiscal quarters of Holdings then last ended as of such time for which financial statements have been delivered pursuant to Section 5.01(a) or (b) or, at the option of the Borrower, in connection with a Limited Condition Transaction, the period of four consecutive fiscal quarters of Holdings for which financial statements have been delivered to the Administrative Agent on or prior to the applicable LCT Test Date; provided that for any date of determination before the delivery of the first financial statements pursuant to Section 5.01(a) or (b), the Test Period shall be the period of four consecutive fiscal quarters of Holdings then last ended as of such time.
“ Total Net Leverage Ratio ” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Total Net Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“ Trademark ” has the meaning assigned to such term in the Collateral Agreement.
“ Transaction Costs ” means all fees, premiums, costs and expenses incurred or payable by Holdings, the Borrower or any other Subsidiary in connection with the Transactions, including fees, costs and expenses of any counsel, consultants and other advisors.
“ Transactions ” means (a) the Financing Transactions, (b) the Acquisition and the other transactions contemplated by the Acquisition Documents, (c) the Refinancing and (d) the payment of the Transaction Costs.
“ Type ,” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate, Adjusted BA Rate, Adjusted EURIBOR, Alternate Base Rate or Canadian Base Rate.
“ UCC ” or “ Uniform Commercial Code ” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided , however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a U.S. jurisdiction other than the State of New York, the term “UCC” and “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
“ UCP ” means, with respect to any commercial Letter of Credit, the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce, in its Publication No. 600 (or such later version thereof as may be reasonably acceptable to the applicable Issuing Bank and in effect at the time of issuance of such Letter of Credit). On an exception basis and if specifically requested by the Borrower, a standby Letter of Credit may be issued subject to UCP.
“ UK Debenture ” means the all asset debenture governed by English law and entered into by each Foreign Loan Party incorporated in England and Wales.
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“ UK Charge over Shares ” means each charge over shares governed by English law and entered into in respect of the Equity Interests in any UK Loan Guarantor in favor of the Collateral Agent.
“ UK Legal Reservations ” means (i) the principle that equitable remedies may be granted or refused at the discretion of the court, the limitation on enforcement by laws relating to bankruptcy, insolvency, liquidation, reorganization, court schemes, moratoria, administration and other laws generally affecting the rights of creditors; (ii) the time barring of claims under the Limitation Act 1980 and Foreign Limitation Periods Act 1984, the possibility that an undertaking to assume liability for or to indemnify a person against non-payment of UK stamp duty may be void, and defences of set-off or counterclaims, (iii) any other matters which are set out as qualifications or reservations as to matters of law in any legal opinion delivered to the Administrative Agent or the Collateral Agent under any provision of or otherwise in connection with any Loan Document and (iv) similar principles, rights and defences under the laws of any relevant jurisdiction.
“ UK Loan Party ” shall mean any Loan Party incorporated in England and Wales.
“ UK Perfection Requirements ” shall mean the making of the appropriate registrations, filings or notifications of each Security Document entered into by a UK Loan Party as specifically set out in the relevant Security Document or in any legal opinion.
“ UK Security Documents ” shall mean the UK Debenture, UK Charge over Shares and UK Security Trust Deed.
“ UK Security Trust Deed ” means the security trust deed governed by English law and entered into by, among others, the UK Loan Parties, Intermediate Lux Holdings and the Collateral Agent.
“ Unaudited Financial Statements ” means the unaudited consolidated statement of financial position and the related consolidated statements of comprehensive income and statement of cash flows of the Acquired Companies and their subsidiaries for the quarters ending March 31, 2015, June 30, 2015 and September 30, 2015.
“ United States Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.17(ii)(C).
“ Unrestricted Subsidiary ” means any Subsidiary designated by the Borrower as an Unrestricted Subsidiary pursuant to Section 5.13 subsequent to the Effective Date.
“ USA PATRIOT Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.
“ Voluntary Prepayment Amount ” has the meaning set forth in the definition of “ Incremental Cap ”.
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“ Weighted Average Life to Maturity ” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness, in each case, without giving effect to any reductions of amortization or other scheduled payments for periods where amortization has been reduced as a result of the prepayment of the applicable Indebtedness.
“ Wholly Owned Restricted Subsidiary ” means any Restricted Subsidiary that is a Wholly Owned Subsidiary.
“ Wholly Owned Subsidiary ” means, as to any Person, (i) any corporation 100% of whose capital stock is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person and (ii) any partnership, limited liability company, association, or other similar non-corporate entity in which such Person and/or one or more Wholly Owned Subsidiaries of such Person has a 100% equity interest at such time (other than, in the case of the preceding clauses (i) and (ii), director’s qualifying shares and/or other nominal amount of shares required to be held by Persons other than the Borrower and its Subsidiaries under applicable law).
“ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
SECTION 1.02 Classification of Loans and Borrowings .
For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g ., a “ Revolving Loan ”) or by Type ( e.g ., a “ Eurodollar Loan ” or “ ABR Loan ”) or by Class and Type ( e.g ., a “ Eurodollar Revolving Loan ”). Borrowings also may be classified and referred to by Class ( e.g ., a “ Revolving Borrowing ” or “ Term Borrowing ”) or by Type ( e.g ., a “ Eurodollar Borrowing ”) or by Class and Type ( e.g ., a “ Eurodollar Revolving Borrowing ”). Borrowings of Revolving Loans are sometimes referred to herein as “ Revolving Borrowings ”.
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SECTION 1.03 Terms Generally .
The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (a) any definition of or reference to any agreement (including this Agreement and the other Loan Documents), instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or other modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
Without limiting the reclassification rights under any Section of Article VI, for purposes of determining compliance with any Section of Article VI, in the event that any Lien, Investment, Indebtedness (whether at the time of incurrence or upon application of all or a portion of the proceeds thereof), Disposition, Restricted Payment, Affiliate transaction, restrictive agreement or prepayment of Indebtedness meets the criteria of one or more than one of the categories of transactions permitted pursuant to any clause of such Sections, such transaction (or portion thereof) at the time of incurrence or consummation thereof shall be deemed to be incurred or otherwise permitted under such clause(s) determined by the Borrower in its sole discretion at such time of incurrence or consummation, as applicable.
SECTION 1.04 Accounting Terms; GAAP .
(a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, except as otherwise prescribed herein.
(b) Notwithstanding anything in this Agreement to the contrary, for purposes of determining compliance with any test contained in this Agreement, the Total Net Leverage Ratio, the Senior Secured First Lien Net Leverage Ratio and the Senior Secured Net Leverage Ratio shall be calculated on a Pro Forma Basis to give effect to the Transaction and all Specified Transactions that have been made during the applicable period of measurement or subsequent to such period and prior to or simultaneously with the event for which the calculation is made.
SECTION 1.05 Effectuation of Transactions .
All references herein to Holdings, the Borrower and their respective Subsidiaries shall be deemed to be references to such Persons, and all the representations and warranties of Holdings, any Intermediate Parent, the Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall be deemed made, in each case, after giving effect to the Acquisition and the other Transactions to occur on the Effective Date, unless the context otherwise requires.
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SECTION 1.06 Limited Condition Transactions .
Notwithstanding anything in this Agreement or any Loan Document to the contrary, when calculating any applicable ratio, the amount or availability of the Available Amount or any other basket (including incremental facilities or any baskets based on Consolidated EBITDA or total assets), or determining other compliance with this Agreement (including the determination of compliance with representations, warranties or any provision of this Agreement which requires that no Default or Event of Default has occurred, is continuing or would result therefrom) in connection with a Specified Transaction or other transaction undertaken in connection with the consummation of a Limited Condition Transaction, the date of determination of such ratio, the amount or availability of the Available Amount or any other basket and determination of the accuracy of any representation or warranty or whether an Default or Event of Default has occurred, is continuing or would result therefrom or other applicable covenant shall, at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “ LCT Election ”), be deemed to be the date the definitive agreements for such Limited Condition Transaction are entered into (the “ LCT Test Date ”) and if, after such ratios and other provisions are measured on a Pro Forma Basis after giving effect to such Limited Condition Transaction and the other Specified Transactions or other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if they occurred at the beginning of the applicable Test Period ending prior to the LCT Test Date, the Borrower could have taken such action on the relevant LCT Test Date in compliance with such ratios and provisions, such provisions shall be deemed to have been complied with. For the avoidance of doubt, (x) if any of such ratios are exceeded as a result of fluctuations in such ratio (including due to fluctuations in Consolidated EBITDA of the Borrower and its Subsidiaries) at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be deemed to have been exceeded as a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction is permitted hereunder and (y) such ratios and other provisions shall not be tested at the time of consummation of such Limited Condition Transaction or related Specified Transactions or other transactions. If the Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or basket availability with respect to any other Specified Transaction on or following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or basket shall be calculated on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated.
SECTION 1.07 Additional Alternative Currencies .
(a) The Borrower may from time to time request that Eurodollar Revolving Loans be made and/or Letters of Credit be issued in a currency other than Dollars or those specifically listed in the definition of “Alternative Currency.” In the case of any such request with respect to the making of Eurodollar Revolving Loans, such request shall be subject to the approval of the Administrative Agent and all of the Revolving Lenders. In the case of any such request with respect to the issuance of Letters of Credit, such request shall be subject to the approval of the Administrative Agent, the applicable Issuing Bank and all of the Revolving Lenders.
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(b) Any such request shall be made to the Administrative Agent not later than 11:00 a.m. (New York City time), ten (10) Business Days prior to the date of the desired Revolving Borrowing or issuance of Letters of Credit (or such other time or date as may be agreed to by the Administrative Agent and, in the case of any such request pertaining to Letters of Credit, each Issuing Bank, in its or their sole discretion). In the case of any such request pertaining to Eurodollar Revolving Loans, the Administrative Agent shall promptly notify each Revolving Lender thereof. In the case of any such request pertaining to Letters of Credit, the Administrative Agent shall promptly notify the applicable Issuing Bank thereof. Each Revolving Lender (in the case of any such request pertaining to Eurodollar Revolving Loans) or each Issuing Bank (in the case of a request pertaining to Letters of Credit) shall notify the Administrative Agent, not later than 11:00 a.m. (New York City time), two (2) Business Days after its receipt of such request as to whether it consents, in its sole discretion, to the making of Eurodollar Revolving Loans or the issuance of Letters of Credit, as the case may be, in such requested currency.
(c) Any failure by a Revolving Lender or an Issuing Bank, as the case may be, to respond to such request within the time period specified in the last sentence of clause (b) above shall be deemed to be a refusal by such Revolving Lender or such Issuing Bank, as the case may be, to permit Eurodollar Revolving Loans to be made or Letters of Credit to be issued in such requested currency. If the Administrative Agent and all the Revolving Lenders consent to making Eurodollar Revolving Loans in such requested currency, the Administrative Agent shall so notify the Borrower and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Borrowings of Eurodollar Revolving Loans. If the Administrative Agent and each Issuing Bank consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify the Borrower and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.07, the Administrative Agent shall promptly so notify the Borrower.
SECTION 1.08 Currency Equivalents Generally .
(a) The Administrative Agent shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Amounts of a Borrowing or an issuance of any Letter of Credit or extension, renewal or increase of the amount thereof and any amounts outstanding hereunder denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except as set forth in this Agreement, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Amount as so determined by the Administrative Agent or the Issuing Bank, as applicable and notified to the Borrower.
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(b) Wherever in this Agreement in connection with a Borrowing, conversion, continuation or prepayment of a Eurodollar Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Borrowing, Eurodollar Loan or Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar Amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the applicable Issuing Bank, as the case may be and notified to the Borrower.
(c) For purposes of determining compliance as of any date with any covenant or incurrence test under any Loan Document or for purposes of making any determination under any Default or Event of Default hereunder or for any other specified purpose hereunder, amounts incurred or outstanding in currencies (other than Dollars) shall be translated into Dollars at the Exchange Rate; provided that if any Indebtedness or Liens are incurred to extend, replace, refund, refinance, renew or defease other Indebtedness or Liens denominated in currencies (other than Dollars), and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, plus the amount of any premium paid, and fees and expenses incurred, in connection with such extension, replacement, refunding refinancing, renewal or defeasance (including any fees and original issue discount incurred in respect of such resulting Indebtedness). No Default or Event of Default shall arise as a result of any limitation or threshold set forth in Dollars in any covenant, representation or Default or Event of Default under any Loan Document being exceeded solely as a result of changes in currency exchange rates from the applicable Exchange Rate on the first Business Day of the fiscal quarter of Holdings in which such determination occurs or in respect of which such determination is made.
SECTION 1.09 Change in Currency .
(a) Each obligation of the Borrower to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euros at the time of such adoption (in accordance with the EMU Legislation). If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Revolving Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Borrowing, at the end of the then current Interest Period.
(b) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be necessary to reflect the adoption of the Euro by any member state of the European Union.
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(c) Each provision of this Agreement also shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be necessary to reflect a change in currency of any other country.
SECTION 1.10 Guaranty and Security Principles .
(a) Each Guarantee, the Security Documents and each other guarantee and security document delivered or to be delivered under this Agreement and any obligation to enter into such document or obligation by any Foreign Loan Party shall be subject in all respects to the Guaranty and Security Principles.
(b) Notwithstanding any other provisions to the contrary in this Agreement, the guarantee granted by any Loan Guarantor incorporated or established in Luxembourg (“ Luxembourg Guarantor ”) for the obligations of any Loan Party which is not a direct or indirect subsidiary of such Luxembourg Guarantor shall be limited at any time to an aggregate amount (without double-counting) not exceeding the higher of:
(i) 95% of such Luxembourg Guarantor’s capitaux propres (as referred to in annex I to the grand-ducal regulation dated 18 December 2015 defining the form and content of the presentation of balance sheet and profit and loss account (the “ Regulation ”)) determined as at the date on which a demand is made under this guarantee, increased by the amount of any Intra-Group Liabilities; and
(ii) 95% of such Luxembourg Guarantor’s capitaux propres (as referred to in the Regulation) determined as at the date of this Agreement, increased by the amount of any Intra-Group Liabilities.
For the purposes of this section 1.10, Intra-Group Liabilities shall mean any amounts owed by the Luxembourg Guarantor to any Affiliate of such Luxembourg Guarantor and that have not been financed (directly or indirectly) by a borrowing under the Loan Documents.
In addition, the above limitation shall not apply to (i) any amounts borrowed by a Luxembourg Guarantor or any of its direct or indirect Subsidiaries under the Loan Documents and (ii) any amounts borrowed under the Loan Documents and on-lent, or otherwise made available, to the Luxembourg Guarantor or any of its direct or indirect Subsidiaries (in any form whatsoever).
SECTION 1.11 Luxembourg Terms . Without prejudice to the generality of any provision of this Agreement, in this Agreement where it relates to a Luxembourg Credit Party
(a) A reference to an “officer” or “director” of (a) a société à responsabilité limitée incorporated in Luxembourg includes a reference to a manager of such company and (b) a société en commandite par actions includes a reference to the managers or directors of its general partner.
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(b) In respect of any company incorporated in Luxembourg, a reference to “by-laws” or “constitutional documents” of such company includes its up-to-date (restated) articles of association ( statuts coordonnés ).
(c) In any Loan Document, where it relates to a company incorporated under the laws of Luxembourg, a reference to:
(i) a “bankruptcy”, “insolvency”, “reorganization”, “receivership”, “liquidation”, “windingup”, “administration” or “dissolution” includes bankruptcy ( faillite ), insolvency, voluntary or judicial liquidation ( liquidation volontaire ou judiciaire ), composition with creditors ( concordat préventif de faillite ), reprieve from payment ( sursis de paiement ), controlled management ( gestion contrôlée ), general settlement with creditors, reorganization or similar laws affecting the rights of creditors generally;
(ii) an act “affecting the rights of creditors generally” includes, without limitation, fraudulent conveyances which may lead to an action paulienne ;
(iii) a “receiver”, “administrative receiver”, “administrator”, “trustee”, “custodian”, “sequestrator”, “conservator” or similar officer includes a juge délégué , commissaire , juge-commissaire , mandataire ad hoc , administrateur provisoire , liquidateur or curateur ;
(iv) a “lien” or “security interest” includes any hypothèque , nantissement , gage , privilège , sûreté réelle , droit de rétention and any type of security in rem ( sûreté réelle ) or agreement or arrangement having a similar effect and any transfer of title by way of security;
(v) a “set-off” includes, for the purposes of Luxembourg law, legal set-off;
(vi) a person being “unable to pay its debts” includes that person being in a state of cessation of payments ( cessation de paiements ); and
(vii) a guarantee includes any garantie which is independent from the debt to which it relates and excludes any suretyship ( cautionnement ) within the meaning of Articles 2011 et seq. of the Luxembourg Civil Code.
(d) In any Loan Document, usage of the term “promissory note” does not, unless otherwise explicitly specified, refer to a “ billet à ordre ” within the meaning of the Luxembourg consolidated law dated December 15, 1962 on the bills of exchange and promissory note.
SECTION 1.12 Dutch Terms . In any Loan Document, where it relates to a company incorporated under the laws of the Netherlands, a reference to:
(a) an administration or dissolution (and any of those terms) includes a Dutch entity being declared bankrupt ( failliet verklaard ) or dissolved ( ontbonden );
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(b) a moratorium includes surseance van betaling and granted a moratorium includes surseance verleend ;
(c) any step or procedure taken in connection with insolvency proceedings includes a Dutch entity having filed a notice under section 36 of the Tax Collection Act of the Netherlands ( Invorderingswet 1990 );
(d) a security interest includes any mortgage ( hypotheek ), pledge ( pandrecht ), retention-of-title arrangement ( recht van retentie ), right to reclaim goods ( recht van reclame ), privilege ( voorrecht ) and, in general, any right in rem ( beperkt recht ) created for the purpose of granting security ( goederenrechtelijk zekerheidsrecht );
(e) a director in relation to a Dutch Loan Guarantor, means a managing director ( bestuurder ) and board of directors means its managing board ( bestuur );
(f) a receiver or trustee in bankruptcy includes a curator ;
(g) an administrator includes a bewindvoerder ;
(h) an attachment includes a beslag and attaching or taking possession of (any of those terms) includes beslag leggen ; and
(i) indemnify means vrijwaren .
Article II
THE CREDITS
SECTION 2.01 Commitments .
Subject to the terms and conditions set forth herein, (a) each Term Lender agrees to make Term Loans to the Borrower on the Effective Date denominated in Dollars in a principal amount not exceeding such Term Lender’s Term Commitment and (b) each Revolving Lender agrees to make Revolving Loans of the applicable Class to the Borrower denominated in Dollars or an Alternative Currency, from time to time during the Revolving Availability Period in an aggregate principal amount which will not result in such Revolving Lender’s Revolving Exposure of such Class exceeding such Revolving Lender’s Revolving Commitment of such Class. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02 Loans and Borrowings .
(a) Each (i) Loan shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class and (ii) Revolving Loans shall be made by the Revolving Lenders ratably in accordance with their respective Revolving Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder, provided that the Commitments of the Lenders are several and other than as expressly provided herein with respect to a Defaulting Lender, no Lender shall be responsible for any other Lender’s failure to make Loans as required hereby.
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(b) Subject to Section 2.14, each Revolving Borrowing and Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith, provided that all Borrowings made on the Effective Date must be made as ABR Borrowings unless the Borrower shall have given the notice required for a Eurodollar Borrowing under Section 2.03 and provided an indemnity letter extending the benefits of Section 2.16 to Lenders in respect of such Borrowings. Revolving Loans denominated in (i) Dollars or Canadian Dollars may be ABR Loans or Eurodollar Loans and (ii) any Alternative Currency (other than Canadian Dollars) shall be Eurodollar Loans. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that a Eurodollar Borrowing that results from a continuation of an outstanding Eurodollar Borrowing may be in an aggregate amount that is equal to such outstanding Borrowing. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of eight Eurodollar Borrowings outstanding plus an additional two Eurodollar Borrowings for each outstanding Incremental Facility. Notwithstanding anything to the contrary herein, an ABR Revolving Borrowing of the applicable Class may be in an aggregate amount equal to the entire unused balance of the aggregate Revolving Commitments of such Class or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(f).
SECTION 2.03 Requests for Borrowings .
To request a Revolving Borrowing or Term Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing (or, in the case of any Eurodollar Borrowing to be made on the Effective Date, the same Business Day) or (b) in the case of an ABR Borrowing, not later than 1:00 p.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Borrowing Request signed by the Borrower substantially in the form of Exhibit C. Each such telephonic and written Borrowing Request shall specify the following information:
(i) whether the requested Borrowing is to be a Revolving Borrowing, a Term Borrowing or a Borrowing of any other Class (specifying the Class thereof);
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(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
(vi) the location and number of the Borrower’s account or accounts to which funds are to be disbursed; and
(vii) in the case of a Revolving Borrowing, the currency in which such Borrowing is to be denominated.
If no election as to the Type of Borrowing is specified as to any requested Borrowing in Dollars or Canadian Dollars, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. If no currency is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have requested that the Borrowing be denominated in Dollars. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION 2.04 [Reserved ]
SECTION 2.05 Letters of Credit .
(a) General . Subject to the terms and conditions set forth herein (including Section 2.22), each Issuing Bank agrees, in reliance upon the agreements of the Revolving Lenders and the Borrower set forth in this Section 2.05 and elsewhere in the Loan Documents, to issue Letters of Credit denominated in Dollars or an Alternative Currency for the Borrower’s own account (or for the account of any Subsidiary so long as the Borrower is an obligor in respect of all Loan Document Obligations arising under or in respect of such Letter of Credit), in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, which shall reflect the standard operating procedures of such Issuing Bank, at any time and from time to time during the period from the Effective Date until the date that is the fifth (5th) Business Day prior to the Revolving Maturity Date; provided that (x) no Issuing Bank shall be required to issue any trade letters of credit hereunder without its consent and (y) no Issuing Bank shall be required to issue any Letter of Credit if after giving effect thereto the LC Exposure with respect to all Letters of Credit issued by such Issuing Bank would exceed the amount set forth across from its name on Schedule 2.05 (or in the documents pursuant to which such Issuing Bank became an Issuing Bank). In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by a Borrower to, or entered into by the Borrower with, the applicable Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
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(b) Issuance, Amendment, Renewal or Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall deliver in writing by hand delivery or facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the recipient) to the applicable Issuing Bank and the Administrative Agent (at least three (3) Business Days before the requested date of issuance, amendment, renewal or extension (or, in the case of any such request to be made on the Effective Date, one (1) Business Day) or such shorter period as the applicable Issuing Bank and the Administrative Agent may agree) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended or extended, and specifying the date of issuance, amendment, renewal or extension, as the case may be (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (d) of this Section 2.05), the amount and currency of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend or extend, as the case may be, such Letter of Credit. Each such notice shall be in the form of Exhibit Q, appropriately completed (each, a “ Letter of Credit Request ”). If requested by the applicable Issuing Bank, the Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended or extended only if (and upon issuance, amendment, renewal or extension of any Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) subject to Section 9.04(b)(ii), the Applicable Fronting Exposure of each Issuing Bank shall not exceed its Fronting Exposure Cap, (ii) the aggregate Revolving Exposures shall not exceed the aggregate Revolving Commitments and (iii) the aggregate LC Exposure shall not exceed the Letter of Credit Sublimit. Letters of Credit will be available to be issued up to an aggregate face amount not to exceed the Letter of Credit Sublimit. No Issuing Bank shall be under any obligation to issue any Letter of Credit if (i) any order, judgment or decree of any Governmental Authority or arbitrator shall enjoin or restrain such Issuing Bank from issuing the Letter of Credit, or any Requirements of Law applicable to such Issuing Bank or any directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon such Issuing Bank with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise fully compensated hereunder) not in effect on the Effective Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Effective Date and which such Issuing Bank in good faith deems material to it, (ii) the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank now or hereafter in effect and applicable to letters of credit generally, (iii) except as otherwise agreed in writing by the Administrative Agent and the applicable Issuing Bank, such Letter of Credit is to be denominated in a currency other than Dollars or an Alternative Currency, (iv) except as otherwise agreed by the Administrative Agent and such Issuing Bank, the Letter of Credit is in an initial stated amount less than $100,000, or (v) any Lender is at that time a Defaulting Lender, if after giving effect to Section 2.22(a)(iv), any Defaulting Lender Fronting Exposure remains outstanding, unless such Issuing Bank has entered into arrangements, including the delivery of cash collateral, reasonably satisfactory to such Issuing Bank with the Borrower or such Lender to eliminate such Issuing Bank’s Defaulting Lender Fronting Exposure arising from either the Letter of Credit then proposed to be issued or such Letter of Credit and all other LC Exposure as to which such Issuing Bank has Defaulting Lender Fronting Exposure. No Issuing Bank shall be under any obligation (i) to amend or extend any Letter of Credit if (x) such Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof or (y) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit or (ii) to issue any Letter of Credit if such Letter of Credit contains any provisions for automatic reinstatement of all or any portion of the stated amount thereof after any drawing thereunder or after the expiry date of such Letter of Credit (provided that any Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods as provided in Section 2.05(d)).
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(c) Notice . Each Issuing Bank agrees that, upon any issuance, amendment, renewal or extension of a Letter of Credit, it shall have given to the Administrative Agent written notice thereof required under paragraph (m)(iii) of this Section 2.05.
(d) Expiration Date . Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date that is one year after the date of the issuance of such Letter of Credit (or, in the case of any extension thereof, the date to which it has been extended (not in excess of one year from the last applicable expiry date)) and (ii) the date that is five (5) Business Days prior to the Revolving Maturity Date; provided that if such expiry date is not a Business Day, such Letter of Credit shall expire at or prior to the close of business on the next succeeding Business Day; provided further that any Letter of Credit may, upon the request of the Borrower, include a provision whereby such Letter of Credit shall be renewed or extended automatically for additional consecutive periods of one year or less (but not beyond the date that is five (5) Business Days prior to the Revolving Maturity Date) unless the applicable Issuing Bank notifies the beneficiary thereof within the time period specified in such Letter of Credit or, if no such time period is specified, at least thirty (30) days prior to the then-applicable expiration date, that such Letter of Credit will not be renewed or extended; provided further that such Letter of Credit shall not be required to expire on such fifth (5 th ) Business Day prior to the Revolving Maturity Date if such Letter of Credit is cash collateralized or backstopped in an amount, by an institution and otherwise pursuant to arrangements, in each case reasonably acceptable to the applicable Issuing Bank. For the avoidance of doubt, if the Revolving Maturity Date occurs prior to the expiration of any Letter of Credit as a result of the last proviso in the foregoing sentence, then upon the taking of actions described in such proviso with respect to such Letter of Credit, all participations in such Letter of Credit under the terminated Revolving Commitments shall terminate.
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(e) Participations . Immediately upon the issuance of each Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank that is the issuer thereof or the Lenders, each Revolving Lender shall be deemed to have purchased and the applicable Issuing Bank shall be deemed to have sold a participation in such Letter of Credit equal to such Revolving Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of such Issuing Bank, such Revolving Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (f) of this Section 2.05, or of any reimbursement payment required to be refunded to the Borrower for any reason. All fundings of such participations shall be denominated in Dollars. Each Revolving Lender acknowledges and agrees that its acquisition of participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment or extension of any Letter of Credit or the occurrence and continuance of a Default or any reduction or termination of the Revolving Commitments, and that each payment required to be made by it under the preceding sentence shall be made without any offset, abatement, withholding or reduction whatsoever.
(f) Reimbursement . If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount (in same day funds) equal to such LC Disbursement not later than 4:00 p.m., New York City time, on the Business Day immediately following the day that the Borrower receives written notice (including via e-mail) of such LC Disbursement (the “ Reimbursement Date ”), together with accrued interest or fees thereon in accordance with clause (i) of this Section 2.05. Anything contained herein to the contrary notwithstanding, (i) unless the Borrower shall have notified the Administrative Agent and the applicable Issuing Bank prior to 4:00 p.m., New York City time, on the date such LC Disbursement is made that the Borrower intends to reimburse the applicable Issuing Bank for the amount of the LC Disbursement (including any accrued interest or fees thereon) with funds other than the proceeds of Revolving Loans, the Borrower shall be deemed to have given a timely Borrowing Request to the Administrative Agent requesting Revolving Lenders to make Revolving Loans that are ABR Revolving Loans on the Reimbursement Date in an amount equal to such LC Disbursement (together with any accrued interest or fees thereon), and (ii) subject to satisfaction or waiver of the conditions specified in Section 4.02, Revolving Lenders shall, on the Reimbursement Date, make Revolving Loans that are ABR Revolving Loans in an amount equal to their Applicable Percentage of such LC Disbursement (together with any accrued interest or fees thereon), the proceeds of which shall be applied directly by the Administrative Agent to reimburse the applicable Issuing Bank for the amount of such LC Disbursement (together with any accrued interest or fees thereon); provided that if for any reason proceeds of Revolving Loans are not received by the Issuing Bank on the Reimbursement Date in an amount equal to such LC Disbursement (together with any accrued interest or fees thereon), the Borrower shall reimburse the applicable Issuing Bank, on demand, in an amount in same day funds equal to the excess of such LC Disbursement (together with any accrued interest or fees thereon) over the aggregate amount of such Revolving Loans, if any, which are so received. The Revolving Loans made pursuant to this paragraph (f) shall be made without regard to the Borrowing Minimum.
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(g) Obligations Absolute . The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (f) of this Section 2.05 is absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, this Agreement or any other Loan Document, or any term or provision herein or therein, (ii) any exchange, change, waiver or release of any Collateral for, or any other Person’s guarantee of or other liability for, any of the Secured Obligations, (iii) the existence of any claim, set-off, defense or other right which the Borrower or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), the Issuing Bank, any Lender or any other Person or, in the case of a Lender, against the Borrower, whether in connection herewith, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between the Borrower or one or more of its Subsidiaries and the beneficiary for which any Letter of Credit was procured), (iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (v) payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit ( provided that the Borrower shall not be obligated to reimburse such LC Disbursements unless payment is made against presentation of a draft or other document that at least substantially complies with the terms of such Letter of Credit), (vi) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Holdings or any of its Subsidiaries; (vii) any breach hereof or any other Loan Document by any party hereto or thereto, (viii) the fact that an Event of Default or a Default shall have occurred and be continuing, (ix) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.05, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder or (x) any adverse change in the relevant exchange rates or in the availability of any Alternative Currency to the Borrower or in the relevant currency markets generally. As between the Borrower and the Issuing Bank, the Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by the Issuing Bank and the proceeds thereof, by the respective beneficiaries of such Letters of Credit or any assignees or transferees thereof. In furtherance and not in limitation of the foregoing, none of the Administrative Agent, the Lenders, the Issuing Banks or any of their Related Parties shall have any liability or responsibility for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged other than to confirm such documents comply with the terms of such Letter of Credit; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) its honor of any presentation under a Letter of Credit that appears on its face to substantially comply with the terms and conditions of such Letter of Credit; (v) any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder); (vi) errors in interpretation of technical terms; (vii) any loss or delay in the transmission of any document required in order to make a drawing under any such Letter of Credit; (viii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (ix) any consequences arising from causes beyond the control of the Issuing Bank, including any act by a Governmental Authority and fluctuation in currency exchange rates. None of the above shall affect or impair, or prevent the vesting of, any of the Issuing Bank’s rights or powers hereunder or place the Issuing Bank under any liability to the Borrower or any other Person. Notwithstanding the foregoing, none of the above shall be construed to excuse any Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential, incidental, exemplary or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by Requirements of Law) suffered by the Borrower that are caused by such Issuing Bank’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final, nonappealable judgment) when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, an Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if (notwithstanding the appearance of substantial compliance) such documents are not in strict compliance with the terms of such Letter of Credit, and any such acceptance or refusal shall be deemed not to constitute gross negligence or willful misconduct.
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(h) Disbursement Procedures . Each Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Each Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed in writing by hand delivery or facsimile) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligations to reimburse such Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement in accordance with paragraph (f) of this Section 2.05.
(i) Interim Interest . If an Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (f) of this Section 2.05, then Section 2.13(c) shall apply. Interest accrued pursuant to this paragraph shall be paid to the Administrative Agent, for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (f) of this Section 2.05 to reimburse such Issuing Bank shall be for the account of such Lender to the extent of such payment and shall be payable on demand or, if no demand has been made, on the date on which the Borrower reimburses the applicable LC Disbursement in full.
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(j) Cash Collateralization . If (i) effective immediately, without demand or other notice of any kind, as of any expiration date of a Letter of Credit, such Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, (ii) effective immediately, without demand or other notice of any kind, as of the occurrence of any Event of Default under paragraph (h) or (i) of Section 7.01, or (iii) any Event of Default under paragraph (a) or (b) of Section 7.01 shall occur and be continuing, on the Business Day on which the Borrower receives notice from the Administrative Agent, the applicable Issuing Bank or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing more than 50% of the aggregate LC Exposure of all Revolving Lenders) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Secured Parties, an amount of cash in Dollars or an Alternative Currency, as the case may be, equal to the portions of the LC Exposure attributable to Letters of Credit, as of such date plus any accrued and unpaid interest thereon. The Borrower also shall deposit cash collateral pursuant to this paragraph as and to the extent required by Section 2.11(b). Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement and the other Loan Documents. At any time that there shall exist a Defaulting Lender, if any Defaulting Lender Fronting Exposure remains outstanding (after giving effect to Section 2.22(a)(iv)), then promptly upon the request of the Administrative Agent or the Issuing Bank, the Borrower shall deliver to the Administrative Agent cash collateral in an amount sufficient to cover such Defaulting Lender Fronting Exposure (after giving effect to any cash collateral provided by the Defaulting Lender). The Administrative Agent (for the benefit of the Secured Parties) shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent in Permitted Investments and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Notwithstanding anything to the contrary set forth in this Agreement, moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Banks for LC Disbursements for which they have not been reimbursed and, to the extent not so applied, the balance shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing more than 50% of the aggregate LC Exposure of all the Revolving Lenders), such balance shall be applied to satisfy other obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default or the existence of a Defaulting Lender, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived or after the termination of Defaulting Lender status, as applicable. If the Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.11(b), such amount (to the extent not applied as aforesaid) shall be returned to the Borrower as and to the extent that, after giving effect to such return, the Borrower would remain in compliance with Section 2.11(b) and no Event of Default shall have occurred and be continuing.
(k) Designation of Additional Issuing Banks . The Borrower may, at any time and from time to time, designate as additional Issuing Banks one or more Revolving Lenders that agree in writing to serve in such capacity as provided below. The acceptance by a Revolving Lender of an appointment as an Issuing Bank hereunder shall be evidenced by an agreement, which shall be in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, executed by the Borrower, the Administrative Agent and such designated Revolving Lender and, from and after the effective date of such agreement, (i) such Revolving Lender shall have all the rights and obligations of an Issuing Bank under this Agreement and (ii) references herein to the term “Issuing Bank” shall be deemed to include such Revolving Lender in its capacity as an issuer of Letters of Credit hereunder.
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(l) Resignation or Termination of an Issuing Bank . Subject to the appointment and acceptance of a successor Issuing Bank reasonably acceptable to the Borrower, any Issuing Bank may resign at any time by giving thirty (30) days’ written notice to the Administrative Agent, the Lenders and the Borrower. The Borrower may terminate the appointment of any Issuing Bank as an “Issuing Bank” hereunder by providing a written notice thereof to such Issuing Bank, with a copy to the Administrative Agent. Any such termination shall become effective upon the earlier of (i) such Issuing Bank’s acknowledging receipt of such notice and (ii) the fifth Business Day following the date of the delivery thereof; provided that no such termination shall become effective until and unless the LC Exposure attributable to all Letters of Credit issued by such Issuing Bank (or its Affiliates) shall have been reduced to zero. At the time any such resignation or termination shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the resigning or terminated Issuing Bank pursuant to Section 2.12(b). Notwithstanding the effectiveness of any such resignation or termination, the resigning or terminated Issuing Bank shall remain a party hereto and shall continue to have all the rights of an Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation or termination, but shall not (a) be required (and shall be discharged from its obligations) to issue any additional Letters of Credit or extend or increase the amount of Letters of Credit then outstanding, without affecting its rights and obligations with respect to Letters of Credit previously issued by it, or (b) be deemed an Issuing Bank for any other purpose.
(m) Issuing Bank Reports to the Administrative Agent . Unless otherwise agreed by the Administrative Agent, each Issuing Bank shall, in addition to its notification obligations set forth elsewhere in this Section 2.05, report in writing to the Administrative Agent (i) periodic activity (for such period or recurrent periods as shall be requested by the Administrative Agent) in respect of Letters of Credit issued by such Issuing Bank, including all issuances, extensions, amendments and renewals, all expirations and cancellations and all disbursements and reimbursements, (ii) within five (5) Business Days following the time that such Issuing Bank issues, amends, renews or extends any Letter of Credit, the date of such issuance, amendment, renewal or extension, and face amount of the Letters of Credit issued, amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension (and whether the amounts thereof shall have changed), (iii) on each Business Day on which such Issuing Bank makes any LC Disbursement, the date and amount of such LC Disbursement, (iv) on any Business Day on which a Borrower fails to reimburse an LC Disbursement required to be reimbursed to such Issuing Bank on such day, the date of such failure and amount of such LC Disbursement and (v) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such Issuing Bank; provided that no Issuing Bank shall have any liability hereunder to any Person for any failure to deliver the reports contemplated by this paragraph (m) of Section 2.05.
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(n) Applicability of ISP and UCP . Unless otherwise expressly agreed by the applicable Issuing Bank and the Borrower when a Letter of Credit is issued or when it is amended with the consent of the beneficiary thereof, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit. Notwithstanding the foregoing, the applicable Issuing Bank shall not be responsible to the Borrower for, and the applicable Issuing Bank’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of the applicable Issuing Bank required or permitted under any law, order or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the applicable law or any order of any Governmental Authority in a jurisdiction where the applicable Issuing Bank or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade (BAFT), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.
SECTION 2.06 Funding of Borrowings .
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the Applicable Account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Borrower; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(f) shall be remitted by the Administrative Agent to the applicable Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section 2.06 and may, in reliance on such assumption and in its sole discretion, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender agrees to pay to the Administrative Agent an amount equal to such share on demand of the Administrative Agent. If such Lender does not pay such corresponding amount forthwith upon demand of the Administrative Agent therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower agrees to pay such corresponding amount to the Administrative Agent forthwith on demand. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower interest on such corresponding amount, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, or (ii) in the case of the Borrower, the interest rate applicable to such Borrowing in accordance with Section 2.13. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
(c) The obligations of the Lenders hereunder to make Term Loans and Revolving Loans, to fund participations in Letters of Credit and to make payments pursuant to Section 9.03(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 9.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 9.03(c).
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SECTION 2.07 Interest Elections .
(a) Each Revolving Borrowing of the applicable Class and each Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request or designated by Section 2.03 and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request or designated by Section 2.03. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07; provided that, notwithstanding anything to the contrary herein, no Loan may be converted into or continued as a Loan denominated in a different currency but instead must be prepaid in the original currency of such Loan and reborrowed in the other currency. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Revolving Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery, facsimile or other electronic transmission to the Administrative Agent of a written Interest Election Request signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.03:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”
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If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request in accordance with this Section 2.07, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid, at the end of such Interest Period such Borrowing, if denominated in Dollars or Canadian Dollars, shall be continued as a Eurodollar Borrowing of one month. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing in excess of one month.
SECTION 2.08 Termination and Reduction of Commitments .
(a) Unless previously terminated, (i) the Term Commitments shall terminate at 5:00 p.m., New York City time, on the Effective Date and (ii) the Revolving Commitments shall terminate on the Revolving Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class, provided that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $500,000 and not less than $500,000 unless such amount represents all of the remaining Commitments of such Class and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.11, the aggregate Revolving Exposures would exceed the aggregate Revolving Commitments.
(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section 2.08 at least one (1) Business Day prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.08 shall be irrevocable; provided that a notice of termination of the Revolving Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of any credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or the occurrence of some other identifiable and specified event or condition, in which case such notice may be revoked or extended by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date of termination) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of (x) the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class and (y) the Revolving Commitments shall be made to any Class of Revolving Commitment as directed by the Borrower (including to any Class of existing or extended Revolving Commitments).
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SECTION 2.09 Repayment of Loans; Evidence of Debt .
(a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Maturity Date and (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall, in connection with the maintenance of the Register in accordance with Section 9.04(b)(iv), maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (c) of this Section 2.09 shall be prima facie evidence of the existence and amounts of the obligations recorded therein, provided that the failure of the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to pay any amounts due hereunder in accordance with the terms of this Agreement.
(e) Any Lender may request through the Administrative Agent that Loans of any Class made by it be evidenced by a Note. In such event, the Borrower shall execute and deliver to such Lender a Note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns).
SECTION 2.10 Amortization of Term Loans .
(a) Subject to adjustment pursuant to paragraph (c) of this Section 2.10, the Borrower shall repay Initial Term Loans on the last day of each March, June, September and December (commencing on September 30, 2016) in the principal amount of Term Loans as follows; provided that if any such date is not a Business Day, such payment shall be due on the next preceding Business Day:
Payment Date | Amortization Payment | |||
September 30, 2016 | $ | 2,750,000.00 | ||
December 31, 2016 | $ | 2,750,000.00 | ||
March 31, 2017 | $ | 2,750,000.00 | ||
June 30, 2017 | $ | 2,750,000.00 | ||
September 30, 2017 | $ | 2,750,000.00 |
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Payment Date | Amortization Payment | |||
December 31, 2017 | $ | 2,750,000.00 | ||
March 31, 2018 | $ | 2,750,000.00 | ||
June 30, 2018 | $ | 2,750,000.00 | ||
September 30, 2018 | $ | 2,750,000.00 | ||
December 31, 2018 | $ | 2,750,000.00 | ||
March 31, 2019 | $ | 2,750,000.00 | ||
June 30, 2019 | $ | 2,750,000.00 | ||
September 30, 2019 | $ | 2,750,000.00 | ||
December 31, 2019 | $ | 2,750,000.00 | ||
March 31, 2020 | $ | 2,750,000.00 | ||
June 30, 2020 | $ | 2,750,000.00 | ||
September 30, 2020 | $ | 2,750,000.00 | ||
December 31, 2020 | $ | 2,750,000.00 | ||
March 31, 2021 | $ | 2,750,000.00 | ||
June 30, 2021 | $ | 2,750,000.00 | ||
September 30, 2021 | $ | 2,750,000.00 | ||
December 31, 2021 | $ | 2,750,000.00 | ||
March 31, 2022 | $ | 2,750,000.00 | ||
June 30, 2022 | $ | 2,750,000.00 | ||
September 30, 2022 | $ | 2,750,000.00 | ||
December 31, 2022 | $ | 2,750,000.00 | ||
March 31, 2023 | $ | 2,750,000.00 |
(b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Maturity Date.
(c) Any prepayment of a Term Borrowing of any Class (i) pursuant to Section 2.11(a) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Borrowings of such Class to be made pursuant to this Section 2.10 as directed by the Borrower (and absent such direction in direct order of maturity) and (ii) pursuant to Section 2.11(c) or 2.11(d) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Borrowings of such Class to be made pursuant to this Section 2.10, or, in each case except as otherwise provided in any Incremental Amendment, Refinancing Amendment or Loan Modification Agreement, pursuant to the corresponding section of such Incremental Amendment, Refinancing Amendment or Loan Modification Agreement, as applicable, as directed by the Borrower and, in the absence of such direction, in direct order of maturity (including any Incremental Facility).
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(d) Prior to any repayment of any Term Borrowings of any Class hereunder, the Borrower shall select the Borrowing or Borrowings of the applicable Class to be repaid and shall notify the Administrative Agent by telephone (confirmed by hand delivery or facsimile) of such election not later than 2:00 p.m., New York City time, one (1) Business Day before the scheduled date of such repayment. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16 and shall be applied in direct order of maturity. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.11 Prepayment of Loans .
(a) (i) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty; provided that in the event that, on or prior to the first anniversary of the Effective Date, the Borrower (x) makes any prepayment of Initial Term Loans in connection with any Repricing Transaction or (y) effects any amendment of this Agreement resulting in a Repricing Transaction or (z) makes a mandatory prepayment of Initial Term Loans pursuant to Section 2.11(c) in connection with a Prepayment Event described in clause (b) of the definition of “ Prepayment Event ”, in either case, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Term Lenders holding Initial Term Loans, (I) a prepayment premium of 1.00% of the principal amount of the Initial Term Loans being prepaid in connection with such Repricing Transaction and (II) in the case of clause (y), an amount equal to 1.00% of the aggregate amount of the applicable Initial Term Loans of non-consenting Lenders outstanding immediately prior to such amendment that are subject to an effective pricing reduction pursuant to such amendment.
(ii) Notwithstanding anything in any Loan Document to the contrary, so long as no Default or Event of Default has occurred and is continuing, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries may offer to prepay all or a portion of the outstanding Class of any Term Loans on the following basis:
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(A) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall have the right to make a voluntary prepayment of Term Loans at a discount to par (such prepayment, the “ Discounted Term Loan Prepayment ”) pursuant to a Borrower Offer of Specified Discount Prepayment, Borrower Solicitation of Discount Range Prepayment Offers or Borrower Solicitation of Discounted Prepayment Offers, in each case made in accordance with this Section 2.11(a)(ii); provided that (x) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall not make any Borrowing of Revolving Loans to fund any Discounted Term Loan Prepayment and (y) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall not initiate any action under this Section 2.11(a)(ii) in order to make a Discounted Term Loan Prepayment unless (I) at least ten (10) Business Days shall have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries on the applicable Discounted Prepayment Effective Date; or (II) at least three (3) Business Days shall have passed since the date Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries were notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of Holdings’, any Intermediate Parent’s, the Borrower’s or any of their respective Subsidiaries’ election not to accept any Solicited Discounted Prepayment Offers and (z) each Lender participating in any Discounted Term Loan Prepayment acknowledges and agrees that in connection with such Discounted Term Loan Prepayment, (1) the Borrower then may have, and later may come into possession of, information regarding the Term Loans or the Loan Parties hereunder that is not known to such Lender and that may be material to a decision by such Lender to participate in such Discounted Term Loan Prepayment (“ Excluded Information ”), (2) such Lender has independently and, without reliance on Holdings, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to participate in such Discounted Term Loan Prepayment notwithstanding such Lender’s lack of knowledge of the Excluded Information and (3) none of Holdings, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against Holdings, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Excluded Information; provided further that any Term Loan that is prepaid will be automatically and irrevocably cancelled.
(B) (1) Subject to the proviso to subsection (A) above, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries may from time to time offer to make a Discounted Term Loan Prepayment by providing the Auction Agent with three (3) Business Days’ notice in the form of a Specified Discount Prepayment Notice; provided that (I) any such offer shall be made available, at the sole discretion of Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such offer shall specify the aggregate principal amount offered to be prepaid (the “ Specified Discount Prepayment Amount ”) with respect to each applicable tranche, the tranche or tranches of Term Loans subject to such offer and the specific percentage discount to par (the “ Specified Discount ”) of such Term Loans to be prepaid (it being understood that different Specified Discounts and/or Specified Discount Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Specified Discount Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such offer shall remain outstanding through the Specified Discount Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Specified Discount Prepayment Notice and a form of the Specified Discount Prepayment Response to be completed and returned by each such Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “ Specified Discount Prepayment Response Date ”).
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(2) Each relevant Term Lender receiving such offer shall notify the Auction Agent (or its delegate) by the Specified Discount Prepayment Response Date whether or not it agrees to accept a prepayment of any of its relevant then outstanding Term Loans at the Specified Discount and, if so (such accepting Term Lender, a “ Discount Prepayment Accepting Lender ”), the amount and the tranches of such Lender’s Term Loans to be prepaid at such offered discount. Each acceptance of a Discounted Term Loan Prepayment by a Discount Prepayment Accepting Lender shall be irrevocable. Any Term Lender whose Specified Discount Prepayment Response is not received by the Auction Agent by the Specified Discount Prepayment Response Date shall be deemed to have declined to accept the applicable Borrower Offer of Specified Discount Prepayment.
(3) If there is at least one Discount Prepayment Accepting Lender, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries will make prepayment of outstanding Term Loans pursuant to this paragraph (B) to each Discount Prepayment Accepting Lender in accordance with the respective outstanding amount and tranches of Term Loans specified in such Lender’s Specified Discount Prepayment Response given pursuant to subsection (2); provided that, if the aggregate principal amount of Term Loans accepted for prepayment by all Discount Prepayment Accepting Lenders exceeds the Specified Discount Prepayment Amount, such prepayment shall be made pro-rata among the Discount Prepayment Accepting Lenders in accordance with the respective principal amounts accepted to be prepaid by each such Discount Prepayment Accepting Lender and the Auction Agent (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its reasonable discretion) will calculate such proration (the “ Specified Discount Proration ”). The Auction Agent shall promptly, and in any case within three (3) Business Days following the Specified Discount Prepayment Response Date, notify (I) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries of the respective Term Lenders’ responses to such offer, the Discounted Prepayment Effective Date and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, and the aggregate principal amount and the tranches of Term Loans to be prepaid at the Specified Discount on such date and (III) each Discount Prepayment Accepting Lender of the Specified Discount Proration, if any, and confirmation of the principal amount, tranche and Type of Loans of such Lender to be prepaid at the Specified Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall be due and payable by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(C) (1) Subject to the proviso to subsection (A) above, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries may from time to time solicit Discount Range Prepayment Offers by providing the Auction Agent with three (3) Business Days’ notice in the form of a Discount Range Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate principal amount of the relevant Term Loans (the “ Discount Range Prepayment Amount ”), the tranche or tranches of Term Loans subject to such offer and the maximum and minimum percentage discounts to par (the “ Discount Range ”) of the principal amount of such Term Loans with respect to each relevant tranche of Term Loans willing to be prepaid by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries (it being understood that different Discount Ranges and/or Discount Range Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Discount Range Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall remain outstanding through the Discount Range Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Discount Range Prepayment Notice and a form of the Discount Range Prepayment Offer to be submitted by a responding relevant Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “ Discount Range Prepayment Response Date ”). Each relevant Term Lender’s Discount Range Prepayment Offer shall be irrevocable and shall specify a discount to par within the Discount Range (the “ Submitted Discount ”) at which such Term Lender is willing to allow prepayment of any or all of its then outstanding Term Loans of the applicable tranche or tranches and the maximum aggregate principal amount and tranches of such Lender’s Term Loans (the “ Submitted Amount ”) such Lender is willing to have prepaid at the Submitted Discount. Any Term Lender whose Discount Range Prepayment Offer is not received by the Auction Agent by the Discount Range Prepayment Response Date shall be deemed to have declined to accept a Discounted Term Loan Prepayment of any of its Term Loans at any discount to their par value within the Discount Range.
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(2) The Auction Agent shall review all Discount Range Prepayment Offers received on or before the applicable Discount Range Prepayment Response Date and shall determine (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the Applicable Discount and Term Loans to be prepaid at such Applicable Discount in accordance with this subsection (C). Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries agree to accept on the Discount Range Prepayment Response Date all Discount Range Prepayment Offers received by the Auction Agent by the Discount Range Prepayment Response Date, in the order from the Submitted Discount that is the largest discount to par to the Submitted Discount that is the smallest discount to par, up to and including the Submitted Discount that is the smallest discount to par within the Discount Range (such Submitted Discount that is the smallest discount to par within the Discount Range being referred to as the “ Applicable Discount ”) which yields a Discounted Term Loan Prepayment in an aggregate principal amount equal to the lower of (I) the Discount Range Prepayment Amount and (II) the sum of all Submitted Amounts. Each Lender that has submitted a Discount Range Prepayment Offer to accept prepayment at a discount to par that is larger than or equal to the Applicable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Submitted Amount (subject to any required proration pursuant to the following subsection (3)) at the Applicable Discount (each such Lender, a “ Participating Lender ”).
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(3) If there is at least one Participating Lender, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries will prepay the respective outstanding Term Loans of each Participating Lender in the aggregate principal amount and of the tranches specified in such Lender’s Discount Range Prepayment Offer at the Applicable Discount; provided that if the Submitted Amount by all Participating Lenders offered at a discount to par greater than the Applicable Discount exceeds the Discount Range Prepayment Amount, prepayment of the principal amount of the relevant Term Loans for those Participating Lenders whose Submitted Discount is a discount to par greater than or equal to the Applicable Discount (the “ Identified Participating Lenders ”) shall be made pro-rata among the Identified Participating Lenders in accordance with the Submitted Amount of each such Identified Participating Lender and the Auction Agent (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “ Discount Range Proration ”). The Auction Agent shall promptly, and in any case within five (5) Business Days following the Discount Range Prepayment Response Date, notify (I) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries of the respective Term Lenders’ responses to such solicitation, the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount and tranches of Term Loans to be prepaid at the Applicable Discount on such date, (III) each Participating Lender of the aggregate principal amount and tranches of such Lender to be prepaid at the Applicable Discount on such date, and (z) if applicable, each Identified Participating Lender of the Discount Range Proration. Each determination by the Auction Agent of the amounts stated in the foregoing notices to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall be due and payable by the Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
(D) (1) Subject to the proviso to subsection (A) above, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries may from time to time solicit Solicited Discounted Prepayment Offers by providing the Auction Agent with three (3) Business Days’ notice in the form of a Solicited Discounted Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate Dollar Amount of the Term Loans (the “ Solicited Discounted Prepayment Amount ”) and the tranche or tranches of Term Loans Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries is willing to prepay at a discount (it being understood that different Solicited Discounted Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Solicited Discounted Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall remain outstanding through the Solicited Discounted Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Solicited Discounted Prepayment Notice and a form of the Solicited Discounted Prepayment Offer to be submitted by a responding Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “ Solicited Discounted Prepayment Response Date ”). Each Term Lender’s Solicited Discounted Prepayment Offer shall (x) be irrevocable, (y) remain outstanding until the Acceptance Date, and (z) specify both a discount to par (the “ Offered Discount ”) such Term Lender is willing to allow to be applied to the prepayment of its then outstanding Term Loan and the maximum aggregate principal amount and tranches of such Term Loans (the “ Offered Amount ”) such Term Lender is willing to have prepaid subject to such Offered Discount. Any Term Lender whose Solicited Discounted Prepayment Offer is not received by the Auction Agent by the Solicited Discounted Prepayment Response Date shall be deemed to have declined prepayment of any of its Term Loans at any discount.
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(2) The Auction Agent shall promptly provide Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries with a copy of all Solicited Discounted Prepayment Offers received on or before the Solicited Discounted Prepayment Response Date. Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall review all such Solicited Discounted Prepayment Offers and select the largest of the Offered Discounts specified by the relevant responding Term Lenders in the Solicited Discounted Prepayment Offers that is acceptable to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries (the “ Acceptable Discount ”), if any. If Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries elects to accept any Offered Discount as the Acceptable Discount, then as soon as practicable after the determination of the Acceptable Discount, but in no event later than by the third Business Day after the date of receipt by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries from the Auction Agent of a copy of all Solicited Discounted Prepayment Offers pursuant to the first sentence of this subsection (2) (the “ Acceptance Date ”), Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall submit an Acceptance and Prepayment Notice to the Auction Agent setting forth the Acceptable Discount. If the Auction Agent shall fail to receive an Acceptance and Prepayment Notice from Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries by the Acceptance Date, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall be deemed to have rejected all Solicited Discounted Prepayment Offers.
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(3) Based upon the Acceptable Discount and the Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, within three (3) Business Days after receipt of an Acceptance and Prepayment Notice (the “ Discounted Prepayment Determination Date ”), the Auction Agent will determine (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the aggregate principal amount and the tranches of Term Loans (the “ Acceptable Prepayment Amount ”) to be prepaid by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries at the Acceptable Discount in accordance with this Section 2.11(a)(ii)(D). If Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries elects to accept any Acceptable Discount, then Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries agrees to accept all Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, in the order from largest Offered Discount to smallest Offered Discount, up to and including the Acceptable Discount. Each Lender that has submitted a Solicited Discounted Prepayment Offer with an Offered Discount that is greater than or equal to the Acceptable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Offered Amount (subject to any required pro-rata reduction pursuant to the following sentence) at the Acceptable Discount (each such Lender, a “ Qualifying Lender ”). Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries will prepay outstanding Term Loans pursuant to this subsection (D) to each Qualifying Lender in the aggregate principal amount and of the tranches specified in such Lender’s Solicited Discounted Prepayment Offer at the Acceptable Discount; provided that if the aggregate Offered Amount by all Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount exceeds the Solicited Discounted Prepayment Amount, prepayment of the principal amount of the Term Loans for those Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount (the “ Identified Qualifying Lenders ”) shall be made pro-rata among the Identified Qualifying Lenders in accordance with the Offered Amount of each such Identified Qualifying Lender and the Auction Agent (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “ Solicited Discount Proration ”). On or prior to the Discounted Prepayment Determination Date, the Auction Agent shall promptly notify (I) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries of the Discounted Prepayment Effective Date and Acceptable Prepayment Amount comprising the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender who made a Solicited Discounted Prepayment Offer of the Discounted Prepayment Effective Date, the Acceptable Discount, and the Acceptable Prepayment Amount of all Term Loans and the tranches to be prepaid to be prepaid at the Applicable Discount on such date, (III) each Qualifying Lender of the aggregate principal amount and the tranches of such Lender to be prepaid at the Acceptable Discount on such date, and (IV) if applicable, each Identified Qualifying Lender of the Solicited Discount Proration. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower shall be due and payable by the Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(E) In connection with any Discounted Term Loan Prepayment, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and the Lenders acknowledge and agree that the Auction Agent may require as a condition to any Discounted Term Loan Prepayment, the payment of reasonable and customary fees and expenses from Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries in connection therewith.
(F) If any Term Loan is prepaid in accordance with paragraphs (B) through (D) above, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall prepay such Term Loans on the Discounted Prepayment Effective Date. Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall make such prepayment to the Auction Agent, for the account of the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable, at the Administrative Agent’s Office in immediately available funds not later than 11:00 a.m. New York City time on the Discounted Prepayment Effective Date and all such prepayments shall be applied to the remaining principal installments of the relevant tranche of Term Loans as directed by the Borrower. The Term Loans so prepaid shall be accompanied by all accrued and unpaid interest on the par principal amount so prepaid up to, but not including, the Discounted Prepayment Effective Date. Each prepayment of the outstanding Term Loans pursuant to this Section 2.11(a)(ii) shall be paid to the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable. The aggregate principal amount of the tranches and installments of the relevant Term Loans outstanding shall be deemed reduced by the full par value of the aggregate principal amount of the tranches of Term Loans prepaid on the Discounted Prepayment Effective Date in any Discounted Term Loan Prepayment.
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(G) To the extent not expressly provided for herein, each Discounted Term Loan Prepayment shall be consummated pursuant to procedures consistent with the provisions in this Section 2.11(a)(ii), established by the Auction Agent acting in its reasonable discretion and as reasonably agreed by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries.
(H) Notwithstanding anything in any Loan Document to the contrary, for purposes of this Section 2.11(a)(ii), each notice or other communication required to be delivered or otherwise provided to the Auction Agent (or its delegate) shall be deemed to have been given upon Auction Agent’s (or its delegate’s) actual receipt during normal business hours of such notice or communication; provided that any notice or communication actually received outside of normal business hours shall be deemed to have been given as of the opening of business on the next Business Day.
(I) Each of Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and the Lenders acknowledges and agrees that the Auction Agent may perform any and all of its duties under this Section 2.11(a)(ii) by itself or through any Affiliate of the Auction Agent and expressly consents to any such delegation of duties by the Auction Agent to such Affiliate and the performance of such delegated duties by such Affiliate. The exculpatory provisions pursuant to this Agreement shall apply to each Affiliate of the Auction Agent and their respective activities in connection with any Discounted Term Loan Prepayment provided for in this Section 2.11(a)(ii) as well as activities of the Auction Agent.
(J) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall have the right, by written notice to the Auction Agent, to revoke in full (but not in part) its offer to make a Discounted Term Loan Prepayment and rescind the applicable Specified Discount Prepayment Notice, Discount Range Prepayment Notice or Solicited Discounted Prepayment Notice therefor at its discretion at any time on or prior to the applicable Specified Discount Prepayment Response Date, Discount Range Prepayment Response Date or Solicited Discounted Prepayment Response Date, as applicable (and if such offer is revoked pursuant to the preceding clauses, any failure by the Borrower to make any prepayment to a Term Lender, as applicable, pursuant to this Section 2.11(a)(ii) shall not constitute a Default or Event of Default under Section 7.01 or otherwise).
(b) In the event and on each occasion that the aggregate Revolving Exposures exceed the aggregate Revolving Commitments (other than as a result of currency fluctuations on any date that is not a Revaluation Date), the Borrower shall prepay Revolving Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.05(j)) in an aggregate amount necessary to eliminate such excess within one (1) Business Day following Borrower’s receipt of written notice from the Administrative Agent.
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(c) In the event and on each occasion that any Net Proceeds are received by or on behalf of Holdings or its Restricted Subsidiaries in respect of any Prepayment Event, the Borrower shall, within five (5) Business Days after such Net Proceeds are received (or, in the case of a Prepayment Event described in clause (b) of the definition of the term “Prepayment Event,” on the date of such Prepayment Event), prepay Initial Term Loans in an aggregate amount equal to (x) 100% of the amount of such Net Proceeds; provided that, in the case of any event described in clause (a) of the definition of the term “Prepayment Event”, if Holdings, the Borrower or any of the Restricted Subsidiaries invest (or commit to invest) the Net Proceeds from such event (or a portion thereof) within 12 months after receipt of such Net Proceeds in the business of the Borrower and the other Subsidiaries, then no prepayment shall be required pursuant to this paragraph in respect of such Net Proceeds in respect of such event (or the applicable portion of such Net Proceeds, if applicable) except to the extent of any such Net Proceeds therefrom that have not been so invested (or committed to be invested) by the end of such 12-month period (or if committed to be so invested within such 12-month period, have not been so invested within 18 months after receipt thereof), at which time a prepayment shall be required in an amount equal to such Net Proceeds that have not been so invested (or committed to be invested); provided further that the Borrower may use a portion of such Net Proceeds to prepay or repurchase any Incremental Term Loans, Other Term Loans or other Indebtedness, in each case that is secured by the Collateral on a pari passu basis with the Loans to the extent such other Indebtedness and the Liens securing the same are permitted hereunder and the documentation governing such other Indebtedness requires such a prepayment or repurchase thereof with the proceeds of such Prepayment Event, in each case in an amount not to exceed the product of (x) the amount of such Net Proceeds and (y) a fraction, the numerator of which is the outstanding principal amount of such other Indebtedness and the denominator of which is the aggregate outstanding principal amount of Initial Term Loans and such other Indebtedness.
(d) Following the end of each fiscal year of Holdings, commencing with the fiscal year ending December 31, 2017, the Borrower shall prepay Initial Term Loans in an aggregate amount equal to the ECF Percentage of Excess Cash Flow for such fiscal year; provided that such amount shall be reduced by the aggregate amount of prepayments and repurchases of (i) Term Loans (and, (x) amounts used to repay borrowings of Revolving Loans incurred on the Effective Date to fund original issue discount or upfront fees resulting from the Joint Lead Arrangers’ exercise of the “pricing flex” provisions of the Fee Letter and (y) to the extent the Revolving Commitments are reduced in a corresponding amount pursuant to Section 2.08, Revolving Loans) made pursuant to Section 2.11(a) or otherwise in a manner not prohibited by Section 9.04(g) during such fiscal year or after such fiscal year and prior to the time such prepayment is due (without duplication to subsequent years) as provided below ( provided that such reduction as a result of prepayments pursuant to Section 2.11(a)(ii) or repurchases pursuant to Section 9.04(g) shall be limited to the actual amount of such cash prepayment) and (ii) other Senior Secured First Lien Indebtedness (provided that in the case of the prepayment of any revolving commitments, there is a corresponding reduction in commitments) made during such fiscal year or after such fiscal year and prior to the time such prepayment is due (without duplication to subsequent years) (excluding all such prepayments funded with the proceeds of other long term Indebtedness). Each prepayment pursuant to this paragraph shall be made on or before the date that is ten (10) days after the date on which financial statements are required to be delivered pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash Flow is being calculated.
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(e) Prior to any optional prepayment of Borrowings pursuant to Section 2.11(a)(i), the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (f) of this Section 2.11. In the event of any optional prepayment of Revolving Borrowings, the Borrower shall select the Class or Classes of Revolving Borrowings to be prepaid. In the event of any mandatory prepayment of Term Borrowings made at a time when Term Borrowings of more than one Class remain outstanding, the Borrower shall select Term Borrowings to be prepaid so that the aggregate amount of such prepayment is allocated between Term Borrowings (and, to the extent provided in the Refinancing Amendment for any Class of Other Term Loans, the Borrowings of such Class) pro rata based on the aggregate principal amount of outstanding Borrowings of each such Class; provided that any Term Lender (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, any Lender that holds Other Term Loans of such Class) may elect, by notice to the Administrative Agent by telephone (confirmed by facsimile) at least two (2) Business Days prior to the prepayment date, to decline all or any portion of any prepayment of its Term Loans or Other Term Loans of any such Class pursuant to this Section 2.11 (other than an optional prepayment pursuant to paragraph (a)(i) of this Section or a mandatory prepayment as a result of the Prepayment Event set forth in clause (b) of the definition thereof, which may not be declined), in which case the aggregate amount of the prepayment that would have been applied to prepay Term Loans or Other Term Loans of any such Class but was so declined (and not used pursuant to the immediately following sentence) shall be retained by Holdings or its Restricted Subsidiaries (such amounts, “ Retained Declined Proceeds ”). An amount equal to any portion of a mandatory prepayment of Term Borrowings that is declined by the Lenders under this Section 2.11(e) may, to the extent not prohibited hereunder or under the documentation governing the Permitted First Priority Refinancing Debt or the Pari Passu Intercreditor Agreement, be applied by the Borrower to prepay (at the Borrower’s election), pari passu Indebtedness, Second Lien Term Loans or Permitted Junior Priority Refinancing Debt or may be retained to be used for any other purposes not prohibited hereunder. Optional prepayments of Term Borrowings shall be allocated among the Classes of Term Borrowings as directed by the Borrower. In the absence of a designation by the Borrower as described in the preceding provisions of this paragraph of the Type of Borrowing of any Class, the Administrative Agent shall make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16, provided that, in connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to Section 2.11(c) or (d), such prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or Eurodollar Loans.
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(f) The Borrower shall notify the Administrative Agent of any optional prepayment pursuant to Section 2.11(a)(i) by telephone (confirmed by facsimile) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that a notice of optional prepayment may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or the occurrence of some other identifiable and specified event or condition, in which case such notice of prepayment may be revoked or extended by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date of prepayment) if such condition is not satisfied. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13, and subject to Section 2.11(a)(i), shall be without premium or penalty. At the Borrower’s election in connection with any prepayment pursuant to this Section 2.11, such prepayment shall not be applied to any Term Loan or Revolving Loan of a Defaulting Lender (under any of subclauses (a), (b) or (c) of the definition of “Defaulting Lender”) and shall be allocated ratably among the relevant non-Defaulting Lenders.
(g) Notwithstanding any other provisions of Section 2.11(c) or (d), (A) to the extent that any of or all the Net Proceeds of any Prepayment Event by a Subsidiary of Holdings that is organized or incorporated under the laws of a jurisdiction other than the United States, any state, commonwealth or territory thereof or the District of Columbia, giving rise to a prepayment pursuant to Section 2.11(c) or (d) (a “ Restricted Prepayment Event ”) or Excess Cash Flow are prohibited or delayed by applicable local law (including financial assistance, corporate benefit, restrictions on repatriating or upstreaming of cash intra-group and the fiduciary and statutory duties of the directors of the relevant subsidiaries) from being repatriated to the Borrower, the portion of such Net Proceeds or Excess Cash Flow so affected will not be required to be taken into account in determining the amount to be applied to repay Term Loans at the times provided in Section 2.11(c) or (d), as the case may be, and such amounts may be retained by such Subsidiary, (B) to the extent that and for so long as the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Restricted Prepayment Event or Excess Cash Flow would have an adverse (other than de minimis consequence) tax or cost consequence to any Loan Party or any direct or indirect equity holder thereof with respect to such Net Proceeds or Excess Cash Flow, the Net Proceeds or Excess Cash Flow so affected will not be required to be taken into account in determining the amount to be applied to repay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary, (C) to the extent that and for so long as the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Restricted Prepayment Event or Excess Cash Flow would violate any material organizational document restrictions (as a result of minority ownership) and restrictions in other material agreements (to the extent not in violation of Section 6.09), the Net Proceeds or Excess Cash Flow so affected will not be required to be taken into account in determining the amount to be applied to repay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary and (D) to the extent that and for so long as the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Restricted Prepayment Event or Excess Cash Flow would give rise to a risk of liability for the directors of such Subsidiary, the Net Proceeds or Excess Cash Flow so affected will not be required to be taken into account in determining the amount to be applied to repay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary; provided that (i) the Borrower hereby agrees to use commercially reasonable efforts (as determined in the Borrower’s reasonable business judgment) to overcome or eliminate any such restrictions on repatriation even if the Borrower does not intend to actually repatriate such cash, so that an amount equal to the full amount of such Net Proceeds will otherwise be subject to repayment under this Section 2.11, and (ii) to the extent that the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Restricted Payment Event could reasonably be expected to have adverse Tax cost consequences for Holdings, the Borrower or any Restricted Subsidiary with respect to such Net Proceeds, an amount equal to such Net Proceeds that would be so affected will not be subject to repayment under this Section 2.11 and such amounts shall be available for general corporate purposes of the Loan Parties and their Subsidiaries as long as not required to be prepaid in accordance with this Section 2.11. For the avoidance of doubt, Borrower shall be permitted to make any repayments required by Section 2.11(c) or Section 2.11(d) from any source of funds and shall not be required to make any repayments from funds contained in any particular Loan Party. The non-application of any such prepayment amounts as a result of the foregoing provisions will not constitute a Default or Event of Default and such amounts shall be available for working capital and general corporate purposes of the Loan Parties and their Subsidiaries as long as not required to be prepaid in accordance with such provisions. Notwithstanding the foregoing, any payments actually made by the Loan Parties shall be applied net of an amount equal to the additional Taxes of Holdings, its Subsidiaries and the direct and indirect holders of Equity Interests in Holdings that would be payable or reserved against and any additional costs that would be incurred as a result of a repatriation, whether or not a repatriation actually occurs.
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SECTION 2.12 Fees .
(a) The Borrower agrees to pay to the Administrative Agent in Dollars for the account of each Revolving Lender (other than a Defaulting Lender) a commitment fee, which shall accrue at the rate of the Commitment Fee Percentage per annum on the average daily unused amount of the Revolving Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which the Revolving Commitments terminate. Accrued commitment fees shall be payable in arrears on the last Business day of March, June, September and December of each year and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the Effective Date. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing commitment fees, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender.
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(b) The Borrower agrees to pay (i) to the Administrative Agent in Dollars for the account of each Revolving Lender (other than any Defaulting Lender) a participation fee with respect to its participations in Letters of Credit, which shall accrue at the Applicable Rate used to determine the interest rate applicable to Eurodollar Revolving Loans on the daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements but taking into account the maximum amount available to be drawn under all outstanding Letters of Credit, whether or not such maximum amount is then in effect) during the period from and including the Effective Date to and including the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank in Dollars a fronting fee (which fee shall be calculated by the Administrative Agent in consultation with the applicable Issuing Bank and payable directly to the applicable Issuing Bank), which shall accrue at the rate to be agreed by each Issuing Bank, not to be greater than 0.125% per annum on the daily amount of the LC Exposure attributable to Letters of Credit issued by such Issuing Bank (excluding any portion thereof attributable to unreimbursed LC Disbursements but taking into account the maximum amount available to be drawn under all outstanding Letters of Credit, whether or not such maximum amount is then in effect) during the period from and including the Effective Date to and including the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the last Business Day of March, June, September and December, respectively, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to an Issuing Bank pursuant to this paragraph shall be payable within 10 days after written demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon in writing between the Borrower and the Administrative Agent.
(d) The Borrower agrees to pay on the Effective Date to each Term Lender party to this Agreement as a Term Lender on the Effective Date, as fee compensation for the funding of such Term Lender’s Initial Term Loan, a closing fee in an amount equal to 4.00% of the stated principal amount of such Term Lender’s Initial Term Loan. Such fees shall be payable to each Lender out of the proceeds of such Term Lender’s Initial Term Loan as and when funded on the Effective Date and shall be treated (and reported) by the Borrower and Term Lenders as a reduction in issue price of the Initial Term Loans for U.S. federal, state and local income tax purposes. Such closing fee will be in all respects fully earned, due and payable on the Effective Date and non-refundable and non-creditable thereafter.
(e) Notwithstanding the foregoing, and subject to Section 2.22, the Borrower shall not be obligated to pay any amounts to any Defaulting Lender pursuant to this Section 2.12.
SECTION 2.13 Interest .
(a) The Loans comprising each ABR Borrowing denominated in Dollars or Canadian Dollars shall bear interest at the Alternate Base Rate or Canadian Base Rate, respectively, plus the Applicable Rate.
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(b) The Loans comprising each Eurodollar Borrowing denominated in (i) Dollars or Sterling shall bear interest at the Adjusted LIBO Rate, (ii) Canadian Dollars shall bear interest at the Adjusted BA Rate or (iii) Euros shall bear interest at Adjusted EURIBOR, in each case for the Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if upon the occurrence and during the continuance of any Specified Event of Default, any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.00% per annum plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.13 or (ii) in the case of any other amount, 2.00% per annum plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of this Section 2.13; provided that no amount shall be payable pursuant to this Section 2.13(c) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided , further that no amounts shall accrue pursuant to this Section 2.13(c) on any overdue amount, reimbursement obligation in respect of any LC Disbursement or other amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Revolving Commitments, provided that (i) interest accrued pursuant to paragraph (c) of this Section 2.13 shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate, the Canadian Base Rate or the BA Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Canadian Base Rate, Adjusted LIBO Rate, Adjusted BA Rate or Adjusted EURIBOR shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.14 Alternate Rate of Interest .
If at least two (2) Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Adjusted BA Rate or Adjusted EURIBOR, as applicable, for such Interest Period; or
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(b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate, the Adjusted BA Rate or Adjusted EURIBOR, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period (in each case with respect to the Loans impacted by this clause (b) or clause (a) above, “ Impacted Loans ”);
(c) the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) in the event any Loans denominated in Dollars or Canadian Dollars are so affected, (x) any Interest Election Request that requests the conversion of any Borrowing in Dollars or Canadian Dollars to, or continuation of any Borrowing in Dollars or Canadian Dollars as, a Eurodollar Borrowing in Dollars or Canadian Dollars shall be ineffective and (y) if any Borrowing Request requests a Eurodollar Borrowing in Dollars or Canadian Dollars, then such Borrowing shall be made as an ABR Borrowing, unless such Borrowing is a Revolving Facility B Borrowing denominated in Canadian Dollars, in which case such Borrowing Request shall be ineffective and (ii) in the event any Loans denominated in an Alternative Currency (other than Canadian Dollars) are so affected, the relevant interest rate shall be determined in accordance with clause (ii) of the definition of “LIBO Rate” or “EURIBOR”, as applicable; provided , however , that, in each case, the Borrower may revoke any Borrowing Request that is pending when such notice is received.
(d) Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (a) of this Section 2.14 and/or is advised by the Required Lenders of their determination in accordance with clause (b) of this Section 2.14 and the Borrower shall so request, the Administrative Agent, the Required Lenders and the Borrower shall negotiate in good faith to amend the definition of “LIBO Rate”, “BA Rate”, or “EURIBOR” and other applicable provisions to preserve the original intent thereof in light of such change; provided that, until so amended, such Impacted Loans will be handled as otherwise provided pursuant to the terms of this Section 2.14.
SECTION 2.15 Increased Costs .
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any Issuing Bank (except any such reserve requirement reflected in the Adjusted LIBO Rate, the Adjusted BA Rate or Adjusted EURIBOR, as applicable); or
(ii) impose on any Lender or any Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;
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and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or issue any Letter of Credit) or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or otherwise), then, from time to time upon request of such Lender or Issuing Bank, the Borrower will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or Issuing Bank, as the case may be, for such increased costs actually incurred or reduction actually suffered.
(b) If any Lender or Issuing Bank determines that any Change in Law regarding capital requirements has the effect of reducing the rate of return on such Lender’s or Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s holding company with respect to capital adequacy), then, from time to time upon request of such Lender or Issuing Bank, the Borrower will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such reduction actually suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company in reasonable detail, as the case may be, as specified in paragraph (a) or (b) of this Section 2.15 delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or Issuing Bank, as the case may be, the amount shown as due on any such certificate within 15 days after receipt thereof.
(d) Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section 2.15 shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or Issuing Bank pursuant to this Section 2.15 for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
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SECTION 2.16 Break Funding Payments .
In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or Section 9.02(c), then, in any such event, the Borrower shall, after receipt of a written request by any Lender affected by any such event (which request shall set forth in reasonable detail the basis for requesting such amount), compensate each Lender for the loss, cost and expense (excluding loss of profit) actually incurred by it as a result of such event. For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 2.16, each Lender shall be deemed to have funded each Eurodollar Loan made by it at the Adjusted LIBO Rate, the Adjusted BA Rate or Adjusted EURIBOR, as applicable, for such Loan by a matching deposit or other borrowing in the applicable interbank eurodollar market or Canadian money market, as applicable, for a comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so funded. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 and the reasons therefor delivered to the Borrower shall be prima facie evidence of such amounts. The Borrower shall pay such Lender the amount shown as due on any such certificate within 15 days after receipt of such demand; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.16 for any loss, cost or expense more than 180 days prior to the date that such Lender delivers such certificate. Notwithstanding the foregoing, this Section 2.16 will not apply to losses, costs or expenses resulting from Taxes, as to which Section 2.17 shall govern. Notwithstanding the foregoing, no Lender shall demand compensation pursuant to this Section 2.16 if it shall not at the time be the general policy or practice of such Lender to demand such compensation in substantially the same manner as applied to other similarly situated borrowers under comparable syndicated credit facilities.
SECTION 2.17 Taxes .
(a) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable Requirements of Law. If the applicable withholding agent (including, for the avoidance of doubt, the Administrative Agent or any Loan Party) shall be required by applicable Requirements of Law (as determined in the good faith discretion of the applicable withholding agent) to deduct any Taxes from such payments, then the applicable withholding agent shall make such deductions and shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Requirements of Law, and if such Taxes are Indemnified Taxes or Other Taxes, then the amount payable by the applicable Loan Party shall be increased as necessary so that after all such required deductions have been made (including such deductions applicable to additional amounts payable under this Section 2.17), each Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deductions been made.
(b) Without limiting the provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Requirements of Law.
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(c) The Borrower shall indemnify the Administrative Agent and each Lender within 30 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender as the case may be, on or with respect to any payment by or on account of any obligation of any Loan Party under any Loan Document and any Other Taxes paid by the Administrative Agent or such Lender, as the case may be (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.17) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) To the extent required by any applicable Requirements of Law (as determined in good faith by the Administrative Agent), the Administrative Agent may deduct or withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered or not property executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective), such Lender shall indemnify and hold harmless the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by the Loan Parties pursuant to Section 2.17 and without limiting any obligation of the Loan Parties to do so pursuant to such Section) fully for all amounts paid, directly or indirectly, by the Administrative Agent as Taxes or otherwise, together with all expenses incurred, including legal expenses, and any other out-of-pocket expenses, 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 authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this Section 2.17(d). The agreements in this Section 2.17(d) shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, any assignment of rights by a Loan Party, the termination of this Agreement and the repayment, satisfaction or discharge of all other obligations under any Loan Document.
(e) As soon as practicable after any payment of any Taxes by a Loan Party to a Governmental Authority, the Borrower 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.
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(f) Each Lender shall, at such times as are reasonably requested by Borrower or the Administrative Agent, (i) complete any documentation required for the Borrower to obtain clearance to make payments under the Loan Documents without, or with a reduction in, any withholding Tax and (ii) provide the Borrower and the Administrative Agent with any properly completed and executed documentation prescribed by any Requirement of Law, or reasonably requested by the Borrower or the Administrative Agent, certifying as to any entitlement of such Lender to an exemption from, or reduction in, any withholding Tax with respect to any payments to be made to such Lender under the Loan Documents. Each such Lender shall, whenever a lapse in time or change in circumstances renders any such documentation expired, obsolete or inaccurate in any respect (including any specific documentation required below in this Section 2.17(e)), deliver promptly to Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify the Borrower and the Administrative Agent in writing of its legal ineligibility to do so. Unless the applicable withholding agent has received forms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Lender are not subject to withholding tax or are subject to Tax at a rate reduced by an applicable tax treaty, the Borrower, Administrative Agent or other applicable withholding agent shall withhold amounts required to be withheld by applicable law from such payments at the applicable statutory rate.
Without limiting the generality of the foregoing:
(i) Each Lender that is a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to the Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement two properly completed and duly signed copies of Internal Revenue Service Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding.
(ii) Each Lender that is not a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to the Borrower and the Administrative Agent on or before the date on which it becomes a party to 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:
(A) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E (or any successor forms) claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,
(B) two properly completed and duly signed copies of Internal Revenue Service Form W-8ECI (or any successor forms),
(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (x) two properly completed and duly signed certificates, substantially in the form of Exhibit N (any such certificate a “ United States Tax Compliance Certificate ”), and (y) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E (or any successor forms),
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(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Lender is a partnership or a participating Lender), two properly completed and duly signed copies of Internal Revenue Service Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, United States Tax Compliance Certificate, Form W-9, Form W-8IMY (or other successor forms) or any other required information from each beneficial owner that would be required under this Section 2.17 if such beneficial owner were a Lender, as applicable ( provided that, if the Lender is a partnership (and not a participating Lender) and one or more direct or indirect partners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate may be provided by such Lender on behalf of such direct or indirect partner(s)), or
(E) two properly completed and duly signed copies of any other form prescribed by applicable Requirements of 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 Requirements of Law to permit the Borrower and the Administrative Agent to determine the withholding or deduction required to be made.
(iii) If a payment made to any Lender under any Loan Document would be subject to 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 whether such Lender has or has not complied with such Lender’s obligations under FATCA and, if necessary, to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Notwithstanding any other provision of this clause (e), a Lender shall not be required to deliver any form that such Lender is not legally eligible to deliver.
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(g) If the Borrower determines in good faith that a reasonable basis exists for contesting any Taxes for which indemnification has been demanded hereunder, the Administrative Agent or the relevant Lender, as applicable, shall use commercially reasonable efforts to cooperate with the Borrower in a reasonable challenge of such Taxes if so requested by the Borrower, provided that (a) the Administrative Agent or such Lender determines in its reasonable discretion that it would not be subject to any unreimbursed third party cost or expense or otherwise be prejudiced by cooperating in such challenge, (b) the Borrower pays all related expenses of the Administrative Agent or such Lender, as applicable and (c) the Borrower indemnifies the Administrative Agent or such Lender, as applicable, for any liabilities or other costs incurred by such party in connection with such challenge. If the Administrative Agent or a Lender receives a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.17, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.17 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent or such Lender, agree promptly to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. The Administrative Agent or such Lender, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the relevant taxing authority ( provided that the Administrative Agent or such Lender may delete any information therein that the Administrative Agent or such Lender deems confidential). Notwithstanding anything to the contrary, this Section 2.17(g) shall not be construed to require the Administrative Agent or any Lender to make available its Tax returns (or any other information relating to Taxes which it deems confidential) to any Loan Party or any other person). Notwithstanding anything herein to the contrary, the Borrower shall not be required to compensate such Lender for any amount incurred under this Section 2.17 more than one hundred and eighty (180) days prior to the date that such Lender notifies the Borrower of the event that gives rise to such claim; provided that, if the circumstance giving rise to such claim is retroactive, then such one hundred and eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof.
(h) The agreements in this Section 2.17 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 this Agreement and the payment of the Loans and all other amounts payable hereunder.
(i) For purposes of this Section 2.17, the term “Lender” shall include any Issuing Bank and the term “applicable Requirements of Law” includes FATCA.
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SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs .
(a) The Borrower shall make each payment required to be made by it under any Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) at or prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time, on the date when due), in immediately available funds, without condition or deduction for any counterclaim, recoupment or setoff. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. Except as otherwise expressly provided herein and except with respect to principal of or interest on Loans denominated in an Alternative Currency, all such payments shall be made in Dollars to such account as may be specified by the Administrative Agent. Except as otherwise expressly provided herein and except with respect to principal of or interest on Loans denominated in Dollars, all payments by the Borrower hereunder with respect to principal of and interest on Loans denominated in any Alternative Currency shall be made in such Alternative Currency to such account as may be specified by the Administrative Agent. If, for any reason, the Borrower is prohibited by any Requirements of Law from making any required payment hereunder in an Alternative Currency, the Borrower shall make such payment in Dollars in the Dollar Amount of the Alternative Currency payment amount (it being agreed that, for purposes of this sentence, the Dollar Amount shall be determined by the Administrative Agent pursuant to clause (b) of the definition of “Dollar Amount”). Payments to be made directly to any Issuing Bank shall be made as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. Except as otherwise provided herein, if any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar 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 payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate for the period of such extension.
(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first , towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second , towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans, Term Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Term Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, Term Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, Term Loans and participations in LC Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest and (ii) the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant or (C) any disproportionate payment obtained by a Lender of any Class as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans or Revolving Commitments of that Class or any increase in the Applicable Rate in respect of Loans of Lenders that have consented to any such extension. The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower’s rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
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(d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Banks hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption and in its sole discretion, distribute to the Lenders or Issuing Banks, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or Issuing Banks, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate (if denominated in Dollars or any Alternative Currency (other than Canadian Dollars)) or the BA Rate (if denominated in Canadian Dollars) and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(e), Section 2.05(f), Section 2.06(a), Section 2.06(b), Section 2.18(d) or Section 9.03(c), then the Administrative Agent may, in its discretion and in the order determined by the Administrative Agent (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such 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 to be applied to, any future funding obligations of such Lender under any such Section.
SECTION 2.19 Mitigation Obligations; Replacement of Lenders .
(a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or any event gives rise to the operation of Section 2.23, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or its participation in any Letter of Credit affected by such event, or to assign and delegate its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment and delegation (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17 or mitigate the applicability of Section 2.23, as the case may be, and (ii) would not subject such Lender to any unreimbursed cost or expense reasonably deemed by such Lender to be material and would not be inconsistent with the internal policies of, or otherwise be disadvantageous in any material economic, legal or regulatory respect to, such Lender.
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(b) If (i) any Lender requests compensation under Section 2.15 or gives notice under Section 2.23, (ii) the Borrower is required to pay any additional amount to any Lender or to any Governmental Authority for the account of any Lender pursuant to Section 2.17, (iii) any Lender is or becomes a Disqualified Lender or (iv) any Lender is a Defaulting Lender, 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 9.04), all its interests, rights and obligations under this Agreement and the other Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment and delegation); provided that (A) the Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable (and if a Revolving Commitment is being assigned and delegated, each Issuing Bank), which consents, in each case, shall not unreasonably be withheld or delayed, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and unreimbursed participations in LC Disbursements, accrued but unpaid interest thereon, accrued but unpaid 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), (C) the Borrower or such assignee shall have paid (unless waived) to the Administrative Agent the processing and recordation fee specified in Section 9.04(b)(ii) and (D) in the case of any such assignment resulting from a claim for compensation under Section 2.15, or payments required to be made pursuant to Section 2.17 or a notice given under Section 2.23, such assignment will result in a material reduction in such compensation or payments. 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 (including as a result of any action taken by such Lender under paragraph (a) above), the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee and that the Lender required to make such assignment need not be a party thereto.
SECTION 2.20 Incremental Credit Extensions .
(a) The Borrower may at any time or from time to time on one or more occasions after the Effective Date, by written notice delivered to the Administrative Agent request (i) one or more additional Classes of term loans (each an “ Incremental Term Facility ”), (ii) one or more additional term loans of the same Class of any existing Class of term loans (each an “ Incremental Term Increase ”), (iii) one or more increases in the amount of the Revolving Commitments of any Class (each such increase, an “ Incremental Revolving Commitment Increase ”) and/or (iv) one or more additional Classes of Revolving Commitments (the “ Additional/Replacement Revolving Commitments ,” and, together with any Incremental Term Facility, Incremental Term Increase and the Incremental Revolving Commitment Increases, the “ Incremental Facilities ” and any Loans thereunder, the “ Incremental Loans ”); provided that, after giving effect to the effectiveness of any Incremental Facility Amendment, subject to certain “certain funds provisions” to be agreed to by the Borrower and the Incremental Facilities Lenders, no Event of Default shall have occurred and be continuing or would result therefrom ( provided , that in the case of an Incremental Facility incurred to finance a Limited Condition Transaction, if the Borrower has made an LCT Election, such condition shall be that no Event of Default shall have occurred and be continuing at the LCT Test Date). Notwithstanding anything to contrary herein, the aggregate principal amount of the Incremental Facilities that can be incurred at any time shall not exceed the Incremental Cap at such time. Each Incremental Facility shall be in a minimum principal amount of $10,000,000 and integral multiples of $1,000,000 in excess thereof if such Incremental Facilities are denominated in Dollars (unless the Borrower and the Administrative Agent otherwise agree); provided that such amount may be less than $10,000,000 to the extent such amount represents all the remaining availability under the aggregate principal amount of Incremental Facilities set forth above.
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(b) (i) The Incremental Term Loans (a)(1) shall rank equal or junior in right of payment and equal or junior in right of security with the Term Loans or may be unsecured, and if junior in right of payment and/or security or unsecured, shall be established as a separate facility than the facility for the Term Loans that are secured by the Collateral on a first priority basis, (2) shall be structured such that neither Holdings nor any Restricted Subsidiary is a guarantor with respect to such Indebtedness unless Holdings or such Restricted Subsidiary is a Loan Party which shall have previously or substantially concurrently guaranteed the Obligations, and (3) if secured, the obligations in respect thereof shall not be secured by Liens on the assets of Holdings and the Restricted Subsidiaries, other than assets constituting Collateral, and if established as a separate facility, shall be subject to a customary intercreditor agreement with the Administrative Agent and/or Collateral Agent substantially consistent with the applicable Intercreditor Agreement together with (A) any immaterial changes and (B) material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not less than five (5) Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five (5) Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agent’s and/or Collateral Agent’s entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agent’s and/or Collateral Agent’s execution thereof, in each case in form and substance reasonably satisfactory to the Administrative Agent and/or Collateral Agent (it being understood that junior Liens are not required to be pari passu with other junior Liens, and that Indebtedness secured by junior liens may secured by Liens that are pari passu with or junior in priority to, other Liens that are junior to the Liens securing the Obligations), (b) shall not (except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature prior to the Term Maturity Date of the Initial Term Loans) mature earlier than the Term Maturity Date of the Initial Term Loans, (c) shall not (except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not have a shorter Weighted Average Life to Maturity than the remaining Initial Term Loans) have a shorter Weighted Average Life to Maturity than the remaining Initial Term Loans, (d) shall have a maturity date (subject to clause (b)), an amortization schedule (subject to clause (c)), interest rates (including through fixed interest rates), “most favored nation” provisions (if any), interest margins, rate floors, upfront fees, funding discounts, original issue discounts, financial covenants (if any) and prepayment terms and premiums as determined by the Borrower and the Additional Term Lenders thereunder; provided that, for any Incremental Term Loans which are secured on a pari passu basis with the Initial Term Loans and ranking pari passu with the Initial Term Loans in right of payment, in the event that the Effective Yield for any such Incremental Term Loans is greater than the Effective Yield for the Initial Term Loans by more than 0.50% per annum, then the Effective Yield for the Initial Term Loans shall be increased to the extent necessary so that the Effective Yield for the Initial Term Loans is equal to the Effective Yield for such Incremental Term Loans minus 0.50% per annum; provided , further , that if the Incremental Term Loans include an interest rate floor greater than the applicable interest rate floor under the Initial Term Loans, such differential between interest rate floors shall be equated to the applicable interest rate margin for purposes of determining whether an increase to the interest rate margin under the Initial Term Loans shall be required, but only to the extent an increase in the interest rate floor in the Initial Term Loans would cause an increase in the interest rate then in effect thereunder, and in such case, the interest rate floor (but not the interest rate margin) applicable to the Initial Term Loans shall be increased to the extent of such differential between interest rate floors, (e) any Incremental Term Facility may provide for the ability to participate (x) on a pro rata basis or less than pro rata basis (but not greater than pro rata basis) in any voluntary prepayments of the Initial Term Loans and (y) on a pro rata basis or less than pro rata basis (but not on a greater than pro rata basis other than in the case of prepayment with Other Term Loans incurred pursuant to a Refinancing Amendment to refinance such Incremental Term Loans or any other Credit Agreement Refinancing Indebtedness in respect of such Incremental Term Loans) in any mandatory prepayments of the Initial Term Loans and (f) may otherwise have terms and conditions different from those of the Term Loans (including currency denomination); provided that (x) to the extent the terms and documentation with respect to such Incremental Term Loans are not consistent with the existing Initial Term Loans (except with respect to matters contemplated by clauses (a), (b), (c), (d) and (e) above), the covenants, events of default and guarantees of any such Incremental Term Loans shall not be materially more restrictive to the Borrower, when taken as a whole, than the terms of the Initial Term Loans unless (1) Lenders under the Initial Term Loans also receive the benefit of such more restrictive terms (it being understood that, to the extent that any covenant, event of default or guarantee is added or modified for the benefit of any Incremental Term Facility, no consent shall be required from the Administrative Agent or any of the Term Lenders to the extent that such covenant, event of default or guarantee is also added or modified for the benefit of the existing Term Loans), (2) any such provisions apply after the Term Maturity Date with respect to the Initial Term Loans or (3) such terms are reasonably satisfactory to the Administrative Agent and the Borrower and (y) in no event shall it be a condition to the effectiveness of, or borrowing under, any such Incremental Term Loans that any representation or warranty of any Loan Party set forth herein be true and correct, except and solely to the extent required by the Additional Term Lenders providing such Incremental Term Loans. Any Incremental Term Increase shall be on the same terms and pursuant to the same documentation applicable to the Term Loans (except with respect to matters contemplated by clauses (a), (b), (c), (d) and (e) above). Any Incremental Term Facility shall be on terms and pursuant to documentation as determined by the Borrower and the Additional Term Lenders providing such Incremental Term Facility, subject to the restrictions and exceptions set forth above.
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(ii) The Incremental Revolving Commitment Increase shall be treated the same as the Class of Revolving Commitments being increased (including with respect to maturity date thereof) and shall be considered to be part of the Class of Revolving Loans being increased (it being understood that, if required to consummate an Incremental Revolving Commitment Increase, the pricing, interest rate margins, “most favored nation” provisions (if any), rate floors and undrawn commitment fees on the Class of Revolving Commitments being increased may be increased and additional upfront or similar fees may be payable to the lenders providing the Incremental Revolving Commitment Increase (without any requirement to pay such fees to any existing Revolving Lenders)). Any Incremental Revolving Commitment Increase shall be on the same terms and pursuant to the same documentation applicable to the Revolving Loans (excluding upfront fees and customary arranger fees).
(iii) The Additional/Replacement Revolving Commitments (a)(1) shall rank equal or junior in right of payment and equal or junior in right of security with the Revolving Loans or may be unsecured, and if junior in right of payment and/or security or unsecured, shall be established as a separate facility than the facility for the Revolving Loans that are secured by the Collateral on a first priority basis, (2) shall be structured such that neither Holdings nor any Restricted Subsidiary is a borrower or a guarantor with respect to such Indebtedness unless Holdings or such Restricted Subsidiary is a Loan Party which shall have previously or substantially concurrently guaranteed or borrowed, as applicable, the Obligations, and (3) if secured, the obligations in respect thereof shall not be secured by Liens on the assets of Holdings and the Restricted Subsidiaries, other than assets constituting Collateral, and if established as a separate facility, shall be subject to a customary intercreditor agreement with the Administrative Agent and/or Collateral Agent substantially consistent with the applicable Intercreditor Agreement together with (A) any immaterial changes and (B) material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not less than five Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agent’s and/or Collateral Agent’s entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agent’s and/or Collateral Agent’s execution thereof, in each case in form and substance reasonably satisfactory to the Administrative Agent and/or Collateral Agent (it being understood that junior Liens are not required to be pari passu with other junior Liens, and that Indebtedness secured by junior liens may secured by Liens that are pari passu with or junior in priority to, other Liens that are junior to the Liens securing the Obligations), (b) shall not mature earlier than the Revolving Maturity Date with respect to the initial Revolving Loans and shall require no mandatory commitment reduction prior to the Revolving Maturity Date applicable to the initial Revolving Loans, (c) shall have interest rates (including through fixed interest rates), interest margins, rate floors, upfront fees, arrangement fees, structuring fees, ticking fees, amendment fees, consent fees, and any other fees, undrawn commitment fees, funding discounts, original issue discounts, prepayment terms and premiums, and commitment reduction and termination terms as determined by the Borrower and the lenders of such commitments, (d) shall contain borrowing, repayment and termination of Commitment procedures as determined by the Borrower and the lenders of such commitments, (e) may include provisions relating to letters of credit, as applicable, issued thereunder, which issuances shall be on terms substantially similar (except for the overall size of such subfacilities, the fees payable in connection therewith and the identity of the letter of credit issuer, as applicable, which shall be determined by the Borrower, the lenders of such commitments and the applicable letter of credit issuers and borrowing, repayment and termination of commitment procedures with respect thereto, in each case which shall be specified in the applicable Incremental Facility Amendment) to the terms relating to the Letters of Credit with respect to the applicable Class of Revolving Commitments or otherwise reasonably acceptable to the Administrative Agent and (f) may otherwise have terms and conditions different from those of the Revolving Commitments and the Revolving Loans made under this Agreement (including currency denomination); provided that (x) to the extent the terms and documentation with respect to such Additional/Replacement Revolving Commitments are not consistent with the existing Revolving Commitments (except with respect to matters contemplated by clauses (b), (c), (d) and (e) above), the covenants, events of default and guarantees of any such Additional/Replacement Revolving Commitments shall not be materially more restrictive to the Borrower, when taken as a whole, than the terms of the Revolving Commitments unless (1) Lenders under Revolving Commitments also receive the benefit of such more restrictive terms (it being understood that, to the extent that any financial maintenance covenant is added for the benefit of any Additional/Replacement Revolving Commitment, no consent shall be required from the Administrative Agent or any of the Revolving Lenders to the extent that such financial maintenance covenant is also added for the benefit of the existing Revolving Commitments), (2) any such provisions apply after the Revolving Maturity Date or (3) such terms shall be reasonably satisfactory to the Administrative Agent and the Borrower and (y) in no event shall it be a condition to the effectiveness of, or initial borrowing under, any such Additional/Replacement Revolving Commitments that any representation or warranty of any Loan Party set forth herein be true and correct, except and solely to the extent required by the Additional/Replacement Revolving Lenders providing such Additional/Replacement Revolving Commitments. Any Additional/Replacement Revolving Commitments shall be on terms and pursuant to documentation as determined by the Borrower and the Additional/Replacement Revolving Lenders providing such Additional/Replacement Revolving Commitments, subject to the restrictions set forth above; provided further that, notwithstanding anything to the contrary in this Section 2.19 or otherwise, (1) the borrowing and repayment (except for (A) payments of interest and fees at different rates, (B) repayments required upon the maturity date of the Revolving Loan Commitments and (C) repayment made in connection with a permanent repayment and termination of any commitments) of Loans with respect to Additional/Replacement Revolving Commitments after the associated Incremental Facility Closing Date shall be made on a pro rata basis with all other Revolving Loan Commitments, and (2) the permanent repayment of Revolving Loans with respect to, and termination of, Additional/Replacement Revolving Commitments after the associated Incremental Facility closing date shall be made on a pro rata basis with all other Revolving Loan Commitments, except that the Borrower shall be permitted to permanently repay and terminate commitments of any such Class on a better than a pro rata basis as compared to any other Class with a later maturity date than such Class. Any Additional/Replacement Revolving Commitments may constitute a separate Class or Classes, as the case may be, of Commitments from the Classes constituting the Revolving Loan Commitments prior to the Incremental Facility Closing Date.
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(c) Each notice from the Borrower pursuant to this Section shall set forth the requested amount of the relevant Incremental Term Loans, Incremental Revolving Commitment Increases or Additional/Replacement Revolving Commitments.
(d) Commitments in respect of any Incremental Term Increase and Incremental Revolving Commitment Increases shall become Commitments (or in the case of an Incremental Revolving Commitment Increase to be provided by an existing Lender with a Revolving Commitment, an increase in such Lender’s applicable Revolving Commitment) under this Agreement pursuant to an amendment (an “ Incremental Facility Amendment ”) to this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each Lender agreeing to provide such Commitment, if any, each Additional Lender, if any, and the Administrative Agent ( provided , that if such amendment does not affect the rights, duties, privileges or obligations of the Administrative Agent, the Administrative Agent shall only be required to acknowledge such amendment). An Incremental Facility may be provided, subject to the prior written consent of the Borrower (not to be unreasonably withheld), by any existing Lender (it being understood that no existing Lender shall have the right to participate in any Incremental Facility or, unless it agrees, be obligated to provide any Incremental Loans) or by any Additional Lender. Any loan under an Incremental Term Increase and any loan under an Incremental Revolving Commitment Increase shall be a “Loan” for all purposes of this Agreement and the other Loan Documents. The Incremental Facility Amendment may, subject to Section 2.20(b), without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.20 (including, in connection with an Incremental Revolving Commitment Increase, to reallocate Revolving Exposure on a pro rata basis among the relevant Revolving Lenders and including voting rights as contemplated by Section 9.02). The effectiveness of any Incremental Facility Amendment and the occurrence of any credit event (including the making (but not the conversion or continuation) of a Loan and the issuance, increase in the amount, or extension of a Letter of Credit thereunder) pursuant to such Incremental Facility Amendment shall be subject to the satisfaction of such conditions as the parties thereto shall agree and as required by this Section 2.20. The Borrower will use the proceeds of the Incremental Term Loans, Incremental Revolving Commitment Increases and Additional/Replacement Revolving Commitments for any purpose not prohibited by this Agreement.
(e) Notwithstanding anything to the contrary, this Section 2.20 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
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SECTION 2.21 Refinancing Amendments .
(a) At any time after the Effective Date, the Borrower may obtain, from any Lender or any Additional Lender, Credit Agreement Refinancing Indebtedness in respect of (i) all or any portion of the Term Loans then outstanding under this Agreement (which for purposes of this clause (i) will be deemed to include any then outstanding Other Term Loans) or (ii) all or any portion of the Revolving Loans (or unused Revolving Commitments) under this Agreement (which for purposes of this clause (ii) will be deemed to include any then outstanding Other Revolving Loans and Other Revolving Commitments), in the form of (x) Other Term Loans or Other Term Commitments or (y) Other Revolving Loans or Other Revolving Commitments, as the case may be, in each case pursuant to a Refinancing Amendment; provided that such Credit Agreement Refinancing Indebtedness (i) will be unsecured or will rank pari passu or junior in right of payment and of security with the other Loans and Commitments hereunder, (ii) will have such pricing and optional prepayment terms as may be agreed by the Borrower and the Lenders thereof, and (iii) the Net Proceeds of such Credit Agreement Refinancing Indebtedness shall be applied, substantially concurrently with the incurrence thereof, to the prepayment of any outstanding Term Loans or reduction of Revolving Commitments being so refinanced, as the case may be. The effectiveness of any Refinancing Amendment shall be subject to the satisfaction on the date thereof of the conditions as agreed between the lenders providing such Credit Agreement Refinancing Indebtedness and the Borrower. Each Class of Credit Agreement Refinancing Indebtedness incurred under this Section 2.21 shall be in an aggregate principal amount that is (x) not less than $10,000,000 in the case of Other Term Loans or $10,000,000 in the case of Other Revolving Loans and (y) an integral multiple of $1,000,000 in excess thereof (in each case unless the Borrower and the Administrative Agent otherwise agree). Any Refinancing Amendment may provide for the issuance of Letters of Credit for the account of the Borrower pursuant to any Other Revolving Commitments established thereby, in each case on terms substantially equivalent to the terms applicable to Letters of Credit under the Revolving Commitments; provided that no Issuing Bank shall be required to act as “issuing bank” under any such Refinancing Amendment without its written consent. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment. Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Other Term Loans, Other Revolving Loans, Other Revolving Commitments and/or Other Term Commitments). Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section. In addition, if so provided in the relevant Refinancing Amendment and with the consent of each Issuing Bank, participations in Letters of Credit expiring on or after the Revolving Maturity Date shall be reallocated from Lenders holding Revolving Commitments to Lenders holding extended revolving commitments in accordance with the terms of such Refinancing Amendment; provided , however , that such participation interests shall, upon receipt thereof by the relevant Lenders holding Revolving Commitments, be deemed to be participation interests in respect of such Revolving Commitments and the terms of such participation interests (including, without limitation, the commission applicable thereto) shall be adjusted accordingly.
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(b) If, in connection with any proposed Refinancing Amendment with respect to any Class of Loans, any Lender of such Class declines to provide any portion of the Credit Agreement Refinancing Indebtedness on the terms provided by the other Lenders providing such Credit Agreement Refinancing Indebtedness (each such Lender, a “ Non-Refinancing Lender ”) then the Borrower may, on notice to the Administrative Agent and the Non-Refinancing Lender, (i) cause such Lender to (and such Lender shall be obligated to (and to the extent such Non-Refinancing Lender does not execute such Refinancing Amendment, such Refinancing Amendment shall nonetheless be effective without such signature of the Non-Refinancing Lender)) assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04) all or any part of its interests, rights and obligations under this Agreement in respect of the Loans and Commitments of the applicable Class to one or more Eligible Assignees (which Eligible Assignee may be another Lender, if a Lender accepts such assignment) in connection with such Refinancing Amendment; provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided , further, that (a) such Non-Refinancing Lender shall have received payment of an amount equal to the outstanding principal of the Loans of the applicable Class assigned by it pursuant to this Section 2.21(b), accrued interest thereon, accrued fees and all other amounts (including any amounts under Section 2.11) payable to it hereunder from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) and (b) no processing and recordation fee specified in Section 9.04(b) shall be payable in connection therewith.
(c) This Section 2.21 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
SECTION 2.22 Defaulting Lenders .
(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Waivers and Amendments . Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.02.
(ii) Reallocation of Payments . Subject to the last sentence of Section 2.11(f), any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 9.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second , in the case of a Revolving Lender, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to each Issuing Bank hereunder; third , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fourth , in the case of a Revolving Lender, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; fifth , to the payment of any amounts owing to the Lenders or the Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender, such Issuing Bank against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; sixth , so long as no Default or Event of Default exists, to the payment of any amounts owing to any Loan Party as a result of any judgment of a court of competent jurisdiction obtained by any Loan Party against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and seventh , to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans or LC Disbursements and such Lender is a Defaulting Lender under clause (a) of the definition thereof, such payment shall be applied solely to pay the relevant Loans of, and LC Disbursements owed to, the relevant non-Defaulting Lenders on a pro rata basis prior to being applied pursuant to Section 2.05(j) or this Section 2.22(a)(ii). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to Section 2.05(j) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
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(iii) Certain Fees . That Defaulting Lender (x) shall not be entitled to receive or accrue any commitment fee pursuant to Section 2.12(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender) and (y) shall be limited in its right to receive Letter of Credit fees as provided in Section 2.12(b).
(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure . During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit pursuant to Section 2.05 and the payments of participation fees pursuant to Section 2.12(b), the “Applicable Percentage” of each non-Defaulting Lender shall be computed without giving effect to the Revolving Commitment of that Defaulting Lender; provided that the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit shall not exceed the positive difference, if any, of (1) the Revolving Commitment of that non-Defaulting Lender minus (2) the aggregate principal amount of the Revolving Loans of that non-Defaulting Lender.
(v) Cash Collateral . If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, cash collateralize the Issuing Banks’ Applicable Fronting Exposure in accordance with the procedures set forth in Section 2.05(j).
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(b) Defaulting Lender Cure . If the Borrower, the Administrative Agent and each Issuing Bank agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), such Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.22(a)(iv) or the proviso to the definition thereof), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided further that except to the extent otherwise expressly agreed by the affected parties and subject to Section 9.20, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
SECTION 2.23 Illegality .
If any Lender reasonably determines that any law has made it unlawful, or any Governmental Authority has asserted that it is unlawful, for any Lender to make, maintain or fund Loans whose interest is determined by reference to the Adjusted LIBO Rate, the Adjusted BA Rate or Adjusted EURIBOR (whether denominated in Dollars or an Alternative Currency), or to determine or charge interest rates based upon the Adjusted LIBO Rate, the Adjusted BA Rate or Adjusted EURIBOR, then, on notice thereof by such Lender to Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurodollar Loans in the affected currency or currencies or to convert ABR Loans to Eurodollar Loans in the affected currency or currencies shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining ABR Loans the interest rate on which is determined by reference to the Adjusted LIBO Rate component of the Alternate Base Rate or the Adjusted BA Rate component of the Canadian Base Rate, the interest rate on such ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate or the Adjusted BA Rate component of the Canadian Base Rate, as applicable, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon three Business Days’ notice from such Lender (with a copy to the Administrative Agent), prepay or (I) if applicable and such Loans are denominated in Dollars or Canadian Dollars, convert all Eurodollar Loans denominated in Dollars or Canadian Dollars of such Lender to ABR Loans (the interest rate on which ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate or the Adjusted BA Rate component of the Canadian Base Rate, as applicable), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans, or (II) if applicable and such Loans are denominated in an Alternative Currency (other than Canadian Dollars), to the extent the Borrower and the applicable Lenders agree, convert such Loans to Loans bearing interest at an alternative rate mutually acceptable to the Borrower and all of the applicable Lenders, in each case, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans; provided , however , that if the Borrower and the applicable Lender cannot agree within a reasonable time on an alternative rate for such Loans denominated in an Alternative Currency (other than Canadian Dollars), the Borrower may, at its discretion, either (i) prepay such Loans or (ii) maintain such Loans outstanding, in which case, the interest rate payable to the applicable Lender on such Loans will be the rate determined by such Lender as its cost of funds to fund a Borrowing of such Loans with maturities comparable to the Interest Period applicable thereto plus the Applicable Rate unless the maintenance of such Loans outstanding on such basis would not stop the conditions described in the first sentence of this Section 2.23 from existing (in which case the Borrower shall be required to prepay such Loans), and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Adjusted LIBO Rate or the Adjusted BA Rate, the Administrative Agent shall during the period of such suspension compute the Alternate Base Rate or the Canadian Base Rate, as applicable, applicable to such Lender without reference to the Adjusted LIBO Rate component or the Adjusted BA Rate component, as applicable, thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted LIBO Rate or the Adjusted BA Rate, as applicable. Each Lender agrees to notify the Administrative Agent and the Borrower in writing promptly upon becoming aware that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted LIBO Rate, the Adjusted BA Rate or Adjusted EURIBOR. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
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SECTION 2.24 Loan Modification Offers .
(a) At any time after the Effective Date, the Borrower may on one or more occasions, by written notice to the Administrative Agent, make one or more offers (each, a “ Loan Modification Offer ”) to all the Lenders of one or more Classes (each Class subject to such a Loan Modification Offer, an “ Affected Class ”) to effect one or more Permitted Amendments relating to such Affected Class pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Borrower (including mechanics to permit cashless rollovers and exchanges by Lenders). Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective. Permitted Amendments shall become effective only with respect to the Loans and Commitments of the Lenders of the Affected Class that accept the applicable Loan Modification Offer (such Lenders, the “ Accepting Lenders ”) and, in the case of any Accepting Lender, only with respect to such Lender’s Loans and Commitments of such Affected Class as to which such Lender’s acceptance has been made.
(b) A Permitted Amendment shall be effected pursuant to a Loan Modification Agreement executed and delivered by Holdings, Borrower, each applicable Accepting Lender and the Administrative Agent ( provided , that if such amendment does not affect the rights, duties, privileges or obligations of the Administrative Agent, the Administrative Agent shall only be required to acknowledge such amendment). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement. Each Loan Modification Agreement may, without the consent of any Lender other than the applicable Accepting Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of this Section 2.24, including any amendments necessary to treat the applicable Loans and/or Commitments of the Accepting Lenders as a new “Class” of loans and/or commitments hereunder.
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(c) If, in connection with any proposed Loan Modification Offer, any Lender declines to consent to such Loan Modification Offer on the terms and by the deadline set forth in such Loan Modification Offer (each such Lender, a “ Non-Accepting Lender ”) then the Borrower may, on notice to the Administrative Agent and the Non-Accepting Lender, (i) replace such Non-Accepting Lender in whole or in part by causing such Lender to (and such Lender shall be obligated to) assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04) all or any part of its interests, rights and obligations under this Agreement in respect of the Loans and Commitments of the Affected Class to one or more Eligible Assignees (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided , further, that (a) the applicable assignee shall have agreed to provide Loans and/or Commitments on the terms set forth in the applicable Permitted Amendment, (b) such Non-Accepting Lender shall have received payment of an amount equal to the outstanding principal of the Loans of the Affected Class assigned by it pursuant to this Section 2.24(c), accrued interest thereon, accrued fees and all other amounts (including any amounts under Section 2.11) payable to it hereunder from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) and (c) the processing and recordation fee specified in Section 9.04(b) shall be payable.
(d) Notwithstanding anything to the contrary, this Section 2.24 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
Article III
REPRESENTATIONS AND WARRANTIES
Each of Holdings and the Borrower represents and warrants to the Lenders that as of the Effective Date:
SECTION 3.01 Organization; Powers .
Each of Holdings, any Intermediate Parent, the Borrower and the Restricted Subsidiaries is (a) duly organized or incorporated, validly existing and in good standing (to the extent such concept exists in the jurisdiction of organization of such Person) under the laws of the jurisdiction of its organization or incorporation, (b) has the corporate or other organizational power and authority to carry on its business as now conducted and to execute, deliver and perform its obligations under each Loan Document to which it is a party and (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except in the cases of clause (a) (other than with respect to the Borrower), clause (b) and clause (c), where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
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SECTION 3.02 Authorization; Enforceability .
This Agreement has been duly authorized, executed and delivered by each of Holdings and the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of Holdings, the Borrower or such Loan Party, as the case may be, enforceable against it in accordance with its terms, subject to applicable Debtor Relief Laws and any other applicable bankruptcy, insolvency, reorganization, moratorium, examinership or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and, in the case of each UK Loan Party and each UK Security Document, subject to the UK Legal Reservations and, where applicable, the UK Perfection Requirements and in the case of each Irish Loan Guarantor and each Irish Security Document, subject to the Irish Legal Reservations and, where applicable, the Irish Perfection Requirements.
SECTION 3.03 Governmental Approvals; No Conflicts .
Except as set forth on Schedule 3.03, the Financing Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate (i) the Organizational Documents of, or (ii) any Requirements of Law applicable to, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, (c) will not violate or result in a default under any indenture or other agreement or instrument binding upon Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary or their respective assets, or give rise to a right thereunder to require any payment, repurchase or redemption to be made by Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation thereunder and (d) will not result in the creation or imposition of any Lien on any asset of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary (other than Liens created under the Loan Documents) except (in the case of each of clauses (a), (b)(ii) and (c)) to the extent that the failure to obtain or make such consent, approval, registration, filing or action, or such violation, default or right, as the case may be, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; provided that in the case of a UK Loan Party and each UK Security Document, each representation and warranty in this Section 3.03 (excluding those representations and warranties at Section 3.03(b)(i) and Section 3.03(c)) shall be subject to, in each case as applicable, the UK Legal Reservations and the UK Perfection Requirements.
SECTION 3.04 Financial Condition; No Material Adverse Effect .
(a) The Holdings Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the consolidated financial condition of Holdings and its Subsidiaries as of the respective dates thereof and their consolidated results of operations and cash flows for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.
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(b) To the knowledge of Holdings and the Borrower, the PRN Audited Financial Statements fairly present in all material respects the combined financial condition of the Acquired Companies and their subsidiaries as of the respective dates thereof and their combined results of operations and cash flows for the period covered thereby in accordance with GAAP in all material respects, except as otherwise expressly noted therein or as could not reasonably be expected to be materially adverse to the interests of the Lenders.
(c) The Pro Forma Financial Statements have been prepared in good faith, based on assumptions and adjustments believed by the Borrower to be reasonable as of the date of delivery thereof, and, to the knowledge of Holdings and the Borrower, present fairly in all material respects on a pro forma basis the estimated unaudited financial position of Holdings and its Subsidiaries as at March 31, 2016 and their estimated unaudited results of operations for the period covered thereby, in each case after giving effect to the Transactions, subject to audit adjustments.
(d) Since the Effective Date, there has been no Material Adverse Effect.
SECTION 3.05 Properties .
Each of Holdings, each Intermediate Parent, the Borrower and the Restricted Subsidiaries has good and marketable title to, or valid interests in, all its real and personal property material to its business, if any (including all of the Mortgaged Properties), (i) free and clear of all Liens except for Liens permitted by Section 6.02 and (ii) except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.06 Litigation and Environmental Matters .
(a) Except as set forth on Schedule 3.06, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of Holdings or the Borrower, threatened in writing against or affecting Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(b) Except as set forth on Schedule 3.06, and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, none of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary (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, to the knowledge of Holdings or the Borrower, become subject to any Environmental Liability or (iii) has received written notice of any claim with respect to any Environmental Liability.
SECTION 3.07 Compliance with Laws and Agreements .
Each of Holdings, each Intermediate Parent, the Borrower and the Restricted Subsidiaries is in compliance with (a) all Requirements of Law applicable to it or its property and (b) all indentures and other agreements and instruments binding upon it or its property, except, in each case, where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
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SECTION 3.08 Investment Company Status .
None of the Loan Parties is required to register as an “investment company” under the Investment Company Act of 1940, as amended from time to time.
SECTION 3.09 Taxes .
Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, Holdings, each Intermediate Parent, the Borrower and each Restricted Subsidiary (a) have timely filed or caused to be filed all Tax returns and reports required to have been filed and (b) have paid or caused to be paid all Taxes levied or imposed on their properties, income or assets (whether or not shown on a Tax return) including in their capacity as tax withholding agents, except any Taxes that are being contested in good faith by appropriate proceedings, provided that Holdings, the Borrower or such Intermediate Parent or Restricted Subsidiary, as the case may be, has set aside on its books adequate reserves therefor in accordance with GAAP. There is no proposed Tax assessment, deficiency or other claim against Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary that would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.10 ERISA .
(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan sponsored by a Loan Party is in compliance with the applicable provisions of ERISA, the Code and other federal or state laws.
(b) Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) no ERISA Event has occurred during the six year period prior to the date on which this representation is made or deemed made or is reasonably expected to occur, and (ii) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that would reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.
(c) Except as could not reasonably be expected, individually or in the aggregate to result in a Material Adverse Effect: (i) each employee benefit plan (as defined in Section 3(2) of ERISA) sponsored by Holdings or the Borrower that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service; (ii) to the knowledge of Holdings and the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status; and (iii) there are no pending or, to the knowledge of Holdings and the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any such plan.
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SECTION 3.11 Disclosure .
As of the Effective Date, (in the case of any of the following relating to the Acquired Companies, to the best of Borrower’s knowledge), all written factual information and written factual data (other than projections, any pro forma financial information (including the Pro Forma Financial Statements), budgets, other forward-looking information or information consisting of statements, estimates or forecasts regarding the future condition of the industries in which the Loan Parties operate and information of a general economic or industry specific nature) made available to the Administrative Agent, any Joint Lead Arranger or any Lender in connection with the Transactions, when taken as a whole after giving effect to all supplements and updates provided thereto, is correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not materially misleading in the light of the circumstances under which they were made; provided that, with respect to the projections of Holdings and its Subsidiaries included in the Information Memorandum, Holdings and the Borrower represent that such projections, when taken as a whole, were prepared in good faith based upon assumptions believed by them to be reasonable at the time furnished, it being understood that (i) such projections are merely a prediction as to future events and are not to be viewed as facts, (ii) such projections are subject to significant uncertainties and contingencies, many of which are beyond the control of Holdings and (iii) no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ significantly from the projected results and such differences may be material.
SECTION 3.12 Subsidiaries . As of the Effective Date, after giving effect to the Transactions to occur on the Effective Date, Schedule 3.12 sets forth the name of, and the ownership interest of each Subsidiary of Holdings.
SECTION 3.13 Intellectual Property; Licenses, Etc.
Except as could not reasonably be expected to have a Material Adverse Effect, each of Holdings, each Intermediate Parent, the Borrower and the Restricted Subsidiaries owns, licenses or possesses the right to use all Intellectual Property that is reasonably necessary for the operation of its business substantially as currently conducted. To the knowledge of Holdings and the Borrower, no Intellectual Property used by Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary in the operation of its business as currently conducted infringes upon the Intellectual Property of any Person except for such infringements that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No claim or litigation regarding any of the Intellectual Property is pending or, to the knowledge of Holdings and the Borrower, threatened in writing against Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
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SECTION 3.14 Solvency .
Immediately after the consummation of each of the Transactions to occur on the Effective Date, after taking into account all applicable rights of indemnity and contribution, (a) the sum of the debt (including contingent liabilities) of Holdings and its Subsidiaries, taken as a whole, does not exceed the present fair saleable value (on a going concern basis) of the assets of Holdings and its Subsidiaries, taken as a whole; (b) the capital of Holdings and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of Holdings and its Subsidiaries, taken as a whole, contemplated as of the date hereof; and (c) Holdings and its Subsidiaries, taken as a whole, do not intend to incur, or believe that they will incur, debts including current obligations beyond their ability to pay such debts as they mature in the ordinary course of business. For the purposes of this Section 3.14, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5) in the ordinary course of business.
SECTION 3.15 Federal Reserve Regulations .
No part of the proceeds of the Loans will be used, directly or indirectly, to purchase or carry any margin stock (within the meaning of Regulation U of the Board of Governors) or to refinance any Indebtedness originally incurred for such purpose, or for any other purpose that entails a violation (including on the part of any Lender) of the provisions of Regulations U or X of the Board of Governors.
SECTION 3.16 USA PATRIOT Act; OFAC and FCPA .
(a) The Borrower will not directly or, knowingly, indirectly use the proceeds of the Loans or otherwise make available such proceeds to any Person for the purpose of funding activities or business of or with any Person that is the subject of Sanctions, or in any Sanctioned Country, in each case, in violation of applicable Sanctions, or in any other manner that would result in a violation by any party to this Agreement of Sanctions applicable to such party. The Borrower will not use the proceeds of the Loans for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity on behalf of a government, in order to obtain, retain or direct business or obtain any improper advantage, in each case in violation of the United States Foreign Corrupt Practices Act of 1977, as amended (the “ FCPA ”) or any other applicable anti-corruption law.
(b) Each of Holdings, the Borrower and the Restricted Subsidiaries is in compliance in all material respects with (i) applicable regulations and other Sanctions administered by OFAC, (ii) Title III of the USA Patriot Act and (iii) the FCPA, the UK Bribery Act of 2010, the Prevention of Corruption (Amendment) Act 2010, the Dutch Criminal Code, the Dutch Sanctions Act 1977 (Sanctiewet 1977) and the Luxembourg Criminal Code.
(c) None of Holdings, any Intermediate Parent, the Borrower, any of the Restricted Subsidiaries or, to the knowledge of the Borrower, any director or officer thereof or one or more individuals or entities holding 50 percent or more of the equity interests of Holdings, are individuals or entities currently on OFAC’s list of Specially Designated Nationals and Blocked Persons and/or any similar list maintained by OFAC, nor is Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary located, organized or resident in a Sanctioned Country.
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Article IV
CONDITIONS
SECTION 4.01 Effective Date .
The obligation of each Lender to make Loans and the obligations of each Issuing Bank to issue Letters of Credit hereunder on the Effective Date shall be subject to satisfaction of the following conditions (or waiver thereof in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from the Borrower, Intermediate Lux Holdings, Intermediate U.S. Holdings and Holdings either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile or other electronic transmission of a signed counterpart of this Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a written opinion (addressed to the Administrative Agent, the Lenders and the Issuing Banks and dated the Effective Date) of (i) Kirkland & Ellis LLP, New York counsel for the Loan Parties, (ii) Greenberg Traurig, LLP, special Maryland counsel for the Loan Parties, (iii) Loyens & Loeff Luxembourg S.À R.L., special Luxembourg counsel for the Foreign Loan Parties, and (iv) DLA Piper Nederland N.V., special Dutch counsel for the Foreign Loan Parties, in each case in form and substance reasonably satisfactory to the Joint Lead Arrangers, the Administrative Agent and the Issuing Banks. Each of Holdings and the Borrower hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received a customary certificate of each Loan Party, dated the Effective Date, executed by any Responsible Officer of such Loan Party including or attaching only those documents referred to in paragraph (d) of this Section 4.01 and confirming that such documents are correct, complete and in full force and effect and have not been amended or superseded as of the Effective Date.
(d) The Administrative Agent shall have received a copy of (i) each Organizational Document of each Loan Party (including, in relation to a Dutch Loan Guarantor, a recent extract from the Dutch trade register ( handelsregister ) relating to it) certified, to the extent applicable, as of a recent date by the applicable Governmental Authority, (ii) signature and incumbency certificates of the Responsible Officers of each Loan Party executing the Loan Documents to which it is a party, (iii) copies of resolutions of the Board of Directors of each Loan Party approving and authorizing the execution, delivery and performance of Loan Documents to which it is a party (or, to the extent required by any applicable law or Organizational Documents, a copy of a resolution signed by all the holders of the issued shares in each Foreign Loan Party, approving and authorizing the execution, delivery and performance of Loan Documents to which it is a party and, if required by applicable law or Organizational Documents, a copy of a resolution of the Board of Directors of each corporate shareholder of each Foreign Loan Party approving the terms of such resolution), certified as of the Effective Date by a secretary, an assistant secretary or a Responsible Officer of such Loan Party as being in full force and effect without modification or amendment and (iv) a good standing certificate (to the extent such concept exists in the jurisdiction of incorporation, organization or formation of such Loan Party) from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation.
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(e) The Administrative Agent shall have received (or shall receive substantially contemporaneously with funding on the initial Loans hereunder) (which amounts may be funded from the proceeds of the initial Loans hereunder) all fees and other amounts previously agreed in writing by the Joint Lead Arrangers and the Borrower to be due and payable on or prior to the Effective Date, including, to the extent invoiced at least three (3) Business Days prior to the Effective Date, reimbursement or payment of all reasonable and documented out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel to the extent required to be reimbursed pursuant to the Commitment Letter) required to be reimbursed or paid by any Loan Party under any Loan Document.
(f) Holdings and the Borrower shall have satisfied the Collateral and Guarantee Requirement and, substantially simultaneously with the consummation of the Acquisition the Subsidiary Guarantors shall have satisfied the Collateral and Guarantee Requirement (in each case other than in accordance with Section 5.14); provided that if, notwithstanding the use by Holdings and the Borrower of commercially reasonable efforts without undue burden or expense to cause the Collateral and Guarantee Requirement to be satisfied on the Effective Date, the requirements thereof (other than (a) the execution and delivery of the Guarantee Agreement and the Collateral Agreement by the Effective Date Loan Parties described in clauses (i) and (ii) of the definition thereof, (b) the delivery of stock certificates or other certificates, if any, representing equity interests of the Borrower and Wholly Owned Subsidiaries of Holdings that are Effective Date Loan Parties described in clause (ii) of the definition thereof ( provided that (x) possession of such certificates perfects a security interest therein and (y) such certificated Equity Interests, other than certificated Equity Interests of the Borrower, will be required to be delivered on the Effective Date only to the extent received from the Acquired Companies (if applicable) after use of Borrower’s commercially reasonable efforts to obtain delivery of such certificates) and (c) delivery of Uniform Commercial Code financing statements, with respect to perfection of security interests in the assets of the Loan Parties that may be perfected by the filing of a financing statement under the Uniform Commercial Code) are not satisfied as of the Effective Date, the satisfaction of such requirements shall not be a condition to the availability of the Loans on the Effective Date (but shall be required to be satisfied as promptly as practicable after the Effective Date and in any event within the period specified therefor in Schedule 5.14 or such later date as the Administrative Agent may otherwise reasonably agree).
(g) Since the date of the Acquisition Agreement, there shall not have been any change or event that has resulted in, or would be reasonably expected to result in, a Material Adverse Effect (as defined in the Acquisition Agreement).
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(h) The Joint Lead Arrangers shall have received the Audited Financial Statements, the Unaudited Financial Statements and the Pro Forma Financial Statements.
(i) (A) The Specified Acquisition Agreement Representations shall be true and correct in all material respects on and as of the Effective Date and (B) the Specified Representations shall be true and correct in all material respects on and as of the Effective Date.
(j) The Core Acquisition shall be consummated in all material respects pursuant to the Acquisition Agreement substantially concurrently with the initial funding of the Loans without giving effect to any amendments, consents or waivers to the execution copy of the Acquisition Agreement made available to the Joint Lead Arrangers prior to their execution and delivery of the Commitment Letter or modifications, consents or waivers of the provisions thereof that, in any such case, are materially adverse to the interests of the Lenders or the Joint Lead Arrangers without the written consent (including vie e-mail) of the Joint Lead Arrangers, such consent not to be unreasonably withheld, conditioned or delayed (it being understood and agreed that (i) any increase in the consideration for the Acquisition shall not be deemed to be materially adverse to the interests of the Lenders or the Joint Lead Arrangers (so long as any increase in the purchase price shall not be funded with additional indebtedness other than Revolving Borrowings), (ii) the following decreases in the consideration for the Acquisition shall not be deemed to be materially adverse to the interests of the Lenders or the Joint Lead Arrangers: (x) decreases pursuant to any purchase price or similar adjustment provisions set forth in the Acquisition Agreement and (y) decreases to the extent they are applied first to reduce the Equity Contribution Percentage (as defined in the Commitment Letter) to a percentage not less than twenty percent (20%) and second, to reduce the amount of the Initial Term Loans and the Second Lien Term Loans, on the one hand, and the Equity Contribution (as defined in the Commitment Letter), on the other hand, on a pro rata basis and (iii) any modification to the definition of “Material Adverse Effect” (as defined in the Acquisition Agreement) without the prior written consent of the Joint Lead Arrangers shall be deemed to be materially adverse to the interests of the Lenders or the Joint Lead Arrangers.
(k) The Debt Repayment shall have been consummated, or substantially concurrently with the initial funding of Loans and the Second Lien Term Loans on the Effective Date, shall be consummated.
(l) The Joint Lead Arrangers and the Lenders shall have received a certificate from the chief financial officer of Holdings certifying as to the solvency of Holdings and its Subsidiaries on a consolidated basis after giving effect to the Transactions, substantially the form of Exhibit P.
(m) The Administrative Agent and the Joint Lead Arrangers shall have received, at least three (3) Business Days prior to the Effective Date, all documentation and other information about the Loan Parties as shall have been reasonably requested in writing at least ten (10) Business Days prior to the Effective Date by the Administrative Agent or the Joint Lead Arrangers that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USA PATRIOT Act.
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(n) The Equity Contribution (as such term is defined in the Commitment Letter) shall have been received or otherwise applied to the Transactions, or substantially concurrently with, or prior to, the Borrowing of the Loans on the Effective Date, in at least the amount set forth in Exhibit A to the Commitment Letter.
SECTION 4.02 Each Credit Event .
After the Effective Date, the obligation of each Lender to make a Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend, renew or extend any Letter of Credit (other than (x) any Borrowing or issuance, amendment, renewal or extension of a Letter of Credit on the Effective Date, (y) any Borrowing or issuance of a Letter of Credit under any Incremental Facility and (z) any Borrowing or issuance of a Letter of Credit the proceeds of which are used to finance a Limited Condition Transaction), is subject to receipt of the request therefor in accordance herewith and to the satisfaction of the following conditions:
(a) The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as the case may be; provided that, in each case, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date.
(b) At the time of and immediately after giving effect to such Borrowing, or the issuance, amendment, renewal or extension of such Letter of Credit, as the case may be, no Default or Event of Default shall have occurred and be continuing.
Each Borrowing ( provided that a conversion or a continuation of a Borrowing shall not constitute a “Borrowing” for purposes of this Section 4.02), other than a Borrowing on the Effective Date or under any Incremental Facility or a Borrowing the proceeds of which are used to finance a Limited Condition Transaction, and each issuance, amendment, renewal or extension of a Letter of Credit (other than any issuance, amendment, renewal or extension of a Letter of Credit on the Effective Date) shall be deemed to constitute a representation and warranty by Holdings and the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section 4.02.
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Article V
AFFIRMATIVE COVENANTS
From and after the Effective Date and until the Termination Date, each of Holdings and the Borrower covenants and agrees with the Lenders that:
SECTION 5.01 Financial Statements and Other Information .
Holdings or the Borrower will furnish to the Administrative Agent, on behalf of each Lender:
(a) on or before the date that is one hundred and twenty (120) days after the end of each fiscal year of Holdings commencing with the fiscal year ended December 31, 2016 (or, in the case of financial statements for the fiscal year ended December 31, 2016, on or before the date that is one hundred and fifty (150) days after the end of such fiscal year), audited consolidated balance sheet and audited consolidated statements of income and retained earnings and statement of cash flows of Holdings and its Subsidiaries as of the end of and for such year, and related notes thereto, setting forth in each case in comparative form the figures for the previous fiscal year (commencing with fiscal year ended December 31, 2017) and accompanied by customary management discussion and analysis, all reported on by an independent public accountant of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition as of the end of and for such year and results of operations and cash flows of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) commencing with the financial statements for the fiscal quarter ended June 30, 2016, on or before the date that is forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of Holdings (or, in the case of financial statements for the fiscal quarters ended June 30, 2016 and September 30, 2016, on or before the date that is seventy-five (75) days after the end of such fiscal quarter, and, in the case of financial statements for the fiscal quarter ended March 31, 2017, on or before the date that is sixty (60) days after the end of such fiscal quarter), unaudited consolidated balance sheet and unaudited consolidated statements of income and retained earnings and statement of cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year and accompanied by customary management discussion and analysis, all certified by a Financial Officer as presenting fairly in all material respects the financial condition as of the end of and for such fiscal quarter and such portion of the fiscal year and results of operations and cash flows of Holdings and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;
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(c) simultaneously with the delivery of each set of consolidated financial statements referred to in clauses (a) and (b) above, the related unaudited consolidating financial information reflecting adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from such consolidated financial statements;
(d) not later than five (5) days after any delivery of financial statements under paragraph (a) or (b) above, a certificate of a Financial Officer (i) certifying as to whether a Default has occurred and is continuing and, if a Default has occurred and is continuing, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth (I) reasonably detailed calculations (A) demonstrating compliance with the Financial Performance Covenant (including a calculation of Consolidated EBITDA for such period with any applicable pro forma and other adjustments expressly contemplated to be included in such certificate pursuant to the other provisions of this Agreement), (B) in the case of financial statements delivered under paragraph (a) above and only to the extent the Borrower would be required to prepay Term Borrowings pursuant to Section 2.11(d), beginning with the financial statements for the fiscal year of Holdings ending December 31, 2017, of Excess Cash Flow for such fiscal year and (C) of the Available Amount then in effect, (II) if the Applicable Rate with respect to the Revolving Loans is to be determined in accordance with Category 2, a calculation of the Senior Secured First Lien Net Leverage Ratio as of the last day of the applicable fiscal quarter or fiscal year and (III) a reconciliation of Consolidated EBITDA to the net income set forth on the applicable statement of income.
(e) not later than forty-five (45) days after the commencement of each fiscal year of Holdings (beginning with the fiscal year commencing January 1, 2017), a detailed consolidated budget for Holdings and its Subsidiaries for such fiscal year (including a projected consolidated balance sheet and consolidated statements of income and retained earnings and statement of cash flows as of the end of and for such fiscal year and setting forth the material assumptions used for purposes of preparing such budget); provided that the obligations of this paragraph shall be suspended upon and following the filing for an IPO; it being understood and agreed that any financial or business projections furnished by any Loan Party (i)(A) are subject to significant uncertainties and contingencies, which may be beyond the control of the Loan Parties, (B) no assurance is given by the Loan Parties that the results or forecast in any such projections will be realized and (C) the actual results may differ from the forecast results set forth in such projections and such differences may be material and (ii) are not a guarantee of performance;
(f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and registration statements (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered to the Administrative Agent), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) filed by Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary with the SEC or with any national securities exchange; and
(g) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, as the Administrative Agent may reasonably request in writing, in each case subject to the limitations set forth below.
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Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this Section 5.01 may be satisfied with respect to financial information of Holdings and its Subsidiaries by furnishing (x) the applicable financial statements of any Holdings Parent that, directly or indirectly, holds all of the Equity Interests of Holdings and holds no other material assets other than the Equity Interests of Holdings or (y) the Form 10-K or 10-Q (or the equivalent), as applicable, of Holdings (or any Holdings Parent) filed with the SEC within the applicable time periods required by applicable law and regulations (including any extended deadlines available thereunder in connection with an IPO); provided that (i) to the extent such information relates to a Holdings Parent, such information is accompanied by consolidating information, which may be unaudited, that explains in reasonable detail the differences between the information relating to such parent, on the one hand, and the information relating to Holdings and its Subsidiaries on a standalone basis, on the other hand, and (ii) to the extent such information is in lieu of information required to be provided under Section 5.01(a), such materials are accompanied by a report and opinion of an independent registered public accounting firm of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit.
Documents required to be delivered pursuant to Section 5.01(a), (b) or (f) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Holdings posts such documents, or provides a link thereto on Holdings’ or the Borrower’s website on the Internet at the website address listed on Schedule 9.01 (or otherwise notified pursuant to Section 9.01(d)); or (ii) on which such documents are posted on Holdings’ or the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) Holdings shall deliver paper copies of such documents to the Administrative Agent upon its reasonable request until a written notice to cease delivering paper copies is given by the Administrative Agent and (ii) Holdings shall notify the Administrative Agent (by fax or electronic mail) of the posting of any such documents and upon its reasonable request, provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or maintain paper copies of the documents referred to above, and each Lender shall be solely responsible for timely accessing posted documents and maintaining its copies of such documents.
Notwithstanding anything to the contrary herein, neither Holdings nor any Subsidiary shall be required to deliver, disclose, permit the inspection, examination or making of copies of or excerpts from, or any discussion of, any document, information, or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent (or any Lender (or their respective representatives or contractors)) is prohibited by applicable law, fiduciary duty or binding agreement, (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) with respect to which any Loan Party or any Subsidiary owes confidentiality obligations (to the extent not created in contemplation of such Loan Party’s or Subsidiary’s obligations under this Section 5.01) to any third party.
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The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Joint Lead Arrangers will make available to the Lenders and the Issuing Bank materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive Material Non-Public Information and who may be engaged in investment and other market-related activities with respect to the Borrower’s or their Affiliates’ securities. The Borrower hereby agrees that they will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Joint Lead Arrangers, the Issuing Bank and the Lenders to treat such Borrower Materials as not containing any Material Non-Public Information (although it may be sensitive and proprietary) ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.12); (x) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (y) the Administrative Agent and the Joint Lead Arrangers shall be entitled to treat the Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”. Each Loan Party hereby acknowledges and agrees that, unless the Borrower notifies the Administrative Agent in advance, all financial statements and certificates furnished pursuant to Sections 5.01(a), (b) and (c) above are hereby deemed to be suitable for distribution, and to be made available, to all Lenders and may be treated by the Administrative Agent and the Lenders as not containing any Material Non-Public Information and all other information shall be assumed to contain Material Non-Public Information.
SECTION 5.02 Notices of Material Events .
Promptly after any Responsible Officer of Holdings or the Borrower obtains actual knowledge thereof, Holdings or the Borrower will furnish to the Administrative Agent (for distribution to each Lender through the Administrative Agent) written notice of the following:
(a) the occurrence of any Default;
(b) to the extent permissible by Requirements of Law, the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of a Financial Officer or another executive officer of Holdings, any Intermediate Parent, the Borrower or any Subsidiary, affecting Holdings, any Intermediate Parent, the Borrower or any Subsidiary or the receipt of a written notice of an Environmental Liability, in each case that would reasonably be expected to result in a Material Adverse Effect; and
(c) the occurrence of any ERISA Event or ERISA Events that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
Each notice delivered under this Section 5.02 shall be accompanied by a written statement of a Responsible Officer of Holdings or the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
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SECTION 5.03 Information Regarding Collateral .
(a) Holdings or the Borrower will furnish to the Administrative Agent prompt (and in any event within thirty (30) days after or such longer period as reasonably agreed to by the Administrative Agent) written notice of any change (i) in any Loan Party’s legal name (as set forth in its certificate of organization or like document), (ii) in the jurisdiction of incorporation or organization of any Loan Party or in the form of its organization or (iii) in any Loan Party’s organizational identification number to the extent that such Loan Party is organized or owns Mortgaged Property in a jurisdiction where an organizational identification number is required to be included in a UCC financing statement for such jurisdiction.
(b) The Borrower shall provide in each Compliance Certificate delivered pursuant to Section 5.01(d) any changes, if any, to Schedule III to the Collateral Agreement as required to make such schedules accurate as of the last day of the fiscal quarter for which such Compliance Certificate is delivered.
SECTION 5.04 Existence; Conduct of Business .
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, Intellectual Property and Governmental Approvals material to the conduct of its business, except to the extent (other than with respect to the preservation of the existence of Holdings and the Borrower) that the failure to do so could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, amalgamation, consolidation, liquidation or dissolution permitted under Section 6.03 or any Disposition permitted by Section 6.05.
SECTION 5.05 Payment of Taxes, etc.
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, pay all Taxes (whether or not shown on a Tax return) imposed upon it or its income or properties or in respect of its property or assets, before the same shall become delinquent or in default, except where (a) the same are being contested in good faith by an appropriate proceeding diligently conducted by Holdings, the Borrower or any of their respective Subsidiaries or (b) the failure to make payment could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
SECTION 5.06 Maintenance of Properties .
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, keep and maintain all tangible property material to the conduct of its business in good working order and condition (casualty, condemnation and ordinary wear and tear excepted), except where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
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SECTION 5.07 Insurance .
(a) Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, maintain, with insurance companies that Holdings believes (in the good faith judgment of the management of Holdings) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which Holdings believes (in the good faith judgment of management of Holdings) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as Holdings believes (in the good faith judgment or the management of Holdings) are reasonable and prudent in light of the size and nature of its business, and will furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the insurance so carried. The Borrower shall, and shall cause each Restricted Subsidiary organized or existing under the laws of a Covered Jurisdiction to (i) name the Collateral Agent, on behalf of the Secured Parties, as an additional insured as its interests may appear on each such general liability policy of insurance belonging to or insuring such Restricted Subsidiary (other than directors and officers policies, workers compensation policies and business interruption insurance) and (ii) in the case of each casualty insurance policy belonging to or insuring a Restricted Subsidiary organized or existing under the laws of a Covered Jurisdiction, include a loss payable clause or mortgagee endorsement that names the Collateral Agent, on behalf of the Secured Parties, as the loss payee or mortgagee thereunder.
(b) If any portion of any Mortgaged Property is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), then the Borrower shall, or shall cause each Loan Party to (i) maintain, or cause to be maintained, with insurance companies that Holdings believes (in the good faith judgment of the management of Holdings) are financially sound and responsible at the time the relevant coverage is placed or renewed, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and (ii) furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the flood insurance so carried.
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SECTION 5.08 Books and Records; Inspection and Audit Rights .
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, maintain proper books of record and account in which entries that are full, true and correct in all material respects and are in conformity with GAAP (or applicable local standards (it being understood and agreed that Foreign Subsidiaries may maintain individual books and records in conformity with generally accepted accounting principles that are applicable in their respective countries of organization and that such maintenance shall not constitute a breach of the representations, warranties or covenants hereunder)) consistently applied shall be made of all material financial transactions and matters involving the assets and business of Holdings, any Intermediate Parent, the Borrower or the Restricted Subsidiaries, as the case may be. Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, permit any representatives designated by the Administrative Agent, upon reasonable prior notice, to visit and inspect its tangible properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested; provided that, excluding any such visits and inspections during the continuation of an Event of Default, only the Administrative Agent on behalf of the Lenders may exercise visitation and inspection rights of the Administrative Agent and the Lenders under this Section 5.08 and the Administrative Agent shall not exercise such rights more often than one time during any calendar year absent the existence of an Event of Default and such time shall be at the Borrower’s expense; provided, further that (a) when an Event of Default exists, the Administrative Agent (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice and (b) the Administrative Agent shall give Holdings and the Borrower the opportunity to participate in any discussions with Holdings’ or the Borrower’s independent public accountants.
SECTION 5.09 Compliance with Laws .
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, comply with all Requirements of Law (including Environmental Laws, the FCPA, Sanctions and the USA PATRIOT Act) with respect to it, its property and operations, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.10 Use of Proceeds and Letters of Credit .
The Borrower will use the proceeds of the Term Loans borrowed on the Effective Date and may use up to $5,000,000 of Revolving Loans drawn on the Effective Date (excluding any undrawn Letters of Credit) plus an additional amount of Revolving Loans to account for the amount of original issue discount or upfront fees resulting from the Joint Lead Arrangers’ exercise of the “pricing flex” provisions of the Fee Letter, together with cash on hand of the Borrower and proceeds of the Second Lien Term Loans borrowed on the Effective Date to directly or indirectly finance the Transactions, directly or indirectly pay all or a portion of the Transaction Costs, to increase cash on hand and for other working capital purposes. The proceeds of the Revolving Loans drawn after the Effective Date will be used only for general corporate purposes, and the Letters of Credit will be used only for general corporate purposes, in each case, including capital expenditures, Permitted Acquisitions, Investments, Restricted Payments, refinancing of Indebtedness and any other transactions not prohibited by this Agreement.
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SECTION 5.11 Additional Subsidiaries .
(a) If (i) any additional Restricted Subsidiary or Intermediate Parent in each case, organized or incorporated in a Covered Jurisdiction, is formed or acquired after the Effective Date, (ii) any Restricted Subsidiary ceases to be an Excluded Subsidiary or (iii) the Borrower, at its option, elects to cause a Subsidiary of Holdings organized or incorporated in a Covered Jurisdiction, or to the extent reasonably acceptable to the Administrative Agent, a Subsidiary that is not a Wholly Owned Subsidiary (including any consolidated Affiliate in which the Borrower and their respective Subsidiaries own no Equity Interest) to become a Subsidiary Loan Party, then Holdings or the Borrower will (subject to the Guaranty and Security Principles in the case of Foreign Loan Parties), within ninety (90) days (or such longer period as may be agreed to by the Administrative Agent in its reasonable discretion) after (x) such newly formed or acquired Restricted Subsidiary or Intermediate Parent is formed or acquired, (y) such Restricted Subsidiary ceases to be an Excluded Subsidiary or (z) the Borrower has made such election, cause such Restricted Subsidiary (unless such Restricted Subsidiary is an Excluded Subsidiary) or Intermediate Parent to satisfy the Collateral and Guarantee Requirement with respect to such Restricted Subsidiary or Intermediate Parent and with respect to any Equity Interest in or Indebtedness of such Restricted Subsidiary or Intermediate Parent owned by or on behalf of any Loan Party.
(b) Notwithstanding the foregoing, in the event any real property would be required to be mortgaged pursuant to this Section 5.11, Holdings and the Borrower shall be required to comply with the “Collateral and Guarantee Requirement” as it relates to such real property within 90 days following the formation or acquisition of such real property or such Restricted Subsidiary or the identification of such new Material Subsidiary, or such longer time period as agreed by the Administrative Agent in its reasonable discretion.
SECTION 5.12 Further Assurances .
(a) Subject to the proviso to Section 4.01(f) solely with respect to the Effective Date, each of Holdings and the Borrower will, and will cause each Loan Party to (subject to the Guaranty and Security Principles in the case of Foreign Loan Parties), execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law and that the Administrative Agent or the Required Lenders may reasonably request, to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties.
(b) Subject, in each case, to the limitations set forth in the Security Documents, if, after the Effective Date, any material assets (other than Excluded Assets), including any Material Real Property, are acquired by the Borrower or any other Loan Party or are held by any Subsidiary on or after the time it becomes a Loan Party pursuant to Section 5.11 (other than assets constituting Collateral under a Security Document that become subject to the Lien created by such Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent thereof, and, if requested by the Administrative Agent (subject to the Guaranty and Security Principles in the case of Foreign Loan Parties), the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause the other Loan Parties to take, such actions as shall be necessary and reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section but only as and to the extent required pursuant to the “Collateral and Guarantee Requirement,” all at the expense of the Loan Parties and subject to the second to last paragraph of the definition of the term “Collateral and Guarantee Requirement.” In the event any Material Real Property is mortgaged pursuant to this Section 5.12(b), the Borrower or such other Loan Party, as applicable, shall be required to comply with the “Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Material Real Property or such longer time period as agreed by the Administrative Agent in its reasonable discretion.
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SECTION 5.13 Designation of Subsidiaries . (a) The Borrower may at any time after the Effective Date designate any Restricted Subsidiary (other than Intermediate Lux Holdings, Intermediate U.S. Holdings, any Intermediate Parent, the Borrower or GTCR Canyon UK Investments Ltd.) as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) immediately after such designation on a Pro Forma Basis, no Event of Default shall have occurred and be continuing and (ii) any Unrestricted Subsidiary shall also be designated an Unrestricted Subsidiary under (x) the Second Lien Credit Agreement and (y) any other Junior Financing constituting Material Indebtedness. The designation of any Subsidiary as an Unrestricted Subsidiary after the Effective Date shall constitute an Investment by Holdings or its Restricted Subsidiaries therein at the date of designation in an amount equal to the fair market value (as determined in good faith by the Borrower) of Holdings’ or its respective subsidiaries’ (as applicable) investment therein. The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute (i) the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary existing at such time and (ii) a return on any Investment by Holdings in such Unrestricted Subsidiary pursuant to the preceding sentence in an amount equal to the fair market value (as determined in good faith by the Borrower) at the date of such designation of Holdings’ or its Subsidiaries’ (as applicable) Investment in such Subsidiary.
(b) The Borrower may at any time after the Effective Date designate any Restricted Subsidiary organized in a Covered Jurisdiction that is an Excluded Subsidiary as an Electing Guarantor or Electing Guarantor as an Excluded Subsidiary; provided that (i) any Electing Guarantor shall also be designated an Electing Guarantor under the Second Lien Credit Agreement and (ii) such Electing Guarantor is located in a Covered Jurisdiction. The designation of any Subsidiary as an Electing Guarantor after the Effective Date shall constitute an Investment by Holdings or its Restricted Subsidiaries therein at the date of designation in an amount equal to the fair market value (as determined in good faith by the Borrower) of Holdings’ or its respective subsidiaries’ (as applicable) investment therein. The designation of any Electing Guarantor as an Excluded Subsidiary shall constitute (i) the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary existing at such time and (ii) a return on any Investment by Holdings in such Excluded Subsidiary pursuant to the preceding sentence in an amount equal to the fair market value (as determined in good faith by the Borrower) at the date of such designation of Holdings’ or its Subsidiaries’ (as applicable) Investment in such Subsidiary.
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SECTION 5.14 Certain Post-Closing Obligations . As promptly as practicable, and in any event within the time periods after the Effective Date specified in Schedule 5.14 or such later date as the Administrative Agent agrees to in writing, including to reasonably accommodate circumstances unforeseen on the Effective Date, Holdings, the Borrower and each other Loan Party shall deliver the documents or take the actions specified on Schedule 5.14 that would have been required to be delivered or taken on the Effective Date, in each case except to the extent otherwise agreed by the Administrative Agent pursuant to its authority as set forth in the definition of the term “Collateral and Guarantee Requirement.”
SECTION 5.15 Maintenance of Rating of Facilities . The Loan Parties shall use commercially reasonable efforts to maintain (i) a public corporate credit rating (but not any particular rating) from S&P and a public corporate family rating (but not any particular rating) from Moody’s, in each case in respect of Holdings and (ii) a public rating (but not any particular rating) in respect of the Initial Term Loans from each of S&P and Moody’s.
SECTION 5.16 Lines of Business . Holdings and its Restricted Subsidiaries, taken as a whole, will not fundamentally and substantively alter the character of their business, taken as a whole, from the business conducted by them on the Effective Date and other business activities which are extensions thereof or otherwise incidental, corollary, synergistic, reasonably related or ancillary to any of the foregoing.
SECTION 5.17 Fiscal Periods . Holdings will keep its current fiscal year; provided , however , that Holdings may, upon written notice to the Administrative Agent, change its fiscal year to any other fiscal year reasonably acceptable to the Administrative Agent, in which case, the Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year.
SECTION 5.18 Lender Calls . Following delivery of the annual or quarterly financial statements pursuant to Section 5.01 (a) or (b), as applicable, and upon request by the Administrative Agent, Holdings will host a conference call, at a time selected by Holdings and reasonably acceptable to the Administrative Agent, with the Lenders to review the financial information provided therein.
Article VI
NEGATIVE COVENANTS
From and after the Effective Date and until the Termination Date, each of Holdings and the Borrower covenants and agrees with the Lenders that:
SECTION 6.01 Indebtedness; Certain Equity Securities .
(a) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness of Holdings, the Borrower and any of the Restricted Subsidiaries under the Loan Documents (including any Indebtedness incurred pursuant to Section 2.20 or 2.21);
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(ii) Indebtedness, including intercompany Indebtedness, outstanding on the Effective Date provided that any Indebtedness in excess of $2,500,000 individually shall only be permitted if set forth on Schedule 6.01 (unless such Indebtedness is permitted by another clause in this Section 6.01), and any Permitted Refinancing thereof;
(iii) Guarantees by Holdings, the Borrower and any of the Restricted Subsidiaries in respect of Indebtedness of Holdings, the Borrower or any Restricted Subsidiary otherwise permitted hereunder; provided that (A) such Guarantee is permitted under Section 6.04 (other than Section 6.04(u)), (B) no Guarantee by any Restricted Subsidiary of the Second Lien Term Loans or any other Junior Financing or Indebtedness that is unsecured and incurred under Section 6.01(a)(xv) shall be permitted unless such Restricted Subsidiary shall have also provided a Guarantee of the Loan Document Obligations pursuant to the Guarantee Agreement and (C) if the Indebtedness being Guaranteed is subordinated to the Loan Document Obligations, such Guarantee shall be subordinated to the Guarantee of the Loan Document Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;
(iv) Indebtedness of Holdings owing to the Borrower or any other Restricted Subsidiary, of the Borrower owing to Holdings or any Restricted Subsidiary or of any Restricted Subsidiary owing to any other Restricted Subsidiary, Holdings or the Borrower, to the extent permitted by Section 6.04; provided that all such Indebtedness of any Loan Party owing to any Restricted Subsidiary that is not a Loan Party shall be subordinated to the Loan Document Obligations (to the extent any such Indebtedness is outstanding at any time after the date that is thirty (30) days after the Effective Date or such later date as the Administrative Agent may reasonably agree) (but only to the extent permitted by applicable law and not giving rise to adverse tax consequences) on terms (i) at least as favorable to the Lenders as those set forth in the form of intercompany note attached as Exhibit F or (ii) otherwise reasonably satisfactory to the Administrative Agent;
(v) (A) Indebtedness (including Capital Lease Obligations and purchase money Indebtedness) incurred, issued or assumed by Holdings, the Borrower or any Restricted Subsidiary to finance the acquisition, purchase, lease, construction, repair, replacement or improvement of fixed or capital property, equipment or other assets; provided that such Indebtedness is incurred concurrently with or within 270 days after the applicable acquisition, purchase, lease, construction, repair, replacement or improvement, and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof); provided, further that, at the time of any such incurrence of Indebtedness and after giving Pro Forma Effect thereto and the use of the proceeds thereof, the aggregate principal amount of Indebtedness that is outstanding in reliance on this clause (v) shall not exceed the greater of (A) $30,000,000 and (B) 10% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
(vi) Indebtedness in respect of Swap Agreements incurred in the ordinary course of business and not for speculative purposes;
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(vii) (a) Indebtedness (1) of any Person acquired in connection with a Permitted Acquisition or permitted Investment or secured by any assets so acquired (and not incurred by the obligor thereon in contemplation of such Permitted Acquisition or permitted Investment) and (2) of any Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary (it being acknowledged that (x) a Person that becomes a direct or indirect Restricted Subsidiary of Holdings as a result of a Permitted Acquisition or permitted Investment may remain liable with respect to Indebtedness existing on the date of such acquisition (and not incurred in contemplation thereof) and (y) an Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary may remain liable with respect to Indebtedness existing on the date of such redesignation (and not incurred in contemplation thereof)); provided that the aggregate principal amount of such Indebtedness outstanding under this clause (vii) at the time of incurrence does not exceed at any time (I) the greater of (x) $45,000,000 and (y) and 15% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time, plus (II) unlimited additional Indebtedness if, for purposes of this clause (II) , immediately after giving effect to such Permitted Acquisition, permitted Investment or redesignation, as the case may be, and the assumption of such Indebtedness, the Total Net Leverage Ratio computed on a Pro Forma Basis for the most recently ended Test Period as of such time is not greater than 5.20:1.00 (it being understood and agreed that unless notified by the Borrower, (A) the Borrower shall be deemed to have used capacity under this clause (II) (to the extent compliant therewith) prior to utilization of amounts of the type described in clause (I) above, (B) Indebtedness may be incurred in respect of both this clause (II) and clause (I) above, and the proceeds from any such incurrence in respect of both clauses may be utilized in a single transaction by first calculating the incurrence in respect of this clause (II) and then calculating the incurrence in respect of clause (I) above (and, for the avoidance of doubt, the Total Net Leverage Ratio may be exceeded as a result thereof) and (C) the Borrower may re-designate any such Indebtedness originally incurred in respect of clause (I) as incurred in respect of clause (II) if, at the time of such re-designation, the Borrower would be permitted to incur such Indebtedness under clause (II) the aggregate principal amount of Indebtedness being so re-designated (for purposes of clarity, with any such re-designation having the effect of increasing the Borrower’s ability to incur Indebtedness in respect of clause (I) as of the date of such re-designation by the amount of such Indebtedness so re-designated); and (b) in respect of the foregoing, any Permitted Refinancing thereof; provided further that the aggregate principal amount of Indebtedness outstanding pursuant to this clause (vii) at the time of incurrence of which the primary obligor or a guarantor is a Restricted Subsidiary that is not a Loan Party shall not exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of (A) $45,000,000 and (B) 15% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
(viii) Indebtedness to the seller of any business or assets acquired by Holdings or any Restricted Subsidiary in a transaction permitted hereunder (including Indebtedness to finance the payment of earnout obligations owing to such seller as a result of such transaction), provided that the aggregate principal amount of Indebtedness permitted under this Section 6.01(a)(viii) at any one time outstanding shall not exceed the greater of (A) $30,000,000 and (B) 10% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
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(ix) Permitted Guarantees and Indebtedness arising under a Permitted Guarantee;
(x) Indebtedness incurred by a Restricted Subsidiary in connection with bankers’ acceptances, discounted bills of exchange or the discounting or factoring of receivables for credit management purposes, in each case incurred or undertaken in the ordinary course of business on arm’s length commercial terms on a non-recourse basis;
(xi) Settlement Indebtedness;
(xii) Indebtedness in respect of Cash Management Obligations and other Indebtedness in respect of netting services, automated clearinghouse arrangements, overdraft protections and similar arrangements, in each case, in connection with securities or deposit accounts or from the honoring of a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;
(xiii) Indebtedness consisting of obligations under deferred compensation (including indemnification obligations, obligations in respect of purchase price adjustments, earn-outs, incentive non-competes and other contingent obligations), or other similar arrangements incurred or assumed in connection with the Acquisition, any Permitted Acquisition, any other Investment or any Disposition, in each case, permitted under this Agreement;
(xiv) Indebtedness of Holdings, the Borrower or any Restricted Subsidiary or any Person that becomes a Restricted Subsidiary after the Effective Date (or of any Person not previously a Restricted Subsidiary that is merged, amalgamated or consolidated with or into Holdings, the Borrower or any Restricted Subsidiary including the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary); provided that, at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xiv) shall not exceed the greater of (A) $75,000,000 and (B) 27.5% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
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(xv) (A) unsecured Indebtedness of Holdings, the Borrower or any Subsidiary Loan Party or any Person that becomes a Loan Party after the Effective Date (or of any Person not previously a Subsidiary Loan Party that is merged, amalgamated or consolidated with or into Holdings, the Borrower or any Restricted Subsidiary including the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary so long as such Restricted Subsidiary becomes a Subsidiary Loan Party); provided that after giving effect to the incurrence of such Indebtedness on a Pro Forma Basis, such amount shall not exceed the sum of (I) (x) $100,000,000 ( minus the amounts of all Incremental Facilities, Incremental Equivalent Debt and Indebtedness incurred under Section 6.01(a)(xx)(B), in each case incurred pursuant to clause (I)(a) of the definition of “Incremental Cap” and all amounts previously incurred pursuant to clause (A)(I)(x) of this Section 6.01(a)(xv) or of Section 6.01(a)(xvi)), plus (y) the Voluntary Prepayment Amount (less the amounts of all Incremental Facilities, Incremental Equivalent Debt and Indebtedness incurred under Section 6.01(a)(xx)(B), in each case incurred pursuant to clause (I)(b) of the definition of “Incremental Cap” and all amounts previously incurred pursuant to clause (A)(I)(y) of this Section 6.01(a)(xv) or of Section 6.01(a)(xvi)), plus (II) the maximum aggregate principal amount that can be incurred without causing the Total Net Leverage Ratio, on a Pro Forma Basis, to exceed 5.20 to 1.00 for the most recent Test Period ended (calculated without deducting from the numerator of such Total Net Leverage Ratio any cash proceeds of such Indebtedness and assuming that, in the case of any revolving facility being established under this clause (xv), that all commitments with respect thereto were fully drawn; provided that to the extent the proceeds of any such Indebtedness are to be used to repay Indebtedness, the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis” shall not be limited) and (B) any Permitted Refinancing of Indebtedness incurred pursuant to the foregoing subclause (A) so long as the obligors thereon do not include any Person that is not Holdings, the Borrower or any Subsidiary Loan Party; provided further that such Indebtedness complies with clauses (a), (b), (c), (d) and (f) of the definition of “Required Additional Debt Terms”; provided , further , that Indebtedness may be incurred under both clauses (I) and (II), and proceeds from any such incurrence may be utilized in a single transaction by first calculating the incurrence under clause (II) above and then calculating the incurrence under clause (I) above) (if any) and, for the avoidance of doubt, the Total Net Leverage Ratio shall be permitted to exceed the maximum ratio set forth in clause (II) above to the extent of such amounts incurred in reliance on clause (I) at substantially the same time;
(xvi) (A) Indebtedness of Holdings, the Borrower or any Subsidiary Loan Party or any Person that becomes a Subsidiary Loan Party after the Effective Date (or of any Person not previously a Subsidiary Loan Party that is merged, amalgamated or consolidated with or into Holdings, the Borrower or any Subsidiary Loan Party including the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary so long as such Restricted Subsidiary becomes a Subsidiary Loan Party) that is secured on a pari passu or junior basis to the Secured Obligations and the agent for such Indebtedness has become a party to the applicable Intercreditor Agreement; provided that after giving effect to the incurrence of such Indebtedness on a Pro Forma Basis, such amount shall not exceed the sum of (I) (x) $100,000,000 ( minus the amounts of all Incremental Facilities, Incremental Equivalent Debt and Indebtedness incurred under Section 6.01(a)(xx)(B), in each case incurred pursuant to clause (I)(a) of the definition of “Incremental Cap” and all amounts previously incurred pursuant to clause (A)(I)(x) of this Section 6.01(a)(xvi) or of Section 6.01(a)(xv)), plus (y) the Voluntary Prepayment Amount (less the amounts of all Incremental Facilities, Incremental Equivalent Debt and Indebtedness incurred under Section 6.01(a)(xx)(B), in each case incurred pursuant to clause (I)(b) of the definition of “Incremental Cap” and all amounts previously incurred pursuant to clause (A)(I)(y) of this Section 6.01(a)(xvi) or of Section 6.01(a)(xv)), plus (II) in the case of Indebtedness secured on a pari passu basis with the Secured Obligations, the maximum aggregate principal amount that can be incurred without causing the Senior Secured First Lien Net Leverage Ratio, on a Pro Forma Basis, to exceed 3.90 to 1.00 for the most recent Test Period ended (calculated without deducting from the numerator of such Total Net Leverage Ratio any cash proceeds of such Indebtedness and assuming that, in the case of any revolving facility being established under this clause (xvi), that all commitments with respect thereto were fully drawn; provided that to the extent the proceeds of any such Indebtedness are to be used to repay Indebtedness, the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis” shall not be limited) plus (III) in the case of Indebtedness secured on a junior basis to the Secured Obligations, the maximum aggregate principal amount that can be incurred without causing the Senior Secured Net Leverage Ratio, on a Pro Forma Basis, to exceed 5.20 to 1.00 for the most recent Test Period ended (calculated without deducting from the numerator of such Total Net Leverage Ratio any cash proceeds of such Indebtedness and assuming that, in the case of any revolving facility being established under this clause (xvi), that all commitments with respect thereto were fully drawn; provided that to the extent the proceeds of any such Indebtedness are to be used to repay Indebtedness, the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis” shall not be limited)), and (B) any Permitted Refinancing of Indebtedness incurred pursuant to the foregoing subclause (A) so long as the obligors thereon do not include any Person that is not Holdings, the Borrower or any Subsidiary Loan Party; provided further that such Indebtedness complies with clauses (a), (b), (c), (d), (e), (f) and, to the extent applicable, (g) of the definition of “Required Additional Debt Terms”; provided further that Indebtedness may be incurred under both clauses (I) and (II) or clauses (I) and (III) and proceeds from any such incurrence may be utilized in a single transaction by first calculating the incurrence under clause (II) or (III) above and then calculating the incurrence under clause (I) above) (if any) and, for the avoidance of doubt, the Senior Secured First Lien Net Leverage Ratio or Senior Secured Net Leverage Ratio, as applicable, shall be permitted to exceed the maximum ratio set forth in clause (II) or (III) above to the extent of such amounts incurred in reliance on clause (I) at substantially the same time;
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(xvii) Indebtedness of Holdings, the Borrower or any Restricted Subsidiary in an aggregate principal amount not greater than the Available Equity Amount that is Not Otherwise Applied at the time of incurrence;
(xviii) Indebtedness consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(xix) Indebtedness supported by a Letter of Credit, in a principal amount not to exceed the face amount of such Letter of Credit;
(xx) (A) the Second Lien Term Loans (and any Guarantee thereof by any Loan Party) and any other Indebtedness of the Borrower (and any Guarantee thereof by any Loan Party), in an aggregate principal amount for this clause (A) not to exceed $370,000,000, (B) Indebtedness in respect of additional term debt incurred by the Borrower under the Second Lien Credit Agreement (and any Guarantee thereof by any Loan Party) not to exceed the Incremental Cap and (C), in the case of clauses (A) and (B), any Permitted Refinancing of the foregoing; provided , that in the case of any Permitted Refinancing, the obligors thereon shall not include any Person that is not Holdings, the Borrower or any Subsidiary Loan Party;
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(xxi) Permitted Unsecured Refinancing Debt, and any Permitted Refinancing thereof; provided , that (A) in the case of any Permitted Unsecured Refinancing Debt that constitutes a Permitted Refinancing of Incremental Equivalent Debt, the obligor thereon shall be the Borrower and (B) in the case of any Permitted Refinancing of any Permitted Unsecured Refinancing Debt, the obligor thereon shall be the Borrower or a Subsidiary Loan Party; provided further that in the case of any Permitted Unsecured Refinancing Debt that constitutes a Permitted Refinancing of Incremental Equivalent Debt (or any Permitted Refinancing thereof), such Indebtedness shall comply with clauses (c) and (e) of the definition of “Credit Agreement Refinancing Indebtedness”;
(xxii) Permitted First Priority Refinancing Debt and Permitted Junior Priority Refinancing Debt, and any Permitted Refinancing of any of the foregoing; provided , that (A) in the case of any Permitted First Priority Refinancing Debt or Permitted Junior Priority Refinancing Debt that constitutes a Permitted Refinancing of Incremental Equivalent Debt, the obligor thereon shall be the Borrower and (B) in the case of any Permitted Refinancing of any Permitted First Priority Refinancing Debt or Permitted Junior Priority Refinancing Debt, the obligor thereon shall be the Borrower or a Subsidiary Loan Party; provided further that in the case of any Permitted First Priority Refinancing Debt or Permitted Junior Priority Refinancing Debt that constitutes a Permitted Refinancing of Incremental Equivalent Debt (or any Permitted Refinancing thereof), such Indebtedness shall comply with clauses (c), (d) and (e) of the definition of “Credit Agreement Refinancing Indebtedness”;
(xxiii) Indebtedness of the Borrower issued in lieu of Incremental Facilities (and including, for the avoidance of doubt, if applicable, any such Indebtedness that is also issued in lieu of “Incremental Facilities” as defined in the Second Lien Credit Agreement) consisting of one or more series of secured or unsecured loans, bonds, notes or debentures (which loans, bonds, notes or debentures, if secured, may be secured either by Liens pari passu with the Liens on the Collateral securing the Secured Obligations (but without regard to control of remedies) or by Liens having a junior priority relative to the Liens on the Collateral securing the Secured Obligations) (and any Registered Equivalent Notes issued in exchange therefor) (the “ Incremental Equivalent Debt ”); provided that (x) the aggregate principal amount of all such Indebtedness incurred pursuant to this clause (xxiii) shall not exceed, at the time of incurrence, the Incremental Cap at such time, and (y) such Indebtedness complies with the provisions of the Required Additional Debt Terms;
(xxiv) Indebtedness of any Restricted Subsidiary that is not a Loan Party in an amount not to exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of (A) $30,000,000 and (B) 10% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
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(xxv) Indebtedness incurred by Holdings, the Borrower or any Restricted Subsidiary in respect of letters of credit, bank guarantees, warehouse receipts, bankers’ acceptances or similar instruments issued or created in the ordinary course of business or consistent with past practice, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other indemnification or reimbursement-type obligations;
(xxvi) obligations in respect of self-insurance and obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by Holdings, the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business or consistent with past practice;
(xxvii) Indebtedness representing deferred compensation or stock-based compensation owed to employees of Holdings, any Intermediate Parent, the Borrower or the Restricted Subsidiaries incurred in the ordinary course of business or consistent with past practice;
(xxviii) Indebtedness consisting of unsecured promissory notes issued by Holdings, the Borrower or any Restricted Subsidiary to future, current or former officers, directors, employees, managers and consultants or their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings (or any Holdings Parent) to the extent permitted by Section 6.07(a);
(xxix) Indebtedness incurred in connection with a Qualified Securitization Facility;
(xxx) Indebtedness of any Restricted Subsidiary that is a joint venture in an amount not to exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of (A) $30,000,000 and (B) 10% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time; and
(xxxi) endorsement of instruments or other payment items for deposit in the ordinary course of business;
(xxxii) to the extent constituting Indebtedness, Guarantees in the ordinary course of business of the obligations of suppliers, customers, franchisees and licensees of Holdings and its Restricted Subsidiaries;
(xxxiii) performance Guarantees of Holdings and the Restricted Subsidiaries primarily guaranteeing performance of contractual obligations of Holdings or Restricted Subsidiaries to a third party and not primarily for the purpose of guaranteeing payment of Indebtedness;
(xxxiv) Indebtedness in respect of trade letters of credit not to exceed $5,000,000 at any time outstanding;
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(xxxv) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Restricted Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; and
(xxxvi) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (i) through (xxxv) above.
(b) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, issue any Disqualified Equity Interests in excess of the greater of (A) $30,000,000 and (B) 10% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time, except (x) to the extent incurred as Indebtedness under Section 6.01(a) and (y) (i) preferred Equity Interests issued to and held by Holdings, the Borrower or any Restricted Subsidiary, and (ii) preferred Equity Interests issued to and held by joint venture partners after the Effective Date; provided that in the case of this clause (ii) any such issuance of preferred Equity Interests shall be deemed to be incurred Indebtedness and subject to the provisions set forth in Section 6.01(a) and (b).
For purposes of determining compliance with this Section 6.01, (i) in the event that an item of Indebtedness (or any portion thereof) meets the criteria of more than one of the categories of Indebtedness described in clauses (a)(i) through (a)(xxxvi) above, the Borrower may, in its sole discretion, at the time of incurrence, divide, classify or reclassify, or at any later time divide, classify or reclassify, such item of Indebtedness (or any portion thereof) and will only be required to include the amount and type of such Indebtedness in one or more of the above clauses; provided that all Indebtedness outstanding under the Loan Documents will be deemed to have been incurred in reliance only on the exception in clause (a)(i) and (B) all Indebtedness outstanding under the Second Lien Loan Documents on the Effective Date will be deemed to have been incurred in reliance only on the exception in clause (a)(xx)(A).
For purposes of determining compliance with any restriction on the incurrence of Indebtedness, the principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, plus the amount of any premium paid, and fees and expenses incurred, in connection with such extension, replacement, refunding refinancing, renewal or defeasance (including any fees and original issue discount incurred in respect of such resulting Indebtedness).
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SECTION 6.02 Liens .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased) or hereafter acquired (but not leased) by it, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) Liens existing on the Effective Date; provided that any Lien securing Indebtedness or other obligations in excess of $2,500,000 individually shall only be permitted if set forth on Schedule 6.02 (unless such Lien is permitted by another clause in this Section 6.02) and any modifications, replacements, renewals or extensions thereof; provided further that such modified, replacement, renewal or extension Lien does not extend to any additional property other than (1) after-acquired property that is affixed or incorporated into the property covered by such Lien and (2) proceeds and products thereof;
(iv) Liens securing Indebtedness permitted under Section 6.01(a)(v); provided that (A) such Liens attach concurrently with or within 270 days after the acquisition, repair, replacement, construction or improvement (as applicable) of the property subject to such Liens, (B) such Liens do not at any time encumber any property other than the property financed by such Indebtedness except for replacements, additions, accessions and improvements to such property and the proceeds and the products thereof, and any lease of such property (including accessions thereto) and the proceeds and products thereof and (C) with respect to Capital Lease Obligations, such Liens do not at any time extend to or cover any assets (except for replacements, additions, accessions and improvements to or proceeds of such assets) other than the assets subject to such Capital Lease Obligations; provided further that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;
(v) (i) easements, leases, licenses, subleases or sublicenses granted to others (including licenses and sublicenses of Intellectual Property) in the ordinary course of business that do not (A) interfere in any material respect with the business of Holdings and its Restricted Subsidiaries, taken as a whole, or (B) secure any Indebtedness and (ii) any interest or title of a lessor, licensor, sublicensor or sublessor under any lease or license entered into by Holdings, the Borrower or any Restricted Subsidiary in the ordinary course of its business or consistent with past practice;
(vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(vii) Liens (A) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection; (B) attaching to pooling, commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business; or (C) in favor of a banking or other financial institution or entity, or electronic payment service provider, arising as a matter of law encumbering deposits (including the right of setoff) and that are within the general parameters customary in the banking or finance industry;
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(viii) Liens (A) on cash advances or escrow deposits in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 6.04 to be applied against the purchase price for such Investment or otherwise in connection with any escrow arrangements with respect to any such Investment or any Disposition permitted under Section 6.05 (including any letter of intent or purchase agreement with respect to such Investment or Disposition), or (B) consisting of an agreement to dispose of any property in a Disposition permitted under Section 6.05, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
(ix) Liens on property or other assets of any Restricted Subsidiary that is not a Loan Party, which Liens secure Indebtedness of such Restricted Subsidiary or another Restricted Subsidiary that is not a Loan Party, in each case permitted under Section 6.01(a);
(x) Liens granted by a Restricted Subsidiary that is not a Loan Party in favor of any Restricted Subsidiary and Liens granted by a Loan Party in favor of any other Loan Party;
(xi) Liens existing on property or other assets at the time of its acquisition or existing on the property or other assets of any Person at the time such Person becomes a Restricted Subsidiary, in each case after the Effective Date and any modifications, replacements, renewals or extensions thereof; provided that (A) such Lien was not created in contemplation of such acquisition or such Person becoming a Restricted Subsidiary and (B) such Lien does not extend to or cover any other assets or property (other than any replacements of such property or assets and additions and accessions thereto, the proceeds or products thereof and other than after-acquired property subject to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require or include, pursuant to their terms at such time, a pledge of after-acquired property, and proceeds or products thereof and, in the case of multiple equipment financings provided by any lender, other equipment financed by such lender);
(xii) Liens on cash, Permitted Investments or other marketable securities securing Letters of Credit of any Loan Party that are cash collateralized on the Effective Date in an amount of cash, Cash Equivalents or other marketable securities with a fair market value of up to 105% of the face amount of such Letters of Credit being secured;
(xiii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods by Holdings, the Borrower or any Restricted Subsidiary in the ordinary course of business;
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(xiv) Liens deemed to exist in connection with Investments in repurchase agreements under clause (e) of the definition of the term “Permitted Investments”;
(xv) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(xvi) Liens that are contractual rights of setoff (A) relating to the establishment of depository relations with banks not given in connection with the incurrence of Indebtedness, (B) relating to pooled deposit or sweep accounts to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of Holdings, the Borrower and the Restricted Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of Holdings, the Borrower or any Restricted Subsidiary in the ordinary course of business;
(xvii) ground leases in respect of real property on which facilities owned or leased by Holdings, the Borrower or any of the Restricted Subsidiaries are located;
(xviii) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(xix) Liens on the Collateral securing Indebtedness permitted under Section 6.01(a)(xx), Section 6.01(a)(xxii) or 6.01(a)(xxiii); provided that (A) such Liens securing Indebtedness permitted under Section 6.01(a)(xx) shall be junior to the Liens on the Collateral securing the Secured Obligations pursuant to the Closing Date Intercreditor Agreement and (B) in all cases such Liens shall be subject to the applicable Intercreditor Agreement;
(xx) Liens securing Indebtedness on real property other than the Material Real Properties (except as required by this Agreement);
(xxi) Settlement Liens;
(xxii) Liens securing Indebtedness permitted under Section 6.01(a) (viii), (xiv) or (xvi);
(xxiii) Liens on assets of any Restricted Subsidiary that is not a Loan Party (x) securing working capital lines in foreign jurisdictions and/or (y) securing other obligations or Indebtedness permitted by Section 6.01;
(xxiv) Liens on cash and Permitted Investments used to satisfy or discharge Indebtedness; provided such satisfaction or discharge is permitted hereunder;
(xxv) Receipt of progress payments and advances from customers in the ordinary course of business to the extent the same creates a Lien on the related inventory and proceeds thereof;
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(xxvi) Liens on Equity Interests of any joint venture (a) securing obligations of such joint venture or (b) pursuant to the relevant joint venture agreement or arrangement;
(xxvii) [reserved];
(xxviii) other Liens; provided that, at the time of the granting thereof and after giving Pro Forma Effect thereto, the aggregate amount of obligations secured by all Liens incurred in reliance on this clause (xxviii) shall not exceed the greater of (A) $75,000,000 and (B) 27.5% of Consolidated EBITDA for the Test Period then last ended (provided that, with respect to any such obligation, the amount of such obligation shall be the lesser of (x) the outstanding face amount of such obligation and (y) the fair market value of the assets securing such obligation);
(xxix) Liens on accounts receivable, Securitization Assets and related assets incurred in connection with a Qualified Securitization Facility;
(xxx) Liens on Escrowed Proceeds for the benefit of the related holders of debt securities or other Indebtedness (or the underwriters for arrangers thereof) or on cash set aside at the time of the incurrence of any Indebtedness or government securities purchased with such cash, in either case to the extent such cash or government securities prefund the payment of interest on such Indebtedness and are held in an escrow account or similar arrangement to be applied for such purpose;
(xxxi) Liens of bailees arising as a matter of law or pursuant to the standard terms of agreement of such bailee in the ordinary course of business; provided that such Liens shall extend only to the assets subject to such bailment;
(xxxii) Liens securing obligations (other than obligations representing Indebtedness for borrowed money) under operating, reciprocal easement or similar agreements entered into in the ordinary course of business of Holdings and its Subsidiaries;
(xxxiii) utility and similar deposits in the ordinary course of business;
(xxxiv) purchase options, call and similar rights of, and restrictions for the benefit of, a third party with respect to Equity Interests held by Holdings or any Restricted Subsidiary in Joint Ventures;
(xxxv) Liens in favor of Holdings or a Restricted Subsidiary arising in connection with Intercompany License Agreements;
(xxxvi) Liens on cash or Permitted Investments securing any Swap Agreement (or any obligations in respect of the clearing thereof) so long as the fair market value of the assets securing such Swap Agreement does not exceed $30,000,000 at any time;
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(xxxvii) Liens (i) attaching solely to cash advances and cash earnest money deposits in connection with Investments permitted under Section 6.04 or (ii) consisting of an agreement to Dispose of any property in a Disposition permitted hereunder; and
(xxxviii) any Lien resulting from the rules and regulations of any clearing system or stock exchange over shares and/or other securities held in that clearing system or stock exchange.
For purposes of determining compliance with this Section 6.02, (i) in the event that any Lien (or any portion thereof) meets the criteria of more than one of the categories of Liens described in clauses (i) through (xxxviii) above, the Borrower may, in its sole discretion, at the time of incurrence, divide, classify or reclassify, or at any later time divide, classify or reclassify, such Lien (or any portion thereof) and will only be required to include the amount and type of such Lien in one or more of the above clauses; provided that (x) all Liens created under the Loan Documents will be deemed to have been incurred in reliance only on the exception in clause (i) and (y) all Liens created under the Second Lien Loan Documents on the Effective Date will be deemed to have been incurred in reliance only on the exception in clause (xix).
SECTION 6.03 Fundamental Changes; Holdings Covenant .
(a) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, merge into or amalgamate or consolidate with any other Person, or permit any other Person to merge into or amalgamate or consolidate with it, or liquidate or dissolve (which, for the avoidance of doubt, shall not restrict Holdings, the Borrower or any Restricted Subsidiary from changing its organizational form), except that:
(i) any Restricted Subsidiary (other than the Borrower) may merge, amalgamate or consolidate with (A) the Borrower or Holdings; provided that the Borrower or Holdings shall be the continuing or surviving Person, or (B) any one or more Restricted Subsidiaries (other than the Borrower); provided , further , that when any Subsidiary Loan Party is merging, amalgamating or consolidating with another Restricted Subsidiary (1) the continuing or surviving Person shall be a Subsidiary Loan Party or the Borrower or (2) if the continuing or surviving Person is not a Subsidiary Loan Party, the acquisition of such Subsidiary Loan Party by such surviving Restricted Subsidiary is otherwise permitted under Section 6.04;
(ii) (A) any Restricted Subsidiary that is not a Loan Party may merge, amalgamate or consolidate with or into any Restricted Subsidiary that is not a Loan Party and (B) (x) any Restricted Subsidiary (other than the Borrower) may liquidate or dissolve and (y) any Restricted Subsidiary may change its legal or organizational form if the Borrower determines in good faith that such action is in the best interests of Holdings and its Restricted Subsidiaries and is not materially disadvantageous to the Lenders;
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(iii) any Restricted Subsidiary (other than the Borrower) may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to Holdings, the Borrower or another Restricted Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then (A) the transferee must be a Loan Party, (B) to the extent constituting an Investment, such Investment is a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04 or (C) to the extent constituting a Disposition to a Restricted Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04;
(iv) the Borrower may merge, amalgamate or consolidate with (or Dispose of all or substantially all of its assets to) any other Person; provided that (A) the Borrower shall be the continuing or surviving Person or (B) if the Person formed by or surviving any such merger, amalgamation or consolidation is not the Borrower or is a Person into which the Borrower has been liquidated (or, in connection with a Disposition of all or substantially all of the Borrower’s assets, if the transferee of such assets) (any such Person, the “ Successor Borrower ”), (1) the Successor Borrower shall be an entity organized or existing under the laws of the United States (or any state thereof), (2) the Successor Borrower shall expressly assume all of the obligations of the Borrower under this Agreement and the other Loan Documents to which the Borrower is a party pursuant to a supplement hereto or thereto in form and substance reasonably satisfactory to the Administrative Agent, (3) each Loan Party other than the Borrower, unless it is the other party to such merger, amalgamation or consolidation, shall have reaffirmed, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, that its Guarantee of and grant of any Liens as security for the Secured Obligations shall apply to the Successor Borrower’s obligations under this Agreement and (4) the Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrower stating that such merger, amalgamation or consolidation complies with this Agreement; provided further that (y) if such Person is not a Loan Party, no Event of Default (or, to the extent related to a Permitted Acquisition or any Investment not prohibited by Section 6.04, no Specified Event of Default) shall exist after giving effect to such merger, amalgamation or consolidation and (z) if the foregoing requirements are satisfied, the Successor Borrower will succeed to, and be substituted for, the Borrower under this Agreement and the other Loan Documents; provided further that (A) the Borrower shall have provided any documentation and other information about the Successor Borrower to the extent reasonably requested in writing promptly, and in any case within one Business Day following the delivery of the certificate in clause (4), by any Lender or Issuing Bank through the Administrative Agent that such Lender or Issuing Bank shall have reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including Title III of the USA PATRIOT Act and (B) such Lender or Issuing Bank, as applicable, shall be reasonably satisfied that its review of such documentation and information requested and delivered pursuant to clause (A) complies with such applicable “know your customer” and anti-money laundering rules and regulations ( provided , that for the avoidance of doubt, the Borrower’s failure to deliver information requested after the first Business Day following delivery of the certificate in clause (4) above shall not constitute a Default or an Event of Default under this Agreement or the Loan Documents);
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(v) any Restricted Subsidiary (other than the Borrower) may merge, consolidate or amalgamate with any other Person in order to effect an Investment permitted pursuant to Section 6.04; provided that the continuing or surviving Person shall be the Borrower or a Restricted Subsidiary, which together with each of the Restricted Subsidiaries, shall have complied with the requirements of Sections 5.11 and 5.12;
(vi) Holdings, the Borrower and the Restricted Subsidiaries may consummate the Acquisition and related transactions contemplated by the Acquisition Agreement and the Transactions and any Permitted Reorganization or IPO Reorganization Transaction; and
(vii) any Restricted Subsidiary (other than the Borrower) may effect a merger, amalgamation, dissolution, liquidation consolidation or amalgamation to effect a Disposition permitted pursuant to Section 6.05.
(b) Holdings will not, and will not permit Intermediate U.S. Holdings, Intermediate Lux Holdings or any other Intermediate Parent to, conduct, transact or otherwise engage in any business or operations other than (i) the ownership and/or acquisition of the Equity Interests or debt interests of the Borrower, any Intermediate Parent and any other Subsidiary, (ii) the maintenance of its legal existence, including the ability to incur fees, costs and expenses relating to such maintenance, (iii) participating in tax, accounting and other administrative matters as a member of the consolidated group of Holdings and its Subsidiaries, (iv) the performance of its obligations under and in connection with the Loan Documents, the Second Lien Loan Documents and any documentation governing any Indebtedness or Guarantee, the Acquisition Agreement, the other agreements contemplated by the Acquisition Agreement and the other agreements contemplated hereby and thereby and any Permitted Reorganization or IPO Reorganization Transaction, (v) any public offering of its (except in the case of any Intermediate Parent that is not the direct or indirect parent of GTCR Canyon UK Investments Ltd.) or any of its direct or indirect parent’s common stock or any other issuance or registration of its Equity Interests for sale or resale not prohibited by this Agreement, including the costs, fees and expenses related thereto, (vi) making any dividend or distribution or other transaction similar to a Restricted Payment and not otherwise prohibited by Section 6.08, or any Investment in the Borrower, any Intermediate Parent or any other Subsidiary, (vii) the incurrence of any Indebtedness permitted under Section 6.01, (viii) incurring fees, costs and expenses relating to overhead and general operating including professional fees for legal, tax and accounting issues and paying taxes, (ix) providing indemnification to officers and members of the Board of Directors, (x) activities incidental to the consummation of the Transactions and (xi) activities incidental to the businesses or activities described in clauses (i) to (ix) of this paragraph.
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, make or hold any Investment, except:
(a) Permitted Investments at the time such Permitted Investment is made and purchases of assets in the ordinary course of business consistent with past practice;
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(b) loans or advances to officers, members of the Board of Directors and employees of Holdings, the Borrower and the Restricted Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes, (ii) in connection with such Person’s purchase of Equity Interests of Holdings (or any direct or indirect parent thereof) ( provided that the amount of such loans and advances made in cash to such Person shall be contributed to Holdings in cash as common equity or Qualified Equity Interests) and (iii) for purposes not described in the foregoing clauses (i) and (ii), in an aggregate principal amount outstanding at any time not to exceed $10,000,000;
(c) Investments by Holdings in the Borrower or any Restricted Subsidiary, Investments by the Borrower in Holdings or any Restricted Subsidiary and Investments by any Restricted Subsidiary in Holdings, the Borrower or any other Restricted Subsidiary; provided that, in Investments by Loan Parties in Restricted Subsidiaries that are not Loan Parties shall not exceed the greater of (A) $100,000,000 and (B) 35% of Consolidated EBITDA for the Test Period then last ended at the time of making such Investment;
(d) Investments consisting of extensions of trade credit and accommodation guarantees in the ordinary course of business;
(e) Investments (i) existing or contemplated on the Effective Date and set forth on Schedule 6.04 and any modification, replacement, renewal, reinvestment or extension thereof and (ii) existing on the Effective Date by Holdings, the Borrower or any Restricted Subsidiary in Holdings, the Borrower or any Restricted Subsidiary and any modification, renewal or extension thereof; provided that the amount of the original Investment is not increased except by the terms of such Investment to the extent as set forth on Schedule 6.04 or as otherwise permitted by this Section 6.04;
(f) Investments in Swap Agreements incurred in the ordinary course of business and not for speculative purposes;
(g) promissory notes and other non-cash consideration received in connection with Dispositions permitted by Section 6.05;
(h) Permitted Acquisitions, provided that the aggregate principal amount of any financing provided by a Loan Party to a Restricted Subsidiary that is a non-Loan Party in connection with any Permitted Acquisition shall not exceed the greater of (A) $50,000,000 and (B) 20% of Consolidated EBITDA for the Test Period then last ended at the time of making such Investment;
(i) the Transactions;
(j) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers in the ordinary course of business;
(k) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
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(l) loans and advances to any Holdings Parent (x) in lieu of, and not in excess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof), Restricted Payments to the extent permitted to be made to such Holdings Parent in accordance with Section 6.07(a) (other than Section 6.07(a)(xvii)(2)) and (y) to the extent the proceeds thereof are contributed or loaned or advanced to Holdings or a Restricted Subsidiary;
(m) additional Investments and other acquisitions; provided that at the time any such Investment or other acquisition is made, the aggregate outstanding amount of such Investment or acquisition made in reliance on this clause (m), together with the aggregate amount of all consideration paid in connection with all other Investments and acquisitions made in reliance on this clause (m) (including the aggregate principal amount of all Indebtedness assumed in connection with any such other Investment or acquisition previously made under this clause (m)), shall not exceed the sum of the greater of (i)(A) $100,000,000 and (B) 35% of Consolidated EBITDA for the most recently ended Test Period after giving Pro Forma Effect to the making of such Investment or other acquisition, plus (ii) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (iii) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment;
(n) advances of payroll payments to employees in the ordinary course of business;
(o) Investments and other acquisitions to the extent that payment for such Investments is made with Qualified Equity Interests (excluding Qualified Equity Interests the proceeds of which will be applied as Cure Amounts) of Holdings or any Holdings Parent;
(p) Investments of a Subsidiary acquired after the Effective Date or of a Person merged, amalgamated or consolidated with any Subsidiary in accordance with this Section 6.04 and Section 6.03 after the Effective Date or that otherwise becomes a Subsidiary ( provided that if such Investment is made under Section 6.04(h), existing Investments in subsidiaries of such Subsidiary or Person shall comply with the requirements of Section 6.04(h)) to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;
(q) receivables owing to Holdings, the Borrower or any Restricted Subsidiary, if created or acquired in the ordinary course of business;
(r) Investments (A) for utilities, security deposits, leases and similar prepaid expenses incurred in the ordinary course of business and (B) trade accounts created, or prepaid expenses accrued, in the ordinary course of business;
(s) any Permitted Reorganization and any IPO Reorganization Transaction and any Investments in connection therewith;
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(t) additional Investments so long as at the time of any such Investment and after giving effect thereto, on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 3.75 to 1.00;
(u) Investments consisting of Indebtedness, Liens, fundamental changes, Dispositions and Restricted Payments permitted (other than by reference to this Section 6.04(u)) under Sections 6.01, 6.02, 6.03, 6.05 and 6.07, respectively;
(v) contributions to a “rabbi” trust for the benefit of employees, directors, consultants, independent contractors or other service providers or other grantor trust subject to claims of creditors in the case of a bankruptcy of Holdings or the Borrower;
(w) to the extent that they constitute Investments, purchases and acquisitions of inventory, supplies, materials or equipment or purchases, acquisitions, licenses or leases of other assets, Intellectual Property, or other rights, in each case in the ordinary course of business;
(x) any Investment in any Subsidiary or any joint venture in connection with intercompany cash management arrangements or related activities arising in the ordinary course of business;
(y) Investments made by an Unrestricted Subsidiary (other than Investments made with the proceeds of Investments made in reliance on Section 6.04(bb)) prior to the day such Unrestricted Subsidiary is redesignated as a Restricted Subsidiary pursuant to the definition of “Unrestricted Subsidiary”;
(z) Investments in or relating to a Securitization Subsidiary that, in the good faith determination of the Borrower are necessary or advisable to effect any Qualified Securitization Facility or any repurchase obligation in connection therewith, including, without limitation, Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Securitization Facilities or any related Indebtedness;
(aa) Investments in the ordinary course of business in connection with Settlements;
(bb) Investments in any Unrestricted Subsidiaries, joint ventures and Persons which do not become Loan Parties as a result of such Investment in an amount not to exceed the greater of (A) $30,000,000 and (B) 10% of Consolidated EBITDA for the Test Period then last ended at the time of making such Investment;
(cc) Investments in any Person engaged in a business similar to the business activities of Holdings and its Subsidiaries on the Effective Date or business activities which are extensions thereof or otherwise incidental, corollary, synergistic, reasonably related or ancillary to any of the foregoing in an amount not to exceed the greater of (A) $30,000,000 and (B) 10% of Consolidated EBITDA for the Test Period then last ended at the time of making such Investment;
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(dd) asset purchases (including purchases of inventory, supplies and materials) and the granting of non-exclusive licenses or contribution of intellectual property pursuant to joint marketing arrangements with other Persons, in each case in the ordinary course of business;
(ee) the investment by any Restricted Subsidiary that is not a Loan Party in a Person that is not a Loan Party, and will not become a Loan Party upon the making of such Investment, to the extent such Investments is funded with amounts attributable to the cash flow of a Restricted Subsidiary that is not a Loan Party;
(ff) Investments in connection with Intercompany License Agreements;
(gg) Investments consisting of cash earnest money deposits in connection with a Permitted Acquisition or other Investment permitted hereunder;
(hh) Investments solely to the extent such Investments reflect an increase in the value of Investments otherwise permitted under this Section 6.04; and
(ii) Term Loans repurchased by Holdings or a Restricted Subsidiary pursuant to and in accordance with Section 2.11(a)(ii) or Section 9.04 and Second Lien Term Loans repurchased by Holdings or a Restricted Subsidiary pursuant to and in accordance with Section 2.11(a)(ii) or Section 9.04 of the Second Lien Credit Agreement (for any comparable provision of a Permitted Refinancing thereof) , so long as such loans are immediately cancelled.
For the avoidance of doubt, if an Investment would be permitted under any provision of this Section 6.04 (other than Section 6.04(h)) and as a Permitted Acquisition, such Investment need not satisfy the requirements otherwise applicable to a Permitted Acquisition unless such Investments are consummated in reliance on Section 6.04(h). In addition, to the extent an Investment is permitted to be made by Holdings or a Restricted Subsidiary directly in any Restricted Subsidiary or any other Person who is not a Loan Party (each such person, a “ Target Person ”) under any provision of this Section 6.04, such Investment may be made by advance, contribution or distribution directly or indirectly to a Holdings Parent and further advanced or contributed substantially simultaneously by such Holdings Parent to a Loan Party or other Restricted Subsidiary for purposes of ultimately making the relevant Investment in the Target Person without constituting an Investment for purposed of Section 6.04 (it being understood that such Investment must satisfy the requirements of, and shall count toward any thresholds or baskets in, the applicable clause under Section 6.04 as if made by the applicable Restricted Subsidiary directly to the Target Person).
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SECTION 6.05 Asset Sales .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, (i) sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by it or (ii) permit any Restricted Subsidiary to issue any additional Equity Interest in such Restricted Subsidiary (other than issuing directors’ qualifying shares, nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law and other than issuing Equity Interests to Holdings, the Borrower or any Restricted Subsidiary in compliance with Section 6.04(c)) (each, a “ Disposition ” and the term “ Dispose ” as a verb has the corresponding meaning), except:
(a) Dispositions of obsolete, damaged, used, surplus or worn out property, whether now owned or hereafter acquired, in the ordinary course of business and Dispositions of property no longer used or useful, or economically practicable or commercially desirable to maintain, in the conduct of the business of Holdings and any Restricted Subsidiary (including by ceasing to enforce, allowing the lapse, abandonment or invalidation of or discontinuing the use or maintenance of or putting into the public domain any Intellectual Property that is, in the reasonable judgment of Holdings, the Borrower or the Restricted Subsidiaries, no longer used or useful, or economically practicable or commercially desirable to maintain, or in respect of which Holdings, the Borrower or any Restricted Subsidiary determines in its reasonable business judgment that such action or inaction is desirable);
(b) Dispositions of inventory and other assets (including Settlement Assets) in the ordinary course of business and immaterial assets (considered in the aggregate) in the ordinary course of business;
(c) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property (or a functional equivalent of such property) or (ii) an amount equal to Net Proceeds of such Disposition are promptly applied to the purchase price of such replacement property (or a functional equivalent of such property);
(d) Dispositions of property to Holdings, the Borrower or any Restricted Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then either (i) the transferee must be a Loan Party, (ii) to the extent constituting an Investment, such Investment must be a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04 or (iii) to the extent constituting a Disposition to a Restricted Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04;
(e) Dispositions permitted by Section 6.03, Investments permitted by Section 6.04, Restricted Payments permitted by Section 6.07 and Liens permitted by Section 6.02;
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(f) Dispositions of property acquired by Holdings, the Borrower or any of the Restricted Subsidiaries after the Effective Date pursuant to sale-leaseback transactions;
(g) Dispositions of Permitted Investments;
(h) Dispositions or forgiveness of accounts receivable in connection with the collection or compromise thereof (including sales to factors or other third parties);
(i) leases, subleases, service agreements, product sales, transfers, licenses or sublicenses (including transfers, licenses and sublicenses of Intellectual Property), in each case that do not materially interfere with the business of Holdings, the Borrower and the Restricted Subsidiaries, taken as a whole;
(j) transfers of property subject to Casualty Events;
(k) Dispositions of property to Persons other than Restricted Subsidiaries (including the sale or issuance of Equity Interests of a Restricted Subsidiary) for fair market value (as determined by a Responsible Officer of the Borrower in good faith) not otherwise permitted under this Section 6.05; provided that with respect to any Disposition pursuant to this clause (k) for a purchase price in excess of $25,000,000, Holdings, the Borrower or such Restricted Subsidiaries shall receive not less than 75% of such consideration in the form of cash or Permitted Investments; provided , however , that solely for the purposes of this clause (k), (A) any liabilities (as shown on the most recent balance sheet of Holdings, the Borrower or such Restricted Subsidiary or in the footnotes thereto) of Holdings, the Borrower or such Restricted Subsidiary, other than liabilities that are by their terms subordinated in right of payment to the Loan Document Obligations, that are assumed by the transferee with respect to the applicable Disposition and for which Holdings, the Borrower and all of the Restricted Subsidiaries shall have been validly released by all applicable creditors in writing, shall be deemed to be cash, (B) any securities, notes or other obligations or assets received by Holdings, the Borrower or such Restricted Subsidiary from such transferee that are converted by Holdings, the Borrower or such Restricted Subsidiary into cash or Permitted Investments (to the extent of the cash or Permitted Investments received) within one hundred and eighty (180) days following the closing of the applicable Disposition, shall be deemed to be cash, (C) Indebtedness of any Restricted Subsidiary that ceases to be a Restricted Subsidiary as a result of such Disposition (other than intercompany debt owed to Holdings or its Restricted Subsidiaries), to the extent that Holdings, the Borrower and all of the Restricted Subsidiaries (to the extent previously liable thereunder) are released from any guarantee of payment of the principal amount of such Indebtedness in connection with such Disposition, shall be deemed to be cash, (D) any Designated Non-Cash Consideration received by Holdings, the Borrower or such Restricted Subsidiary in respect of such Disposition having an aggregate fair market value (as determined by a Responsible Officer of the Borrower in good faith), taken together with all other Designated Non-Cash Consideration received pursuant to this clause (k) that is at that time outstanding, not in excess of $25,000,000 at the time of the receipt of such Designated Non-Cash Consideration, with the fair market value (as determined by a Responsible Officer of the Borrower in good faith) of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value, shall be deemed to be cash, (E) consideration received in connection with an asset swap shall be deemed “cash”, and (F) at the time of the execution of a binding agreement in respect of and immediately after giving effect to such Disposition, no Default or Event of Default shall have occurred and be continuing; provided , that the Required Revolving Lenders may waive such requirement;
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(l) Dispositions of Investments in joint ventures or non-wholly owned Subsidiaries to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(m) Dispositions of any assets not constituting Collateral hereunder, provided that the aggregate fair market value (as determined in good faith by the Borrower) of all such Dispositions, in the aggregate, shall not be in excess of the greater of (A) $20,000,000 and (B) 7.5% of Consolidated EBITDA at the time of such Disposition;
(n) Dispositions of any assets (including Equity Interests) (A) acquired in connection with any Permitted Acquisition or other Investment not prohibited hereunder, which assets are not used or useful to the core or principal business of Holdings, the Borrower and the Restricted Subsidiaries; provided that the fair market value of such assets shall not exceed 30% of the consideration paid in such Permitted Acquisition or Investment or (B) made to obtain the approval of any applicable antitrust authority in connection with the Transactions;
(o) (i) any Disposition of accounts receivable, Securitization Assets, any participations thereof, or related assets in connection with or any Qualified Securitization Facility or (iii) the sale or discount of inventory, accounts receivable or notes receivable in the ordinary course of business or the conversion of accounts receivable to notes receivable;
(p) transfers of condemned real property as a result of the exercise of “eminent domain” or other similar powers to the respective Governmental Authority or agency that has condemned the same (whether by deed in lieu of condemnation or otherwise), and transfers of real property arising from foreclosure or similar action or that have been subject to a casualty to the respective insurer of such real property as part of an insurance settlement;
(q) Dispositions constituting any part of a Permitted Reorganization or IPO Reorganization Transaction;
(r) Dispositions of Unrestricted Subsidiaries (other than Unrestricted Subsidiaries the primary assets of which are Permitted Investments received from Holdings or a Restricted Subsidiary) or assets acquired from Unrestricted Subsidiaries;
(s) any swap of assets in exchange for services or other assets in the ordinary course of business of comparable or greater fair market value of usefulness to the business of Holdings and its Restricted Subsidiaries, taken as a whole, as determined in good faith by the Borrower; provided that the aggregate fair market value (as determined in good faith by the Borrower) of all assets constituting Collateral that are exchanged for other assets not constituting Collateral pursuant to this clause (s) shall not exceed the greater of (x) $25,000,000 and (y) 10.0% of Consolidated EBITDA at the time of such swap of assets;
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(t) other Dispositions in an aggregate amount not be in excess of the greater of (A) $50,000,000 and (B) 20% of Consolidated EBITDA at the time of such Disposition;
(u) samples, including time-limited evaluation software, provided to customers or prospective customers;
(v) de minimis amounts of equipment or other assets provided to employees;
(w) the unwinding of any Cash Management Obligations or Swap Agreement pursuant to its terms;
(x) sales, transfers, leases or other dispositions to Holdings or a Restricted Subsidiary pursuant to Intercompany License Agreements; and
(y) Holdings and any Restricted Subsidiary may (i) terminate or otherwise collapse its cost sharing agreements with Holdings or any Restricted Subsidiary and settle any crossing payments in connection therewith, (ii) convert any intercompany Indebtedness to Equity Interests, (iii) transfer any intercompany Indebtedness to Holdings or any Restricted Subsidiary, (iv) settle, discount, write off, forgive or cancel any intercompany Indebtedness or other obligation owing by Holdings or any Restricted Subsidiary, (v) settle, discount, write off, forgive or cancel any Indebtedness owing by any present or former consultants, directors, officers or employees, Holdings or any Restricted Subsidiary or any of their successors or assigns or (vi) surrender or waive contractual rights and settle or waive contractual or litigation claims.
SECTION 6.06 [Reserved] .
SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness .
(a) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, declare or make any Restricted Payment, except:
(i) the Borrower and each Restricted Subsidiary may make Restricted Payments to Holdings, the Borrower or any Restricted Subsidiary, provided that in the case of any such Restricted Payment by a Restricted Subsidiary that is not a Wholly Owned Subsidiary, such Restricted Payment is made to Holdings, the Borrower, any Restricted Subsidiary and to each other owner of Equity Interests of such Restricted Subsidiary based on their relative ownership interests of the relevant class of Equity Interests;
(ii) Holdings, the Borrower and each Restricted Subsidiary may declare and make dividend payments or other distributions payable solely in the Equity Interests of such Person;
(iii) Restricted Payments made to consummate the Transactions and Restricted Payments constituting any part of a Permitted Reorganization or IPO Reorganization Transaction;
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(iv) repurchases of Equity Interests in any Holdings Parent, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price or withholding taxes payable in connection with the exercise of such options or warrants or other incentive interests;
(v) Restricted Payments to any Holdings Parent, which such Holdings Parent may use to redeem, acquire, retire, repurchase or settle its Equity Interests (or any options, warrants, restricted stock or stock appreciation rights or similar securities issued with respect to any such Equity Interests) or Indebtedness or to service Indebtedness incurred by a Holdings Parent to finance the redemption, acquisition, retirement, repurchase or settlement of such Equity Interest or Indebtedness, held directly or indirectly by current or former officers, managers, consultants, members of the Board of Directors, employees or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of a Holdings Parent, Holdings, any Intermediate Parent, the Borrower and the Restricted Subsidiaries, upon the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any stock option or stock appreciation rights plan, any management, director and/or employee stock ownership or incentive plan, stock subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement in an aggregate amount after the Effective Date together with the aggregate amount of loans and advances to any Holdings Parent made pursuant to Section 6.04(l) in lieu of Restricted Payments permitted by this clause (v) not to exceed $15,000,000 in any calendar year with unused amounts in any calendar year being carried over to succeeding calendar years (subject to a maximum of $30,000,000 ($60,000,000 after consummation of an IPO) in any calendar year) (without giving effect to the following proviso); provided that such amount in any calendar year may be increased by (1) an amount not to exceed the cash proceeds of key man life insurance policies received by the Borrower, Holdings (or by any Holdings Parent and contributed to Holdings) or the Restricted Subsidiaries after the Effective Date, or (2) the amount of any bona fide cash bonuses otherwise payable to members of the Board of Directors, consultants, officers, employees, managers or independent contractors of any Holdings Parent, Holdings, an Intermediate Parent, the Borrower or any Restricted Subsidiary that are foregone in return for the receipt of Equity Interests, the fair market value of which is equal to or less than the amount of such cash bonuses, which, if not used in any year, may be carried forward to any subsequent fiscal year; provided further that cancellation of Indebtedness owing to Holdings, the Borrower or any Restricted Subsidiary from members of the Board of Directors, consultants, officers, employees, managers or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of a Holdings Parent, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary in connection with a repurchase of Equity Interests of a Holdings Parent, Holdings, any Intermediate Parent or the Borrower will not be deemed to constitute a Restricted Payment for purposes of this Section 6.07 or any other provisions of this Agreement.
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(vi) other Restricted Payments made by Holdings; provided that, on the date of declaration of such Restricted Payments, (x) no Event of Default shall have occurred and be continuing or would result therefrom and (y) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 3.75 to 1.00;
(vii) Holdings may make Restricted Payments in cash to any Holdings Parent:
(A) as distributions by Holdings, the Borrower or any Restricted Subsidiary to any Holdings Parent in amounts required for any Holdings Parent to pay with respect to any taxable period in which Holdings, the Borrower and/or any of the Subsidiaries is a member of a consolidated, combined, unitary or similar tax group (a “ Tax Group ”) of which such Holdings Parent is the common parent, non-U.S. taxes that are attributable to the taxable income, revenue, receipts, gross receipts, gross profits, capital or margin of Holdings and/or its Subsidiaries; provided that, for each taxable period, the amount of such payments made in respect of such taxable period in the aggregate shall not exceed the amount of such taxes that Holdings and its Subsidiaries would have been required to pay if they were a stand-alone Tax Group with Holdings as the corporate common parent of such stand-alone Tax Group (collectively, “ Tax Distributions ”);
(B) the proceeds of which shall be used by a Holdings Parent to pay (or to make Restricted Payments to allow any direct or indirect parent of such Holdings Parent to pay) (1) its operating expenses incurred in the ordinary course of business and other corporate overhead costs and expenses (including administrative, legal, accounting and similar expenses payable to third parties) that are reasonable and customary and incurred in the ordinary course of business, (2) any reasonable and customary indemnification claims made by members of the Board of Directors or officers, employees, directors, managers, consultants or independent contractors of any Holdings Parent attributable to the ownership or operations of Holdings, the Borrower and the Restricted Subsidiaries, (3) fees and expenses (x) due and payable by Holdings, the Borrower and the Restricted Subsidiaries and (y) otherwise permitted to be paid by Holdings, the Borrower and any Restricted Subsidiaries under this Agreement, (4) to the extent constituting a Restricted Payment, amounts due and payable pursuant to the Sponsor Management Agreement and (5) to satisfy indemnity and other obligations under acquisition or other agreements and (6) amounts that would otherwise be permitted to be paid pursuant to Section 6.08(iii), (iv)(a)(ii) and/or (iv)(b), (viii), (xi) or (xiv);
(C) the proceeds of which shall be used by a Holdings Parent to pay franchise and similar Taxes, and other fees and expenses, required to maintain its corporate or other legal existence;
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(D) to finance any Investment made by a Holdings Parent that, if made by Holdings or the Borrower, would be permitted to be made pursuant to Section 6.04; provided that (A) such Restricted Payment shall be made substantially concurrently with the closing of such Investment and (B) such Holdings Parent shall, immediately following the closing thereof, cause (1) all property acquired (whether assets or Equity Interests but not including any loans or advances made pursuant to Section 6.04(b)) to be contributed to Holdings or its Restricted Subsidiaries or (2) the Person formed or acquired to merge into or amalgamate or consolidate with Holdings, the Borrower or any of the Restricted Subsidiaries to the extent such merger, amalgamation or consolidation is permitted in Section 6.03) in order to consummate such Investment, in each case in accordance with the requirements of Sections 5.11 and 5.12;
(E) the proceeds of which shall be used to pay (or to make Restricted Payments to allow a Holdings Parent to pay) (1) fees and expenses related to any actual or proposed equity or debt offering not prohibited by this Agreement and (2) advisory, refinancing, transaction and exit fees and expenses attributable to the business of Holdings and the Restricted Subsidiaries;
(F) the proceeds of which shall be used to pay customary salary, bonus and other benefits payable to officers and employees of any Holdings Parent to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of Holdings, the Borrower and the Restricted Subsidiaries; and
(G) the proceeds of which shall be used to make payments permitted by clause (b)(iv) and (b)(v) of Section 6.07;
(viii) in addition to the foregoing Restricted Payments, Holdings may make additional Restricted Payments, in an aggregate amount not to exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment; provided that any amounts included in clause (b) of the definition of “Available Amount” may only be used for Restricted Payments so long as (i) no Event of Default shall have occurred and be continuing at the time of declaration of such Restricted Payment and (ii) on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 5.00 to 1.00; provided further that not more than $10,000,000 of amounts included in clause (a) of the definition of “Available Amount” may be used for Restricted Payments pursuant to this Section 6.07(a)(viii);
(ix) redemptions in whole or in part of any of its Equity Interests for another class of its Equity Interests or with proceeds from substantially concurrent equity contributions or issuances of new Equity Interests; provided , that such new Equity Interests contain terms and provisions at least as advantageous to the Lenders in all respects material to their interests as those contained in the Equity Interests redeemed thereby;
(x) payments made or expected to be made in respect of withholding or similar Taxes payable by any future, present or former employee, director, manager or consultant and any repurchases of Equity Interests in consideration of such payments including deemed repurchases in connection with the exercise of stock options and the vesting of restricted stock and restricted stock units;
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(xi) payments to any Holdings Parent to permit it to (a) pay cash in lieu of fractional Equity Interests in connection with any dividend, split or combination thereof or any Permitted Acquisition (or other similar Investment) and (b) honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Indebtedness in accordance with its terms;
(xii) payments made or expected to be made by any Holdings Parent, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary in respect of withholding or similar taxes payable upon exercise of Equity Interests by any future, present or former employee, director, officer, manager or consultant (or their respective controlled Affiliates or permitted transferees) and any repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants or required withholding or similar taxes;
(xiii) the distribution, by dividend or otherwise, of shares of Equity Interests of, or Indebtedness owed to any Holdings Parent, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary by, Unrestricted Subsidiaries (other than Unrestricted Subsidiaries, the primary assets of which are Permitted Investments) received as Permitted Investments from Holdings or a Restricted Subsidiary;
(xiv) the declaration and payment of a Restricted Payment on Holdings’ common stock (or the payment to the IPO Issuer or any Holdings Parent to fund a payment of dividends on such company’s common stock), following consummation of an IPO, of up to 6.0% per annum of the net cash proceeds of such IPO received by or contributed to Holdings;
(xv) any distributions or payments of Securitization Fees, sales or contributions and other transfers of Securitization Assets and purchases of Securitization Assets, in each case in connection with a Qualified Securitization Facility;
(xvi) Restricted Payments in an amount not to exceed the greater of (A) $10,000,000 and (B) 3.5% of Consolidated EBITDA for the Test Period then last ended at the time of making such Restricted Payment;
(xvii) to the extent constituting Restricted Payments, Holdings, the Borrower and the Restricted Subsidiaries may consummate (1) transactions permitted pursuant to Section 6.03 and (2) make Investments permitted under Section 6.04; and
(xviii) any Restricted Subsidiary may make a Restricted Payment in connection with the acquisition of additional Equity Interests in such Restricted Subsidiary from minority shareholders to the extent such acquisition would have been permitted (and to the extent so permitted shall constitute such Investment) by the parent company of such Restricted Subsidiary pursuant to Section 6.04.
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(b) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, make any voluntary prepayment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Junior Financing constituting Material Indebtedness (other than to the extent of any Retained Declined Proceeds applied in compliance with Section 2.11(e)), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Junior Financing, except:
(i) payment of regularly scheduled interest and principal payments, mandatory offers to repay, repurchase or redeem, mandatory prepayments of principal premium and interest, and payment of fees, expenses and indemnification obligations, with respect to such Junior Financing, other than payments in respect of any Junior Financing prohibited by the subordination provisions thereof;
(ii) refinancings, supplements, substitutions, extensions, restructurings, exchanges or renewals of Indebtedness to the extent permitted by Section 6.01 and fees and expenses in connection therewith;
(iii) the conversion of any Junior Financing to Equity Interests (other than Disqualified Equity Interests) of Holdings or any Holdings Parent, and any payment that is intended to prevent any Junior Financing from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;
(iv) prepayments, redemptions, repurchases, defeasances and other payments in respect of Junior Financing prior to their scheduled maturity in an aggregate amount, not to exceed the sum of (A) an amount at the time of making any such prepayment, redemption, repurchase, defeasance or other payment and together with any other prepayments, redemptions, repurchases, defeasances and other payments made utilizing this subclause (A) not to exceed the greater of (1) $10,000,000 and (2) 3.5% of Consolidated EBITDA on a Pro Forma Basis for the most recently ended Test Period after giving Pro Forma Effect to the making of such prepayment, redemption, purchase, defeasance or other payment, plus (B) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment plus (y) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment; provided that any amounts included in clause (b) of the definition of “Available Amount” may only be used for such prepayments, redemptions, repurchases, defeasances and other payments of Junior Financing so long as (i) no Event of Default shall have occurred and be continuing at the time of making such prepayments, redemptions, repurchases, defeasances and other payments and (ii) on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 5.00 to 1.00;
(v) payments made in connection with the Transactions;
(vi) prepayments, redemptions, purchases, defeasances and other payments in respect of Junior Financing prior to their scheduled maturity; provided that after giving effect to such prepayment, redemption, repurchase, defeasance or other payment, on a Pro Forma Basis, the Total Net Leverage Ratio is less than or equal to 3.75 to 1.00;
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(vii) prepayment of Second Lien Term Loans and Junior Financing owed to Holdings, the Borrower or any Restricted Subsidiary or the prepayment of Permitted Refinancing of such Indebtedness with the proceeds of any other Junior Financing; and
(viii) so long as no Specified Event of Default then exists or would result therefrom, prepayments of principal of and any required premium on loans under the Second Lien Credit Agreement in connection with the removal of a lender pursuant to Section 2.19 or 2.24(c) of the Second Lien Credit Agreement (or any comparable provision of a Permitted Refinancing thereof).
(c) Any basket available for Restricted Payments pursuant to Section 6.07(a) may instead be used to make a payment or other distribution of or in respect of principal of or interest on the Second Lien Term Loans or any Junior Financing, or any payment or other distribution on account of the purchase, redemption, retirement, acquisition, cancellation or termination of the Second Lien Term Loans or any Junior Financing, pursuant to Section 6.07(b), and such payment or other distribution shall not be prohibited by Section 6.07(b). For the avoidance of doubt, any such payment or other distribution shall reduce the amount available under such basket set forth in Section 6.07(a).
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SECTION 6.08 Transactions with Affiliates .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) (A) transactions between or among Holdings, the Borrower or any Restricted Subsidiary or any entity that becomes a Restricted Subsidiary as a result of such transaction and (B) transactions involving aggregate payment or consideration of less than $15,000,000, (ii) on terms, taken as a whole, substantially as favorable to Holdings, the Borrower or such Restricted Subsidiary as would be obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other than an Affiliate, (iii) the Transactions and the payment of fees and expenses as part of or in connection with the Transactions and transactions constituting any Permitted Reorganization or IPO Reorganization Transaction, (iv) the payment of (a) (i) transaction fees and expenses and management fees and expenses paid pursuant to the Sponsor Management Agreement and (ii) other management, consulting, advisory and monitoring, oversight and similar fees to the Investors (or management companies of the Investors) in an aggregate amount in any fiscal year, when taken together with the amounts paid pursuant to the preceding clause (a)(i), not to exceed the amount permitted to be paid pursuant to Section 6.07(a)(vii)(B)(4) and (b) indemnities to the Investors (or management companies of the Investors) to the extent such indemnities relate to the ownership and operation of Holdings and its Restricted Subsidiaries, (v) issuances of Equity Interests of Holdings to the extent otherwise permitted by this Agreement, (vi) compensation (including bonuses and securities issuances or other payments, awards, grants in cash or otherwise) and employee benefit arrangements and severance arrangements between Holdings and its Restricted Subsidiaries and their respective officers, directors, managers, consultants and employees in the ordinary course of business or otherwise in connection with the Transactions (including loans and advances pursuant to Section 6.04) or any acquisition or other Investment permitted hereunder), (vii) payments by Holdings and its Restricted Subsidiaries pursuant to tax sharing agreements among Holdings (and any such parent thereof), any Intermediate Parent, the Borrower and the Restricted Subsidiaries on customary terms to the extent attributable to the ownership or operation of Holdings and its Restricted Subsidiaries, to the extent such payments are permitted by Section 6.07, (viii) the payment of customary fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, members of the Board of Directors, officers and employees of Holdings (or any Holdings Parent), the Borrower, any Intermediate Parent and the Restricted Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of Holdings and its Restricted Subsidiaries, (ix) transactions pursuant to permitted agreements in existence or contemplated on the Effective Date and set forth on Schedule 6.08 or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect, (x) Restricted Payments permitted under Section 6.07 and loans and advances in lieu thereof pursuant to Section 6.04(l), (xi) payments to or from, and transactions with, any joint venture in the ordinary course of business (including, without limitation, any cash management activities related thereto), (xii) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services that are Affiliates, in each case in the ordinary course of business and which are fair to Holdings, the Borrower and the Restricted Subsidiaries, in the reasonable determination of the Borrower, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, (xiii) sales of accounts receivable, or participations therein, or Securitization Assets or related assets or other customary transactions in connection with or any Qualified Securitization Facility, (xiv) customary payments by Holdings and its Restricted Subsidiaries to the Sponsor made for any financial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions, divestitures or financings), which payments are approved by the majority of the members of the Board of Directors or a majority of the disinterested members of the Board of Directors of the Borrower in good faith, (xv) the existence and performance of agreements and transactions with any Unrestricted Subsidiary that were entered into prior to the designation of a Restricted Subsidiary as such Unrestricted Subsidiary to the extent that the transaction was permitted at the time that it was entered into with such Restricted Subsidiary, and transactions entered into by an Unrestricted Subsidiary with an Affiliate prior to the redesignation of any such Unrestricted Subsidiary as a Restricted Subsidiary and not in contemplation of such Unrestricted Subsidiary becoming redesignated as a Restricted Subsidiary, (xvi) Affiliate repurchases of the Loans, Second Lien Term Loans or Commitments to the extent permitted hereunder and the holding of such Loans, Second Lien Term Loans or Commitments and the payments and other transactions contemplated herein and in the Second Lien Credit Agreement in respect thereof, and (xvii) any transaction between or among Holdings or any Restricted Subsidiary and any non-wholly owned Affiliate of Holdings or a joint venture or similar entity that is otherwise permitted hereunder to the extent such Affiliate, joint venture or similar entity is an Affiliate solely because Holdings or a Restricted Subsidiary owns an equity interest in or otherwise controls such Affiliate, joint venture or similar entity.
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SECTION 6.09 Restrictive Agreements .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, enter into any agreement, instrument, deed or lease that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of their respective properties or revenues, whether now owned or hereafter acquired, for the benefit of the Secured Parties with respect to the Secured Obligations or under the Loan Documents; provided that the foregoing shall not apply to:
(a) restrictions and conditions imposed by (1) Requirements of Law, (2) any Loan Document, (3) any documentation governing Incremental Equivalent Debt, (4) any documentation governing Permitted Unsecured Refinancing Debt, Permitted First Priority Refinancing Debt or Permitted Junior Priority Refinancing Debt, (5) any documentation governing Indebtedness of a Restricted Subsidiary that is not a Loan Party incurred pursuant to Section 6.01 and that do not apply to any Loan Party, (6) any documentation governing Indebtedness incurred pursuant to Section 6.01(a) (v) (but only to the extent applicable to the assets financed by such Indebtedness (and replacements, additions, accessions and improvements to or proceeds of such assets and other assets financed by the same lender)), (vi), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xx), (xxv), (xxvi), (xxix), (xxx), or (xxxiv), and (7) any documentation governing any Permitted Refinancing incurred to refinance any such Indebtedness referenced in clauses (1) through (6) above;
(b) customary restrictions and conditions existing on the Effective Date and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(c) restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale; provided that such restrictions and conditions apply only to the Subsidiary or assets that is or are to be sold and such sale is permitted hereunder;
(d) customary provisions in leases, licenses, sublicenses and other contracts (including licenses and sublicenses of Intellectual Property) restricting the assignment, license, sublicense, transfer or security interest thereof or assets subject thereto;
(e) restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent such restriction applies only to the property securing such Indebtedness;
(f) any restrictions or conditions set forth in any agreement in effect at any time any Person becomes a Restricted Subsidiary (but not any modification or amendment expanding the scope of any such restriction or condition); provided that such agreement was not entered into in contemplation of such Person becoming a Restricted Subsidiary and the restriction or condition set forth in such agreement does not apply to Holdings, the Borrower or any Restricted Subsidiary (other than such Person that has become a Restricted Subsidiary);
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(g) restrictions or conditions in any Indebtedness permitted pursuant to Section 6.01 that is incurred or assumed by Restricted Subsidiaries that are not Loan Parties to the extent such restrictions or conditions are no more restrictive in any material respect than the restrictions and conditions in the Loan Documents or are market terms at the time of issuance and are imposed solely on such Restricted Subsidiary and its Subsidiaries;
(h) restrictions on cash (or Permitted Investments) or other deposits imposed by agreements entered into in the ordinary course of business (or other restrictions on cash or deposits constituting Permitted Encumbrances);
(i) restrictions set forth on Schedule 6.09 and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(j) customary provisions in shareholders agreements, joint venture agreements, organization constitutive documents or similar binding agreements relating to any joint venture or non-wholly-owned Restricted Subsidiary and other similar agreements applicable to joint ventures and non-wholly-owned Restricted Subsidiaries and applicable solely to such joint venture or non-wholly-owned Restricted Subsidiary and the Equity Interests issued thereby, in each case, permitted by Section 6.04;
(k) customary restrictions contained in leases, subleases, licenses, sublicenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate only to the assets subject thereto;
(l) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary; and
(m) customary net worth provisions contained in real property leases or other contracts entered into by Subsidiaries, so long as the Borrower has determined in good faith that such net worth provisions could not reasonably be expected to impair the ability of Holdings, the Borrower and its Subsidiaries to meet their ongoing obligations;
(n) in respect of a Dutch Loan Guarantor, only with respect to its shares which are subject to a Security Document, customary transfer restrictions based on a blocking arrangement ( blokkeringsregeling ) contained in its constitutional documents which restrict or inhibit any transfer of those shares on creation or enforcement of the Security Documents;
(o) restrictions on transfers of assets subject to Liens permitted by Section 6.02 (but, with respect to any such Lien, only to the extent that such transfer restrictions apply solely to the assets that are the subject of such Lien);
(p) restrictions created in connection with any Qualified Securitization Facility;
(q) any restrictions regarding licensing or sublicensing by Holdings and its Restricted Subsidiaries of intellectual property in the ordinary course of business;
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(r) any restrictions that arise in connection with cash or other deposits permitted under Section 6.02 and Section 6.04; and
(s) comprise restrictions imposed by any agreement governing Indebtedness entered into on or after the Effective Date and permitted under Section 6.01 if the restrictions contained in any such agreement taken as a whole (a) are not materially less favorable to the Secured Parties than the encumbrances and restrictions contained in the Loan Documents (as determined by the Borrower) or (b) either (I) the Borrower determines at the time of entry into such agreement or instrument that such encumbrances or restrictions will not adversely affect, in any material respect, the Borrower’s ability to make principal or interest payments required hereunder or (II) such encumbrances or restriction applies only during the continuance of a default relating to such agreement or instrument.
SECTION 6.10 Amendment of Junior Financing .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, amend or modify the documentation governing any Junior Financing if such amendment is not expressly permitted by any applicable Intercreditor Agreement or subordination agreement if the effect of such amendment or modification is materially adverse to the Lenders or the Issuing Banks; provided that such modification will not be deemed to be materially adverse if such Junior Financing could be otherwise incurred or refinanced under this Agreement (including as Indebtedness that does not constitute a Junior Financing) with such terms as so modified at the time of such modification.
SECTION 6.11 Financial Performance Covenant .
Holdings will not permit the Total Net Leverage Ratio as of the last day of any Test Period ending on any date set forth in the table below, to exceed the applicable ratio set forth in the table below opposite the last day of such Test Period:
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Article VII
EVENTS OF DEFAULT
SECTION 7.01 Events of Default .
If any of the following events (any such event, an “ Event of Default ”) shall occur:
(a) any Loan Party shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) any Loan Party shall fail to pay (i) any interest on any Loan when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) Business Days, or (ii) any fee or any other amount (other than an amount referred to in paragraph (a) or (b)(i) of this Section 7.01) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of ten (10) Business Days;
(c) any representation or warranty made or deemed made by or on behalf of Holdings, any Intermediate Parent, the Borrower or any of its Restricted Subsidiaries in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made, and such incorrect representation or warranty (if curable) shall remain incorrect for a period of 30 days after notice thereof from the Administrative Agent to the Borrower;
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(d) (i) Holdings, any Intermediate Parent, the Borrower or any of the Restricted Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in Sections 5.02(a), 5.04 (with respect to the existence of Holdings or the Borrower or Intermediate Lux Holdings only) or in Article VI (other than Section 6.08 or the Financial Performance Covenant); provided that any Event of Default under Section 5.02(a) shall be deemed cured upon Borrower providing the applicable written notice; or
(ii) Holdings or any of the Restricted Subsidiaries shall fail to observe or perform the Financial Performance Covenant; provided that any Event of Default under Section 6.11 is subject to cure as provided in Section 7.02 and an Event of Default with respect to such Section shall not occur until the expiration of the twelfth (12th) Business Day subsequent to the date on which the financial statements with respect to the applicable fiscal quarter (or the fiscal year ended on the last day of such fiscal quarter) are required to be delivered pursuant to Section 5.01(a) or Section 5.01(b), as applicable;
(e) Holdings, any Intermediate Parent, the Borrower or any of the Restricted Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Section 7.01), and such failure shall continue unremedied for a period of thirty (30) days after written notice thereof from the Administrative Agent to the Borrower;
(f) Holdings, any Intermediate Parent, the Borrower or any of the Restricted Subsidiaries shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any applicable grace period and all required notices have been given); provided that this paragraph (f) shall not apply to any Indebtedness if the sole remedy of the holder thereof in the event of such non-payment is to elect to convert such Indebtedness into Qualified Equity Interests and cash in lieu of fractional shares; provided that this paragraph (f) shall not apply to any such failure that (x) is remedied by Holdings, any Intermediate Parent, the Borrower or any applicable Restricted Subsidiary or (y) waived (including in the form of amendment) by the requisite holders of the applicable item of Material Indebtedness in either case, prior to acceleration of all the Loans pursuant to this Section 7.01;
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(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with all applicable grace periods having expired and all required notices have been given) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, provided that this paragraph (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement), (ii) termination events or similar events occurring under any Swap Agreement that constitutes Material Indebtedness (it being understood that paragraph (f) of this Section 7.01 will apply to any failure to make any payment required as a result of any such termination or similar event) or (iii) any Indebtedness if the sole remedy of the holder thereof following such event or condition is to elect to convert such Indebtedness into Qualified Equity Interests and cash in lieu of fractional shares, provided that this paragraph (g) shall not apply to any such failure that (x) is remedied by Holdings, any Intermediate Parent, the Borrower or any applicable Restricted Subsidiary or (y) waived (including in the form of amendment) by the requisite holders of the applicable item of Material Indebtedness in either case, prior to acceleration of all the Loans pursuant to this Section 7.01; provided further that a default under any financial covenant in such Material Indebtedness shall not constitute an Event of Default unless and until the lenders or holders with respect to such Material Indebtedness have actually declared all such obligations to be immediately due and payable and terminate the commitments in accordance with the agreement governing such Material Indebtedness and such declaration has not been rescinded by the required lenders with respect to such Material Indebtedness on or before such date;
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, court protection, examination, reorganization or other relief in respect of Holdings, the Borrower or any Material Subsidiary or its debts, or of a material part of its assets, under any Federal, state or foreign bankruptcy, insolvency, examinership, receivership or similar law, now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, examiner, sequestrator, conservator, interim receiver, liquidator, receiver and manager, administrative receiver, administrator, insolvency practitioner or similar official for Holdings, the Borrower or any Material Subsidiary or for a material part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;
(i) Holdings, the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, court protection, examinership, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, examinership, receivership or similar law, now or hereafter in effect (but excluding any such proceeding or petition (other than under the Bankruptcy Code) the sole purpose of which is to effect a transaction permitted under Section 6.03(a) that is not otherwise prohibited by the Loan Documents), (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, examiner, custodian, sequestrator, conservator, interim receiver, interim examiner, liquidator, receiver and manager, administrative receiver, administrator, insolvency practitioner or similar official for Holdings, the Borrower or any Material Subsidiary or for a material part of its assets (but excluding any such application or consent (other than under the Bankruptcy Code) the sole purpose of which is to effect a transaction permitted under Section 6.03(a) that is not otherwise prohibited by the Loan Documents), (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding or (v) make a general assignment for the benefit of creditors;
(j) one or more enforceable judgments for the payment of money in an aggregate amount in excess of $50,000,000 (to the extent not covered by insurance or another creditworthy (as reasonably determined by the Administrative Agent) indemnitor, and as to which such insurer or indemnitor has not denied coverage) shall be rendered against Holdings, any Intermediate Parent, the Borrower, any Material Subsidiary or any combination thereof and the same shall remain undischarged, unvacated, unbonded or unstayed for a period of 60 consecutive days;
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(k) an ERISA Event occurs that has resulted or would reasonably be expected, individually or together with any other ERISA Event(s) in the aggregate to result in a Material Adverse Effect;
(l) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be (other than in an informational notice), a valid and perfected (if and to the extent required to be perfected under the Loan Documents) Lien on any material portion of the Collateral, with the priority required by the applicable Security Documents, except (i) as a result of the release of a Loan Party (including as a result of the designation of a Restricted Subsidiary as an Unrestricted Subsidiary) or the sale or other disposition of the applicable Collateral to a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of the Collateral Agent’s failure to (A) maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Security Documents or (B) file Uniform Commercial Code amendment or continuation financing statements or (iii) as to Collateral consisting of real property to the extent that such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage or (iv) as a result of acts or omissions of the Collateral Agent, the Administrative Agent or any Lender;
(m) any material provision of any Loan Document or any Guarantee of the Loan Document Obligations shall for any reason be asserted by any Loan Party not to be a legal, valid and binding obligation of any Loan Party thereto other than as expressly permitted hereunder or thereunder;
(n) any material portion of the Guarantees of the Loan Document Obligations pursuant to the Guarantee Agreement, taken as a whole, shall cease to be in full force and effect (in each case, other than the occurrence of the Termination Date or otherwise in accordance with the terms of the Loan Documents including as a result of transactions permitted hereunder); or
(o) a Change in Control shall occur;
then, and in every such event (other than an event with respect to Holdings or the Borrower described in paragraph (h) or (i) of this Section 7.01), and at any time thereafter during the continuance of such event, the Administrative Agent at the request of the Required Lenders ( provided that the following actions may not be taken (A) in the case of an Event of Default under Section 7.01(d)(ii), until the ability to exercise the Cure Right under Section 7.02 has expired (but may be taken as soon as the ability to exercise the Cure Right has expired and it has not been so exercised) and (B) in the case of an Event of Default under Section 7.01(d)(i), if the express conditions in the last proviso contained in Section 7.01(d)(i) have been satisfied) shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and (iii) demand the Borrower deposit cash collateral with the Administrative Agent as contemplated by Section 2.05(j) in the aggregate LC Exposure Amount of all outstanding Letters of Credit and thereupon the principal of the Loans and the LC Exposure of all Letters of Credit so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to Holdings or the Borrower described in paragraph (h) or (i) of this Section 7.01, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
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SECTION 7.02 Right to Cure .
(a) Notwithstanding anything to the contrary contained in Section 7.01, in the event that Holdings and its Restricted Subsidiaries fail to comply with the requirements of the Financial Performance Covenant as of the last day of any applicable fiscal quarter of Holdings, at any time after the beginning of such fiscal quarter until the expiration of the twelfth (12th) Business Day subsequent to the date on which the financial statements with respect to such fiscal quarter (or the fiscal year ended on the last day of such fiscal quarter) are required to be delivered pursuant to Section 5.01(a) or (b), as applicable (the “ Cure Termination Date ”), Holdings shall have the right to issue Qualified Equity Interests for cash or otherwise receive cash contributions to the capital of Holdings as cash common equity or other Qualified Equity Interests (collectively, the “ Cure Right ”), and upon the receipt by Holdings of the Net Proceeds of such issuance (the “ Cure Amount ”) pursuant to the exercise by Holdings of such Cure Right the Financial Performance Covenant shall be recalculated giving effect to the following pro forma adjustment:
(i) Consolidated EBITDA shall be increased with respect to such applicable fiscal quarter and any four fiscal quarter period that contains such fiscal quarter, solely for the purpose of measuring the Financial Performance Covenant and not for any other purpose under this Agreement, by an amount equal to the Cure Amount; and
(ii) if, after giving effect to the foregoing pro forma adjustment (without giving effect to any repayment of any Indebtedness with any portion of the Cure Amount or any portion of the Cure Amount on the balance sheet of Holdings and its Restricted Subsidiaries, in each case, with respect to such fiscal quarter only), Holdings and its Restricted Subsidiaries shall then be in compliance with the requirements of the Financial Performance Covenant, Holdings and its Restricted Subsidiaries shall be deemed to have satisfied the requirements of the Financial Performance Covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default or event of default of the Financial Performance Covenant that had occurred shall be deemed cured for the purposes of this Agreement and the other Loan Documents;
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provided that the Borrower shall have notified the Administrative Agent of the exercise of such Cure Right within five (5) Business Days of the issuance of the relevant Qualified Equity Interests for cash or the receipt of the cash contributions by Holdings.
(b) Notwithstanding anything herein to the contrary, (i) in each four consecutive fiscal quarter period of the Borrower there shall be at least two (2) fiscal quarters in which the Cure Right is not exercised, (ii) during the term of this Agreement, the Cure Right shall not be exercised more than five (5) times, (iii) for purposes of this Section 7.02, the Cure Amount shall be no greater than the amount required for purposes of complying with the Financial Performance Covenant and any amounts in excess thereof shall not be deemed to be a Cure Amount and (iv) neither the Administrative Agent nor any Lender or Secured Party shall exercise any remedy (including acceleration) under the Loan Documents or applicable law on the basis of an Event of Default caused by the failure to comply with Section 6.11 until after Holding’s ability to cure has lapsed and Holdings has not exercised the Cure Right, and, if the Borrower shall have delivered to the Administrative Agent a notice of its intent to cure a breach or default under Section 7.01(d)(ii) prior to the Cure Termination Date, no Event of Default under Section 7.01(d)(ii) shall then be deemed to be in existence, provided , however , that if the Cure Amount is not received by Holdings on or prior to the Cure Termination Date, such Event of Default shall be deemed to arise). Notwithstanding any other provision in this Agreement to the contrary, the Cure Amount received pursuant to any exercise of the Cure Right shall not be included in the calculation of Consolidated EBITDA or any incurrence ratio test for purposes of determining any available basket under Article VI of this Agreement. For the avoidance of doubt, no Cure Amounts shall be applied to reduce the Indebtedness of Holdings and its Restricted Subsidiaries on a Pro Forma Basis for purposes of determining compliance with the Financial Performance Covenant for the fiscal quarter in which such Cure Right was made and there shall not have been a breach of any covenant under Article VI of this Agreement by reason of having no longer included such Cure Amount in any basket during the relevant period.
SECTION 7.03 Application of Proceeds . Subject to the terms of the Closing Date Intercreditor Agreement and any other applicable Intercreditor Agreement, the Collateral Agent shall apply the proceeds of any collection or sale of Collateral, including any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the Collateral Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Loan Document or any of the Secured Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent hereunder or under any other Loan Document on behalf of any Loan Party and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Secured Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Secured Obligations owed to them on the date of any such distribution);
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THIRD, to any agent of any other junior secured debt, in accordance with the Closing Date Intercreditor Agreement and any other any applicable Intercreditor Agreement; and
FOURTH, to the Loan Parties, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. The Collateral Agent shall have no liability to any of the Secured Parties for actions taken in reliance on information supplied to it as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Secured Obligations. Notwithstanding the foregoing, Excluded Swap Obligations with respect to any Subsidiary Loan Party shall not be paid with amounts received from such Subsidiary Loan Party or its assets, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Secured Obligations otherwise set forth above.
Article VIII
ADMINISTRATIVE AGENT
SECTION 8.01 Appointment and Authority .
(a) Each of the Lenders and the Issuing Bank hereby irrevocably appoints Deutsche Bank AG New York Branch to act on its behalf as the Administrative Agent and Collateral Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent and Collateral Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Collateral Agent, the Lenders and the Issuing Bank, and the Borrower shall not have rights as a third party beneficiary of any of such provisions.
(b) The Administrative Agent shall also act as the “Collateral Agent” or, as the case may be, “Security Trustee” under the Loan Documents, and each of the Lenders and the Issuing Bank hereby irrevocably appoints and authorizes the Collateral Agent to act as the agent or, as the case may be, the security trustee, of such Lender and the Issuing Bank, and acknowledges that, to the extent required in any relevant jurisdiction, the Administrative Agent may enter into such security trust or equivalent deeds as the Administrative Agent may consider necessary, in each case for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Collateral Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent and Collateral Agent pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.03 as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” or the “security agent” or the “security trustee” under the Loan Documents) as if set forth in full herein with respect thereto.
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(c) Each Secured Party acknowledges the terms of each Security Trust Deed and, in particular, the terms, basis and limitation on which the Administrative Agent holds the “Transaction Security” (as defined therein) and specifically agrees and accepts (i) such terms, basis and limitation; (ii) that the Administrative Agent shall, as trustee, have only those duties, obligations and responsibilities expressly specified in each Security Trust Deed; (iii) the limitation and exclusion of the Administrative Agent’s liability as set out therein; and (iv) all other provisions of the Security Trust Deed as if it were a party thereto.
SECTION 8.02 Rights as a Lender .
The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, own securities of, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate of the Borrower as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
SECTION 8.03 Exculpatory Provisions .
The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law;
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(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of their Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity;
(d) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 9.02 and in the last paragraph of Section 7.01) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment; provided that the Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Bank; and
(e) shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
SECTION 8.04 Reliance by Administrative Agent .
The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
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SECTION 8.05 Delegation of Duties .
The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents (which may include such of the Administrative Agent’s affiliates or branches as it deems appropriate) appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
SECTION 8.06 Resignation of Administrative Agent .
Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign upon thirty (30) days’ notice to the Lenders, the Issuing Banks and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the Borrower’s consent (such consent not to be unreasonably withheld or delayed) unless a Specified Event of Default has occurred and is continuing), to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent, which shall be an Approved Bank with an office in New York, New York, or an Affiliate of any such Approved Bank (the date upon which the retiring Administrative Agent is replaced, the “ Resignation Effective Date ”); provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice.
If the Person serving as Administrative Agent is a Defaulting Lender, the Required Lenders and Holdings may, to the extent permitted by applicable law, by notice in writing to such Person remove such Person as Administrative Agent and, with the consent of the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
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With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except (i) that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed and (ii) with respect to any outstanding payment obligations) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder and under the other Loan Documents as set forth in this Section. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.
SECTION 8.07 Non-Reliance on Administrative Agent and Other Lenders .
Each Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
Each Lender, by delivering its signature page to this Agreement and funding its Loans on the Effective Date, or delivering its signature page to an Assignment and Assumption, Incremental Facility Amendment or Refinancing Amendment pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Effective Date.
No Lender shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee of the Secured Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Administrative Agent and Collateral Agent on behalf of the Lenders in accordance with the terms thereof. In the event of a foreclosure by the Administrative Agent or Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Administrative Agent, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition, and the Administrative Agent or Collateral Agent, as agent for and representative of the Lenders (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent or Collateral Agent on behalf of the Lenders at such sale or other disposition. Each Lender, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guarantees of the Secured Obligations, to have agreed to the foregoing provisions.
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SECTION 8.08 No Other Duties, Etc.
Anything herein to the contrary notwithstanding, neither any Joint Lead Arrangers nor any person named on the cover page hereof as a Joint Lead Arranger shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an Issuing Bank hereunder.
SECTION 8.09 Administrative Agent May File Proofs of Claim .
In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or outstanding Letter of Credit shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, Letter of Credit outstandings and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Bank and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Bank and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Bank and the Administrative Agent under Sections 2.12 and 9.03) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the Issuing Bank to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Bank, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.12 and 9.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or the Issuing Bank to authorize the Administrative Agent to vote in respect of the claim of any Lender or the Issuing Bank or in any such proceeding.
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SECTION 8.10 No Waiver; Cumulative Remedies; Enforcement .
No failure by any Lender, any Issuing Bank or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Article VII for the benefit of all the Lenders and the Issuing Banks; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the Issuing Banks from exercising the rights and remedies that inure to its benefit (solely in its capacity as Issuing Bank) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 9.08 (subject to the terms of Section 2.18), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided further that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Article VII and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.18, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
Article
IX
MISCELLANEOUS
SECTION 9.01 Notices .
(a) Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax or other electronic transmission (including e-mail), as follows:
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(i) if to Holdings, the Borrower, the Administrative Agent or the Issuing Bank, to the address, fax number, e-mail address or telephone number specified for such Person on Schedule 9.01; and
(ii) if to any other Lender, to it at its address (or fax number, telephone number or e-mail address) set forth in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain Material Non-Public Information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by fax shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).
(b) Electronic Communications . Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures reasonably approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant to Article II if such Lender or the Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received when sent to the proper e-mail address as specified on Schedule 9.01 (as updated from time to time in accordance with Section 9.01(d)), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received when an e-mail is sent to the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
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(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to Holdings, the Borrower, any Lender, the Issuing Bank or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided , however , that in no event shall any Agent Party have any liability to Holdings, the Borrower, any Lender, the Issuing Bank or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d) Change of Address, Etc . Each of Holdings, the Borrower, the Administrative Agent and the Issuing Bank may change its address, electronic mail address, fax or telephone number for notices and other communications or website hereunder by notice to the other parties hereto. Each other Lender may change its address, fax or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent and the Issuing Bank. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, fax number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.
(e) Reliance by Administrative Agent, Issuing Bank and Lenders . The Administrative Agent, the Issuing Bank and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent and each of the parties hereto hereby consents to such recording.
SECTION 9.02 Waivers; Amendments .
(a) No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power under this Agreement or any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Banks and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 9.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or the issuance, amendment, renewal or extension of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time. No notice or demand on the Borrower or Holdings in any case shall entitle the Borrower or Holdings to any other or further notice or demand in similar or other circumstances.
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(b) Except as provided in Section 2.20 with respect to any Incremental Facility Amendment, Section 2.21 with respect to any Refinancing Amendment or Section 2.24 with respect to any Permitted Amendment, neither this Agreement, any Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Holdings, the Borrower, the Administrative Agent and the Required Lenders ( provided , that if such waiver, amendment or modification does not affect the rights, duties, privileges or obligations of the Administrative Agent under this Agreement, the Administrative Agent shall only be required to acknowledge such waiver, amendment or modification) or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that the consent of the Required Lenders shall not be required with respect to the amendments set forth below; provided further that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender (it being understood that a waiver of any condition precedent set forth in Section 4.02 or the waiver of any Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender), (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the reimbursement obligations of the Borrower for the LC Exposure at such time (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute a reduction or forgiveness of principal) or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly and adversely affected thereby (it being understood that any change to the definition of Total Net Leverage Ratio, Senior Secured Net Leverage Ratio or Senior Secured First Lien Net Leverage Ratio or in the component definitions thereof shall not constitute a reduction of interest or fees), provided that only the consent of the Required Lenders shall be necessary to waive or otherwise modify any obligation of the Borrower to pay default interest pursuant to Section 2.13(c), (iii) postpone the maturity of any Loan (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension of any maturity date), or the date of any scheduled amortization payment of the principal amount of any Term Loan under Section 2.10 or the applicable Refinancing Amendment, or the reimbursement date with respect to any LC Disbursement, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly and adversely affected thereby, (iv) change Section 2.18(b), Section 2.18(c) or Section 7.03 in a manner that would alter the pro rata sharing of payments or other amounts required thereby without the consent of each Lender directly and adversely affected thereby ( provided , that any such changes required in connection with any Refinancing Amendment, Incremental Amendment or other transaction expressly permitted hereunder shall only require the approval (to the extent any approval is required) of the Required Lenders), (v) change any of the provisions of this Section 9.02(b) without the written consent of such Lender directly and adversely affected thereby, (vi) change the percentage set forth in the definition of “Required Lenders”, “Required Revolving Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vii) release all or substantially all the value of the Guarantees under the Guarantee Agreement (except as expressly provided in the Loan Documents) without the written consent of each Lender (other than a Defaulting Lender) or (viii) release all or substantially all the Collateral from the Liens of the Security Documents, without the written consent of each Lender (other than a Defaulting Lender), except as expressly provided in the Loan Documents; provided , further , that in connection with an amendment that addresses solely a re-pricing transaction in which any Class of Term Loans or Revolving Commitments (and the Revolving Loans in respect hereof) is refinanced with a replacement Class of term loans or revolving commitments (and the revolving loans in respect hereof) bearing (or is modified in such a manner such that the resulting term loans or revolving commitments (and the revolving loans in respect hereof) bear a lower Yield, only the consent of the Lenders holding Term Loans or Revolving Commitments (and the Revolving Loans in respect hereof) subject to such permitted re-pricing transaction that will continue as a Lender in respect of the re-priced tranche of Term Loans or Revolving Commitments (and the Revolving Loans in respect hereof) or modified Term Loans or Revolving Commitments and the Revolving Loans in respect hereof shall be required); provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or any Issuing Bank without the prior written consent of the Administrative Agent or such Issuing Bank, as the case may be, (B) any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by Holdings, the Borrower and the Administrative Agent to cure any mistake, ambiguity, omission, defect, obvious error or incorrect cross-reference, or to effect administrative changes of a technical or immaterial nature or to correct any inconsistency and (C) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Loans or Commitments of a particular Class (but not the Lenders holding Loans or Commitments of any other Class) may be effected by an agreement or agreements in writing entered into by Holdings, Intermediate Parent, the Borrower and the requisite percentage in interest of the affected Class of Lenders stating that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time. Notwithstanding the foregoing, (a) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent, Holdings and the Borrower (i) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents and (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders on substantially the same basis as the Lenders prior to such inclusion and (b) guarantees, Security Documents and related documents in connection with this Agreement may be in a form reasonably determined by the Administrative Agent and may be, together with this Agreement and the other Loan Documents, amended and waived with the consent of the Administrative Agent at the request of the Borrower without the need to obtain the consent of any other Lender if such amendment or waiver is delivered in order (i) to comply with local law or advice of local counsel, (ii) to cure ambiguities or defects, (iii) to cause such guarantee, collateral security document or other document to be consistent with this Agreement and the other Loan Documents or (iv) to integrate any Incremental Facility or Credit Agreement Refinancing Indebtedness in a manner consistent with this Agreement and the other Loan Documents. N otwithstanding the foregoing, no Lender or Issuing Lender consent is required to effect any amendment, modification or supplement to any Intercreditor Agreement or subordination agreement or arrangement permitted under this Agreement or in any document pertaining to any Indebtedness permitted hereby that is permitted to be secured by the Collateral, including any Incremental Term Loan or Incremental Revolving Loan, any Other Term Loan, Other Revolving Loan or Other Revolving Commitments, for the purpose of adding the holders of such Indebtedness (or their senior representative) as a party thereto and otherwise causing such Indebtedness to be subject thereto, to give effect hereto or otherwise carry out the purposes thereof, in each case as contemplated by the terms of such Intercreditor Agreement permitted under this Agreement (including any changes thereto as contemplated by Section 9.14(b)) or subordination agreement or arrangement permitted under this Agreement, as applicable.
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(c) In connection with any proposed amendment, modification, waiver or termination (a “ Proposed Change ”) requiring the consent of all Lenders or all directly and adversely affected Lenders, if the consent of the Required Lenders to such Proposed Change is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in paragraph (b) of this Section 9.02 being referred to as a “ Non-Consenting Lender ”), then the Borrower may, at its sole expense and effort, upon notice to such Non-Consenting Lender and the Administrative Agent, require such Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment), provided that (a) the Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable (and, if a Revolving Commitment is being assigned and each Issuing Bank), which consent shall not unreasonably be withheld, (b) such Non-Consenting Lender shall have received payment of an amount equal to the outstanding par principal amount of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including pursuant to Section 2.11(a)(i)) from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
(d) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, the Revolving Commitments, Term Loans and Revolving Exposure of any Lender that is at the time a Defaulting Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of a Class), all affected Lenders (or all affected Lenders of a Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to this Section 9.02); provided that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.
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(e) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, each Affiliated Lender (other than an Affiliated Debt Fund) hereby agrees that, for purposes of any plan of reorganization, such Affiliated Lender will be deemed to have voted in the same proportion as non-Affiliated Lenders voting on such matter; provided that such Affiliated Lender shall be entitled to vote in accordance with its sole discretion in connection with any plan of reorganization to the extent (a) any such plan of reorganization proposes to treat any Secured Obligations held by such Affiliated Lender in a manner that is less favorable in any material respect to such Affiliated Lender than the proposed treatment of similar Secured Obligations held by Lenders that are not Affiliates of the Borrower, (b) that would deprive such Affiliated Lender of its pro rata share of any payments to which it is entitled or (c) if such plan of reorganization does not require the consent of each Lender or each affected Lender.
(f) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, only the consent of the Required Revolving Lenders shall be necessary to waive the requirement in Section 6.05(k)(F).
SECTION 9.03 Expenses; Indemnity; Damage Waiver .
(a) The Borrower shall pay, if the Effective Date occurs and the Transactions have been consummated, (i) all reasonable and documented out-of-pocket costs and expenses incurred by the Administrative Agent, the Joint Lead Arrangers, each Issuing Bank and their respective Affiliates (without duplication), (but limited, (A) in the case of legal fees and expenses, to the reasonable fees, disbursements and other charges of one counsel to the First Lien Administrative Agent, the Issuing Lender and the Joint Lead Arrangers, taken as a whole, plus, if reasonably necessary, one local counsel to the First Lien Administrative Agent, the Issuing Lender and the Joint Lead Arrangers, taken as a whole, in any relevant material jurisdiction, in each case excluding allocated costs of in-house counsel (and in the case of an actual or reasonably perceived potential conflict of interest, one additional counsel and local counsel to the affected First Lien Lenders, taken as a whole), and (B) in the case of other consultants and advisors, limited to the fees and expenses of such persons approved by the Borrower, acting reasonably), in each case for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, and the preparation, execution, delivery and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof), (ii) all reasonable and documented and invoiced out-of-pocket costs and expenses incurred by each Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented and invoiced out-of-pocket expenses (but not third party costs or expenses such as legal fees or the fees of other advisors) incurred by the Administrative Agent, each Issuing Bank or any Lender and the fees, charges and disbursements of counsel to the First Lien Administrative Agent, the Issuing Lender and the First Lien Lenders, taken as a whole, in any relevant material jurisdiction (and in the case of an actual or reasonably perceived potential conflict of interest, one additional counsel to the affected First Lien Lenders, taken as a whole) and in the case of other consultants and advisers, limited to the fees and expenses of such persons approved by the Borrower, acting reasonably) (but limited, (A) in the case of legal fees and expenses, to the fees, disbursements and other charges of one counsel to the Administrative Agent, the Issuing Lender and the Lenders, taken as a whole, and, if reasonably necessary, one local counsel to the Administrative Agent, the Issuing Lender and the Lenders, taken as a whole, in each relevant material jurisdiction (and in the case of an actual or reasonably perceived potential conflict of interest, one additional counsel to the affected Lenders, taken as a whole) and (B) in the case of other consultants and advisers, limited to the fees and expenses of such persons approved by the Borrower, acting reasonably) in connection with the enforcement or protection of any rights or remedies in connection with the Loan Documents (including all such costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Laws or during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit).
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(b) Without duplication of the expense reimbursement obligations pursuant to clause (a) above, the Borrower shall indemnify the Administrative Agent, each Issuing Bank, each Lender, the Joint Lead Arrangers and each Related Party (other than Excluded Affiliates to the extent acting in their capacities as such) of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and expenses (but limited, in the case of legal expenses, to the reasonable and documented and invoiced out-of-pocket fees and expenses of one counsel for all Indemnitees and to the extent reasonably determined by the Administrative Agent to be necessary, one local counsel in each relevant jurisdiction (and, in the case of a conflict of interest, where the Indemnitee affected by such conflict notifies Holdings of the existence of such conflict and thereafter retains its own counsel, one additional counsel) for all Indemnitees (which may include a single special counsel acting in multiple jurisdictions but excluding allocated costs of in-house counsel)), incurred by or asserted against any Indemnitee by any third party or by the Borrower, Holdings or any Subsidiary arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any Loan Document or any other agreement or instrument contemplated hereby or thereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated thereby, the syndication of the credit facilities provided for herein, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) to the extent in any way arising from or relating to any of the foregoing, any actual or alleged presence or Release or threat of Release of Hazardous Materials on, at, to or from any Mortgaged Property or any other real property currently or formerly owned or operated by Holdings, any Intermediate Parent, the Borrower or any Subsidiary, or any other Environmental Liability related in any way to Holdings, any Intermediate Parent, the Borrower or any Subsidiary, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, Holdings or any Subsidiary or their Affiliates and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, costs or related expenses (w) resulted from the gross negligence, bad faith, fraud or willful misconduct of such Indemnitee or its Related Parties (as determined by a court of competent jurisdiction in a final and non-appealable judgment), (x) resulted from a material breach of the Loan Documents by such Indemnitee or its Related Parties (as determined by a court of competent jurisdiction in a final and non-appealable judgment), (y) arise from disputes between or among Indemnitees (other than disputes involving claims against the Administrative Agent, the Collateral Agent or the Joint Lead Arrangers or any Issuing Bank, in each case, in their respective capacities) that do not involve an act or omission by Holdings, the Borrower or any Restricted Subsidiary or (z) resulted from any settlement effected without the Borrower’s prior written consent; provided , that to the extent any amounts paid to an Indemnitee in respect of this Section 9.03, such Indemnitee, by its acceptance of the benefits hereof, agrees to refund and return any and all amounts paid by the Borrower to it if, pursuant to the operation of the foregoing clauses (w) through (z), such Indemnitee was not entitled to receipt of such amount.
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(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, any Lender or any Issuing Bank under paragraph (a) or (b) of this Section 9.03, each Lender severally agrees to pay to the Administrative Agent, such Lender or such Issuing Bank, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, such Lender or such Issuing Bank in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the aggregate Revolving Exposures, outstanding Term Loans and unused Commitments at such time. The obligations of the Lenders under this paragraph (c) are subject to the last sentence of Section 2.02(a) (which shall apply mutatis mutandis to the Lenders’ obligations under this paragraph (c)).
(d) To the extent permitted by applicable law, none of Holdings, the Borrower, any Agent, any Lender, any other party hereto or any Indemnitee shall assert, and each hereby waives, any claim against any other such Person on any theory of liability for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, arising out of, as a result of, or in any way related to, this Agreement or any agreement or instrument contemplated hereby or referred to herein, the transactions contemplated hereby or thereby, or any act or omission or event occurring in connection therewith and each such Person further agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor; provided that the foregoing shall in no event limit the Borrower’s indemnification obligations under clause (b) above.
(e) In case any proceeding is instituted involving any Indemnitee for which indemnification is to be sought hereunder by such Indemnitee, then such Indemnitee will promptly notify the Borrower of the commencement of any proceeding; provided , however , that the failure to do so will not relieve the Borrower from any liability that it may have to such Indemnitee hereunder, except to the extent that the Borrower is materially prejudiced by such failure. Notwithstanding the above, following such notification, the Borrower may elect in writing to assume the defense of such proceeding, and, upon such election, the Borrower will not be liable for any legal costs subsequently incurred by such Indemnitee (other than reasonable costs of investigation and providing evidence) in connection therewith, unless (i) the Borrower has failed to provide counsel reasonably satisfactory to such Indemnitee in a timely manner, (ii) counsel provided by the Borrower reasonably determines its representation of such Indemnitee would present it with a conflict of interest or (iii) the Indemnitee reasonably determines that there are actual conflicts of interest between the Borrower and the Indemnitee, including situations in which there may be legal defenses available to the Indemnitee which are different from or in addition to those available to the Borrower.
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(f) Notwithstanding anything to the contrary in this Agreement, the extent permitted by applicable law, neither Holdings nor the Borrower shall assert, and each hereby waives, any claim against any Indemnitee for any direct or actual damages arising from the use by unintended recipients of information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems (including the Internet) in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby; except to the extent that such direct or actual damages are determined by a court of competent jurisdiction by final, non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of, or a material breach of the Loan Documents by, such Indemnitee or its Related Parties.
(g) All amounts due under this Section 9.03 shall be payable not later than twenty (20) Business Days after written demand therefor; provided , however , that any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 9.03.
SECTION 9.04 Successors and Assigns .
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of their rights or obligations hereunder (other than to a Successor Borrower pursuant to a transaction permitted by Section 6.03(a)(iv)(B)) without the prior written consent of each Lender, each Issuing Bank and the acknowledgement of the Administrative Agent (and any attempted assignment or transfer by the Borrower without such consent (other than to a Successor Borrower pursuant to a transaction permitted by Section 6.03(a)(iv)(B)) shall be null and void), (ii) no assignment shall be made to any Defaulting Lender or any of its Affiliates, or any Persons who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (ii) and (iii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 9.04. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section 9.04), the Indemnitees and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
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(b) (i) Subject to the conditions set forth in paragraphs (b)(ii) and (f) below, any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of (A) the Borrower; provided that no consent of the Borrower shall be required for an assignment (x) by a Term Lender to any Lender, an Affiliate of any Lender or an Approved Fund, (y) if a Specified Event of Default has occurred and is continuing or (z) by a Revolving Lender to another Revolving Lender, an Affiliate of a Revolving Lender or an Approved Fund; provided further that no assignee contemplated by the immediately preceding proviso shall be entitled to receive any greater payment under Section 2.15 or Section 2.17 than the applicable assignor would have been entitled to receive with respect to the assignment made to such assignee, unless the assignment to such assignee is made with the Borrower’s prior written consent; provided further that the Borrower shall have the right to withhold its consent to any assignment if in order for such assignment to comply with applicable law, the Borrower would be required to obtain the consent of, or make any filing or registration with, any Governmental Authority, (B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of a Term Loan subject to Section 9.04(f) and (g), an Affiliated Lender, Holdings, the Borrower or any of its Subsidiaries and (C) solely in the case of Revolving Loans and Revolving Commitments, each Issuing Bank (not to be unreasonably withheld or delayed); provided that, for the avoidance of doubt, no consent of any Issuing Bank shall be required for an assignment of all or any portion of a Term Loan or Term Commitment. Notwithstanding anything in this Section 9.04 to the contrary, if the Borrower has not given the Administrative Agent written notice of its objection to an assignment of Term Loans within ten (10) Business Days after written notice of such assignment, the Borrower shall be deemed to have consented to such assignment.
(ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the trade date specified in the Assignment and Assumption with respect to such assignment or, if no trade date is so specified, as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall, in the case of Revolving Loans, not be less than $2,500,000 (and integral multiples thereof) or, in the case of a Term Loan, $1,000,000 (and integral multiples thereof), unless the Borrower and the Administrative Agent otherwise consent (in each case, such consent not to be unreasonably withheld or delayed); provided that no such consent of the Borrower shall be required if a Specified Event of Default has occurred and is continuing, (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement; provided that this clause (B) shall not be construed to prohibit assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans, (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption via an electronic settlement system acceptable to the Administrative Agent or, if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Assumption, and, in each case, together with a processing and recordation fee of $3,500; provided that the Administrative Agent, in its sole discretion, may elect to waive or reduce such processing and recordation fee; provided further that any such Assignment and Assumption shall include a representation by the assignee that the assignee is not a Disqualified Lender; provided further that assignments made pursuant to Section 2.19(b), 2.21(b) or Section 9.02(c) shall not require the signature of the assigning Lender to become effective, (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent any tax forms required by Section 2.17(e) and an 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 Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws and (E) unless the Borrower otherwise consents, no assignment of all or any portion of the Revolving Commitment of a Lender that is also an Issuing Bank may be made unless (1) the assignee shall be or become an Issuing Bank, as applicable, and assume a ratable portion of the rights and obligations of such assignor in its capacity as Issuing Bank, or (2) the assignor agrees, in its discretion, to retain all of its rights with respect to and obligations to make or issue Letters of Credit hereunder in which case the Applicable Fronting Exposure of such assignor may exceed such assignor’s Fronting Exposure Cap for purposes of Section 2.05(b) by an amount not to exceed the difference between the assignor’s Fronting Exposure Cap prior to such assignment and the assignor’s Fronting Exposure Cap following such assignment; provided that no such consent of the Borrower shall be required if a Specified Event of Default has occurred and is continuing.
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(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) of this Section 9.04, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of (and subject to the obligations and limitations of) Sections 2.15, 2.16, 2.17 and 9.03 and to any fees payable hereunder that have accrued for such Lender’s account but have not yet been paid). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c)(i) of this Section 9.04 to the extent otherwise permitted thereby or otherwise shall be void.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices 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 Commitment of, and principal and interest amounts of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). Notwithstanding the foregoing, in no event shall the Administrative Agent be obligated to ascertain, monitor or inquire as to whether any Lender is an Affiliated Lender, nor shall the Administrative Agent be obligated to monitor the aggregate amount of the Loans or Incremental Loans held by Affiliated Lenders. The entries in the Register shall be conclusive absent manifest error, and Holdings, the Borrower, the Administrative Agent, the Issuing Banks and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by the Borrower, the Issuing Banks and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
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(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire and any tax forms required by Section 2.17(e) (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.04 and any written consent to such assignment required by paragraph (b) of this Section 9.04, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(vi) The words “execution,” “signed,” “signature” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as an original executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act or any other similar state laws based on the Uniform Electronic Transactions Act.
(c) (i) Any Lender may, without the consent of the Borrower, the Administrative Agent or the Issuing Banks, sell participations to one or more banks or other Persons (other than to a Disqualified Lender (but only if the list of Disqualified Lenders is available to Lenders upon request) or other Person that is not an Eligible Assignee) (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) Holdings, the Borrower, the Administrative Agent, the Issuing Banks 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. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and any other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and any other Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that directly and adversely affects such Participant. Subject to paragraph (c)(iii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the obligations and limitations thereof and Section 2.19, it being understood that any tax forms required by Section 2.17(e) shall be provided solely to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 9.04. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.
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(ii) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related interest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “ Participant Register ”). The entries in the Participant Register shall be conclusive, absent manifest error, and the parties hereto 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. No Lender shall have any obligation to disclose all or any portion of its Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or other obligations under the Loan Documents) except to the extent that the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary in connection with a Tax audit or other proceeding to establish that any Loan or other obligation under the Loan Documents is in registered form for U.S. federal income tax purposes.
(iii) A Participant (other than a Revolving Lender pursuant to Section 2.05(e)) shall not be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.
(d) Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other “central” bank, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
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(e) In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(f) Notwithstanding anything to the contrary herein, any Lender may, at any time, assign all or a portion of its rights and obligations under this Agreement to an Affiliated Lender subject to the following limitations:
(i) Affiliated Lenders (other than Affiliated Debt Funds) will not receive information provided solely to Lenders by the Administrative Agent or any Lender and will not be permitted to attend or participate in meetings attended solely by the Lenders and the Administrative Agent, other than the right to receives notices of Borrowings, notices of prepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenders pursuant to Article II;
(ii) for purposes of any amendment, waiver or modification of any Loan Document (including such modifications pursuant to Section 9.02), or, subject to Section 9.02(e), in any plan of reorganization pursuant to the U.S. Bankruptcy Code, that in either case does not require the consent of each Lender, or that would not deprive such Affiliated Lender of its pro rata share of any payments to which it is entitled, Affiliated Lenders will be deemed to have voted in the same proportion as the Lenders that are not Affiliated Lenders voting on such matter; and each Affiliated Lender hereby acknowledges, agrees and consents that if, for any reason, its vote to accept or reject any plan pursuant to the U.S. Bankruptcy Code is not deemed to have been so voted, then such vote will be (x) deemed not to be in good faith and (y) “designated” pursuant to Section 1126(e) of the U.S. Bankruptcy Code such that the vote is not counted in determining whether the applicable class has accepted or rejected such plan in accordance with Section 1126(c) of the U.S. Bankruptcy Code; provided that Affiliated Debt Funds will not be subject to such voting limitations and will be entitled to vote as any other Lender; provided that Affiliated Debt Funds may not account for more than 49.9% of the “Required Lenders” in any Required Lender vote;
(iii) Affiliated Lenders may not purchase Revolving Loans, including pursuant to this Section 9.04;
(iv) the aggregate principal amount of Term Loans purchased by assignment pursuant to this Section 9.04 and held at any one time by Affiliated Lenders (other than Affiliated Debt Funds) may not exceed 25.0% of the aggregate principal amount of all Term Loans outstanding at the time of such purchase, after giving effect to any substantially simultaneous cancellations thereof;
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(v) Affiliated Lenders shall clearly identify themselves as an Affiliated Lender in the loan assignment documentation. In no event shall the Administrative Agent be obligated to ascertain, monitor or inquire as to whether any lender is an Affiliated Lender or Affiliated Debt Fund nor shall the Administrative Agent be obligated to monitor the number of Affiliated Lenders or Affiliated Debt Funds or the aggregate amount of Term Loans or Incremental Term Loans held by Affiliated Lenders or Affiliated Debt Funds;
(vi) Affiliated Lenders (other than Affiliated Debt Funds) will not be permitted to vote on matters requiring a Required Lender vote, and the Term Loans held by Affiliated Lenders (other than Affiliated Debt Funds) shall be disregarded in determining (x) other Lenders’ commitment percentages or (y) matters submitted to Lenders for consideration that do not require the consent of each Lender or each affected Lender; provided that the commitments of any Affiliated Lender shall not be increased, the Interest Payment Dates and the dates of any scheduled amortization payments (including at maturity) owed to any Affiliated Lender hereunder will not be extended and the amounts owning to any Affiliated Lender hereunder will not be reduced without the consent of such Affiliated Lender; and
(vii) each Lender making such assignment to such Affiliated Lender acknowledges and agrees that in connection with such assignment, (1) such Affiliated Lender then may have, and later may come into possession of Material Non-Public Information, (2) such Lender has independently and, without reliance on such Affiliated Lender, Holdings, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack of knowledge of the Material Non-Public Information and (3) none of Holdings, its Subsidiaries, the Administrative Agent, any Affiliated Lender or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against Holdings, its Subsidiaries, the Administrative Agent, such Affiliated Lender and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Material Non-Public Information. Each Lender entering into such an assignment further acknowledges that the Material Non-Public Information may not be available to the Administrative Agent or the other Lenders.
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(g) Any Lender may, at any time, assign all or a portion of its Term Loans (but not Revolving Loans) to Holdings or any of its Subsidiaries, through (x) Dutch auctions or other offers to purchase open to all Lenders on a pro rata basis in accordance with procedures of the type described in Section 2.11(a)(ii) or other customary procedures acceptable to the Administrative Agent and/or (y) open market purchases on a non-pro rata basis, provided that (i) the Borrower shall not make any Borrowing of Revolving Loans to fund such assignment, (ii) any Term Loans that are so assigned will be automatically and irrevocably cancelled and the aggregate principal amount of the tranches and installments of the relevant Term Loans then outstanding shall be reduced by an amount equal to the principal amount of such Term Loans, (iii) no Event of Default shall have occurred and be continuing and (iv) each Lender making such assignment to Holdings or any of its Subsidiaries acknowledges and agrees that in connection with such assignment, (1) Holdings or its Subsidiaries then may have, and later may come into possession of Material Non-Public Information, (2) such Lender has independently and, without reliance on Holdings, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack of knowledge of the Material Non-Public Information and (3) none of Holdings, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against Holdings, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Material Non-Public Information. Each Lender entering into such an assignment further acknowledges that the Material Non-Public Information may not be available to the Administrative Agent or the other Lenders.
(h) Notwithstanding the foregoing, no assignment may be made or participation sold to a Disqualified Lender without the prior written consent of the Borrower; provided that, upon inquiry by any Lender to the Administrative Agent as to whether a specified potential assignee or prospective participant is on the list of Disqualified Lenders, the Administrative Agent shall be permitted to disclose to such Lender whether such specific potential assignee or prospective participant is on the list of Disqualified Lenders; provided further that inclusion on the list of Disqualified Lenders shall not apply retroactively to disqualify any persons that have previously acquired an assignment or participation in the Loan if such person was not included on the list of Disqualified Lenders at the time of such assignment or participation. Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary, if any Lender was a Disqualified Lender at the time of the assignment of any Loans or Commitments to such Lender, following written notice from the Borrower to such Lender and the Administrative Agent and otherwise in accordance with Section 2.19(b), as applicable: (1) such Lender shall promptly assign all Loans and Commitments held by such Lender to an Eligible Assignee (and the signature of such Disqualified Lender shall not be required on any such assignment); provided that (A) the Administrative Agent shall not have any obligation to the Borrower, such Lender or any other Person to find such a replacement Lender, (B) the Borrower shall not have any obligation to such Disqualified Lender or any other Person to find such a replacement Lender or accept or consent to any such assignment to itself or any other Person subject to the Borrower’s consent in accordance with Section 9.04(b)(i) and (C) the assignment of such Loans and/or Commitments, as the case may be, shall be at par plus accrued and unpaid interest and fees; (2) such Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of any Class), all affected Lenders (or all affected Lenders of any Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02); provided that (x) the Commitment of any Disqualified Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Disqualified Lender adversely and in a manner that is disproportionate to other affected Lenders shall require the consent of such Disqualified Lender; and (3) no Disqualified Lender is entitled to receive information provided solely to Lenders by the Administrative Agent or any Lender or will be permitted to attend or participate in meetings attended solely by the Lenders and the Administrative Agent, other than the right to receive notices or Borrowings, notices or prepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenders pursuant to Article II.
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(i) Notwithstanding the foregoing, any Affiliated Lender shall be permitted, at its option, to contribute any Term Loans so assigned to such Affiliated Lender pursuant to this Section 9.04 to Holdings or any of its Subsidiaries for purposes of cancellation, which contribution may be made (including, with the Borrower’s consent, to the Borrower, whether through Holdings or any Intermediate Parent or otherwise), in exchange for Qualified Equity Interests of Holdings, any Intermediate Parent or the Borrower or Indebtedness of the Borrower to the extent such Indebtedness is permitted to be incurred (including, if applicable, as a Permitted Refinancing) pursuant to Section 6.01 at such time.
SECTION 9.05 Survival .
All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to any Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect until the Termination Date. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and all other amounts payable hereunder, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof. Notwithstanding the foregoing or anything else to the contrary set forth in this Agreement, in the event that, in connection with the refinancing or repayment in full of the credit facilities provided for herein, an Issuing Bank shall have provided to the Administrative Agent a written consent to the release of the Revolving Lenders from their obligations hereunder with respect to any Letter of Credit issued by such Issuing Bank (whether as a result of the obligations of the Borrower (and any other account party) in respect of such Letter of Credit having been collateralized in full by a deposit of cash with such Issuing Bank or being supported by a letter of credit that names such Issuing Bank as the beneficiary thereunder, or otherwise), then from and after such time such Letter of Credit shall cease to be a “Letter of Credit” outstanding hereunder for all purposes of this Agreement and the other Loan Documents, and the Revolving Lenders shall be deemed to have no participations in such Letter of Credit, and no obligations with respect thereto, under Section 2.05(e) or (f).
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SECTION 9.06 Counterparts; Integration; Effectiveness .
This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the syndication of the Loans and Commitments constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic means shall be effective as delivery of an original executed counterpart of this Agreement.
SECTION 9.07 Severability .
Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 9.07, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent or the Issuing Bank, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.
SECTION 9.08 Right of Setoff .
If a Specified Event of Default shall have occurred and be continuing, each Lender and each Issuing Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency, but not withholding or payroll accounts, employee benefits accounts, de minimis accounts or other accounts used exclusively for taxes or fiduciary or trust purposes) at any time held and other obligations (in whatever currency) at any time owing by such Lender or such Issuing Bank to or for the credit or the account of the Borrower (excluding, for the avoidance of doubt, any Settlement Assets except to effect Settlement Payments such Lender is obligated to make to a third party in respect of such Settlement Assets or as otherwise agreed in writing between the Borrower and such Lender) against any of and all the obligations of the Borrower then due and owing under this Agreement held by such Lender or Issuing Bank, irrespective of whether or not such Lender or Issuing Bank shall have made any demand under this Agreement and although such obligations are owed to a branch or office of such Lender or Issuing Bank different from the branch or office holding such deposit or obligated on such Indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.22 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The applicable Lender and applicable Issuing Bank shall notify the Borrower and the Administrative Agent of such setoff and application; provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section. The rights of each Lender and each Issuing Bank under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or such Issuing Bank may have. Notwithstanding the foregoing, no amount set off from any Loan Party (other than the Borrower) shall be applied to any Excluded Swap Obligation of such Loan Party (other than the Borrower).
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SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process .
(a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court except to the extent required by any Security Document to be brought in another jurisdiction pursuant to the terms of such Security Document. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in any Loan Document shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to any Loan Document against Holdings or the Borrower or their respective properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to any Loan Document in any court referred to in paragraph (b) of this Section 9.09. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.01. NOTHING IN ANY LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. IN ADDITION TO THE SERVICE OF PROCESS PROVIDED FOR HEREIN, EACH FOREIGN LOAN PARTY HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE BORROWER (AND THE BORROWER HEREBY IRREVOCABLY ACCEPTS SUCH APPOINTMENT) AS ITS AUTHORIZED DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON THE BORROWER SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH FOREIGN LOAN PARTY AGREES TO DESIGNATE A NEW AUTHORIZED DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY OR DELAWARE ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT.
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SECTION 9.10 WAIVER OF JURY TRIAL .
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11 Headings .
Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
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SECTION 9.12 Confidentiality .
(a) Each of the Administrative Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its Affiliates (other than Excluded Affiliates) and its and their respective directors, officers, employees, trustees and agents, including accountants, legal counsel and other agents and advisors and any numbering, administration or settlement service providers on a “need-to-know” basis (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and will be instructed to keep such Information confidential and any failure of such Persons acting on behalf of the Administrative Agent, any Issuing Bank or the relevant Lender to comply with this Section 9.12 shall constitute a breach of this Section 9.12 by the Administrative Agent, such Issuing Bank or the relevant Lender, as applicable), (ii) to the extent requested by any regulatory authority or self-regulatory authority, required by applicable law or by any subpoena or similar legal process or in connection with the exercise of remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; provided that (x) solely to the extent permitted by law and other than in connection with routine audits and reviews by regulatory and self-regulatory authorities, each Lender and the Administrative Agent shall promptly notify the Borrower of any such requested or required disclosure in connection with any legal or regulatory proceeding and (y) in the case of clause (ii) only, each Lender and the Administrative Agent shall use commercially reasonable efforts to ensure that such Information is kept confidential in connection with the exercise of such remedies, (iii) to any other party to this Agreement, (iv) subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12 (but other than to a Disqualified Lender), to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (B) any actual or prospective counterparty (or its advisors) to any Swap Agreement or derivative transaction relating to any Loan Party or its Subsidiaries and its obligations under the Loan Documents or (C) any pledgee referred to in Section 9.04(d), (v) if required by any rating agency; provided that prior to any such disclosure, such rating agency shall have agreed in writing to maintain the confidentiality of such Information, (vi) to service providers providing administrative and ministerial services solely in connection with the syndication and administration of the Loan Documents and the facilities (e.g., identities of parties, maturity dates, interest rates, etc.) on a confidential basis, or (vii) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 9.12 or (y) becomes available to the Administrative Agent, any Issuing Bank, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than Holdings, the Borrower or any Subsidiary, which source is not known (after due inquiry) by the recipient of such information to be subject to a confidentiality obligation. For the purposes hereof, “ Information ” means all information received from or on behalf of Holdings or the Borrower relating to Holdings, any Intermediate Parent, the Borrower, any other Subsidiary or their business other than any such information that is available to the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by Holdings, any Intermediate Parent, the Borrower or any Subsidiary. Notwithstanding the foregoing, no such information shall be disclosed to a Disqualified Lender that constitutes a Disqualified Lender at the time of such disclosure without the Borrower’s prior written consent.
(b) EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN SECTION 9.12(a)) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING HOLDINGS, THE BORROWER, THE LOAN PARTIES 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.
(c) 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, WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT HOLDINGS, THE BORROWER, THE LOAN PARTIES 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.
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SECTION 9.13 USA PATRIOT Act .
Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA PATRIOT Act.
SECTION 9.14 Release of Liens and Guarantees .
(a) A Subsidiary Loan Party shall automatically be released from its obligations under the Loan Documents, and all security interests created by the Security Documents in Collateral owned by such Subsidiary Loan Party shall be automatically released, (1) upon the consummation of any transaction or designation permitted by this Agreement as a result of which such Subsidiary Loan Party ceases to be a Restricted Subsidiary (including pursuant to a permitted merger or amalgamation with a Subsidiary that is not a Loan Party or a designation as an Unrestricted Subsidiary) or becomes an Excluded Subsidiary or (2) upon the request of the Borrower, in connection with a transaction permitted under this Agreement, as a result of which such Subsidiary Loan Party ceases to be a Wholly Owned Subsidiary; provided that, if so required by this Agreement, the Required Lenders shall have consented to such transaction and the terms of such consent shall not have provided otherwise. Upon any sale or other transfer by any Loan Party (other than to any other Loan Party) of any Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Security Document in any Collateral or upon any Collateral becoming an Excluded Asset, the security interests in such Collateral created by the Security Documents shall be automatically released. Upon the release of Holdings or any Subsidiary Loan Party from its Guarantee in compliance with this Agreement, the security interest in any Collateral owned by Holdings or such Subsidiary created by the Security Documents shall be automatically released. Upon the designation of a Restricted Subsidiary as an Unrestricted Subsidiary in compliance with this Agreement, the security interest created by the Security Documents in the Equity Interests of such new Unrestricted Subsidiary shall automatically be released. To the extent the release of any Lien in any Collateral is approved, authorized or ratified in writing by the Required Lenders (or such other percentage of the Lenders whose consent may be required in accordance with Section 9.02), the security interest in such Collateral shall be automatically released. To the extent the release of any security interest in any Collateral is required to effect any sale or other disposition of Collateral in connection with any exercise of remedies of the Collateral Agent pursuant to the Loan Documents, the security interest in such Collateral shall be automatically released. In addition, liens shall be released and guarantees released in accordance with the terms of the Security Documents and the Guarantee. Upon the Termination Date all obligations under the Loan Documents and all security interests created by the Security Documents shall be automatically released. Any such release shall not in any manner discharge, affect, or impair the Obligations (other than those being discharged or released) or any Liens (other than those being discharged or released) of the Loan Parties in respect of all interests retained by the Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral except to the extent comprised of Excluded Assets or otherwise released in accordance with the provisions of the Loan Documents. In connection with any termination or release pursuant to this Section 9.14, without the further consent of any Lender, Issuing Bank or other Secured Party, the Administrative Agent or the Collateral Agent, as the case may be, shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence or to file or register in any office such termination or release so long as the Borrower or applicable Loan Party shall have provided the Administrative Agent or the Collateral Agent, as the case may be, such certifications or documents as the Administrative Agent or the Collateral Agent, as the case may be, shall reasonably request in order to demonstrate compliance with this Agreement. The Administrative Agent or the Collateral Agent, as the case may be, will, at the Borrower’s expense, execute and deliver to the applicable Loan Party or to file or register in any office such documents as such Loan Party may reasonably request to subordinate its Lien on any property granted to or held by the Administrative Agent or the Collateral Agent, as the case may be, under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(ii) (but only pursuant to clauses (d), (j) and (k) of the definition of “Permitted Encumbrances), (iv), (v), (xi), (xii), (xv), (xxii) (but only with respect to any such liens securing Indebtedness permitted under Section 6.01(a)(viii)), (xxiii), (xxix) or (xxx).
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(b) Each of the Lenders and the Issuing Bank irrevocably authorizes the Administrative Agent or the Collateral Agent, as the case may be, to (i) provide any release or evidence of release, termination or subordination contemplated by this Section 9.14 (and upon request by the Administrative Agent or the Collateral Agent, as the case may be, at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority or the Collateral Agent’s authority, as the case may be, to release or subordinate its interest in particular types or items of property, or to release any Loan Party from its obligations under any Loan Document, in each case in accordance with the terms of the Loan Documents and this Section 9.14), (ii) enter into subordination or intercreditor agreements with respect to Indebtedness to the extent the Administrative Agent or Collateral Agent is otherwise contemplated herein as being a party to such intercreditor or subordination agreement, in each case to the extent such agreements, at the time they are first entered into, are substantially consistent with the terms set forth on Exhibit E-1 , E-2 or E-3 annexed hereto, together with (A) any immaterial changes and (B) material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not less than five Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agent’s and/or Collateral Agent’s entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agent’s and/or Collateral Agent’s execution thereof, in each case in form and substance reasonably satisfactory to the Administrative Agent and/or Collateral Agent (it being understood that junior Liens are not required to be pari passu with other junior Liens, and that Indebtedness secured by junior Liens may secured by Liens that are pari passu with, or junior in priority to, other Liens that are junior to the Liens securing the Obligations); and (iii) enter into and sign for and on behalf of the Lenders as Secured Parties the Security Documents for the benefit of the Lenders and the other Secured Parties.
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SECTION 9.15 No Advisory or Fiduciary Responsibility .
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each of the Borrower and Holdings acknowledges and agrees that (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Joint Lead Arrangers, the Issuing Banks and the Lenders are arm’s-length commercial transactions between the Borrower, Holdings and their respective Affiliates, on the one hand, and the Administrative Agent, the Joint Lead Arrangers, the Issuing Banks and the Lenders on the other hand, (B) each of the Borrower and Holdings has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each of the Borrower and Holdings is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Administrative Agent, the Joint Lead Arrangers, the Issuing Banks and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary for the Borrower, Holdings, any of their respective Affiliates or any other Person and (B) none of the Administrative Agent, the Joint Lead Arrangers, the Issuing Banks and the Lenders has any obligation to the Borrower, Holdings or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Joint Lead Arrangers, the Issuing Banks and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, Holdings and their respective Affiliates, and none of the Administrative Agent, the Joint Lead Arrangers, the Issuing Banks and the Lenders has any obligation to disclose any of such interests to the Borrower, Holdings or any of their respective Affiliates.
SECTION 9.16 Interest Rate Limitation .
Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligations hereunder.
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SECTION 9.17 Judgment Currency .
If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrower or any other Loan Party in respect of any such sum due from it to the Secured Parties hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent from the Borrower in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under Requirements of Law).
SECTION 9.18 Intercreditor Agreement . Each Secured Party hereby agrees that the Administrative Agent and/or Collateral Agent may enter into the Closing Date Intercreditor Agreement and any other intercreditor agreement and/or subordination agreement pursuant to, or contemplated by, the terms of this Agreement (including with respect to Indebtedness permitted pursuant to Section 6.01, any applicable Liens on Collateral permitted pursuant to Section 6.02 and, in each case, together with the defined terms referenced therein) on its behalf and agrees to be bound by the terms thereof and, in each case, consents and agrees to the appointment of Deutsche Bank AG New York Branch (or its affiliated designee, representative, agent or successor) on its behalf as collateral agent, respectively, thereunder. Each Lender (a) understands, acknowledges and agrees that Liens shall be created on the Collateral pursuant to the Second Lien Loan Documents, which Liens shall be subject to the terms and conditions of the Closing Date Intercreditor Agreement, (b) hereby agrees that it will be bound by and will take no actions contrary to the provisions of the Closing Date Intercreditor Agreement or any other applicable Intercreditor Agreement (if entered into) and (c) hereby authorizes and instructs the Administrative Agent and Collateral Agent to enter into the Closing Date Intercreditor Agreement and, if applicable, any other Intercreditor Agreement (and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, such agreements (subject, if applicable, to the last sentence of Section 9.02(b)), and to subject the Liens on the Collateral securing the Obligations to the provisions thereof).
SECTION 9.19 Cashless Settlement .
Notwithstanding anything to the contrary contained in this Agreement, any Lender may exchange, continue or rollover all or a portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent and such Lender.
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SECTION 9.20 Acknowledgement and Consent to Bail-In of EEA Financial Institutions .
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
[Remainder of Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
CANYON COMPANIES S.À R.L. | ||
a Luxembourg private limited liability company (société à responsabilité limitée) Registered office: 6D, route de Trèves, L-2633 Senningerberg Grand-Duchy of Luxembourg Share Capital : USD 20,010.- R.C.S. Luxembourg: B187.216, |
||
as Holdings | ||
By: | /s/ Jeffrey S. Wright | |
Name: | Jeffrey S. Wright | |
Title: | Authorized Signatory |
CANYON GROUP S.À R.L. | ||
a Luxembourg private limited liability company (société à responsabilité limitée) Registered office: 6D, route de Trèves, L-2633 Senningerberg Grand-Duchy of Luxembourg Share Capital : USD 20,000.- R.C.S. Luxembourg: B202.299, |
||
as Intermediate Lux Holdings | ||
By: | /s/ Jeffrey S. Wright | |
Name: | Jeffrey S. Wright | |
Title: | Authorized Signatory | |
GTCR VALOR HOLDINGS, INC.
,
as Intermediate U.S. Holdings |
||
By: | /s/ Peter Granat | |
Name: | Peter Granat | |
Title: | Chief Executive Officer | |
GTCR VALOR COMPANIES, INC.
,
as Borrower |
||
By: | /s/ Peter Granat | |
Name: | Peter Granat | |
Title: | Chief Executive Officer |
[Signature Page to Credit Agreement]
DEUTSCHE BANK AG NEW YORK BRANCH
,
as Administrative Agent, an Issuing Bank and a Lender |
||
By: | /s/ Anca Trifan | |
Name: | Anca Trifan | |
Title: | Managing Director | |
By: | /s/ Benjamin Souh | |
Name: | Benjamin Souh | |
Title: | Vice President | |
BARCLAYS BANK PLC
,
as an Issuing Bank and a Lender |
||
By: | /s/ Ronnie Glenn | |
Name: | Ronnie Glenn | |
Title: | Vice President | |
ROYAL BANK OF CANADA
,
as an Issuing Bank and a Lender |
||
By: | /s/ Kenneth Klassen | |
Name: | Kenneth Klassen | |
Title: | Authorized Signatory | |
By: | /s/ Michael Ferencich | |
Name: | Michael Ferencich | |
Title: | Authorized Signatory |
[Signature Page to Credit Agreement]
EXHIBIT A
Form of Assignment and Assumption
This Assignment and Assumption (this “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between the Assignor named below (the “ Assignor ”) and the Assignee named below (the “ Assignee ”). It is understood and agreed that the rights and obligations of the Assignor and the Assignee hereunder are several and not joint. Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below, receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex A attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, any Letters of Credit and Guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, 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 by the Assignor to the Assignee 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: | [Assignor Name] [and is a Defaulting Lender] |
2. Assignee: | [Assignee Name] |
[and is an Affiliate/Approved Fund/Affiliated Debt Fund of [Lender Name]] | |
Assignees are Affiliated Lenders: _______ | |
3. Borrower: | GTCR Valor Companies, Inc. |
4. Administrative Agent: | Deutsche Bank AG New York Branch, as the Administrative Agent under the Credit Agreement. |
A- 1 |
5. Credit Agreement: | The First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). |
7. Effective Date: 5 | __________________, 20__ |
1 | Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. |
2 | Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g., “Revolving Credit Commitment,” “Term Loan Commitment,” etc.) |
3 | Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. |
4 | Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g., “Revolving Commitment,” “Term Commitment,” “Revolving Loan,” “Term Loan,” etc.). |
5 | To be inserted by the Administrative Agent and which shall be the effective date of recordation of transfer in the register therefor. |
A- 2 |
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR: | ||
[NAME OF ASSIGNOR] | ||
By: | ||
Name: | ||
Title: | ||
ASSIGNEE: | ||
[NAME OF ASSIGNEE] | ||
By: | ||
Name: | ||
Title: |
[Consented to and] 6 Accepted: | ||
DEUTSCHE BANK AG NEW YORK BRANCH, | ||
as Administrative Agent | ||
By: | ||
Name: | ||
Title: | ||
[GTCR VALOR COMPANIES, INC.] 7 | ||
By: | ||
Name: | ||
Title: |
6 | To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. |
7 | To be included unless Borrower's consent is not required under the terms of the Credit Agreement. |
A- 3 |
[Consented to:] 1 | ||
By: | ||
Name: | ||
Title: |
1 | To be added only if the consent of any Issuing Bank is required by the terms of the Credit Agreement. |
A- 4 |
ANNEX A
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, ( 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 ( iv ) it is [not] a Defaulting Lender; 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 Loan Document, ( ii ) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, ( iii ) the financial condition of Holdings, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document, or ( iv ) the performance or observance by Holdings, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan 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 meets all the requirements to be an assignee under Section 9.04 of the Credit Agreement (subject to such consents, if any, as may be required under the Credit Agreement) and is not a Disqualified 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 is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, ( v ) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.01( a ) or ( b ) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, ( vi ) it has independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, ( vii ) if it is a Lender that is not a United States person, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, completed and duly executed by the Assignee and ( viii ) if it is an Affiliated Lender, it has indicated its status as such in the space provided on the first page of this Assignment and Assumption; 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 Loan Documents, and ( ii ) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
A-I- 1 |
2. Payments . From and after the Effective Date referred to in this Assignment and Assumption, 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 facsimile or electronic transmission 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 laws of the State of New York.
A-I- 2 |
EXHIBIT B
Form of Guarantee Agreement
[See attached.]
B- 1 |
EXHIBIT C
Form of Notice of Borrowing
Deutsche Bank AG New York Branch,
as Administrative Agent
60 Wall Street, MS NYC 60-4305
New York, NY 10005
Attention Hareesha D. Kuberappa
Telephone: +44 207-779-4769
Email: loan.admin-ny@db.com
[●] [●], 20[●] 1
Ladies and Gentlemen:
Reference is hereby made to that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Terms defined in the Credit Agreement are used herein with the same meanings unless otherwise defined herein.
The undersigned hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that it requests the Borrowings under the Credit Agreement to be made on [●] [●], 20[●], and that in connection with such request sets forth below the terms on which the Borrowings are requested to be made:
(A) | Date of Borrowing (which shall be a Business Day): | [●] |
(B) | Aggregate Amount of Borrowing: 2 | [●] |
(C) | Type of Borrowing: 3 | [●] |
1 | The Administrative Agent must be notified by telephone (with such telephonic notification to be promptly confirmed in writing in substantially in the form of this Exhibit C), which must be received by the Administrative Agent (by hand delivery, fax or other electronic transmission (including “.pdf” or “.tif”)) not later than (i) in the case of a Eurodollar Borrowing, 2:00 p.m. New York City time, three (3) Business Days prior to the requested day of such Eurodollar Borrowing (or in the case of any Eurodollar Borrowing to be made on the Effective Date, the same Business Day) or (ii) in the case of an ABR Borrowing, 1:00 p.m. New York City time, on the requested date of any such ABR Borrowing (or, in each case, such later time as is acceptable to the Administrative Agent). |
2 | Subject to Section 2.02(c) of the Credit Agreement. |
3 | State whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing. If no Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. |
C- 1 |
(D) | Class of Borrowing: 4 | [●] |
(E) | Interest Period 5 (in the case of a Eurodollar Borrowing): | [●] |
(F) | Location and Number of the Borrower’s Account(s) to which funds are to be disbursed 6 : | [●] |
(G) | Currency of Borrowing: 7 | [●] |
[The undersigned hereby certifies that the following statements will be true on the date of the Borrowing:
(A) The representations and warranties of each Loan Party set forth in the Loan Documents are true and correct in all material respects on and as of the date of the Borrowing; provided that to the extent that any representations and warranties specifically refer to an earlier date, they are true and correct in all material respects as of such earlier date.
(B) At the time of and immediately after giving effect to the Borrowing, no Default or Event of Default has occurred and is continuing.] 8
[In consideration for permitting the Borrower to request Loans as Eurodollar Loans pursuant to the Credit Agreement prior to the effectiveness thereof, the Borrower hereby agrees that, in the event the Borrower fails to borrow such Eurodollar Loans on the requested date of Borrowing above for any reason (other than the failure by a Lender to make a Loan, but including the failure of the Credit Agreement to become effective), the Borrower shall reimburse each applicable Lender in respect of its Eurodollar Loans as set forth in Section 2.16 of the Credit Agreement as if the Credit Agreement were in effect with respect to the requested Eurodollar Loans.
Notwithstanding anything herein to the contrary, the Borrowings contemplated by this Borrowing Request shall be subject to and conditioned upon the effectiveness of the Credit Agreement.] 9
This Notice of Borrowing shall be governed by, and construed in accordance with, the laws of the State of New York.
[Signature Page Follows]
4 | State whether such Borrowing is to be of Term Loans, Incremental Term Loans, Other Term Loans, Revolving Loans, etc. |
5 | Must be a period contemplated by the definition of “Interest Period”. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. |
6 | Such information shall comply with the requirements of Section 2.06 of the Credit Agreement. |
7 | In the case of Revolving Borrowings. |
8 | Include bracketed language for Borrowings of new Loans after the Effective Date other than the exceptions/revisions contemplated in Section 4.02. |
9 | Include bracketed language for Borrowings on the Effective Date. |
C- 2 |
GTCR VALOR COMPANIES, INC. | ||
By: | ||
Name: | ||
Title: |
C- 3 |
EXHIBIT D
Form of Collateral Agreement
[See attached.]
D- 1 |
EXHIBIT E-1
Form of Pari Passu Intercreditor Agreement
[See attached.]
E-1- 1 |
EXHIBIT E-2
Form of Closing Date Intercreditor Agreement
[See attached.]
E-2- 1 |
EXHIBIT E-3
Form of Junior Intercreditor Agreement
[See attached.]
E-3- 1 |
EXHIBIT F
Form of Intercompany Note
New York, New York
Date: , 20[ ]
FOR VALUE RECEIVED, each of the undersigned and each Additional Party (as defined below), to the extent a borrower from time to time from any other entity listed on the signature page hereto (each, in such capacity, a “ Payor ”), hereby promises to pay on demand to such other entity listed below (each, in such capacity, a “ Payee ”), in lawful money of the United States of America, or in such other lawful money as agreed to by such Payor and such Payee, in immediately available funds, at the appropriate office of a Payee as such Payee shall from time to time designate, the unpaid principal amount of all loans and advances made by such Payee to such Payor. Each Payor promises also to pay interest on the unpaid principal amount of all such loans and advances in like money at said location from the date of such loans and advances until paid at such rate per annum as shall be agreed upon from time to time by such Payor and such Payee.
This note (“ Note ”) is an intercompany note referred to in Section 6.01(a)(iv) of the First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand and ten United States Dollars ($20,010) and registered with the Luxembourg Register of Commerce and Companies under number B 187.216 (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand United States Dollars ($20,000) and registered with the Luxembourg Register of Commerce and Companies under number B 202.299 (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”), and is subject to the terms thereof. Capitalized terms used herein without definition have the same meanings as in the Credit Agreement.
Anything in this Note to the contrary notwithstanding, the indebtedness evidenced by this Note shall be subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to all Secured Obligations of such Payor until the Termination Date shall have occurred; provided , that each Payor may make payments to the applicable Payee unless an Event of Default shall have occurred and be continuing and such Payor shall have received notice from the Administrative Agent ( provided , that no such notice shall be required to be given in the case of any Event of Default arising under Section 7.01(h) or 7.01(i) of the Credit Agreement) (such Secured Obligations and other indebtedness and obligations in connection with any renewal, refunding, restructuring or refinancing thereof, including interest thereon accruing after the commencement of any proceedings referred to in clause (i) below, whether or not such interest is an allowed claim in such proceeding, being hereinafter collectively referred to as “ Senior Indebtedness ”):
F- 1 |
(i) in the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to any Payor or to its creditors, as such, or to its property, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of such Payor, whether or not involving insolvency or bankruptcy, then, if an Event of Default has occurred and is continuing, (x) the Termination Date shall have occurred before any Payee that is not a Loan Party is entitled to receive (whether directly or indirectly), or make any demands for, any payment on account of this Note and (y) until the Termination Date shall have occurred, any payment or distribution to which such Payee would otherwise be entitled (other than in the form of debt securities of such Payor that are subordinated, to at least the same extent as this Note, to the payment of all Senior Indebtedness then outstanding (such securities being hereinafter referred to as “ Restructured Debt Securities ”)) shall be made to the holders of Senior Indebtedness;
(ii) if any Event of Default has occurred and is continuing and after notice from the Administrative Agent ( provided that no such notice shall be required to be given in the case of any Event of Default arising under Section 7.01(h) or 7.01(i) of the Credit Agreement), then unless otherwise agreed by the Administrative Agent with respect to any Senior Indebtedness, no payment or distribution of any kind or character shall be made by or on behalf of any Payor that is a Loan Party or any other Person on its behalf with respect to this Note owed to any Payee that is not a Loan Party until (x) the Termination Date shall have occurred or (y) such Event of Default shall have been cured or waived in accordance with the terms of the Credit Agreement; and
(iii) if any payment or distribution of any character, whether in cash, securities or other property (other than in the form of Restructured Debt Securities), in respect of this Note shall (despite these subordination provisions) be received by any Payee in violation of clause (i) or (ii) above before the Termination Date shall have occurred, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness (or their representatives), ratably according to the respective aggregate amounts remaining unpaid thereon, to the extent necessary to pay all Senior Indebtedness in full in cash.
To the fullest extent permitted by law, no present or future holder of Senior Indebtedness shall be prejudiced in its right to enforce the subordination of this Note by any act or failure to act on the part of any Payor or by any act or failure to act on the part of such holder or any trustee or agent for such holder. Each Payee and each Payor hereby agree that the subordination of this Note is for the benefit of the Administrative Agent, each Issuing Bank and the Lenders, and the Administrative Agent, each Issuing Bank and the Lenders are obligees under this Note to the same extent as if their names were written herein as such and the Administrative Agent may, on behalf of itself, each Issuing Bank and the Lenders, as applicable, proceed to enforce the subordination provisions herein.
F- 2 |
Nothing contained in the subordination provisions set forth above is intended to or will impair, as between each Payor and each Payee, the obligations of such Payor, which are absolute and unconditional, to pay to such Payee the principal of and interest on this Note as and when due and payable in accordance with its terms, or is intended to or will affect the relative rights of such Payee and other creditors of such Payor other than the holders of Senior Indebtedness.
Each Payee is hereby authorized to record all loans and advances made by it to any Payor (all of which shall be evidenced by this Note), and all repayments or prepayments thereof, in its books and records, such books and records constituting prima facie evidence of the accuracy of the information contained therein.
Each Payor hereby waives (to the extent permitted by applicable law) presentment, demand, protest or notice of any kind in connection with this Note. All payments under this Note shall be made without offset, counterclaim or deduction of any kind.
This Note shall be binding upon each Payor and its successors and assigns, and the terms and provisions of this Note shall inure to the benefit of each Payee and its successors and assigns, including subsequent holders hereof.
From time to time after the date hereof, additional subsidiaries of Holdings may become parties hereto (as Payor and/or Payee, as the case may be) by executing a counterpart signature page to this Note (each additional subsidiary, an “ Additional Party ”). Upon delivery of such counterpart signature page to the Payees, notice of which is hereby waived by the other Payors, and updating or supplementing Schedule A hereto by adding the name of each Additional Party, each Additional Party shall be a Payor and/or a Payee, as the case may be, and shall be as fully a party hereto as if such Additional Party were an original signatory hereof. Each Payor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Payor or Payee hereunder. This Note shall be fully effective as to any Payor or Payee that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Payor or Payee hereunder.
Any subsidiary of Holdings that is a party to this Note, which ceases to be a subsidiary of Holdings (the “ Former Subsidiary ”), shall be automatically released from the rights and obligations under this Note, provided, that, at the time of such release, any existing balances between the Former Subsidiary and the remaining parties hereto have been paid in full or settled.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[Remainder of Page Intentionally Left Blank]
F- 3 |
[_], | ||
as Payor | ||
By: | ||
Name: | ||
Title: | ||
[_____________________], | ||
as Payee | ||
By: | ||
Name: | ||
Title: |
F- 4 |
SCHEDULE A
NAME OF PAYOR/PAYEE | JURISDICTION OF ORGANIZATION | |
1. [ ] | [ ] | |
2. [ ] | [ ] |
F- 5 |
EXHIBIT G
Form of Specified Discount Prepayment Notice
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
This Specified Discount Prepayment Notice is delivered to you pursuant to Section 2.11(a)(ii)(B) of that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement.
Pursuant to Section 2.11(a)(ii)(B) of the Credit Agreement, [_____] 1 hereby offers to make a Discounted Term Loan Prepayment to each Term Lender [and to each Lender of the [●, 20●] 2 tranche[s] of Term Loans] on the following terms:
1. This Borrower Offer of Specified Discount Prepayment is available only to each Term Lender [and to each Lender of the [●, 20●] 3 tranche[s] of Term Loans].
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that will be made in connection with this offer shall not exceed $[●] of Term Loans [and $[●] of the [●, 20●] 4 tranche[(s)] of Term Loans] (the “ Specified Discount Prepayment Amount ”). 5
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | List multiple tranches if applicable. |
4 | List multiple tranches if applicable. |
5 | Minimum of $1.0 million and whole increments of $500,000. |
G- 1 |
3. The percentage discount to par value at which such Discounted Term Loan Prepayment will be made is [●]% in respect of the Term Loans [and [●]% in respect of the [●, 20●] 6 tranche[(s)] of Term Loans] (the “ Specified Discount ”).
To accept this offer, you are required to submit to the Administrative Agent a Specified Discount Prepayment Response on or before 5:00 p.m. New York time on the date that is three (3) Business Days following the date of delivery of this notice pursuant to Section 2.11(a)(ii)(B) of the Credit Agreement.
[_____] 7 hereby represents and warrants to the Administrative Agent [and the Term Lenders][, the Term Lenders and each Lender of the [●, 20●] 8 tranche[s] of Term Loans] as follows:
1. [_____] 9 will not make a Borrowing of Revolving Loans to fund this Discounted Term Loan Prepayment.
2. [At least ten (10) Business Days have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by [_____] 10 on the applicable Discounted Prepayment Effective Date.][At least three (3) Business Days have passed since the date [_____] 11 was notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of the [_____] 12 ’s election not to accept any Solicited Discounted Prepayment Offers], provided , further , that any Term Loan that is prepaid will be automatically and irrevocably cancelled. 13
The Borrower acknowledges that the Auction Agent and the relevant Term Lenders are relying on the truth and accuracy of the foregoing representations and warranties in connection with their decision whether or not to accept the offer set forth in this Specified Discount Prepayment Notice and the acceptance of any prepayment made in connection with this Specified Discount Prepayment Notice.
6 | List multiple tranches if applicable. |
7 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
8 | List multiple tranches if applicable. |
9 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
10 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
11 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
12 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
13 | Insert applicable representation. |
G- 2 |
The Borrower requests that the Auction Agent promptly notify each of the relevant Term Lenders party to the Credit Agreement of this Specified Discount Prepayment Notice.
[Remainder of Page Intentionally Left Blank]
G- 3 |
IN WITNESS WHEREOF, the undersigned has executed this Specified Discount Prepayment Notice as of the date first above written.
[______________] 14 | ||
By: | ||
Name: | ||
Title: |
Enclosure: Form of Specified Discount Prepayment Response
14 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
G- 4 |
EXHIBIT H
Form of Specified Discount Prepayment Response
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
Reference is made to (a) that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”), and (b) that certain Specified Discount Prepayment Notice, dated ______, 20__, from [_______] 1 (the “ Specified Discount Prepayment Notice ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Specified Discount Prepayment Notice or, to the extent not defined therein, in the Credit Agreement.
The undersigned [Term Lender] [Lender] hereby gives you irrevocable notice, pursuant to Section 2.11(a)(ii)(B) of the Credit Agreement, that it is willing to accept a prepayment of the following [tranches of] Term Loans held by such [Term Lender] [Lender] at the Specified Discount in an aggregate outstanding amount as follows:
[Term Loans - $[●]]
[[●, 20●] 2 tranche[s] of Term Loans - $[●]]
The undersigned [Term Lender] [Lender] hereby expressly consents and agrees to a prepayment of its [Term Loans][[●, 20●] 3 tranche[s]] pursuant to Section 2.11(a)(ii)(B) of the Credit Agreement at a price equal to the [applicable] Specified Discount in the aggregate outstanding amount not to exceed the amount set forth above, as such amount may be reduced in accordance with the Specified Discount Proration, and as otherwise determined in accordance with and subject to the requirements of the Credit Agreement.
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | List multiple tranches if applicable. |
H- 1 |
The undersigned [Term Lender] [Lender] hereby represents and warrants to [________] 4 as follows:
1. The undersigned [Term Lender] [Lender] has independently and, without reliance on Holdings, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to accept a prepayment pursuant to the terms of this Specified Discount Prepayment Response notwithstanding undersigned [Term Lender] [Lender]’s lack of knowledge of any Excluded Information; and
2. None of Holdings, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to the undersigned [Term Lender] [Lender], and the undersigned [Term Lender] [Lender] hereby waives and releases, to the extent permitted by Requirements of Law, any claims the undersigned [Term Lender] [Lender] may have against Holdings, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of any Excluded Information.
[Remainder of Page Intentionally Left Blank]
4 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
H- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Specified Discount Prepayment Response as of the date first above written.
[ ] | ||
By: | ||
Name | ||
Title: | ||
By: | ||
Name | ||
Title: |
H- 3 |
EXHIBIT I
Form of Discount Range Prepayment Notice
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
This Discount Range Prepayment Notice is delivered to you pursuant to Section 2.11(a)(ii)(C) of that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement.
Pursuant to Section 2.11(a)(ii)(C) of the Credit Agreement, [_____] 1 hereby requests that each Term Lender [and to each Lender of the [●, 20●] 2 tranche[s] of Term Loans] submit a Discount Range Prepayment Offer. Any Discounted Term Loan Prepayment made in connection with this solicitation shall be subject to the following terms:
1. This Borrower Solicitation of Discount Range Prepayment Offers is extended at the sole discretion of [_____] 3 to each Term Lender [and to each Lender of the [●, 20●] 4 tranche[s] of Term Loans].
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that will be made in connection with this solicitation is $[●] of Term Loans [and $[●] of the [●, 20●] 5 tranche[(s)] of Term Loans] (the “ Discount Range Prepayment Amount ”). 6
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
4 | List multiple tranches if applicable. |
5 | List multiple tranches if applicable. |
6 | Minimum of $1.0 million and whole increments of $500,000. |
I- 1 |
3. [_____] 7 is willing to make Discount Term Loan Prepayments at a percentage discount to par value greater than or equal to [●]% but less than or equal to [●]% in respect of the Term Loans [and greater than or equal to [●]% but less than or equal to [●]% in respect of the [●, 20●] 8 tranche[(s)] of Term Loans] (the “ Discount Range ”).
To make an offer in connection with this solicitation, you are required to deliver to the Administrative Agent a Discount Range Prepayment Offer on or before 5:00 p.m. New York time on the date that is three ( 3 ) Business Days following the dated delivery of the notice pursuant to Section 2.11(a)(ii)(C) of the Credit Agreement.
[_____] 9 hereby represents and warrants to the Auction Agent [and the Term Lenders][, the Term Lenders and each Lender of the [●, 20●] 10 tranche[s] of Term Loans] as follows:
1. [_____] 11 will not make a Borrowing of Revolving Loans to fund this Discounted Term Loan Prepayment.
2. [At least ten (10) Business Days have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by [_____] 12 on the applicable Discounted Prepayment Effective Date.][At least three (3) Business Days have passed since the date [_____] 13 was notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of [_____] 14 ’s election not to accept any Solicited Discounted Prepayment Offers made by a Term Lender], provided , further , that any Term Loan that is prepaid will be automatically and irrevocably cancelled. 15
7 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
8 | List multiple tranches if applicable. |
9 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
10 | List multiple tranches if applicable. |
11 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
12 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
13 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
14 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
15 | Insert applicable representation. |
I- 2 |
[_____] 16 acknowledges that the Auction Agent and the relevant Term Lenders are relying on the truth and accuracy of the foregoing representations and warranties in connection with any Discount Range Prepayment Offer made in response to this Discount Range Prepayment Notice and the acceptance of any prepayment made in connection with this Discount Range Prepayment Notice.
[_____] 17 requests that the Auction Agent promptly notify each of the relevant Term Lenders party to the Credit Agreement of this Discount Range Prepayment Notice.
[Remainder of Page Intentionally Left Blank]
16 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
17 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
I- 3 |
IN WITNESS WHEREOF, the undersigned has executed this Discount Range Prepayment Notice as of the date first above written.
[______________] 18 | ||
By: | ||
Name: | ||
Title: |
Enclosure: Form of Discount Range Prepayment Offer
18 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
I- 4 |
EXHIBIT J
Form of Discount Range Prepayment Offer
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
Reference is made to (a) that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”), and (b) that certain Discount Range Prepayment Notice, dated ______, 201_, from [_____] 1 (the “ Discount Range Prepayment Notice ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Discount Range Prepayment Notice or, to the extent not defined therein, in the Credit Agreement.
The undersigned [Term Lender] [Lender] hereby gives you irrevocable notice, pursuant to Section 2.11(a)(ii)(C) of the Credit Agreement, that it is hereby offering to accept a Discounted Term Loan Prepayment on the following terms:
1. This Discount Range Prepayment Offer is available only for prepayment on the [Term Loans][and the [●, 20●] 2 tranche[s] of Term Loans] held by the undersigned.
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that may be made in connection with this offer shall not exceed (the “ Submitted Amount ”):
[Term Loans - $[●]]
[[●, 20●] 3 tranche[s] of Term Loans - $[●]]
3. The percentage discount to par value at which such Discounted Term Loan Prepayment may be made is [●]% in respect of the Term Loans [and [●]% in respect of the [●, 20●] 4 tranche[(s)] of Term Loans] (the “ Submitted Discount ”).
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | List multiple tranches if applicable. |
4 | List multiple tranches if applicable. |
J- 1 |
The undersigned [Term Lender] [Lender] hereby expressly consents and agrees to a prepayment of its [Term Loans] [[●, 20●] 5 tranche[s] of Term Loans] indicated above pursuant to Section 2.11(a)(ii)(C) of the Credit Agreement at a price equal to the Applicable Discount and in an aggregate outstanding amount not to exceed the Submitted Amount, as such amount may be reduced in accordance with the Discount Range Proration, if any, and as otherwise determined in accordance with and subject to the requirements of the Credit Agreement.
[Remainder of Page Intentionally Left Blank]
5 | List multiple tranches if applicable. |
J- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Discount Range Prepayment Offer as of the date first above written.
[ ] | ||
By: | ||
Name | ||
Title: | ||
By: | ||
Name | ||
Title: |
J- 3 |
EXHIBIT K
Form of Solicited Discounted Prepayment Notice
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
This Solicited Discounted Prepayment Notice is delivered to you pursuant to Section 2.11(a)(ii)(D) of that First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement.
Pursuant to Section 2.11(a)(ii)(D) of the Credit Agreement, [_____] 1 hereby requests that each Term Lender [and to each Lender of the [●, 20●] 2 tranche[s] of Term Loans] submit a Solicited Discounted Prepayment Offer. Any Discounted Term Loan Prepayment made in connection with this solicitation shall be subject to the following terms:
1. This Borrower Solicitation of Discounted Prepayment Offer is extended at the sole discretion of [_____] 3 to each Term Lender [and to each Lender of the [●, 20●] 4 tranche[s] of Term Loans].
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that will be made in connection with this solicitation is (the “ Solicited Discounted Prepayment Amount ”): 5
[Term Loans - $[●]]
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
4 | List multiple tranches if applicable. |
5 | Minimum of $1.0 million and whole increments of $500,000. |
K- 1 |
[[●, 20●] 6 tranche[s] of Term Loans - $[●]]
To make an offer in connection with this solicitation, you are required to deliver to the Administrative Agent a Solicited Discounted Prepayment Offer on or before 5:00 p.m. New York time on the date that is three (3) Business Days following delivery of this notice pursuant to Section 2.11(a)(ii)(D) of the Credit Agreement.
[_____] 7 requests that the Auction Agent promptly notify each of the relevant Term Lenders party to the Credit Agreement of this Solicited Discounted Prepayment Notice.
[Remainder of Page Intentionally Left Blank]
6 | List multiple tranches if applicable. |
7 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
K- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Solicited Discounted Prepayment Notice as of the date first above written.
[______________] 8 | ||
By: | ||
Name: | ||
Title: |
Enclosure: Form of Solicited Discounted Prepayment Offer
8 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
K- 3 |
EXHIBIT L
Form of Solicited Discounted Prepayment Offer
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
Reference is made to (a) that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”), and (b) that certain Solicited Discounted Prepayment Notice, dated ______, 201_, from [_____] 1 (the “ Solicited Discounted Prepayment Notice ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Solicited Discounted Prepayment Notice or, to the extent not defined therein, in the Credit Agreement.
To accept the offer set forth herein, you must submit an Acceptance and Prepayment Notice on or before the third Business Day following your receipt of this notice.
The undersigned [Term Lender] [Lender] hereby gives you irrevocable notice, pursuant to Section 2.11(a)(ii)(D) of the Credit Agreement, that it is hereby offering to accept a Discounted Term Loan Prepayment on the following terms:
1. This Solicited Discounted Prepayment Offer is available only for prepayment on the [Term Loans][[●, 20●] 2 tranche[s] of Term Loans] held by the undersigned.
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that may be made in connection with this offer shall not exceed (the “ Offered Amount ”):
[Term Loans - $[●]]
[[●, 20●] 3 tranche[s] of Term Loans - $[●]]
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | List multiple tranches if applicable. |
L- 1 |
3. The percentage discount to par value at which such Discounted Term Loan Prepayment may be made is [●]% in respect of the Term Loans [and [●]% in respect of the [●, 20●] 4 tranche[(s)] of Term Loans] (the “ Offered Discount ”).
The undersigned [Term Lender] [Lender] hereby expressly consents and agrees to a prepayment of its [Term Loans] [[●, 20●] 5 tranche[s] of Term Loans] pursuant to Section 2.11(a)(ii)(D ) of the Credit Agreement at a price equal to the Acceptable Discount and in an aggregate outstanding amount not to exceed such Lender’s Offered Amount as such amount may be reduced in accordance with the Solicited Discount Proration, if any, and as otherwise determined in accordance with and subject to the requirements of the Credit Agreement.
[Remainder of Page Intentionally Left Blank]
4 | List multiple tranches if applicable. |
5 | List multiple tranches if applicable. |
L- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Solicited Discounted Prepayment Offer as of the date first above written.
[ ] | ||
By: | ||
Name | ||
Title: | ||
By: | ||
Name | ||
Title: |
L- 3 |
EXHIBIT M
Form of Acceptance and Prepayment Notice
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
This Acceptance and Prepayment Notice is delivered to you pursuant to Section 2.11(a)(ii)(D) of that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement.
Pursuant to Section 2.11(a)(ii)(D) of the Credit Agreement, [_____] 1 hereby irrevocably notifies you that it accepts offers delivered in response to the Solicited Discounted Prepayment Notice having an Offered Discount equal to or greater than [●]% in respect of the Term Loans [and [●]% in respect of the [●, 20●] 2 tranche[(s)] of Term Loans] (the “ Acceptable Discount ”) in an aggregate amount not to exceed the Solicited Discounted Prepayment Amount.
[_____] 3 expressly agrees that this Acceptance and Prepayment Notice shall be irrevocable and is subject to the provisions of Section 2.11(a)(ii)(D) of the Credit Agreement.
[_____] 4 hereby represents and warrants to the Auction Agent [and the Term Lenders][and the Term Lenders and each Lender of the [●, 20●] 5 tranche[s] of Term Loans] as follows:
1. [_____] 6 will not make a Borrowing of Revolving Loans to fund this Discounted Term Loan Prepayment.
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
4 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
5 | List multiple tranches if applicable. |
6 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
M- 1 |
2. [At least ten (10) Business Days have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by [_____] 7 on the applicable Discounted Prepayment Effective Date.][At least three (3) Business Days have passed since the date [_____] 8 was notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of the [_____] 9 ’s election not to accept any Solicited Discounted Prepayment Offers made by a Term Lender]; provided , further , that any Term Loan that is prepaid will be automatically and irrevocably cancelled. 10
[_____] 11 acknowledges that the Auction Agent and the relevant Term Lenders are relying on the truth and accuracy of the foregoing representations and warranties in connection with the acceptance of any prepayment made in connection with a Solicited Discounted Prepayment Offer.
[_____] 12 requests that the Auction Agent promptly notify each of the relevant Term Lenders party to the Credit Agreement of this Acceptance and Prepayment Notice.
[Remainder of Page Intentionally Left Blank]
7 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
8 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
9 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
10 | Insert applicable representation. |
11 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
12 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
M- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Acceptance and Prepayment Notice as of the date first above written.
[______________] 13 | ||
By: | ||
Name: | ||
Title: |
13 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
M- 3 |
EXHIBIT N-1
Form of United States Tax Compliance
Certificate 1
(For Non-U.S. Lenders That Are Not Partnerships for U.S. Federal Income Tax Purposes)
Reference is made to that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.17(f) 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, (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a United States trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. person status on Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, or if a lapse in time or change in circumstances renders the information on this certificate obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform the Borrower and the Administrative Agent in writing and deliver promptly to the Borrower and the Administrative Agent an updated certificate or other appropriate documentation (including any new documentation prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax reasonably requested by the Borrower or the Administrative Agent) or promptly notify the Borrower and the Administrative Agent of its legal ineligibility to do so in writing, and (2) the undersigned has 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 at such times as are reasonably requested by the Borrower or the Administrative Agent.
[Remainder of Page Intentionally Left Blank]
N-1- 1 |
[Lender] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: ________________, 20[ ]
N-1- 2 |
EXHIBIT N-2
Form of United States Tax Compliance Certificate 2
(For Non-U.S. Lenders That Are Partnerships for U.S. Federal Income Tax Purposes)
Reference is made to that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.17(f) 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) it and/or 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) neither the undersigned nor any of its direct or indirect partners/members is a bank 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, (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its direct or indirect partners’/members’ conduct of a United States trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with Internal Revenue Service Form W-8IMY accompanied by one of the following forms from each of its direct or indirect partners/members claiming the portfolio interest exemption: (i) an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, or (ii) an Internal Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption, provided that, for the avoidance of doubt, the foregoing shall not limit the obligation of the Lender to provide, in the case of a partner/member not claiming the portfolio interest exemption, a Form W-8ECI, Form W-9 or Form W-8IMY (including if such document is Form W-8IMY, appropriate underlying certificates from each interest holder of such partner/member), in each case establishing such partner/member’s available exemption from U.S. federal withholding tax. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, or if a lapse in time or change in circumstances renders the information on this certificate obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform the Borrower and the Administrative Agent and deliver promptly to the Borrower and the Administrative Agent an updated certificate or other appropriate documentation (including any new documentation prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax reasonably requested by the Borrower or the Administrative Agent) or promptly notify the Borrower and the Administrative Agent of its legal ineligibility to do so, (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent in writing 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 at such times as are reasonably requested by either the Borrower or the Administrative Agent.
[Remainder of Page Intentionally Left Blank]
N-2- 1 |
[Lender] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: ________________, 20[ ]
N-2- 2 |
EXHIBIT N-3
Form of United States Tax Compliance Certificate 3
(For Non-U.S. Participants That Are Not Partnerships for U.S. Federal Income Tax Purposes)
Reference is made to that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.17(f) 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 Code Section 871(h)(3)(B), (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a United States trade or business.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. person status on Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, or if a lapse in time or change in circumstances renders the information on this certificate obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform such Lender in writing and deliver promptly to such Lender an updated certificate or other appropriate documentation (including any new documentation prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax reasonably requested by such Lender) or promptly notify such Lender in writing of its legal ineligibility to do so, 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 at such times as are reasonably requested by such Lender.
[Remainder of Page Intentionally Left Blank]
N-3- 1 |
[Participant] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: ________________, 20[ ]
N-3- 2 |
EXHIBIT N-4
Form of United States Tax Compliance Certificate 4
(For Non-U.S. Participants That Are Partnerships for U.S. Federal Income Tax Purposes)
Reference is made to that certain First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.17(f) 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) it and/or its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) neither the undersigned nor any of its direct or indirect partners/members is a bank 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 Code Section 871(h)(3)(B), (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its direct or indirect partners’/members’ conduct of a United States trade or business.
The undersigned has furnished its participating Lender with Internal Revenue Service Form W-8IMY accompanied by one of the following forms from each of its direct or indirect partners/members claiming the portfolio interest exemption: (i) an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable or (ii) an Internal Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption, provided ; that, for the avoidance of doubt, the foregoing shall not limit the obligation of the undersigned to provide, in the case of a partner/member not claiming the portfolio interest exemption, a Form W-8ECI, Form W-9 or Form W-8IMY (including if such document is Form W-8IMY, appropriate underlying certificates from each interest holder of such partner/member), in each case establishing such partner/member’s available exemption from U.S. federal withholding tax. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, or if a lapse in time or change in circumstances renders the information on this certificate obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform such Lender in writing and deliver promptly to such Lender an updated certificate or other appropriate documentation (including any new documentation prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax reasonably requested by such Lender) or promptly notify such Lender in writing of its legal ineligibility to do so, 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 at such times as are reasonably requested by such Lender.
[Remainder of Page Intentionally Left Blank]
N-4- 1 |
[Participant] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: ________________, 20[ ]
N-4- 2 |
EXHIBIT O
Form of Note
PROMISSORY NOTE
U.S. $[●] | New York, New York |
[●], 20[_] |
FOR VALUE RECEIVED, the undersigned, GTCR VALOR COMPANIES, INC., a Delaware corporation, (the “ Borrower ”), hereby promises to pay [NAME OF LENDER] (the “ Lender ”) or its registered assigns, at the office of DEUTSCHE BANK AG NEW YORK BRANCH (the “ Administrative Agent ”) specified pursuant to the Credit Agreement (defined below), on the [Revolving][Term] Maturity Date (such term and each other capitalized term used but not otherwise defined herein having the meaning specified in the First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), the Borrower, the Lenders and the Issuing Banks from time to time party thereto and the Administrative Agent), in lawful money of the United States of America and in immediately available funds, the lesser of (a) the principal amount of $[●] and (b) the aggregate unpaid principal amount of all [Revolving][Term] Loans made by the Lender to the Borrower pursuant to the Credit Agreement and to pay interest from the date hereof on the principal amount hereof from time to time outstanding, in like funds, at said office, at the rate or rates per annum and payable on the dates, each as provided in the Credit Agreement.
Upon the occurrence and during the continuation of a Specified Event of Default, the Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates, in accordance with the terms set forth in the Credit Agreement, at the rate or rates provided in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this note (the “ Note ”) and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof, each pursuant to the terms of the Credit Agreement, shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof that shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided , however , that the failure of the holder hereof to make such notation or any error in such notation shall not affect the obligations of the Borrower under this Note.
This Note is one of the Notes referred to in the Credit Agreement, which, among other things, contains provisions for the acceleration of the maturity hereof upon the occurrence of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified. This Note is entitled to the benefits of the Credit Agreement and the other Loan Documents. This Note is secured by each Security Document and is entitled to the benefits of the guarantee under the Guarantee Agreement. This NOTE shall be construed in accordance with and governed by the laws of the State of New York.
O- 1 |
[ Signature page follows ]
LOANS AND PAYMENTS
Date |
Amount of
[Revolving][Term] Loan |
Payment of
Principal |
Payment of
Interest |
Unpaid Principal
Balance |
Name of Person
Making Notation |
|||||
O- 2 |
EXHIBIT P
Form of Solvency Certificate
SOLVENCY CERTIFICATE
[__], 201[_]
This Solvency Certificate (this “ Certificate ”) is delivered pursuant to Section 4.01(l) of the First Lien Credit Agreement (the “ Credit Agreement ”), dated as of the date hereof among GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand and ten United States Dollars ($20,010) and registered with the Luxembourg Register of Commerce and Companies under number B 187.216 (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand United States Dollars ($20,000) and registered with the Luxembourg Register of Commerce and Companies under number B 202.299 (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), Deutsche Bank AG New York Branch , (“ Deutsche Bank ”) as the Administrative Agent and the other Lenders parties thereto. Unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement.
1. I, Jack Pearlstein, the Chief Financial Officer of Borrower, solely in such capacity and not in an individual capacity, hereby certify that I am the Chief Financial Officer of Borrower and that I am generally familiar with the businesses and assets of Holdings and its Subsidiaries (taken as a whole), I have made such other investigations and inquiries as I have deemed appropriate and, pursuant to the Credit Agreement, I am duly authorized to execute this Certificate on behalf of Borrower and on behalf of Holdings pursuant to that certain written consent in lieu of a special meeting of the Board of Directors of Holdings dated June 16, 2016.
2. I further certify, solely in my capacity as Chief Financial Officer of Borrower, and not in my individual capacity, as of the date hereof and after giving effect to the Transactions and the incurrence of the indebtedness and obligations being incurred in connection with the Credit Agreement and the Transactions on the date hereof, that, (a) the sum of the Indebtedness (including contingent liabilities) of Holdings and its Subsidiaries, taken as a whole, does not exceed the present fair saleable value (on a going concern basis) of the assets of Holdings and its Subsidiaries, taken as a whole; (b) the capital of Holdings and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of Holdings and its Subsidiaries, taken as a whole, contemplated as of the date hereof; and (c) Holdings and its Subsidiaries, taken as a whole, do not intend to incur, or believe that they will incur, Indebtedness including current obligations beyond their ability to pay such Indebtedness as it matures in the ordinary course of business. For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5) in the ordinary course of business.
[Remainder of this page intentionally left blank.]
P- 1 |
IN WITNESS WHEREOF , I HAVE EXECUTED THIS Certificate as of the date first written above.
GTCR VALOR COMPANIES, INC. | ||
By: | ||
Name: Jack Pearlstein | ||
Title: Chief Financi al Officer |
P- 2 |
EXHIBIT Q
Form of Letter of Credit Request
[Issuing Bank]
,
1
as Issuing Bank
Attention: | [●] |
Fax: [●]
with a copy to: |
Deutsche Bank AG New York Branch,
as Administrative Agent for the Secured Parties (as defined in the Credit Agreement) |
Attention: |
[ ]
[ ] Attention: [ ] Fax: [ ] Email: [ ] |
[●] [●] 20[●] 2
Ladies and Gentlemen:
We hereby request that [●] 3 , as an Issuing Bank, in its individual capacity, [ issue, amend, extend ][ a/an ] [ existing ] [ Standby ] [ Commercial ] Letter of Credit on [●] 4 (the “ Date of Issuance ”), which Letter of Credit shall be in the aggregate amount of [●] 5 and shall be for the account of [●] 6 . The beneficiary of the requested Letter of Credit is [●] 7 , and such Letter of Credit will have a stated expiration date of [●] 8 . For the purposes of this Letter of Credit Request, unless otherwise defined herein, all capitalized terms used herein and defined in the First Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS and ISSUING BANKS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”).
1 | Insert name and address of the applicable Issuing Bank. |
2 | Must be delivered to the applicable Issuing Bank and the Administrative Agent, at least three (3) Business Days in advance of the requested date of issuance, amendment, extension or renewal (or (i) in the case of any such request to be made on the Effective Date, one (1) Business Day or (ii) such shorter period as is acceptable to the applicable Issuing Bank). |
3 | Insert name of the applicable Issuing Bank. |
4 | Insert date of issuance, which must be a Business Day. |
5 | Insert aggregate initial amount and currency of Letter of Credit. |
6 | Insert name of account party. |
7 | Insert name and address of beneficiary. |
8 | Date may not be later than the date referred to in Section 2.05(d) of the Credit Agreement. |
Q- 1 |
[We hereby certify that:
(A) | The representations and warranties of each Loan Party set forth in the Loan Documents are true and correct in all material respects on and as of the date of issuance, amendment, renewal or extension of the requested Letter of Credit, as the case may be; provided that to the extent that such representations and warranties specifically refer to an earlier date, they are true and correct in all material respects as of such earlier date. |
(B) | As of the date of issuance, amendment, renewal or extension of such Letter of Credit and immediately after giving effect to the requested Letter of Credit, no Default or Event of Default exists] 9 |
[Notwithstanding anything herein to the contrary, this Letter of Credit Request shall be subject to and conditioned upon the effectiveness of the Credit Agreement.] 10
[Signature Page Follows]
9 | Include bracketed language only for issuances, amendments, modifications, extensions or renewals, of Letters of Credit after Effective Date. |
10 | Include bracketed language for Letter of Credit Requests on the Effective Date. |
Q- 2 |
By: | ||
Name: | ||
Title: |
Q- 3 |
Exhibit 10.21
Execution Version
SECOND
LIEN CREDIT AGREEMENT
dated as of
June 16, 2016
among
CANYON COMPANIES S.À R.L.,
as Holdings,
CANYON
GROUP S.À R.L.,
as Intermediate Lux Holdings,
GTCR VALOR
HOLDINGS, INC.,
as Intermediate U.S. Holdings,
GTCR VALOR
COMPANIES, INC.,
as Borrower,
the Lenders party hereto
and
DEUTSCHE BANK AG NEW YORK BRANCH
as Administrative Agent
___________________________
Crescent Mezzanine Partners VI, L.P.,
Crescent Mezzanine Partners VIB, L.P.,
Crescent Mezzanine Partners VIC, L.P.,
American Capital, Ltd.,
Northwestern Mutual Investment Management Company, LLC and
Newstone
Capital Partners II, L.P.,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page | ||
Article I DEFINITIONS | 2 | |
SECTION 1.01 | Defined Terms | 2 |
SECTION 1.02 | Classification of Loans and Borrowings | 78 |
SECTION 1.03 | Terms Generally | 78 |
SECTION 1.04 | Accounting Terms; GAAP | 79 |
SECTION 1.05 | Effectuation of Transactions | 79 |
SECTION 1.06 | Limited Condition Transactions | 80 |
SECTION 1.07 | [Reserved] | 80 |
SECTION 1.08 | Currency Equivalents Generally | 80 |
SECTION 1.09 | [Reserved] | 81 |
SECTION 1.10 | Guaranty and Security Principles | 81 |
SECTION 1.11 | Luxembourg Terms | 81 |
SECTION 1.12 | Dutch Terms | 82 |
Article II THE CREDITS | 83 | |
SECTION 2.01 | Commitments | 83 |
SECTION 2.02 | Loans and Borrowings | 83 |
SECTION 2.03 | Requests for Borrowings | 84 |
SECTION 2.04 | [Reserved] | 85 |
SECTION 2.05 | [Reserved] | 85 |
SECTION 2.06 | Funding of Borrowings | 85 |
SECTION 2.07 | Interest Elections | 86 |
SECTION 2.08 | Termination and Reduction of Commitments | 87 |
SECTION 2.09 | Repayment of Loans; Evidence of Debt | 87 |
i |
Page | ||
SECTION 2.10 | Repayment of Principal | 88 |
SECTION 2.11 | Prepayment of Loans | 89 |
SECTION 2.12 | Fees | 101 |
SECTION 2.13 | Interest | 102 |
SECTION 2.14 | Alternate Rate of Interest | 103 |
SECTION 2.15 | Increased Costs | 103 |
SECTION 2.16 | Break Funding Payments | 105 |
SECTION 2.17 | Taxes | 105 |
SECTION 2.18 | Payments Generally; Pro Rata Treatment; Sharing of Setoffs | 109 |
SECTION 2.19 | Mitigation Obligations; Replacement of Lenders | 111 |
SECTION 2.20 | Incremental Credit Extensions | 112 |
SECTION 2.21 | Refinancing Amendments | 115 |
SECTION 2.22 | Defaulting Lenders | 116 |
SECTION 2.23 | Illegality | 117 |
SECTION 2.24 | Loan Modification Offers | 118 |
Article III REPRESENTATIONS AND WARRANTIES | 119 | |
SECTION 3.01 | Organization; Powers | 119 |
SECTION 3.02 | Authorization; Enforceability | 119 |
SECTION 3.03 | Governmental Approvals; No Conflicts | 120 |
SECTION 3.04 | Financial Condition; No Material Adverse Effect | 120 |
SECTION 3.05 | Properties | 120 |
SECTION 3.06 | Litigation and Environmental Matters | 121 |
SECTION 3.07 | Compliance with Laws and Agreements | 121 |
SECTION 3.08 | Investment Company Status | 121 |
ii |
Page | ||
SECTION 3.09 | Taxes | 121 |
SECTION 3.10 | ERISA | 122 |
SECTION 3.11 | Disclosure | 122 |
SECTION 3.12 | Subsidiaries | 123 |
SECTION 3.13 | Intellectual Property; Licenses, Etc. | 123 |
SECTION 3.14 | Solvency | 123 |
SECTION 3.15 | Federal Reserve Regulations | 123 |
SECTION 3.16 | USA PATRIOT Act; OFAC and FCPA | 124 |
Article IV CONDITIONS | 124 | |
SECTION 4.01 | Effective Date | 124 |
SECTION 4.02 | [Reserved] | 127 |
Article V AFFIRMATIVE COVENANTS | 127 | |
SECTION 5.01 | Financial Statements and Other Information | 127 |
SECTION 5.02 | Notices of Material Events | 131 |
SECTION 5.03 | Information Regarding Collateral | 131 |
SECTION 5.04 | Existence; Conduct of Business | 132 |
SECTION 5.05 | Payment of Taxes, etc. | 132 |
SECTION 5.06 | Maintenance of Properties | 132 |
SECTION 5.07 | Insurance | 132 |
SECTION 5.08 | Books and Records; Inspection and Audit Rights | 133 |
SECTION 5.09 | Compliance with Laws | 134 |
SECTION 5.10 | Use of Proceeds and Letters of Credit | 134 |
SECTION 5.11 | Additional Subsidiaries | 134 |
SECTION 5.12 | Further Assurances | 135 |
SECTION 5.13 | Designation of Subsidiaries | 136 |
iii |
Page | ||
SECTION 5.14 | Certain Post-Closing Obligations | 136 |
SECTION 5.15 | Maintenance of Rating of Facilities | 136 |
SECTION 5.16 | Lines of Business | 136 |
SECTION 5.17 | Fiscal Periods | 137 |
SECTION 5.18 | Lender Calls | 137 |
Article VI NEGATIVE COVENANTS | 137 | |
SECTION 6.01 | Indebtedness; Certain Equity Securities | 137 |
SECTION 6.02 | Liens | 145 |
SECTION 6.03 | Fundamental Changes; Holdings Covenant | 150 |
SECTION 6.04 | Investments, Loans, Advances, Guarantees and Acquisitions | 152 |
SECTION 6.05 | Asset Sales | 156 |
SECTION 6.06 | [Reserved] | 159 |
SECTION 6.07 | Restricted Payments; Certain Payments of Indebtedness | 160 |
SECTION 6.08 | Transactions with Affiliates | 166 |
SECTION 6.09 | Restrictive Agreements | 167 |
SECTION 6.10 | Amendment of Junior Financing | 169 |
SECTION 6.11 | No Layering of Debt | 169 |
SECTION 6.12 | Financial Performance Covenant | 170 |
Article VII EVENTS OF DEFAULT | 171 | |
SECTION 7.01 | Events of Default | 171 |
SECTION 7.02 | Right to Cure | 174 |
SECTION 7.03 | Application of Proceeds | 176 |
Article VIII ADMINISTRATIVE AGENT | 177 | |
SECTION 8.01 | Appointment and Authority | 177 |
iv |
Page | ||
SECTION 8.02 | Rights as a Lender | 178 |
SECTION 8.03 | Exculpatory Provisions | 178 |
SECTION 8.04 | Reliance by Administrative Agent | 179 |
SECTION 8.05 | Delegation of Duties | 179 |
SECTION 8.06 | Resignation of Administrative Agent | 180 |
SECTION 8.07 | Non-Reliance on Administrative Agent and Other Lenders | 181 |
SECTION 8.08 | No Other Duties, Etc. | 181 |
SECTION 8.09 | Administrative Agent May File Proofs of Claim | 182 |
SECTION 8.10 | No Waiver; Cumulative Remedies; Enforcement | 182 |
Article IX MISCELLANEOUS | 183 | |
SECTION 9.01 | Notices | 183 |
SECTION 9.02 | Waivers; Amendments | 185 |
SECTION 9.03 | Expenses; Indemnity; Damage Waiver | 188 |
SECTION 9.04 | Successors and Assigns | 191 |
SECTION 9.05 | Survival | 198 |
SECTION 9.06 | Counterparts; Integration; Effectiveness | 199 |
SECTION 9.07 | Severability | 199 |
SECTION 9.08 | Right of Setoff | 200 |
SECTION 9.09 | Governing Law; Jurisdiction; Consent to Service of Process | 200 |
SECTION 9.10 | WAIVER OF JURY TRIAL | 201 |
SECTION 9.11 | Headings | 201 |
SECTION 9.12 | Confidentiality | 202 |
SECTION 9.13 | USA PATRIOT Act | 203 |
SECTION 9.14 | Release of Liens and Guarantees | 204 |
v |
Page | ||
SECTION 9.15 | No Advisory or Fiduciary Responsibility | 205 |
SECTION 9.16 | Interest Rate Limitation | 206 |
SECTION 9.17 | Judgment Currency | 206 |
SECTION 9.18 | Intercreditor Agreement | 207 |
SECTION 9.19 | Cashless Settlement | 207 |
SECTION 9.20 | Acknowledgement and Consent to Bail-In of EEA Financial Institutions | 207 |
vi |
SCHEDULES:
Schedule 1.01 |
— | Excluded Subsidiaries |
Schedule 1.12 | — | Guaranty and Security Principles |
Schedule 2.01 | — | Commitments and Loans |
Schedule 3.03 | — | Government Approvals; No Conflicts |
Schedule 3.06 | — | Litigation and Environmental Matters |
Schedule 3.12 | — | Subsidiaries |
Schedule 5.14 | — | Certain Post-Closing Obligations |
Schedule 6.01 | — | Existing Indebtedness |
Schedule 6.02 | — | Existing Liens |
Schedule 6.04 | — | Existing Investments |
Schedule 6.08 | — | Existing Affiliate Transactions |
Schedule 6.09 | — | Existing Restrictions |
Schedule 9.01 | — | Notices |
EXHIBITS:
vii |
SECOND LIEN CREDIT AGREEMENT dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”) among Canyon Companies S.à r.l., a private limited liability company ( société à responsabilité limitée ) organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand and ten United States Dollars ($20,010) and registered with the Luxembourg Register of Commerce and Companies under number B 187.216 (“ Holdings ”), Canyon Group S.à r.l., a private limited liability company ( société à responsabilité limitée ) organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand United States Dollars ($20,000) and registered with the Luxembourg Register of Commerce and Companies under number B 202.299 (“ Intermediate Lux Holdings ”), GTCR Valor Holdings, Inc., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR Valor Companies, Inc., a Delaware corporation (the “ Borrower ”), the Lenders party hereto and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent.
Preliminary Statements :
WHEREAS, Holdings and certain of its Subsidiaries intend to acquire the Acquired Companies pursuant to the Acquisition Agreement;
WHEREAS, in order to finance the Debt Repayment and the Acquisition and to provide for the working capital needs and general corporate requirements (including to finance permitted Investments, acquisitions, capital expenditures and Restricted Payments) of Holdings and its Restricted Subsidiaries after giving effect to the Acquisition, the Borrower has requested that (i) the Lenders extend credit in the form of Initial Term Loans in an aggregate principal amount of $370,000,000 on the Effective Date and (ii) certain other lenders extend credit in the form of First Lien Term Loans in an aggregate principal amount of $1,100,000,000 pursuant to the First Lien Credit Agreement on the Effective Date and the First Lien Revolving Loans pursuant to the First Lien Credit Agreement on and after the Effective Date.
WHEREAS, the proceeds of the Loans borrowed on the Effective Date and the First Lien Term Loans and First Lien Revolving Loans borrowed on the Effective Date, together with the proceeds of the Equity Financing, will be used to fund (w) any original issue discount or upfront fees in connection with the Loans, the First Lien Term Loans, and the First Lien Revolving Loans, (x) the purchase price for the Acquisition, (y) the Debt Repayment and (z) the Transaction Costs.
WHEREAS, the Lenders are willing to extend credit to the Borrower on the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
Article I
DEFINITIONS
SECTION 1.01 Defined Terms .
As used in this Agreement, the following terms have the meanings specified below:
“ ABR ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
“ Acceptable Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(2).
“ Acceptable Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“ Acceptance and Prepayment Notice ” means an irrevocable written notice from a Term Lender accepting a Solicited Discounted Prepayment Offer to make a Discounted Term Loan Prepayment at the Acceptable Discount specified therein pursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit M.
“ Acceptance Date ” has the meaning specified in Section 2.11(a)(ii)(D)(2).
“ Accepting Lenders ” has the meaning specified in Section 2.24(a).
“ Acquired Companies ” means the PRN Companies, the PRN Company Subsidiaries and the PRN India Business, each as defined in the Acquisition Agreement.
“ Acquired EBITDA ” means, with respect to any Acquired Entity or Business or any Converted Restricted Subsidiary (any of the foregoing, a “ Pro Forma Entity ”) for any period, the amount for such period of Consolidated EBITDA of such Pro Forma Entity (determined as if references to Holdings, the Borrower and the Restricted Subsidiaries in the definition of “Consolidated EBITDA” were references to such Pro Forma Entity and its subsidiaries that will become Restricted Subsidiaries), all as determined on a consolidated basis for such Pro Forma Entity.
“ Acquired Entity or Business ” has the meaning given such term in the definition of “Consolidated EBITDA.”
“ Acquisition ” means the acquisition pursuant to the terms of the Acquisition Agreement.
2 |
“ Acquisition Agreement ” means that Purchase and Sale Agreement, dated as of December 14, 2015 (as amended, restated, supplemented or otherwise modified), by and among PWW Acquisition LLC, a Delaware limited liability company, and UBM plc, a public limited company organized in Jersey (the “ Seller ”).
“ Acquisition Documents ” means the Acquisition Agreement, all other agreements to be entered into between or among the Seller or its Affiliates and Holdings or its Affiliates in connection with the Acquisition and all schedules, exhibits and annexes to each of the foregoing and all side letters, instruments and agreements affecting the terms of the foregoing or entered into in connection therewith.
“ Additional Term Lender ” means, at any time, any bank, financial institution or other institutional lender or investor (other than any natural person) that agrees to provide any portion of any (a) Incremental Term Loans pursuant to an Incremental Facility Amendment in accordance with Section 2.20 or (b) Credit Agreement Refinancing Indebtedness pursuant to a Refinancing Amendment in accordance with Section 2.21; provided that each Additional Term Lender shall be subject to the approval of the Administrative Agent if such consent would be required under Section 9.04(b) for an assignment of Term Loans or Term Commitments, as applicable, to such bank, financial institution or other institutional lender or investor (such approval in each case not to be unreasonably withheld, conditioned or delayed) and the Borrower.
“ Adjusted LIBO Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum equal to (i) the LIBO Rate for such Interest Period multiplied by (ii) the Statutory Reserve Rate; provided that, (x) with respect to the Initial Term Loans only, the Adjusted LIBO Rate for any Interest Period shall not be less than 1.00% per annum and (y) in no event shall the Adjusted LIBO Rate be less than 0%.
“ Administrative Agent ” means Deutsche Bank AG New York Branch, in its capacity as administrative agent hereunder and under the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“ Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 9.01, or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
“ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.
“ Affected Class ” has the meaning specified in Section 2.24(a).
“ Affiliate ” means, with respect to a specified Person, another Person that directly or indirectly Controls or is Controlled by or is under common Control with the Person specified.
“ Affiliated Debt Fund ” means any Affiliated Lender that is a bona fide debt fund or an investment vehicle that is engaged in the making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course and whose managers have fiduciary duties to the third-party investors in such fund or investment vehicle independent of their duties to Holdings or the Sponsor.
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“ Affiliated Lender ” means, at any time, any Lender that is any Person (other than Holdings or any of its Subsidiaries) contemplated by the definition of Sponsor at such time.
“ Agent ” means any of the Administrative Agent, the Collateral Agent, each Joint Lead Arranger, any successors and assigns of the foregoing in such capacity, and “ Agents ” means two or more of them.
“ Agent Parties ” has the meaning given to such term in Section 9.01(c).
“ Agreement ” has the meaning given to such term in the preliminary statements hereto.
“ Agreement Currency ” has the meaning assigned to such term in Section 9.17.
“ Alternate Base Rate ” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1.00% and (c) the Adjusted LIBO Rate for the applicable Loan on such day (or if such day is not a Business Day, the immediately preceding Business Day) for a deposit in Dollars with a maturity of one month plus 1.00%; provided that, solely for purposes of the foregoing, the Adjusted LIBO Rate for any day shall be calculated using the LIBO Rate on such day at approximately 11:00 a.m. (New York City time) for a deposit in Dollars with a maturity of one month. If 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 or the Adjusted LIBO Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition of Federal Funds Effective Rate, the Alternate Base Rate shall be determined without regard to clause (b) or (c), as applicable, of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively. Notwithstanding the foregoing, with respect to the Initial Term Loans only, the Alternate Base Rate will be deemed to be 2.00% per annum if the Alternate Base Rate calculated pursuant to the foregoing provisions would otherwise be less than 2.00% per annum.
“ Alternative Currency ” means each currency (other than Dollars).
“ Applicable Account ” means, with respect to any payment to be made to the Administrative Agent hereunder, the account specified by the Administrative Agent from time to time for the purpose of receiving payments of such type.
“ Applicable Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“ Applicable Rate ” means, for any day, with respect to any Initial Term Loan, (i) 8.50% per annum, in the case of an ABR Loan, or (ii) 9.50% per annum, in the case of a Eurodollar Loan.
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“ Approved Bank ” has the meaning assigned to such term in the definition of the term “Permitted Investments.”
“ Approved Foreign Bank ” has the meaning assigned to such term in the definition of “Permitted Investments.”
“ Approved Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any Person whose consent is required by Section 9.04(b)), substantially in the form of Exhibit A or any other form reasonably approved by the Administrative Agent.
“ Auction Agent ” means (a) the Administrative Agent or (b) any other financial institution or advisor employed by the Borrower (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any Discounted Term Loan Prepayment pursuant to Section 2.11(a)(ii)(A); provided that the Borrower shall not designate the Administrative Agent as the Auction Agent without the written consent of the Administrative Agent (it being understood that the Administrative Agent shall be under no obligation to agree to act as the Auction Agent).
“ Audited Financial Statements ” means the Holdings Audited Financial Statements and the PRN Audited Financial Statements.
“ Available Amount ” means, as of any date of determination, a cumulative amount equal to (without duplication):
(a) $57,500,000 (the “ Starter Basket ”), plus
(b) the sum of an amount (which amount shall not be less than zero) equal to 50% of Consolidated Net Income of Holdings and its Restricted Subsidiaries for the period (treated as one accounting period) from January 1, 2016 to the end of the most recently ended Test Period as of such date, plus
(c) to the extent not included in Consolidated Net Income, returns, profits, distributions and similar amounts received in cash or Permitted Investments by Holdings and its Restricted Subsidiaries on Investments made using the Available Amount and cash received from the sale of Investments made using the Available Amount or pursuant to Section 6.04(o) or (cc), plus
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(d) Investments of Holdings, the Borrower or any of the Restricted Subsidiaries in any Unrestricted Subsidiary, non-Subsidiary joint venture or minority investment made using the Available Amount that has been re-designated as a Restricted Subsidiary or that has been merged, amalgamated or consolidated with or into Holdings, the Borrower or any Restricted Subsidiary, or the assets of which has been transferred to a Loan Party or any of its Restricted Subsidiaries (up to the fair market value determined in good faith by the Borrower of the Investments of Holdings, the Borrower and the Restricted Subsidiaries in such Unrestricted Subsidiary at the time of such re-designation or merger or consolidation), plus
(e) to the extent not included in Consolidated Net Income, the Net Proceeds of a sale or other Disposition of any Unrestricted Subsidiary (including the issuance of stock of an Unrestricted Subsidiary), non-Subsidiary joint venture or minority investment received by Holdings, the Borrower or any Restricted Subsidiary (or the fair market value of the assets thereof that have been transferred to Holdings, the Borrower or any Restricted Subsidiary), plus
(f) to the extent not included in Consolidated Net Income, dividends, profits, or other distributions, returns on capital or similar amounts received by Holdings, the Borrower or any Restricted Subsidiary from an Unrestricted Subsidiary, non-Subsidiary joint venture or minority investment (or from the sale of the assets thereof), plus
(g) to the extent not included in Consolidated Net Income, the aggregate proceeds and the fair market value (as reasonably determined by the Borrower) of marketable securities or other property received by Holdings, the Borrower or a Restricted Subsidiary since the Effective Date from any Person other than the Borrower or a Restricted Subsidiary, plus
(h) the aggregate amount of any Retained Declined Proceeds since the Effective Date, to the extent not applied to prepay Junior Financing, as contemplated by Section 2.11(e) and Section 6.07(b).
“ Available Equity Amount ” means a cumulative amount equal to (without duplication):
(a) the Net Proceeds of new public or private issuances of Qualified Equity Interests (excluding Qualified Equity Interests the proceeds of which will be applied as Cure Amounts) in Holdings or any parent of Holdings which are contributed to the Holdings or the Borrower, plus
(b) capital contributions received by Holdings or the Borrower after the Effective Date in cash or Permitted Investments (other than in respect of any Disqualified Equity Interest), plus
(c) the net cash proceeds received by Holdings, the Borrower or any Restricted Subsidiary from Indebtedness and Disqualified Equity Interest issuances issued after the Effective Date and which have been exchanged or converted into Qualified Equity Interests, plus
(d) returns, profits, distributions and similar amounts received in cash or Permitted Investments by Holdings, the Borrower or any Restricted Subsidiary on Investments made using the Available Equity Amount.
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“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“ Bankruptcy Code ” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.
“ Basel III ” means: (A) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; and (B) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011 as amended, supplemented or restated; and (C) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.
“ Board of Directors ” means, with respect to any Person, (a) in the case of any corporation, the board of directors of such Person or any committee thereof duly authorized to act on behalf of such board, (b) in the case of any limited liability company, the board of managers, board of directors, manager or managing member of such Person or the functional equivalent of the foregoing or any committee thereof duly authorized to act on behalf of such board, manager or managing member, (c) in the case of any partnership, the board of directors or board of managers of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.
“ Board of Governors ” means the Board of Governors of the Federal Reserve System of the United States of America.
“ Borrower ” has the meaning assigned to such term in the preliminary statements hereto.
“ Borrower Materials ” has the meaning assigned to such term in Section 5.01.
“ Borrower Offer of Specified Discount Prepayment ” means the offer by the Borrower to make a voluntary prepayment of Term Loans at a Specified Discount to par pursuant to Section 2.11(a)(ii)(B).
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“ Borrower Solicitation of Discount Range Prepayment Offers ” means the solicitation by the Borrower of offers for, and the corresponding acceptance by a Term Lender of, a voluntary prepayment of Term Loans at a specified range at a discount to par pursuant to Section 2.11(a)(ii)(C).
“ Borrower Solicitation of Discounted Prepayment Offers ” means the solicitation by the Borrower of offers for, and the subsequent acceptance, if any, by a Term Lender of, a voluntary prepayment of Term Loans at a discount to par pursuant to Section 2.11(a)(ii)(D).
“ Borrowing ” means Loans of the same Class, Type and currency, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.
“ Borrowing Request ” means a request by the Borrower for a Borrowing in accordance with Section 2.03.
“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or in Luxembourg are authorized or required by Requirements of Law to remain closed.
“ Canadian Dollars ” or “ CAD$ ” means the lawful money of Canada.
“ Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP; provided that all obligations of any Person that are or would be characterized as an operating lease as determined in accordance with GAAP as in effect on the Effective Date (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capitalized Lease) for purposes of this Agreement regardless of any change in GAAP following the Effective Date that would otherwise require such obligation to be recharacterized as a Capital Lease Obligation, to the extent that financial reporting shall not be affected hereby or thereby. For purposes of Section 6.02, a Capital Lease Obligation shall be deemed to be secured by a Lien on the property being leased and such property shall be deemed to be owned by the lessee.
“ Capitalized Leases ” means all leases that have been or should be, in accordance with GAAP as in effect on the Effective Date, recorded as capitalized leases; provided that for all purposes hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for as a liability in accordance with GAAP; provided further that all obligations of any Person that are or would be characterized as an operating lease as determined in accordance with GAAP as in effect on the Effective Date (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capitalized Lease) for purposes of this Agreement regardless of any change in GAAP following the Effective Date that would otherwise require such obligation to be recharacterized as a Capital Lease.
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“ Capitalized Software Expenditures ” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by Holdings and its Restricted Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of Holdings and its Restricted Subsidiaries.
“ Cashless Roll Letter ” means the letter agreement re Cashless Settlement of Existing Loans, dated June 16, 2016, between the Borrower, the Administrative Agent, Jefferies Finance LLC, as administrative agent under the Existing Second Lien Credit Agreement, and the Lenders identified therein.
“ Cash Management Obligations ” means (a) obligations of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services or any automated clearing house transfers of funds and (b) other obligations in respect of netting services, employee credit or purchase card programs and similar arrangements.
“ Casualty Event ” means any event that gives rise to the receipt by Holdings, the Borrower or any Subsidiary of any insurance proceeds or condemnation awards in an amount in excess of $25,000,000 in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
“ CFC ” means a “controlled foreign corporation” within the meaning of Sections 956 and 957 of the Code.
“ Change in Control ” means (a) the failure of Holdings prior to an IPO, or, after the IPO, the IPO Entity, directly or indirectly through wholly owned subsidiaries, to own all of the Equity Interests of each of (x) the Borrower and (y) GTCR Canyon UK Investments Ltd., (b) prior to an IPO, the failure by the Permitted Holders to own, directly or indirectly through one or more holding company parents of Holdings, beneficially and of record, Equity Interests in Holdings representing at least a majority of the aggregate ordinary voting power for the election of members of the Board of Directors of Holdings represented by the issued and outstanding Equity Interests in Holdings, unless the Permitted Holders otherwise have the right (pursuant to contract, proxy, ownership of Equity Interests or otherwise), directly or indirectly, to designate, nominate or appoint (and do so designate, nominate or appoint) a majority of the Board of Directors of Holdings, (c) after an IPO, the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group, other than the Permitted Holders (directly or indirectly, including through one or more holding companies), of Equity Interests representing 40% or more of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests in the IPO Entity and the percentage of the aggregate ordinary voting power so held is greater than the percentage of the aggregate ordinary voting power represented by the Equity Interests in the IPO Entity held by the Permitted Holders, unless the Permitted Holders (directly or indirectly, including through one of more holding companies) otherwise have the right (pursuant to contract, proxy or otherwise), directly or indirectly, to designate, nominate or appoint (and do so designate, nominate or appoint) a majority of the Board of Directors of Holdings the IPO Entity or (d) the occurrence of a “Change of Control” (or similar event, however denominated), as defined in the First Lien Credit Agreement, the documentation governing any Incremental Equivalent Debt, Junior Financing or other unsecured Indebtedness, in each case, that is Material Indebtedness.
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For purposes of this definition, (i) “beneficial ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act, (ii) the phrase Person or “group” is within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and (iii) if any Person or “group” includes one or more Permitted Holders, the issued and outstanding Equity Interests of Holdings, the IPO Entity or the Borrower, as applicable, directly or indirectly owned by the Permitted Holders that are part of such Person or “group” shall not be treated as being owned by such Person or “group” for purposes of determining whether clause (c) of this definition is triggered.
“ Change in Law ” means: (a) the adoption of any rule, regulation, treaty or other law after the date of this Agreement, (b) any change in any rule, regulation, treaty or other law or in the administration, interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided , that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or by the United States, Canada, the European Union, United Kingdom or other foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” to the extent enacted, adopted, promulgated or issued after the date of this Agreement, but only to the extent such rules, regulations, or published interpretations or directives are applied to Holdings and its Subsidiaries by the Administrative Agent or any Lender in substantially the same manner as applied to other similarly situated borrowers under comparable syndicated credit facilities, including, without limitation, for purposes of Section 2.15.
“ Class ” when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Term Loans, Incremental Term Loans or Other Term Loans, (b) any Commitment, refers to whether such Commitment is a Term Commitment or Other Term Commitment and (c) any Lender, refers to whether such Lender has a Loan or Commitment with respect to a particular Class of Loans or Commitments. Other Term Commitments, Other Term Loans, and Incremental Term Loans that have different terms and conditions shall be construed to be in different Classes.
“ Closing Date Intercreditor Agreement ” means the Closing Date Intercreditor Agreement dated as of the Effective Date, substantially in the form of Exhibit E-2, between the Administrative Agent and the First Lien Administrative Agent (and each other Senior Representative for holders of Indebtedness permitted by this Agreement to be secured by the Collateral), that becomes party thereto after the Effective Date.
“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
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“ Collateral ” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Security Documents as security for the Secured Obligations.
“ Collateral Agent ” has the meaning given to such term in Section 8.01(b) and its successors in such capacity as provided in Article VIII.
“ Collateral Agreement ” means the Collateral Agreement among the Loan Parties party thereto and the Collateral Agent, substantially in the form of Exhibit D.
“ Collateral and Guarantee Requirement ” means, at any time, the requirement that:
(a) the Administrative Agent shall have received from (i) Holdings, any Intermediate Parent, the Borrower and each of the Restricted Subsidiaries (other than any Excluded Subsidiary) either (x) a counterpart of the Guarantee Agreement duly executed and delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including by ceasing to be an Excluded Subsidiary), a supplement to the Guarantee Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person and (ii) Holdings, any Intermediate Parent, the Borrower and each Subsidiary Loan Party either (x) a counterpart of each applicable Security Document duly executed and delivered on behalf of such Person or (y) in the case of any Person that becomes a Subsidiary Loan Party after the Effective Date (including by ceasing to be an Excluded Subsidiary), either (A) to the extent applicable, a supplement to each applicable Security Document, substantially the form specified therein, duly executed and delivered on behalf of such Person or (B) a Security Document, in each case under this clause (a) together with, in the case of any such Loan Documents executed and delivered after the Effective Date, to the extent reasonably requested by the Administrative Agent, documents of the type referred to in Section 4.01(d) within the time periods set forth in Sections 5.11 and 5.12;
(b) all outstanding Equity Interests of the Borrower, any Intermediate Parent and each Restricted Subsidiary (other than any Equity Interests constituting Excluded Assets) owned by or on behalf of any Loan Party, shall have been pledged, charged or otherwise made subject to security pursuant to the applicable Security Document, and, subject to the Closing Date Intercreditor Agreement, to the extent not delivered to the First Lien Administrative Agent, the Administrative Agent shall have received certificates, if any, representing all such Equity Interests to the extent constituting “certificated securities”, together with all certificates, documents of title and other documentary evidence of ownership and undated stock powers or other instruments of transfer with respect thereto endorsed in blank, in each case, to the extent required to perfect the security interest therein in the jurisdiction of the issuer and, solely with respect to any Foreign Loan Party, all other documents required to enable: (x) the Collateral Agent (or its nominee) to perfect its security interest in such Equity Interests or (y) the Collateral Agent (or, upon enforcement, any purchaser) to be registered as the owner of, or otherwise to obtain legal title to, such Equity Interests pursuant to the applicable Security Documents;
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(c) if any Indebtedness for borrowed money of Holdings, any Intermediate Parent, the Borrower or any Subsidiary in a principal amount of $25,000,000 or more is owing by such obligor to any Loan Party and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged or otherwise secured pursuant to the applicable Security Document, and, subject to the Closing Date Intercreditor Agreement, to the extent not delivered to the First Lien Administrative Agent, the Administrative Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided , however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by all Loan Parties as payees and all such obligors as payors;
(d) all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Intellectual Property Security Agreements with respect to any Trademarks, Patents and Copyrights that are registered, issued or applied-for in the United States and that constitute Collateral, for the filing with the United States Patent or Trademark Office and the United States Copyright Office to the extent required by this Agreement, the Security Documents, Requirements of Law and as reasonably requested by the Administrative Agent to be filed, delivered, registered or recorded to create the Liens intended to be created by the Security Documents and perfect such Liens to the extent required by, and with the priority required by, the Closing Date Intercreditor Agreement, this Agreement, the Security Documents and the other provisions of the term “Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording; and
(e) the Administrative Agent shall have received (i) counterparts of a Mortgage with respect to each Material Real Property duly executed and delivered by the record owner of such Mortgaged Property (if the Mortgaged Property is in a jurisdiction that imposes a mortgage recording or similar tax is imposed on the amount secured by such Mortgage, then the amount secured by such Mortgage shall be limited to the fair market value of such Mortgaged Property, as reasonably determined by Holdings), (ii) a policy or policies of title insurance (or marked unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien of each such Mortgage as a second priority Lien on the Mortgaged Property described therein (with the priority as required by this Agreement and the Closing Date Intercreditor Agreement), free of any other Liens except as expressly permitted by Section 6.02, together with such endorsements (other than a creditor’s rights endorsement) as the Administrative Agent may reasonably request to the extent available in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Administrative Agent shall accept zoning reports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in an amount equal to the fair market value of such Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower be required to obtain independent appraisals of such Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination with respect to each Mortgaged Property, and if any Mortgaged Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be located in special flood hazard area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance as provided in Section 5.07(b), (iv) in each case if reasonably requested by the Administrative Agent, a customary legal opinion with respect to each such Mortgage, from counsel qualified to opine in each jurisdiction (i) where a Mortgaged Property is located regarding the enforceability of the Mortgage and (ii) where the applicable Loan Party granting the Mortgage on said Mortgaged Property is organized or incorporated, regarding the due authorization, execution and delivery of such Mortgage, and in each case, such other customary matters as may be in form and substance reasonably satisfactory to the Administrative Agent, (v) a survey or existing survey together with a no change affidavit of such Mortgaged Property, in compliance with the 2011 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys and otherwise reasonably satisfactory to the Administrative Agent, and (vi) evidence of payment of title insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording the Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s).
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Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the terms of the Security Documents to be entered into by the Foreign Loan Parties and each other guaranty and security document delivered or to be delivered under this Agreement by a Foreign Loan Party and any obligation to enter into or perfect or otherwise carry out any action in connection with such document or obligation by any Foreign Loan Party shall be subject in all respects to the Guaranty and Security Principles, (b) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, particular assets of the Loan Parties, or the provision of Guarantees by any Subsidiary, if, and for so long as the Administrative Agent and the Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets, or providing such Guarantees (taking into account any adverse tax consequences to Holdings and its Affiliates (including the imposition of withholding or other material taxes)), is excessive in relation to the benefits to be obtained by the Lenders therefrom or, in the case of a Foreign Loan Party, is not customary in the jurisdiction of incorporation of that Loan Party; (c) Liens required to be granted from time to time pursuant to the term “Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in this Agreement and the Security Documents; (d) in no event shall control agreements or other control or similar arrangements be required with respect to cash, Permitted Investments, other deposit accounts, securities and commodities accounts (including securities entitlements and related assets), letter of credit rights or other assets requiring perfection by control (but not, for avoidance of doubt, possession); (e) in no event shall any Loan Party be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of a Covered Jurisdiction (or, with respect to Intellectual Property, in any jurisdiction outside the United States or United Kingdom) or outside of the country where such Loan Party is formed or incorporated (except that perfection action may be required in the jurisdiction of incorporation of any Foreign Loan Party in relation to security granted over its equity interests held by another Foreign Loan Party incorporated in a different jurisdiction), and no actions in any non-Covered Jurisdiction (or, with respect to Intellectual Property, in any jurisdiction outside the United States or United Kingdom) or required by the laws of any non-Covered Jurisdiction (or, with respect to Intellectual Property, by the laws of any jurisdiction outside the United States or United Kingdom) shall be required to be taken to create any security interests in assets located or titled outside of any Covered Jurisdiction (including in any Equity Interests of Subsidiaries organized outside of a Covered Jurisdiction), or in any Intellectual Property governed by, arising, existing, registered or applied-for under the laws of any jurisdiction other than the United States or United Kingdom, or to perfect or make enforceable any security interests in any such assets (it being understood that (i) all security granted by a Domestic Loan Party (other than Mortgages) shall be governed by the law of the state of New York, (ii) all security granted by a Foreign Loan Party (other than share security over its subsidiaries that are Loan Parties) shall be governed by the law of the country of incorporation of such Loan Party and (iii) all share security granted by a Loan Party over the shares in a subsidiary that is located in a Covered Jurisdiction shall be governed by the law of the country of incorporation of such subsidiary); (f) in no event shall any Loan Party be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements (and, if applicable, corresponding or customary filings in the country of organization of any other Loan Party); (g) other than the filing of UCC financing statements (and, if applicable, corresponding or customary filings in the country of organization of any other Loan Party), no perfection shall be required with respect to promissory notes evidencing debt for borrowed money in a principal amount of less than $25,000,000; (h) in no event shall any Domestic Loan Party be required to complete any filings or other action (including entering into any source code escrow arrangements or seeking registration of any Copyrights) with respect to security interests in Intellectual Property beyond the filing of Intellectual Property Security Agreements with the United States Patent and Trademark Office and the United States Copyright Office; (i) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements (and, if applicable, corresponding or customary filings in the country of organization of any other Loan Party)); (j) in no event shall environmental reports be required to be delivered to the Administrative Agent or the Lenders; and (k) in no event shall the Collateral include any Excluded Assets. The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets or the provision of any Guarantee by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) and any other obligations under this definition where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement (including as set forth on Schedule 5.14) or the Security Documents.
Notwithstanding the foregoing provisions of this definition or any other Loan Document to the contrary, to the extent necessary in connection with an IPO Reorganization Transaction, Holdings and any Intermediate Parent may release the guarantees, pledges and Collateral so long as (i) no Change of Control shall have occurred after giving effect to such IPO Reorganization Transaction, (ii) the IPO entity or other Loan Party shall provide a pledge of the stock of 100% of the Equity Interests of (x) the Borrower or Intermediate U.S. Holdings and (y) GTCR Canyon UK Investments Ltd and (iii) the other conditions set forth in the definition of “IPO Reorganization Transaction” are satisfied.
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“ Commitment ” means with respect to any Lender, its Term Commitment, Other Term Commitment of any Class or any combination thereof (as the context requires).
“ Commitment Letter ” means the commitment letter among the Borrower, the Joint Lead Arrangers, the Joint Lead Arrangers’ respective Affiliates party thereto, and the other parties thereto, dated as of December 14, 2015.
“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq .), as amended from time to time, and any successor statute.
“ Compliance Certificate ” means the certificate required to be delivered pursuant to Section 5.01(d).
“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“ Consolidated EBITDA ” means, for any period, Consolidated Net Income for such period, plus :
(a) without duplication and to the extent deducted (and not added back), other than with respect to clauses (xvi), (xx) and (xxi), in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) total interest expense and, to the extent not reflected in such total interest expense, the sum of (A) premium payments, debt discount, fees, charges and related expenses incurred in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets plus (B) the portion of rent expense with respect to such period under Capitalized Leases that is treated as interest expense in accordance with GAAP plus (C) the implied interest component of synthetic leases with respect to such period plus (D) any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such hedging obligations or such derivative instruments plus (E) bank and letter of credit fees and banker’s acceptance fees and costs of surety bonds in connection with financing activities, plus (F) any commissions, discounts, yield and other fees and charges (including any interest expense) related to any Qualified Securitization Facility;
(ii) provision for taxes based on income, profits or capital and sales taxes, including federal, foreign, state, franchise, excise, and similar taxes paid or accrued during such period (including in respect of repatriated funds) including penalties and interest related to such taxes or arising from any tax examinations;
(iii) Non-Cash Charges as elected by the Borrower;
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(iv) operating expenses incurred on or prior to the Effective Date attributable to (A) salary obligations paid to employees terminated prior to the Effective Date and (B) wages paid to executives in excess of the amounts the Acquired Companies and its Subsidiaries are required to pay pursuant to any employment agreements;
(v) extraordinary charges, expenses or losses in accordance with GAAP;
(vi) unusual or non-recurring charges, expenses or losses (including any unusual or non-recurring operating expenses directly attributable to the implementation of cost savings initiatives), integration costs, severance, relocation costs, office and facilities’ opening costs and other business optimization expenses (including related to new product introductions and new system design and implementation costs), recruiting costs and fees, signing fees, expenses, costs and bonuses, retention or completion bonuses, contract termination costs, transaction fees and expenses, transition costs, systems establishment costs, costs related to closure/consolidation of office and facilities, costs related to the implementation of operational and reporting systems and technology initiatives, consulting fees and expenses, any one time expense relating to enhanced accounting function or other transaction costs (including those associated with becoming a standalone entity or a public company), costs incurred in connection with acquisitions and non-recurring intellectual property development, internal costs in respect of strategic initiatives and curtailments or modifications to pension and post-retirement employee benefit plans (including any settlement of pension liabilities), project start up costs or any other costs incurred in connection with any of the foregoing;
(vii) restructuring costs, charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves), whether or not classified as restructuring expense on the consolidated financial statements;
(viii) the amount of any non-controlling interest consisting of income attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary deducted (and not added back in such period) in calculating Consolidated Net Income;
(ix) (A) transaction fees and expenses and management fees, indemnities and expenses paid pursuant to the Sponsor Management Agreement and the amount of management, monitoring, consulting and advisory fees, indemnities and related expenses paid or accrued in such period to (or on behalf of) the Sponsor (including any termination fees payable in connection with the early termination of management and monitoring agreements) and (B) the amount of expenses relating to payments made to option holders of Holdings or any Holdings Parent in connection with, or as a result of, any distribution being made to shareholders of such Person or its direct or indirect parent companies, which payments are being made to compensate such option holders as though they were shareholders at the time of, and entitled to share in, such distribution, in each case to the extent permitted by the Loan Documents;
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(x) losses on asset sales, disposals or abandonments (other than asset sales, disposals or abandonments in the ordinary course of business);
(xi) any non-cash loss attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging but only to the extent the cash impact resulting from such loss has not been realized);
(xii) any loss relating to amounts paid in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income for such period;
(xiii) any gain relating to hedging obligations associated with transactions realized in the current period that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clauses (d)(iv) and (d)(v) below;
(xiv) any costs or expenses incurred by Holdings, the Borrower or any Restricted Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, any severance agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are non-cash or otherwise funded with cash proceeds contributed to the capital of Holdings or Net Proceeds of an issuance of Equity Interests of Holdings (other than Disqualified Equity Interests);
(xv) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of FASB Accounting Standards Codification 715, and any other items of a similar nature;
(xvi) any other add-backs and adjustments previously identified and agreed to by the Administrative Agent, including all such add-backs and adjustments set forth in the Sponsor Model or the Information Memorandum;
(xvii) the amount of losses on Dispositions of accounts receivable, Securitization Assets and related assets incurred in connection with a Qualified Securitization Facility;
(xviii) any increase in expenses resulting from the revaluation of inventory (including any impact of changes of inventory valuation policy methods including changes in capitalization of variances) or other inventory adjustments;
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(xix) charges, losses or expenses to the extent indemnified or insured or reimbursed by a third party;
(xx) solely for purposes of determining compliance with the Financial Performance Covenant in respect of any period which includes the exercise of a Cure Right (but not for the determination of the Senior Secured Net Leverage Ratio or the Total Net Leverage Ratio for any other purposes), any Cure Amount; and
(xxi) to the extent that any Holdings Parent Specified Expenses would have been added back to Consolidated EBITDA pursuant to clauses (a)(i) through (xx) above had such charge, tax or expense been incurred directly by Holdings, such Holdings Parent Specified Expenses;
plus
(b) without duplication, the amount of “run rate” cost savings, operating expense reductions, other operating improvements and “run rate” synergies related to the Transactions, any Specified Transaction, any restructuring, cost saving initiative or other initiative projected by the Borrower in good faith to result from actions (including the Acquisition) taken, committed to be taken or expected to be taken, in each case on or prior to the date that is 18 months after the end of the relevant Test Period (including actions initiated prior to the Effective Date) (which cost savings, operating expense reductions, other operating improvements and synergies shall be added to Consolidated EBITDA until fully realized and calculated on a pro forma basis as though such cost savings, operating expense reductions, other operating improvements and synergies had been realized on the first day of the relevant period), net of the amount of actual benefits realized from such actions; provided that (A) a Financial Officer of the Borrower shall certify in a Compliance Certificate that such cost savings are reasonably identifiable and factually supportable and (B) no cost savings, operating expense reductions, other operating improvements or synergies shall be added pursuant to this clause (b) to the extent duplicative of any expenses or charges relating to such cost savings, operating expense reductions or synergies that are included in clauses (a)(vi) and (a)(vii) above or in the definition of “Pro Forma Adjustment” (it being understood and agreed that “run rate” shall mean the full recurring benefit that is associated with any action taken); provided further that such anticipated “run rate” cost savings and synergies added back pursuant to this clause (b) only (together with any anticipated “run rate” synergies added to the calculation of Consolidated EBITDA pursuant to the definition of “Pro Forma Adjustment”), in each case solely in respect of Acquisitions and Dispositions, and together with the anticipated “run rate” synergies from other actions described in this clause (b) or the definition of Pro Forma Adjustment, shall not exceed, in the aggregate for such period, 20% of Consolidated EBITDA (determined after giving effect to all such amounts added pursuant to this clause (b) and the definition or “Pro Forma Adjustment”); provided , further that, for the avoidance of doubt, the amount of any such (x) items that would be permitted to be included in financial statements prepared in accordance with Regulation S-X and (y) items resulting from, or in connection with, the Transactions, in either case, shall not be subject to or included in the calculation of such 20% limitation.
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plus
(c) to the extent covered by business interruption insurance and actually reimbursed or otherwise paid in cash, expenses or losses relating to business interruption or, so long as Holdings or the Borrower has made a determination that a reasonable basis exists for indemnification or reimbursement and only to the extent that such amount is in fact indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period for any amount so added back to the extent not so indemnified or reimbursed within such 365 days);
less
(d) without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) extraordinary gains and unusual or non-recurring gains;
(ii) non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated Net Income or Consolidated EBITDA in any prior period);
(iii) gains on asset sales, disposals or abandonments (other than asset sales, disposals or abandonments in the ordinary course of business);
(iv) any non-cash gain attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging but only to the extent the cash impact resulting from such gain has not been realized);
(v) any gain relating to amounts received in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income in such period; and
(vi) any loss relating to hedging obligations associated with transactions realized in the current period that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clauses (a)(xii) and (a)(xiii) above; plus
in each case, as determined on a consolidated basis for Holdings and the Restricted Subsidiaries in accordance with GAAP; provided that:
(I) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting from the application of Financial Accounting Standards Codification No. 815—Derivatives and Hedging,
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(II) there shall be included in determining Consolidated EBITDA for any period, without duplication, (A) to the extent not included in Consolidated Net Income, the Acquired EBITDA of any Person, property, business, line of business, division, business unit or asset acquired by Holdings, the Borrower or any Restricted Subsidiary during such period (other than any Unrestricted Subsidiary) to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of any related Person, property, business, line of business, division, business unit or assets to the extent not so acquired) (each such Person, property, business, line of business, division, business unit or asset acquired, including pursuant to the Transactions or pursuant to a transaction consummated prior to the Effective Date, and not subsequently so disposed of, an “ Acquired Entity or Business ”), and the Acquired EBITDA of any Unrestricted Subsidiary that is converted into a Restricted Subsidiary during such period (each, a “ Converted Restricted Subsidiary ”), in each case based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portion thereof occurring prior to such acquisition or conversion) determined on a historical Pro Forma Basis and (B) an adjustment equal to the amount of the Pro Forma Adjustment for such period (including the portion thereof occurring prior to such acquisition or conversion);
(III) there shall be (A) to the extent included in Consolidated Net Income, excluded in determining Consolidated EBITDA for any period the Disposed EBITDA of any Person, property, business, line of business, division, business unit or asset (other than any Unrestricted Subsidiary) sold, transferred or otherwise disposed of, closed or classified as discontinued operations in accordance with GAAP (other than (x) if so classified on the basis that it is being held for sale unless such sale has actually occurred during such period and (y) for periods prior to the applicable sale, transfer or other disposition, if the Disposed EBITDA of such Person, property, business, line of business, division, business unit or asset is positive (i.e., if such Disposed EBITDA is negative, it shall be added back in determining Consolidated EBITDA for any period)) by Holdings, the Borrower or any Restricted Subsidiary during such period (each such Person, property, business, line of business, division, business unit or asset so sold, transferred or otherwise disposed of, closed or classified, a “ Sold Entity or Business ”), and the Disposed EBITDA of any Restricted Subsidiary that is converted into an Unrestricted Subsidiary during such period (each, a “ Converted Unrestricted Subsidiary ”), in each case based on the Disposed EBITDA of such Sold Entity or Business or Converted Unrestricted Subsidiary for such period (including the portion thereof occurring prior to such sale, transfer, disposition, closure, classification or conversion) determined on a historical Pro Forma Basis and (B) to the extent not included in Consolidated Net Income, included in determining Consolidated EBITDA for any period in which a Sold Entity or Business is disposed, an adjustment equal to the Pro Forma Disposal Adjustment with respect to such Sold Entity or Business (including the portion thereof occurring prior to such disposal);
(IV) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA any expense (or income) as a result of adjustments recorded to contingent consideration liabilities relating to the Transaction or any Permitted Acquisition (or other Investment permitted hereunder); and
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(V) to the extent not already included in Consolidated Net Income, Consolidated EBITDA shall include the amount of proceeds received or due from reimbursement of expenses and charges pursuant to indemnification and other reimbursement provisions in connection with any acquisition or other Investment or any disposition of any asset permitted hereunder.
For the purposes of determining the Senior Secured Net Leverage Ratio or the Total Net Leverage Ratio for any relevant Test Period, Consolidated EBITDA shall be deemed to equal (a) $66,599,000 for the fiscal quarter ended March 31, 2015, (b) $75,384,000 for the fiscal quarter ended June 30, 2015, (c) $68,756,000 for the fiscal quarter ended September 30, 2015 and (d) $72,598,000 for the fiscal quarter ended December 31, 2015 (it being understood that such amounts are subject to adjustments, as and to the extent otherwise contemplated in this Agreement, in connection with any Pro Forma Adjustment or any calculation on a Pro Forma Basis).
“ Consolidated Net Income ” means, for any period, the net income (loss) of Holdings and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication,
(a) extraordinary items for such period,
(b) the cumulative effect of a change in accounting principles during such period,
(c) any Transaction Costs incurred during such period ,
(d) any accruals, payments, fees, costs and expenses (including rationalization, legal, tax, structuring, financial advisory, investment banking, any transaction or retention bonus or similar payment and fees, costs and expenses of any counsel, consultants or other advisors and other costs and expenses) incurred during such period, or any amortization thereof for such period, in connection with the Transactions, any Specified Transactions, any non-recurring costs to acquire equipment to the extent not capitalized in accordance with GAAP, Investments (including any earn-outs), Restricted Payments, Dispositions, recapitalization, issuances of Indebtedness or Equity Interests (including any initial public offering) or repayment of debt, refinancing transactions or amendment or other modification of any debt instrument, and restructurings, workouts and extensions and refinancings of any of the foregoing, non-competition agreements, one-time accruals, up-front fees, financing fees, commitment fees, costs, expenses or premiums related to any repayment of debt, issuance of equity securities, refinancing transaction or amendment or other modification of or waiver or consent relating to any debt instrument (in each case, including the Transaction Costs and any such transaction consummated prior to the Effective Date and any such transaction undertaken but not completed and including costs and expenses of the Administrative Agent and Lenders that are reimbursed and fees paid to the Permitted Holders) and any charges or non-recurring merger or amalgamation costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt, the effects of expensing all transaction-related expenses in accordance with FASB Accounting Standards Codification 805 and gains or losses associated with FASB Accounting Standards Codification 460),
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(e) any income (loss) for such period attributable to the early extinguishment of Indebtedness, hedging agreements or other derivative instruments,
(f) accruals and reserves that are established or adjusted as a result of the Transactions or any Permitted Acquisition or other Investment not prohibited under this Agreement in accordance with GAAP (including any adjustment of estimated payouts on earn-outs) or changes as a result of the adoption or modification of accounting policies during such period;
(g) stock-based award compensation expenses,
(h) any income (loss) attributable to deferred compensation plans or trusts,
(i) the amount of any expense required to be recorded as compensation expense related to contingent transaction consideration, and
(j) currency translation gains and losses related to currency remeasurements of assets, liabilities or indebtedness (including the net loss or gain resulting from hedging agreements for currency exchange risk and revaluations of intercompany balances),
There shall be included in Consolidated Net Income, without duplication, (i) the amount of any cash tax benefits related to the tax amortization of intangible assets in such period, (ii) any dividends or other distributions received in cash or other Permitted Investments from Unrestricted Subsidiaries and (iii) the effects from applying acquisition method accounting, including applying acquisition method accounting to inventory, property and equipment, loans and leases, software and other intangible assets and deferred revenue (including deferred costs related thereto) required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to Holdings and its Restricted Subsidiaries), as a result of the Transactions, any acquisition or Investment consummated prior to the Effective Date and any Permitted Acquisitions (or other Investment not prohibited hereunder) or the amortization or write-off of any amounts thereof.
“ Consolidated Senior Secured Net Indebtedness ” means, as of any date of determination, the aggregate amount of Senior Secured Indebtedness of Holdings and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, consisting only of Senior Secured Indebtedness for borrowed money, drawn but unreimbursed obligations under letters of credit (and in the case of trade letters of credit, unreimbursed for more than three (3) Business Days) and the principal portion of obligations in respect of Capitalized Leases, but excluding any obligations under or in respect of Qualified Securitization Facilities, minus the lesser of (x) the aggregate amount of cash and Permitted Investments of Holdings and its Restricted Subsidiaries (excluding cash and Permitted Investments that are listed as “restricted” on the consolidated balance sheet of Holdings and its Restricted Subsidiaries as of such date) and (y) $100,000,000.
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“ Consolidated Total Net Indebtedness ” means, as of any date of determination, the aggregate amount of Indebtedness of Holdings and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, consisting only of Indebtedness for borrowed money, drawn but unreimbursed obligations under letters of credit (and in the case of trade letters of credit, unreimbursed for more than three (3) Business Days) and the principal portion of obligations in respect of Capitalized Leases, but excluding any obligations under or in respect of Qualified Securitization Facilities, minus the lesser of (x) the aggregate amount of cash and Permitted Investments of Holdings and its Restricted Subsidiaries (excluding cash and Permitted Investments that are listed as “restricted” on the consolidated balance sheet of Holdings and its Restricted Subsidiaries as of such date) and (y) $100,000,000.
“ Consolidated Working Capital ” means, at any date, the excess (which may be negative) of (a) the sum of all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries at such date, excluding the current portion of deferred income taxes over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries on such date, but excluding, without duplication, (i) the current portion of any Funded Debt, (ii) all Indebtedness consisting of First Lien Term Loans and First Lien Revolving Loans, Loans and obligations under letters of credit and Capital Lease Obligations to the extent otherwise included therein, (iii) the current portion of interest, (iv) the current portion of current and deferred income taxes, (v) accrual of any costs or expenses related to restructuring reserves, (vi) the current portion of pension liabilities and (vii) deferred revenue; provided that, for purposes of calculating Excess Cash Flow, increases or decreases in working capital (A) arising from acquisitions or dispositions by Holdings and its Restricted Subsidiaries shall be measured from the date on which such acquisition or disposition occurred until the first anniversary of such acquisition or disposition with respect to the Person subject to such acquisition or disposition and (B) shall exclude (I) the impact of non-cash adjustments contemplated in the Excess Cash Flow calculation, (II) the impact of adjusting items in the definition of Consolidated Net Income and (III) any changes in current assets or current liabilities as a result of (x) the effect of fluctuations in the amount of accrued or contingent obligations, assets or liabilities under hedging agreements or other derivative obligations or (y) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent.
“ Contract Consideration ” has the meaning assigned to such term in the definition of “Excess Cash Flow.”
“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.
“ Converted Restricted Subsidiary ” has the meaning given such term in the definition of “Consolidated EBITDA.”
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“ Converted Unrestricted Subsidiary ” has the meaning given such term in the definition of “Consolidated EBITDA.”
“ Copyright ” has the meaning assigned to such term in the Collateral Agreement.
“ Core Acquisition ” means the acquisition by Holdings or certain of its Subsidiaries of the issued and outstanding equity interests of each Core PRN Company (as defined in the Acquisition Agreement), all of the PRN India Purchased Assets (as defined in the Acquisition Agreement) and the assumption by Holdings or certain of its Subsidiaries of the PRN India Assumed Liabilities (as defined in the Acquisition Agreement) pursuant to the terms of the Acquisition Agreement.
“ Covered Elective Jurisdiction ” has the meaning assigned to such term in the definition of “Covered Jurisdiction”.
“ Covered Jurisdiction ” means each of (a) the United States (or any state, commonwealth or territory thereof or the District of Columbia), (b) the United Kingdom, (c) the Netherlands, (d) Luxembourg and (e) Ireland. Furthermore, from time to time after the Effective Date, the Borrower may elect (by written notice to the Administrative Agent) that one or more additional jurisdictions be added to the list of Covered Jurisdictions. In such event, such elective jurisdictions (“ Covered Elective Jurisdictions ”) shall be added to (and thereafter form part of) the list of Covered Jurisdictions. The Borrower may at any time elect to release the guarantees of any entity in a Covered Elective Jurisdiction and/or remove such jurisdiction from the list of Covered Jurisdictions upon notice to the Administrative Agent; provided that (a) no Event of Default shall have occurred and be continuing or would result therefrom and (b) the release of guarantees of any entity shall constitute (i) the incurrence by such entity of any Investment, Indebtedness or Liens of such entity existing at such time that were incurred when such entity was a Loan Party, tested for such entity’s revised status as a non-Loan Party and (ii) an Investment by Holdings in such entity at the date of release in an amount equal to the fair market value (as determined in good faith by the Borrower) of Holdings’ or its Subsidiary’s (as applicable) investment therein made while such entity was a Loan Party.
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“ Credit Agreement Refinancing Indebtedness ” means Indebtedness issued, incurred or otherwise obtained by the Borrower (including by means of the extension or renewal of existing Indebtedness) in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Term Loans (“ Refinanced Debt ”); provided that such exchanging, extending, renewing, replacing or refinancing Indebtedness (a) is in an original aggregate principal amount not greater than the aggregate principal amount of the Refinanced Debt (plus any premium, original issue discount and upfront fees, accrued interest and fees and expenses incurred in connection with such exchange, extension, renewal, repayment, replacement or refinancing and the incurrence of such new Credit Agreement Refinancing Indebtedness) plus additional amounts to the extent otherwise permitted to be incurred under this Agreement (which additional amounts, for the avoidance of doubt, do not constitute Credit Agreement Refinancing Indebtedness), (b) (i) (except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature prior to the maturity date of the Refinanced Debt) does not mature earlier than or have a Weighted Average Life to Maturity shorter than the Refinanced Debt and (ii) if such Indebtedness is unsecured or secured by the Collateral on a junior lien basis to the Secured Obligations, does not have scheduled amortization or required payments of principal prior to the maturity date of the Refinanced Debt (except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature prior to the maturity date of the Refinanced Debt) (except for customary payments in respect of asset sales, insurance and condemnation proceeds events, change of control or similar events and AHYDO catch up payments and offers to purchase upon an event of default), (c) shall not be guaranteed by any entity that is not, or that does not substantially concurrently become, a Loan Party, (d) in the case of any secured Indebtedness that is (i) not secured by any assets not securing the Secured Obligations and (ii) subject to the relevant Intercreditor Agreement(s) and (e) has covenants and events of default (excluding, for the avoidance of doubt, pricing, interest rate margins, rate floors, discounts, fees, collateral, guarantees, premiums and prepayment or redemption provisions) that are not materially more favorable (when taken as a whole) to the lenders or investors providing such Indebtedness than the covenants and events of default of this Agreement (when taken as a whole) are to the Lenders (unless (x) such covenants or other provisions are applicable only to periods after the maturity date of the Refinanced Debt at the time of such refinancing, (y) the Lenders under the Initial Term Loans also receive the benefit of such more favorable covenants and events of default (together with, at the election of the Borrower, any applicable “equity cure” provisions with respect to any financial maintenance covenant) (it being understood that, to the extent that any covenant, event of default or guarantee is added or modified for the benefit of any such Indebtedness, no consent shall be required by the Administrative Agent or any of the Lenders if such covenant, event of default or guarantee is (i) also added or modified for the benefit of any corresponding Loans remaining outstanding after the issuance or incurrence of such Indebtedness, or (ii) only applicable after the Latest Maturity Date at the time of such refinancing) or (z) such terms and conditions are reasonably satisfactory to the Administrative Agent. For the avoidance of doubt, it is understood and agreed that (x) notwithstanding anything in this Agreement to the contrary, in the case of any Indebtedness incurred to modify, refinance, refund, extend, renew or replace Indebtedness initially incurred in reliance on and measured by reference to a percentage of Consolidated EBITDA at the time of incurrence, and such modification, refinancing, refunding, extension, renewal or replacement would cause the percentage of Consolidated EBITDA to be exceeded if calculated based on the percentage of Consolidated EBITDA on the date of such modification, refinancing, refunding, extension, renewal or replacement, such percentage of Consolidated EBITDA restriction shall not be deemed to be exceeded so long as such incurrence otherwise constitutes “Credit Agreement Refinancing Indebtedness” and (y) such Credit Agreement Refinancing Indebtedness shall not be subject to any “most favored nation” pricing provisions.
“ Cure Amount ” has the meaning assigned to such term in Section 7.02(a).
“ Cure Right ” has the meaning assigned to such term in Section 7.02(a).
“ Cure Termination Date ” has the meaning assigned to such term in Section 7.02(a).
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“ Debt Repayment ” means the repayment, refinancing, roll over, termination, discharge, defeasance or release, or the arrangement for the repayment, refinancing, roll over, termination, discharge, defeasance or release in a manner reasonably satisfactory to the Administrative Agent of: (i) all Indebtedness and guaranties and security granted by Holdings and its Subsidiaries under the credit facilities evidenced by the First Lien Credit Agreement, dated as of May 30, 2014 (as amended, restated, supplemented or otherwise modified), among the Borrower, Intermediate U.S. Holdings, Holdings, Jefferies Finance LLC, as administrative agent and collateral agent, and each lender from time to time party thereto, (ii) all Indebtedness and guaranties and security granted by Holdings and its Subsidiaries under the credit facilities evidenced by the Second Lien Credit Agreement, dated as of May 30, 2014 (as amended, restated, supplemented or otherwise modified), among the Borrower, Intermediate U.S. Holdings, Holdings, Jefferies Finance LLC, as administrative agent and collateral agent, and each lender from time to time party thereto (the “ Existing Second Lien Credit Agreement ”) , (iii) all obligations of the Acquired Companies under any Indebtedness (other than Indebtedness contemplated to remain outstanding under the Acquisition Agreement or which the Joint Lead Arrangers otherwise permit to remain outstanding) owed to the Seller or its subsidiaries which will remain subsidiaries of Seller (and not Holdings) following the Acquisition, and (iv) all Indebtedness and guaranties and security granted under the Note Purchase Agreement, dated as of January 26, 2015 (as amended, restated supplemented or otherwise modified), among Canyon Investments S.à r.l., a Luxembourg private limited liability company (société à responsabilité limitée), Canyon Holdings S.à r.l., a Luxembourg private limited liability company (société à responsabilité limitée), and the holders from time to time party thereto.
“ Debtor Relief Laws ” means the Bankruptcy Code, the Insolvency Act of 1986 of the United Kingdom and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, examinership or similar debtor relief laws of the United States, the United Kingdom, Luxembourg, the Netherlands or other applicable jurisdictions (domestic or foreign) from time to time in effect and affecting the rights of creditors generally.
“ Default ” means any event or condition that constitutes an Event of Default or that, upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
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“ Defaulting Lender ” means, subject to Section 2.22(b), any Lender that (a) has failed to perform any of its funding obligations hereunder (or otherwise failed to pay over to the Administrative Agent any amounts owed by such Lender hereunder), including in respect of its Loans, within one (1) Business Days of the date required to be funded by it hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, (b) has notified the Borrower, the Administrative Agent, or any Lender that it does not intend to comply with its funding obligations or has made a public statement or provided any written notification to any Person to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after request by the Administrative Agent (whether acting on its own behalf or at the reasonable request of the Borrower (it being understood that the Administrative Agent shall comply with any such reasonable request)), to confirm in a manner satisfactory to the Administrative Agent and the Borrower that it will comply with its funding obligations (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become or is insolvent (or has admitted in writing that it is insolvent), (ii) become the subject of a proceeding under any Debtor Relief Law, (iii) had a receiver, conservator, trustee, administrator, examiner, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a substantial part of its assets or a custodian appointed for it or a substantial part of its assets, (iv) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment or (v) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority, where such ownership interest or proceeding does not result in or provide such Lender or Person with immunity from the jurisdiction of courts within the United States of America or from the enforcement of judgments or writs of attachment on its assets or permit such Lender or Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Lender or Person.
“ Designated Non-Cash Consideration ” means the fair market value of non-cash consideration received by the Borrower or a Subsidiary in connection with a Disposition pursuant to Section 6.05(k) that is designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer of the Borrower, setting forth the basis of such valuation (which amount will be reduced by the fair market value of the portion of the non-cash consideration converted to cash within 180 days following the consummation of the applicable Disposition).
“ Discount Prepayment Accepting Lender ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(2).
“ Discount Range ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ Discount Range Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ Discount Range Prepayment Notice ” means a written notice of a Borrower Solicitation of Discount Range Prepayment Offers made pursuant to Section 2.11(a)(ii)(C) substantially in the form of Exhibit I.
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“ Discount Range Prepayment Offer ” means the irrevocable written offer by a Term Lender, substantially in the form of Exhibit J, submitted in response to an invitation to submit offers following the Auction Agent’s receipt of a Discount Range Prepayment Notice.
“ Discount Range Prepayment Response Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ Discount Range Proration ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“ Discounted Prepayment Determination Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“ Discounted Prepayment Effective Date ” means in the case of a Borrower Offer of Specified Discount Prepayment, Borrower Solicitation of Discount Range Prepayment Offer or Borrower Solicitation of Discounted Prepayment Offers, five (5) Business Days following the receipt by each relevant Term Lender of notice from the Auction Agent in accordance with Section 2.11(a)(ii)(B), Section 2.11(a)(ii)(C) or Section 2.11(a)(ii)(D), as applicable unless a shorter period is agreed to between the Borrower and the Auction Agent.
“ Discounted Term Loan Prepayment ” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
“ Dispose ” and “ Disposition ” each have the meaning assigned to such term in Section 6.05.
“ Disposed EBITDA ” means, with respect to any Sold Entity or Business or Converted Unrestricted Subsidiary for any period through (but not after) the date of such disposition, the amount for such period of Consolidated EBITDA of such Sold Entity or Business or Converted Unrestricted Subsidiary (determined as if references to Holdings and its Restricted Subsidiaries in the definition of the term “Consolidated EBITDA” (and in the component financial definitions used therein) were references to such Sold Entity or Business and its subsidiaries or to such Converted Unrestricted Subsidiary and its subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business or Converted Unrestricted Subsidiary.
“ Disqualified Equity Interest ” means, with respect to any Person, any Equity Interest in such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:
(a) matures or is mandatorily redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise;
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(b) is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Indebtedness or Equity Interests (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests); or
(c) is redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by such Person or any of its Affiliates, in whole or in part, at the option of the holder thereof;
in each case, on or prior to the date ninety-one (91) days after the Latest Maturity Date; provided , however , that (i) an Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest upon the occurrence of an “asset sale” or a “change in control” or similar event shall not constitute a Disqualified Equity Interest if any such requirement becomes operative only after the Termination Date and (ii) if an Equity Interest in any Person is issued pursuant to any plan for the benefit of employees of Holdings (or any direct or indirect parent thereof) or any of its Subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by Holdings (or any direct or indirect parent company thereof) or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations of such Person or as a result of such employee’s termination, death or disability.
“ Disqualified Lenders ” means (i) those Persons identified by the Borrower to the Joint Lead Arrangers in writing prior to December 14, 2015 as being “Disqualified Lenders”, (ii) those Persons who are competitors of Holdings and its Subsidiaries and are identified by the Sponsor or the Borrower to the Administrative Agent from time to time in writing, which designation shall not apply retroactively to disqualify any Persons that previously acquired an assignment or participation interest in any Loan prior to such designation, (iii) Excluded Affiliates and (iv) in the case of each Person identified pursuant to clauses (i) or (ii) above, any of their Affiliates that are either (x) identified in writing by the Sponsor or the Borrower to the Administrative Agent from time to time or (y) known or reasonably identifiable as an Affiliate of any such Person. Upon inquiry by any Lender to the Administrative Agent as to whether a specified potential assignee or prospective participant is a Disqualified Lender, the Administrative Agent shall be permitted to disclose to such Lender and such specific potential assignee (x) whether such specific potential assignee or prospective participant is a Disqualified Lender or (y) the identity of any other Disqualified Lender which the Administrative Agent reasonably believes may be an Affiliate of such specified potential assignee or prospective participant.
“ Dollar Amount ” means, at any time:
(a) with respect to an amount denominated in Dollars, such amount;
(b) with respect to any amount denominated in a currency other than Dollars, where a determination of such amount is required to be made under any Loan Document by the Administrative Agent, the equivalent amount thereof in Dollars as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the applicable date of determination) for the purchase of Dollars with such alternative currency; and
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(c) with respect to any amount denominated in a currency other than Dollars, where a determination of such amount is required to be made under any Loan Document by Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, the equivalent amount thereof in Dollars as determined on the basis of the Exchange Rate for such currency and as determined in accordance with Section 1.08.
“ Dollars ” or “ $ ” refers to lawful money of the United States of America.
“ Domestic Loan Party ” means any Loan Party organized or incorporated in the United States (or any state thereof or the District of Columbia).
“ Domestic Subsidiary ” means any Subsidiary of Holdings organized or incorporated in the United States (or any state, thereof or the District of Columbia).
“ Dutch Loan Guarantor ” means a Loan Guarantor incorporated under Netherlands law.
“ Dutch Omnibus Pledge Deed ” means the substantially all assets pledge deed governed by Dutch law and entered into by each Foreign Loan Party incorporated in the Netherlands.
“ Dutch Security Documents ” means the Dutch Omnibus Pledge Deed and the Dutch Share Pledge Deed.
“ Dutch Share Pledge Deed ” means each pledge over shares governed by Dutch law and entered into in respect of the Equity Interests in any Foreign Loan Party incorporated in the Netherlands in favor of the Collateral Agent.
“ ECF Percentage ” means, with respect to the prepayment required by Section 2.11(d) with respect to any fiscal year of Holdings, if the Senior Secured Net Leverage Ratio (after giving effect to the applicable prepayment pursuant to Section 2.11(d), and after giving effect to any voluntary prepayments made pursuant to Section 2.11(a) prior to the date of such prepayment) as of the end of such fiscal year is (a) greater than 3.50 to 1.00, 75% of Excess Cash Flow for such fiscal year, (b) greater than 3.00 to 1.00 but less than or equal to 3.50 to 1.00, 50% of Excess Cash Flow for such fiscal year, (c) greater than 2.50 to 1.00 but less than or equal to 3.00 to 1.00, 25% of Excess Cash Flow for such fiscal year and (d) less than or equal to 2.50 to 1.00, 0% of Excess Cash Flow for such fiscal year.
“ EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent;
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“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“ EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“ Effective Date ” means June 16, 2016.
“ Effective Date Loan Parties ” means (i) Holdings, (ii) each Domestic Loan Party that was a Restricted Subsidiary of Holdings (including the Borrower) on or prior to the Effective Date and (iii) each other Subsidiary of Holdings that is a Loan Party as of the Effective Date (if any).
“ Effective Yield ” means, as to any Indebtedness, the effective yield on such Indebtedness in the reasonable determination of the Administrative Agent and the Borrower and consistent with generally accepted financial practices, taking into account the applicable interest rate margins, any interest rate floors (the effect of which floors shall be determined in a manner set forth in the proviso below) or similar devices and all fees , including upfront or similar fees or original issue discount (amortized over the shorter of (a) the remaining Weighted Average Life to Maturity of such Indebtedness and (b) the four years following the date of incurrence thereof) payable generally to lenders or other institutions providing such Indebtedness, but excluding any arrangement, syndication, commitment, prepayment, structuring, ticking or other similar fees payable in connection therewith that are not generally shared with all relevant syndicate Lenders and, if applicable, consent fees for an amendment paid generally to consenting Lenders; provided that with respect to any Indebtedness that includes a “LIBOR floor” or “Base Rate floor,” (i) to the extent that the LIBO Rate or Alternate Base Rate (without giving effect to any floors in such definitions), as applicable, on the date that the Effective Yield is being calculated is less than such floor, the amount of such difference shall be deemed added to the interest rate margin for such Indebtedness for the purpose of calculating the Effective Yield and (ii) to the extent that the LIBO Rate or Alternate Base Rate (without giving effect to any floors in such definitions), as applicable, on the date that the Effective Yield is being calculated is greater than such floor, then the floor shall be disregarded in calculating the Effective Yield.
“ Electing Guarantor ” any Excluded Subsidiary organized in a Covered Jurisdiction that, at the option and in the sole discretion of the Borrower, has been designated a Subsidiary Loan Party.
“ Eligible Assignee ” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than Holdings, any Intermediate Parent, the Borrower or any of their respective Affiliates), other than, in each case, (i) a natural person, (ii) a Defaulting Lender or (iii) a Disqualified Lender. Notwithstanding the foregoing, each Loan Party and the Lenders acknowledge and agree that the Administrative Agent shall have no responsibility or liability for monitoring or enforcing the list of Disqualified Lenders or for any assignment made to a Disqualified Lender unless (A) such assignment resulted from the Administrative Agent’s gross negligence, bad faith or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable judgment) or (B) such assignment resulted from a material breach of the Loan Documents by the Administrative Agent (as determined by a court of competent jurisdiction in a final and non-appealable judgment).
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“ EMU Legislation ” means the legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency.
“ Environmental Laws ” means all applicable treaties, rules, regulations, codes, ordinances, judgments, orders, decrees and other applicable Requirements of Law, and all applicable injunctions or binding agreements issued, promulgated or entered into by or with any Governmental Authority, in each instance relating to the protection of the environment, to preservation or reclamation of natural resources, to Release or threatened Release of any Hazardous Material or to the extent relating to exposure to Hazardous Materials, to health or safety matters.
“ Environmental Liability ” means any liability, obligation, loss, claim, action, order or cost, contingent or otherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration, administrative oversight costs, consultants’ fees, fines, penalties and indemnities) directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, or treatment of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“ Equity Financing ” means the contribution by the Sponsor, the Management Investors and the other Investors on or prior to the Effective Date, directly or indirectly of cash equity contributions to Holdings or, solely to the extent used on the Effective Date for the purposes described in clause (iv) of the definition of “Debt Repayment,” a Holdings Parent.
“ Equity Interests ” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person (whether evidenced by share certificates (or similar) or not).
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or 414(c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
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“ ERISA Event ” means (a) any “reportable event,” as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived; (c) 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 Plan; (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (e) the incurrence by a Loan Party or any ERISA Affiliate of any liability under Title IV of ERISA (other than premiums due and not delinquent under Section 4007 of ERISA) with respect to the termination of any Plan or by application of Section 4069 of ERISA with respect to any terminated plan; (f) the receipt by a Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or to an intention to terminate or to appoint a trustee to administer any plan or plans in respect of which such Loan Party or ERISA Affiliate would be deemed to be an employer under Section 4069 of ERISA; (g) the incurrence by a Loan Party or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by a Loan Party or any ERISA Affiliate 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 the failure of a Loan Party or any ERISA Affiliate to pay when due, after the expiration of any applicable grace period, any installment payment with respect to any Withdrawal Liability; or (i) the withdrawal of a Loan Party or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA.
“ Escrowed Proceeds ” means the proceeds from the offering of any debt securities or other Indebtedness paid into an escrow account with an independent escrow agent on the date of the applicable offering or incurrence pursuant to escrow arrangements that permit the release of amounts on deposit in such escrow account upon satisfaction of certain conditions or the occurrence of certain events. The term “Escrowed Proceeds” shall include any interest earned on the amounts held in escrow.
“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“ Euro ” or “ € ” means the lawful single currency of the Participating Member States.
“ Eurodollar ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate .
“ Event of Default ” has the meaning assigned to such term in Section 7.01.
“ Excess Cash Flow ” means, for any period, an amount equal to the excess of:
(a) the sum, without duplication, of:
(i) Consolidated Net Income for such period,
(ii) an amount equal to the amount of all Non-Cash Charges to the extent deducted in arriving at such Consolidated Net Income,
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(iii) decreases in Consolidated Working Capital, and
(iv) an amount equal to the aggregate net non-cash loss on dispositions by Holdings and its Restricted Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income; less
(b) the sum, without duplication, of:
(i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income (including any amounts included in Consolidated Net Income of proceeds received or due from business interruption insurance or reimbursement of expenses and charges pursuant to indemnification and other reimbursement provisions in connection with any acquisition or other Investment or any disposition of any asset permitted under this Agreement to the extent such amounts are due but not received during such period) and cash charges, expenditures and losses added to (or excluded from the determination of) Consolidated Net Income pursuant to clauses (a) through (k) of the definition of “Consolidated Net Income” (other than cash charges in respect of Transaction Costs paid on or about the Effective Date to the extent financed with the proceeds of long-term Indebtedness incurred on the Effective Date),
(ii) without duplication of amounts deducted pursuant to clause (xii) below in prior fiscal years, the amount of capital expenditures and intellectual property development expenditures made in cash or accrued during such period, except to the extent that such expenditures were financed with the proceeds of long-term Indebtedness of Holdings and its Restricted Subsidiaries,
(iii) the aggregate amount of all principal payments of Indebtedness (including (1) the principal component of payments in respect of Capitalized Leases and (2) the amount of any mandatory prepayment of Loans to the extent required due to a Disposition that resulted in an increase to Consolidated Net Income and not in excess of the amount of such increase, but excluding all other prepayments of First Lien Term Loans, Term Loans or other Senior Secured Indebtedness and all prepayments of revolving loans (including First Lien Revolving Loans (except to the extent the prepayment thereof reduces the Borrower’s prepayment obligation pursuant to clause (i) of the proviso to the first sentence of Section 2.11(d)) made during such period, other than (A) in respect of any revolving credit facility except to the extent there is an equivalent permanent reduction in commitments thereunder and (B) to the extent financed with the proceeds of other long-term Indebtedness of Holdings or its Restricted Subsidiaries,
(iv) an amount equal to the aggregate net non-cash gain on dispositions by Holdings and its Restricted Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income,
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(v) increases in Consolidated Working Capital for such period,
(vi) cash payments by Holdings and its Restricted Subsidiaries during such period in respect of long-term liabilities of Holdings and its Restricted Subsidiaries other than Indebtedness,
(vii) without duplication of amounts deducted pursuant to clause (xii) below in prior fiscal years, the amount of Investments (other than Investments in Permitted Investments) and acquisitions made in accordance with Section 6.04 (other than Investments pursuant to Section 6.04(a), (c), (e)(ii), (g), (k), (o), (p), (q) or (hh)) to the extent that such Investments and acquisitions were not financed with the proceeds of long-term Indebtedness of Holdings or its Restricted Subsidiaries,
(viii) the amount of dividends and other Restricted Payments (including the amount of Tax Distributions made by the Borrower during such period or payable after such period in respect of income generated during such period) pursuant to Section 6.07(a) (other than pursuant to Section 6.07(a)(i), (a)(ii), (a)(vi), (a)(viii), (a)(xiii), (a)(xv) or (a)(xvii)), in each case to the extent not deducted in arriving at Consolidated Net Income) and paid in cash during such period or payable in respect of such period, to the extent such dividends and Restricted Payments were not financed with the proceeds of long-term Indebtedness of Holdings or its Restricted Subsidiaries; provided that any amount deducted for such period in respect of amounts payable during a subsequent period shall not be deducted in any subsequent period and, to the extent not actually paid during such subsequent period, shall be added to Excess Cash Flow for such subsequent period;
(ix) the aggregate amount of payments and expenditures actually made by Holdings and its Restricted Subsidiaries in cash during such period (including expenditures for the payment of financing fees and restructuring charges) to the extent that such payments and expenditures are not expensed during such period,
(x) cash payments by Holdings and its Restricted Subsidiaries during such period in respect of Non-Cash Charges included in the calculation of Consolidated Net Income in any prior period,
(xi) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by Holdings and its Restricted Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness, in each case to the extent not deducted in determining Consolidated Net Income,
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(xii) at the option of the Borrower, and without duplication of amounts deducted from Excess Cash Flow in prior periods, (1) the aggregate consideration required to be paid in cash by the Borrower or any of the Restricted Subsidiaries pursuant to binding contracts, commitments, letters of intent or purchase orders (the “ Contract Consideration ”), in each case, entered into prior to or during such period, or at the option of the Borrower, after the applicable period and prior to the applicable Excess Cash Flow due date, and (2) to the extent set forth in a certificate of a Financial Officer delivered to the Administrative Agent at or before the time the Compliance Certificate for the period ending simultaneously with such Test Period is required to be delivered pursuant to Section 5.01(d) (which shall be satisfied if such certification is included in the Compliance Certificate), the aggregate amount of cash that is reasonably expected to be paid in respect of planned cash expenditures by the Borrower or any of the Restricted Subsidiaries (the “ Planned Expenditures ”), in the case of each of clauses (1) and (2), relating to Permitted Acquisitions, other Investments (other than Investments in Permitted Investments pursuant to Section 6.04(a) and Investments pursuant to Section 6.04(a), (c), (e)(ii), (g), (k), (o), (p), (q) or (hh)), restructuring charges, or capital expenditures (including Capitalized Software Expenditures or other purchases or development of Intellectual Property) to be consummated or made during a subsequent Test Period (and in the case of Planned Expenditures, the immediately succeeding fiscal year); provided , that to the extent the aggregate amount of internally generated cash actually utilized to finance such Permitted Acquisitions, Investments, restructuring charges or capital expenditures during such Test Period is less than the Contract Consideration and Planned Expenditures, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such Test Period, and
(xiii) the amount of taxes (including penalties and interest) paid in cash and/or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period; and
(xiv) the aggregate amount of Transaction Costs incurred during such period.
“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended from time to time.
“ Exchange Rate ” means, on any day, for purposes of determining the Dollar Amount of any currency, the currency exchange rate at which such other currency may be exchanged into Dollars at the time of determination based on such rate in effect on the First Business Day of the Fiscal Quarter of Holdings in which such determination occurs or in respect of which such determination is made, for the most recently ended fiscal month of Holdings, as reasonably determined in good faith by the Borrower based on commonly used financial reporting sources; provided further that, if an amount that is to otherwise be converted using the foregoing methodology has been hedged, swapped or otherwise effectively converted into another currency pursuant to a Swap Agreement to which any Loan Party is a party, the currency exchange rate so utilized for that amount shall be as set forth in such Swap Agreement (copies of which shall be made available to the Administrative Agent upon request).
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“ Excluded Affiliates ” means any employees of (a) any Affiliate of any Joint Lead Arranger that are engaged as principals primarily in private equity, mezzanine financing or venture capital transactions and (b) any Joint Lead Arranger engaged directly or indirectly in the sale of the Acquired Companies as representatives of the Acquired Companies (other than, in the case of clauses (a) and (b) above, (x) such employees that are required, in accordance with industry regulations or such Joint Lead Arranger’s (or its Affiliate’s) internal policies and procedures, to act in a supervisory capacity or (y) such Joint Lead Arranger’s (or its Affiliate’s) internal legal, compliance, risk management, credit or investment committee members).
“ Excluded Assets ” means (a) any fee-owned real property that is not Material Real Property and all leasehold (including ground lease) interests in real property (including requirements to deliver landlord lien waivers, estoppels and collateral access letters), (b) motor vehicles and other assets subject to certificates of title or ownership, (c) letter of credit rights (except to the extent constituting supporting obligations (as defined under the UCC) in which a security interest can be perfected with the filing of a UCC-1 financing statement or similar financing statements in the jurisdiction of organization of a Foreign Loan Party), (d) commercial tort claims, (e) Excluded Equity Interests, (f) any lease, contract, license, sublicense, other agreement or document, government approval, charter, authorization or franchise (or any asset subject to such agreement or arrangement) with any Person if, to the extent and for so long as, the grant of a Lien thereon to secure the Secured Obligations would require the consent of a third party (unless such consent has been received) or violate or invalidate, constitute a breach of or a default under, or create a right of termination in favor of any party (other than any Loan Party) to, such lease, contract, license, sublicense, other agreement or document, government approval, charter, authorization or franchise (but after giving effect to the applicable anti-non-assignment provisions of the Uniform Commercial Code, or any other applicable Requirements of Law), (g) any asset subject to a Lien of the type permitted by Section 6.02(iv) (whether or not incurred pursuant to such Section) or a Lien permitted by Section 6.02(xi), in the case of Liens permitted by Section 6.02(xi) if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, any agreement pursuant to which such Lien has been created (but after giving effect to the applicable anti-non-assignment provisions of the Uniform Commercial Code, or any other applicable Requirements of Law), (h) any intent-to-use trademark applications filed in the United States Patent and Trademark Office, pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the accepted filing of a “Statement of Use” and issuance of a “Certificate of Registration” pursuant to Section 1(d) of the Lanham Act or an accepted filing of an “Amendment to Allege Use” whereby such intent-to-use trademark application is converted to a “use in commerce” application pursuant to Section 1(c) of the Lanham Act and any other Intellectual Property in any jurisdiction where such pledge or security interest would cause the invalidation or abandonment of such Intellectual Property under applicable law, (i) any asset (including Equity Interests) if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations is prohibited by any Requirements of Law, rule or regulation, contractual obligation existing on the Effective Date (or, if later, the date the Person owning the asset becomes a Restricted Subsidiary, so long as the applicable contractual obligation was not entered into in contemplation of such Person becoming a Restricted Subsidiary) or agreements with any Governmental Authority (other than to the extent that any such prohibition would be rendered ineffective pursuant to the applicable anti-non-assignment provisions of the Uniform Commercial Code, or any other applicable Requirements of Law) or which would require consent, approval, license or authorization from any Governmental Authority or regulatory authority (provided that there shall be no requirement to obtain the consent of any governmental authority or third party, including, without limitation, no requirement to comply with the Federal Assignment of Claims Act or any similar statute), unless such consent, approval, license or authorization has been received, (j) margin stock (within the meaning of Regulation U of the Board of Governors, as in effect from time to time) and pledges and security interests prohibited by applicable law, rule or regulation or agreements with any Governmental Authority, (k) Securitization Assets, (l) cash and Permitted Investments (other than cash and Permitted Investments representing proceeds of other “Collateral”), any Deposit Account (as defined in the Collateral Agreement), Securities Account (as defined in the Collateral Agreement), commodities account or similar account (including securities entitlements and related assets) (except in each case to the extent perfected solely through the filing of a UCC financing statement or similar financing statement in the applicable Covered Jurisdiction) and any other assets requiring perfection through control agreements or perfection by “control”, (m) other than with respect to the pledge of Equity Interests by a Loan Party (in the case of a Foreign Loan Party, to the extent required by the Guaranty and Security Principles), any assets located or titled outside of such Loan Party’s jurisdiction of organization, (n) any assets to the extent that the granting of a Lien thereon to secure the Secured Obligations could reasonably be expected to result in adverse (other than de minimis consequences) tax consequences or adverse regulatory consequences, in each case, as reasonably determined by the Borrower; and (o) any assets with respect to which, in the reasonable judgment of the Administrative Agent and the Borrower (as agreed to in writing), the cost or other consequences (including adverse tax consequences of pledging such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom). In the event that the First Lien Administrative Agent makes any determination that any asset constitutes an Excluded Asset, the Administrative Agent shall also be deemed to have made such same determination unless otherwise requested by the Borrower.
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“ Excluded Equity Interests ” means Equity Interests in any (a) Unrestricted Subsidiary, (b) Immaterial Subsidiary, (c) Subsidiary of a Domestic Subsidiary that is a CFC (except that up to 65% of the equity interests of any CFC that is owned directly and indirectly by Loan Parties that are not CFCs, other than a U.S. Loan Party described in clause (e) of this definition of “Excluded Equity Interests,” shall not be Excluded Equity Interests), (d) joint ventures and Non-Wholly Owned Subsidiaries, (e) any Domestic Subsidiary that has no material assets other than the equity and/or debt of one or more CFCs and cash or cash equivalents (except that up to 65% of the equity interests of any such Subsidiary shall not be Excluded Equity Interests), (f) not-for-profit Subsidiary, captive insurance company or special purpose securitization vehicle (or similar entity), including any Securitization Subsidiary.
“ Excluded Information ” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
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“ Excluded Subsidiary ” means (a) any Subsidiary that is not a Wholly Owned Subsidiary of Holdings, (b) each Subsidiary listed on Schedule 1.01, (c) any Subsidiary that is prohibited by applicable law, rule or regulation or contractual obligation existing on the Effective Date or, if later, the date such Subsidiary first becomes a Restricted Subsidiary (but, in the case of a contractual obligation, to the extent not incurred in contemplation of such Subsidiary becoming a Restricted Subsidiary), from guaranteeing the Secured Obligations or which would require any governmental or regulatory consent, or third party consent, approval, license or authorization to do so, unless such consent, approval, license or authorization has been obtained, (d) any Immaterial Subsidiary, (e) any Subsidiary to the extent the provision of a Guarantee by such Subsidiary could reasonably be expected to result in adverse (other than a de minimis consequence) tax consequences as reasonably determined by the Borrower, (f) any Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and the Borrower (as agreed in writing), the cost, burden or other consequences of providing the Guarantee shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (g) any Subsidiary that is (or, if it were a Loan Party, would be) an “investment company” under the Investment Company Act of 1940, as amended, (h) any not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries, (i) any Subsidiary that is organized under the laws of a jurisdiction other than any Covered Jurisdiction, (j) any direct or indirect Subsidiary of a CFC that is a direct or indirect Subsidiary of Intermediate U.S. Holdings, the Borrower or any other Domestic Subsidiary), (k) any direct or indirect Foreign Subsidiary of Intermediate U.S. Holdings or of any other Domestic Subsidiary that is a CFC, (l) any special purpose securitization vehicle (or similar entity), including any Securitization Subsidiary, (m) any Domestic Subsidiary that has no material assets other than the equity and/or debt of one or more CFCs and cash or cash equivalents, (n) each Unrestricted Subsidiary, (o) any Subsidiary for which the providing of a Guarantee could reasonably be expected to result in any violation or breach of, or conflict with, fiduciary duties of such Subsidiary’s officers, directors (or other governing body) or managers and (p) any Restricted Subsidiary acquired pursuant to a Permitted Acquisition (or other Investment not prohibited by this Agreement) financed with Indebtedness permitted under Section 6.01 hereof as assumed Indebtedness and any Restricted Subsidiary thereof that Guarantees such Indebtedness, in each case to the extent such Indebtedness prohibits such Subsidiary from becoming a Loan Guarantor; provided that any Immaterial Subsidiary that is a signatory to any Collateral Agreement or the Guarantee Agreement shall be deemed not to be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents unless the Borrower has otherwise notified the Administrative Agent. In the event that the First Lien Administrative Agent makes any determination that any Subsidiary constitutes an Excluded Subsidiary, the Administrative Agent shall also be deemed to have made such same determination unless otherwise requested by the Borrower.
“ Excluded Taxes ” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, (a) Taxes imposed on (or measured by) such recipient’s net income (however denominated) and franchise Taxes imposed on it (in lieu of net income Taxes) by a jurisdiction (i) as a result of such recipient being organized or having its principal office or, in the case of any Lender, its applicable lending office in such jurisdiction, or (ii) Other Connection Taxes, (b) any branch profits tax imposed under Section 884(a) of the Code, or any similar Tax, imposed by any jurisdiction described in clause (a) above, (c) any withholding Tax imposed pursuant to FATCA, (d) any withholding Tax that is attributable to a Lender’s failure to comply with Section 2.17(e) and (e) except in the case of an assignee pursuant to a request by the Borrower under Section 2.19 hereto, any withholding Taxes imposed on amounts payable to a Lender pursuant to a Requirement of Law in effect at the time such Lender becomes a party hereto (or designates a new lending office), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts with respect to such withholding Tax under Section 2.17(a).
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“ Existing Second Lien Credit Agreement ” has the meaning specified in the definition of Debt Repayment.
“ FATCA ” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable thereto), any current or future Treasury regulations thereunder or other official administrative interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code as of the date of this Agreement (or any amended or successor version described above) and any intergovernmental agreements implementing the foregoing or any treaty, regulation or law implementing any such intergovernmental agreement.
“ FCPA ” has the meaning specified in Section 3.16(a).
“ Federal Funds Effective Rate ” means, for any day, 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 that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it; provided that the Federal Funds Effective Rate, if negative, shall be deemed to be 0.00%.
“ Fee Letter ” means the fee letter among the Borrower, the Joint Lead Arrangers, the Joint Lead Arrangers’ respective Affiliates party thereto, and the other parties thereto, dated as of December 14, 2015.
“ Financial Officer ” means the chief financial officer, principal accounting officer, treasurer or corporate controller of Holdings or the Borrower, as applicable.
“ Financial Performance Covenant ” means the covenant set forth in Section 6.12.
“ Financing Transactions ” means (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party, (b) the borrowing of Loans hereunder and the use of the proceeds thereof, (c) the execution, delivery and performance by each Loan Party of the First Lien Loan Documents to which it is to be a party, (d) the borrowing of the First Lien Loans and the use of proceeds thereof, (e) the issuance, amendment or extension of First Lien Letters of Credit and the use of proceeds thereof and (f) the Equity Financing.
“ FIRREA ” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
“ First Lien Administrative Agent ” means the “Administrative Agent” as defined in the First Lien Credit Agreement.
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“ First Lien Credit Agreement ” means the First Lien Credit Agreement, dated as of the Effective Date (as amended, restated, supplemented, extended, increased, renewed, refunded, replaced, restructured or refinanced or otherwise modified from time to time in one more more agreements (in each case with the same and/or new lenders, investors or agents), among the Borrower, Holdings, Intermediate Lux Holdings, Intermediate U.S. Holdings, Deutsche Bank AG New York Branch, as administrative agent (the “ First Lien Administrative Agent ”) (or any successor thereto) and collateral agent and the other lenders and financial institutions party thereto from time to time.
“ First Lien Letters of Credit ” means the “Letters of Credit” as defined in the First Lien Credit Agreement.
“ First Lien Loan Documents ” means the First Lien Credit Agreement and all security agreements, guarantees, pledge agreements, notes and other agreements or instruments executed in connection therewith, including all “Loan Documents” (or any comparable term) (as defined in the First Lien Credit Agreement).
“ First Lien Loans ” means the First Lien Revolving Loans and the First Lien Term Loans.
“ First Lien Revolving Loans ” means the “Revolving Loans” (or comparable successor term) as defined in the First Lien Credit Agreement.
“ First Lien Term Loans ” means the “Term Loans” (or comparable successor term) as defined in the First Lien Credit Agreement.
“ Flood Insurance Laws ” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“ Foreign Lender ” means a Lender that is not a United States Person (as defined in Section 7701(a)(30) of the Code).
“ Foreign Loan Party ” means any Loan Party other than a Domestic Loan Party.
“ Foreign Security Documents ” means (a) the Dutch Security Documents; (b) the Luxembourg Share Pledge Documents; (c) the UK Security Documents; (d) the Irish Security Documents; and (e) such other documents as are customary for the jurisdiction of incorporation of the Foreign Loan Parties and the location of the assets of the Foreign Loan Parties.
“ Foreign Subsidiary ” means any Restricted Subsidiary of Holdings other than a Domestic Subsidiary.
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“ Funded Debt ” means all Indebtedness of Holdings and its Restricted Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within one year from such date that is renewable or extendable, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including Indebtedness in respect of the Loans.
“ GAAP ” means generally accepted accounting principles in the United States of America, as in effect from time to time; provided , however , that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, (a) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB Accounting Standards Codification 825-Financial Instruments, or any successor thereto (including pursuant to the FASB Accounting Standards Codification), to value any Indebtedness of any subsidiary at “fair value,” as defined therein and (b) the amount of any Indebtedness under GAAP with respect to Capital Lease Obligations shall be determined in accordance with the definition of Capital Lease Obligations.
“ Governmental Approvals ” means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, Governmental Authorities.
“ Governmental Authority ” means the government of the United States of America, Luxembourg, the United Kingdom, the Netherlands, Ireland, any other nation or any political subdivision thereof, whether federal, state, provincial, territorial, local or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government in any jurisdiction (including any supra national bodies such as the European Union or the European Central Bank).
“ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined in good faith by a Financial Officer. The term “Guarantee” as a verb has a corresponding meaning.
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“ Guarantee Agreement ” means the Master Guarantee Agreement among the Loan Parties and the Administrative Agent, substantially in the form of Exhibit B.
“ Guaranty and Security Principles ” means the Guaranty and Security Principles set forth on Schedule 1.12.
“ Hazardous Materials ” means all explosive, radioactive, hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum by-products or distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other hazardous or toxic substances, wastes, chemicals, pollutants, contaminants of any nature and in any form regulated pursuant to any Environmental Law.
“ Holdings ” has the meaning given to such term in the preliminary statements hereto; provided that upon and after an IPO, if the IPO Entity is Holdings or any Person of which Holdings is a wholly-owned Subsidiary, “Holdings” shall mean the IPO Entity.
“ Holdings Audited Financial Statements ” means the audited consolidated balance sheet and the related consolidated statements of income and retained earnings and statement of cash flows of Holdings and its subsidiaries for the fiscal year ending December 31, 2015.
“ Holdings Parent ” means any direct or indirect parent company of Holdings.
“ Holdings Parent Specified Expenses ” shall mean any charge, tax or expense incurred or accrued by any Holdings Parent during any period to the extent that Holdings has made a Restricted Payment (or has made any Investment in lieu thereof pursuant to Section 6.04(l)) to any Holdings Parent in respect thereof pursuant to Section 6.07(a)(vii), but in each case limited to the amount of such Restricted Payment or Investment.
“ Identified Participating Lenders ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“ Identified Qualifying Lenders ” has the meaning specified in Section 2.11(a)(ii)(D)(3).
“ Immaterial Subsidiary ” means any Subsidiary other than a Material Subsidiary.
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“ Incremental Cap ” means, as of any date of determination, the sum of (I)(a) $100,000,000 ( minus , without duplication, (x) amounts incurred prior to the date of determination in respect of all Incremental Facilities and Incremental Equivalent Debt, in each case, incurred in reliance on this clause (a), (y) all amounts incurred pursuant to clause (A)(I)(x) of Section 6.01(a)(xv) or clause (A)(I)(x) of Section 6.01(a)(xvi), and (z) any Indebtedness incurred under Section 6.01(a)(xx)(B) to the extent such Indebtedness is incurred in reliance on the $100,000,000 basket in the definition of “Incremental Cap” in the First Lien Credit Agreement or clause (A)(I)(x) of Section 6.01(a)(xv) or clause (A)(I)(x) of Section 6.01(a)(xvi) of the First Lien Credit Agreement (or any equivalent successor provision); provided that the maximum amount deducted pursuant to this clause (I)(a) shall not exceed $100,000,000), plus (b)(i) the aggregate principal amount of all Term Loans voluntarily prepaid pursuant to Section 2.11(a)(i), (ii) the aggregate amount of all Term Loans repurchased and prepaid pursuant to Section 2.11(a)(ii) or otherwise in a manner not prohibited by Section 9.04(g), and (iii) the aggregate principal amount of all Incremental Facilities and Incremental Equivalent Debt and all “Incremental Facilities” and “Incremental Equivalent Debt” under and as defined in the First Lien Loan Documents voluntarily prepaid or repurchased, in each case prior to such date (other than, in each case, prepayments, repurchases and commitment reductions (A) made with the proceeds of the incurrence of Credit Agreement Refinancing Indebtedness or other long-term Indebtedness or (B) of Incremental Facilities or Incremental Equivalent Debt (or “Incremental Facilities” or “Incremental Equivalent Debt” under and as defined in the First Lien Loan Documents) that had been incurred in reliance on the following clause (II) or in reliance on the corresponding ratio basket in the First Lien Credit Agreement (the sum of the amounts set forth in this clause (b), the “ Voluntary Prepayment Amount ”) ( minus the amount of all Incremental Facilities and all Incremental Equivalent Debt incurred in reliance on the this clause (b)) plus (II) the maximum aggregate principal amount that can be incurred without causing the Senior Secured Net Leverage Ratio, after giving effect to the incurrence of any such Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) (without deducting in calculating the numerator of such Secured Net Leverage Ratio any cash proceeds thereof, provided that to the extent the proceeds of any such Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) are to be used to repay Indebtedness it shall not limit the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis”) and the use of proceeds thereof, on a Pro Forma Basis (but without giving effect to any simultaneous incurrence of any Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) made pursuant to the foregoing clause (I)), to exceed 5.20 to 1.00 for the most recent Test Period ended; provided , further , that if such Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) is unsecured, in lieu of complying with the Senior Secured Net Leverage Ratio set forth above in this clause (II), the Total Net Leverage Ratio, after giving effect to the incurrence of such unsecured Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) (without deducting in calculating the numerator of such Total Net Leverage Ratio any cash proceeds thereof, provided that to the extent the proceeds of any such Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) are to be used to repay Indebtedness it shall not limit the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis”) and the use of proceeds thereof, shall not exceed 5.20 to 1.00 on a Pro Forma Basis for the most recent Test Period ended. Any ratio calculated for purposes of determining the “Incremental Cap” shall be calculated on a Pro Forma Basis for the most recent Test Period ended and subject to Section 1.06 to the extent applicable and, at the option of the Borrower, any unfunded Incremental Facility, Incremental Equivalent Debt or Indebtedness incurred in reliance on Section 6.01(a)(xx)(B) may be tested at the time of the initial funding in lieu of the time of establishment. Loans may be incurred under both clauses (I) and (II), and proceeds from any such incurrence may be utilized in a single transaction by first calculating the incurrence under clause (II) above and then calculating the incurrence under clause (I) above) (if any) and, for the avoidance of doubt, the Senior Secured Net Leverage Ratio or Total Net Leverage Ratio, as applicable shall be permitted to exceed the maximum ratio set forth in clause (II) above to the extent of such amounts incurred in reliance on clause (I) at substantially the same time. Unless the Borrower otherwise elects in writing to the Administrative Agent, the Borrower shall be deemed to have used amounts, if any, that are available under clause (II) above prior to the utilization of amounts under clause (I) above.
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“ Incremental Equivalent Debt ” has the meaning assigned to such term in Section 6.01(a)(xxiii).
“ Incremental Facility ” has the meaning assigned to such term in Section 2.20(a).
“ Incremental Facility Amendment ” has the meaning assigned to such term in Section 2.20(d).
“ Incremental Loan ” has the meaning assigned to such term in Section 2.20(a).
“ Incremental Term Facility ” has the meaning assigned to such term in Section 2.20(a).
“ Incremental Term Increase ” has the meaning assigned to such term in Section 2.20(a).
“ Incremental Term Loan ” means any Term Loan provided under any Incremental Facility.
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“ Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (x) trade accounts payable in the ordinary course of business, (y) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and if not paid after being due and payable and (z) expenses accrued in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances; provided that the term “Indebtedness” shall not include (i) deferred or prepaid revenue, deferred tax liabilities, liabilities associated with customer prepayments and deposits and any such obligations incurred under ERISA and other accrued obligations (including transfer pricing), and customary obligations under employment agreements and deferred compensation, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty, indemnity or other unperformed obligations of the seller, or other contingent post-closing purchase price adjustments, non-compete or consulting obligations, (iii) any obligations attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto, (iv) Indebtedness of any Person that is a Holdings Parent appearing on the balance sheet of Holdings or the Borrower, or solely by reason of push down accounting under GAAP, or (v) for the avoidance of doubt, any Qualified Equity Interests issued by Holdings or the Borrower. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith. For all purposes hereof, the Indebtedness of the Borrower and the Restricted Subsidiaries shall exclude intercompany liabilities arising from their cash management, tax, and accounting operations and intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any rollover or extensions of terms) and made in the ordinary course of business.
“ Indemnified Taxes ” means all Taxes, other than Excluded Taxes and Other Taxes.
“ Indemnitee ” has the meaning assigned to such term in Section 9.03(b).
“ Information ” has the meaning assigned to such term in Section 9.12(a).
“ Information Memorandum ” means the Confidential Information Memorandum dated April 26, 2016, relating to Holdings and the Transactions.
“ Initial Term Loans ” means the Loans made pursuant to Section 2.01(a).
“ Intellectual Property ” has the meaning assigned to such term in the Collateral Agreement.
“ Intellectual Property Security Agreements ” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Trademarks, Patents and Copyrights that are registered, issued or applied-for in the United States and that constitute Collateral.
“ Intercompany License Agreement ” means any cost sharing agreement, commission or royalty agreement, license or sub-license agreement, distribution agreement, services agreement, intellectual property rights transfer agreement or any related agreements, in each case where all the parties to such agreement are one or more of Holdings or a Restricted Subsidiary.
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“ Intercreditor Agreement ” means the Pari Passu Intercreditor Agreement, the Closing Date Intercreditor Agreement or the Junior Intercreditor Agreement, as applicable.
“ Interest Election Request ” means a request by the Borrower to convert or continue a Term Borrowing in accordance with Section 2.07.
“ Interest Payment Date ” means (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last Business Day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.
“ Interest Period ” means, with respect to any Eurodollar Borrowing, the period commencing on the date such Borrowing is disbursed or converted to or continued as a Eurodollar Borrowing and ending on the date that is one, two, three or six months thereafter as selected by the Borrower in its Borrowing Request (or, if available to each Lender participating therein, twelve months or any shorter period as the Borrower may elect); provided that (a) 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 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, (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month at the end of such Interest Period and (c) no Interest Period shall extend beyond the Term Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“ Intermediate Lux Holdings ” has the meaning given to such term in the preliminary statements hereto.
“ Intermediate Parent ” means any Subsidiary of Holdings of which the Borrower is a subsidiary.
“ Intermediate U.S. Holdings ” has the meaning given to such term in the preliminary statements hereto.
“ Interpolated Rate ” means in relation to the “LIBO Rate” for any Loan, the rate which results from interpolating on a linear basis between: (i) the rate displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or on any successor or substitute page of such service) for the longest period (for which that rate is available) which is less than the Interest Period and (ii) the rate displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or on any successor or substitute page of such service) for the shortest period (for which that rate is available) which exceeds the Interest Period, each as of approximately 11:00 A.M., London, England time, two (2) Business Days prior to the commencement of such Interest Period; provided that the Interpolated Rate, if negative, shall be deemed to be 0.00%.
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“ Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person (excluding, in the case of Holdings and its Subsidiaries (i) intercompany advances arising from their cash management, tax, and accounting operations and (ii) intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business) or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person; provided that, in the event that any Investment is made by Holdings or any Restricted Subsidiary in any Person through one or more other substantially concurrent interim transfers of any amount through any other Restricted Subsidiaries, then such other substantially concurrent interim transfers shall be disregarded for purposes of Section 6.04. The amount, as of any date of determination, of (a) any Investment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, minus any cash payments actually received by such investor representing interest in respect of such Investment (to the extent any such payment to be deducted does not exceed the remaining principal amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any adjustment for write-downs or write-offs (including as a result of forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (b) any Investment in the form of a Guarantee shall be equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof, as determined in good faith by a Financial Officer, (c) any Investment in the form of a transfer of Equity Interests or other non-cash property by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair market value (as determined in good faith by a Financial Officer) of such Equity Interests or other property as of the time of the transfer, minus any payments actually received by such investor representing a return of capital of, or dividends or other distributions in respect of, such Investment (to the extent such payments do not exceed, in the aggregate, the original amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment, and (d) any Investment (other than any Investment referred to in clause (a), (b) or (c) above) by the specified Person in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Indebtedness or other securities of any other Person shall be the original cost of such Investment (including any Indebtedness assumed in connection therewith), plus (i) the cost of all additions thereto and minus (ii) the amount of any portion of such Investment that has been repaid to the investor in cash as a repayment of principal or a return of capital, and of any cash payments actually received by such investor representing interest, dividends or other distributions in respect of such Investment (to the extent the amounts referred to in clause (ii) do not, in the aggregate, exceed the original cost of such Investment plus the costs of additions thereto and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. For purposes of Section 6.04, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall be allocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to be so allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Financial Officer.
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“ Investor ” means a holder of Equity Interests in Holdings (or any direct or indirect parent thereof) (including, for the avoidance of doubt, the Sponsor).
“ Irish Debenture ” means the all asset debenture governed by Irish law and entered into by each Foreign Loan Party incorporated in Ireland in favor of the Collateral Agent.
“ Irish Legal Reservations ” means (i) the principle that equitable remedies may be granted or refused at the discretion of the court, the limitation on enforcement by laws relating to bankruptcy, insolvency, liquidation, reorganization, resolution, court schemes, moratoria, administration and other laws generally affecting the rights of creditors; (ii) the time barring of claims under the Statute of Limitations Act 1957 (as amended) of Ireland and defences of set-off or counterclaims and (iii) any other matters which are set out as qualifications or reservations as to matters of Irish law in any legal opinion delivered to the Administrative Agent or the Collateral Agent under any provision of or otherwise in connection with any Loan Document.
“ Irish Loan Guarantor ” means a Loan Guarantor incorporated under the laws of Ireland.
“ Irish Perfection Requirements ” shall mean the making of the appropriate registrations, filings or notifications of each Security Document entered into by any Irish Loan Guarantor and each Irish Security Document as specifically set out in the relevant Security Document or in any related legal opinion.
“ Irish Security Document ” means each of (a) the Irish Debenture, (b) each Irish Share Charge and (c) the Irish Security Trust Deed.
“ Irish Security Trust Deed ” means the substantially all assets trust deed governed by Irish law and entered into by, among others, each Foreign Loan Party incorporated in Ireland and the Collateral Agent.
“ Irish Share Charge ” means each charge over shares governed by Irish law and entered into in respect of the Equity Interests in any Irish Loan Guarantor in favor of the Collateral Agent.
“ IPO ” means the initial underwritten public offering (other than a public offering pursuant to a registration statement on Form S-8) of common Equity Interests in the IPO Entity.
“ IPO Entity ” means, at any time upon and after an IPO, Holdings, a Holdings Parent or an Intermediate Parent, as the case may be, the Equity Interests of which were issued or otherwise sold pursuant to the IPO; provided that, immediately following the IPO, each of (x) the Borrower and (y) GTCR Canyon UK Investments Ltd. is a Wholly Owned Subsidiary of such IPO Entity and such IPO Entity owns, directly or through its subsidiaries, substantially all the businesses and assets owned or conducted, directly or indirectly, by the Borrower and GTCR Canyon UK Investments Ltd. immediately prior to the IPO.
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“ IPO Reorganization Transaction ” means any re-organization or other similar activities among Holdings, the Borrower and the Restricted Subsidiaries in connection with and reasonably related to consummating an IPO, so long as, after giving effect thereto, (a) the Loan Parties are in compliance with the Collateral and Guarantee Requirement and Sections 5.11 and 6.12, (b) taken as a whole, the value of the Collateral securing the Secured Obligations and the Guarantees by the Guarantors of the Secured Obligations are not materially reduced or impaired and (c) the Liens in favor of the Administrative Agent for the benefit of the Secured Parties under the Security Documents are not materially impaired.
“ Joint Lead Arranger ” means each of Crescent Mezzanine Partners VI, L.P., Crescent Mezzanine Partners VIB, L.P., Crescent Mezzanine Partners VIC, L.P., American Capital, Ltd., Northwestern Mutual Investment Management Company, LLC, and Newstone Capital Partners II, L.P., each in their capacity as joint lead arranger and joint bookrunner, and any permitted successors and assigns of the foregoing.
“ Judgment Currency ” has the meaning assigned to such term in Section 9.17.
“ Junior Financing ” means (a) any Indebtedness (other than (i) any permitted intercompany Indebtedness owing to Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary or any Permitted Unsecured Refinancing Debt or (ii) any Indebtedness in an aggregate principal amount not exceeding $28,750,000) that is subordinated in right of payment to the Loan Document Obligations or that is secured by the Collateral on a junior lien basis relative to the liens granted pursuant to the Loan Documents securing the Secured Obligations and (b) any Permitted Refinancing in respect of the foregoing.
“ Junior Intercreditor Agreement ” means the Junior Intercreditor Agreement substantially in the form of Exhibit E-3 among the Administrative Agent and one or more Senior Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral on a junior basis, with such modifications thereto as the Administrative Agent and the Borrower may reasonably agree.
“ Latest Maturity Date ” means, at any date of determination, the latest maturity or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any Other Term Loan, any Other Term Commitment, in each case as extended in accordance with this Agreement from time to time.
“ LCT Election ” has the meaning assigned to such term in Section 1.06.
“ LCT Test Date ” has the meaning assigned to such term in Section 1.06.
“ Lenders ” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, an Incremental Facility Amendment, a Loan Modification Agreement or a Refinancing Amendment, in each case, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
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“ LIBO Rate ” means, for any Interest Period with respect to a Eurodollar Borrowing, the rate per annum equal to (i) the London interbank offered rate administered by ICE Benchmark Administration Limited (or such other commercially available source providing quotations of that rate as may be designated by the Administrative Agent from time to time, including any Person that takes over administration of the rate) displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters) at approximately 11:00 a.m., London, England time, two (2) London Banking Days prior to the commencement of such Interest Period, for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or (ii) if such published rate is not available at such time for any reason, then the “LIBO Rate” for such Interest Period shall be the Interpolated Rate; provided that the LIBO Rate, if negative, shall be deemed to be 0.00%.
“ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, assignment by way of security, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“ Limited Condition Transaction ” means any investment or acquisition, including by way of merger or amalgamation, by Holdings, the Borrower or any Restricted Subsidiary permitted pursuant to this Agreement whose consummation is not conditioned upon the availability of, or on obtaining, third party financing.
“ Loan Document Obligations ” means the due and punctual payment by the Borrower of (i) the principal of the Loans, and all accrued and unpaid interest thereon at the applicable rate or rates provided in this Agreement (including interest accruing during the pendency of any bankruptcy, insolvency, examinership, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of the Borrower under or pursuant to this Agreement and each of the other Loan Documents, including obligations to pay fees, expenses, reimbursement obligations and indemnification obligations and obligations to provide cash collateral, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, examinership, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).
“ Loan Documents ” means this Agreement, any Refinancing Amendment, any Modification Agreement, any Incremental Facility Amendment, the Guarantee Agreement, the Collateral Agreement, the other Security Documents, the Closing Date Intercreditor Agreement and any other Intercreditor Agreement (if applicable), except for purposes of Section 9.02, any Note delivered pursuant to Section 2.09(e), and any other document entered into or delivered by a Loan Party in connection with the foregoing and designated by the Borrower as a Loan Document therein for purposes of this Agreement.
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“ Loan Guarantors ” means Holdings, Intermediate Lux Holdings, Intermediate U.S. Holdings, any Intermediate Parent and the Subsidiary Loan Parties, in each case, to the extent such entity provides a guaranty of the Secured Obligations.
“ Loan Modification Agreement ” means a Loan Modification Agreement, among the Borrower, and one or more Accepting Lenders, and acknowledged by the Administrative Agent, effecting one or more Permitted Amendments and such other amendments hereto and to the other Loan Documents as are contemplated by Section 2.24.
“ Loan Modification Offer ” has the meaning specified in Section 2.24(a).
“ Loan Parties ” means the Loan Guarantors and the Borrower.
“ Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement, including, for the avoidance of doubt, all loans made pursuant to the Cashless Roll Letter.
“ London Banking Day ” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.
“ Luxembourg ” shall mean the Grand Duchy of Luxembourg.
“ Luxembourg Loan Party ” means any Loan Party incorporated in Luxembourg.
“ Luxembourg Security Documents ” means the Luxembourg Share Pledge Agreement.
“ Majority in Interest ”, when used in reference to Lenders of any Class, means, at any time, Lenders holding outstanding Term Loans of such Class representing more than 50% of all Term Loans of such Class outstanding at such time; provided that whenever there are one or more Defaulting Lenders, the total outstanding Term Loans of each Defaulting Lender shall be excluded for purposes of making a determination of the Majority in Interest.
“ Management Investors ” means the members of the Board of Directors, officers and employees of Holdings, the Borrower and/or their respective Subsidiaries who are (directly or indirectly through one or more investment vehicles) investors in Holdings or any Holdings Parent and, in each case, each of their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees.
“ Master Agreement ” has the meaning assigned to such term in the definition of “Swap Agreement.”
“ Material Adverse Effect ” means (i) on the Effective Date, a PRN Material Adverse Effect and (ii) after the Effective Date, (a) a material adverse effect on the business, financial condition or results of operations of the Loan Parties and their Subsidiaries, taken as a whole or (b) a material adverse effect on the material rights and remedies of the Administrative Agent, the Collateral Agent and the Lenders under the Loan Documents.
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“ Material Indebtedness ” means Indebtedness for borrowed money (other than the Loan Document Obligations), Capital Lease Obligations, unreimbursed obligations for letter of credit drawings and financial guarantees (other than ordinary course of business contingent reimbursement obligations) or obligations in respect of one or more Swap Agreements, of any one or more of Holdings and its Restricted Subsidiaries in an aggregate principal amount exceeding $57,500,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Restricted Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
“ Material Non-Public Information ” means (a) if Holdings is a public reporting company, material non-public information with respect to Holdings or its Subsidiaries, or the respective securities of any of the foregoing, and (b) if Holdings is not a public reporting company, information that is (i) of a type that would not be publicly available if Holdings were a public reporting company and (ii) material with respect to Holdings or its Subsidiaries or any of their respective securities for purposes of United States Federal and state and applicable foreign securities laws.
“ Material Real Property ” means any real property (including fixtures) located in the United States of America and owned in fee by any Loan Party with a fair market value, as reasonably determined by the Borrower in good faith, greater than or equal to $15,000,000.
“ Material Subsidiary ” means each Intermediate Parent or Wholly Owned Restricted Subsidiary that, as of the last day of the fiscal quarter of Holdings most recently ended, had net revenues or total assets for such quarter in excess of 3.0% of the consolidated net revenues or consolidated total assets of Holdings and its Restricted Subsidiaries for such quarter; provided that in the event that the Immaterial Subsidiaries, taken together, had as of the last day of the fiscal quarter of Holdings’ most recently ended net revenues or total assets in excess of 7.5% of the consolidated net revenues or consolidated total assets of Holdings and its Restricted Subsidiaries for such quarter, as applicable, the Borrower shall designate in writing one or more Immaterial Subsidiaries to be a Material Subsidiary within 10 Business Days of the delivery of financial statements in accordance with Section 5.01(a) or (b) as may be necessary such that the foregoing 7.5% limit shall not be exceeded, and any such Subsidiary shall thereafter be deemed to be an Material Subsidiary hereunder and shall comply with the requirements set forth in Section 5.11 within the time periods set forth therein; provided further that the Borrower may re-designate Material Subsidiaries as Immaterial Subsidiaries so long as the Borrower is in compliance with the foregoing.
“ Maximum Rate ” has the meaning assigned to such term in Section 9.16.
“ Moody’s ” means Moody’s Investors Service, Inc. and any successor to its rating agency business.
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“ Mortgage ” means a mortgage, charge, deed of trust, assignment of leases and rents or other security document granting a Lien on any Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. Each Mortgage shall be consistent with any comparable First Lien Loan Document or otherwise in form and substance reasonably satisfactory to the Administrative Agent and the Borrower (subject to the definition of “Collateral and Guarantee Requirement” (including with respect to deemed determinations by the Administrative Agent) and the Closing Date Intercreditor Agreement).
“ Mortgaged Property ” means each parcel of Material Real Property with respect to which a Mortgage will (or is required to be) be granted pursuant to the Collateral and Guarantee Requirement, Section 5.11, Section 5.12 or Section 5.14 (if any).
“ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“ Net Proceeds ” means, with respect to any event, (a) the proceeds received in respect of such event in cash or Permitted Investments, including (i) any cash or Permitted Investments received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment or earn-out, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds that are actually received, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments that are actually received, minus (b) the sum of (i) all fees and out-of-pocket expenses paid by Holdings, any Intermediate Parent, the Borrower and any Restricted Subsidiaries in connection with such event (including attorney’s fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, underwriting discounts and commissions, other customary expenses and brokerage, consultant, accountant and other customary fees), (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), (x) the amount of all payments that are permitted hereunder and are made by Holdings, any Intermediate Parent, the Borrower and the Restricted Subsidiaries as a result of such event to repay Indebtedness, including the First Lien Loans, (other than the Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, (y) the pro rata portion of net cash proceeds thereof (calculated without regard to this clause (y)) attributable to minority interests and not available for distribution to or for the account of Holdings, any Intermediate Parent, the Borrower or the Restricted Subsidiaries as a result thereof and (z) the amount of any liabilities directly associated with such asset and retained by the Borrower or any Restricted Subsidiary and (iii) the amount of all taxes paid (or reasonably estimated to be payable), the amount of dividends and other restricted payments that Holdings, any Intermediate Parent, the Borrower and/or its Restricted Subsidiaries may make pursuant to Section 6.07(a)(vii)(A) or (B) as a result of such event, and the amount of any reserves established by Holdings, any Intermediate Parent, the Borrower and the Restricted Subsidiaries to fund contingent liabilities reasonably estimated to be payable, that are directly attributable to such event, provided that any reduction at any time in the amount of any such reserves (other than as a result of payments made in respect thereof) shall be deemed to constitute the receipt by the Borrower at such time of Net Proceeds in the amount of such reduction.
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“ New Project ” shall mean (a) each facility which is either a new facility, branch or office or an expansion, relocation, remodeling or substantial modernization of an existing facility, branch or office owned by Holdings or its Subsidiaries which in fact commences operations and (b) each creation (in one or a series of related transactions) of a business unit to the extent such business unit commences operations or each expansion (in one or a series of related transactions) of business into a new market.
“ Non-Accepting Lender ” has the meaning assigned to such term in Section 2.24(c).
“ Non-Cash Charges ” means (a) any impairment charge or asset write-off or write-down related to intangible assets (including goodwill), long-lived assets, and Investments in debt and equity securities pursuant to GAAP, (b) all losses from Investments recorded using the equity method, (c) all Non-Cash Compensation Expenses, (d) depreciation and amortization including amortization or impairment of intangibles (including goodwill) (including, without limitation, as they relate to amortization of deferred financing fees or costs, Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pension and other post-employment benefits) and (f) other non-cash charges, expenses and losses, including, without limitation, any non-cash translation loss and non-cash expense relating to the vesting of warrants, non-cash asset write-offs or write-downs, non-cash write offs of debt discounts and debt incurrences, non-cash costs and commissions, non-cash discounts and other non-cash fees and charges with respect to Indebtedness, interest rate protection and other Hedging Agreements, provided , in each case, that if any non-cash charges added back pursuant to clause (iii) of the definition of Consolidated EBITDA represent an accrual or reserve for potential cash items in any future period to the extent the Borrower elects to include such non-cash charges, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent.
“ Non-Cash Compensation Expense ” means any non-cash expenses and costs that result from the issuance of stock-based awards, partnership interest-based awards and similar incentive based compensation awards or arrangements.
“ Non-Consenting Lender ” has the meaning assigned to such term in Section 9.02(c).
“ Non-Refinancing Lender ” has the meaning assigned to such term in Section 2.21(b).
“ Non-Wholly Owned Subsidiary ” of any Person means any subsidiary of such Person other than a Wholly Owned Subsidiary.
“ Not Otherwise Applied ” means, with reference to the Available Amount or the Available Equity Amount, as applicable, that such amount was not previously applied pursuant to Sections 6.01(a)(xvii), 6.04(m), 6.07(a)(viii) and 6.07(b)(iv).
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“ Note ” means a promissory note of the Borrower, in substantially the form of Exhibit O, payable to a Lender in a principal amount equal to the principal amount of the Term Loans of such Lender.
“ OFAC ” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“ Offered Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“ Offered Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“ Organizational Documents ” means, with respect to any Person, the charter, articles or certificate of organization or incorporation and bylaws or other organizational, constitutional or governing documents of such Person (including any certificates of incorporation and/or certificates of incorporation on a change of name).
“ Other Connection Taxes ” means, with respect to any recipient, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“ Other Taxes ” means any and all present or future recording, stamp, registration duties, documentary, excise, transfer, sales, property or similar Taxes, charges or levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.
“ Other Term Commitments ” means one or more Classes of term loan commitments hereunder that result from a Refinancing Amendment or a Loan Modification Agreement.
“ Other Term Loans ” means one or more Classes of Term Loans that result from a Refinancing Amendment or a Loan Modification Agreement.
“ Pari Passu Intercreditor Agreement ” means the Pari Passu Intercreditor Agreement substantially in the form of Exhibit E-1 among the Administrative Agent and one or more Senior Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral on a pari passu basis (but without regard to the control of remedies), with such modifications thereto as the Administrative Agent and the Borrower may reasonably agree.
“ Participant ” has the meaning assigned to such term in Section 9.04(c)(i).
“ Participant Register ” has the meaning assigned to such term in Section 9.04(c)(ii).
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“ Participating Lender ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“ Participating Member State ” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
“ Patent ” has the meaning assigned to such term in the Collateral Agreement.
“ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“ Permitted Acquisition ” means the purchase or other acquisition, by merger, amalgamation, consolidation or otherwise, by Holdings, Borrower or any Subsidiary of any Equity Interests in, or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of), any Person; provided that (a) in the case of any purchase or other acquisition of Equity Interests in a Person, (i) such Person, upon the consummation of such purchase or acquisition, will be a Subsidiary (including as a result of a merger, amalgamation or consolidation between any Subsidiary and such Person), or (ii) such Person is merged or amalgamated into or consolidated with a Subsidiary and such Subsidiary is the surviving entity of such merger, amalgamation or consolidation, (b) the business of such Person, or such assets, as the case may be, constitute a business permitted by Section 5.16, (c) with respect to each such purchase or other acquisition, all actions required to be taken with respect to such newly created or acquired Subsidiary (including each subsidiary thereof) or assets in order to satisfy the requirements set forth in clauses (a), (b), (c) and (d) of the definition of the term “Collateral and Guarantee Requirement” to the extent applicable shall have been taken (or arrangements for the taking of such actions after the consummation of the Permitted Acquisition shall have been made that are reasonably satisfactory to the Administrative Agent) (unless such newly created or acquired Subsidiary is designated as an Unrestricted Subsidiary pursuant to Section 5.13 or is otherwise an Excluded Subsidiary), (d) the Consolidated EBITDA of such Person (after giving effect to any adjustments and add-backs in accordance the definition of “Consolidated EBITDA”, “Consolidated Net Income” and “Pro Forma Adjustment”) shall be greater than $0, and (e) after giving effect to any such purchase or other acquisition, no Specified Event of Default shall have occurred and be continuing (at the time of execution of a binding agreement in respect thereof).
“ Permitted Amendment ” means an amendment to this Agreement and, if applicable the other Loan Documents, effected in connection with a Loan Modification Offer pursuant to Section 2.24, providing for an extension of a maturity date applicable to the Loans and/or Commitments of the Accepting Lenders and, in connection therewith, (a) a change in the Applicable Rate with respect to the Loans and/or Commitments of the Accepting Lenders and/or (b) a change in the fees payable to, or the inclusion of new fees to be payable to, the Accepting Lenders, and/or (c) a change in Sections 2.08(b), 2.08(c), 2.10(c), 2.11(a), 2.11(e) and/or 2.11(f) with respect to the Loans and/or Commitments of the Accepting Lenders and/or (d) additional or modified covenants, events of default, or guarantees or other provisions (it being understood that to the extent that any covenant, event of default, guarantee or such other provision is added or modified for the benefit of any such Loans and/or Commitments, no consent shall be required by the Administrative Agent or any of the Lenders if such covenant, event of default, guarantee or other provision is either (i) also added or modified for the benefit of any corresponding Loans remaining outstanding after the issuance or incurrence of such Loans and/or Commitments, (ii) only applicable after the Latest Maturity Date at the time of such Loan Modification Offer or (iii) in the aggregate, not materially more restrictive to the Loan Parties (as determined in good faith by the Borrower) when taken as a whole, than the terms of the Loans hereunder).
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“ Permitted Encumbrances ” means:
(a) Liens for Taxes, assessments or governmental charges that are not overdue for a period of more than 30 days or that are not required to be paid pursuant to Section 5.05 (assuming Section 5.05 were applicable thereto);
(b) Liens with respect to outstanding motor vehicle fines and carriers’, warehousemen’s, mechanics’, materialmen’s, landlord’s, repairmen’s or construction contractors’ Liens and other similar Liens, imposed by law or Contract (to the extent providing for Liens that are similar in scope to the foregoing), arising in the ordinary course of business that secure amounts not overdue for a period of more than 30 days, or, if more than 30 days overdue, are unfiled and no other action has been taken to enforce such Lien or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP, or so long as such Liens do not individually or in the aggregate have a Material Adverse Effect;
(c) Liens incurred or deposits made in the ordinary course of business (i) in connection with workers’ compensation, unemployment insurance, social security, retirement and other similar legislation or (ii) securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instrument for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Restricted Subsidiary or otherwise supporting the payment of items set forth in the foregoing clause (i);
(d) Liens incurred or deposits made to secure the performance of bids, trade contracts, governmental contracts and leases, statutory obligations, surety, stay, customs and appeal bonds, performance bonds, bankers acceptance facilities and other obligations of a like nature (including those to secure health, safety and environmental obligations) and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, in each case incurred in the ordinary course of business or consistent with past practices;
(e) minor survey exceptions, minor encumbrances, covenants, conditions, easements, rights-of-way, restrictions, encroachments, protrusions, by-law, regulation or zoning restrictions, reservations of or rights of others for sewers, electric lines, telegraph and telephone lines and other similar purposes and other similar encumbrances and minor title defects or irregularities affecting real property, that, in the aggregate, do not materially interfere with the ordinary conduct of the business of Holdings and its Restricted Subsidiaries, taken as a whole, or which are set forth in the title insurance policy delivered with respect to the Mortgaged Property and are “insured over” in such insurance policy;
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(f) Liens securing, or otherwise arising from, judgments not constituting an Event of Default under Section 7.01(j);
(g) Liens on goods the purchase price of which is financed by a documentary or trade letter of credit issued for the account of the Borrower or any of its Restricted Subsidiaries or Liens on bills of lading, drafts or other documents of title arising by operation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and other similar instruments; provided that such Lien secures only the obligations of the Borrower or such Subsidiaries in respect of such letter of credit to the extent such obligations are permitted by Section 6.01;
(h) the filing of UCC or PPSA (or equivalent) financing statements solely as a precautionary measure or required notice in connection with operating leases or consignment of goods;
(i) rights of recapture of unused real property (other than any Mortgaged Property) in favor of the seller of such property set forth in customary purchase agreements and related arrangements with any Governmental Authority;
(j) Liens in favor of deposit banks or securities intermediaries securing customary fees, expenses or charges in connection with the establishment, operation or maintenance of deposit accounts or securities accounts;
(k) Liens in favor of obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by Holdings, the Borrower or any of the Restricted Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;
(l) Liens arising from grants of licenses or sublicenses of Intellectual Property made in the ordinary course of business or that do not interfere in any material respect with the business of Holdings and its Restricted Subsidiaries, taken as a whole; provided that such Liens do not secure any Indebtedness;
(m) rights of setoff, banker’s lien, netting agreements and other Liens arising by operation of law or by of the terms of documents of banks or other financial institutions in relation to the maintenance of administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments;
(n) Liens arising from the right of distress enjoyed by landlords or Liens otherwise granted to landlords, in either case, to secure the payment of arrears of rent in respect of leased properties, so long as such Liens are not exercised;
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(o) securities to public utilities or to any Governmental Authority when required by the utility or other authority in connection with the supply of services or utilities to the Borrower and any Restricted Subsidiaries;
(p) servicing agreements, development agreements, site plan agreements and other agreements with any Governmental Authority pertaining to the use or development of any of the assets of the Person, provided same are complied with in all material respects and do not materially reduce the value of the assets of the Person or materially interfere with the use of such assets in the operation of the business of such Person;
(q) any security or quasi-security arising under any retention-of-title arrangement ( eigendomsvoorbehoud );
(r) any security interest or right to set-off arising under article 24 or 25 respectively of the general terms and conditions ( algemene voorwaarden ) of any member of the Dutch Bankers’ Association ( Nederlandse Vereniging van Banken );
(s) customary rights of first refusal or first offer, and tag, drag and similar rights in joint venture agreements;
(t) Liens arising from Permitted Investments described in clause (e) of the definition hereof; and
(u) with respect to any Foreign Subsidiary, other Liens and privileges arising mandatorily by any Requirements of Law in the ordinary course of business.
“ Permitted Guarantee ” means any guarantee or joint or several liability arising under a Dutch fiscal unity or a statement as referred to in Article 2:403 of the Dutch Civil Code (and any residual liability ( overblijvende aansprakelijkheid ) under such statement arising pursuant to Article 2:404(2) of the Dutch Civil Code).
“ Permitted Holders ” means (a) the Sponsor Group and (b) any other holder of a direct or indirect equity interest in Holdings or any Holdings Parent that becomes a holder of such interest prior to the ninetieth (90th) day after the Effective Date that was identified in writing to the Joint Lead Arrangers prior to the Effective Date.
“ Permitted Investments ” means any of the following, to the extent owned by Holdings or any Restricted Subsidiary:
(a) Dollars, Euros, Canadian Dollars, Sterling, or such other currencies held by it from time to time in the ordinary course of business;
(b) readily marketable obligations issued or directly and fully guaranteed or insured by the government or any agency or instrumentality of (i) the United States, (ii) Canada, (iii) Switzerland, (iv) United Kingdom, or (v) any member state of the European Union rated A (or the equivalent thereof) or better by S&P and A2 (or the equivalent thereof) or better by Moody’s, having average maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of such country or such member state of the European Union is pledged in support thereof;
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(c) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) is a Lender or (ii) has combined capital and surplus of at least (x) $250,000,000 in the case of U.S. banks or (y) $100,000,000 in the case of non-U.S. banks, or the U.S. dollar equivalent (any such bank in the foregoing clauses (i) or (ii) being an “ Approved Bank ”), in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(d) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(e) repurchase agreements entered into by any Person with an Approved Bank, a bank or trust company (including any of the Lenders) or recognized securities dealer, in each case, having capital and surplus in excess of $250,000,000 or its equivalent for direct obligations issued by or fully guaranteed or insured by the government or any agency or instrumentality of (i) the United States, (ii) Canada, (iii) Switzerland, (iv) United Kingdom, or (v) any member state of the European Union rated A (or the equivalent thereof) or better by S&P and A2 (or the equivalent thereof) or better by Moody’s, in which such Person shall have a perfected first priority security interest (subject to no other Liens) or title to which shall have been transferred to such Person and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations;
(f) marketable short-term money market and similar highly liquid funds either (i) having assets in excess of $250,000,000 or its equivalent, or (ii) having a rating of at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);
(g) securities with average maturities of 12 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, Canada, Switzerland, United Kingdom, a member of the European Union or by any political subdivision or taxing authority of any such state, member, commonwealth or territory having an investment grade rating from either S&P or Moody’s (or the equivalent thereof);
(h) investments with average maturities of 12 months or less from the date of acquisition in mutual funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s;
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(i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in euros or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized or incorporated in such jurisdiction;
(j) investments, classified in accordance with GAAP as current assets of the Borrower or any Subsidiary, in money market investment programs that are registered under the Investment Company Act of 1940 or that are administered by financial institutions having capital of at least $250,000,000 or its equivalent, and, in either case, the portfolios of which are limited such that substantially all of such investments are of the character, quality and maturity described in clauses (a) through (i) of this definition;
(k) with respect to Holdings or any Foreign Subsidiary: (i) obligations of the national government of the country in which Holdings or such Subsidiary maintains its chief executive office and principal place of business; provided such country is a member of the Organization for Economic Cooperation and Development, in each case maturing within one year after the date of investment therein, (ii) certificates of deposit of, bankers acceptances of, or time deposits with, any commercial bank which is organized and existing under the laws of the country in which such Subsidiary maintains its chief executive office and principal place of business; provided such country is a member of the Organization for Economic Cooperation and Development, and whose short-term commercial paper rating from S&P is at least “A-2” or the equivalent thereof or from Moody’s is at least “P-2” or the equivalent thereof (any such bank being an “ Approved Foreign Bank ”), and in each case with maturities of not more than 24 months from the date of acquisition and (iii) the equivalent of demand deposit accounts which are maintained with an Approved Foreign Bank; and
(l) investment funds investing at least 90% of their assets in securities of the types described in clauses (a) through (k) above.
“ Permitted Junior Priority Refinancing Debt ” means any secured Indebtedness incurred by the Borrower and/or any Subsidiary Loan Party (and any Guarantee thereof by Holdings or any Intermediate Parent) in the form of one or more series of junior lien secured notes or junior lien secured loans; provided that (i) such Indebtedness is secured by the Collateral on a junior lien basis to the Initial Term Loans and the obligations in respect of any Permitted Pari Passu Priority Refinancing Debt, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness or a Permitted Refinancing of Incremental Equivalent Debt, (iii) such Indebtedness does not have mandatory redemption features (other than customary asset sale, insurance and condemnation proceeds events, change of control offers, AHYDO catch up payments, offers upon an event of default or excess cash flow payments (subject to the prior payment of the Obligations or the prior offer thereof to prepay the Obligations)) that could result in redemptions of such Indebtedness prior to the maturity of the Refinanced Debt, (iv) such Indebtedness is not guaranteed by any entity that is not a Loan Party and (v) a Senior Representative acting on behalf of the holders of such Indebtedness shall have become party to the Junior Intercreditor Agreement. Permitted Junior Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
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“ Permitted Pari Passu Refinancing Debt ” means any secured Indebtedness incurred by the Borrower and/or any Subsidiary Loan Party (and any Guarantee thereof by Holdings or any Intermediate Parent) in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtedness is secured by the Collateral (and no other assets which are not Collateral) on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness or a Permitted Refinancing of Incremental Equivalent Debt, (iii) such Indebtedness does not have mandatory redemption features (other than customary asset sale, insurance and condemnation proceeds events, change of control offers, AHYDO catch up payments or offers upon an event of default) that could result in redemptions of such Indebtedness prior to the maturity of the Refinanced Debt, (iv) such Indebtedness is not guaranteed by an entity that is not a Loan Party and (v) a Senior Representative acting on behalf of the holders of such Indebtedness shall have become party to the Pari Passu Intercreditor Agreement and, if applicable, the Closing Date Intercreditor Agreement and/or Junior Intercreditor Agreement; provided that if such Indebtedness is the initial Permitted Pari Passu Refinancing Debt incurred by the Borrower, then the Borrower, the other Loan Parties, the Administrative Agent and the Senior Representative for such Indebtedness shall have executed and delivered a customary intercreditor agreement with the Administrative Agent and/or Collateral Agent substantially in the form of the Pari Passu Intercreditor Agreement, together with (A) any immaterial changes and (B) material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not less than five Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agent’s and/or Collateral Agent’s entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agent’s and/or Collateral Agent’s execution thereof, in each case in form and substance reasonably satisfactory to the Administrative Agent and/or Collateral Agent (it being understood that junior Liens are not required to be pari passu with other junior Liens, and that Indebtedness secured by junior Liens may secured by Liens that are pari passu with, or junior in priority to, other Liens that are junior to the Liens securing the Obligations) to provide for the sharing of the Collateral on a pari passu basis among the holders of the Secured Obligations and the holders of such Permitted Pari Passu Refinancing Debt. Permitted Pari Passu Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
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“ Permitted Refinancing ” means, with respect to any Person, any modification, refinancing, refunding, renewal or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended except by an amount equal to unpaid accrued interest and premium thereon plus other amounts paid, and fees (including original issue discount and fees incurred in connection with the resulting Indebtedness) and expenses incurred, in connection with such modification, refinancing, refunding, renewal or extension and by an amount equal to any existing commitments unutilized thereunder; provided that the principal amount (or accreted value, if applicable) may exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended to the extent such excess amount (and the terms thereof) is otherwise permitted to be incurred under Section 6.01, (b) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to Section 6.01(a)(v), (a)(vii) or (a)(viii) (or except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature prior to the maturity date of the Indebtedness being modified, refinanced, refunded, renewed or extended), Indebtedness resulting from such modification, refinancing, refunding, renewal or extension has a final maturity date equal to or later than the final maturity date of, and (except in the case of revolving commitments) has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed or extended and (c) if the Indebtedness being modified, refinanced, refunded, renewed or extended is subordinated in right of payment to the Loan Document Obligations, Indebtedness resulting from such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Loan Document Obligations on terms (taken as a whole) at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed or extended (as determined by the Borrower in good faith) or otherwise reasonably satisfactory to the Administrative Agent. For the avoidance of doubt, it is understood and agreed that (x) notwithstanding anything in this Agreement to the contrary, in the case of any Indebtedness incurred to modify, refinance, refund, extend, renew or replace Indebtedness initially incurred in reliance on and measured by reference to a percentage of Consolidated EBITDA at the time of incurrence, and such modification, refinancing, refunding, extension, renewal or replacement would cause the percentage of Consolidated EBITDA to be exceeded if calculated based on the percentage of Consolidated EBITDA on the date of such modification, refinancing, refunding, extension, renewal or replacement, such percentage of Consolidated EBITDA restriction shall not be deemed to be exceeded so long as such incurrence otherwise constitutes a “Permitted Refinancing” and (y) a Permitted Refinancing includes successive Permitted Refinancings of the same Indebtedness.
“ Permitted Reorganization ” means any re-organization or other similar activities among Holdings, the Borrower and the Restricted Subsidiaries related to Tax planning and re-organization, so long as, after giving effect thereto, (a) the Loan Parties are in compliance with the Collateral and Guarantee Requirement and Sections 5.11 and 6.12, (b) taken as a whole, the value of the Collateral securing the Secured Obligations and the Guarantees by the Guarantors of the Secured Obligations are not materially reduced and (c) the Liens in favor of the Administrative Agent for the benefit of the Secured Parties under the Security Documents are not materially impaired.
“ Permitted Unsecured Refinancing Debt ” means any unsecured Indebtedness incurred by the Borrower and/or any Loan Party in the form of one or more series of unsecured notes or unsecured loans (or revolving commitments in respect thereof, with revolving commitments deemed to be loans in the full amount of such commitments); provided that (i) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness or a Permitted Refinancing of Incremental Equivalent Debt, (ii) such Indebtedness does not have mandatory redemption features (other than customary asset sale, insurance and condemnation proceeds events, change of control offers, AHYDO catch up payments or offers upon an event of default) that could result in redemptions of such Indebtedness prior to the maturity of the Refinanced Debt, (iii) such Indebtedness is not guaranteed by any entity that is not a Loan Party, and (iv) such Indebtedness is not secured by any Lien on any property or assets of Holdings, Intermediate Parent, the Borrower or any Restricted Subsidiary. Permitted Unsecured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
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“ Person ” means any natural person, corporation, limited or unlimited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“ Plan ” means any employee pension benefit plan as such term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which a Loan Party or any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA.
“ Planned Expenditures ” has the meaning assigned to such term in clause (b) of the definition of “Excess Cash Flow”.
“ Platform ” has the meaning assigned to such term in Section 5.01.
“ Prepayment Event ” means:
(a) (i) any sale, transfer or other disposition of any property or asset of Holdings or any of its Restricted Subsidiaries permitted by Section 6.05(k) other than dispositions resulting in aggregate Net Proceeds not exceeding (A) $15,000,000 in the case of any single transaction or series of related transactions and (B) $30,000,000 for all such transactions during any fiscal year of Holdings and (ii) any Casualty Event; or
(b) the incurrence by the Borrower or any of its Restricted Subsidiaries of any Indebtedness, other than Indebtedness permitted under Section 6.01 or permitted by the Required Lenders pursuant to Section 9.02.
“ Prime Rate ” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate at its principal office in New York City and notified to the Borrower; each change in the Prime Rate shall be effective from and including the date change is publicly announced as being effective.
“ PRN Audited Financial Statements ” means the audited combined statement of financial position and the related combined statements of comprehensive income and statement of cash flows of the Acquired Companies and their subsidiaries for the year ended December 31, 2015.
“ PRN Material Adverse Effect ” means a “Material Adverse Effect” as defined in the Acquisition Agreement.
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“ Pro Forma Adjustment ” means, for any Test Period with respect to the Acquired EBITDA of the applicable Pro Forma Entity or the Consolidated EBITDA of Holdings, the pro forma increase in such Acquired EBITDA or such Consolidated EBITDA, as the case may be, projected by the Borrower in good faith to be reasonably anticipated to be realizable within eighteen (18) months following any applicable acquisition (including the Transactions), Specified Transactions, dispositions, operational change or initiative as a result of actions taken or expected to be taken or a plan for realization shall have been established, for the purposes of realizing cost savings, operating expense reductions or other operating improvements and synergies; provided that (A) such calculation shall be made on a Pro Forma Basis as though such cost savings, operating expense reduction, other operating improvements and synergies (on a “run rate” basis) had been realized on the first day of such period and, for purposes of projecting such pro forma increase to such Acquired EBITDA or such Consolidated EBITDA, as the case may be, such calculation shall be made on a Pro Forma Basis as though such cost savings, operating expense reductions, other operating improvements and “run rate” synergies had been realized commencing on the first day of such period and that such cost savings, operating expense reductions, other operating improvements and synergies were realized on a “run rate” basis during the entirety of such Test Period, (B) any Pro Forma Adjustment to Consolidated EBITDA shall be certified by a Financial Officer, the chief executive officer or president of the Borrower in the Compliance Certificate and (C) any such pro forma increase or decrease to such Acquired EBITDA or such Consolidated EBITDA, as the case may be, shall be without duplication for cost savings, operating expense reductions, other operating improvements and synergies or additional costs already included in such Acquired EBITDA or such Consolidated EBITDA, as the case may be, for such Test Period.
“ Pro Forma Basis ,” “ Pro Forma Compliance ” and “ Pro Forma Effect ” mean, with respect to compliance with any test, financial ratio or covenant hereunder required by the terms of this Agreement to be made on a Pro Forma Basis or after giving Pro Forma Effect thereto, that (a) to the extent applicable, the Pro Forma Adjustment and the Pro Forma Disposal Adjustment shall have been made and (b) the Transactions, all Specified Transactions, operational changes or initiatives described in the definition of “Pro Forma Adjustment” or “Consolidated EBITDA” and the following transactions in connection therewith that have been made during the applicable period of measurement or subsequent to such period and prior to or simultaneously with the event for which the calculation is made shall be deemed to have occurred as of the first day of the applicable period of measurement in such test, financial ratio or covenant: (i) income statement items (whether positive or negative) attributable to the property or Person subject to such Transaction, Specified Transaction, operational change or initiative (A) in the case of a Disposition of all or substantially all Equity Interests in any subsidiary of Holdings or any division, product line, or facility used for operations of Holdings, the Borrower or any of their respective Subsidiaries, shall be excluded and (B) in the case of a Permitted Acquisition or Investment described in the definition of “Specified Transaction,” shall be included, (ii) any retirement of Indebtedness, and (iii) any Indebtedness incurred or assumed by Holdings, the Borrower or any of their respective Subsidiaries in connection therewith and if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate that is or would be in effect with respect to such Indebtedness as at the relevant date of determination and interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period; provided that, without limiting the application of the Pro Forma Adjustment pursuant to clause (a) above, the foregoing pro forma adjustments may be applied to any such test or covenant solely to the extent that such adjustments are consistent with the definition of Consolidated EBITDA and give effect to operating expense reductions that are (i) (x) directly attributable to such transaction, (y) expected to have a continuing impact on Holdings, the Borrower or any of their respective Subsidiaries and (z) factually supportable or (ii) otherwise consistent with the definition of Pro Forma Adjustment.
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“ Pro Forma Disposal Adjustment ” means, for any Test Period with respect to any Sold Entity or Business, the pro forma increase or decrease in Consolidated EBITDA projected by the Borrower in good faith to be realizable within eighteen (18) months following the date the applicable Person, property, business, line of business, division, business unit or asset becomes a Sold Entity or Business as a result of contractual arrangements between the Borrower or any Restricted Subsidiary entered into with such Sold Entity or Business at the time of its disposal which represent an increase or decrease in Consolidated EBITDA which is incremental to the Disposed EBITDA of such Sold Entity or Business for the most recent Test Period prior to its disposal. Any such pro forma increase or decrease in Consolidated EBITDA shall be certified by a Financial Officer, the chief executive officer or president of the Borrower in the Compliance Certificate. The proceeds of any Indebtedness being incurred pursuant to any financial ratio hereunder shall not be deducted from the amount of Indebtedness outstanding for purposes of calculating any such financial ratio (except to the extent such proceeds are to be used to repay any indebtedness, it shall not limit the Borrower’s ability to give pro forma effect to such repayment).
“ Pro Forma Entity ” has the meaning given to such term in the definition of “Acquired EBITDA.”
“ Pro Forma Financial Statements ” means the unaudited consolidated pro forma balance sheet of Holdings and its Subsidiaries as of March 31, 2016, and the related unaudited pro forma consolidated statement of income of Holdings and its Subsidiaries as of and for the twelve-month period then ended, prepared after giving effect to the Transactions (and which may exclude, at the Borrower’s option, the impact of purchase accounting effects required by GAAP) as if the Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such statement of income) and any other adjustments as agreed by the Sponsor and the Joint Lead Arrangers (which need not be prepared in compliance with Regulations S-X of the Securities Act of 1933, as amended, or (at the option of the Borrower) include adjustments for purchase accounting).
“ Proposed Change ” has the meaning assigned to such term in Section 9.02(c).
“ Public Lender ” has the meaning assigned to such term in Section 5.01.
“ Qualified Equity Interests ” means Equity Interests of Holdings or the Borrower other than Disqualified Equity Interests.
“ Qualified Securitization Facility ” means any Securitization Facility that meets the following conditions: (a) the board of directors of the Borrower shall have determined in good faith that such Securitization Facility (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Borrower and the applicable Securitization Subsidiary and (b) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Borrower).
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“ Qualifying Lender ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“ Refinanced Debt ” has the meaning assigned to such term in the definition of “Credit Agreement Refinancing Indebtedness.”
“ Refinancing Amendment ” means an amendment to this Agreement in form reasonably satisfactory to the Administrative Agent and the Borrower executed by each of (a) the Borrower and Holdings, (b) the Administrative Agent and (c) each Additional Term Lender and Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 2.21.
“ Register ” has the meaning assigned to such term in Section 9.04(b)(iv).
“ Registered Equivalent Notes ” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same Guarantees) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, controlling persons, trustees, administrators, managers, advisors and representatives of such Person and of each of such Person’s Affiliates and permitted successors and assigns of each of the foregoing.
“ Release ” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) and including the environment within any building, or any occupied structure, facility or fixture.
“ Removal Effective Date ” has the meaning assigned to such term in Section 8.06.
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“ Required Additional Debt Terms ” means with respect to any Indebtedness, (a) such Indebtedness does not mature earlier than the Latest Maturity Date for the Initial Term Loans (except in the case of customary bridge loans which subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature earlier than the Latest Maturity Date for the Initial Term Loans), (b) such Indebtedness does not have a shorter Weighted Average Life to Maturity than the Initial Term Loans, (c) if such Indebtedness is unsecured or secured by the Collateral on a junior lien basis to the Secured Obligations, such Indebtedness does not have scheduled amortization or mandatory redemption features (other than customary asset sale, insurance and condemnation proceeds events, change of control offers, AHYDO catch up payments, offers upon an event of default or, in the case of junior lien secured debt, excess cash flow payments (subject to the prior payment of the Obligations or the prior offer thereof to prepay the Obligations)) that could result in redemptions of such Indebtedness prior to the Latest Maturity Date, (d) such Indebtedness is not guaranteed by any entity that is not a Loan Party, (e) such Indebtedness that is secured (i) is not secured by any assets not securing the Secured Obligations and (ii) is subject to the relevant Intercreditor Agreement, (f) the terms and conditions of such Indebtedness (excluding pricing, interest rate margins, rate floors, discounts, fees, collateral, guarantees, premiums and prepayment or redemption provisions) are not materially more favorable (when taken as a whole) to the lenders or investors providing such Indebtedness than the terms and conditions of this Agreement (when taken as a whole) are to the Lenders (unless (x) such terms and conditions are applicable only to periods after the Latest Maturity Date at such time, (y) the Lenders also receive the benefit of such more favorable terms and conditions or (z) such terms are reasonably satisfactory to the Administrative Agent) (together with, at the election of the Borrower, any applicable “equity cure” provisions with respect to any financial covenant) (it being understood that, to the extent that any covenant, event of default, guarantee or other provision is added or modified for the benefit of any such Indebtedness, no consent shall be required by the Administrative Agent or any of the Lenders if such covenant, event of default or guarantee is either (i) also added or modified for the benefit of any corresponding Loans remaining outstanding after the issuance or incurrence of any such Indebtedness in connection therewith, or (ii) only applicable after the Latest Maturity Date at such time); provided that the Borrower may, in its sole discretion, deliver a certificate of a Responsible Officer of the Borrower to the Administrative Agent at least five (5) Business Days prior to the incurrence of such indebtedness, together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement, and such certificate shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Administrative Agent notifies the Borrower within such five (5) Business Day period that it disagrees with such determination (including a reasonable description of the basis upon which it disagrees) and (g) if such Indebtedness (regardless of form) is secured on a pari passu basis with the Initial Term Loans and ranks pari passu with the Initial Term Loans in right of payment (a “ Loan Equivalent ”), in the event that the Effective Yield for any such Loan Equivalent is greater than the Effective Yield for the Initial Term Loans by more than 0.50% per annum, then the Effective Yield for the Initial Term Loans shall be increased (without the requirement for any Lender consent) to the extent necessary so that the Effective Yield for the Initial Term Loans is equal to the Effective Yield for such Loan Equivalent minus 0.50% per annum; provided that if such Loan Equivalent includes an interest rate floor greater than the applicable interest rate floor under the Initial Term Loans, such differential between interest rate floors shall be equated to the applicable interest rate margin for purposes of determining whether an increase to the interest rate margin under the Initial Term Loans shall be required, but only to the extent an increase in the interest rate floor in the Initial Term Loans would cause an increase in the interest rate then in effect thereunder, and in such case, the interest rate floor (but not the interest rate margin) applicable to the Initial Term Loans shall be increased to the extent of such differential between interest rate floors.
“ Required Lenders ” means, at any time, Lenders having Term Loans representing more than 50% of the outstanding Term Loans at such time; provided that to the extent set forth in Section 9.02 or Section 9.04 whenever there are one or more Defaulting Lenders, the total outstanding Term Loans of each Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
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“ Requirements of Law ” means, with respect to any Person, any statutes, laws, treaties, rules, regulations, statutory instruments, orders, decrees, writs, injunctions or determinations of any arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“ Resignation Effective Date ” has the meaning assigned to such term in Section 8.06.
“ Responsible Officer ” means the chief executive officer, president, vice president, chief financial officer, treasurer or assistant treasurer, director, company secretary or other similar officer, manager or a member of the Board of Directors of a Loan Party and with respect to certain limited liability companies, partnerships or Foreign Loan Parties that do not have officers, any authorized signatory, director, manager, sole member, managing member or general partner thereof, and as to any document delivered on the Effective Date or thereafter pursuant to paragraph (a)(i) of the definition of the term “Collateral and Guarantee Requirement,” any secretary or assistant secretary of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in Holdings, the Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in Holdings, the Borrower or any Restricted Subsidiary or any option, warrant or other right to acquire any such Equity Interests in Holdings, the Borrower or any Restricted Subsidiary.
“ Restricted Prepayment Event ” has the meaning assigned to such term in Section 2.11(g).
“ Restricted Subsidiary ” means, unless otherwise specified, any Subsidiary of Holdings, other than an Unrestricted Subsidiary.
“ Retained Declined Proceeds ” has the meaning assigned to such term in Section 2.11(e).
“ S&P ” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor to its rating agency business.
“ Sanctions ” means any economic sanctions administered or enforced by the United States Government (including without limitation, OFAC).
“ Sanctioned Country ” means, at any time, a country or territory which is the target of any comprehensive Sanctions (as of the date of this Agreement, the Crimea Republic of Ukraine, Cuba, Iran, North Korea, Sudan and Syria).
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“ SEC ” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“ Secured Obligations ” means the Loan Document Obligations.
“ Secured Parties ” means (a) each Lender, (b) the Administrative Agent, (c) the Collateral Agent, (d) each Joint Lead Arranger, (e) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (f) the permitted successors and assigns of each of the foregoing.
“ Securitization Assets ” means the accounts receivable, royalty and other similar rights to payment and any other assets related thereto subject to a Qualified Securitization Facility that are customarily sold or pledged in connection with securitization transactions and the proceeds thereof.
“ Securitization Facility ” means any of one or more receivables securitization financing facilities as amended, supplemented, modified, extended, renewed, restated or refunded from time to time, the obligations of which are non-recourse (except for customary representations, warranties and indemnities made in connection with such facilities) to Holdings, the Borrower or any Restricted Subsidiary (other than a Securitization Subsidiary) pursuant to which Holdings, the Borrower or any Restricted Subsidiary sells or grants a security interest in its accounts receivable or assets related thereto that are customarily sold or pledged in connection with securitization transactions to either (a) a Person that is not a Restricted Subsidiary or (b) a Securitization Subsidiary that in turn sells its accounts receivable to a Person that is not a Restricted Subsidiary.
“ Securitization Fees ” means distributions or payments made directly or by means of discounts with respect to any participation interest issued or sold in connection with, and other fees paid to a Person that is not a Securitization Subsidiary in connection with, any Qualified Securitization Facility.
“ Securitization Subsidiary ” means any Subsidiary formed for the purpose of, and that solely engages only in one or more Qualified Securitization Facilities and other activities reasonably related thereto.
“ Security Documents ” means the Collateral Agreement, the Mortgages, the Foreign Security Documents and each other security agreement or pledge agreement executed and delivered pursuant to the Collateral and Guarantee Requirement, Sections 5.11, 5.12 or 5.14 to secure any of the Secured Obligations.
“ Security Trust Deeds ” means the Irish Security Trust Deed and the UK Security Trust Deed.
“ Seller ” has the meaning assigned to such term in the definition of “Acquisition Agreement.”
“ Senior Obligations ” has the meaning assigned to such term in the Closing Date Intercreditor Agreement.
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“ Senior Representative ” means, with respect to any series of Indebtedness permitted by this Agreement to be secured on the Collateral on a senior pari passu or junior basis, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.
“ Senior Secured Indebtedness ” means any Indebtedness of Holdings and its Restricted Subsidiaries that is secured by a Lien on any asset of Holdings or any of the Restricted Subsidiaries.
“ Senior Secured Net Leverage Ratio ” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Senior Secured Net Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“ Settlement ” means the transfer of cash or other property with respect to any credit or debit card charge, check or other instrument, electronic funds transfer, or other type of paper-based or electronic payment, transfer, or charge transaction for which a Person acts as a processor, remitter, funds recipient or funds transmitter in the ordinary course of its business.
“ Settlement Asset ” means any cash, receivable or other property, including a Settlement Receivable, due or conveyed to a Person in consideration for a Settlement made or arranged, or to be made or arranged, by such Person or an Affiliate of such Person.
“ Settlement Indebtedness ” means any payment or reimbursement obligation in respect of a Settlement Payment.
“ Settlement Lien ” means any Lien relating to any Settlement or Settlement Indebtedness (and may include, for the avoidance of doubt, the grant of a Lien in or other assignment of a Settlement Asset in consideration of a Settlement Payment, Liens securing intraday and overnight overdraft and automated clearing house exposure, and similar Liens).
“ Settlement Payment ” means the transfer, or contractual undertaking (including by automated clearing house transaction) to effect a transfer, of cash or other property to effect a Settlement.
“ Settlement Receivable ” means any general intangible, payment intangible, or instrument representing or reflecting an obligation to make payments to or for the benefit of a Person in consideration for a Settlement made or arranged, or to be made or arranged, by such Person.
“ Sold Entity or Business ” has the meaning assigned to such term in the definition of the term “Consolidated EBITDA.”
“ Solicited Discount Proration ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“ Solicited Discounted Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
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“ Solicited Discounted Prepayment Notice ” means an irrevocable written notice of a Borrower Solicitation of Discounted Prepayment Offers made pursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit K.
“ Solicited Discounted Prepayment Offer ” means the irrevocable written offer by each Term Lender, substantially in the form of Exhibit L, submitted following the Administrative Agent’s receipt of a Solicited Discounted Prepayment Notice.
“ Solicited Discounted Prepayment Response Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“ Specified Acquisition Agreement Representations ” means such of the representations made by the Seller with respect to the Acquired Companies and their subsidiaries in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that the Borrower or its applicable affiliates have the right (determined without regard to any notice provisions but taking into account any applicable cure provisions) to terminate its (or their) obligations under the Acquisition Agreement or decline to consummate the Acquisition as a result of a breach of one or more of such representations in the Acquisition Agreement.
“ Specified Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“ Specified Discount Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“ Specified Discount Prepayment Notice ” means an irrevocable written notice of the Borrower of Specified Discount Prepayment made pursuant to Section 2.11(a)(ii)(B) substantially in the form of Exhibit G.
“ Specified Discount Prepayment Response ” means the irrevocable written response by each Term Lender, substantially in the form of Exhibit H, to a Specified Discount Prepayment Notice.
“ Specified Discount Prepayment Response Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“ Specified Discount Proration ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(3).
“ Specified Event of Default ” means an Event of Default under Section 7.01(a), (b), (h) or (i).
“ Specified Representations ” means the representations and warranties made by the Borrower and, and to the extent applicable, the Effective Date Loan Parties, set forth in (i) Section 3.01, Section 3.02 (with respect to authorization, execution, delivery and performance and enforceability of the Loan Documents), Section 3.03(b)(i) (with respect to entering into and performance of the Loan Documents by the Borrower and the Effective Date Loan Parties), Section 3.08, Section 3.14, Section 3.15 and Section 3.16(a) of this Agreement and (ii) Sections 2.03(f) and 3.02(c) of the Collateral Agreement.
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“ Specified Transaction ” means any Investment, acquisition (including the commitment of activities constituting such business), sale, transfer or other disposition of assets, incurrence or repayment of Indebtedness, Restricted Payment, subsidiary designation, commencement of a New Project or other event that by the terms of the Loan Documents requires “Pro Forma Compliance” with a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis after giving Pro Forma Effect thereto.
“ Sponsor ” means GTCR LLC, GTCR Fund X/A AIV L.P., GTCR Co-Invest X/C, AIV, L.P., GTCR Fund X/C AIV, LP, and their respective associated funds and each of their respective Affiliates (other than any portfolio companies of any of the foregoing).
“ Sponsor Group ” means the Sponsor and limited partners of the Sponsor and the Management Investors.
“ Sponsor Management Agreement ” means that certain Amended and Restated Professional Services Agreement, dated as of May 30, 2014, by and among GTCR LLC, a Delaware limited liability company, GTCR Management X LP, a Delaware limited partnership, GTCR Canyon Holdings (Cayman), L.P., a Cayman Islands exempted limited partnership (by its general partner, GTCR Canyon Partners, Ltd.), and the Borrower, as such agreement may be amended, restated, supplemented or otherwise modified from time to time; provided that in no event shall any such amendment, restatement, supplement or modification increase the compensation or other amounts payable thereunder (other than payments in the form of Qualified Equity Interests of Holdings or any parent of Holdings) without the consent of the Required Lenders.
“ Sponsor Model ” means the Sponsor model delivered to the Joint Lead Arrangers on November 19, 2015 (together with any updates or modifications thereto mutually agreed between the Sponsor and the Joint Lead Arrangers prior to April 26, 2016).
“ Spot Rate ” means, on any day, with respect to any currency other than Dollars (for purposes of determining the Dollar Amount thereof) or Dollars (for purposes of determining the Alternative Currency Equivalent thereof), the rate at which such currency may be exchanged into Dollars or the applicable Alternative Currency, as the case may be, as set forth at approximately 11:00 a.m., New York City time, two (2) Business Days prior to such date on the applicable Bloomberg Key Cross Currency Rates Page. In the event that any such rate does not appear on any Bloomberg Key Cross Currency Rates Page, the Spot Rate shall be determined by reference to such other publicly available service for displaying exchange rates selected by the Administrative Agent for such purpose, or, at the discretion of the Administrative Agent, such Spot Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 10:00 a.m., local time in such market, two (2) Business Days prior to such date for the purchase of Dollars or the applicable Alternative Currency, as the case may be, for delivery two (2) Business Days later; provided that, if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any other reasonable method it deems appropriate to determine such rate, and such determination shall be presumed correct absent manifest error.
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“ Starter Basket ” has the meaning assigned to such term in the definition of “Available Amount.”
“ Statutory Reserve Rate ” means 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, liquid asset or similar percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority to be applicable to any member bank of the Federal Reserve System in respect of Eurocurrency funding or liabilities. Such reserve, liquid asset or similar percentages shall include those imposed pursuant to Regulation D of the Board of Governors. Eurodollar Loans shall be deemed to be subject to such reserve, liquid asset or similar requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any other Requirements of Law. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“ Sterling ” or “ £ ” means the lawful currency for the time being of the United Kingdom.
“ Submitted Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ Submitted Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“ subsidiary ” means, with respect to any Person (the “ parent ”) at any date (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more subsidiaries of such Person and (ii) any partnership, limited liability company, association, or other similar non-corporate entity in which such Person and/or one or more subsidiaries of such Person owns more than a 50% equity interest at the time.
“ Subsidiary ” means any subsidiary of Holdings (unless otherwise specified).
“ Subsidiary Loan Party ” means each Restricted Subsidiary of Holdings (other than the Borrower) that is a party to the Guarantee Agreement.
“ Successor Borrower ” has the meaning assigned to such term in Section 6.03(a)(iv).
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“ Swap Agreement ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.
“ Target Person ” has the meaning assigned to such term in Section 6.04.
“ Tax Distributions ” has the meaning assigned to such term in Section 6.07(a)(vii)(A).
“ Tax Group ” has the meaning assigned to such term in Section 6.07(a)(vii)(A).
“ Taxes ” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“ Term Commitment ” means, with respect to each Lender, the commitment, if any, of such Lender to make a Term Loan hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term Loan to be made by such Lender hereunder. The amount of each Lender’s Term Commitment as of the Effective Date is set forth on Schedule 2.01. As of the Effective Date, the total Term Commitment is $370,000,000.
“ Term Lender ” means a Lender with a Term Commitment or an outstanding Term Loan.
“ Term Loans ” means Initial Term Loans, Other Term Loans and Incremental Term Loans, as the context requires.
“ Term Maturity Date ” means June 16, 2024 (or, with respect to any Term Lender that has extended the maturity date of its Term Loans in accordance with the terms of this Agreement, the extended maturity date set forth in the applicable Loan Modification Agreement, Refinancing Amendment or other amendment hereto).
“ Termination Date ” means the date on which all Commitments have expired or been terminated and all Secured Obligations have been paid in full in cash (other than contingent obligations not yet accrued and payable).
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“ Test Period ” means, at any date of determination, the period of four consecutive fiscal quarters of Holdings then last ended as of such time for which financial statements have been delivered pursuant to Section 5.01(a) or (b) or, at the option of the Borrower, in connection with a Limited Condition Transaction, the period of four consecutive fiscal quarters of Holdings for which financial statements have been delivered to the Administrative Agent on or prior to the applicable LCT Test Date; provided that for any date of determination before the delivery of the first financial statements pursuant to Section 5.01(a) or (b), the Test Period shall be the period of four consecutive fiscal quarters of Holdings then last ended as of such time.
“ Total Net Leverage Ratio ” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Total Net Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“ Trademark ” has the meaning assigned to such term in the Collateral Agreement.
“ Transaction Costs ” means all fees, premiums, costs and expenses incurred or payable by Holdings, the Borrower or any other Subsidiary in connection with the Transactions, including fees, costs and expenses of any counsel, consultants and other advisors.
“ Transactions ” means (a) the Financing Transactions, (b) the Acquisition and the other transactions contemplated by the Acquisition Documents, (c) the Refinancing and (d) the payment of the Transaction Costs.
“ Type ,” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or Alternate Base Rate.
“ UCC ” or “ Uniform Commercial Code ” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided , however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a U.S. jurisdiction other than the State of New York, the term “UCC” and “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
“ UK Debenture ” means the all asset debenture governed by English law and entered into by each Foreign Loan Party incorporated in England and Wales.
“ UK Charge over Shares ” means each charge over shares governed by English law and entered into in respect of the Equity Interests in any UK Loan Guarantor in favor of the Collateral Agent.
“ UK Legal Reservations ” means (i) the principle that equitable remedies may be granted or refused at the discretion of the court, the limitation on enforcement by laws relating to bankruptcy, insolvency, liquidation, reorganization, court schemes, moratoria, administration and other laws generally affecting the rights of creditors; (ii) the time barring of claims under the Limitation Act 1980 and Foreign Limitation Periods Act 1984, the possibility that an undertaking to assume liability for or to indemnify a person against non-payment of UK stamp duty may be void, and defences of set-off or counterclaims, (iii) any other matters which are set out as qualifications or reservations as to matters of law in any legal opinion delivered to the Administrative Agent or the Collateral Agent under any provision of or otherwise in connection with any Loan Document and (iv) similar principles, rights and defences under the laws of any relevant jurisdiction.
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“ UK Loan Party ” shall mean any Loan Party incorporated in England and Wales.
“ UK Perfection Requirements ” shall mean the making of the appropriate registrations, filings or notifications of each Security Document entered into by a UK Loan Party as specifically set out in the relevant Security Document or in any legal opinion.
“ UK Security Documents ” shall mean the UK Debenture, UK Charge over Shares and UK Security Trust Deed.
“ UK Security Trust Deed ” means the security trust deed governed by English law and entered into by, among others, the UK Loan Parties, Intermediate Lux Holdings and the Collateral Agent.
“ Unaudited Financial Statements ” means the unaudited consolidated statement of financial position and the related consolidated statements of comprehensive income and statement of cash flows of the Acquired Companies and their subsidiaries for the quarters ending March 31, 2015, June 30, 2015 and September 30, 2015.
“ United States Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.17(ii)(C).
“ Unrestricted Subsidiary ” means any Subsidiary designated by the Borrower as an Unrestricted Subsidiary pursuant to Section 5.13 subsequent to the Effective Date.
“ USA PATRIOT Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.
“ Voluntary Prepayment Amount ” has the meaning set forth in the definition of “ Incremental Cap ”.
“ Weighted Average Life to Maturity ” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness, in each case, without giving effect to any reductions of amortization or other scheduled payments for periods where amortization has been reduced as a result of the prepayment of the applicable Indebtedness.
“ Wholly Owned Restricted Subsidiary ” means any Restricted Subsidiary that is a Wholly Owned Subsidiary.
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“ Wholly Owned Subsidiary ” means, as to any Person, (i) any corporation 100% of whose capital stock is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person and (ii) any partnership, limited liability company, association, or other similar non-corporate entity in which such Person and/or one or more Wholly Owned Subsidiaries of such Person has a 100% equity interest at such time (other than, in the case of the preceding clauses (i) and (ii), director’s qualifying shares and/or other nominal amount of shares required to be held by Persons other than the Borrower and its Subsidiaries under applicable law).
“ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
SECTION 1.02 Classification of Loans and Borrowings .
For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g ., a “ Term Loan ”) or by Type ( e.g ., a “ Eurodollar Loan ” or “ ABR Loan ”) or by Class and Type ( e.g ., a “ Eurodollar Term Loan ”). Borrowings also may be classified and referred to by Class ( e.g ., a “ Term Borrowing ”) or by Type ( e.g ., a “ Eurodollar Borrowing ”) or by Class and Type ( e.g ., a “ Eurodollar Term Borrowing ”).
SECTION 1.03 Terms Generally .
The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (a) any definition of or reference to any agreement (including this Agreement and the other Loan Documents), instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or other modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
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Without limiting the reclassification rights under any Section of Article VI, for purposes of determining compliance with any Section of Article VI, in the event that any Lien, Investment, Indebtedness (whether at the time of incurrence or upon application of all or a portion of the proceeds thereof), Disposition, Restricted Payment, Affiliate transaction, restrictive agreement or prepayment of Indebtedness meets the criteria of one or more than one of the categories of transactions permitted pursuant to any clause of such Sections, such transaction (or portion thereof) at the time of incurrence or consummation thereof shall be deemed to be incurred or otherwise permitted under such clause(s) determined by the Borrower in its sole discretion at such time of incurrence or consummation, as applicable.
SECTION 1.04 Accounting Terms; GAAP .
(a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, except as otherwise prescribed herein.
(b) Notwithstanding anything in this Agreement to the contrary, for purposes of determining compliance with any test contained in this Agreement, the Total Net Leverage Ratio and the Senior Secured Net Leverage Ratio shall be calculated on a Pro Forma Basis to give effect to the Transaction and all Specified Transactions that have been made during the applicable period of measurement or subsequent to such period and prior to or simultaneously with the event for which the calculation is made.
SECTION 1.05 Effectuation of Transactions .
All references herein to Holdings, the Borrower and their respective Subsidiaries shall be deemed to be references to such Persons, and all the representations and warranties of Holdings, any Intermediate Parent, the Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall be deemed made, in each case, after giving effect to the Acquisition and the other Transactions to occur on the Effective Date, unless the context otherwise requires.
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SECTION 1.06 Limited Condition Transactions .
Notwithstanding anything in this Agreement or any Loan Document to the contrary, when calculating any applicable ratio, the amount or availability of the Available Amount or any other basket (including incremental facilities or any baskets based on Consolidated EBITDA or total assets), or determining other compliance with this Agreement (including the determination of compliance with representations, warranties or any provision of this Agreement which requires that no Default or Event of Default has occurred, is continuing or would result therefrom) in connection with a Specified Transaction or other transaction undertaken in connection with the consummation of a Limited Condition Transaction, the date of determination of such ratio, the amount or availability of the Available Amount or any other basket and determination of the accuracy of any representation or warranty or whether an Default or Event of Default has occurred, is continuing or would result therefrom or other applicable covenant shall, at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “ LCT Election ”), be deemed to be the date the definitive agreements for such Limited Condition Transaction are entered into (the “ LCT Test Date ”) and if, after such ratios and other provisions are measured on a Pro Forma Basis after giving effect to such Limited Condition Transaction and the other Specified Transactions or other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if they occurred at the beginning of the applicable Test Period ending prior to the LCT Test Date, the Borrower could have taken such action on the relevant LCT Test Date in compliance with such ratios and provisions, such provisions shall be deemed to have been complied with. For the avoidance of doubt, (x) if any of such ratios are exceeded as a result of fluctuations in such ratio (including due to fluctuations in Consolidated EBITDA of the Borrower and its Subsidiaries) at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be deemed to have been exceeded as a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction is permitted hereunder and (y) such ratios and other provisions shall not be tested at the time of consummation of such Limited Condition Transaction or related Specified Transactions or other transactions. If the Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or basket availability with respect to any other Specified Transaction on or following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio or basket shall be calculated on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated.
SECTION 1.07 [Reserved] .
SECTION 1.08 Currency Equivalents Generally .
(a) For purposes of determining compliance as of any date with any covenant or incurrence test under any Loan Document or for purposes of making any determination under any Default or Event of Default hereunder or for any other specified purpose hereunder, amounts incurred or outstanding in currencies (other than Dollars) shall be translated into Dollars at the Exchange Rate; provided that if any Indebtedness or Liens are incurred to extend, replace, refund, refinance, renew or defease other Indebtedness or Liens denominated in currencies (other than Dollars), and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, plus the amount of any premium paid, and fees and expenses incurred, in connection with such extension, replacement, refunding refinancing, renewal or defeasance (including any fees and original issue discount incurred in respect of such resulting Indebtedness). No Default or Event of Default shall arise as a result of any limitation or threshold set forth in Dollars in any covenant, representation or Default or Event of Default under any Loan Document being exceeded solely as a result of changes in currency exchange rates from the applicable Exchange Rate on the first Business Day of the fiscal quarter of Holdings in which such determination occurs or in respect of which such determination is made.
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SECTION 1.09 [Reserved] .
SECTION 1.10 Guaranty and Security Principles .
(a) Each Guarantee, the Security Documents and each other guarantee and security document delivered or to be delivered under this Agreement and any obligation to enter into such document or obligation by any Foreign Loan Party shall be subject in all respects to the Guaranty and Security Principles.
(b) Notwithstanding any other provisions to the contrary in this Agreement, the guarantee granted by any Loan Guarantor incorporated or established in Luxembourg (“ Luxembourg Guarantor ”) for the obligations of any Loan Party which is not a direct or indirect subsidiary of such Luxembourg Guarantor shall be limited at any time to an aggregate amount (without double-counting) not exceeding the higher of:
(i) 95% of such Luxembourg Guarantor’s capitaux propres (as referred to in annex I to the grand-ducal regulation dated 18 December 2015 defining the form and content of the presentation of balance sheet and profit and loss account (the “ Regulation ”)) determined as at the date on which a demand is made under this guarantee, increased by the amount of any Intra-Group Liabilities; and
(ii) 95% of such Luxembourg Guarantor’s capitaux propres (as referred to in the Regulation) determined as at the date of this Agreement, increased by the amount of any Intra-Group Liabilities.
For the purposes of this section 1.10, Intra-Group Liabilities shall mean any amounts owed by the Luxembourg Guarantor to any Affiliate of such Luxembourg Guarantor and that have not been financed (directly or indirectly) by a borrowing under the Loan Documents.
In addition, the above limitation shall not apply to (i) any amounts borrowed by a Luxembourg Guarantor or any of its direct or indirect Subsidiaries under the Loan Documents and (ii) any amounts borrowed under the Loan Documents and on-lent, or otherwise made available, to the Luxembourg Guarantor or any of its direct or indirect Subsidiaries (in any form whatsoever).
SECTION 1.11 Luxembourg Terms . Without prejudice to the generality of any provision of this Agreement, in this Agreement where it relates to a Luxembourg Credit Party:
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(a) A reference to an “officer” or “director” of (a) a société à responsabilité limitée incorporated in Luxembourg includes a reference to a manager of such company and (b) a société en commandite par actions includes a reference to the managers or directors of its general partner.
(b) In respect of any company incorporated in Luxembourg, a reference to “by-laws” or “constitutional documents” of such company includes its up-to-date (restated) articles of association ( statuts coordonnés ).
(c) In any Loan Document, where it relates to a company incorporated under the laws of Luxembourg, a reference to:
(i) a “bankruptcy”, “insolvency”, “reorganization”, “receivership”, “liquidation”, “windingup”, “administration” or “dissolution” includes bankruptcy ( faillite ), insolvency, voluntary or judicial liquidation ( liquidation volontaire ou judiciaire ), composition with creditors ( concordat préventif de faillite ), reprieve from payment ( sursis de paiement ), controlled management ( gestion contrôlée ), general settlement with creditors, reorganization or similar laws affecting the rights of creditors generally;
(ii) an act “affecting the rights of creditors generally” includes, without limitation, fraudulent conveyances which may lead to an action paulienne ;
(iii) a “receiver”, “administrative receiver”, “administrator”, “trustee”, “custodian”, “sequestrator”, “conservator” or similar officer includes a juge délégué , commissaire , juge-commissaire , mandataire ad hoc , administrateur provisoire , liquidateur or curateur ;
(iv) a “lien” or “security interest” includes any hypothèque , nantissement , gage , privilège , sûreté réelle , droit de rétention and any type of security in rem ( sûreté réelle ) or agreement or arrangement having a similar effect and any transfer of title by way of security;
(v) a “set-off” includes, for the purposes of Luxembourg law, legal set-off;
(vi) a person being “unable to pay its debts” includes that person being in a state of cessation of payments ( cessation de paiements ); and
(vii) a guarantee includes any garantie which is independent from the debt to which it relates and excludes any suretyship ( cautionnement ) within the meaning of Articles 2011 et seq. of the Luxembourg Civil Code.
(d) In any Loan Document, usage of the term “promissory note” does not, unless otherwise explicitly specified, refer to a “ billet à ordre ” within the meaning of the Luxembourg consolidated law dated December 15, 1962 on the bills of exchange and promissory note.
SECTION 1.12 Dutch Terms . In any Loan Document, where it relates to a company incorporated under the laws of the Netherlands, a reference to:
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(a) an administration or dissolution (and any of those terms) includes a Dutch entity being declared bankrupt ( failliet verklaard ) or dissolved ( ontbonden );
(b) a moratorium includes surseance van betaling and granted a moratorium includes surseance verleend ;
(c) any step or procedure taken in connection with insolvency proceedings includes a Dutch entity having filed a notice under section 36 of the Tax Collection Act of the Netherlands ( Invorderingswet 1990 );
(d) a security interest includes any mortgage ( hypotheek ), pledge ( pandrecht ), retention-of-title arrangement ( recht van retentie ), right to reclaim goods ( recht van reclame ), privilege ( voorrecht ) and, in general, any right in rem ( beperkt recht ) created for the purpose of granting security ( goederenrechtelijk zekerheidsrecht );
(e) a director in relation to a Dutch Loan Guarantor, means a managing director ( bestuurder ) and board of directors means its managing board ( bestuur );
(f) a receiver or trustee in bankruptcy includes a curator ;
(g) an administrator includes a bewindvoerder ;
(h) an attachment includes a beslag and attaching or taking possession of (any of those terms) includes beslag leggen ; and
(i) indemnify means vrijwaren .
Article II
THE CREDITS
SECTION 2.01 Commitments .
Subject to the terms and conditions set forth herein, each Term Lender agrees to make Term Loans to the Borrower on the Effective Date in a principal amount not exceeding such Term Lender’s Term Commitment. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02 Loans and Borrowings .
(a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder, provided that the Commitments of the Lenders are several and other than as expressly provided herein with respect to a Defaulting Lender, no Lender shall be responsible for any other Lender’s failure to make Loans as required hereby.
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(b) Subject to Section 2.14, each Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith, provided that all Borrowings made on the Effective Date must be made as ABR Borrowings unless the Borrower shall have given the notice required for a Eurodollar Borrowing under Section 2.03 and provided an indemnity letter extending the benefits of Section 2.16 to Lenders in respect of such Borrowings. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that a Eurodollar Borrowing that results from a continuation of an outstanding Eurodollar Borrowing may be in an aggregate amount that is equal to such outstanding Borrowing. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of ten Eurodollar Borrowings outstanding plus an additional two Eurodollar Borrowings for each outstanding Incremental Facility.
SECTION 2.03 Requests for Borrowings .
To request a Term Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing (or, in the case of any Eurodollar Borrowing to be made on the Effective Date, the same Business Day) or (b) in the case of an ABR Borrowing, not later than 1:00 p.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Borrowing Request signed by the Borrower substantially in the form of Exhibit C. Each such telephonic and written Borrowing Request shall specify the following information:
(i) whether the requested Borrowing is to be a Term Borrowing or a Borrowing of any other Class (specifying the Class thereof);
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and
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(vi) the location and number of the Borrower’s account or accounts to which funds are to be disbursed.
If no election as to the Type of Borrowing is specified as to any requested Borrowing, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION 2.04 [Reserved] .
SECTION 2.05 [Reserved] .
SECTION 2.06 Funding of Borrowings .
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the Applicable Account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Borrower.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section 2.06 and may, in reliance on such assumption and in its sole discretion, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender agrees to pay to the Administrative Agent an amount equal to such share on demand of the Administrative Agent. If such Lender does not pay such corresponding amount forthwith upon demand of the Administrative Agent therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower agrees to pay such corresponding amount to the Administrative Agent forthwith on demand. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower interest on such corresponding amount, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, or (ii) in the case of the Borrower, the interest rate applicable to such Borrowing in accordance with Section 2.13. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
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(c) The obligations of the Lenders hereunder to make Term Loans and to make payments pursuant to Section 9.03(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 9.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 9.03(c).
SECTION 2.07 Interest Elections .
(a) Each Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request or designated by Section 2.03 and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request or designated by Section 2.03. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Term Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery, facsimile or other electronic transmission to the Administrative Agent of a written Interest Election Request signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.03:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”
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If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request in accordance with this Section 2.07, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid, at the end of such Interest Period such Borrowing shall be continued as a Eurodollar Borrowing of one month. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing in excess of one month.
SECTION 2.08 Termination and Reduction of Commitments .
(a) Unless previously terminated, the Term Commitments shall terminate at 5:00 p.m., New York City time, on the Effective Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class, provided that each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $500,000 and not less than $500,000 unless such amount represents all of the remaining Commitments of such Class.
(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section 2.08 at least one (1) Business Day prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.08 shall be irrevocable. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.
SECTION 2.09 Repayment of Loans; Evidence of Debt .
(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
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(c) The Administrative Agent shall, in connection with the maintenance of the Register in accordance with Section 9.04(b)(iv), maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (c) of this Section 2.09 shall be prima facie evidence of the existence and amounts of the obligations recorded therein, provided that the failure of the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to pay any amounts due hereunder in accordance with the terms of this Agreement.
(e) Any Lender may request through the Administrative Agent that Loans of any Class made by it be evidenced by a Note. In such event, the Borrower shall execute and deliver to such Lender a Note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns).
SECTION 2.10 Repayment of Principal .
(a) [Reserved].
(b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Maturity Date.
(c) [Reserved].
(d) Prior to any repayment of any Term Borrowings of any Class hereunder, the Borrower shall select the Borrowing or Borrowings of the applicable Class to be repaid and shall notify the Administrative Agent by telephone (confirmed by hand delivery or facsimile) of such election not later than 2:00 p.m., New York City time, one (1) Business Day before the scheduled date of such repayment. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16 and shall be applied in direct order of maturity. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by accrued interest on the amount repaid.
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SECTION 2.11 Prepayment of Loans .
(a) (i) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty; provided if the Borrower makes (I) a voluntary prepayment of Initial Term Loans pursuant to this Section 2.11(a)(i) or (II) a mandatory prepayment of Initial Term Loans pursuant to Section 2.11(c) in connection with a Prepayment Event described in clause (b) of the definition of “Prepayment Event”, in either case, prior to the date that is two years after the Effective Date, such prepayment shall be accompanied by a premium equal to (i) if such prepayment is made prior to the date that is one year after the Effective Date, 2.00% of the principal amount of the Initial Term Loans so prepaid, (ii) if such prepayment is made on or after the date that is one year after of the Effective Date but prior to the date that is two years after the Effective Date, 1.00% of the principal amount of the Initial Term Loans so prepaid, (iii) if such prepayment is made on or after the date that is two years after the Effective Date, 0% of the principal amount of the Initial Term Loans so prepaid.
(ii) Notwithstanding anything in any Loan Document to the contrary, so long as no Default or Event of Default has occurred and is continuing, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries may offer to prepay all or a portion of the outstanding Class of any Term Loans on the following basis:
(A) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall have the right to make a voluntary prepayment of Term Loans at a discount to par (such prepayment, the “ Discounted Term Loan Prepayment ”) pursuant to a Borrower Offer of Specified Discount Prepayment, Borrower Solicitation of Discount Range Prepayment Offers or Borrower Solicitation of Discounted Prepayment Offers, in each case made in accordance with this Section 2.11(a)(ii); provided that Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall not initiate any action under this Section 2.11(a)(ii) in order to make a Discounted Term Loan Prepayment unless (I) at least ten (10) Business Days shall have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries on the applicable Discounted Prepayment Effective Date; or (II) at least three (3) Business Days shall have passed since the date Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries were notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of Holdings’, any Intermediate Parent’s, the Borrower’s or any of their respective Subsidiaries’ election not to accept any Solicited Discounted Prepayment Offers and (z) each Lender participating in any Discounted Term Loan Prepayment acknowledges and agrees that in connection with such Discounted Term Loan Prepayment, (1) the Borrower then may have, and later may come into possession of, information regarding the Term Loans or the Loan Parties hereunder that is not known to such Lender and that may be material to a decision by such Lender to participate in such Discounted Term Loan Prepayment (“ Excluded Information ”), (2) such Lender has independently and, without reliance on Holdings, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to participate in such Discounted Term Loan Prepayment notwithstanding such Lender’s lack of knowledge of the Excluded Information and (3) none of Holdings, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against Holdings, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Excluded Information; provided further that any Term Loan that is prepaid will be automatically and irrevocably cancelled.
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(B) (1) Subject to the proviso to subsection (A) above, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries may from time to time offer to make a Discounted Term Loan Prepayment by providing the Auction Agent with three (3) Business Days’ notice in the form of a Specified Discount Prepayment Notice; provided that (I) any such offer shall be made available, at the sole discretion of Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such offer shall specify the aggregate principal amount offered to be prepaid (the “ Specified Discount Prepayment Amount ”) with respect to each applicable tranche, the tranche or tranches of Term Loans subject to such offer and the specific percentage discount to par (the “ Specified Discount ”) of such Term Loans to be prepaid (it being understood that different Specified Discounts and/or Specified Discount Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Specified Discount Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such offer shall remain outstanding through the Specified Discount Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Specified Discount Prepayment Notice and a form of the Specified Discount Prepayment Response to be completed and returned by each such Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “ Specified Discount Prepayment Response Date ”).
(2) Each relevant Term Lender receiving such offer shall notify the Auction Agent (or its delegate) by the Specified Discount Prepayment Response Date whether or not it agrees to accept a prepayment of any of its relevant then outstanding Term Loans at the Specified Discount and, if so (such accepting Term Lender, a “ Discount Prepayment Accepting Lender ”), the amount and the tranches of such Lender’s Term Loans to be prepaid at such offered discount. Each acceptance of a Discounted Term Loan Prepayment by a Discount Prepayment Accepting Lender shall be irrevocable. Any Term Lender whose Specified Discount Prepayment Response is not received by the Auction Agent by the Specified Discount Prepayment Response Date shall be deemed to have declined to accept the applicable Borrower Offer of Specified Discount Prepayment.
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(3) If there is at least one Discount Prepayment Accepting Lender, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries will make prepayment of outstanding Term Loans pursuant to this paragraph (B) to each Discount Prepayment Accepting Lender in accordance with the respective outstanding amount and tranches of Term Loans specified in such Lender’s Specified Discount Prepayment Response given pursuant to subsection (2); provided that, if the aggregate principal amount of Term Loans accepted for prepayment by all Discount Prepayment Accepting Lenders exceeds the Specified Discount Prepayment Amount, such prepayment shall be made pro-rata among the Discount Prepayment Accepting Lenders in accordance with the respective principal amounts accepted to be prepaid by each such Discount Prepayment Accepting Lender and the Auction Agent (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its reasonable discretion) will calculate such proration (the “ Specified Discount Proration ”). The Auction Agent shall promptly, and in any case within three (3) Business Days following the Specified Discount Prepayment Response Date, notify (I) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries of the respective Term Lenders’ responses to such offer, the Discounted Prepayment Effective Date and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, and the aggregate principal amount and the tranches of Term Loans to be prepaid at the Specified Discount on such date and (III) each Discount Prepayment Accepting Lender of the Specified Discount Proration, if any, and confirmation of the principal amount, tranche and Type of Loans of such Lender to be prepaid at the Specified Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall be due and payable by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(C) (1) Subject to the proviso to subsection (A) above, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries may from time to time solicit Discount Range Prepayment Offers by providing the Auction Agent with three (3) Business Days’ notice in the form of a Discount Range Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate principal amount of the relevant Term Loans (the “ Discount Range Prepayment Amount ”), the tranche or tranches of Term Loans subject to such offer and the maximum and minimum percentage discounts to par (the “ Discount Range ”) of the principal amount of such Term Loans with respect to each relevant tranche of Term Loans willing to be prepaid by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries (it being understood that different Discount Ranges and/or Discount Range Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Discount Range Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall remain outstanding through the Discount Range Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Discount Range Prepayment Notice and a form of the Discount Range Prepayment Offer to be submitted by a responding relevant Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “ Discount Range Prepayment Response Date ”). Each relevant Term Lender’s Discount Range Prepayment Offer shall be irrevocable and shall specify a discount to par within the Discount Range (the “ Submitted Discount ”) at which such Term Lender is willing to allow prepayment of any or all of its then outstanding Term Loans of the applicable tranche or tranches and the maximum aggregate principal amount and tranches of such Lender’s Term Loans (the “ Submitted Amount ”) such Lender is willing to have prepaid at the Submitted Discount. Any Term Lender whose Discount Range Prepayment Offer is not received by the Auction Agent by the Discount Range Prepayment Response Date shall be deemed to have declined to accept a Discounted Term Loan Prepayment of any of its Term Loans at any discount to their par value within the Discount Range.
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(2) The Auction Agent shall review all Discount Range Prepayment Offers received on or before the applicable Discount Range Prepayment Response Date and shall determine (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the Applicable Discount and Term Loans to be prepaid at such Applicable Discount in accordance with this subsection (C). Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries agree to accept on the Discount Range Prepayment Response Date all Discount Range Prepayment Offers received by the Auction Agent by the Discount Range Prepayment Response Date, in the order from the Submitted Discount that is the largest discount to par to the Submitted Discount that is the smallest discount to par, up to and including the Submitted Discount that is the smallest discount to par within the Discount Range (such Submitted Discount that is the smallest discount to par within the Discount Range being referred to as the “ Applicable Discount ”) which yields a Discounted Term Loan Prepayment in an aggregate principal amount equal to the lower of (I) the Discount Range Prepayment Amount and (II) the sum of all Submitted Amounts. Each Lender that has submitted a Discount Range Prepayment Offer to accept prepayment at a discount to par that is larger than or equal to the Applicable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Submitted Amount (subject to any required proration pursuant to the following subsection (3)) at the Applicable Discount (each such Lender, a “ Participating Lender ”).
(3) If there is at least one Participating Lender, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries will prepay the respective outstanding Term Loans of each Participating Lender in the aggregate principal amount and of the tranches specified in such Lender’s Discount Range Prepayment Offer at the Applicable Discount; provided that if the Submitted Amount by all Participating Lenders offered at a discount to par greater than the Applicable Discount exceeds the Discount Range Prepayment Amount, prepayment of the principal amount of the relevant Term Loans for those Participating Lenders whose Submitted Discount is a discount to par greater than or equal to the Applicable Discount (the “ Identified Participating Lenders ”) shall be made pro-rata among the Identified Participating Lenders in accordance with the Submitted Amount of each such Identified Participating Lender and the Auction Agent (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “ Discount Range Proration ”). The Auction Agent shall promptly, and in any case within five (5) Business Days following the Discount Range Prepayment Response Date, notify (I) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries of the respective Term Lenders’ responses to such solicitation, the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount and tranches of Term Loans to be prepaid at the Applicable Discount on such date, (III) each Participating Lender of the aggregate principal amount and tranches of such Lender to be prepaid at the Applicable Discount on such date, and (z) if applicable, each Identified Participating Lender of the Discount Range Proration. Each determination by the Auction Agent of the amounts stated in the foregoing notices to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall be due and payable by the Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(D) (1) Subject to the proviso to subsection (A) above, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries may from time to time solicit Solicited Discounted Prepayment Offers by providing the Auction Agent with three (3) Business Days’ notice in the form of a Solicited Discounted Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate Dollar Amount of the Term Loans (the “ Solicited Discounted Prepayment Amount ”) and the tranche or tranches of Term Loans Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries is willing to prepay at a discount (it being understood that different Solicited Discounted Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Solicited Discounted Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall remain outstanding through the Solicited Discounted Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Solicited Discounted Prepayment Notice and a form of the Solicited Discounted Prepayment Offer to be submitted by a responding Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “ Solicited Discounted Prepayment Response Date ”). Each Term Lender’s Solicited Discounted Prepayment Offer shall (x) be irrevocable, (y) remain outstanding until the Acceptance Date, and (z) specify both a discount to par (the “ Offered Discount ”) such Term Lender is willing to allow to be applied to the prepayment of its then outstanding Term Loan and the maximum aggregate principal amount and tranches of such Term Loans (the “ Offered Amount ”) such Term Lender is willing to have prepaid subject to such Offered Discount. Any Term Lender whose Solicited Discounted Prepayment Offer is not received by the Auction Agent by the Solicited Discounted Prepayment Response Date shall be deemed to have declined prepayment of any of its Term Loans at any discount.
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(2) The Auction Agent shall promptly provide Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries with a copy of all Solicited Discounted Prepayment Offers received on or before the Solicited Discounted Prepayment Response Date. Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall review all such Solicited Discounted Prepayment Offers and select the largest of the Offered Discounts specified by the relevant responding Term Lenders in the Solicited Discounted Prepayment Offers that is acceptable to Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries (the “ Acceptable Discount ”), if any. If Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries elects to accept any Offered Discount as the Acceptable Discount, then as soon as practicable after the determination of the Acceptable Discount, but in no event later than by the third Business Day after the date of receipt by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries from the Auction Agent of a copy of all Solicited Discounted Prepayment Offers pursuant to the first sentence of this subsection (2) (the “ Acceptance Date ”), Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall submit an Acceptance and Prepayment Notice to the Auction Agent setting forth the Acceptable Discount. If the Auction Agent shall fail to receive an Acceptance and Prepayment Notice from Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries by the Acceptance Date, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall be deemed to have rejected all Solicited Discounted Prepayment Offers.
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(3) Based upon the Acceptable Discount and the Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, within three (3) Business Days after receipt of an Acceptance and Prepayment Notice (the “ Discounted Prepayment Determination Date ”), the Auction Agent will determine (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the aggregate principal amount and the tranches of Term Loans (the “ Acceptable Prepayment Amount ”) to be prepaid by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries at the Acceptable Discount in accordance with this Section 2.11(a)(ii)(D). If Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries elects to accept any Acceptable Discount, then Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries agrees to accept all Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, in the order from largest Offered Discount to smallest Offered Discount, up to and including the Acceptable Discount. Each Lender that has submitted a Solicited Discounted Prepayment Offer with an Offered Discount that is greater than or equal to the Acceptable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Offered Amount (subject to any required pro-rata reduction pursuant to the following sentence) at the Acceptable Discount (each such Lender, a “ Qualifying Lender ”). Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries will prepay outstanding Term Loans pursuant to this subsection (D) to each Qualifying Lender in the aggregate principal amount and of the tranches specified in such Lender’s Solicited Discounted Prepayment Offer at the Acceptable Discount; provided that if the aggregate Offered Amount by all Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount exceeds the Solicited Discounted Prepayment Amount, prepayment of the principal amount of the Term Loans for those Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount (the “ Identified Qualifying Lenders ”) shall be made pro-rata among the Identified Qualifying Lenders in accordance with the Offered Amount of each such Identified Qualifying Lender and the Auction Agent (in consultation with Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “ Solicited Discount Proration ”). On or prior to the Discounted Prepayment Determination Date, the Auction Agent shall promptly notify (I) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries of the Discounted Prepayment Effective Date and Acceptable Prepayment Amount comprising the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender who made a Solicited Discounted Prepayment Offer of the Discounted Prepayment Effective Date, the Acceptable Discount, and the Acceptable Prepayment Amount of all Term Loans and the tranches to be prepaid to be prepaid at the Applicable Discount on such date, (III) each Qualifying Lender of the aggregate principal amount and the tranches of such Lender to be prepaid at the Acceptable Discount on such date, and (IV) if applicable, each Identified Qualifying Lender of the Solicited Discount Proration. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower shall be due and payable by the Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
(E) In connection with any Discounted Term Loan Prepayment, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and the Lenders acknowledge and agree that the Auction Agent may require as a condition to any Discounted Term Loan Prepayment, the payment of reasonable and customary fees and expenses from Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries in connection therewith.
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(F) If any Term Loan is prepaid in accordance with paragraphs (B) through (D) above, Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall prepay such Term Loans on the Discounted Prepayment Effective Date. Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall make such prepayment to the Auction Agent, for the account of the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable, at the Administrative Agent’s Office in immediately available funds not later than 11:00 a.m. New York City time on the Discounted Prepayment Effective Date. The Term Loans so prepaid shall be accompanied by all accrued and unpaid interest on the par principal amount so prepaid up to, but not including, the Discounted Prepayment Effective Date. Each prepayment of the outstanding Term Loans pursuant to this Section 2.11(a)(ii) shall be paid to the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable. The aggregate principal amount of the tranches of the relevant Term Loans outstanding shall be deemed reduced by the full par value of the aggregate principal amount of the tranches of Term Loans prepaid on the Discounted Prepayment Effective Date in any Discounted Term Loan Prepayment.
(G) To the extent not expressly provided for herein, each Discounted Term Loan Prepayment shall be consummated pursuant to procedures consistent with the provisions in this Section 2.11(a)(ii), established by the Auction Agent acting in its reasonable discretion and as reasonably agreed by Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries.
(H) Notwithstanding anything in any Loan Document to the contrary, for purposes of this Section 2.11(a)(ii), each notice or other communication required to be delivered or otherwise provided to the Auction Agent (or its delegate) shall be deemed to have been given upon Auction Agent’s (or its delegate’s) actual receipt during normal business hours of such notice or communication; provided that any notice or communication actually received outside of normal business hours shall be deemed to have been given as of the opening of business on the next Business Day.
(I) Each of Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries and the Lenders acknowledges and agrees that the Auction Agent may perform any and all of its duties under this Section 2.11(a)(ii) by itself or through any Affiliate of the Auction Agent and expressly consents to any such delegation of duties by the Auction Agent to such Affiliate and the performance of such delegated duties by such Affiliate. The exculpatory provisions pursuant to this Agreement shall apply to each Affiliate of the Auction Agent and their respective activities in connection with any Discounted Term Loan Prepayment provided for in this Section 2.11(a)(ii) as well as activities of the Auction Agent.
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(J) Holdings, any Intermediate Parent, the Borrower or any of their respective Subsidiaries shall have the right, by written notice to the Auction Agent, to revoke in full (but not in part) its offer to make a Discounted Term Loan Prepayment and rescind the applicable Specified Discount Prepayment Notice, Discount Range Prepayment Notice or Solicited Discounted Prepayment Notice therefor at its discretion at any time on or prior to the applicable Specified Discount Prepayment Response Date, Discount Range Prepayment Response Date or Solicited Discounted Prepayment Response Date, as applicable (and if such offer is revoked pursuant to the preceding clauses, any failure by the Borrower to make any prepayment to a Term Lender, as applicable, pursuant to this Section 2.11(a)(ii) shall not constitute a Default or Event of Default under Section 7.01 or otherwise).
(b) [Reserved].
(c) Subject to Section 2.11(h), in the event and on each occasion that any Net Proceeds are received by or on behalf of Holdings or its Restricted Subsidiaries in respect of any Prepayment Event, the Borrower shall, within five (5) Business Days after such Net Proceeds are received (or, in the case of a Prepayment Event described in clause (b) of the definition of the term “Prepayment Event,” on the date of such Prepayment Event), prepay Initial Term Loans in an aggregate amount equal to (x) 100% of the amount of such Net Proceeds; provided that, in the case of any event described in clause (a) of the definition of the term “Prepayment Event”, if Holdings, the Borrower or any of the Restricted Subsidiaries invest (or commit to invest) the Net Proceeds from such event (or a portion thereof) within 12 months after receipt of such Net Proceeds in the business of the Borrower and the other Subsidiaries, then no prepayment shall be required pursuant to this paragraph in respect of such Net Proceeds in respect of such event (or the applicable portion of such Net Proceeds, if applicable) except to the extent of any such Net Proceeds therefrom that have not been so invested (or committed to be invested) by the end of such 12-month period (or if committed to be so invested within such 12-month period, have not been so invested within 18 months after receipt thereof), at which time a prepayment shall be required in an amount equal to such Net Proceeds that have not been so invested (or committed to be invested); provided further that the Borrower may use a portion of such Net Proceeds to prepay or repurchase any Incremental Term Loans, Other Term Loans or other Indebtedness, in each case that is secured by the Collateral on a pari passu basis with the Loans to the extent such other Indebtedness and the Liens securing the same are permitted hereunder and the documentation governing such other Indebtedness requires such a prepayment or repurchase thereof with the proceeds of such Prepayment Event, in each case in an amount not to exceed the product of (x) the amount of such Net Proceeds and (y) a fraction, the numerator of which is the outstanding principal amount of such other Indebtedness and the denominator of which is the aggregate outstanding principal amount of Initial Term Loans and such other Indebtedness.
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(d) Subject to Section 2.11(h), following the end of each fiscal year of Holdings, commencing with the fiscal year ending December 31, 2017, the Borrower shall prepay Initial Term Loans in an aggregate amount equal to the ECF Percentage of Excess Cash Flow for such fiscal year; provided that such amount shall be reduced by the aggregate amount of prepayments and repurchases of (i) Term Loans (and amounts used to repay borrowings of First Lien Revolving Loans incurred on the Effective Date to fund original issue discount or upfront fees resulting from the Joint Lead Arrangers’ (as defined in the First Lien Credit Agreement) exercise of the “pricing flex” provisions of the Fee Letter) made pursuant to Section 2.11(a) or otherwise in a manner not prohibited by Section 9.04(g) during such fiscal year or after such fiscal year and prior to the time such prepayment is due (without duplication to subsequent years) as provided below ( provided that such reduction as a result of prepayments pursuant to Section 2.11(a)(ii) or repurchases pursuant to Section 9.04(g) shall be limited to the actual amount of such cash prepayment) and (ii) all Senior Secured Indebtedness secured by the Collateral on a pari passu or senior basis with the Secured Obligations (including the First Lien Loans and Indebtedness in respect of additional debt incurred under the First Lien Credit Agreement (whether incremental debt or incremental equivalent debt) and prepayments of any revolving commitments (including the First Lien Revolving Loans) to the extent accompanied by a corresponding reduction in commitments) made during such fiscal year or after such fiscal year and prior to the time such prepayment is due (without duplication to subsequent years) (excluding all such prepayments funded with the proceeds of other long term Indebtedness). Each prepayment pursuant to this paragraph shall be made on or before the date that is ten (10) days after the date on which financial statements are required to be delivered pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash Flow is being calculated.
(e) Prior to any optional prepayment of Borrowings pursuant to Section 2.11(a)(i), the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (f) of this Section 2.11. In the event of any mandatory prepayment of Term Borrowings made at a time when Term Borrowings of more than one Class remain outstanding, the Borrower shall select Term Borrowings to be prepaid so that the aggregate amount of such prepayment is allocated between Term Borrowings (and, to the extent provided in the Refinancing Amendment for any Class of Other Term Loans, the Borrowings of such Class) pro rata based on the aggregate principal amount of outstanding Borrowings of each such Class; provided that any Term Lender (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, any Lender that holds Other Term Loans of such Class) may elect, by notice to the Administrative Agent by telephone (confirmed by facsimile) at least two (2) Business Days prior to the prepayment date, to decline all or any portion of any prepayment of its Term Loans or Other Term Loans of any such Class pursuant to this Section 2.11 (other than an optional prepayment pursuant to paragraph (a)(i) of this Section or a mandatory prepayment as a result of the Prepayment Event set forth in clause (b) of the definition thereof, which may not be declined), in which case the aggregate amount of the prepayment that would have been applied to prepay Term Loans or Other Term Loans of any such Class but was so declined (and not used pursuant to the immediately following sentence) shall be retained by Holdings or its Restricted Subsidiaries (such amounts, “ Retained Declined Proceeds ”). An amount equal to any portion of a mandatory prepayment of Term Borrowings that is declined by the Lenders under this Section 2.11(e) may, to the extent not prohibited hereunder or under the documentation governing the Permitted Pari Passu Refinancing Debt or the Pari Passu Intercreditor Agreement, be applied by the Borrower to prepay (at the Borrower’s election) pari passu indebtedness, Permitted Junior Priority Refinancing Debt or any Junior Financing or may be retained to be used for any other purposes not prohibited hereunder. Optional prepayments of Term Borrowings shall be allocated among the Classes of Term Borrowings as directed by the Borrower. In the absence of a designation by the Borrower as described in the preceding provisions of this paragraph of the Type of Borrowing of any Class, the Administrative Agent shall make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16, provided that, in connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to Section 2.11(c) or (d), such prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or Eurodollar Loans.
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(f) The Borrower shall notify the Administrative Agent of any optional prepayment pursuant to Section 2.11(a)(i) by telephone (confirmed by facsimile) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that a notice of optional prepayment may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or the occurrence of some other identifiable and specified event or condition, in which case such notice of prepayment may be revoked or extended by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date of prepayment) if such condition is not satisfied. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13, and subject to Section 2.11(a)(i), shall be without premium or penalty. At the Borrower’s election in connection with any prepayment pursuant to this Section 2.11, such prepayment shall not be applied to any Term Loan of a Defaulting Lender (under any of subclauses (a), (b) or (c) of the definition of “Defaulting Lender”) and shall be allocated ratably among the relevant non-Defaulting Lenders.
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(g) Notwithstanding any other provisions of Section 2.11(c) or (d), (A) to the extent that any of or all the Net Proceeds of any Prepayment Event by a Subsidiary of Holdings that is organized or incorporated under the laws of a jurisdiction other than the United States, any state, commonwealth or territory thereof or the District of Columbia, giving rise to a prepayment pursuant to Section 2.11(c) or (d) (a “ Restricted Prepayment Event ”) or Excess Cash Flow are prohibited or delayed by applicable local law (including financial assistance, corporate benefit, restrictions on repatriating or upstreaming of cash intra-group and the fiduciary and statutory duties of the directors of the relevant subsidiaries) from being repatriated to the Borrower, the portion of such Net Proceeds or Excess Cash Flow so affected will not be required to be taken into account in determining the amount to be applied to repay Term Loans at the times provided in Section 2.11(c) or (d), as the case may be, and such amounts may be retained by such Subsidiary, (B) to the extent that and for so long as the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Restricted Prepayment Event or Excess Cash Flow would have an adverse (other than de minimis consequence) tax or cost consequence to any Loan Party or any direct or indirect equity holder thereof with respect to such Net Proceeds or Excess Cash Flow, the Net Proceeds or Excess Cash Flow so affected will not be required to be taken into account in determining the amount to be applied to repay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary, (C) to the extent that and for so long as the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Restricted Prepayment Event or Excess Cash Flow would violate any material organizational document restrictions (as a result of minority ownership) and restrictions in other material agreements (to the extent not in violation of Section 6.09), the Net Proceeds or Excess Cash Flow so affected will not be required to be taken into account in determining the amount to be applied to repay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary and (D) to the extent that and for so long as the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Restricted Prepayment Event or Excess Cash Flow would give rise to a risk of liability for the directors of such Subsidiary, the Net Proceeds or Excess Cash Flow so affected will not be required to be taken into account in determining the amount to be applied to repay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary; provided that (i) the Borrower hereby agrees to use commercially reasonable efforts (as determined in the Borrower’s reasonable business judgment) to overcome or eliminate any such restrictions on repatriation even if the Borrower does not intend to actually repatriate such cash, so that an amount equal to the full amount of such Net Proceeds will otherwise be subject to repayment under this Section 2.11, and (ii) to the extent that the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Restricted Payment Event could reasonably be expected to have adverse Tax cost consequences for Holdings, the Borrower or any Restricted Subsidiary with respect to such Net Proceeds, an amount equal to such Net Proceeds that would be so affected will not be subject to repayment under this Section 2.11 and such amounts shall be available for general corporate purposes of the Loan Parties and their Subsidiaries as long as not required to be prepaid in accordance with this Section 2.11. For the avoidance of doubt, Borrower shall be permitted to make any repayments required by Section 2.11(c) or Section 2.11(d) from any source of funds and shall not be required to make any repayments from funds contained in any particular Loan Party. The non-application of any such prepayment amounts as a result of the foregoing provisions will not constitute a Default or Event of Default and such amounts shall be available for working capital and general corporate purposes of the Loan Parties and their Subsidiaries as long as not required to be prepaid in accordance with such provisions. Notwithstanding the foregoing, any payments actually made by the Loan Parties shall be applied net of an amount equal to the additional Taxes of Holdings, its Subsidiaries and the direct and indirect holders of Equity Interests in Holdings that would be payable or reserved against and any additional costs that would be incurred as a result of a repatriation, whether or not a repatriation actually occurs.
(h) Notwithstanding anything to the contrary, no prepayments of Term Loans shall be required or permitted pursuant to Sections 2.11(c) through 2.11(g) until the Discharge of First Lien Credit Agreement Obligations (as defined in the Closing Date Intercreditor Agreement) has occurred.
SECTION 2.12 Fees .
(a) [Reserved].
(b) [Reserved].
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(c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon in writing between the Borrower and the Administrative Agent.
(d) The Borrower agrees to pay on the Effective Date to each Term Lender party to this Agreement as a Term Lender on the Effective Date, as fee compensation for the funding of such Term Lender’s Initial Term Loan, a closing fee in an amount equal to 2.75% of the stated principal amount of such Term Lender’s Initial Term Loan. Such fees shall be payable to each Lender out of the proceeds of such Term Lender’s Initial Term Loan as and when funded on the Effective Date and shall be treated (and reported) by the Borrower and Term Lenders as a reduction in issue price of the Initial Term Loans for U.S. federal, state and local income tax purposes. Such closing fee will be in all respects fully earned, due and payable on the Effective Date and non-refundable and non-creditable thereafter.
(e) Notwithstanding the foregoing, and subject to Section 2.22, the Borrower shall not be obligated to pay any amounts to any Defaulting Lender pursuant to this Section 2.12.
SECTION 2.13 Interest .
(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if upon the occurrence and during the continuance of any Specified Event of Default, any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.00% per annum plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.13 or (ii) in the case of any other amount, 2.00% per annum plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section 2.13; provided that no amount shall be payable pursuant to this Section 2.13(c) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided , further that no amounts shall accrue pursuant to this Section 2.13(c) on any overdue amount or other amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan, provided that (i) interest accrued pursuant to paragraph (c) of this Section 2.13 shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
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(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.14 Alternate Rate of Interest .
If at least two (2) Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period (in each case with respect to the Loans impacted by this clause (b) or clause (a) above, “ Impacted Loans ”);
(c) the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (x) any Interest Election Request that requests the conversion of any Borrowing or continuation of any Borrowing as a Eurodollar Borrowing shall be ineffective and (y) if any Borrowing Request requests a Eurodollar Borrowing, then such Borrowing shall be made as an ABR Borrowing; provided , however , that, in each case, the Borrower may revoke any Borrowing Request that is pending when such notice is received.
(d) Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (a) of this Section 2.14 and/or is advised by the Required Lenders of their determination in accordance with clause (b) of this Section 2.14 and the Borrower shall so request, the Administrative Agent, the Required Lenders and the Borrower shall negotiate in good faith to amend the definition of “LIBO Rate” and other applicable provisions to preserve the original intent thereof in light of such change; provided that, until so amended, such Impacted Loans will be handled as otherwise provided pursuant to the terms of this Section 2.14.
SECTION 2.15 Increased Costs .
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or
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(ii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurodollar Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or to reduce the amount of any sum received or receivable by such Lender (whether of principal, interest or otherwise), then, from time to time upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such increased costs actually incurred or reduction actually suffered.
(b) If any Lender determines that any Change in Law regarding capital requirements has the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then, from time to time upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction actually suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company in reasonable detail, as the case may be, as specified in paragraph (a) or (b) of this Section 2.15 delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 15 days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.15 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.15 for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
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SECTION 2.16 Break Funding Payments .
In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Term Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or Section 9.02(c), then, in any such event, the Borrower shall, after receipt of a written request by any Lender affected by any such event (which request shall set forth in reasonable detail the basis for requesting such amount), compensate each Lender for the loss, cost and expense (excluding loss of profit) actually incurred by it as a result of such event. For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 2.16, each Lender shall be deemed to have funded each Eurodollar Loan made by it at the Adjusted LIBO Rate for such Loan by a matching deposit or other borrowing in the applicable interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so funded. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 and the reasons therefor delivered to the Borrower shall be prima facie evidence of such amounts. The Borrower shall pay such Lender the amount shown as due on any such certificate within 15 days after receipt of such demand; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.16 for any loss, cost or expense more than 180 days prior to the date that such Lender delivers such certificate. Notwithstanding the foregoing, this Section 2.16 will not apply to losses, costs or expenses resulting from Taxes, as to which Section 2.17 shall govern. Notwithstanding the foregoing, no Lender shall demand compensation pursuant to this Section 2.16 if it shall not at the time be the general policy or practice of such Lender to demand such compensation in substantially the same manner as applied to other similarly situated borrowers under comparable syndicated credit facilities.
SECTION 2.17 Taxes .
(a) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable Requirements of Law. If the applicable withholding agent (including, for the avoidance of doubt, the Administrative Agent or any Loan Party) shall be required by applicable Requirements of Law (as determined in the good faith discretion of the applicable withholding agent) to deduct any Taxes from such payments, then the applicable withholding agent shall make such deductions and shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Requirements of Law, and if such Taxes are Indemnified Taxes or Other Taxes, then the amount payable by the applicable Loan Party shall be increased as necessary so that after all such required deductions have been made (including such deductions applicable to additional amounts payable under this Section 2.17), each Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deductions been made.
(b) Without limiting the provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Requirements of Law.
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(c) The Borrower shall indemnify the Administrative Agent and each Lender within 30 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender as the case may be, on or with respect to any payment by or on account of any obligation of any Loan Party under any Loan Document and any Other Taxes paid by the Administrative Agent or such Lender, as the case may be (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.17) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) To the extent required by any applicable Requirements of Law (as determined in good faith by the Administrative Agent), the Administrative Agent may deduct or withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered or not property executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective), such Lender shall indemnify and hold harmless the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by the Loan Parties pursuant to Section 2.17 and without limiting any obligation of the Loan Parties to do so pursuant to such Section) fully for all amounts paid, directly or indirectly, by the Administrative Agent as Taxes or otherwise, together with all expenses incurred, including legal expenses, and any other out-of-pocket expenses, 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 authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this Section 2.17(d). The agreements in this Section 2.17(d) shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, any assignment of rights by a Loan Party, the termination of this Agreement and the repayment, satisfaction or discharge of all other obligations under any Loan Document.
(e) As soon as practicable after any payment of any Taxes by a Loan Party to a Governmental Authority, the Borrower 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.
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(f) Each Lender shall, at such times as are reasonably requested by Borrower or the Administrative Agent, (i) complete any documentation required for the Borrower to obtain clearance to make payments under the Loan Documents without, or with a reduction in, any withholding Tax and (ii) provide the Borrower and the Administrative Agent with any properly completed and executed documentation prescribed by any Requirement of Law, or reasonably requested by the Borrower or the Administrative Agent, certifying as to any entitlement of such Lender to an exemption from, or reduction in, any withholding Tax with respect to any payments to be made to such Lender under the Loan Documents. Each such Lender shall, whenever a lapse in time or change in circumstances renders any such documentation expired, obsolete or inaccurate in any respect (including any specific documentation required below in this Section 2.17(e)), deliver promptly to Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify the Borrower and the Administrative Agent in writing of its legal ineligibility to do so. Unless the applicable withholding agent has received forms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Lender are not subject to withholding tax or are subject to Tax at a rate reduced by an applicable tax treaty, the Borrower, Administrative Agent or other applicable withholding agent shall withhold amounts required to be withheld by applicable law from such payments at the applicable statutory rate.
Without limiting the generality of the foregoing:
(i) Each Lender that is a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to the Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement two properly completed and duly signed copies of Internal Revenue Service Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding.
(ii) Each Lender that is not a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to the Borrower and the Administrative Agent on or before the date on which it becomes a party to 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:
(A) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E (or any successor forms) claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,
(B) two properly completed and duly signed copies of Internal Revenue Service Form W-8ECI (or any successor forms),
(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (x) two properly completed and duly signed certificates, substantially in the form of Exhibit N (any such certificate a “ United States Tax Compliance Certificate ”), and (y) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E (or any successor forms),
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(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Lender is a partnership or a participating Lender), two properly completed and duly signed copies of Internal Revenue Service Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, United States Tax Compliance Certificate, Form W-9, Form W-8IMY (or other successor forms) or any other required information from each beneficial owner that would be required under this Section 2.17 if such beneficial owner were a Lender, as applicable ( provided that, if the Lender is a partnership (and not a participating Lender) and one or more direct or indirect partners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate may be provided by such Lender on behalf of such direct or indirect partner(s)), or
(E) two properly completed and duly signed copies of any other form prescribed by applicable Requirements of 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 Requirements of Law to permit the Borrower and the Administrative Agent to determine the withholding or deduction required to be made.
(iii) If a payment made to any Lender under any Loan Document would be subject to 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 whether such Lender has or has not complied with such Lender’s obligations under FATCA and, if necessary, to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Notwithstanding any other provision of this clause (e), a Lender shall not be required to deliver any form that such Lender is not legally eligible to deliver.
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(g) If the Borrower determines in good faith that a reasonable basis exists for contesting any Taxes for which indemnification has been demanded hereunder, the Administrative Agent or the relevant Lender, as applicable, shall use commercially reasonable efforts to cooperate with the Borrower in a reasonable challenge of such Taxes if so requested by the Borrower, provided that (a) the Administrative Agent or such Lender determines in its reasonable discretion that it would not be subject to any unreimbursed third party cost or expense or otherwise be prejudiced by cooperating in such challenge, (b) the Borrower pays all related expenses of the Administrative Agent or such Lender, as applicable and (c) the Borrower indemnifies the Administrative Agent or such Lender, as applicable, for any liabilities or other costs incurred by such party in connection with such challenge. If the Administrative Agent or a Lender receives a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.17, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.17 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent or such Lender, agree promptly to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. The Administrative Agent or such Lender, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the relevant taxing authority ( provided that the Administrative Agent or such Lender may delete any information therein that the Administrative Agent or such Lender deems confidential). Notwithstanding anything to the contrary, this Section 2.17(g) shall not be construed to require the Administrative Agent or any Lender to make available its Tax returns (or any other information relating to Taxes which it deems confidential) to any Loan Party or any other person). Notwithstanding anything herein to the contrary, the Borrower shall not be required to compensate such Lender for any amount incurred under this Section 2.17 more than one hundred and eighty (180) days prior to the date that such Lender notifies the Borrower of the event that gives rise to such claim; provided that, if the circumstance giving rise to such claim is retroactive, then such one hundred and eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof.
(h) The agreements in this Section 2.17 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 this Agreement and the payment of the Loans and all other amounts payable hereunder.
(i) For purposes of this Section 2.17, the term “applicable Requirements of Law” includes FATCA.
SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs .
(a) The Borrower shall make each payment required to be made by it under any Loan Document (whether of principal, interest, or fees, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) at or prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time, on the date when due), in immediately available funds, without condition or deduction for any counterclaim, recoupment or setoff. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. Except as otherwise expressly provided herein, all such payments shall be made in Dollars to such account as may be specified by the Administrative Agent. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. Except as otherwise provided herein, if any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar 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 payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate for the period of such extension.
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(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal interest and fees then due hereunder, such funds shall be applied (i) first , towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second , towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Term Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Term Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Term Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest and (ii) the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant or (C) any disproportionate payment obtained by a Lender of any Class as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans of that Class or any increase in the Applicable Rate in respect of Loans of Lenders that have consented to any such extension. The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower’s rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption and in its sole discretion, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
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(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(a), Section 2.06(b), Section 2.18(d) or Section 9.03(c), then the Administrative Agent may, in its discretion and in the order determined by the Administrative Agent (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such 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 to be applied to, any future funding obligations of such Lender under any such Section.
SECTION 2.19 Mitigation Obligations; Replacement of Lenders .
(a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or any event gives rise to the operation of Section 2.23, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder, or to assign and delegate its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment and delegation (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17 or mitigate the applicability of Section 2.23, as the case may be, and (ii) would not subject such Lender to any unreimbursed cost or expense reasonably deemed by such Lender to be material and would not be inconsistent with the internal policies of, or otherwise be disadvantageous in any material economic, legal or regulatory respect to, such Lender.
(b) If (i) any Lender requests compensation under Section 2.15 or gives notice under Section 2.23, (ii) the Borrower is required to pay any additional amount to any Lender or to any Governmental Authority for the account of any Lender pursuant to Section 2.17, (iii) any Lender is or becomes a Disqualified Lender or (iv) any Lender is a Defaulting Lender, 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 9.04), all its interests, rights and obligations under this Agreement and the other Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment and delegation); provided that (A) the Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consents, in each case, shall not unreasonably be withheld or delayed, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued but unpaid interest thereon, accrued but unpaid 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), (C) the Borrower or such assignee shall have paid (unless waived) to the Administrative Agent the processing and recordation fee specified in Section 9.04(b)(ii) and (D) in the case of any such assignment resulting from a claim for compensation under Section 2.15, or payments required to be made pursuant to Section 2.17 or a notice given under Section 2.23, such assignment will result in a material reduction in such compensation or payments. 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 (including as a result of any action taken by such Lender under paragraph (a) above), the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee and that the Lender required to make such assignment need not be a party thereto.
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SECTION 2.20 Incremental Credit Extensions .
(a) The Borrower may at any time or from time to time on one or more occasions after the Effective Date, by written notice delivered to the Administrative Agent request (i) one or more additional Classes of term loans (each an “ Incremental Term Facility ”), or (ii) one or more additional term loans of the same Class of any existing Class of term loans (each an “ Incremental Term Increase ” and, together with any Incremental Term Facility, the “ Incremental Facilities ” and any Loans thereunder, the “ Incremental Loans ”); provided that, after giving effect to the effectiveness of any Incremental Facility Amendment, subject to certain “certain funds provisions” to be agreed to by the Borrower and the Incremental Facilities Lenders, no Event of Default shall have occurred and be continuing or would result therefrom ( provided , that in the case of an Incremental Facility incurred to finance a Limited Condition Transaction, if the Borrower has made an LCT Election, such condition shall be that no Event of Default shall have occurred and be continuing at the LCT Test Date). Notwithstanding anything to contrary herein, the aggregate principal amount of the Incremental Facilities that can be incurred at any time shall not exceed the Incremental Cap at such time. Each Incremental Facility shall be in a minimum principal amount of $10,000,000 and integral multiples of $1,000,000 in excess thereof (unless the Borrower and the Administrative Agent otherwise agree); provided that such amount may be less than $10,000,000 to the extent such amount represents all the remaining availability under the aggregate principal amount of Incremental Facilities set forth above.
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(b) (i) The Incremental Term Loans (a)(1) shall rank equal or junior in right of payment and equal or junior in right of security with the Term Loans or may be unsecured, and if junior in right of payment and/or security or unsecured, shall be established as a separate facility than the facility for the Term Loans that are secured by the Collateral on a pari passu basis with the Term Loans, (2) shall be structured such that neither Holdings nor any Restricted Subsidiary is a guarantor with respect to such Indebtedness unless Holdings or such Restricted Subsidiary is a Loan Party which shall have previously or substantially concurrently guaranteed the Obligations, and (3) if secured, the obligations in respect thereof shall not be secured by Liens on the assets of Holdings and the Restricted Subsidiaries, other than assets constituting Collateral, and if established as a separate facility, shall be subject to a customary intercreditor agreement with the Administrative Agent and/or Collateral Agent substantially consistent with the applicable Intercreditor Agreement together with (A) any immaterial changes and (B) material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not less than five (5) Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five (5) Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agent’s and/or Collateral Agent’s entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agent’s and/or Collateral Agent’s execution thereof, in each case in form and substance reasonably satisfactory to the Administrative Agent and/or Collateral Agent (it being understood that junior Liens are not required to be pari passu with other junior Liens, and that Indebtedness secured by junior liens may secured by Liens that are pari passu with or junior in priority to, other Liens that are junior to the Liens securing the Obligations), (b) shall not (except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not mature prior to the Term Maturity Date of the Initial Term Loans) mature earlier than the Term Maturity Date of the Initial Term Loans, (c) shall not (except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing that does not have a shorter Weighted Average Life to Maturity than the remaining Initial Term Loans) have a shorter Weighted Average Life to Maturity than the remaining Initial Term Loans, (d) shall have a maturity date (subject to clause (b)), an amortization schedule (subject to clause (c)), interest rates (including through fixed interest rates), “most favored nation” provisions (if any), interest margins, rate floors, upfront fees, funding discounts, original issue discounts, financial covenants (if any) and prepayment terms and premiums as determined by the Borrower and the Additional Term Lenders thereunder; provided that, for any Incremental Term Loans which are secured on a pari passu basis with the Initial Term Loans and ranking pari passu with the Initial Term Loans in right of payment, in the event that the Effective Yield for any such Incremental Term Loans is greater than the Effective Yield for the Initial Term Loans by more than 0.50% per annum, then the Effective Yield for the Initial Term Loans shall be increased to the extent necessary so that the Effective Yield for the Initial Term Loans is equal to the Effective Yield for such Incremental Term Loans minus 0.50% per annum; provided , further , that if the Incremental Term Loans include an interest rate floor greater than the applicable interest rate floor under the Initial Term Loans, such differential between interest rate floors shall be equated to the applicable interest rate margin for purposes of determining whether an increase to the interest rate margin under the Initial Term Loans shall be required, but only to the extent an increase in the interest rate floor in the Initial Term Loans would cause an increase in the interest rate then in effect thereunder, and in such case, the interest rate floor (but not the interest rate margin) applicable to the Initial Term Loans shall be increased to the extent of such differential between interest rate floors, (e) any Incremental Term Facility may provide for the ability to participate (x) on a pro rata basis or less than pro rata basis (but not greater than pro rata basis) in any voluntary prepayments of the Initial Term Loans and (y) on a pro rata basis or less than pro rata basis (but not on a greater than pro rata basis other than in the case of prepayment with Other Term Loans incurred pursuant to a Refinancing Amendment to refinance such Incremental Term Loans or any other Credit Agreement Refinancing Indebtedness in respect of such Incremental Term Loans) in any mandatory prepayments of the Initial Term Loans and (f) may otherwise have terms and conditions different from those of the Term Loans (including currency denomination); provided that (x) to the extent the terms and documentation with respect to such Incremental Term Loans are not consistent with the existing Initial Term Loans (except with respect to matters contemplated by clauses (a), (b), (c), (d) and (e) above), the covenants, events of default and guarantees of any such Incremental Term Loans shall not be materially more restrictive to the Borrower, when taken as a whole, than the terms of the Initial Term Loans unless (1) Lenders under the Initial Term Loans also receive the benefit of such more restrictive terms (it being understood that, to the extent that any covenant, event of default or guarantee is added or modified for the benefit of any Incremental Term Facility, no consent shall be required from the Administrative Agent or any of the Term Lenders to the extent that such covenant, event of default or guarantee is also added or modified for the benefit of the existing Term Loans), (2) any such provisions apply after the Term Maturity Date with respect to the Initial Term Loans or (3) such terms are reasonably satisfactory to the Administrative Agent and the Borrower and (y) in no event shall it be a condition to the effectiveness of, or borrowing under, any such Incremental Term Loans that any representation or warranty of any Loan Party set forth herein be true and correct, except and solely to the extent required by the Additional Term Lenders providing such Incremental Term Loans. Any Incremental Term Increase shall be on the same terms and pursuant to the same documentation applicable to the Term Loans (except with respect to matters contemplated by clauses (a), (b), (c), (d) and (e) above). Any Incremental Term Facility shall be on terms and pursuant to documentation as determined by the Borrower and the Additional Term Lenders providing such Incremental Term Facility, subject to the restrictions and exceptions set forth above.
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(ii) [Reserved].
(iii) [Reserved].
(c) Each notice from the Borrower pursuant to this Section shall set forth the requested amount of the relevant Incremental Term Loans.
(d) Commitments in respect of any Incremental Term Increase shall become Commitments under this Agreement pursuant to an amendment (an “ Incremental Facility Amendment ”) to this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each Lender agreeing to provide such Commitment, if any, each Additional Term Lender, if any, and the Administrative Agent ( provided , that if such amendment does not affect the rights, duties, privileges or obligations of the Administrative Agent, the Administrative Agent shall only be required to acknowledge such amendment). An Incremental Facility may be provided, subject to the prior written consent of the Borrower (not to be unreasonably withheld), by any existing Lender (it being understood that no existing Lender shall have the right to participate in any Incremental Facility or, unless it agrees, be obligated to provide any Incremental Loans) or by any Additional Term Lender. Any loan under an Incremental Term Increase shall be a “Loan” for all purposes of this Agreement and the other Loan Documents. The Incremental Facility Amendment may, subject to Section 2.20(b), without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.20. The effectiveness of any Incremental Facility Amendment and the occurrence of any credit event (including the making (but not the conversion or continuation) of a Loan thereunder) pursuant to such Incremental Facility Amendment shall be subject to the satisfaction of such conditions as the parties thereto shall agree and as required by this Section 2.20. The Borrower will use the proceeds of the Incremental Term Loans for any purpose not prohibited by this Agreement.
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(e) Notwithstanding anything to the contrary, this Section 2.20 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
SECTION 2.21 Refinancing Amendments .
(a) At any time after the Effective Date, the Borrower may obtain, from any Lender or any Additional Term Lender, Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Term Loans then outstanding under this Agreement (which for purposes of this clause will be deemed to include any then outstanding Other Term Loans), in the form of Other Term Loans or Other Term Commitments, in each case pursuant to a Refinancing Amendment; provided that such Credit Agreement Refinancing Indebtedness (i) will be unsecured or will rank pari passu or junior in right of payment and of security with the other Loans and Commitments hereunder, (ii) will have such pricing and optional prepayment terms as may be agreed by the Borrower and the Lenders thereof, and (iii) the Net Proceeds of such Credit Agreement Refinancing Indebtedness shall be applied, substantially concurrently with the incurrence thereof, to the prepayment of any outstanding Term Loans. The effectiveness of any Refinancing Amendment shall be subject to the satisfaction on the date thereof of the conditions as agreed between the lenders providing such Credit Agreement Refinancing Indebtedness and the Borrower. Each Class of Credit Agreement Refinancing Indebtedness incurred under this Section 2.21 shall be in an aggregate principal amount that is (x) not less than $10,000,000 in the case of Other Term Loans and (y) an integral multiple of $1,000,000 in excess thereof (in each case unless the Borrower and the Administrative Agent otherwise agree). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment. Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Other Term Loans and/or Other Term Commitments). Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section.
(b) If, in connection with any proposed Refinancing Amendment with respect to any Class of Loans, any Lender of such Class declines to provide any portion of the Credit Agreement Refinancing Indebtedness on the terms provided by the other Lenders providing such Credit Agreement Refinancing Indebtedness (each such Lender, a “ Non-Refinancing Lender ”) then the Borrower may, on notice to the Administrative Agent and the Non-Refinancing Lender, (i) cause such Lender to (and such Lender shall be obligated to (and to the extent such Non-Refinancing Lender does not execute such Refinancing Amendment, such Refinancing Amendment shall nonetheless be effective without such signature of the Non-Refinancing Lender)) assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04) all or any part of its interests, rights and obligations under this Agreement in respect of the Loans and Commitments of the applicable Class to one or more Eligible Assignees (which Eligible Assignee may be another Lender, if a Lender accepts such assignment) in connection with such Refinancing Amendment; provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided , further, that (a) such Non-Refinancing Lender shall have received payment of an amount equal to the outstanding principal of the Loans of the applicable Class assigned by it pursuant to this Section 2.21(b), accrued interest thereon, accrued fees and all other amounts (including any amounts under Section 2.11) payable to it hereunder from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) and (b) no processing and recordation fee specified in Section 9.04(b) shall be payable in connection therewith.
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(c) This Section 2.21 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
SECTION 2.22 Defaulting Lenders .
(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Waivers and Amendments . Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.02.
(ii) Reallocation of Payments . Subject to the last sentence of Section 2.11(f), any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 9.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third , to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; fourth , so long as no Default or Event of Default exists, to the payment of any amounts owing to any Loan Party as a result of any judgment of a court of competent jurisdiction obtained by any Loan Party against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and fifth , to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans and such Lender is a Defaulting Lender under clause (a) of the definition thereof, such payment shall be applied solely to pay the relevant Loans of the relevant non-Defaulting Lenders on a pro rata basis. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
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(b) Defaulting Lender Cure . If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), such Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders, whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided further that except to the extent otherwise expressly agreed by the affected parties and subject to Section 9.20, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
SECTION 2.23 Illegality .
If any Lender reasonably determines that any law has made it unlawful, or any Governmental Authority has asserted that it is unlawful, for any Lender to make, maintain or fund Loans whose interest is determined by reference to the Adjusted LIBO Rate or to determine or charge interest rates based upon the Adjusted LIBO Rate, then, on notice thereof by such Lender to Borrower through the Administrative Agent, if such notice asserts the illegality of such Lender making or maintaining ABR Loans the interest rate on which is determined by reference to the Adjusted LIBO Rate component of the Alternate Base Rate, the interest rate on such ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon three Business Days’ notice from such Lender (with a copy to the Administrative Agent), prepay or convert all Eurodollar Loans of such Lender to ABR Loans (the interest rate on which ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans, and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Adjusted LIBO Rate, the Administrative Agent shall during the period of such suspension compute the Alternate Base Rate applicable to such Lender without reference to the Adjusted LIBO Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted LIBO Rate. Each Lender agrees to notify the Administrative Agent and the Borrower in writing promptly upon becoming aware that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted LIBO Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
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SECTION 2.24 Loan Modification Offers .
(a) At any time after the Effective Date, the Borrower may on one or more occasions, by written notice to the Administrative Agent, make one or more offers (each, a “ Loan Modification Offer ”) to all the Lenders of one or more Classes (each Class subject to such a Loan Modification Offer, an “ Affected Class ”) to effect one or more Permitted Amendments relating to such Affected Class pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Borrower (including mechanics to permit cashless rollovers and exchanges by Lenders). Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective. Permitted Amendments shall become effective only with respect to the Loans and Commitments of the Lenders of the Affected Class that accept the applicable Loan Modification Offer (such Lenders, the “ Accepting Lenders ”) and, in the case of any Accepting Lender, only with respect to such Lender’s Loans and Commitments of such Affected Class as to which such Lender’s acceptance has been made.
(b) A Permitted Amendment shall be effected pursuant to a Loan Modification Agreement executed and delivered by Holdings, Borrower, each applicable Accepting Lender and the Administrative Agent ( provided , that if such amendment does not affect the rights, duties, privileges or obligations of the Administrative Agent, the Administrative Agent shall only be required to acknowledge such amendment). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement. Each Loan Modification Agreement may, without the consent of any Lender other than the applicable Accepting Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of this Section 2.24, including any amendments necessary to treat the applicable Loans and/or Commitments of the Accepting Lenders as a new “Class” of loans and/or commitments hereunder.
(c) If, in connection with any proposed Loan Modification Offer, any Lender declines to consent to such Loan Modification Offer on the terms and by the deadline set forth in such Loan Modification Offer (each such Lender, a “ Non-Accepting Lender ”) then the Borrower may, on notice to the Administrative Agent and the Non-Accepting Lender, (i) replace such Non-Accepting Lender in whole or in part by causing such Lender to (and such Lender shall be obligated to) assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04) all or any part of its interests, rights and obligations under this Agreement in respect of the Loans and Commitments of the Affected Class to one or more Eligible Assignees (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided , further, that (a) the applicable assignee shall have agreed to provide Loans and/or Commitments on the terms set forth in the applicable Permitted Amendment, (b) such Non-Accepting Lender shall have received payment of an amount equal to the outstanding principal of the Loans of the Affected Class assigned by it pursuant to this Section 2.24(c), accrued interest thereon, accrued fees and all other amounts (including any amounts under Section 2.11) payable to it hereunder from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) and (c) the processing and recordation fee specified in Section 9.04(b) shall be payable.
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(d) Notwithstanding anything to the contrary, this Section 2.24 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
Article III
REPRESENTATIONS AND WARRANTIES
Each of Holdings and the Borrower represents and warrants to the Lenders that as of the Effective Date:
SECTION 3.01 Organization; Powers .
Each of Holdings, any Intermediate Parent, the Borrower and the Restricted Subsidiaries is (a) duly organized or incorporated, validly existing and in good standing (to the extent such concept exists in the jurisdiction of organization of such Person) under the laws of the jurisdiction of its organization or incorporation, (b) has the corporate or other organizational power and authority to carry on its business as now conducted and to execute, deliver and perform its obligations under each Loan Document to which it is a party and (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except in the cases of clause (a) (other than with respect to the Borrower), clause (b) and clause (c), where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.02 Authorization; Enforceability .
This Agreement has been duly authorized, executed and delivered by each of Holdings and the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of Holdings, the Borrower or such Loan Party, as the case may be, enforceable against it in accordance with its terms, subject to applicable Debtor Relief Laws and any other applicable bankruptcy, insolvency, reorganization, moratorium, examinership or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and, in the case of each UK Loan Party and each UK Security Document, subject to the UK Legal Reservations and, where applicable, the UK Perfection Requirements and in the case of each Irish Loan Guarantor and each Irish Security Document, subject to the Irish Legal Reservations and, where applicable, the Irish Perfection Requirements.
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SECTION 3.03 Governmental Approvals; No Conflicts .
Except as set forth on Schedule 3.03, the Financing Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate (i) the Organizational Documents of, or (ii) any Requirements of Law applicable to, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, (c) will not violate or result in a default under any indenture or other agreement or instrument binding upon Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary or their respective assets, or give rise to a right thereunder to require any payment, repurchase or redemption to be made by Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation thereunder and (d) will not result in the creation or imposition of any Lien on any asset of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary (other than Liens created under the Loan Documents) except (in the case of each of clauses (a), (b)(ii) and (c)) to the extent that the failure to obtain or make such consent, approval, registration, filing or action, or such violation, default or right, as the case may be, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; provided that in the case of a UK Loan Party and each UK Security Document, each representation and warranty in this Section 3.03 (excluding those representations and warranties at Section 3.03(b)(i) and Section 3.03(c)) shall be subject to, in each case as applicable, the UK Legal Reservations and the UK Perfection Requirements.
SECTION 3.04 Financial Condition; No Material Adverse Effect .
(a) The Holdings Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the consolidated financial condition of Holdings and its Subsidiaries as of the respective dates thereof and their consolidated results of operations and cash flows for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.
(b) To the knowledge of Holdings and the Borrower, the PRN Audited Financial Statements fairly present in all material respects the combined financial condition of the Acquired Companies and their subsidiaries as of the respective dates thereof and their combined results of operations and cash flows for the period covered thereby in accordance with GAAP in all material respects, except as otherwise expressly noted therein or as could not reasonably be expected to be materially adverse to the interests of the Lenders.
(c) The Pro Forma Financial Statements have been prepared in good faith, based on assumptions and adjustments believed by the Borrower to be reasonable as of the date of delivery thereof, and, to the knowledge of Holdings and the Borrower, present fairly in all material respects on a pro forma basis the estimated unaudited financial position of Holdings and its Subsidiaries as at March 31, 2016 and their estimated unaudited results of operations for the period covered thereby, in each case after giving effect to the Transactions, subject to audit adjustments.
(d) Since the Effective Date, there has been no Material Adverse Effect.
SECTION 3.05 Properties .
Each of Holdings, each Intermediate Parent, the Borrower and the Restricted Subsidiaries has good and marketable title to, or valid interests in, all its real and personal property material to its business, if any (including all of the Mortgaged Properties), (i) free and clear of all Liens except for Liens permitted by Section 6.02 and (ii) except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
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SECTION 3.06 Litigation and Environmental Matters .
(a) Except as set forth on Schedule 3.06, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of Holdings or the Borrower, threatened in writing against or affecting Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(b) Except as set forth on Schedule 3.06, and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, none of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary (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, to the knowledge of Holdings or the Borrower, become subject to any Environmental Liability or (iii) has received written notice of any claim with respect to any Environmental Liability.
SECTION 3.07 Compliance with Laws and Agreements .
Each of Holdings, each Intermediate Parent, the Borrower and the Restricted Subsidiaries is in compliance with (a) all Requirements of Law applicable to it or its property and (b) all indentures and other agreements and instruments binding upon it or its property, except, in each case, where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.08 Investment Company Status .
None of the Loan Parties is required to register as an “investment company” under the Investment Company Act of 1940, as amended from time to time.
SECTION 3.09 Taxes .
Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, Holdings, each Intermediate Parent, the Borrower and each Restricted Subsidiary (a) have timely filed or caused to be filed all Tax returns and reports required to have been filed and (b) have paid or caused to be paid all Taxes levied or imposed on their properties, income or assets (whether or not shown on a Tax return) including in their capacity as tax withholding agents, except any Taxes that are being contested in good faith by appropriate proceedings, provided that Holdings, the Borrower or such Intermediate Parent or Restricted Subsidiary, as the case may be, has set aside on its books adequate reserves therefor in accordance with GAAP. There is no proposed Tax assessment, deficiency or other claim against Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary that would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
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SECTION 3.10 ERISA .
(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan sponsored by a Loan Party is in compliance with the applicable provisions of ERISA, the Code and other federal or state laws.
(b) Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) no ERISA Event has occurred during the six year period prior to the date on which this representation is made or deemed made or is reasonably expected to occur, and (ii) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that would reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.
(c) Except as could not reasonably be expected, individually or in the aggregate to result in a Material Adverse Effect: (i) each employee benefit plan (as defined in Section 3(2) of ERISA) sponsored by Holdings or the Borrower that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service; (ii) to the knowledge of Holdings and the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status; and (iii) there are no pending or, to the knowledge of Holdings and the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any such plan.
SECTION 3.11 Disclosure .
As of the Effective Date, (in the case of any of the following relating to the Acquired Companies, to the best of Borrower’s knowledge), all written factual information and written factual data (other than projections, any pro forma financial information (including the Pro Forma Financial Statements), budgets, other forward-looking information or information consisting of statements, estimates or forecasts regarding the future condition of the industries in which the Loan Parties operate and information of a general economic or industry specific nature) made available to the Administrative Agent, any Joint Lead Arranger or any Lender in connection with the Transactions, when taken as a whole after giving effect to all supplements and updates provided thereto, is correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not materially misleading in the light of the circumstances under which they were made; provided that, with respect to the projections of Holdings and its Subsidiaries included in the Information Memorandum, Holdings and the Borrower represent that such projections, when taken as a whole, were prepared in good faith based upon assumptions believed by them to be reasonable at the time furnished, it being understood that (i) such projections are merely a prediction as to future events and are not to be viewed as facts, (ii) such projections are subject to significant uncertainties and contingencies, many of which are beyond the control of Holdings and (iii) no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ significantly from the projected results and such differences may be material.
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SECTION 3.12 Subsidiaries . As of the Effective Date, after giving effect to the Transactions to occur on the Effective Date, Schedule 3.12 sets forth the name of, and the ownership interest of each Subsidiary of Holdings.
SECTION 3.13 Intellectual Property; Licenses, Etc.
Except as could not reasonably be expected to have a Material Adverse Effect, each of Holdings, each Intermediate Parent, the Borrower and the Restricted Subsidiaries owns, licenses or possesses the right to use all Intellectual Property that is reasonably necessary for the operation of its business substantially as currently conducted. To the knowledge of Holdings and the Borrower, no Intellectual Property used by Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary in the operation of its business as currently conducted infringes upon the Intellectual Property of any Person except for such infringements that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No claim or litigation regarding any of the Intellectual Property is pending or, to the knowledge of Holdings and the Borrower, threatened in writing against Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
SECTION 3.14 Solvency .
Immediately after the consummation of each of the Transactions to occur on the Effective Date, after taking into account all applicable rights of indemnity and contribution, (a) the sum of the debt (including contingent liabilities) of Holdings and its Subsidiaries, taken as a whole, does not exceed the present fair saleable value (on a going concern basis) of the assets of Holdings and its Subsidiaries, taken as a whole; (b) the capital of Holdings and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of Holdings and its Subsidiaries, taken as a whole, contemplated as of the date hereof; and (c) Holdings and its Subsidiaries, taken as a whole, do not intend to incur, or believe that they will incur, debts including current obligations beyond their ability to pay such debts as they mature in the ordinary course of business. For the purposes of this Section 3.14, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5) in the ordinary course of business.
SECTION 3.15 Federal Reserve Regulations .
No part of the proceeds of the Loans will be used, directly or indirectly, to purchase or carry any margin stock (within the meaning of Regulation U of the Board of Governors) or to refinance any Indebtedness originally incurred for such purpose, or for any other purpose that entails a violation (including on the part of any Lender) of the provisions of Regulations U or X of the Board of Governors.
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SECTION 3.16 USA PATRIOT Act; OFAC and FCPA .
(a) The Borrower will not directly or, knowingly, indirectly use the proceeds of the Loans or otherwise make available such proceeds to any Person for the purpose of funding activities or business of or with any Person that is the subject of Sanctions, or in any Sanctioned Country, in each case, in violation of applicable Sanctions, or in any other manner that would result in a violation by any party to this Agreement of Sanctions applicable to such party. The Borrower will not use the proceeds of the Loans for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity on behalf of a government, in order to obtain, retain or direct business or obtain any improper advantage, in each case in violation of the United States Foreign Corrupt Practices Act of 1977, as amended (the “ FCPA ”) or any other applicable anti-corruption law.
(b) Each of Holdings, the Borrower and the Restricted Subsidiaries is in compliance in all material respects with (i) applicable regulations and other Sanctions administered by OFAC, (ii) Title III of the USA Patriot Act and (iii) the FCPA, the UK Bribery Act of 2010, the Prevention of Corruption (Amendment) Act 2010, the Dutch Criminal Code, the Dutch Sanctions Act 1977 (Sanctiewet 1977) and the Luxembourg Criminal Code.
(c) None of Holdings, any Intermediate Parent, the Borrower, any of the Restricted Subsidiaries or, to the knowledge of the Borrower, any director or officer thereof or one or more individuals or entities holding 50 percent or more of the equity interests of Holdings, are individuals or entities currently on OFAC’s list of Specially Designated Nationals and Blocked Persons and/or any similar list maintained by OFAC, nor is Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary located, organized or resident in a Sanctioned Country.
Article IV
CONDITIONS
SECTION 4.01 Effective Date .
The obligation of each Lender to make Loans hereunder on the Effective Date shall be subject to satisfaction of the following conditions (or waiver thereof in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from the Borrower, Intermediate Lux Holdings, Intermediate U.S. Holdings, and Holdings either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile or other electronic transmission of a signed counterpart of this Agreement) that such party has signed a counterpart of this Agreement.
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(b) The Administrative Agent shall have received a written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of (i) Kirkland & Ellis LLP, New York counsel for the Loan Parties, (ii) Greenberg Traurig, LLP, special Maryland counsel for the Loan Parties, (iii) Loyens & Loeff Luxembourg S.À R.L., special Luxembourg counsel for the Foreign Loan Parties, and (iv) DLA Piper Nederland N.V., special Dutch counsel for the Foreign Loan Parties, in each case in form and substance reasonably satisfactory to the Joint Lead Arrangers and the Administrative Agent. Each of Holdings and the Borrower hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received a customary certificate of each Loan Party, dated the Effective Date, executed by any Responsible Officer of such Loan Party including or attaching only those documents referred to in paragraph (d) of this Section 4.01 and confirming that such documents are correct, complete and in full force and effect and have not been amended or superseded as of the Effective Date.
(d) The Administrative Agent shall have received a copy of (i) each Organizational Document of each Loan Party (including, in relation to a Dutch Loan Guarantor, a recent extract from the Dutch trade register ( handelsregister ) relating to it) certified, to the extent applicable, as of a recent date by the applicable Governmental Authority, (ii) signature and incumbency certificates of the Responsible Officers of each Loan Party executing the Loan Documents to which it is a party, (iii) copies of resolutions of the Board of Directors of each Loan Party approving and authorizing the execution, delivery and performance of Loan Documents to which it is a party (or, to the extent required by any applicable law or Organizational Documents, a copy of a resolution signed by all the holders of the issued shares in each Foreign Loan Party, approving and authorizing the execution, delivery and performance of Loan Documents to which it is a party and, if required by applicable law or Organizational Documents, a copy of a resolution of the Board of Directors of each corporate shareholder of each Foreign Loan Party approving the terms of such resolution), certified as of the Effective Date by a secretary, an assistant secretary or a Responsible Officer of such Loan Party as being in full force and effect without modification or amendment and (iv) a good standing certificate (to the extent such concept exists in the jurisdiction of incorporation, organization or formation of such Loan Party) from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation.
(e) The Administrative Agent shall have received (or shall receive substantially contemporaneously with funding on the initial Loans hereunder) (which amounts may be funded from the proceeds of the initial Loans hereunder) all fees and other amounts previously agreed in writing by the Joint Lead Arrangers and the Borrower to be due and payable on or prior to the Effective Date, including, to the extent invoiced at least three (3) Business Days prior to the Effective Date, reimbursement or payment of all reasonable and documented out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel to the extent required to be reimbursed pursuant to the Commitment Letter) required to be reimbursed or paid by any Loan Party under any Loan Document.
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(f) Holdings and the Borrower shall have satisfied the Collateral and Guarantee Requirement and, substantially simultaneously with the consummation of the Acquisition the Subsidiary Guarantors shall have satisfied the Collateral and Guarantee Requirement (in each case other than in accordance with Section 5.14); provided that if, notwithstanding the use by Holdings and the Borrower of commercially reasonable efforts without undue burden or expense to cause the Collateral and Guarantee Requirement to be satisfied on the Effective Date, the requirements thereof (other than (a) the execution and delivery of the Guarantee Agreement and the Collateral Agreement by the Effective Date Loan Parties described in clauses (i) and (ii) of the definition thereof, (b) subject to the Closing Date Intercreditor Agreement, the delivery to the First Lien Collateral Agent of stock certificates or other certificates, if any, representing equity interests of the Borrower and Wholly Owned Subsidiaries of Holdings that are Effective Date Loan Parties described in clause (ii) of the definition thereof ( provided that (x) possession of such certificates perfects a security interest therein and (y) such certificated Equity Interests, other than certificated Equity Interests of the Borrower, will be required to be delivered on the Effective Date only to the extent received from the Acquired Companies (if applicable) after use of Borrower’s commercially reasonable efforts to obtain delivery of such certificates) and (c) delivery of Uniform Commercial Code financing statements, with respect to perfection of security interests in the assets of the Loan Parties that may be perfected by the filing of a financing statement under the Uniform Commercial Code) are not satisfied as of the Effective Date, the satisfaction of such requirements shall not be a condition to the availability of the Loans on the Effective Date (but shall be required to be satisfied as promptly as practicable after the Effective Date and in any event within the period specified therefor in Schedule 5.14 or such later date as the Administrative Agent may otherwise reasonably agree).
(g) Since the date of the Acquisition Agreement, there shall not have been any change or event that has resulted in, or would be reasonably expected to result in, a Material Adverse Effect (as defined in the Acquisition Agreement).
(h) The Joint Lead Arrangers shall have received Audited Financial Statements, the Unaudited Financial Statements and the Pro Forma Financial Statements.
(i) (A) The Specified Acquisition Agreement Representations shall be true and correct in all material respects on and as of the Effective Date and (B) the Specified Representations shall be true and correct in all material respects on and as of the Effective Date.
(j) The Core Acquisition shall be consummated in all material respects pursuant to the Acquisition Agreement substantially concurrently with the initial funding of the Loans without giving effect to any amendments, consents or waivers to the execution copy of the Acquisition Agreement made available to the Joint Lead Arrangers prior to their execution and delivery of the Commitment Letter or modifications, consents or waivers of the provisions thereof that, in any such case, are materially adverse to the interests of the Lenders or the Joint Lead Arrangers without the written consent (including vie e-mail) of the Joint Lead Arrangers, such consent not to be unreasonably withheld, conditioned or delayed (it being understood and agreed that (i) any increase in the consideration for the Acquisition shall not be deemed to be materially adverse to the interests of the Lenders or the Joint Lead Arrangers (so long as any increase in the purchase price shall not be funded with additional indebtedness other than Revolving Borrowings (as defined in the First Lien Credit Agreement), (ii) the following decreases in the consideration for the Acquisition shall not be deemed to be materially adverse to the interests of the Lenders or the Joint Lead Arrangers: (x) decreases pursuant to any purchase price or similar adjustment provisions set forth in the Acquisition Agreement and (y) decreases to the extent they are applied first to reduce the Equity Contribution Percentage (as defined in the Commitment Letter) to a percentage not less than twenty percent (20%) and second, to reduce the amount of the Initial Term Loans and the First Lien Term Loans, on the one hand, and the Equity Contribution (as defined in the Commitment Letter), on the other hand, on a pro rata basis and (iii) any modification to the definition of “Material Adverse Effect” (as defined in the Acquisition Agreement) without the prior written consent of the Joint Lead Arrangers shall be deemed to be materially adverse to the interests of the Lenders or the Joint Lead Arrangers.
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(k) The Debt Repayment shall have been consummated, or substantially concurrently with the initial funding of Loans and the First Lien Term Loans on the Effective Date, shall be consummated.
(l) The Joint Lead Arrangers and the Lenders shall have received a certificate from the chief financial officer of Holdings certifying as to the solvency of Holdings and its Subsidiaries on a consolidated basis after giving effect to the Transactions, substantially the form of Exhibit P.
(m) The Administrative Agent and the Joint Lead Arrangers shall have received, at least three (3) Business Days prior to the Effective Date, all documentation and other information about the Loan Parties as shall have been reasonably requested in writing at least ten (10) Business Days prior to the Effective Date by the Administrative Agent or the Joint Lead Arrangers that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USA PATRIOT Act.
(n) The Equity Contribution (as such term is defined in the Commitment Letter) shall have been received or otherwise applied to the Transactions, or substantially concurrently with, or prior to, the Borrowing of the Loans on the Effective Date, in at least the amount set forth in Exhibit A to the Commitment Letter.
SECTION 4.02 [Reserved]
Article V
AFFIRMATIVE COVENANTS
From and after the Effective Date and until the Termination Date, each of Holdings and the Borrower covenants and agrees with the Lenders that:
SECTION 5.01 Financial Statements and Other Information .
Holdings or the Borrower will furnish to the Administrative Agent, on behalf of each Lender:
(a) on or before the date that is one hundred and twenty (120) days after the end of each fiscal year of Holdings commencing with the fiscal year ended December 31, 2016 (or, in the case of financial statements for the fiscal year ended December 31, 2016, on or before the date that is one hundred and fifty (150) days after the end of such fiscal year), audited consolidated balance sheet and audited consolidated statements of income and retained earnings and statement of cash flows of Holdings and its Subsidiaries as of the end of and for such year, and related notes thereto, setting forth in each case in comparative form the figures for the previous fiscal year (commencing with fiscal year ended December 31, 2017) and accompanied by customary management discussion and analysis, all reported on by an independent public accountant of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition as of the end of and for such year and results of operations and cash flows of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
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(b) commencing with the financial statements for the fiscal quarter ended June 30, 2016, on or before the date that is forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of Holdings (or, in the case of financial statements for the fiscal quarters ended June 30, 2016 and September 30, 2016, on or before the date that is seventy-five (75) days after the end of such fiscal quarter, and, in the case of financial statements for the fiscal quarter ended March 31, 2017, on or before the date that is sixty (60) days after the end of such fiscal quarter), unaudited consolidated balance sheet and unaudited consolidated statements of income and retained earnings and statement of cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year and accompanied by customary management discussion and analysis, all certified by a Financial Officer as presenting fairly in all material respects the financial condition as of the end of and for such fiscal quarter and such portion of the fiscal year and results of operations and cash flows of Holdings and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;
(c) simultaneously with the delivery of each set of consolidated financial statements referred to in clauses (a) and (b) above, the related unaudited consolidating financial information reflecting adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from such consolidated financial statements;
(d) not later than five (5) days after any delivery of financial statements under paragraph (a) or (b) above, a certificate of a Financial Officer (i) certifying as to whether a Default has occurred and is continuing and, if a Default has occurred and is continuing, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth (I) reasonably detailed calculations (A) demonstrating compliance with the Financial Performance Covenant (including a calculation of Consolidated EBITDA for such period with any applicable pro forma and other adjustments expressly contemplated to be included in such certificate pursuant to the other provisions of this Agreement) and (B) in the case of financial statements delivered under paragraph (a) above and only to the extent the Borrower would be required to prepay Term Borrowings pursuant to Section 2.11(d), beginning with the financial statements for the fiscal year of Holdings ending December 31, 2017, of Excess Cash Flow for such fiscal year and (C) of the Available Amount then in effect and (II) a reconciliation of Consolidated EBITDA to the net income set forth on the applicable statement of income.
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(e) not later than forty-five (45) days after the commencement of each fiscal year of Holdings (beginning with the fiscal year commencing January 1, 2017), a detailed consolidated budget for Holdings and its Subsidiaries for such fiscal year (including a projected consolidated balance sheet and consolidated statements of income and retained earnings and statement of cash flows as of the end of and for such fiscal year and setting forth the material assumptions used for purposes of preparing such budget); provided that the obligations of this paragraph shall be suspended upon and following the filing for an IPO; it being understood and agreed that any financial or business projections furnished by any Loan Party (i)(A) are subject to significant uncertainties and contingencies, which may be beyond the control of the Loan Parties, (B) no assurance is given by the Loan Parties that the results or forecast in any such projections will be realized and (C) the actual results may differ from the forecast results set forth in such projections and such differences may be material and (ii) are not a guarantee of performance;
(f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and registration statements (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered to the Administrative Agent), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) filed by Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary with the SEC or with any national securities exchange; and
(g) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary, as the Administrative Agent may reasonably request in writing, in each case subject to the limitations set forth below.
Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this Section 5.01 may be satisfied with respect to financial information of Holdings and its Subsidiaries by furnishing (x) the applicable financial statements of any Holdings Parent that, directly or indirectly, holds all of the Equity Interests of Holdings and holds no other material assets other than the Equity Interests of Holdings or (y) the Form 10-K or 10-Q (or the equivalent), as applicable, of Holdings (or any Holdings Parent) filed with the SEC within the applicable time periods required by applicable law and regulations (including any extended deadlines available thereunder in connection with an IPO); provided that (i) to the extent such information relates to a Holdings Parent, such information is accompanied by consolidating information, which may be unaudited, that explains in reasonable detail the differences between the information relating to such parent, on the one hand, and the information relating to Holdings and its Subsidiaries on a standalone basis, on the other hand, and (ii) to the extent such information is in lieu of information required to be provided under Section 5.01(a), such materials are accompanied by a report and opinion of an independent registered public accounting firm of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit.
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Documents required to be delivered pursuant to Section 5.01(a), (b) or (f) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Holdings posts such documents, or provides a link thereto on Holdings’ or the Borrower’s website on the Internet at the website address listed on Schedule 9.01 (or otherwise notified pursuant to Section 9.01(d)); or (ii) on which such documents are posted on Holdings’ or the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) Holdings shall deliver paper copies of such documents to the Administrative Agent upon its reasonable request until a written notice to cease delivering paper copies is given by the Administrative Agent and (ii) Holdings shall notify the Administrative Agent (by fax or electronic mail) of the posting of any such documents and upon its reasonable request, provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or maintain paper copies of the documents referred to above, and each Lender shall be solely responsible for timely accessing posted documents and maintaining its copies of such documents.
Notwithstanding anything to the contrary herein, neither Holdings nor any Subsidiary shall be required to deliver, disclose, permit the inspection, examination or making of copies of or excerpts from, or any discussion of, any document, information, or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent (or any Lender (or their respective representatives or contractors)) is prohibited by applicable law, fiduciary duty or binding agreement, (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) with respect to which any Loan Party or any Subsidiary owes confidentiality obligations (to the extent not created in contemplation of such Loan Party’s or Subsidiary’s obligations under this Section 5.01) to any third party.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Joint Lead Arrangers will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive Material Non-Public Information and who may be engaged in investment and other market-related activities with respect to the Borrower’s or their Affiliates’ securities. The Borrower hereby agrees that they will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Joint Lead Arrangers, and the Lenders to treat such Borrower Materials as not containing any Material Non-Public Information (although it may be sensitive and proprietary) ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.12); (x) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (y) the Administrative Agent and the Joint Lead Arrangers shall be entitled to treat the Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”. Each Loan Party hereby acknowledges and agrees that, unless the Borrower notifies the Administrative Agent in advance, all financial statements and certificates furnished pursuant to Sections 5.01(a), (b) and (c) above are hereby deemed to be suitable for distribution, and to be made available, to all Lenders and may be treated by the Administrative Agent and the Lenders as not containing any Material Non-Public Information and all other information shall be assumed to contain Material Non-Public Information.
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SECTION 5.02 Notices of Material Events .
Promptly after any Responsible Officer of Holdings or the Borrower obtains actual knowledge thereof, Holdings or the Borrower will furnish to the Administrative Agent (for distribution to each Lender through the Administrative Agent) written notice of the following:
(a) the occurrence of any Default;
(b) to the extent permissible by Requirements of Law, the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of a Financial Officer or another executive officer of Holdings, any Intermediate Parent, the Borrower or any Subsidiary, affecting Holdings, any Intermediate Parent, the Borrower or any Subsidiary or the receipt of a written notice of an Environmental Liability, in each case that would reasonably be expected to result in a Material Adverse Effect; and
(c) the occurrence of any ERISA Event or ERISA Events that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
Each notice delivered under this Section 5.02 shall be accompanied by a written statement of a Responsible Officer of Holdings or the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
SECTION 5.03 Information Regarding Collateral .
(a) Holdings or the Borrower will furnish to the Administrative Agent prompt (and in any event within thirty (30) days after or such longer period as reasonably agreed to by the Administrative Agent (subject to the definition of “Collateral and Guarantee Requirement” (including with respect to deemed determinations by the Administrative Agent))) written notice of any change (i) in any Loan Party’s legal name (as set forth in its certificate of organization or like document), (ii) in the jurisdiction of incorporation or organization of any Loan Party or in the form of its organization or (iii) in any Loan Party’s organizational identification number to the extent that such Loan Party is organized or owns Mortgaged Property in a jurisdiction where an organizational identification number is required to be included in a UCC financing statement for such jurisdiction.
(b) The Borrower shall provide in each Compliance Certificate delivered pursuant to Section 5.01(d) any changes, if any, to Schedule III to the Collateral Agreement as required to make such schedules accurate as of the last day of the fiscal quarter for which such Compliance Certificate is delivered.
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SECTION 5.04 Existence; Conduct of Business .
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, Intellectual Property and Governmental Approvals material to the conduct of its business, except to the extent (other than with respect to the preservation of the existence of Holdings and the Borrower) that the failure to do so could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, amalgamation, consolidation, liquidation or dissolution permitted under Section 6.03 or any Disposition permitted by Section 6.05.
SECTION 5.05 Payment of Taxes, etc.
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, pay all Taxes (whether or not shown on a Tax return) imposed upon it or its income or properties or in respect of its property or assets, before the same shall become delinquent or in default, except where (a) the same are being contested in good faith by an appropriate proceeding diligently conducted by Holdings, the Borrower or any of their respective Subsidiaries or (b) the failure to make payment could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
SECTION 5.06 Maintenance of Properties .
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, keep and maintain all tangible property material to the conduct of its business in good working order and condition (casualty, condemnation and ordinary wear and tear excepted), except where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 5.07 Insurance .
(a) Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, maintain, with insurance companies that Holdings believes (in the good faith judgment of the management of Holdings) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which Holdings believes (in the good faith judgment of management of Holdings) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as Holdings believes (in the good faith judgment or the management of Holdings) are reasonable and prudent in light of the size and nature of its business, and will furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the insurance so carried. Subject to the terms, conditions and provisions of the Closing Date Intercreditor Agreement, the Borrower shall, and shall cause each Restricted Subsidiary organized or existing under the laws of a Covered Jurisdiction to (i) name the Collateral Agent, on behalf of the Secured Parties, as an additional insured as its interests may appear on each such general liability policy of insurance belonging to or insuring such Restricted Subsidiary (other than directors and officers policies, workers compensation policies and business interruption insurance) and (ii) in the case of each casualty insurance policy belonging to or insuring a Restricted Subsidiary organized or existing under the laws of a Covered Jurisdiction, include a loss payable clause or mortgagee endorsement that names the First Lien Collateral Agent and/or the Collateral Agent, on behalf of the Secured Parties, as the loss payee or mortgagee thereunder.
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(b) If any portion of any Mortgaged Property is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), then the Borrower shall, or shall cause each Loan Party, subject to the terms, conditions and provisions of the Closing Date Intercreditor Agreement, to (i) maintain, or cause to be maintained, with insurance companies that Holdings believes (in the good faith judgment of the management of Holdings) are financially sound and responsible at the time the relevant coverage is placed or renewed, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and (ii) furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the flood insurance so carried.
SECTION 5.08 Books and Records; Inspection and Audit Rights .
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, maintain proper books of record and account in which entries that are full, true and correct in all material respects and are in conformity with GAAP (or applicable local standards (it being understood and agreed that Foreign Subsidiaries may maintain individual books and records in conformity with generally accepted accounting principles that are applicable in their respective countries of organization and that such maintenance shall not constitute a breach of the representations, warranties or covenants hereunder)) consistently applied shall be made of all material financial transactions and matters involving the assets and business of Holdings, any Intermediate Parent, the Borrower or the Restricted Subsidiaries, as the case may be. Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, permit any representatives designated by the Administrative Agent, upon reasonable prior notice, to visit and inspect its tangible properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested; provided that, excluding any such visits and inspections during the continuation of an Event of Default, only the Administrative Agent on behalf of the Lenders may exercise visitation and inspection rights of the Administrative Agent and the Lenders under this Section 5.08 and the Administrative Agent shall not exercise such rights more often than one time during any calendar year absent the existence of an Event of Default and such time shall be at the Borrower’s expense; provided, further that (a) when an Event of Default exists, the Administrative Agent (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice and (b) the Administrative Agent shall give Holdings and the Borrower the opportunity to participate in any discussions with Holdings’ or the Borrower’s independent public accountants.
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SECTION 5.09 Compliance with Laws .
Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary and, in the case of Holdings, each Intermediate Parent to, comply with all Requirements of Law (including Environmental Laws, the FCPA, Sanctions and the USA PATRIOT Act) with respect to it, its property and operations, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.10 Use of Proceeds and Letters of Credit .
The Borrower will use the proceeds of the Term Loans borrowed on the Effective Date, together with cash on hand of the Borrower and proceeds of the First Lien Term Loans and First Lien Revolving Loans borrowed on the Effective Date to directly or indirectly finance the Transactions, directly or indirectly pay all or a portion of the Transaction Costs, to increase cash on hand and for other working capital purposes.
SECTION 5.11 Additional Subsidiaries .
(a) If (i) any additional Restricted Subsidiary or Intermediate Parent in each case, organized or incorporated in a Covered Jurisdiction, is formed or acquired after the Effective Date, (ii) any Restricted Subsidiary ceases to be an Excluded Subsidiary or (iii) the Borrower, at its option, elects to cause a Subsidiary of Holdings organized or incorporated in a Covered Jurisdiction, or to the extent reasonably acceptable to the Administrative Agent (subject to the definition of “Collateral and Guarantee Requirement” (including with respect to deemed determinations by the Administrative Agent)), a Subsidiary that is not a Wholly Owned Subsidiary (including any consolidated Affiliate in which the Borrower and their respective Subsidiaries own no Equity Interest) to become a Subsidiary Loan Party, then Holdings or the Borrower will (subject to the Guaranty and Security Principles in the case of Foreign Loan Parties), within ninety (90) days (or such longer period as may be agreed to by the Administrative Agent in its reasonable discretion (subject to the definition of “Collateral and Guarantee Requirement” (including with respect to deemed determinations by the Administrative Agent))) after (x) such newly formed or acquired Restricted Subsidiary or Intermediate Parent is formed or acquired, (y) such Restricted Subsidiary ceases to be an Excluded Subsidiary or (z) the Borrower has made such election, cause such Restricted Subsidiary (unless such Restricted Subsidiary is an Excluded Subsidiary) or Intermediate Parent to satisfy the Collateral and Guarantee Requirement with respect to such Restricted Subsidiary or Intermediate Parent and with respect to any Equity Interest in or Indebtedness of such Restricted Subsidiary or Intermediate Parent owned by or on behalf of any Loan Party.
(b) Notwithstanding the foregoing, in the event any real property would be required to be mortgaged pursuant to this Section 5.11, Holdings and the Borrower shall be required to comply with the “Collateral and Guarantee Requirement” as it relates to such real property within 90 days following the formation or acquisition of such real property or such Restricted Subsidiary or the identification of such new Material Subsidiary, or such longer time period as agreed by the Administrative Agent in its reasonable discretion (subject to the definition of “Collateral and Guarantee Requirement” (including with respect to deemed determinations by the Administrative Agent).
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SECTION 5.12 Further Assurances .
(a) Subject to the proviso to Section 4.01(f) solely with respect to the Effective Date, each of Holdings and the Borrower will, and will cause each Loan Party to (subject to the Guaranty and Security Principles in the case of Foreign Loan Parties), execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law and that the Administrative Agent or the Required Lenders may reasonably request, to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties.
(b) Subject, in each case, to the limitations set forth in the Security Documents and the applicable Intercreditor Agreements, if, after the Effective Date, any material assets (other than Excluded Assets), including any Material Real Property, are acquired by the Borrower or any other Loan Party or are held by any Subsidiary on or after the time it becomes a Loan Party pursuant to Section 5.11 (other than assets constituting Collateral under a Security Document that become subject to the Lien created by such Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent thereof, and, if requested by the Administrative Agent (subject to the applicable Intercreditor Agreements and the Guaranty and Security Principles in the case of Foreign Loan Parties), the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause the other Loan Parties to take, such actions as shall be necessary and reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section but only as and to the extent required pursuant to the “Collateral and Guarantee Requirement,” all at the expense of the Loan Parties and subject to the second to last paragraph of the definition of the term “Collateral and Guarantee Requirement.” In the event any Material Real Property is mortgaged pursuant to this Section 5.12(b), the Borrower or such other Loan Party, as applicable, shall be required to comply with the “Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Material Real Property or such longer time period as agreed by the Administrative Agent in its reasonable discretion (subject to the definition of “Collateral and Guarantee Requirement” (including with respect to deemed determinations by the Administrative Agent)).
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SECTION 5.13 Designation of Subsidiaries . (a) The Borrower may at any time after the Effective Date designate any Restricted Subsidiary (other than Intermediate Lux Holdings, Intermediate U.S. Holdings, any Intermediate Parent, the Borrower or GTCR Canyon UK Investments Ltd.) as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) immediately after such designation on a Pro Forma Basis, no Event of Default shall have occurred and be continuing and (ii) any Unrestricted Subsidiary shall also be designated an Unrestricted Subsidiary under (x) the First Lien Credit Agreement and (y) any other Junior Financing constituting Material Indebtedness. The designation of any Subsidiary as an Unrestricted Subsidiary after the Effective Date shall constitute an Investment by Holdings or its Restricted Subsidiaries therein at the date of designation in an amount equal to the fair market value (as determined in good faith by the Borrower) of Holdings’ or its respective subsidiaries’ (as applicable) investment therein. The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute (i) the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary existing at such time and (ii) a return on any Investment by Holdings in such Unrestricted Subsidiary pursuant to the preceding sentence in an amount equal to the fair market value (as determined in good faith by the Borrower) at the date of such designation of Holdings’ or its Subsidiaries’ (as applicable) Investment in such Subsidiary.
(b) The Borrower may at any time after the Effective Date designate any Restricted Subsidiary organized in a Covered Jurisdiction that is an Excluded Subsidiary as an Electing Guarantor or Electing Guarantor as an Excluded Subsidiary; provided that (i) any Electing Guarantor shall also be designated an Electing Guarantor under the First Lien Credit Agreement and (ii) such Electing Guarantor is located in a Covered Jurisdiction. The designation of any Subsidiary as an Electing Guarantor after the Effective Date shall constitute an Investment by Holdings or its Restricted Subsidiaries therein at the date of designation in an amount equal to the fair market value (as determined in good faith by the Borrower) of Holdings’ or its respective subsidiaries’ (as applicable) investment therein. The designation of any Electing Guarantor as an Excluded Subsidiary shall constitute (i) the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary existing at such time and (ii) a return on any Investment by Holdings in such Excluded Subsidiary pursuant to the preceding sentence in an amount equal to the fair market value (as determined in good faith by the Borrower) at the date of such designation of Holdings’ or its Subsidiaries’ (as applicable) Investment in such Subsidiary.
SECTION 5.14 Certain Post-Closing Obligations . As promptly as practicable, and in any event within the time periods after the Effective Date specified in Schedule 5.14 or such later date as the Administrative Agent agrees to in writing (subject to the definition of “Collateral and Guarantee Requirement” (including with respect to deemed determinations by the Administrative Agent)), including to reasonably accommodate circumstances unforeseen on the Effective Date, Holdings, the Borrower and each other Loan Party shall deliver the documents or take the actions specified on Schedule 5.14 that would have been required to be delivered or taken on the Effective Date, in each case except to the extent otherwise agreed by the Administrative Agent pursuant to its authority as set forth in the definition of the term “Collateral and Guarantee Requirement.”
SECTION 5.15 Maintenance of Rating of Facilities . The Loan Parties shall use commercially reasonable efforts to maintain a public corporate credit rating (but not any particular rating) from S&P and a public corporate family rating (but not any particular rating) from Moody’s, in each case in respect of Holdings.
SECTION 5.16 Lines of Business . Holdings and its Restricted Subsidiaries, taken as a whole, will not fundamentally and substantively alter the character of their business, taken as a whole, from the business conducted by them on the Effective Date and other business activities which are extensions thereof or otherwise incidental, corollary, synergistic, reasonably related or ancillary to any of the foregoing.
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SECTION 5.17 Fiscal Periods . Holdings will keep its current fiscal year; provided , however , that Holdings may, upon written notice to the Administrative Agent, change its fiscal year to any other fiscal year reasonably acceptable to the Administrative Agent, in which case, the Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year.
SECTION 5.18 Lender Calls . To the extent following delivery of the annual or quarterly financial statements pursuant to Section 5.01(a) or (b), as applicable, Holdings is holding a conference call for any lenders to review financial information, Holdings shall provide reasonable notice of such conference call to the Administrative Agent and Lenders and provide the Administrative Agent and Lenders the opportunity to participate in such conference call (which calls, at the option of the Borrower, may be conducted with the calls with the Borrower’s other lenders).
Article VI
NEGATIVE COVENANTS
From and after the Effective Date and until the Termination Date, each of Holdings and the Borrower covenants and agrees with the Lenders that:
SECTION 6.01 Indebtedness; Certain Equity Securities .
(a) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness of Holdings, the Borrower and any of the Restricted Subsidiaries under the Loan Documents (including any Indebtedness incurred pursuant to Section 2.20 or 2.21);
(ii) Indebtedness, including intercompany Indebtedness, outstanding on the Effective Date, provided that any Indebtedness in excess of $2,875,000 individually shall only be permitted if set forth on Schedule 6.01 (unless such Indebtedness is permitted by another clause in this Section 6.01), and any Permitted Refinancing thereof;
(iii) Guarantees by Holdings, the Borrower and any of the Restricted Subsidiaries in respect of Indebtedness of Holdings, the Borrower or any Restricted Subsidiary otherwise permitted hereunder; provided that (A) such Guarantee is permitted under Section 6.04 (other than Section 6.04(u)), (B) no Guarantee by any Restricted Subsidiary of any Junior Financing or Indebtedness that is unsecured and incurred under Section 6.01(a)(xv) shall be permitted unless such Restricted Subsidiary shall have also provided a Guarantee of the Loan Document Obligations pursuant to the Guarantee Agreement and (C) if the Indebtedness being Guaranteed is subordinated to the Loan Document Obligations, such Guarantee shall be subordinated to the Guarantee of the Loan Document Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;
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(iv) Indebtedness of Holdings owing to the Borrower or any other Restricted Subsidiary, of the Borrower owing to Holdings or any Restricted Subsidiary or of any Restricted Subsidiary owing to any other Restricted Subsidiary, Holdings or the Borrower, to the extent permitted by Section 6.04; provided that all such Indebtedness of any Loan Party owing to any Restricted Subsidiary that is not a Loan Party shall be subordinated to the Loan Document Obligations (to the extent any such Indebtedness is outstanding at any time after the date that is thirty (30) days after the Effective Date or such later date as the Administrative Agent may reasonably agree) (but only to the extent permitted by applicable law and not giving rise to adverse tax consequences) on terms (i) at least as favorable to the Lenders as those set forth in the form of intercompany note attached as Exhibit F or (ii) otherwise reasonably satisfactory to the Administrative Agent;
(v) (A) Indebtedness (including Capital Lease Obligations and purchase money Indebtedness) incurred, issued or assumed by Holdings, the Borrower or any Restricted Subsidiary to finance the acquisition, purchase, lease, construction, repair, replacement or improvement of fixed or capital property, equipment or other assets; provided that such Indebtedness is incurred concurrently with or within 270 days after the applicable acquisition, purchase, lease, construction, repair, replacement or improvement, and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof); provided, further that, at the time of any such incurrence of Indebtedness and after giving Pro Forma Effect thereto and the use of the proceeds thereof, the aggregate principal amount of Indebtedness that is outstanding in reliance on this clause (v) shall not exceed the greater of (A) $34,500,000 and (B) 11.5% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
(vi) Indebtedness in respect of Swap Agreements incurred in the ordinary course of business and not for speculative purposes;
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(vii) (a) Indebtedness (1) of any Person acquired in connection with a Permitted Acquisition or permitted Investment or secured by any assets so acquired (and not incurred by the obligor thereon in contemplation of such Permitted Acquisition or permitted Investment) and (2) of any Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary (it being acknowledged that (x) a Person that becomes a direct or indirect Restricted Subsidiary of Holdings as a result of a Permitted Acquisition or permitted Investment may remain liable with respect to Indebtedness existing on the date of such acquisition (and not incurred in contemplation thereof) and (y) an Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary may remain liable with respect to Indebtedness existing on the date of such redesignation (and not incurred in contemplation thereof)); provided that the aggregate principal amount of such Indebtedness outstanding under this clause (vii) at the time of incurrence does not exceed at any time (I) the greater of (x) $51,750,000 and (y) and 17.25% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time, plus (II) unlimited additional Indebtedness if, for purposes of this clause (II) , immediately after giving effect to such Permitted Acquisition, permitted Investment or redesignation, as the case may be, and the assumption of such Indebtedness, the Total Net Leverage Ratio computed on a Pro Forma Basis for the most recently ended Test Period as of such time is not greater than 5.20:1.00 (it being understood and agreed that unless notified by the Borrower, (A) the Borrower shall be deemed to have used capacity under this clause (II) (to the extent compliant therewith) prior to utilization of amounts of the type described in clause (I) above, (B) Indebtedness may be incurred in respect of both this clause (II) and clause (I) above, and the proceeds from any such incurrence in respect of both clauses may be utilized in a single transaction by first calculating the incurrence in respect of this clause (II) and then calculating the incurrence in respect of clause (I) above (and, for the avoidance of doubt, the Total Net Leverage Ratio may be exceeded as a result thereof) and (C) the Borrower may re-designate any such Indebtedness originally incurred in respect of clause (I) as incurred in respect of clause (II) if, at the time of such re-designation, the Borrower would be permitted to incur such Indebtedness under clause (II) the aggregate principal amount of Indebtedness being so re-designated (for purposes of clarity, with any such re-designation having the effect of increasing the Borrower’s ability to incur Indebtedness in respect of clause (I) as of the date of such re-designation by the amount of such Indebtedness so re-designated); and (b) in respect of the foregoing, any Permitted Refinancing thereof; provided further that the aggregate principal amount of Indebtedness outstanding pursuant to this clause (vii) at the time of incurrence of which the primary obligor or a guarantor is a Restricted Subsidiary that is not a Loan Party shall not exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of (A) $51,750,000 and (B) 17.25% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
(viii) Indebtedness to the seller of any business or assets acquired by Holdings or any Restricted Subsidiary in a transaction permitted hereunder (including Indebtedness to finance the payment of earnout obligations owing to such seller as a result of such transaction), provided that the aggregate principal amount of Indebtedness permitted under this Section 6.01(a)(viii) at any one time outstanding shall not exceed the greater of (A) $34,500,000 and (B) 11.5% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
(ix) Permitted Guarantees and Indebtedness arising under a Permitted Guarantee;
(x) Indebtedness incurred by a Restricted Subsidiary in connection with bankers’ acceptances, discounted bills of exchange or the discounting or factoring of receivables for credit management purposes, in each case incurred or undertaken in the ordinary course of business on arm’s length commercial terms on a non-recourse basis;
(xi) Settlement Indebtedness;
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(xii) Indebtedness in respect of Cash Management Obligations and other Indebtedness in respect of netting services, automated clearinghouse arrangements, overdraft protections and similar arrangements, in each case, in connection with securities or deposit accounts or from the honoring of a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;
(xiii) Indebtedness consisting of obligations under deferred compensation (including indemnification obligations, obligations in respect of purchase price adjustments, earn-outs, incentive non-competes and other contingent obligations), or other similar arrangements incurred or assumed in connection with the Acquisition, any Permitted Acquisition, any other Investment or any Disposition, in each case, permitted under this Agreement;
(xiv) Indebtedness of Holdings, the Borrower or any Restricted Subsidiary or any Person that becomes a Restricted Subsidiary after the Effective Date (or of any Person not previously a Restricted Subsidiary that is merged, amalgamated or consolidated with or into Holdings, the Borrower or any Restricted Subsidiary including the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary); provided that, at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xiv) shall not exceed the greater of (A) $86,250,000 and (B) 31.625% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
(xv) (A) unsecured Indebtedness of Holdings, the Borrower or any Subsidiary Loan Party or any Person that becomes a Loan Party after the Effective Date (or of any Person not previously a Subsidiary Loan Party that is merged, amalgamated or consolidated with or into Holdings, the Borrower or any Restricted Subsidiary including the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary so long as such Restricted Subsidiary becomes a Subsidiary Loan Party); provided that after giving effect to the incurrence of such Indebtedness on a Pro Forma Basis, such amount shall not exceed the sum of (I) (x) $100,000,000 ( minus , without duplication, (x) the amounts of all Incremental Facilities and Incremental Equivalent Debt, in each case incurred pursuant to clause (I)(a) of the definition of “Incremental Cap”, (y) all amounts previously incurred pursuant to clause (A)(I)(x) of this Section 6.01(a)(xv) or of Section 6.01(a)(xvi) and (z) any Indebtedness incurred under Section 6.01(a)(xx)(B) to the extent such Indebtedness is incurred in reliance on the $100,000,000 basket in the definition of “Incremental Cap” in the First Lien Credit Agreement or clause (A)(I)(x) of Section 6.01(a)(xv) or clause (A)(I)(x) of Section 6.01(a)(xvi) of the First Lien Credit Agreement (or any equivalent successor provision)), plus (y) the Voluntary Prepayment Amount (less the amounts of all Incremental Facilities, Incremental Equivalent Debt and Indebtedness incurred under Section 6.01(a)(xx)(B), in each case incurred pursuant to clause (I)(b) of the definition of “Incremental Cap” and all amounts previously incurred pursuant to clause (A)(I)(y) of this Section 6.01(a)(xv) or of Section 6.01(a)(xvi), plus (II) the maximum aggregate principal amount that can be incurred without causing the Total Net Leverage Ratio, on a Pro Forma Basis, to exceed 5.20 to 1.00 for the most recent Test Period ended (calculated without deducting from the numerator of such Total Net Leverage Ratio any cash proceeds of such Indebtedness and assuming that, in the case of any revolving facility being established under this clause (xv), that all commitments with respect thereto were fully drawn; provided that to the extent the proceeds of any such Indebtedness are to be used to repay Indebtedness, the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis” shall not be limited) and (B) any Permitted Refinancing of Indebtedness incurred pursuant to the foregoing subclause (A) so long as the obligors thereon do not include any Person that is not Holdings, the Borrower or any Subsidiary Loan Party; provided further that such Indebtedness complies with clauses (a), (b), (c), (d) and (f) of the definition of “Required Additional Debt Terms”; provided , further , that Indebtedness may be incurred under both clauses (I) and (II), and proceeds from any such incurrence may be utilized in a single transaction by first calculating the incurrence under clause (II) above and then calculating the incurrence under clause (I) above) (if any) and, for the avoidance of doubt, the Total Net Leverage Ratio shall be permitted to exceed the maximum ratio set forth in clause (II) above to the extent of such amounts incurred in reliance on clause (I) at substantially the same time;
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(xvi) (A) Indebtedness of Holdings, the Borrower or any Subsidiary Loan Party or any Person that becomes a Subsidiary Loan Party after the Effective Date (or of any Person not previously a Subsidiary Loan Party that is merged, amalgamated or consolidated with or into Holdings, the Borrower or any Subsidiary Loan Party including the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary so long as such Restricted Subsidiary becomes a Subsidiary Loan Party) that is secured on a pari passu or junior basis to the Secured Obligations and the agent for such Indebtedness has become a party to the applicable Intercreditor Agreement; provided that after giving effect to the incurrence of such Indebtedness on a Pro Forma Basis, such amount shall not exceed the sum of (I) (x) $100,000,000 ( minus , without duplication, (x) the amounts of all Incremental Facilities and Incremental Equivalent Debt, in each case incurred pursuant to clause (I)(a) of the definition of “Incremental Cap”, (y) all amounts previously incurred pursuant to clause (A)(I)(x) of this Section 6.01(a)(xvi) or of Section 6.01(a)(xv) and (z) any Indebtedness incurred under Section 6.01(a)(xx)(B) to the extent such Indebtedness is incurred in reliance on the $100,000,000 basket in the definition of “Incremental Cap” in the First Lien Credit Agreement or clause (A)(I)(x) of Section 6.01(a)(xv) of the First Lien Credit Agreement (or any equivalent successor provision)), plus (y) the Voluntary Prepayment Amount (less the amounts of all Incremental Facilities, Incremental Equivalent Debt and Indebtedness incurred under Section 6.01(a)(xx)(B), in each case incurred pursuant to clause (I)(b) of the definition of “Incremental Cap” and all amounts previously incurred pursuant to clause (A)(I)(y) of this Section 6.01(a)(xvi) or of Section 6.01(a)(xv), plus (II) the maximum aggregate principal amount that can be incurred without causing the Senior Secured Net Leverage Ratio, on a Pro Forma Basis, to exceed 5.20 to 1.00 for the most recent Test Period ended (calculated without deducting from the numerator of such Total Net Leverage Ratio any cash proceeds of such Indebtedness and assuming that, in the case of any revolving facility being established under this clause (xvi), that all commitments with respect thereto were fully drawn; provided that to the extent the proceeds of any such Indebtedness are to be used to repay Indebtedness, the Borrower’s ability to give pro forma effect to such repayment and all other adjustments contemplated by the definition of “Pro Forma Basis” shall not be limited), and (B) any Permitted Refinancing of Indebtedness incurred pursuant to the foregoing subclause (A) so long as the obligors thereon do not include any Person that is not Holdings, the Borrower or any Subsidiary Loan Party; provided further that such Indebtedness complies with clauses (a), (b), (c), (d), (e), (f) and, to the extent applicable, (g) of the definition of “Required Additional Debt Terms”; provided further that Indebtedness may be incurred under both clauses (I) and (II) and proceeds from any such incurrence may be utilized in a single transaction by first calculating the incurrence under clause (II) above and then calculating the incurrence under clause (I) above) (if any) and, for the avoidance of doubt, the Senior Secured Net Leverage Ratio shall be permitted to exceed the maximum ratio set forth in clause (II) or (III) above to the extent of such amounts incurred in reliance on clause (I) at substantially the same time;
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(xvii) Indebtedness of Holdings, the Borrower or any Restricted Subsidiary in an aggregate principal amount not greater than the Available Equity Amount that is Not Otherwise Applied at the time of incurrence;
(xviii) Indebtedness consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(xix) Indebtedness supported by a First Lien Letter of Credit, in a principal amount not to exceed the face amount of such First Lien Letter of Credit;
(xx) (A) the First Lien Term Loans and First Lien Revolving Loans (and any Guarantee thereof by any Loan Party), and (B) Indebtedness in respect of additional debt incurred by the Borrower under the First Lien Credit Agreement (and any Guarantee thereof by any Loan Party) (whether incremental debt or incremental equivalent debt); provided that the total amount of Indebtedness incurred and then outstanding pursuant to clauses (A) and (B) of this clause (xx) shall not exceed the Maximum Senior Principal Amount (as defined in the Closing Date Intercreditor Agreement) less the principal amount incurred and outstanding at such time of determination under Section 6.01(a)(xiv) hereof , (C) additional Senior Obligations (which, for the avoidance of doubt, shall not permit any Senior Obligations which constitute Excluded Senior Obligations (as defined in the Closing Date Intercreditor Agreement)) and (D) any Permitted Refinancing of the foregoing; provided , that in the case of any Permitted Refinancin g, the obligors thereon shall not include any Person that is not Holdings, the Borrower or any Subsidiary Loan Party;
(xxi) Permitted Unsecured Refinancing Debt, and any Permitted Refinancing thereof; provided , that (A) in the case of any Permitted Unsecured Refinancing Debt that constitutes a Permitted Refinancing of Incremental Equivalent Debt, the obligor thereon shall be the Borrower and (B) in the case of any Permitted Refinancing of any Permitted Unsecured Refinancing Debt, the obligor thereon shall be the Borrower or a Subsidiary Loan Party; provided further that in the case of any Permitted Unsecured Refinancing Debt that constitutes a Permitted Refinancing of Incremental Equivalent Debt (or any Permitted Refinancing thereof), such Indebtedness shall comply with clauses (c) and (e) of the definition of “Credit Agreement Refinancing Indebtedness”;
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(xxii) Permitted Pari Passu Refinancing Debt and Permitted Junior Priority Refinancing Debt, and any Permitted Refinancing of any of the foregoing; provided , that (A) in the case of any Permitted Pari Passu Refinancing Debt or Permitted Junior Priority Refinancing Debt that constitutes a Permitted Refinancing of Incremental Equivalent Debt, the obligor thereon shall be the Borrower and (B) in the case of any Permitted Refinancing of any Permitted Pari Passu Refinancing Debt or Permitted Junior Priority Refinancing Debt, the obligor thereon shall be the Borrower or a Subsidiary Loan Party; provided further that in the case of any Permitted Pari Passu Refinancing Debt or Permitted Junior Priority Refinancing Debt that constitutes a Permitted Refinancing of Incremental Equivalent Debt (or any Permitted Refinancing thereof), such Indebtedness shall comply with clauses (c), (d) and (e) of the definition of “Credit Agreement Refinancing Indebtedness”;
(xxiii) Indebtedness of the Borrower issued in lieu of Incremental Facilities (and including, for the avoidance of doubt, if applicable, any such Indebtedness that is also issued in lieu of “Incremental Facilities” as defined in the First Lien Credit Agreement) consisting of one or more series of secured or unsecured loans, bonds, notes or debentures (which loans, bonds, notes or debentures, if secured, may be secured either by Liens pari passu with the Liens on the Collateral securing the Secured Obligations (but without regard to control of remedies) or by Liens having a junior priority relative to the Liens on the Collateral securing the Secured Obligations) (and any Registered Equivalent Notes issued in exchange therefor) (the “ Incremental Equivalent Debt ”); provided that (x) the aggregate principal amount of all such Indebtedness incurred pursuant to this clause (xxiii) shall not exceed, at the time of incurrence, the Incremental Cap at such time, and (y) such Indebtedness complies with the provisions of the Required Additional Debt Terms;
(xxiv) Indebtedness of any Restricted Subsidiary that is not a Loan Party in an amount not to exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of (A) $34,500,000 and (B) 11.5% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time;
(xxv) Indebtedness incurred by Holdings, the Borrower or any Restricted Subsidiary in respect of letters of credit, bank guarantees, warehouse receipts, bankers’ acceptances or similar instruments issued or created in the ordinary course of business or consistent with past practice, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other indemnification or reimbursement-type obligations;
(xxvi) obligations in respect of self-insurance and obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by Holdings, the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business or consistent with past practice;
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(xxvii) Indebtedness representing deferred compensation or stock-based compensation owed to employees of Holdings, any Intermediate Parent, the Borrower or the Restricted Subsidiaries incurred in the ordinary course of business or consistent with past practice;
(xxviii) Indebtedness consisting of unsecured promissory notes issued by Holdings, the Borrower or any Restricted Subsidiary to future, current or former officers, directors, employees, managers and consultants or their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of Holdings (or any Holdings Parent) to the extent permitted by Section 6.07(a);
(xxix) Indebtedness incurred in connection with a Qualified Securitization Facility;
(xxx) Indebtedness of any Restricted Subsidiary that is a joint venture in an amount not to exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of (A) $34,500,000 and (B) 11.5% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time; and
(xxxi) endorsement of instruments or other payment items for deposit in the ordinary course of business;
(xxxii) to the extent constituting Indebtedness, Guarantees in the ordinary course of business of the obligations of suppliers, customers, franchisees and licensees of Holdings and its Restricted Subsidiaries;
(xxxiii) performance Guarantees of Holdings and the Restricted Subsidiaries primarily guaranteeing performance of contractual obligations of Holdings or Restricted Subsidiaries to a third party and not primarily for the purpose of guaranteeing payment of Indebtedness;
(xxxiv) Indebtedness in respect of trade letters of credit not to exceed $5,750,000 at any time outstanding;
(xxxv) obligations in respect of letters of support, guarantees or similar obligations issued, made or incurred for the benefit of any Restricted Subsidiary of Holdings to the extent required by law or in connection with any statutory filing or the delivery of audit opinions performed in jurisdictions other than within the United States; and
(xxxvi) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (i) through (xxxv) above.
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(b) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, issue any Disqualified Equity Interests in excess of the greater of (A) $34,500,000 and (B) 11.5% of Consolidated EBITDA computed on a Pro Forma Basis for the most recently ended Test Period as of such time, except (x) to the extent incurred as Indebtedness under Section 6.01(a) and (y) (i) preferred Equity Interests issued to and held by Holdings, the Borrower or any Restricted Subsidiary, and (ii) preferred Equity Interests issued to and held by joint venture partners after the Effective Date; provided that in the case of this clause (ii) any such issuance of preferred Equity Interests shall be deemed to be incurred Indebtedness and subject to the provisions set forth in Section 6.01(a) and (b).
For purposes of determining compliance with this Section 6.01, (i) in the event that an item of Indebtedness (or any portion thereof) meets the criteria of more than one of the categories of Indebtedness described in clauses (a)(i) through (a)(xxxvi) above, the Borrower may, in its sole discretion, at the time of incurrence, divide, classify or reclassify, or at any later time divide, classify or reclassify, such item of Indebtedness (or any portion thereof) and will only be required to include the amount and type of such Indebtedness in one or more of the above clauses; provided that all Indebtedness outstanding under the Loan Documents will be deemed to have been incurred in reliance only on the exception in clause (a)(i) and (B) all Indebtedness outstanding under the First Lien Loan Documents on the Effective Date will be deemed to have been incurred in reliance only on the exception in clause (a)(xx)(A).
For purposes of determining compliance with any restriction on the incurrence of Indebtedness, the principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, plus the amount of any premium paid, and fees and expenses incurred, in connection with such extension, replacement, refunding refinancing, renewal or defeasance (including any fees and original issue discount incurred in respect of such resulting Indebtedness).
SECTION 6.02 Liens .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased) or hereafter acquired (but not leased) by it, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
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(iii) Liens existing on the Effective Date; provided that any Lien securing Indebtedness or other obligations in excess of $2,875,000 individually shall only be permitted if set forth on Schedule 6.02 (unless such Lien is permitted by another clause in this Section 6.02) and any modifications, replacements, renewals or extensions thereof; provided further that such modified, replacement, renewal or extension Lien does not extend to any additional property other than (1) after-acquired property that is affixed or incorporated into the property covered by such Lien and (2) proceeds and products thereof;
(iv) Liens securing Indebtedness permitted under Section 6.01(a)(v); provided that (A) such Liens attach concurrently with or within 270 days after the acquisition, repair, replacement, construction or improvement (as applicable) of the property subject to such Liens, (B) such Liens do not at any time encumber any property other than the property financed by such Indebtedness except for replacements, additions, accessions and improvements to such property and the proceeds and the products thereof, and any lease of such property (including accessions thereto) and the proceeds and products thereof and (C) with respect to Capital Lease Obligations, such Liens do not at any time extend to or cover any assets (except for replacements, additions, accessions and improvements to or proceeds of such assets) other than the assets subject to such Capital Lease Obligations; provided further that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;
(v) (i) easements, leases, licenses, subleases or sublicenses granted to others (including licenses and sublicenses of Intellectual Property) in the ordinary course of business that do not (A) interfere in any material respect with the business of Holdings and its Restricted Subsidiaries, taken as a whole, or (B) secure any Indebtedness and (ii) any interest or title of a lessor, licensor, sublicensor or sublessor under any lease or license entered into by Holdings, the Borrower or any Restricted Subsidiary in the ordinary course of its business or consistent with past practice;
(vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(vii) Liens (A) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection; (B) attaching to pooling, commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business; or (C) in favor of a banking or other financial institution or entity, or electronic payment service provider, arising as a matter of law encumbering deposits (including the right of setoff) and that are within the general parameters customary in the banking or finance industry;
(viii) Liens (A) on cash advances or escrow deposits in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 6.04 to be applied against the purchase price for such Investment or otherwise in connection with any escrow arrangements with respect to any such Investment or any Disposition permitted under Section 6.05 (including any letter of intent or purchase agreement with respect to such Investment or Disposition), or (B) consisting of an agreement to dispose of any property in a Disposition permitted under Section 6.05, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
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(ix) Liens on property or other assets of any Restricted Subsidiary that is not a Loan Party, which Liens secure Indebtedness of such Restricted Subsidiary or another Restricted Subsidiary that is not a Loan Party, in each case permitted under Section 6.01(a);
(x) Liens granted by a Restricted Subsidiary that is not a Loan Party in favor of any Restricted Subsidiary and Liens granted by a Loan Party in favor of any other Loan Party;
(xi) Liens existing on property or other assets at the time of its acquisition or existing on the property or other assets of any Person at the time such Person becomes a Restricted Subsidiary, in each case after the Effective Date and any modifications, replacements, renewals or extensions thereof; provided that (A) such Lien was not created in contemplation of such acquisition or such Person becoming a Restricted Subsidiary and (B) such Lien does not extend to or cover any other assets or property (other than any replacements of such property or assets and additions and accessions thereto, the proceeds or products thereof and other than after-acquired property subject to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require or include, pursuant to their terms at such time, a pledge of after-acquired property, and proceeds or products thereof and, in the case of multiple equipment financings provided by any lender, other equipment financed by such lender);
(xii) Liens on cash, Permitted Investments or other marketable securities securing letters of credit of any Loan Party that are cash collateralized on the Effective Date in an amount of cash, Cash Equivalents or other marketable securities with a fair market value of up to 105% of the face amount of such letters of credit being secured;
(xiii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods by Holdings, the Borrower or any Restricted Subsidiary in the ordinary course of business;
(xiv) Liens deemed to exist in connection with Investments in repurchase agreements under clause (e) of the definition of the term “Permitted Investments”;
(xv) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(xvi) Liens that are contractual rights of setoff (A) relating to the establishment of depository relations with banks not given in connection with the incurrence of Indebtedness, (B) relating to pooled deposit or sweep accounts to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of Holdings, the Borrower and the Restricted Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of Holdings, the Borrower or any Restricted Subsidiary in the ordinary course of business;
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(xvii) ground leases in respect of real property on which facilities owned or leased by Holdings, the Borrower or any of the Restricted Subsidiaries are located;
(xviii) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(xix) Liens on the Collateral securing Indebtedness permitted under Section 6.01(a)(xx), Section 6.01(a)(xxii) or 6.01(a)(xxiii); provided that (A) only such Liens securing Indebtedness permitted under Section 6.01(a)(xx) may be senior to the Liens on the Collateral securing the Secured Obligations pursuant to the Closing Date Intercreditor Agreement and (B) in all cases such Liens shall be subject to the applicable Intercreditor Agreement;
(xx) Liens securing Indebtedness on real property other than the Material Real Properties (except as required by this Agreement);
(xxi) Settlement Liens;
(xxii) Liens securing Indebtedness permitted under Section 6.01(a) (viii), (xiv) or (xvi);
(xxiii) Liens on assets of any Restricted Subsidiary that is not a Loan Party (x) securing working capital lines in foreign jurisdictions and/or (y) securing other obligations or Indebtedness permitted by Section 6.01;
(xxiv) Liens on cash and Permitted Investments used to satisfy or discharge Indebtedness; provided such satisfaction or discharge is permitted hereunder;
(xxv) Receipt of progress payments and advances from customers in the ordinary course of business to the extent the same creates a Lien on the related inventory and proceeds thereof;
(xxvi) Liens on Equity Interests of any joint venture (a) securing obligations of such joint venture or (b) pursuant to the relevant joint venture agreement or arrangement;
(xxvii) [reserved];
(xxviii) other Liens; provided that, at the time of the granting thereof and after giving Pro Forma Effect thereto, the aggregate amount of obligations secured by all Liens incurred in reliance on this clause (xxviii) shall not exceed the greater of (A) $86,250,000 and (B) 31.625% of Consolidated EBITDA for the Test Period then last ended (provided that, with respect to any such obligation, the amount of such obligation shall be the lesser of (x) the outstanding face amount of such obligation and (y) the fair market value of the assets securing such obligation);
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(xxix) Liens on accounts receivable, Securitization Assets and related assets incurred in connection with a Qualified Securitization Facility;
(xxx) Liens on Escrowed Proceeds for the benefit of the related holders of debt securities or other Indebtedness (or the underwriters for arrangers thereof) or on cash set aside at the time of the incurrence of any Indebtedness or government securities purchased with such cash, in either case to the extent such cash or government securities prefund the payment of interest on such Indebtedness and are held in an escrow account or similar arrangement to be applied for such purpose;
(xxxi) Liens of bailees arising as a matter of law or pursuant to the standard terms of agreement of such bailee in the ordinary course of business; provided that such Liens shall extend only to the assets subject to such bailment;
(xxxii) Liens securing obligations (other than obligations representing Indebtedness for borrowed money) under operating, reciprocal easement or similar agreements entered into in the ordinary course of business of Holdings and its Subsidiaries;
(xxxiii) utility and similar deposits in the ordinary course of business;
(xxxiv) purchase options, call and similar rights of, and restrictions for the benefit of, a third party with respect to Equity Interests held by Holdings or any Restricted Subsidiary in Joint Ventures;
(xxxv) Liens in favor of Holdings or a Restricted Subsidiary arising in connection with Intercompany License Agreements;
(xxxvi) Liens on cash or Permitted Investments securing any Swap Agreement (or any obligations in respect of the clearing thereof) so long as the fair market value of the assets securing such Swap Agreement does not exceed $34,500,000 at any time;
(xxxvii) Liens (i) attaching solely to cash advances and cash earnest money deposits in connection with Investments permitted under Section 6.04 or (ii) consisting of an agreement to Dispose of any property in a Disposition permitted hereunder; and
(xxxviii) any Lien resulting from the rules and regulations of any clearing system or stock exchange over shares and/or other securities held in that clearing system or stock exchange.
For purposes of determining compliance with this Section 6.02, in the event that any Lien (or any portion thereof) meets the criteria of more than one of the categories of Liens described in clauses (i) through (xxxviii) above, the Borrower may, in its sole discretion, at the time of incurrence, divide, classify or reclassify, or at any later time divide, classify or reclassify, such Lien (or any portion thereof) and will only be required to include the amount and type of such Lien in one or more of the above clauses; provided that (x) all Liens created under the Loan Documents will be deemed to have been incurred in reliance only on the exception in clause (i) and (y) all Liens created under the First Lien Loan Documents on the Effective Date will be deemed to have incurred in reliance only on the exception in clause (xix).
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SECTION 6.03 Fundamental Changes; Holdings Covenant .
(a) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, merge into or amalgamate or consolidate with any other Person, or permit any other Person to merge into or amalgamate or consolidate with it, or liquidate or dissolve (which, for the avoidance of doubt, shall not restrict Holdings, the Borrower or any Restricted Subsidiary from changing its organizational form), except that:
(i) any Restricted Subsidiary (other than the Borrower) may merge, amalgamate or consolidate with (A) the Borrower or Holdings; provided that the Borrower or Holdings shall be the continuing or surviving Person, or (B) any one or more Restricted Subsidiaries (other than the Borrower); provided , further , that when any Subsidiary Loan Party is merging, amalgamating or consolidating with another Restricted Subsidiary (1) the continuing or surviving Person shall be a Subsidiary Loan Party or the Borrower or (2) if the continuing or surviving Person is not a Subsidiary Loan Party, the acquisition of such Subsidiary Loan Party by such surviving Restricted Subsidiary is otherwise permitted under Section 6.04;
(ii) (A) any Restricted Subsidiary that is not a Loan Party may merge, amalgamate or consolidate with or into any Restricted Subsidiary that is not a Loan Party and (B) (x) any Restricted Subsidiary (other than the Borrower) may liquidate or dissolve and (y) any Restricted Subsidiary may change its legal or organizational form if the Borrower determines in good faith that such action is in the best interests of Holdings and its Restricted Subsidiaries and is not materially disadvantageous to the Lenders;
(iii) any Restricted Subsidiary (other than the Borrower) may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to Holdings, the Borrower or another Restricted Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then (A) the transferee must be a Loan Party, (B) to the extent constituting an Investment, such Investment is a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04 or (C) to the extent constituting a Disposition to a Restricted Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04;
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(iv) the Borrower may merge, amalgamate or consolidate with (or Dispose of all or substantially all of its assets to) any other Person; provided that (A) the Borrower shall be the continuing or surviving Person or (B) if the Person formed by or surviving any such merger, amalgamation or consolidation is not the Borrower or is a Person into which the Borrower has been liquidated (or, in connection with a Disposition of all or substantially all of the Borrower’s assets, if the transferee of such assets) (any such Person, the “ Successor Borrower ”), (1) the Successor Borrower shall be an entity organized or existing under the laws of the United States (or any state thereof), (2) the Successor Borrower shall expressly assume all of the obligations of the Borrower under this Agreement and the other Loan Documents to which the Borrower is a party pursuant to a supplement hereto or thereto in form and substance reasonably satisfactory to the Administrative Agent, (3) each Loan Party other than the Borrower, unless it is the other party to such merger, amalgamation or consolidation, shall have reaffirmed, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, that its Guarantee of and grant of any Liens as security for the Secured Obligations shall apply to the Successor Borrower’s obligations under this Agreement and (4) the Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrower stating that such merger, amalgamation or consolidation complies with this Agreement; provided further that (y) if such Person is not a Loan Party, no Event of Default (or, to the extent related to a Permitted Acquisition or any Investment not prohibited by Section 6.04, no Specified Event of Default) shall exist after giving effect to such merger, amalgamation or consolidation and (z) if the foregoing requirements are satisfied, the Successor Borrower will succeed to, and be substituted for, the Borrower under this Agreement and the other Loan Documents; provided further that (A) the Borrower shall have provided any documentation and other information about the Successor Borrower to the extent reasonably requested in writing promptly, and in any case within one Business Day following the delivery of the certificate in clause (4), by any Lender through the Administrative Agent that such Lender shall have reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including Title III of the USA PATRIOT Act and (B) such Lender shall be reasonably satisfied that its review of such documentation and information requested and delivered pursuant to clause (A) complies with such applicable “know your customer” and anti-money laundering rules and regulations ( provided , that for the avoidance of doubt, the Borrower’s failure to deliver information requested after the first Business Day following delivery of the certificate in clause (4) above shall not constitute a Default or an Event of Default under this Agreement or the Loan Documents);
(v) any Restricted Subsidiary (other than the Borrower) may merge, consolidate or amalgamate with any other Person in order to effect an Investment permitted pursuant to Section 6.04; provided that the continuing or surviving Person shall be the Borrower or a Restricted Subsidiary, which together with each of the Restricted Subsidiaries, shall have complied with the requirements of Sections 5.11 and 5.12;
(vi) Holdings, the Borrower and the Restricted Subsidiaries may consummate the Acquisition and related transactions contemplated by the Acquisition Agreement and the Transactions and any Permitted Reorganization or IPO Reorganization Transaction; and
(vii) any Restricted Subsidiary (other than the Borrower) may effect a merger, amalgamation, dissolution, liquidation consolidation or amalgamation to effect a Disposition permitted pursuant to Section 6.05.
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(b) Holdings will not, and will not permit Intermediate U.S. Holdings, Intermediate Lux Holdings or any other Intermediate Parent to, conduct, transact or otherwise engage in any business or operations other than (i) the ownership and/or acquisition of the Equity Interests or debt interests of the Borrower, any Intermediate Parent and any other Subsidiary, (ii) the maintenance of its legal existence, including the ability to incur fees, costs and expenses relating to such maintenance, (iii) participating in tax, accounting and other administrative matters as a member of the consolidated group of Holdings and its Subsidiaries, (iv) the performance of its obligations under and in connection with the Loan Documents, the First Lien Loan Documents and any documentation governing any Indebtedness or Guarantee, the Acquisition Agreement, the other agreements contemplated by the Acquisition Agreement and the other agreements contemplated hereby and thereby and any Permitted Reorganization or IPO Reorganization Transaction, (v) any public offering of its (except in the case of any Intermediate Parent that is not the direct or indirect parent of GTCR Canyon UK Investments Ltd.) or any of its direct or indirect parent’s common stock or any other issuance or registration of its Equity Interests for sale or resale not prohibited by this Agreement, including the costs, fees and expenses related thereto, (vi) making any dividend or distribution or other transaction similar to a Restricted Payment and not otherwise prohibited by Section 6.08, or any Investment in the Borrower, any Intermediate Parent or any other Subsidiary, (vii) the incurrence of any Indebtedness permitted under Section 6.01, (viii) incurring fees, costs and expenses relating to overhead and general operating including professional fees for legal, tax and accounting issues and paying taxes, (ix) providing indemnification to officers and members of the Board of Directors, (x) activities incidental to the consummation of the Transactions and (xi) activities incidental to the businesses or activities described in clauses (i) to (ix) of this paragraph.
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, make or hold any Investment, except:
(a) Permitted Investments at the time such Permitted Investment is made and purchases of assets in the ordinary course of business consistent with past practice;
(b) loans or advances to officers, members of the Board of Directors and employees of Holdings, the Borrower and the Restricted Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes, (ii) in connection with such Person’s purchase of Equity Interests of Holdings (or any direct or indirect parent thereof) ( provided that the amount of such loans and advances made in cash to such Person shall be contributed to Holdings in cash as common equity or Qualified Equity Interests) and (iii) for purposes not described in the foregoing clauses (i) and (ii), in an aggregate principal amount outstanding at any time not to exceed $11,500,000;
(c) Investments by Holdings in the Borrower or any Restricted Subsidiary, Investments by the Borrower in Holdings or any Restricted Subsidiary and Investments by any Restricted Subsidiary in Holdings, the Borrower or any other Restricted Subsidiary; provided that, in Investments by Loan Parties in Restricted Subsidiaries that are not Loan Parties shall not exceed the greater of (A) $115,000,000 and (B) 40.25% of Consolidated EBITDA for the Test Period then last ended at the time of making such Investment;
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(d) Investments consisting of extensions of trade credit and accommodation guarantees in the ordinary course of business;
(e) Investments (i) existing or contemplated on the Effective Date and set forth on Schedule 6.04 and any modification, replacement, renewal, reinvestment or extension thereof and (ii) existing on the Effective Date by Holdings, the Borrower or any Restricted Subsidiary in Holdings, the Borrower or any Restricted Subsidiary and any modification, renewal or extension thereof; provided that the amount of the original Investment is not increased except by the terms of such Investment to the extent as set forth on Schedule 6.04 or as otherwise permitted by this Section 6.04;
(f) Investments in Swap Agreements incurred in the ordinary course of business and not for speculative purposes;
(g) promissory notes and other non-cash consideration received in connection with Dispositions permitted by Section 6.05;
(h) Permitted Acquisitions, provided that the aggregate principal amount of any financing provided by a Loan Party to a Restricted Subsidiary that is a non-Loan Party in connection with any Permitted Acquisition shall not exceed the greater of (A) $57,500,000 and (B) 23% of Consolidated EBITDA for the Test Period then last ended at the time of making such Investment;
(i) the Transactions;
(j) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers in the ordinary course of business;
(k) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(l) loans and advances to any Holdings Parent (x) in lieu of, and not in excess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof), Restricted Payments to the extent permitted to be made to such Holdings Parent in accordance with Section 6.07(a) (other than Section 6.07(a)(xvii)(2)) and (y) to the extent the proceeds thereof are contributed or loaned or advanced to Holdings or a Restricted Subsidiary;
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(m) additional Investments and other acquisitions; provided that at the time any such Investment or other acquisition is made, the aggregate outstanding amount of such Investment or acquisition made in reliance on this clause (m), together with the aggregate amount of all consideration paid in connection with all other Investments and acquisitions made in reliance on this clause (m) (including the aggregate principal amount of all Indebtedness assumed in connection with any such other Investment or acquisition previously made under this clause (m)), shall not exceed the sum of the greater of (i)(A) $115,000,000 and (B) 40.25% of Consolidated EBITDA for the most recently ended Test Period after giving Pro Forma Effect to the making of such Investment or other acquisition, plus (ii) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (iii) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment;
(n) advances of payroll payments to employees in the ordinary course of business;
(o) Investments and other acquisitions to the extent that payment for such Investments is made with Qualified Equity Interests (excluding Qualified Equity Interests the proceeds of which will be applied as Cure Amounts) of Holdings or any Holdings Parent;
(p) Investments of a Subsidiary acquired after the Effective Date or of a Person merged, amalgamated or consolidated with any Subsidiary in accordance with this Section 6.04 and Section 6.03 after the Effective Date or that otherwise becomes a Subsidiary ( provided that if such Investment is made under Section 6.04(h), existing Investments in subsidiaries of such Subsidiary or Person shall comply with the requirements of Section 6.04(h)) to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;
(q) receivables owing to Holdings, the Borrower or any Restricted Subsidiary, if created or acquired in the ordinary course of business;
(r) Investments (A) for utilities, security deposits, leases and similar prepaid expenses incurred in the ordinary course of business and (B) trade accounts created, or prepaid expenses accrued, in the ordinary course of business;
(s) any Permitted Reorganization and any IPO Reorganization Transaction and any Investments in connection therewith;
(t) additional Investments so long as at the time of any such Investment and after giving effect thereto, on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 3.75 to 1.00;
(u) Investments consisting of Indebtedness, Liens, fundamental changes, Dispositions and Restricted Payments permitted (other than by reference to this Section 6.04(u)) under Sections 6.01, 6.02, 6.03, 6.05 and 6.07, respectively;
(v) contributions to a “rabbi” trust for the benefit of employees, directors, consultants, independent contractors or other service providers or other grantor trust subject to claims of creditors in the case of a bankruptcy of Holdings or the Borrower;
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(w) to the extent that they constitute Investments, purchases and acquisitions of inventory, supplies, materials or equipment or purchases, acquisitions, licenses or leases of other assets, Intellectual Property, or other rights, in each case in the ordinary course of business;
(x) any Investment in any Subsidiary or any joint venture in connection with intercompany cash management arrangements or related activities arising in the ordinary course of business;
(y) Investments made by an Unrestricted Subsidiary (other than Investments made with the proceeds of Investments made in reliance on Section 6.04(bb)) prior to the day such Unrestricted Subsidiary is redesignated as a Restricted Subsidiary pursuant to the definition of “Unrestricted Subsidiary”;
(z) Investments in or relating to a Securitization Subsidiary that, in the good faith determination of the Borrower are necessary or advisable to effect any Qualified Securitization Facility or any repurchase obligation in connection therewith, including, without limitation, Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Securitization Facilities or any related Indebtedness;
(aa) Investments in the ordinary course of business in connection with Settlements;
(bb) Investments in any Unrestricted Subsidiaries, joint ventures and Persons which do not become Loan Parties as a result of such Investment in an amount not to exceed the greater of (A) $34,500,000 and (B) 11.5% of Consolidated EBITDA for the Test Period then last ended at the time of making such Investment;
(cc) Investments in any Person engaged in a business similar to the business activities of Holdings and its Subsidiaries on the Effective Date or business activities which are extensions thereof or otherwise incidental, corollary, synergistic, reasonably related or ancillary to any of the foregoing in an amount not to exceed the greater of (A) $34,500,000 and (B) 11.5% of Consolidated EBITDA for the Test Period then last ended at the time of making such Investment;
(dd) asset purchases (including purchases of inventory, supplies and materials) and the granting of non-exclusive licenses or contribution of intellectual property pursuant to joint marketing arrangements with other Persons, in each case in the ordinary course of business;
(ee) the investment by any Restricted Subsidiary that is not a Loan Party in a Person that is not a Loan Party, and will not become a Loan Party upon the making of such Investment, to the extent such Investments is funded with amounts attributable to the cash flow of a Restricted Subsidiary that is not a Loan Party;
(ff) Investments in connection with Intercompany License Agreements;
(gg) Investments consisting of cash earnest money deposits in connection with a Permitted Acquisition or other Investment permitted hereunder;
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(hh) Investments solely to the extent such Investments reflect an increase in the value of Investments otherwise permitted under this Section 6.04; and
(ii) Term Loans repurchased by Holdings or a Restricted Subsidiary pursuant to and in accordance with Section 2.11(a)(ii) or Section 9.04 and First Lien Term Loans repurchased by Holdings or a Restricted Subsidiary pursuant to and in accordance with Section 2.11(a)(ii) or Section 9.04 of the First Lien Credit Agreement (for any comparable provision of a Permitted Refinancing thereof), so long as such loans are immediately cancelled.
For the avoidance of doubt, if an Investment would be permitted under any provision of this Section 6.04 (other than Section 6.04(h)) and as a Permitted Acquisition, such Investment need not satisfy the requirements otherwise applicable to a Permitted Acquisition unless such Investments are consummated in reliance on Section 6.04(h). In addition, to the extent an Investment is permitted to be made by Holdings or a Restricted Subsidiary directly in any Restricted Subsidiary or any other Person who is not a Loan Party (each such person, a “ Target Person ”) under any provision of this Section 6.04, such Investment may be made by advance, contribution or distribution directly or indirectly to a Holdings Parent and further advanced or contributed substantially simultaneously by such Holdings Parent to a Loan Party or other Restricted Subsidiary for purposes of ultimately making the relevant Investment in the Target Person without constituting an Investment for purposed of Section 6.04 (it being understood that such Investment must satisfy the requirements of, and shall count toward any thresholds or baskets in, the applicable clause under Section 6.04 as if made by the applicable Restricted Subsidiary directly to the Target Person).
SECTION 6.05 Asset Sales .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, (i) sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by it or (ii) permit any Restricted Subsidiary to issue any additional Equity Interest in such Restricted Subsidiary (other than issuing directors’ qualifying shares, nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law and other than issuing Equity Interests to Holdings, the Borrower or any Restricted Subsidiary in compliance with Section 6.04(c)) (each, a “ Disposition ” and the term “ Dispose ” as a verb has the corresponding meaning), except:
(a) Dispositions of obsolete, damaged, used, surplus or worn out property, whether now owned or hereafter acquired, in the ordinary course of business and Dispositions of property no longer used or useful, or economically practicable or commercially desirable to maintain, in the conduct of the business of Holdings and any Restricted Subsidiary (including by ceasing to enforce, allowing the lapse, abandonment or invalidation of or discontinuing the use or maintenance of or putting into the public domain any Intellectual Property that is, in the reasonable judgment of Holdings, the Borrower or the Restricted Subsidiaries, no longer used or useful, or economically practicable or commercially desirable to maintain, or in respect of which Holdings, the Borrower or any Restricted Subsidiary determines in its reasonable business judgment that such action or inaction is desirable);
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(b) Dispositions of inventory and other assets (including Settlement Assets) in the ordinary course of business and immaterial assets (considered in the aggregate) in the ordinary course of business;
(c) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property (or a functional equivalent of such property) or (ii) an amount equal to Net Proceeds of such Disposition are promptly applied to the purchase price of such replacement property (or a functional equivalent of such property);
(d) Dispositions of property to Holdings, the Borrower or any Restricted Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then either (i) the transferee must be a Loan Party, (ii) to the extent constituting an Investment, such Investment must be a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04 or (iii) to the extent constituting a Disposition to a Restricted Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04;
(e) Dispositions permitted by Section 6.03, Investments permitted by Section 6.04, Restricted Payments permitted by Section 6.07 and Liens permitted by Section 6.02;
(f) Dispositions of property acquired by Holdings, the Borrower or any of the Restricted Subsidiaries after the Effective Date pursuant to sale-leaseback transactions;
(g) Dispositions of Permitted Investments;
(h) Dispositions or forgiveness of accounts receivable in connection with the collection or compromise thereof (including sales to factors or other third parties);
(i) leases, subleases, service agreements, product sales, transfers, licenses or sublicenses (including transfers, licenses and sublicenses of Intellectual Property), in each case that do not materially interfere with the business of Holdings, the Borrower and the Restricted Subsidiaries, taken as a whole;
(j) transfers of property subject to Casualty Events;
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(k) Dispositions of property to Persons other than Restricted Subsidiaries (including the sale or issuance of Equity Interests of a Restricted Subsidiary) for fair market value (as determined by a Responsible Officer of the Borrower in good faith) not otherwise permitted under this Section 6.05; provided that with respect to any Disposition pursuant to this clause (k) for a purchase price in excess of $28,750,000, Holdings, the Borrower or such Restricted Subsidiaries shall receive not less than 75% of such consideration in the form of cash or Permitted Investments; provided , however , that solely for the purposes of this clause (k), (A) any liabilities (as shown on the most recent balance sheet of Holdings, the Borrower or such Restricted Subsidiary or in the footnotes thereto) of Holdings, the Borrower or such Restricted Subsidiary, other than liabilities that are by their terms subordinated in right of payment to the Loan Document Obligations, that are assumed by the transferee with respect to the applicable Disposition and for which Holdings, the Borrower and all of the Restricted Subsidiaries shall have been validly released by all applicable creditors in writing, shall be deemed to be cash, (B) any securities, notes or other obligations or assets received by Holdings, the Borrower or such Restricted Subsidiary from such transferee that are converted by Holdings, the Borrower or such Restricted Subsidiary into cash or Permitted Investments (to the extent of the cash or Permitted Investments received) within one hundred and eighty (180) days following the closing of the applicable Disposition, shall be deemed to be cash, (C) Indebtedness of any Restricted Subsidiary that ceases to be a Restricted Subsidiary as a result of such Disposition (other than intercompany debt owed to Holdings or its Restricted Subsidiaries), to the extent that Holdings, the Borrower and all of the Restricted Subsidiaries (to the extent previously liable thereunder) are released from any guarantee of payment of the principal amount of such Indebtedness in connection with such Disposition, shall be deemed to be cash, (D) any Designated Non-Cash Consideration received by Holdings, the Borrower or such Restricted Subsidiary in respect of such Disposition having an aggregate fair market value (as determined by a Responsible Officer of the Borrower in good faith), taken together with all other Designated Non-Cash Consideration received pursuant to this clause (k) that is at that time outstanding, not in excess of $28,750,000 at the time of the receipt of such Designated Non-Cash Consideration, with the fair market value (as determined by a Responsible Officer of the Borrower in good faith) of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value, shall be deemed to be cash, (E) consideration received in connection with an asset swap shall be deemed “cash”, and (F) at the time of the execution of a binding agreement in respect of and immediately after giving effect to such Disposition, no Default or Event of Default shall have occurred and be continuing;
(l) Dispositions of Investments in joint ventures or non-wholly owned Subsidiaries to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(m) Dispositions of any assets not constituting Collateral hereunder, provided that the aggregate fair market value (as determined in good faith by the Borrower) of all such Dispositions, in the aggregate, shall not be in excess of the greater of (A) $23,000,000 and (B) 8.625% of Consolidated EBITDA at the time of such Disposition;
(n) Dispositions of any assets (including Equity Interests) (A) acquired in connection with any Permitted Acquisition or other Investment not prohibited hereunder, which assets are not used or useful to the core or principal business of Holdings, the Borrower and the Restricted Subsidiaries; provided that the fair market value of such assets shall not exceed 34.25% of the consideration paid in such Permitted Acquisition or Investment or (B) made to obtain the approval of any applicable antitrust authority in connection with the Transactions;
(o) (i) any Disposition of accounts receivable, Securitization Assets, any participations thereof, or related assets in connection with or any Qualified Securitization Facility or (iii) the sale or discount of inventory, accounts receivable or notes receivable in the ordinary course of business or the conversion of accounts receivable to notes receivable;
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(p) transfers of condemned real property as a result of the exercise of “eminent domain” or other similar powers to the respective Governmental Authority or agency that has condemned the same (whether by deed in lieu of condemnation or otherwise), and transfers of real property arising from foreclosure or similar action or that have been subject to a casualty to the respective insurer of such real property as part of an insurance settlement;
(q) Dispositions constituting any part of a Permitted Reorganization or IPO Reorganization Transaction;
(r) Dispositions of Unrestricted Subsidiaries (other than Unrestricted Subsidiaries the primary assets of which are Permitted Investments received from Holdings or a Restricted Subsidiary) or assets acquired from Unrestricted Subsidiaries;
(s) any swap of assets in exchange for services or other assets in the ordinary course of business of comparable or greater fair market value of usefulness to the business of Holdings and its Restricted Subsidiaries, taken as a whole, as determined in good faith by the Borrower; provided that the aggregate fair market value (as determined in good faith by the Borrower) of all assets constituting Collateral that are exchanged for other assets not constituting Collateral pursuant to this clause (s) shall not exceed the greater of (x) $28,750,000 and (y) 11.5% of Consolidated EBITDA at the time of such swap of assets;
(t) other Dispositions in an aggregate amount not be in excess of the greater of (A) $57,500,000 and (B) 23% of Consolidated EBITDA at the time of such Disposition;
(u) samples, including time-limited evaluation software, provided to customers or prospective customers;
(v) de minimis amounts of equipment or other assets provided to employees;
(w) the unwinding of any Cash Management Obligations or Swap Agreement pursuant to its terms;
(x) sales, transfers, leases or other dispositions to Holdings or a Restricted Subsidiary pursuant to Intercompany License Agreements; and
(y) Holdings and any Restricted Subsidiary may (i) terminate or otherwise collapse its cost sharing agreements with Holdings or any Restricted Subsidiary and settle any crossing payments in connection therewith, (ii) convert any intercompany Indebtedness to Equity Interests, (iii) transfer any intercompany Indebtedness to Holdings or any Restricted Subsidiary, (iv) settle, discount, write off, forgive or cancel any intercompany Indebtedness or other obligation owing by Holdings or any Restricted Subsidiary, (v) settle, discount, write off, forgive or cancel any Indebtedness owing by any present or former consultants, directors, officers or employees, Holdings or any Restricted Subsidiary or any of their successors or assigns or (vi) surrender or waive contractual rights and settle or waive contractual or litigation claims.
SECTION 6.06 [Reserved] .
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SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness .
(a) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, declare or make any Restricted Payment, except:
(i) the Borrower and each Restricted Subsidiary may make Restricted Payments to Holdings, the Borrower or any Restricted Subsidiary, provided that in the case of any such Restricted Payment by a Restricted Subsidiary that is not a Wholly Owned Subsidiary, such Restricted Payment is made to Holdings, the Borrower, any Restricted Subsidiary and to each other owner of Equity Interests of such Restricted Subsidiary based on their relative ownership interests of the relevant class of Equity Interests;
(ii) Holdings, the Borrower and each Restricted Subsidiary may declare and make dividend payments or other distributions payable solely in the Equity Interests of such Person;
(iii) Restricted Payments made to consummate the Transactions and Restricted Payments constituting any part of a Permitted Reorganization or IPO Reorganization Transaction;
(iv) repurchases of Equity Interests in any Holdings Parent, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price or withholding taxes payable in connection with the exercise of such options or warrants or other incentive interests;
(v) Restricted Payments to any Holdings Parent, which such Holdings Parent may use to redeem, acquire, retire, repurchase or settle its Equity Interests (or any options, warrants, restricted stock or stock appreciation rights or similar securities issued with respect to any such Equity Interests) or Indebtedness or to service Indebtedness incurred by a Holdings Parent to finance the redemption, acquisition, retirement, repurchase or settlement of such Equity Interest or Indebtedness, held directly or indirectly by current or former officers, managers, consultants, members of the Board of Directors, employees or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of a Holdings Parent, Holdings, any Intermediate Parent, the Borrower and the Restricted Subsidiaries, upon the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any stock option or stock appreciation rights plan, any management, director and/or employee stock ownership or incentive plan, stock subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement in an aggregate amount after the Effective Date together with the aggregate amount of loans and advances to any Holdings Parent made pursuant to Section 6.04(l) in lieu of Restricted Payments permitted by this clause (v) not to exceed $17,250,000 in any calendar year with unused amounts in any calendar year being carried over to succeeding calendar years (subject to a maximum of $34,500,000 ($69,000,000 after consummation of an IPO) in any calendar year) (without giving effect to the following proviso); provided that such amount in any calendar year may be increased by (1) an amount not to exceed the cash proceeds of key man life insurance policies received by the Borrower, Holdings (or by any Holdings Parent and contributed to Holdings) or the Restricted Subsidiaries after the Effective Date, or (2) the amount of any bona fide cash bonuses otherwise payable to members of the Board of Directors, consultants, officers, employees, managers or independent contractors of any Holdings Parent, Holdings, an Intermediate Parent, the Borrower or any Restricted Subsidiary that are foregone in return for the receipt of Equity Interests, the fair market value of which is equal to or less than the amount of such cash bonuses, which, if not used in any year, may be carried forward to any subsequent fiscal year; provided further that cancellation of Indebtedness owing to Holdings, the Borrower or any Restricted Subsidiary from members of the Board of Directors, consultants, officers, employees, managers or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of a Holdings Parent, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary in connection with a repurchase of Equity Interests of a Holdings Parent, Holdings, any Intermediate Parent or the Borrower will not be deemed to constitute a Restricted Payment for purposes of this Section 6.07 or any other provisions of this Agreement.
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(vi) other Restricted Payments made by Holdings; provided that, on the date of declaration of such Restricted Payments, (x) no Event of Default shall have occurred and be continuing or would result therefrom and (y) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 3.75 to 1.00;
(vii) Holdings may make Restricted Payments in cash to any Holdings Parent:
(A) as distributions by Holdings, the Borrower or any Restricted Subsidiary to any Holdings Parent in amounts required for any Holdings Parent to pay with respect to any taxable period in which Holdings, the Borrower and/or any of the Subsidiaries is a member of a consolidated, combined, unitary or similar tax group (a “ Tax Group ”) of which such Holdings Parent is the common parent, non-U.S. taxes that are attributable to the taxable income, revenue, receipts, gross receipts, gross profits, capital or margin of Holdings and/or its Subsidiaries; provided that, for each taxable period, the amount of such payments made in respect of such taxable period in the aggregate shall not exceed the amount of such taxes that Holdings and its Subsidiaries would have been required to pay if they were a stand-alone Tax Group with Holdings as the corporate common parent of such stand-alone Tax Group (collectively, “ Tax Distributions ”);
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(B) the proceeds of which shall be used by a Holdings Parent to pay (or to make Restricted Payments to allow any direct or indirect parent of such Holdings Parent to pay) (1) its operating expenses incurred in the ordinary course of business and other corporate overhead costs and expenses (including administrative, legal, accounting and similar expenses payable to third parties) that are reasonable and customary and incurred in the ordinary course of business, (2) any reasonable and customary indemnification claims made by members of the Board of Directors or officers, employees, directors, managers, consultants or independent contractors of any Holdings Parent attributable to the ownership or operations of Holdings, the Borrower and the Restricted Subsidiaries, (3) fees and expenses (x) due and payable by Holdings, the Borrower and the Restricted Subsidiaries and (y) otherwise permitted to be paid by Holdings, the Borrower and any Restricted Subsidiaries under this Agreement, (4) to the extent constituting a Restricted Payment, amounts due and payable pursuant to the Sponsor Management Agreement and (5) to satisfy indemnity and other obligations under acquisition or other agreements and (6) amounts that would otherwise be permitted to be paid pursuant to Section 6.08(iii), (iv)(a)(ii) and/or (iv)(b), (viii), (xi) or (xiv);
(C) the proceeds of which shall be used by a Holdings Parent to pay franchise and similar Taxes, and other fees and expenses, required to maintain its corporate or other legal existence;
(D) to finance any Investment made by a Holdings Parent that, if made by Holdings or the Borrower, would be permitted to be made pursuant to Section 6.04; provided that (A) such Restricted Payment shall be made substantially concurrently with the closing of such Investment and (B) such Holdings Parent shall, immediately following the closing thereof, cause (1) all property acquired (whether assets or Equity Interests but not including any loans or advances made pursuant to Section 6.04(b)) to be contributed to Holdings or its Restricted Subsidiaries or (2) the Person formed or acquired to merge into or amalgamate or consolidate with Holdings, the Borrower or any of the Restricted Subsidiaries to the extent such merger, amalgamation or consolidation is permitted in Section 6.03) in order to consummate such Investment, in each case in accordance with the requirements of Sections 5.11 and 5.12;
(E) the proceeds of which shall be used to pay (or to make Restricted Payments to allow a Holdings Parent to pay) (1) fees and expenses related to any actual or proposed equity or debt offering not prohibited by this Agreement and (2) advisory, refinancing, transaction and exit fees and expenses attributable to the business of Holdings and the Restricted Subsidiaries;
(F) the proceeds of which shall be used to pay customary salary, bonus and other benefits payable to officers and employees of any Holdings Parent to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of Holdings, the Borrower and the Restricted Subsidiaries; and
(G) the proceeds of which shall be used to make payments permitted by clause (b)(iv) and (b)(v) of Section 6.07;
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(viii) in addition to the foregoing Restricted Payments, Holdings may make additional Restricted Payments, in an aggregate amount not to exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment; provided that any amounts included in clause (b) of the definition of “Available Amount” may only be used for Restricted Payments so long as (i) no Event of Default shall have occurred and be continuing at the time of declaration of such Restricted Payment and (ii) on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 5.00 to 1.00; provided further that not more than $11,500,000 of amounts included in clause (a) of the definition of “Available Amount” may be used for Restricted Payments pursuant to this Section 6.07(a)(viii);
(ix) redemptions in whole or in part of any of its Equity Interests for another class of its Equity Interests or with proceeds from substantially concurrent equity contributions or issuances of new Equity Interests; provided , that such new Equity Interests contain terms and provisions at least as advantageous to the Lenders in all respects material to their interests as those contained in the Equity Interests redeemed thereby;
(x) payments made or expected to be made in respect of withholding or similar Taxes payable by any future, present or former employee, director, manager or consultant and any repurchases of Equity Interests in consideration of such payments including deemed repurchases in connection with the exercise of stock options and the vesting of restricted stock and restricted stock units;
(xi) payments to any Holdings Parent to permit it to (a) pay cash in lieu of fractional Equity Interests in connection with any dividend, split or combination thereof or any Permitted Acquisition (or other similar Investment) and (b) honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Indebtedness in accordance with its terms;
(xii) payments made or expected to be made by any Holdings Parent, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary in respect of withholding or similar taxes payable upon exercise of Equity Interests by any future, present or former employee, director, officer, manager or consultant (or their respective controlled Affiliates or permitted transferees) and any repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants or required withholding or similar taxes;
(xiii) the distribution, by dividend or otherwise, of shares of Equity Interests of, or Indebtedness owed to any Holdings Parent, Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary by, Unrestricted Subsidiaries (other than Unrestricted Subsidiaries, the primary assets of which are Permitted Investments) received as Permitted Investments from Holdings or a Restricted Subsidiary;
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(xiv) the declaration and payment of a Restricted Payment on Holdings’ common stock (or the payment to the IPO Issuer or any Holdings Parent to fund a payment of dividends on such company’s common stock), following consummation of an IPO, of up to 6.0% per annum of the net cash proceeds of such IPO received by or contributed to Holdings;
(xv) any distributions or payments of Securitization Fees, sales or contributions and other transfers of Securitization Assets and purchases of Securitization Assets, in each case in connection with a Qualified Securitization Facility;
(xvi) Restricted Payments in an amount not to exceed the greater of (A) $11,500,000 and (B) 4.025% of Consolidated EBITDA for the Test Period then last ended at the time of making such Restricted Payment;
(xvii) to the extent constituting Restricted Payments, Holdings, the Borrower and the Restricted Subsidiaries may consummate (1) transactions permitted pursuant to Section 6.03 and (2) make Investments permitted under Section 6.04; and
(xviii) any Restricted Subsidiary may make a Restricted Payment in connection with the acquisition of additional Equity Interests in such Restricted Subsidiary from minority shareholders to the extent such acquisition would have been permitted (and to the extent so permitted shall constitute such Investment) by the parent company of such Restricted Subsidiary pursuant to Section 6.04.
(b) Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, make any voluntary prepayment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Junior Financing constituting Material Indebtedness (other than to the extent of any Retained Declined Proceeds applied in compliance with Section 2.11(e)), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Junior Financing, except:
(i) payment of regularly scheduled interest and principal payments, mandatory offers to repay, repurchase or redeem, mandatory prepayments of principal premium and interest, and payment of fees, expenses and indemnification obligations, with respect to such Junior Financing, other than payments in respect of any Junior Financing prohibited by the subordination provisions thereof;
(ii) refinancings, supplements, substitutions, extensions, restructurings, exchanges or renewals of Indebtedness to the extent permitted by Section 6.01 and fees and expenses in connection therewith;
(iii) the conversion of any Junior Financing to Equity Interests (other than Disqualified Equity Interests) of Holdings or any Holdings Parent, and any payment that is intended to prevent any Junior Financing from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;
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(iv) prepayments, redemptions, repurchases, defeasances and other payments in respect of Junior Financing prior to their scheduled maturity in an aggregate amount, not to exceed the sum of (A) an amount at the time of making any such prepayment, redemption, repurchase, defeasance or other payment and together with any other prepayments, redemptions, repurchases, defeasances and other payments made utilizing this subclause (A) not to exceed the greater of (1) $11,500,000 and (2) 4.025% of Consolidated EBITDA on a Pro Forma Basis for the most recently ended Test Period after giving Pro Forma Effect to the making of such prepayment, redemption, purchase, defeasance or other payment, plus (B) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment plus (y) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment; provided that any amounts included in clause (b) of the definition of “Available Amount” may only be used for such prepayments, redemptions, repurchases, defeasances and other payments of Junior Financing so long as (i) no Event of Default shall have occurred and be continuing at the time of making such prepayments, redemptions, repurchases, defeasances and other payments and (ii) on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 5.00 to 1.00;
(v) payments made in connection with the Transactions;
(vi) prepayments, redemptions, purchases, defeasances and other payments in respect of Junior Financing prior to their scheduled maturity; provided that after giving effect to such prepayment, redemption, repurchase, defeasance or other payment, on a Pro Forma Basis, the Total Net Leverage Ratio is less than or equal to 3.75 to 1.00; and
(vii) prepayment of Junior Financing owed to Holdings, the Borrower or any Restricted Subsidiary or the prepayment of Permitted Refinancing of such Indebtedness with the proceeds of any other Junior Financing.
(c) Any basket available for Restricted Payments pursuant to Section 6.07(a) may instead be used to make a payment or other distribution of or in respect of principal of or interest on any Junior Financing, or any payment or other distribution on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Junior Financing, pursuant to Section 6.07(b), and such payment or other distribution shall not be prohibited by Section 6.07(b). For the avoidance of doubt, any such payment or other distribution shall reduce the amount available under such basket set forth in Section 6.07(a).
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SECTION 6.08 Transactions with Affiliates .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) (A) transactions between or among Holdings, the Borrower or any Restricted Subsidiary or any entity that becomes a Restricted Subsidiary as a result of such transaction and (B) transactions involving aggregate payment or consideration of less than $17,250,000, (ii) on terms, taken as a whole, substantially as favorable to Holdings, the Borrower or such Restricted Subsidiary as would be obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other than an Affiliate, (iii) the Transactions and the payment of fees and expenses as part of or in connection with the Transactions and transactions constituting any Permitted Reorganization or IPO Reorganization Transaction, (iv) the payment of (a) (i) transaction fees and expenses and management fees and expenses paid pursuant to the Sponsor Management Agreement and (ii) other management, consulting, advisory and monitoring, oversight and similar fees to the Investors (or management companies of the Investors) in an aggregate amount in any fiscal year, when taken together with the amounts paid pursuant to the preceding clause (a)(i), not to exceed the amount permitted to be paid pursuant to Section 6.07(a)(vii)(B)(4) and (b) indemnities to the Investors (or management companies of the Investors) to the extent such indemnities relate to the ownership and operation of Holdings and its Restricted Subsidiaries, (v) issuances of Equity Interests of Holdings to the extent otherwise permitted by this Agreement, (vi) compensation (including bonuses and securities issuances or other payments, awards, grants in cash or otherwise) and employee benefit arrangements and severance arrangements between Holdings and its Restricted Subsidiaries and their respective officers, directors, managers, consultants and employees in the ordinary course of business or otherwise in connection with the Transactions (including loans and advances pursuant to Section 6.04) or any acquisition or other Investment permitted hereunder), (vii) payments by Holdings and its Restricted Subsidiaries pursuant to tax sharing agreements among Holdings (and any such parent thereof), any Intermediate Parent, the Borrower and the Restricted Subsidiaries on customary terms to the extent attributable to the ownership or operation of Holdings and its Restricted Subsidiaries, to the extent such payments are permitted by Section 6.07, (viii) the payment of customary fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, members of the Board of Directors, officers and employees of Holdings (or any Holdings Parent), the Borrower, any Intermediate Parent and the Restricted Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of Holdings and its Restricted Subsidiaries, (ix) transactions pursuant to permitted agreements in existence or contemplated on the Effective Date and set forth on Schedule 6.08 or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect, (x) Restricted Payments permitted under Section 6.07 and loans and advances in lieu thereof pursuant to Section 6.04(l), (xi) payments to or from, and transactions with, any joint venture in the ordinary course of business (including, without limitation, any cash management activities related thereto), (xii) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services that are Affiliates, in each case in the ordinary course of business and which are fair to Holdings, the Borrower and the Restricted Subsidiaries, in the reasonable determination of the Borrower, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, (xiii) sales of accounts receivable, or participations therein, or Securitization Assets or related assets or other customary transactions in connection with or any Qualified Securitization Facility, (xiv) customary payments by Holdings and its Restricted Subsidiaries to the Sponsor made for any financial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions, divestitures or financings), which payments are approved by the majority of the members of the Board of Directors or a majority of the disinterested members of the Board of Directors of the Borrower in good faith, (xv) the existence and performance of agreements and transactions with any Unrestricted Subsidiary that were entered into prior to the designation of a Restricted Subsidiary as such Unrestricted Subsidiary to the extent that the transaction was permitted at the time that it was entered into with such Restricted Subsidiary, and transactions entered into by an Unrestricted Subsidiary with an Affiliate prior to the redesignation of any such Unrestricted Subsidiary as a Restricted Subsidiary and not in contemplation of such Unrestricted Subsidiary becoming redesignated as a Restricted Subsidiary, (xvi) Affiliate repurchases of the Loans or Commitments and repurchases of the First Lien Loans and commitments under the First Lien Credit Agreement to the extent permitted hereunder and the holding of such Loans, Commitments and First Lien Loans and commitments and the payments and other transactions contemplated herein and in the First Lien Credit Agreement in respect thereof, and (xvii) any transaction between or among Holdings or any Restricted Subsidiary and any non-wholly owned Affiliate of Holdings or a joint venture or similar entity that is otherwise permitted hereunder to the extent such Affiliate, joint venture or similar entity is an Affiliate solely because Holdings or a Restricted Subsidiary owns an equity interest in or otherwise controls such Affiliate, joint venture or similar entity.
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SECTION 6.09 Restrictive Agreements .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, enter into any agreement, instrument, deed or lease that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of their respective properties or revenues, whether now owned or hereafter acquired, for the benefit of the Secured Parties with respect to the Secured Obligations or under the Loan Documents; provided that the foregoing shall not apply to:
(a) restrictions and conditions imposed by (1) Requirements of Law, (2) any Loan Document, (3) any documentation governing Incremental Equivalent Debt, (4) any documentation governing Permitted Unsecured Refinancing Debt, Permitted Pari Passu Refinancing Debt or Permitted Junior Priority Refinancing Debt, (5) any First Lien Loan Documents or any documents governing any indebtedness that is senior in right of payment or security to the Secured Obligations, (6) any documentation governing Indebtedness of a Restricted Subsidiary that is not a Loan Party incurred pursuant to Section 6.01 and that do not apply to any Loan Party, (7) any documentation governing Indebtedness incurred pursuant to Section 6.01(a) (v) (but only to the extent applicable to the assets financed by such Indebtedness (and replacements, additions, accessions and improvements to or proceeds of such assets and other assets financed by the same lender)), (vi), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xx), (xxv), (xxvi), (xxix), (xxx), or (xxxiv), and (8) any documentation governing any Permitted Refinancing incurred to refinance any such Indebtedness referenced in clauses (1) through (7) above;
(b) customary restrictions and conditions existing on the Effective Date and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
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(c) restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale; provided that such restrictions and conditions apply only to the Subsidiary or assets that is or are to be sold and such sale is permitted hereunder;
(d) customary provisions in leases, licenses, sublicenses and other contracts (including licenses and sublicenses of Intellectual Property) restricting the assignment, license, sublicense, transfer or security interest thereof or assets subject thereto;
(e) restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent such restriction applies only to the property securing such Indebtedness;
(f) any restrictions or conditions set forth in any agreement in effect at any time any Person becomes a Restricted Subsidiary (but not any modification or amendment expanding the scope of any such restriction or condition); provided that such agreement was not entered into in contemplation of such Person becoming a Restricted Subsidiary and the restriction or condition set forth in such agreement does not apply to Holdings, the Borrower or any Restricted Subsidiary ( other than such Person that has become a Restricted Subsidiary);
(g) restrictions or conditions in any Indebtedness permitted pursuant to Section 6.01 that is incurred or assumed by Restricted Subsidiaries that are not Loan Parties to the extent such restrictions or conditions are no more restrictive in any material respect than the restrictions and conditions in the Loan Documents or are market terms at the time of issuance and are imposed solely on such Restricted Subsidiary and its Subsidiaries;
(h) restrictions on cash (or Permitted Investments) or other deposits imposed by agreements entered into in the ordinary course of business (or other restrictions on cash or deposits constituting Permitted Encumbrances);
(i) restrictions set forth on Schedule 6.09 and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(j) customary provisions in shareholders agreements, joint venture agreements, organization constitutive documents or similar binding agreements relating to any joint venture or non-wholly-owned Restricted Subsidiary and other similar agreements applicable to joint ventures and non-wholly-owned Restricted Subsidiaries and applicable solely to such joint venture or non-wholly-owned Restricted Subsidiary and the Equity Interests issued thereby, in each case, permitted by Section 6.04;
(k) customary restrictions contained in leases, subleases, licenses, sublicenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate only to the assets subject thereto;
(l) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of Holdings, any Intermediate Parent, the Borrower or any Restricted Subsidiary; and
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(m) customary net worth provisions contained in real property leases or other contracts entered into by Subsidiaries, so long as the Borrower has determined in good faith that such net worth provisions could not reasonably be expected to impair the ability of Holdings, the Borrower and its Subsidiaries to meet their ongoing obligations;
(n) in respect of a Dutch Loan Guarantor, only with respect to its shares which are subject to a Security Document, customary transfer restrictions based on a blocking arrangement ( blokkeringsregeling ) contained in its constitutional documents which restrict or inhibit any transfer of those shares on creation or enforcement of the Security Documents;
(o) restrictions on transfers of assets subject to Liens permitted by Section 6.02 (but, with respect to any such Lien, only to the extent that such transfer restrictions apply solely to the assets that are the subject of such Lien);
(p) restrictions created in connection with any Qualified Securitization Facility;
(q) any restrictions regarding licensing or sublicensing by Holdings and its Restricted Subsidiaries of intellectual property in the ordinary course of business;
(r) any restrictions that arise in connection with cash or other deposits permitted under Section 6.02 and Section 6.04; and
(s) comprise restrictions imposed by any agreement governing Indebtedness entered into on or after the Effective Date and permitted under Section 6.01 if the restrictions contained in any such agreement taken as a whole (a) are not materially less favorable to the Secured Parties than the encumbrances and restrictions contained in the Loan Documents (as determined by the Borrower) or (b) either (I) the Borrower determines at the time of entry into such agreement or instrument that such encumbrances or restrictions will not adversely affect, in any material respect, the Borrower’s ability to make principal or interest payments required hereunder or (II) such encumbrances or restriction applies only during the continuance of a default relating to such agreement or instrument.
SECTION 6.10 Amendment of Junior Financing .
Holdings and the Borrower will not, and will not permit any Restricted Subsidiary to, amend or modify the documentation governing any Junior Financing if such amendment is not expressly permitted by any applicable Intercreditor Agreement or subordination agreement if the effect of such amendment or modification is materially adverse to the Lenders; provided that such modification will not be deemed to be materially adverse if such Junior Financing could be otherwise incurred or refinanced under this Agreement (including as Indebtedness that does not constitute a Junior Financing) with such terms as so modified at the time of such modification.
SECTION 6.11 No Layering of Debt . Holdings and the Borrower will not, and will not permit any Loan Party to, create, incur, assume or permit to exist any Indebtedness secured by a Lien on any property or asset which Lien is (a) contractually subordinated to any Lien created under the First Lien Loan Documents and (b) senior to any Lien securing the Initial Term Loans.
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SECTION 6.12 Financial Performance Covenant .
Holdings will not permit the Total Net Leverage Ratio as of the last day of any Test Period ending on any date set forth in the table below, to exceed the applicable ratio set forth in the table below opposite the last day of such Test Period:
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Article VII
EVENTS OF DEFAULT
SECTION 7.01 Events of Default .
If any of the following events (any such event, an “ Event of Default ”) shall occur:
(a) any Loan Party shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) any Loan Party shall fail to pay (i) any interest on any Loan when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) Business Days, or (ii) any fee or any other amount (other than an amount referred to in paragraph (a) or (b)(i) of this Section 7.01) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of ten (10) Business Days;
(c) any representation or warranty made or deemed made by or on behalf of Holdings, any Intermediate Parent, the Borrower or any of its Restricted Subsidiaries in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made, and such incorrect representation or warranty (if curable) shall remain incorrect for a period of 30 days after notice thereof from the Administrative Agent to the Borrower;
(d) (i) Holdings, any Intermediate Parent, the Borrower or any of the Restricted Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in Sections 5.02(a), 5.04 (with respect to the existence of Holdings or the Borrower or Intermediate Lux Holdings only) or in Article VI (other than Section 6.08 or the Financial Performance Covenant); provided that any Event of Default under Section 5.02(a) shall be deemed cured upon Borrower providing the applicable written notice; or
(ii) Holdings or any of the Restricted Subsidiaries shall fail to observe or perform the Financial Performance Covenant; provided that any Event of Default under Section 6.12 is subject to cure as provided in Section 7.02 and an Event of Default with respect to such Section shall not occur until the expiration of the twelfth (12th) Business Day subsequent to the date on which the financial statements with respect to the applicable fiscal quarter (or the fiscal year ended on the last day of such fiscal quarter) are required to be delivered pursuant to Section 5.01(a) or Section 5.01(b), as applicable;
(e) Holdings, any Intermediate Parent, the Borrower or any of the Restricted Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Section 7.01), and such failure shall continue unremedied for a period of thirty (30) days after written notice thereof from the Administrative Agent to the Borrower;
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(f) Holdings, any Intermediate Parent, the Borrower or any of the Restricted Subsidiaries shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any applicable grace period and all required notices have been given); provided that this paragraph (f) shall not apply to any Indebtedness if the sole remedy of the holder thereof in the event of such non-payment is to elect to convert such Indebtedness into Qualified Equity Interests and cash in lieu of fractional shares; provided that this paragraph (f) shall not apply to any such failure that (x) is remedied by Holdings, any Intermediate Parent, the Borrower or any applicable Restricted Subsidiary or (y) waived (including in the form of amendment) by the requisite holders of the applicable item of Material Indebtedness in either case, prior to acceleration of all the Loans pursuant to this Section 7.01; provided, further, that with respect to any of the defaults described in this clause (f) in respect of Indebtedness outstanding under the First Lien Loan Documents, such default shall only constitute an Event of Default under this Agreement if (x) such Indebtedness has been accelerated in accordance with its terms, or (y) such default relates to the non-payment of interest or principal of First Lien Loans and after the expiration of any applicable grace period and required notice having been given therein (other than any such default that is remedied or waived by the holders of such Indebtedness prior to acceleration of the Term Loans under this Section 7.01);
(g) any event or condition occurs that results in any Material Indebtedness having become immediately due and payable prior to its scheduled maturity and all commitments having been terminated in accordance with the agreement governing such Material Indebtedness and such acceleration has not been rescinded by the required lenders with respect to such Material Indebtedness, provided that this paragraph (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement), (ii) termination events or similar events occurring under any Swap Agreement that constitutes Material Indebtedness (it being understood that paragraph (f) of this Section 7.01 will apply to any failure to make any payment required as a result of any such termination or similar event) or (iii) any Indebtedness if the sole remedy of the holder thereof following such event or condition is to elect to convert such Indebtedness into Qualified Equity Interests and cash in lieu of fractional shares, provided that this paragraph (g) shall not apply to any such failure that (x) is remedied by Holdings, any Intermediate Parent, the Borrower or any applicable Restricted Subsidiary or (y) waived (including in the form of amendment) by the requisite holders of the applicable item of Material Indebtedness in either case, prior to acceleration of all the Loans pursuant to this Section 7.01;
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, court protection, examination, reorganization or other relief in respect of Holdings, the Borrower or any Material Subsidiary or its debts, or of a material part of its assets, under any Federal, state or foreign bankruptcy, insolvency, examinership, receivership or similar law, now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, examiner, sequestrator, conservator, interim receiver, liquidator, receiver and manager, administrative receiver, administrator, insolvency practitioner or similar official for Holdings, the Borrower or any Material Subsidiary or for a material part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;
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(i) Holdings, the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, court protection, examinership, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, examinership, receivership or similar law, now or hereafter in effect (but excluding any such proceeding or petition (other than under the Bankruptcy Code) the sole purpose of which is to effect a transaction permitted under Section 6.03(a) that is not otherwise prohibited by the Loan Documents), (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, examiner, custodian, sequestrator, conservator, interim receiver, interim examiner, liquidator, receiver and manager, administrative receiver, administrator, insolvency practitioner or similar official for Holdings, the Borrower or any Material Subsidiary or for a material part of its assets (but excluding any such application or consent (other than under the Bankruptcy Code) the sole purpose of which is to effect a transaction permitted under Section 6.03(a) that is not otherwise prohibited by the Loan Documents), (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding or (v) make a general assignment for the benefit of creditors;
(j) one or more enforceable judgments for the payment of money in an aggregate amount in excess of $57,500,000 (to the extent not covered by insurance or another creditworthy (as reasonably determined by the Administrative Agent) indemnitor, and as to which such insurer or indemnitor has not denied coverage) shall be rendered against Holdings, any Intermediate Parent, the Borrower, any Material Subsidiary or any combination thereof and the same shall remain undischarged, unvacated, unbonded or unstayed for a period of 60 consecutive days;
(k) an ERISA Event occurs that has resulted or would reasonably be expected, individually or together with any other ERISA Event(s) in the aggregate to result in a Material Adverse Effect;
(l) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be (other than in an informational notice), a valid and perfected (if and to the extent required to be perfected under the Loan Documents) Lien on any material portion of the Collateral, with the priority required by the applicable Security Documents, except (i) as a result of the release of a Loan Party (including as a result of the designation of a Restricted Subsidiary as an Unrestricted Subsidiary) or the sale or other disposition of the applicable Collateral to a Person that is not a Loan Party, in a transaction permitted under the Loan Documents, (ii) as a result of the Collateral Agent’s failure to (A) subject to the terms, conditions and provisions of the Closing Date Intercreditor Agreement, maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Security Documents or (B) file Uniform Commercial Code amendment or continuation financing statements or (iii) as to Collateral consisting of real property to the extent that such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage, (iv) as a result of acts or omissions of the Collateral Agent, the Administrative Agent or any Lender or (v) as a result of releases or terminations pursuant to the applicable Intercreditor Agreement or as provided in Section 9.14;
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(m) any material provision of any Loan Document or any Guarantee of the Loan Document Obligations shall for any reason be asserted by any Loan Party not to be a legal, valid and binding obligation of any Loan Party thereto other than as expressly permitted hereunder or thereunder;
(n) any material portion of the Guarantees of the Loan Document Obligations pursuant to the Guarantee Agreement, taken as a whole, shall cease to be in full force and effect (in each case, other than the occurrence of the Termination Date or otherwise in accordance with the terms of the Loan Documents, including as a result of transactions permitted hereunder or in accordance with the applicable Intercreditor Agreement or Section 9.14); or
(o) a Change in Control shall occur;
then, and in every such event (other than an event with respect to Holdings or the Borrower described in paragraph (h) or (i) of this Section 7.01), and at any time thereafter during the continuance of such event, the Administrative Agent at the request of the Required Lenders; ( provided that the following actions may not be taken (A) in the case of an Event of Default under Section 7.01(d)(ii), until the ability to exercise the Cure Right under Section 7.02 has expired (but may be taken as soon as the ability to exercise the Cure Right has expired and it has not been so exercised) and (B) in the case of an Event of Default under Section 7.01(d)(i), if the express conditions in the last proviso contained in Section 7.01(d)(i) have been satisfied) shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable) and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to Holdings or the Borrower described in paragraph (h) or (i) of this Section 7.01, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
SECTION 7.02 Right to Cure .
(a) Notwithstanding anything to the contrary contained in Section 7.01, in the event that Holdings and its Restricted Subsidiaries fail to comply with the requirements of the “Financial Performance Covenant” under the First Lien Loan Documents and/or the Financial Performance Covenant hereunder as of the last day of any applicable fiscal quarter of Holdings, at any time after the beginning of such fiscal quarter until the expiration of the twelfth (12th) Business Day subsequent to the date on which the financial statements with respect to such fiscal quarter (or the fiscal year ended on the last day of such fiscal quarter) are required to be delivered pursuant to Section 5.01(a) or (b), as applicable (the “ Cure Termination Date ”), Holdings shall have the right to issue Qualified Equity Interests for cash or otherwise receive cash contributions to the capital of Holdings as cash common equity or other Qualified Equity Interests (collectively, the “ Cure Right ”), and upon the receipt by Holdings of the Net Proceeds of such issuance (the “ Cure Amount ”) pursuant to the exercise by Holdings of such Cure Right the Financial Performance Covenant shall be recalculated giving effect to the following pro forma adjustment:
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(i) Consolidated EBITDA shall be increased with respect to such applicable fiscal quarter and any four fiscal quarter period that contains such fiscal quarter, solely for the purpose of measuring the Financial Performance Covenant and not for any other purpose under this Agreement, by an amount equal to the Cure Amount; and
(ii) if, after giving effect to the foregoing pro forma adjustment (without giving effect to any repayment of any Indebtedness with any portion of the Cure Amount or any portion of the Cure Amount on the balance sheet of Holdings and its Restricted Subsidiaries, in each case, with respect to such fiscal quarter only), Holdings and its Restricted Subsidiaries shall then be in compliance with the requirements of the Financial Performance Covenant, Holdings and its Restricted Subsidiaries shall be deemed to have satisfied the requirements of the Financial Performance Covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default or event of default of the Financial Performance Covenant that had occurred shall be deemed cured for the purposes of this Agreement and the other Loan Documents;
provided that the Borrower shall have notified the Administrative Agent of the exercise of such Cure Right within five (5) Business Days of the issuance of the relevant Qualified Equity Interests for cash or the receipt of the cash contributions by Holdings.
(b) Notwithstanding anything herein to the contrary, (i) in each four consecutive fiscal quarter period of the Borrower there shall be at least two (2) fiscal quarters in which the Cure Right is not exercised, (ii) during the term of this Agreement, the Cure Right shall not be exercised more than five (5) times, (iii) for purposes of this Section 7.02, the Cure Amount shall be no greater than the amount required for purposes of complying with the Financial Performance Covenant under the First Lien Loan Documents and any amounts in excess thereof shall not be deemed to be a Cure Amount and (iv) neither the Administrative Agent nor any Lender or Secured Party shall exercise any remedy (including acceleration) under the Loan Documents or applicable law on the basis of an Event of Default caused by the failure to comply with Section 6.12 until after Holding’s ability to cure has lapsed and Holdings has not exercised the Cure Right, and, if the Borrower shall have delivered to the Administrative Agent a notice of its intent to cure a breach or default under Section 7.01(d)(ii) prior to the Cure Termination Date, no Event of Default under Section 7.01(d)(ii) shall then be deemed to be in existence, provided , however , that if the Cure Amount is not received by Holdings on or prior to the Cure Termination Date, such Event of Default shall be deemed to arise). Notwithstanding any other provision in this Agreement to the contrary, the Cure Amount received pursuant to any exercise of the Cure Right shall not be included in the calculation of Consolidated EBITDA or any incurrence ratio test for purposes of determining any available basket under Article VI of this Agreement. For the avoidance of doubt, no Cure Amounts shall be applied to reduce the Indebtedness of Holdings and its Restricted Subsidiaries on a Pro Forma Basis for purposes of determining compliance with the Financial Performance Covenant for the fiscal quarter in which such Cure Right was made and there shall not have been a breach of any covenant under Article VI of this Agreement by reason of having no longer included such Cure Amount in any basket during the relevant period.
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SECTION 7.03 Application of Proceeds . Subject to the terms of the Closing Date Intercreditor Agreement and any other applicable Intercreditor Agreement, the Collateral Agent shall apply the proceeds of any collection or sale of Collateral, including any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the Collateral Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Loan Document or any of the Secured Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent hereunder or under any other Loan Document on behalf of any Loan Party and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Secured Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Secured Obligations owed to them on the date of any such distribution);
THIRD, to any agent of any other junior secured debt, in accordance with any applicable Intercreditor Agreement; and
FOURTH, to the Loan Parties, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. The Collateral Agent shall have no liability to any of the Secured Parties for actions taken in reliance on information supplied to it as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Secured Obligations.
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Article VIII
ADMINISTRATIVE AGENT
SECTION 8.01 Appointment and Authority .
(a) Each of the Lenders hereby irrevocably appoints Deutsche Bank AG New York Branch to act on its behalf as the Administrative Agent and Collateral Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent and Collateral Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Collateral Agent, and the Lenders, and the Borrower shall not have rights as a third party beneficiary of any of such provisions. With respect to any determination, exercise of discretion, or other action to be taken here under by the Administrative Agent, unless this Agreement or the Closing Date Intercreditor Agreement or other applicable intercreditor agreement provides otherwise (or has been deemed provided as set forth herein), such determination, exercise of discretion or action shall be made or taken as directed by Required Lenders.
(b) The Administrative Agent shall also act as the “Collateral Agent” or, as the case may be, “Security Trustee” under the Loan Documents, and each of the Lenders hereby irrevocably appoints and authorizes the Collateral Agent to act as the agent or, as the case may be, the security trustee, of such Lender, and acknowledges that, to the extent required in any relevant jurisdiction, the Administrative Agent may enter into such security trust or equivalent deeds as the Administrative Agent may consider necessary, in each case for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Collateral Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent and Collateral Agent pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.03 as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” or the “security agent” or the “security trustee” under the Loan Documents) as if set forth in full herein with respect thereto.
(c) Each Secured Party acknowledges the terms of each Security Trust Deed and, in particular, the terms, basis and limitation on which the Administrative Agent holds the “Transaction Security” (as defined therein) and specifically agrees and accepts (i) such terms, basis and limitation; (ii) that the Administrative Agent shall, as trustee, have only those duties, obligations and responsibilities expressly specified in each Security Trust Deed; (iii) the limitation and exclusion of the Administrative Agent’s liability as set out therein; and (iv) all other provisions of the Security Trust Deed as if it were a party thereto.
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SECTION 8.02 Rights as a Lender .
The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, own securities of, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate of the Borrower as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
SECTION 8.03 Exculpatory Provisions .
The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law;
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of their Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity;
(d) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 9.02 and in the last paragraph of Section 7.01) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment; provided that the Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to the Administrative Agent by the Borrower or a Lender; and
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(e) shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
SECTION 8.04 Reliance by Administrative Agent .
The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
SECTION 8.05 Delegation of Duties .
The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents (which may include such of the Administrative Agent’s affiliates or branches as it deems appropriate) appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
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SECTION 8.06 Resignation of Administrative Agent .
Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign upon thirty (30) days’ notice to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the Borrower’s consent (such consent not to be unreasonably withheld or delayed) unless a Specified Event of Default has occurred and is continuing), to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders appoint a successor Administrative Agent, which shall be an Approved Bank with an office in New York, New York, or an Affiliate of any such Approved Bank (the date upon which the retiring Administrative Agent is replaced, the “ Resignation Effective Date ”); provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice.
If the Person serving as Administrative Agent is a Defaulting Lender, the Required Lenders and Holdings may, to the extent permitted by applicable law, by notice in writing to such Person remove such Person as Administrative Agent and, with the consent of the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except (i) that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed and (ii) with respect to any outstanding payment obligations) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder and under the other Loan Documents as set forth in this Section. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.
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SECTION 8.07 Non-Reliance on Administrative Agent and Other Lenders .
Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
Each Lender, by delivering its signature page to this Agreement and funding its Loans on the Effective Date, or delivering its signature page to an Assignment and Assumption, Incremental Facility Amendment or Refinancing Amendment pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Effective Date.
No Lender shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee of the Secured Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Administrative Agent and Collateral Agent on behalf of the Lenders in accordance with the terms thereof. In the event of a foreclosure by the Administrative Agent or Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Administrative Agent, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition, and the Administrative Agent or Collateral Agent, as agent for and representative of the Lenders (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent or Collateral Agent on behalf of the Lenders at such sale or other disposition. Each Lender, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guarantees of the Secured Obligations, to have agreed to the foregoing provisions.
SECTION 8.08 No Other Duties, Etc.
Anything herein to the contrary notwithstanding, neither any Joint Lead Arrangers nor any person named on the cover page hereof as a Joint Lead Arranger shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.
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SECTION 8.09 Administrative Agent May File Proofs of Claim .
In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.12 and 9.03) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.12 and 9.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender or in any such proceeding.
SECTION 8.10 No Waiver; Cumulative Remedies; Enforcement .
No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
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Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Article VII for the benefit of all the Lenders; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) [reserved], (c) any Lender from exercising setoff rights in accordance with Section 9.08 (subject to the terms of Section 2.18), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided further that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Article VII and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.18, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
Article IX
MISCELLANEOUS
SECTION 9.01 Notices .
(a) Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax or other electronic transmission (including e-mail), as follows:
(i) if to Holdings, the Borrower or the Administrative Agent, to the address, fax number, e-mail address or telephone number specified for such Person on Schedule 9.01; and
(ii) if to any other Lender, to it at its address (or fax number, telephone number or e-mail address) set forth in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain Material Non-Public Information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by fax shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).
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(b) Electronic Communications . Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures reasonably approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received when sent to the proper e-mail address as specified on Schedule 9.01 (as updated from time to time in accordance with Section 9.01(d)), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received when an e-mail is sent to the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to Holdings, the Borrower, any Lender, or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided , however , that in no event shall any Agent Party have any liability to Holdings, the Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d) Change of Address, Etc . Each of Holdings, the Borrower, and the Administrative Agent may change its address, electronic mail address, fax or telephone number for notices and other communications or website hereunder by notice to the other parties hereto. Each other Lender may change its address, fax or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, fax number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.
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(e) Reliance by Administrative Agent and Lenders . The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent and each of the parties hereto hereby consents to such recording.
SECTION 9.02 Waivers; Amendments .
(a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power under this Agreement or any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 9.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on the Borrower or Holdings in any case shall entitle the Borrower or Holdings to any other or further notice or demand in similar or other circumstances.
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(b) Except as provided in Section 2.20 with respect to any Incremental Facility Amendment, Section 2.21 with respect to any Refinancing Amendment or Section 2.24 with respect to any Permitted Amendment, neither this Agreement, any Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Holdings, the Borrower, the Administrative Agent and the Required Lenders ( provided , that if such waiver, amendment or modification does not affect the rights, duties, privileges or obligations of the Administrative Agent under this Agreement, the Administrative Agent shall only be required to acknowledge such waiver, amendment or modification) or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that the consent of the Required Lenders shall not be required with respect to the amendments set forth below; provided further that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender (it being understood that a waiver of any condition precedent set forth in Section 4.02 or the waiver of any Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender), (ii) reduce the principal amount of any Loan (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute a reduction or forgiveness of principal) or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly and adversely affected thereby (it being understood that any change to the definition of Total Net Leverage Ratio or Senior Secured Net Leverage Ratio or in the component definitions thereof shall not constitute a reduction of interest or fees), provided that only the consent of the Required Lenders shall be necessary to waive or otherwise modify any obligation of the Borrower to pay default interest pursuant to Section 2.13(c), (iii) postpone the maturity of any Loan (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension of any maturity date), or the date of any scheduled amortization payment of the principal amount of any Term Loan under the applicable Refinancing Amendment, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly and adversely affected thereby, (iv) change Section 2.18(b), Section 2.18(c) or Section 7.03 in a manner that would alter the pro rata sharing of payments or other amounts required thereby without the consent of each Lender directly and adversely affected thereby ( provided , that any such changes required in connection with any Refinancing Amendment, Incremental Amendment or other transaction expressly permitted hereunder shall only require the approval (to the extent any approval is required) of the Required Lenders), (v) change any of the provisions of this Section 9.02(b) without the written consent of such Lender directly and adversely affected thereby, (vi) change the percentage set forth in the definition of “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vii) release all or substantially all the value of the Guarantees under the Guarantee Agreement (except as expressly provided in the Loan Documents) without the written consent of each Lender (other than a Defaulting Lender) or (viii) release all or substantially all the Collateral from the Liens of the Security Documents, without the written consent of each Lender (other than a Defaulting Lender), except as expressly provided in the Loan Documents; provided , further , that in connection with an amendment that addresses solely a re-pricing transaction in which any Class of Term Loans is refinanced with a replacement Class of term loans bearing (or is modified in such a manner such that the resulting term loans bear a lower Yield, only the consent of the Lenders holding Term Loans subject to such permitted re-pricing transaction that will continue as a Lender in respect of the re-priced tranche of Term Loans or modified Term Loans; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent without the prior written consent of the Administrative Agent, (B) any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by Holdings, the Borrower and the Administrative Agent to cure any mistake, ambiguity, omission, defect, obvious error or incorrect cross-reference, or to effect administrative changes of a technical or immaterial nature or to correct any inconsistency and (C) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Loans or Commitments of a particular Class (but not the Lenders holding Loans or Commitments of any other Class) may be effected by an agreement or agreements in writing entered into by Holdings, Intermediate Parent, the Borrower and the requisite percentage in interest of the affected Class of Lenders stating that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time. Notwithstanding the foregoing, (a) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent, Holdings and the Borrower (i) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents and (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders on substantially the same basis as the Lenders prior to such inclusion and (b) guarantees, Security Documents and related documents in connection with this Agreement may be in a form reasonably determined by the Administrative Agent and may be, together with this Agreement and the other Loan Documents, amended and waived with the consent of the Administrative Agent at the request of the Borrower without the need to obtain the consent of any other Lender if such amendment or waiver is delivered in order (i) to comply with local law or advice of local counsel, (ii) to cure ambiguities or defects, (iii) to cause such guarantee, collateral security document or other document to be consistent with this Agreement and the other Loan Documents or (iv) to integrate any Incremental Facility or Credit Agreement Refinancing Indebtedness in a manner consistent with this Agreement and the other Loan Documents. N otwithstanding the foregoing, no Lender consent is required to effect any amendment, modification or supplement to any Intercreditor Agreement or subordination agreement or arrangement permitted under this Agreement or in any document pertaining to any Indebtedness permitted hereby that is permitted to be secured by the Collateral, including any Incremental Term Loan, any Other Term Loan, for the purpose of adding the holders of such Indebtedness (or their senior representative) as a party thereto and otherwise causing such Indebtedness to be subject thereto, to give effect hereto or otherwise carry out the purposes thereof, in each case as contemplated by the terms of such Intercreditor Agreement permitted under this Agreement (including any changes thereto as contemplated by Section 9.14(b)) or subordination agreement or arrangement permitted under this Agreement, as applicable.
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(c) In connection with any proposed amendment, modification, waiver or termination (a “ Proposed Change ”) requiring the consent of all Lenders or all directly and adversely affected Lenders, if the consent of the Required Lenders to such Proposed Change is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in paragraph (b) of this Section 9.02 being referred to as a “ Non-Consenting Lender ”), then the Borrower may, at its sole expense and effort, upon notice to such Non-Consenting Lender and the Administrative Agent, require such Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment), provided that (a) the Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consent shall not unreasonably be withheld, (b) such Non-Consenting Lender shall have received payment of an amount equal to the outstanding par principal amount of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including pursuant to Section 2.11(a)(i)) from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
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(d) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, the Term Loans of any Lender that is at the time a Defaulting Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of a Class), all affected Lenders (or all affected Lenders of a Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to this Section 9.02); provided that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.
(e) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, each Affiliated Lender (other than an Affiliated Debt Fund) hereby agrees that, for purposes of any plan of reorganization, such Affiliated Lender will be deemed to have voted in the same proportion as non-Affiliated Lenders voting on such matter; provided that such Affiliated Lender shall be entitled to vote in accordance with its sole discretion in connection with any plan of reorganization to the extent (a) any such plan of reorganization proposes to treat any Secured Obligations held by such Affiliated Lender in a manner that is less favorable in any material respect to such Affiliated Lender than the proposed treatment of similar Secured Obligations held by Lenders that are not Affiliates of the Borrower, (b) that would deprive such Affiliated Lender of its pro rata share of any payments to which it is entitled or (c) if such plan of reorganization does not require the consent of each Lender or each affected Lender.
SECTION 9.03 Expenses; Indemnity; Damage Waiver .
(a) The Borrower shall pay, if the Effective Date occurs and the Transactions have been consummated, (i) all reasonable and documented out-of-pocket costs and expenses incurred by the Administrative Agent, the Joint Lead Arrangers and their respective Affiliates (without duplication), (but limited, (A) in the case of legal fees and expenses, to the reasonable fees, disbursements and other charges of one counsel to the Administrative Agent and one counsel to the Joint Lead Arrangers, taken as a whole, plus, if reasonably necessary, one local counsel to the Administrative Agent and one local counsel to the Joint Lead Arrangers, taken as a whole, in any relevant material jurisdiction, in each case excluding allocated costs of in-house counsel (and in the case of an actual or reasonably perceived potential conflict of interest, one additional counsel and local counsel to the affected Lenders, taken as a whole), and (B) in the case of other consultants and advisors, limited to the fees and expenses of such persons approved by the Borrower, acting reasonably), in each case for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, and the preparation, execution, delivery and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof), (ii) [reserved] and (iii) all reasonable and documented and invoiced out-of-pocket expenses (but not third party costs or expenses such as legal fees or the fees of other advisors) incurred by the Administrative Agent or any Lender and the fees, charges and disbursements of counsel to the Administrative Agent and the Lenders, taken as a whole, in any relevant material jurisdiction (and in the case of an actual or reasonably perceived potential conflict of interest, one additional counsel to the affected Lenders, taken as a whole) and in the case of other consultants and advisers, limited to the fees and expenses of such persons approved by the Borrower, acting reasonably) (but limited, (A) in the case of legal fees and expenses, to the fees, disbursements and other charges of one counsel to the Administrative Agent and one counsel to the Lenders, taken as a whole, and, if reasonably necessary, one local counsel to the Administrative Agent and one local counsel to the Lenders, taken as a whole, in each relevant material jurisdiction (and in the case of an actual or reasonably perceived potential conflict of interest, one additional counsel to the affected Lenders, taken as a whole) and (B) in the case of other consultants and advisers, limited to the fees and expenses of such persons approved by the Borrower, acting reasonably) in connection with the enforcement or protection of any rights or remedies in connection with the Loan Documents (including all such costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Laws or during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit).
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(b) Without duplication of the expense reimbursement obligations pursuant to clause (a) above, the Borrower shall indemnify the Administrative Agent, each Lender, the Joint Lead Arrangers and each Related Party (other than Excluded Affiliates to the extent acting in their capacities as such) of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and expenses (but limited, in the case of legal expenses, to the reasonable and documented and invoiced out-of-pocket fees and expenses of one counsel for all Indemnitees and to the extent reasonably determined by the Administrative Agent to be necessary, one local counsel in each relevant jurisdiction (and, in the case of a conflict of interest, where the Indemnitee affected by such conflict notifies Holdings of the existence of such conflict and thereafter retains its own counsel, one additional counsel) for all Indemnitees (which may include a single special counsel acting in multiple jurisdictions but excluding allocated costs of in-house counsel)), incurred by or asserted against any Indemnitee by any third party or by the Borrower, Holdings or any Subsidiary arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any Loan Document or any other agreement or instrument contemplated hereby or thereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated thereby, the syndication of the credit facilities provided for herein, (ii) any Loan or the use of the proceeds therefrom, (iii) to the extent in any way arising from or relating to any of the foregoing, any actual or alleged presence or Release or threat of Release of Hazardous Materials on, at, to or from any Mortgaged Property or any other real property currently or formerly owned or operated by Holdings, any Intermediate Parent, the Borrower or any Subsidiary, or any other Environmental Liability related in any way to Holdings, any Intermediate Parent, the Borrower or any Subsidiary, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, Holdings or any Subsidiary or their Affiliates and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, costs or related expenses (w) resulted from the gross negligence, bad faith, fraud or willful misconduct of such Indemnitee or its Related Parties (as determined by a court of competent jurisdiction in a final and non-appealable judgment), (x) resulted from a material breach of the Loan Documents by such Indemnitee or its Related Parties (as determined by a court of competent jurisdiction in a final and non-appealable judgment), (y) arise from disputes between or among Indemnitees (other than disputes involving claims against the Administrative Agent, the Collateral Agent or the Joint Lead Arrangers, in each case, in their respective capacities) that do not involve an act or omission by Holdings, the Borrower or any Restricted Subsidiary or (z) resulted from any settlement effected without the Borrower’s prior written consent; provided , that to the extent any amounts paid to an Indemnitee in respect of this Section 9.03, such Indemnitee, by its acceptance of the benefits hereof, agrees to refund and return any and all amounts paid by the Borrower to it if, pursuant to the operation of the foregoing clauses (w) through (z), such Indemnitee was not entitled to receipt of such amount.
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(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, any Lender under paragraph (a) or (b) of this Section 9.03, each Lender severally agrees to pay to the Administrative Agent, such Lender such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or such Lender in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the aggregate outstanding Term Loans and unused Commitments at such time. The obligations of the Lenders under this paragraph (c) are subject to the last sentence of Section 2.02(a) (which shall apply mutatis mutandis to the Lenders’ obligations under this paragraph (c)).
(d) To the extent permitted by applicable law, none of Holdings, the Borrower, any Agent, any Lender, any other party hereto or any Indemnitee shall assert, and each hereby waives, any claim against any other such Person on any theory of liability for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, arising out of, as a result of, or in any way related to, this Agreement or any agreement or instrument contemplated hereby or referred to herein, the transactions contemplated hereby or thereby, or any act or omission or event occurring in connection therewith and each such Person further agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor; provided that the foregoing shall in no event limit the Borrower’s indemnification obligations under clause (b) above.
(e) In case any proceeding is instituted involving any Indemnitee for which indemnification is to be sought hereunder by such Indemnitee, then such Indemnitee will promptly notify the Borrower of the commencement of any proceeding; provided , however , that the failure to do so will not relieve the Borrower from any liability that it may have to such Indemnitee hereunder, except to the extent that the Borrower is materially prejudiced by such failure. Notwithstanding the above, following such notification, the Borrower may elect in writing to assume the defense of such proceeding, and, upon such election, the Borrower will not be liable for any legal costs subsequently incurred by such Indemnitee (other than reasonable costs of investigation and providing evidence) in connection therewith, unless (i) the Borrower has failed to provide counsel reasonably satisfactory to such Indemnitee in a timely manner, (ii) counsel provided by the Borrower reasonably determines its representation of such Indemnitee would present it with a conflict of interest or (iii) the Indemnitee reasonably determines that there are actual conflicts of interest between the Borrower and the Indemnitee, including situations in which there may be legal defenses available to the Indemnitee which are different from or in addition to those available to the Borrower.
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(f) Notwithstanding anything to the contrary in this Agreement, the extent permitted by applicable law, neither Holdings nor the Borrower shall assert, and each hereby waives, any claim against any Indemnitee for any direct or actual damages arising from the use by unintended recipients of information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems (including the Internet) in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby; except to the extent that such direct or actual damages are determined by a court of competent jurisdiction by final, non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of, or a material breach of the Loan Documents by, such Indemnitee or its Related Parties.
(g) All amounts due under this Section 9.03 shall be payable not later than twenty (20) Business Days after written demand therefor; provided , however , that any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 9.03.
SECTION 9.04 Successors and Assigns .
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of their rights or obligations hereunder (other than to a Successor Borrower pursuant to a transaction permitted by Section 6.03(a)(iv)(B)) without the prior written consent of each Lender and the acknowledgement of the Administrative Agent (and any attempted assignment or transfer by the Borrower without such consent (other than to a Successor Borrower pursuant to a transaction permitted by Section 6.03(a)(iv)(B)) shall be null and void), (ii) no assignment shall be made to any Defaulting Lender or any of its Affiliates, or any Persons who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (ii) and (iii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 9.04. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section 9.04), the Indemnitees and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
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(b) (i) Subject to the conditions set forth in paragraphs (b)(ii) and (f) below, any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of (A) the Borrower; provided that no consent of the Borrower shall be required for an assignment (x) by a Term Lender to any Lender, an Affiliate of any Lender or an Approved Fund, or (y) if a Specified Event of Default has occurred and is continuing; provided further that no assignee contemplated by the immediately preceding proviso shall be entitled to receive any greater payment under Section 2.15 or Section 2.17 than the applicable assignor would have been entitled to receive with respect to the assignment made to such assignee, unless the assignment to such assignee is made with the Borrower’s prior written consent; provided further that the Borrower shall have the right to withhold its consent to any assignment if in order for such assignment to comply with applicable law, the Borrower would be required to obtain the consent of, or make any filing or registration with, any Governmental Authority, and (B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of a Term Loan subject to Section 9.04(f) and (g), an Affiliated Lender, Holdings, the Borrower or any of its Subsidiaries. Notwithstanding anything in this Section 9.04 to the contrary, if the Borrower has not given the Administrative Agent written notice of its objection to an assignment of Term Loans within ten (10) Business Days after written notice of such assignment, the Borrower shall be deemed to have consented to such assignment.
(ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the trade date specified in the Assignment and Assumption with respect to such assignment or, if no trade date is so specified, as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall in the case of a Term Loan, $1,000,000 (and integral multiples thereof), unless the Borrower and the Administrative Agent otherwise consent (in each case, such consent not to be unreasonably withheld or delayed); provided that no such consent of the Borrower shall be required if a Specified Event of Default has occurred and is continuing, (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement; provided that this clause (B) shall not be construed to prohibit assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans, (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption via an electronic settlement system acceptable to the Administrative Agent or, if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Assumption, and, in each case, together with a processing and recordation fee of $3,500; provided that the Administrative Agent, in its sole discretion, may elect to waive or reduce such processing and recordation fee; provided further that any such Assignment and Assumption shall include a representation by the assignee that the assignee is not a Disqualified Lender; provided further that assignments made pursuant to Section 2.19(b), 2.21(b) or Section 9.02(c) shall not require the signature of the assigning Lender to become effective, and (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent any tax forms required by Section 2.17(e) and an 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 Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws; provided that no such consent of the Borrower shall be required if a Specified Event of Default has occurred and is continuing.
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(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) of this Section 9.04, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of (and subject to the obligations and limitations of) Sections 2.15, 2.16, 2.17 and 9.03 and to any fees payable hereunder that have accrued for such Lender’s account but have not yet been paid). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c)(i) of this Section 9.04 to the extent otherwise permitted thereby or otherwise shall be void.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices 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 Commitment of, and principal and interest amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). Notwithstanding the foregoing, in no event shall the Administrative Agent be obligated to ascertain, monitor or inquire as to whether any Lender is an Affiliated Lender, nor shall the Administrative Agent be obligated to monitor the aggregate amount of the Loans or Incremental Loans held by Affiliated Lenders. The entries in the Register shall be conclusive absent manifest error, and Holdings, the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire and any tax forms required by Section 2.17(e) (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.04 and any written consent to such assignment required by paragraph (b) of this Section 9.04, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
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(vi) The words “execution,” “signed,” “signature” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as an original executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act or any other similar state laws based on the Uniform Electronic Transactions Act.
(c) (i) Any Lender may, without the consent of the Borrower, or the Administrative Agent, sell participations to one or more banks or other Persons (other than to a Disqualified Lender (but only if the list of Disqualified Lenders is available to Lenders upon request) or other Person that is not an Eligible Assignee) (a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) Holdings, 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. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and any other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and any other Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that directly and adversely affects such Participant. Subject to paragraph (c)(iii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the obligations and limitations thereof and Section 2.19, it being understood that any tax forms required by Section 2.17(e) shall be provided solely to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 9.04. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.
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(ii) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related interest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “ Participant Register ”). The entries in the Participant Register shall be conclusive, absent manifest error, and the parties hereto 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. No Lender shall have any obligation to disclose all or any portion of its Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or other obligations under the Loan Documents) except to the extent that the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary in connection with a Tax audit or other proceeding to establish that any Loan or other obligation under the Loan Documents is in registered form for U.S. federal income tax purposes.
(iii) A Participant shall not be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.
(d) Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other “central” bank, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(e) In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(f) Notwithstanding anything to the contrary herein, any Lender may, at any time, assign all or a portion of its rights and obligations under this Agreement to an Affiliated Lender subject to the following limitations:
(i) Affiliated Lenders (other than Affiliated Debt Funds) will not receive information provided solely to Lenders by the Administrative Agent or any Lender and will not be permitted to attend or participate in meetings attended solely by the Lenders and the Administrative Agent, other than the right to receives notices of Borrowings, notices of prepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenders pursuant to Article II;
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(ii) for purposes of any amendment, waiver or modification of any Loan Document (including such modifications pursuant to Section 9.02), or, subject to Section 9.02(e), in any plan of reorganization pursuant to the U.S. Bankruptcy Code, that in either case does not require the consent of each Lender, or that would not deprive such Affiliated Lender of its pro rata share of any payments to which it is entitled, Affiliated Lenders will be deemed to have voted in the same proportion as the Lenders that are not Affiliated Lenders voting on such matter; and each Affiliated Lender hereby acknowledges, agrees and consents that if, for any reason, its vote to accept or reject any plan pursuant to the U.S. Bankruptcy Code is not deemed to have been so voted, then such vote will be (x) deemed not to be in good faith and (y) “designated” pursuant to Section 1126(e) of the U.S. Bankruptcy Code such that the vote is not counted in determining whether the applicable class has accepted or rejected such plan in accordance with Section 1126(c) of the U.S. Bankruptcy Code; provided that Affiliated Debt Funds will not be subject to such voting limitations and will be entitled to vote as any other Lender; provided that Affiliated Debt Funds may not account for more than 49.9% of the “Required Lenders” in any Required Lender vote;
(iii) [reserved];
(iv) the aggregate principal amount of Term Loans purchased by assignment pursuant to this Section 9.04 and held at any one time by Affiliated Lenders (other than Affiliated Debt Funds) may not exceed 25.0% of the aggregate principal amount of all Term Loans outstanding at the time of such purchase, after giving effect to any substantially simultaneous cancellations thereof;
(v) Affiliated Lenders shall clearly identify themselves as an Affiliated Lender in the loan assignment documentation. In no event shall the Administrative Agent be obligated to ascertain, monitor or inquire as to whether any lender is an Affiliated Lender or Affiliated Debt Fund nor shall the Administrative Agent be obligated to monitor the number of Affiliated Lenders or Affiliated Debt Funds or the aggregate amount of Term Loans or Incremental Term Loans held by Affiliated Lenders or Affiliated Debt Funds;
(vi) Affiliated Lenders (other than Affiliated Debt Funds) will not be permitted to vote on matters requiring a Required Lender vote, and the Term Loans held by Affiliated Lenders (other than Affiliated Debt Funds) shall be disregarded in determining (x) other Lenders’ commitment percentages or (y) matters submitted to Lenders for consideration that do not require the consent of each Lender or each affected Lender; provided that the commitments of any Affiliated Lender shall not be increased, the Interest Payment Dates and the dates of any scheduled amortization payments (including at maturity) owed to any Affiliated Lender hereunder will not be extended and the amounts owning to any Affiliated Lender hereunder will not be reduced without the consent of such Affiliated Lender; and
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(vii) each Lender making such assignment to such Affiliated Lender acknowledges and agrees that in connection with such assignment, (1) such Affiliated Lender then may have, and later may come into possession of Material Non-Public Information, (2) such Lender has independently and, without reliance on such Affiliated Lender, Holdings, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack of knowledge of the Material Non-Public Information and (3) none of Holdings, its Subsidiaries, the Administrative Agent, any Affiliated Lender or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against Holdings, its Subsidiaries, the Administrative Agent, such Affiliated Lender and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Material Non-Public Information. Each Lender entering into such an assignment further acknowledges that the Material Non-Public Information may not be available to the Administrative Agent or the other Lenders.
(g) Any Lender may, at any time, assign all or a portion of its Term Loans to Holdings or any of its Subsidiaries, through (x) Dutch auctions or other offers to purchase open to all Lenders on a pro rata basis in accordance with procedures of the type described in Section 2.11(a)(ii) or other customary procedures acceptable to the Administrative Agent and/or (y) open market purchases on a non-pro rata basis, provided that (i) any Term Loans that are so assigned will be automatically and irrevocably cancelled and the aggregate principal amount of the tranches and installments of the relevant Term Loans then outstanding shall be reduced by an amount equal to the principal amount of such Term Loans, (ii) no Event of Default shall have occurred and be continuing and (iii) each Lender making such assignment to Holdings or any of its Subsidiaries acknowledges and agrees that in connection with such assignment, (1) Holdings or its Subsidiaries then may have, and later may come into possession of Material Non-Public Information, (2) such Lender has independently and, without reliance on Holdings, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack of knowledge of the Material Non-Public Information and (3) none of Holdings, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against Holdings, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Material Non-Public Information. Each Lender entering into such an assignment further acknowledges that the Material Non-Public Information may not be available to the Administrative Agent or the other Lenders.
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(h) Notwithstanding the foregoing, no assignment may be made or participation sold to a Disqualified Lender without the prior written consent of the Borrower; provided that, upon inquiry by any Lender to the Administrative Agent as to whether a specified potential assignee or prospective participant is on the list of Disqualified Lenders, the Administrative Agent shall be permitted to disclose to such Lender whether such specific potential assignee or prospective participant is on the list of Disqualified Lenders; provided further that inclusion on the list of Disqualified Lenders shall not apply retroactively to disqualify any persons that have previously acquired an assignment or participation in the Loan if such person was not included on the list of Disqualified Lenders at the time of such assignment or participation. Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary, if any Lender was a Disqualified Lender at the time of the assignment of any Loans or Commitments to such Lender, following written notice from the Borrower to such Lender and the Administrative Agent and otherwise in accordance with Section 2.19(b), as applicable: (1) such Lender shall promptly assign all Loans and Commitments held by such Lender to an Eligible Assignee (and the signature of such Disqualified Lender shall not be required on any such assignment); provided that (A) the Administrative Agent shall not have any obligation to the Borrower, such Lender or any other Person to find such a replacement Lender, (B) the Borrower shall not have any obligation to such Disqualified Lender or any other Person to find such a replacement Lender or accept or consent to any such assignment to itself or any other Person subject to the Borrower’s consent in accordance with Section 9.04(b)(i) and (C) the assignment of such Loans and/or Commitments, as the case may be, shall be at par plus accrued and unpaid interest and fees; (2) such Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of any Class), all affected Lenders (or all affected Lenders of any Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02); provided that (x) the Commitment of any Disqualified Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Disqualified Lender adversely and in a manner that is disproportionate to other affected Lenders shall require the consent of such Disqualified Lender; and (3) no Disqualified Lender is entitled to receive information provided solely to Lenders by the Administrative Agent or any Lender or will be permitted to attend or participate in meetings attended solely by the Lenders and the Administrative Agent, other than the right to receive notices or Borrowings, notices or prepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenders pursuant to Article II.
(i) Notwithstanding the foregoing, any Affiliated Lender shall be permitted, at its option, to contribute any Term Loans so assigned to such Affiliated Lender pursuant to this Section 9.04 to Holdings or any of its Subsidiaries for purposes of cancellation, which contribution may be made (including, with the Borrower’s consent, to the Borrower, whether through Holdings or any Intermediate Parent or otherwise), in exchange for Qualified Equity Interests of Holdings, any Intermediate Parent or the Borrower or Indebtedness of the Borrower to the extent such Indebtedness is permitted to be incurred (including, if applicable, as a Permitted Refinancing) pursuant to Section 6.01 at such time.
SECTION 9.05 Survival .
All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to any Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect until the Termination Date. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and all other amounts payable hereunder, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof.
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SECTION 9.06 Counterparts; Integration; Effectiveness .
This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the syndication of the Loans and Commitments constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic means shall be effective as delivery of an original executed counterpart of this Agreement.
SECTION 9.07 Severability .
Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 9.07, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent then such provisions shall be deemed to be in effect only to the extent not so limited.
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SECTION 9.08 Right of Setoff .
If a Specified Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency, but not withholding or payroll accounts, employee benefits accounts, de minimis accounts or other accounts used exclusively for taxes or fiduciary or trust purposes) at any time held and other obligations (in whatever currency) at any time owing by such Lender to or for the credit or the account of the Borrower (excluding, for the avoidance of doubt, any Settlement Assets except to effect Settlement Payments such Lender is obligated to make to a third party in respect of such Settlement Assets or as otherwise agreed in writing between the Borrower and such Lender) against any of and all the obligations of the Borrower then due and owing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such Indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.22 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The applicable Lender shall notify the Borrower and the Administrative Agent of such setoff and application; provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender may have.
SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process .
(a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court except to the extent required by any Security Document to be brought in another jurisdiction pursuant to the terms of such Security Document. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in any Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to any Loan Document against Holdings or the Borrower or their respective properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to any Loan Document in any court referred to in paragraph (b) of this Section 9.09. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
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(d) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.01. NOTHING IN ANY LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. IN ADDITION TO THE SERVICE OF PROCESS PROVIDED FOR HEREIN, EACH FOREIGN LOAN PARTY HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE BORROWER (AND THE BORROWER HEREBY IRREVOCABLY ACCEPTS SUCH APPOINTMENT) AS ITS AUTHORIZED DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON THE BORROWER SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH FOREIGN LOAN PARTY AGREES TO DESIGNATE A NEW AUTHORIZED DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY OR DELAWARE ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT.
SECTION 9.10 WAIVER OF JURY TRIAL .
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11 Headings .
Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
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SECTION 9.12 Confidentiality .
(a) Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its Affiliates (other than Excluded Affiliates) and its and their respective directors, officers, employees, trustees and agents, including accountants, legal counsel and other agents and advisors and any numbering, administration or settlement service providers on a “need-to-know” basis (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and will be instructed to keep such Information confidential and any failure of such Persons acting on behalf of the Administrative Agent or the relevant Lender to comply with this Section 9.12 shall constitute a breach of this Section 9.12 by the Administrative Agent or such relevant Lender, as applicable), (ii) to the extent requested by any regulatory authority or self-regulatory authority, required by applicable law or by any subpoena or similar legal process or in connection with the exercise of remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; provided that (x) solely to the extent permitted by law and other than in connection with routine audits and reviews by regulatory and self-regulatory authorities, each Lender and the Administrative Agent shall promptly notify the Borrower of any such requested or required disclosure in connection with any legal or regulatory proceeding and (y) in the case of clause (ii) only, each Lender and the Administrative Agent shall use commercially reasonable efforts to ensure that such Information is kept confidential in connection with the exercise of such remedies, (iii) to any other party to this Agreement, (iv) subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12 (but other than to a Disqualified Lender), to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (B) any actual or prospective counterparty (or its advisors) to any Swap Agreement or derivative transaction relating to any Loan Party or its Subsidiaries and its obligations under the Loan Documents or (C) any pledgee referred to in Section 9.04(d), (v) if required by any rating agency; provided that prior to any such disclosure, such rating agency shall have agreed in writing to maintain the confidentiality of such Information, (vi) to service providers providing administrative and ministerial services solely in connection with the syndication and administration of the Loan Documents and the facilities (e.g., identities of parties, maturity dates, interest rates, etc.) on a confidential basis, or (vii) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 9.12 or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than Holdings, the Borrower or any Subsidiary, which source is not known (after due inquiry) by the recipient of such information to be subject to a confidentiality obligation. For the purposes hereof, “ Information ” means all information received from or on behalf of Holdings or the Borrower relating to Holdings, any Intermediate Parent, the Borrower, any other Subsidiary or their business other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by Holdings, any Intermediate Parent, the Borrower or any Subsidiary. Notwithstanding the foregoing, no such information shall be disclosed to a Disqualified Lender that constitutes a Disqualified Lender at the time of such disclosure without the Borrower’s prior written consent.
(b) EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN SECTION 9.12(a)) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING HOLDINGS, THE BORROWER, THE LOAN PARTIES 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.
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(c) 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, WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT HOLDINGS, THE BORROWER, THE LOAN PARTIES 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 9.13 USA PATRIOT Act .
Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA PATRIOT Act.
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SECTION 9.14 Release of Liens and Guarantees .
(a) A Subsidiary Loan Party shall automatically be released from its obligations under the Loan Documents, and all security interests created by the Security Documents in Collateral owned by such Subsidiary Loan Party shall be automatically released, (1) upon the consummation of any transaction or designation permitted by this Agreement as a result of which such Subsidiary Loan Party ceases to be a Restricted Subsidiary (including pursuant to a permitted merger or amalgamation with a Subsidiary that is not a Loan Party or a designation as an Unrestricted Subsidiary) or becomes an Excluded Subsidiary, (2) upon the request of the Borrower, in connection with a transaction permitted under this Agreement, as a result of which such Subsidiary Loan Party ceases to be a Wholly Owned Subsidiary; provided that, if so required by this Agreement, the Required Lenders shall have consented to such transaction and the terms of such consent shall not have provided otherwise or (3) as provided in the Closing Date Intercreditor Agreement. Upon any sale or other transfer by any Loan Party (other than to any other Loan Party) of any Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Security Document in any Collateral or upon any Collateral becoming an Excluded Asset, the security interests in such Collateral created by the Security Documents shall be automatically released. Upon the release of Holdings or any Subsidiary Loan Party from its Guarantee in compliance with this Agreement, the security interest in any Collateral owned by Holdings or such Subsidiary created by the Security Documents shall be automatically released. Upon the designation of a Restricted Subsidiary as an Unrestricted Subsidiary in compliance with this Agreement, the security interest created by the Security Documents in the Equity Interests of such new Unrestricted Subsidiary shall automatically be released. To the extent the release of any Lien in any Collateral is approved, authorized or ratified in writing by the Required Lenders (or such other percentage of the Lenders whose consent may be required in accordance with Section 9.02), the security interest in such Collateral shall be automatically released. To the extent the release of any security interest in any Collateral is required to effect any sale or other disposition of Collateral in connection with any exercise of remedies of the Collateral Agent pursuant to the Loan Documents, the security interest in such Collateral shall be automatically released. In addition, liens shall be released and guarantees released in accordance with the terms of the Security Documents and the Guarantee. Upon the Termination Date all obligations under the Loan Documents and all security interests created by the Security Documents shall be automatically released. Any such release shall not in any manner discharge, affect, or impair the Obligations (other than those being discharged or released) or any Liens (other than those being discharged or released) of the Loan Parties in respect of all interests retained by the Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral except to the extent comprised of Excluded Assets or otherwise released in accordance with the provisions of the Loan Documents. In connection with any termination or release pursuant to this Section 9.14, without the further consent of any Lender or other Secured Party, the Administrative Agent or the Collateral Agent, as the case may be, shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence or to file or register in any office such termination or release so long as the Borrower or applicable Loan Party shall have provided the Administrative Agent or the Collateral Agent, as the case may be, such certifications or documents as the Administrative Agent or the Collateral Agent, as the case may be, shall reasonably request in order to demonstrate compliance with this Agreement. The Administrative Agent or the Collateral Agent, as the case may be, will, at the Borrower’s expense, execute and deliver to the applicable Loan Party or to file or register in any office such documents as such Loan Party may reasonably request to subordinate its Lien on any property granted to or held by the Administrative Agent or the Collateral Agent, as the case may be, under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(ii) (but only pursuant to clauses (d), (j) and (k) of the definition of “Permitted Encumbrances), (iv), (v), (xi), (xii), (xv), (xix) (but only in respect of Liens on the Collateral securing Indebtedness permitted under Section 6.01(a)(xx)), (xxii) (but only with respect to any such liens securing Indebtedness permitted under Section 6.01(a)(viii)), (xxiii), (xxx), (xxxvi), (xxix) or (xxx). Notwithstanding anything to the contrary contained herein, a Subsidiary Loan Party shall be automatically released from its obligations under all the Loan Documents, and all Liens on the Collateral of such Loan Party under the Security Documents shall be automatically released, upon its release under the Senior Collateral Documents (as defined in the Closing Date Intercreditor Agreement) (other than in connection with the Discharge of Senior Obligations (as defined in the Closing Date Intercreditor Agreement)).
204 |
(b) Each of the Lenders irrevocably authorizes the Administrative Agent or the Collateral Agent, as the case may be, to (i) provide any release or evidence of release, termination or subordination contemplated by this Section 9.14 (and upon request by the Administrative Agent or the Collateral Agent, as the case may be, at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority or the Collateral Agent’s authority, as the case may be, to release or subordinate its interest in particular types or items of property, or to release any Loan Party from its obligations under any Loan Document, in each case in accordance with the terms of the Loan Documents and this Section 9.14), (ii) enter into subordination or intercreditor agreements with respect to Indebtedness to the extent the Administrative Agent or Collateral Agent is otherwise contemplated herein as being a party to such intercreditor or subordination agreement, in each case to the extent such agreements, at the time they are first entered into, are substantially consistent with the terms set forth on Exhibit E-1 , E-2 or E-3 annexed hereto, together with (A) any immaterial changes and (B) material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not less than five Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agent’s and/or Collateral Agent’s entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agent’s and/or Collateral Agent’s execution thereof, in each case in form and substance reasonably satisfactory to the Administrative Agent and/or Collateral Agent (it being understood that junior Liens are not required to be pari passu with other junior Liens, and that Indebtedness secured by junior Liens may secured by Liens that are pari passu with, or junior in priority to, other Liens that are junior to the Liens securing the Obligations); and (iii) enter into and sign for and on behalf of the Lenders as Secured Parties the Security Documents for the benefit of the Lenders and the other Secured Parties.
SECTION 9.15 No Advisory or Fiduciary Responsibility .
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each of the Borrower and Holdings acknowledges and agrees that (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Joint Lead Arrangers and the Lenders are arm’s-length commercial transactions between the Borrower, Holdings and their respective Affiliates, on the one hand, and the Administrative Agent, the Joint Lead Arrangers and the Lenders on the other hand, (B) each of the Borrower and Holdings has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each of the Borrower and Holdings is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Administrative Agent, the Joint Lead Arrangers and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary for the Borrower, Holdings, any of their respective Affiliates or any other Person and (B) none of the Administrative Agent, the Joint Lead Arrangers and the Lenders has any obligation to the Borrower, Holdings or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Joint Lead Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, Holdings and their respective Affiliates, and none of the Administrative Agent, the Joint Lead Arrangers and the Lenders has any obligation to disclose any of such interests to the Borrower, Holdings or any of their respective Affiliates.
205 |
SECTION 9.16 Interest Rate Limitation .
Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligations hereunder.
SECTION 9.17 Judgment Currency .
If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrower or any other Loan Party in respect of any such sum due from it to the Secured Parties hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent from the Borrower in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under Requirements of Law).
206 |
SECTION 9.18 Intercreditor Agreement . Each Secured Party hereby agrees that the Administrative Agent and/or Collateral Agent may enter into the Closing Date Intercreditor Agreement and any other intercreditor agreement and/or subordination agreement pursuant to, or contemplated by, the terms of this Agreement (including with respect to Indebtedness permitted pursuant to Section 6.01, any applicable Liens on Collateral permitted pursuant to Section 6.02 and, in each case, together with the defined terms referenced therein) on its behalf and agrees to be bound by the terms thereof and, in each case, consents and agrees to the appointment of Deutsche Bank AG New York Branch (or its affiliated designee, representative, agent or successor) on its behalf as collateral agent, respectively, thereunder. Each Lender (a) understands, acknowledges and agrees that Liens shall be created on the Collateral pursuant to the First Lien Loan Documents, which Liens shall be subject to the terms and conditions of the Closing Date Intercreditor Agreement, (b) hereby agrees that it will be bound by and will take no actions contrary to the provisions of the Closing Date Intercreditor Agreement or any other applicable Intercreditor Agreement (if entered into) and (c) hereby authorizes and instructs the Administrative Agent and Collateral Agent to enter into the Closing Date Intercreditor Agreement and, if applicable, any other Intercreditor Agreement (and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, such agreements (subject, if applicable, to the last sentence of Section 9.02(b)), and to subject the Liens on the Collateral securing the Obligations to the provisions thereof).
SECTION 9.19 Cashless Settlement .
Notwithstanding anything to the contrary contained in this Agreement, any Lender may exchange, continue or rollover all or a portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent and such Lender.
SECTION 9.20 Acknowledgement and Consent to Bail-In of EEA Financial Institutions .
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
[Remainder of Page Intentionally Left Blank.]
207 |
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
|
CANYON COMPANIES S.À R.L. | |
a Luxembourg private limited liability company (société à responsabilité limitée) Registered office: 6D, route de Trèves, L-2633 Senningerberg Grand-Duchy of Luxembourg Share Capital : USD 20,010.- R.C.S. Luxembourg: B187.216, |
||
as Holdings | ||
By: | /s/ Jeffrey S. Wright | |
Name: Jeffrey S. Wright | ||
Title: Authorized Signatory | ||
CANYON GROUP S.À R.L. | ||
a Luxembourg private limited liability company (société à responsabilité limitée) Registered office: 6D, route de Trèves, L-2633 Senningerberg Grand-Duchy of Luxembourg Share Capital : USD 20,000.- R.C.S. Luxembourg: B202.299, |
||
as Intermediate Lux Holdings | ||
By: | /s/ Jeffrey S. Wright | |
Name: | Jeffrey S. Wright | |
Title: | Authorized Signatory | |
GTCR VALOR HOLDINGS, INC.
,
as Intermediate U.S. Holdings |
||
By: | /s/ Peter Granat | |
Name: | Peter Granat | |
Title: | Chief Executive Officer | |
GTCR VALOR COMPANIES, INC.
,
as Borrower |
||
By: | /s/ Peter Granat | |
Name: | Peter Granat | |
Title: | Chief Executive Officer |
[Signature Page to Credit Agreement]
DEUTSCHE BANK AG NEW YORK BRANCH
,
as Administrative Agent |
||
By: | /s/ Anca Trifan | |
Name: | Anca Trifan | |
Title: | Managing Director | |
By: | /s/ Benjamin Souh | |
Name: | Benjamin Souh | |
Title: | Vice President | |
CRESCENT MEZZANINE PARTNERS VI, L.P. CRESCENT MEZZANINE PARTNERS VIB, L.P.
CRESCENT
MEZZANINE PARTNERS VIC, L.P.
,
|
||
By: | Crescent Capital Group LP, | |
their investment advisor | ||
By: | /s/ Christopher G. Wright | |
Name: | Christopher G. Wright | |
Title: | Managing Director | |
By: | /s/ Christopher Wang | |
Name: | Christopher Wang | |
Title: | Vice President | |
AMERICAN CAPITAL, LTD.
,
as a Lender |
||
By: | /s/ Joseph F. Romic | |
Name: | Joseph F. Romic | |
Title: | Managing Director and SVP |
[Signature Page to Credit Agreement]
[Signature Page to Credit Agreement]
EXHIBIT A
Form of Assignment and Assumption
This Assignment and Assumption (this “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between the Assignor named below (the “ Assignor ”) and the Assignee named below (the “ Assignee ”). It is understood and agreed that the rights and obligations of the Assignor and the Assignee hereunder are several and not joint. Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below, receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex A attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, any Letters of Credit and Guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, 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 by the Assignor to the Assignee 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: | [Assignor Name] [and is a Defaulting Lender] |
2. Assignee: | [Assignee Name] |
[and is an Affiliate/Approved Fund/Affiliated Debt Fund of [Lender Name]] | |
Assignees are Affiliated Lenders: _______ | |
3. Borrower: | GTCR Valor Companies, Inc. |
4. Administrative Agent: | Deutsche Bank AG New York Branch, as the Administrative Agent under the Credit Agreement. |
A- 1 |
5. Credit Agreement: | The Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). |
7. Effective Date: 5 | __________________, 20__ |
1 | Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. |
2 | Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g., “Revolving Credit Commitment,” “Term Loan Commitment,” etc.) |
3 | Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. |
4 | Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g., “Revolving Commitment,” “Term Commitment,” “Revolving Loan,” “Term Loan,” etc.). |
5 | To be inserted by the Administrative Agent and which shall be the effective date of recordation of transfer in the register therefor. |
A- 2 |
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR: | ||
[NAME OF ASSIGNOR] | ||
By: | ||
Name: | ||
Title: | ||
ASSIGNEE: | ||
[NAME OF ASSIGNEE] | ||
By: | ||
Name: | ||
Title: |
[Consented to and] 6 Accepted: | ||
DEUTSCHE BANK AG NEW YORK BRANCH, | ||
as Administrative Agent | ||
By: | ||
Name: | ||
Title: | ||
[GTCR VALOR COMPANIES, INC.] 7 | ||
By: | ||
Name: | ||
Title: |
6 | To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. |
7 | To be included unless Borrower's consent is not required under the terms of the Credit Agreement. |
A- 3 |
ANNEX A
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, ( 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 ( iv ) it is [not] a Defaulting Lender; 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 Loan Document, ( ii ) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, ( iii ) the financial condition of Holdings, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document, or ( iv ) the performance or observance by Holdings, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan 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 meets all the requirements to be an assignee under Section 9.04 of the Credit Agreement (subject to such consents, if any, as may be required under the Credit Agreement) and is not a Disqualified 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 is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, ( v ) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.01( a ) or ( b ) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, ( vi ) it has independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, ( vii ) if it is a Lender that is not a United States person, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, completed and duly executed by the Assignee and ( viii ) if it is an Affiliated Lender, it has indicated its status as such in the space provided on the first page of this Assignment and Assumption; 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 Loan Documents, and ( ii ) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
A-I- 1 |
2. Payments . From and after the Effective Date referred to in this Assignment and Assumption, 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 facsimile or electronic transmission 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 laws of the State of New York.
A-I- 2 |
EXHIBIT B
Form of Guarantee Agreement
[See attached.]
B- 1 |
EXHIBIT C
Form of Notice of Borrowing
Deutsche Bank AG New York Branch,
as Administrative Agent
60 Wall Street, MS NYC 60-4305
New York, NY 10005
Attention Hareesha D. Kuberappa
Telephone: +44 207-779-4769
Email: loan.admin-ny@db.com
[●] [●], 20[●] 1
Ladies and Gentlemen:
Reference is hereby made to that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Terms defined in the Credit Agreement are used herein with the same meanings unless otherwise defined herein.
The undersigned hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that it requests the Borrowings under the Credit Agreement to be made on [●] [●], 20[●], and that in connection with such request sets forth below the terms on which the Borrowings are requested to be made:
(A) | Date of Borrowing (which shall be a Business Day): | [●] |
(B) | Aggregate Amount of Borrowing: 2 | [●] |
(C) | Type of Borrowing: 3 | [●] |
(D) | Class of Borrowing: 4 | [●] |
1 | The Administrative Agent must be notified by telephone (with such telephonic notification to be promptly confirmed in writing in substantially in the form of this Exhibit C), which must be received by the Administrative Agent (by hand delivery, fax or other electronic transmission (including “.pdf” or “.tif”)) not later than (i) in the case of a Eurodollar Borrowing, 2:00 p.m. New York City time, three (3) Business Days prior to the requested day of such Eurodollar Borrowing (or in the case of any Eurodollar Borrowing to be made on the Effective Date, the same Business Day) or (ii) in the case of an ABR Borrowing, 1:00 p.m. New York City time, on the requested date of any such ABR Borrowing (or, in each case, such later time as is acceptable to the Administrative Agent). |
2 | Subject to Section 2.02(c) of the Credit Agreement. |
3 | State whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing. If no Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. |
4 | State whether such Borrowing is to be of Term Loans, Incremental Term Loans, Other Term Loans, Revolving Loans, etc. |
C- 1 |
(E) | Interest Period 5 (in the case of a Eurodollar Borrowing): | [●] |
(F) | Location and Number of the Borrower’s Account(s) to which funds are to be disbursed 6 : | [●] |
[In consideration for permitting the Borrower to request Loans as Eurodollar Loans pursuant to the Credit Agreement prior to the effectiveness thereof, the Borrower hereby agrees that, in the event the Borrower fails to borrow such Eurodollar Loans on the requested date of Borrowing above for any reason (other than the failure by a Lender to make a Loan, but including the failure of the Credit Agreement to become effective), the Borrower shall reimburse each applicable Lender in respect of its Eurodollar Loans as set forth in Section 2.16 of the Credit Agreement as if the Credit Agreement were in effect with respect to the requested Eurodollar Loans.
Notwithstanding anything herein to the contrary, the Borrowings contemplated by this Borrowing Request shall be subject to and conditioned upon the effectiveness of the Credit Agreement.] 7
This Notice of Borrowing shall be governed by, and construed in accordance with, the laws of the State of New York.
[Signature Page Follows]
5 | Must be a period contemplated by the definition of “Interest Period”. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. |
6 | Such information shall comply with the requirements of Section 2.06 of the Credit Agreement. |
7 | Include bracketed language for Borrowings on the Effective Date. |
C- 2 |
GTCR VALOR COMPANIES, INC. | ||
By: | ||
Name: | ||
Title: |
C- 3 |
EXHIBIT D
Form of Collateral Agreement
[See attached.]
D- 1 |
EXHIBIT E-1
Form of Pari Passu Intercreditor Agreement
[See attached.]
E-1- 1 |
EXHIBIT E-2
Form of Closing Date Intercreditor Agreement
[See attached.]
E-2- 1 |
EXHIBIT E-3
Form of Junior Intercreditor Agreement
[See attached.]
E-3- 1 |
EXHIBIT F
Form of Intercompany Note
New York, New York
Date: , 20[ ]
FOR VALUE RECEIVED, each of the undersigned and each Additional Party (as defined below), to the extent a borrower from time to time from any other entity listed on the signature page hereto (each, in such capacity, a “ Payor ”), hereby promises to pay on demand to such other entity listed below (each, in such capacity, a “ Payee ”), in lawful money of the United States of America, or in such other lawful money as agreed to by such Payor and such Payee, in immediately available funds, at the appropriate office of a Payee as such Payee shall from time to time designate, the unpaid principal amount of all loans and advances made by such Payee to such Payor. Each Payor promises also to pay interest on the unpaid principal amount of all such loans and advances in like money at said location from the date of such loans and advances until paid at such rate per annum as shall be agreed upon from time to time by such Payor and such Payee.
This note (“ Note ”) is an intercompany note referred to in Section 6.01(a)(iv) of the Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand and ten United States Dollars ($20,010) and registered with the Luxembourg Register of Commerce and Companies under number B 187.216 (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand United States Dollars ($20,000) and registered with the Luxembourg Register of Commerce and Companies under number B 202.299 (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”), and is subject to the terms thereof. Capitalized terms used herein without definition have the same meanings as in the Credit Agreement.
Anything in this Note to the contrary notwithstanding, the indebtedness evidenced by this Note shall be subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to all Secured Obligations of such Payor until the Termination Date shall have occurred; provided , that each Payor may make payments to the applicable Payee unless an Event of Default shall have occurred and be continuing and such Payor shall have received notice from the Administrative Agent ( provided , that no such notice shall be required to be given in the case of any Event of Default arising under Section 7.01(h) or 7.01(i) of the Credit Agreement) (such Secured Obligations and other indebtedness and obligations in connection with any renewal, refunding, restructuring or refinancing thereof, including interest thereon accruing after the commencement of any proceedings referred to in clause (i) below, whether or not such interest is an allowed claim in such proceeding, being hereinafter collectively referred to as “ Senior Indebtedness ”):
F- 1 |
(i) in the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to any Payor or to its creditors, as such, or to its property, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of such Payor, whether or not involving insolvency or bankruptcy, then, if an Event of Default has occurred and is continuing, (x) the Termination Date shall have occurred before any Payee that is not a Loan Party is entitled to receive (whether directly or indirectly), or make any demands for, any payment on account of this Note and (y) until the Termination Date shall have occurred, any payment or distribution to which such Payee would otherwise be entitled (other than in the form of debt securities of such Payor that are subordinated, to at least the same extent as this Note, to the payment of all Senior Indebtedness then outstanding (such securities being hereinafter referred to as “ Restructured Debt Securities ”)) shall be made to the holders of Senior Indebtedness;
(ii) if any Event of Default has occurred and is continuing and after notice from the Administrative Agent ( provided that no such notice shall be required to be given in the case of any Event of Default arising under Section 7.01(h) or 7.01(i) of the Credit Agreement), then unless otherwise agreed by the Administrative Agent with respect to any Senior Indebtedness, no payment or distribution of any kind or character shall be made by or on behalf of any Payor that is a Loan Party or any other Person on its behalf with respect to this Note owed to any Payee that is not a Loan Party until (x) the Termination Date shall have occurred or (y) such Event of Default shall have been cured or waived in accordance with the terms of the Credit Agreement; and
(iii) if any payment or distribution of any character, whether in cash, securities or other property (other than in the form of Restructured Debt Securities), in respect of this Note shall (despite these subordination provisions) be received by any Payee in violation of clause (i) or (ii) above before the Termination Date shall have occurred, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness (or their representatives), ratably according to the respective aggregate amounts remaining unpaid thereon, to the extent necessary to pay all Senior Indebtedness in full in cash.
To the fullest extent permitted by law, no present or future holder of Senior Indebtedness shall be prejudiced in its right to enforce the subordination of this Note by any act or failure to act on the part of any Payor or by any act or failure to act on the part of such holder or any trustee or agent for such holder. Each Payee and each Payor hereby agree that the subordination of this Note is for the benefit of the Administrative Agent and the Lenders, and the Administrative Agent and the Lenders are obligees under this Note to the same extent as if their names were written herein as such and the Administrative Agent may, on behalf of itself and the Lenders proceed to enforce the subordination provisions herein.
F- 2 |
Nothing contained in the subordination provisions set forth above is intended to or will impair, as between each Payor and each Payee, the obligations of such Payor, which are absolute and unconditional, to pay to such Payee the principal of and interest on this Note as and when due and payable in accordance with its terms, or is intended to or will affect the relative rights of such Payee and other creditors of such Payor other than the holders of Senior Indebtedness.
Each Payee is hereby authorized to record all loans and advances made by it to any Payor (all of which shall be evidenced by this Note), and all repayments or prepayments thereof, in its books and records, such books and records constituting prima facie evidence of the accuracy of the information contained therein.
Each Payor hereby waives (to the extent permitted by applicable law) presentment, demand, protest or notice of any kind in connection with this Note. All payments under this Note shall be made without offset, counterclaim or deduction of any kind.
This Note shall be binding upon each Payor and its successors and assigns, and the terms and provisions of this Note shall inure to the benefit of each Payee and its successors and assigns, including subsequent holders hereof.
From time to time after the date hereof, additional subsidiaries of Holdings may become parties hereto (as Payor and/or Payee, as the case may be) by executing a counterpart signature page to this Note (each additional subsidiary, an “ Additional Party ”). Upon delivery of such counterpart signature page to the Payees, notice of which is hereby waived by the other Payors, and updating or supplementing Schedule A hereto by adding the name of each Additional Party, each Additional Party shall be a Payor and/or a Payee, as the case may be, and shall be as fully a party hereto as if such Additional Party were an original signatory hereof. Each Payor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Payor or Payee hereunder. This Note shall be fully effective as to any Payor or Payee that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Payor or Payee hereunder.
Any subsidiary of Holdings that is a party to this Note, which ceases to be a subsidiary of Holdings (the “ Former Subsidiary ”), shall be automatically released from the rights and obligations under this Note, provided, that, at the time of such release, any existing balances between the Former Subsidiary and the remaining parties hereto have been paid in full or settled.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[Remainder of Page Intentionally Left Blank]
F- 3 |
[_], | ||
as Payor | ||
By: | ||
Name: | ||
Title: | ||
[_____________________], | ||
as Payee | ||
By: | ||
Name: | ||
Title: |
F- 4 |
SCHEDULE A
NAME OF PAYOR/PAYEE | JURISDICTION OF ORGANIZATION | |
1. [ ] | [ ] | |
2. [ ] | [ ] |
F- 5 |
EXHIBIT G
Form of Specified Discount Prepayment Notice
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
This Specified Discount Prepayment Notice is delivered to you pursuant to Section 2.11(a)(ii)(B) of that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement.
Pursuant to Section 2.11(a)(ii)(B) of the Credit Agreement, [_____] 1 hereby offers to make a Discounted Term Loan Prepayment to each Term Lender [and to each Lender of the [●, 20●] 2 tranche[s] of Term Loans] on the following terms:
1. This Borrower Offer of Specified Discount Prepayment is available only to each Term Lender [and to each Lender of the [●, 20●] 3 tranche[s] of Term Loans].
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that will be made in connection with this offer shall not exceed $[●] of Term Loans [and $[●] of the [●, 20●] 4 tranche[(s)] of Term Loans] (the “ Specified Discount Prepayment Amount ”). 5
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | List multiple tranches if applicable. |
4 | List multiple tranches if applicable. |
5 | Minimum of $1.0 million and whole increments of $500,000. |
G- 1 |
3. The percentage discount to par value at which such Discounted Term Loan Prepayment will be made is [●]% in respect of the Term Loans [and [●]% in respect of the [●, 20●] 6 tranche[(s)] of Term Loans] (the “ Specified Discount ”).
To accept this offer, you are required to submit to the Administrative Agent a Specified Discount Prepayment Response on or before 5:00 p.m. New York time on the date that is three (3) Business Days following the date of delivery of this notice pursuant to Section 2.11(a)(ii)(B) of the Credit Agreement.
[_____] 7 hereby represents and warrants to the Administrative Agent [and the Term Lenders][, the Term Lenders and each Lender of the [●, 20●] 8 tranche[s] of Term Loans] as follows:
1. [_____] 9 will not make a Borrowing of Revolving Loans to fund this Discounted Term Loan Prepayment.
2. [At least ten (10) Business Days have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by [_____] 10 on the applicable Discounted Prepayment Effective Date.][At least three (3) Business Days have passed since the date [_____] 11 was notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of the [_____] 12 ’s election not to accept any Solicited Discounted Prepayment Offers], provided , further , that any Term Loan that is prepaid will be automatically and irrevocably cancelled. 13
The Borrower acknowledges that the Auction Agent and the relevant Term Lenders are relying on the truth and accuracy of the foregoing representations and warranties in connection with their decision whether or not to accept the offer set forth in this Specified Discount Prepayment Notice and the acceptance of any prepayment made in connection with this Specified Discount Prepayment Notice.
6 | List multiple tranches if applicable. |
7 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
8 | List multiple tranches if applicable. |
9 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
10 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
11 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
12 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
13 | Insert applicable representation. |
G- 2 |
The Borrower requests that the Auction Agent promptly notify each of the relevant Term Lenders party to the Credit Agreement of this Specified Discount Prepayment Notice.
[Remainder of Page Intentionally Left Blank]
G- 3 |
IN WITNESS WHEREOF, the undersigned has executed this Specified Discount Prepayment Notice as of the date first above written.
[______________] 14 | ||
By: | ||
Name: | ||
Title: |
Enclosure: Form of Specified Discount Prepayment Response
14 To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable.
G- 4 |
EXHIBIT H
Form of Specified Discount Prepayment Response
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
Reference is made to (a) that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”), and (b) that certain Specified Discount Prepayment Notice, dated ______, 20__, from [_______] 1 (the “ Specified Discount Prepayment Notice ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Specified Discount Prepayment Notice or, to the extent not defined therein, in the Credit Agreement.
The undersigned [Term Lender] [Lender] hereby gives you irrevocable notice, pursuant to Section 2.11(a)(ii)(B) of the Credit Agreement, that it is willing to accept a prepayment of the following [tranches of] Term Loans held by such [Term Lender] [Lender] at the Specified Discount in an aggregate outstanding amount as follows:
[Term Loans - $[●]]
[[●, 20●] 2 tranche[s] of Term Loans - $[●]]
The undersigned [Term Lender] [Lender] hereby expressly consents and agrees to a prepayment of its [Term Loans][[●, 20●] 3 tranche[s]] pursuant to Section 2.11(a)(ii)(B) of the Credit Agreement at a price equal to the [applicable] Specified Discount in the aggregate outstanding amount not to exceed the amount set forth above, as such amount may be reduced in accordance with the Specified Discount Proration, and as otherwise determined in accordance with and subject to the requirements of the Credit Agreement.
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | List multiple tranches if applicable. |
H- 1 |
The undersigned [Term Lender] [Lender] hereby represents and warrants to [________] 4 as follows:
1. The undersigned [Term Lender] [Lender] has independently and, without reliance on Holdings, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to accept a prepayment pursuant to the terms of this Specified Discount Prepayment Response notwithstanding undersigned [Term Lender] [Lender]’s lack of knowledge of any Excluded Information; and
2. None of Holdings, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to the undersigned [Term Lender] [Lender], and the undersigned [Term Lender] [Lender] hereby waives and releases, to the extent permitted by Requirements of Law, any claims the undersigned [Term Lender] [Lender] may have against Holdings, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of any Excluded Information.
[Remainder of Page Intentionally Left Blank]
4 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
H- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Specified Discount Prepayment Response as of the date first above written.
[ ] | ||
By: | ||
Name | ||
Title: | ||
By: | ||
Name | ||
Title: |
H- 3 |
EXHIBIT I
Form of Discount Range Prepayment Notice
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
This Discount Range Prepayment Notice is delivered to you pursuant to Section 2.11(a)(ii)(C) of that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement.
Pursuant to Section 2.11(a)(ii)(C) of the Credit Agreement, [_____] 1 hereby requests that each Term Lender [and to each Lender of the [●, 20●] 2 tranche[s] of Term Loans] submit a Discount Range Prepayment Offer. Any Discounted Term Loan Prepayment made in connection with this solicitation shall be subject to the following terms:
1. This Borrower Solicitation of Discount Range Prepayment Offers is extended at the sole discretion of [_____] 3 to each Term Lender [and to each Lender of the [●, 20●] 4 tranche[s] of Term Loans].
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that will be made in connection with this solicitation is $[●] of Term Loans [and $[●] of the [●, 20●] 5 tranche[(s)] of Term Loans] (the “ Discount Range Prepayment Amount ”). 6
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
4 | List multiple tranches if applicable. |
5 | List multiple tranches if applicable. |
6 | Minimum of $1.0 million and whole increments of $500,000. |
I- 1 |
3. [_____] 7 is willing to make Discount Term Loan Prepayments at a percentage discount to par value greater than or equal to [●]% but less than or equal to [●]% in respect of the Term Loans [and greater than or equal to [●]% but less than or equal to [●]% in respect of the [●, 20●] 8 tranche[(s)] of Term Loans] (the “ Discount Range ”).
To make an offer in connection with this solicitation, you are required to deliver to the Administrative Agent a Discount Range Prepayment Offer on or before 5:00 p.m. New York time on the date that is three ( 3 ) Business Days following the dated delivery of the notice pursuant to Section 2.11(a)(ii)(C) of the Credit Agreement.
[_____] 9 hereby represents and warrants to the Auction Agent [and the Term Lenders][, the Term Lenders and each Lender of the [●, 20●] 10 tranche[s] of Term Loans] as follows:
1. [_____] 11 will not make a Borrowing of Revolving Loans to fund this Discounted Term Loan Prepayment.
2. [At least ten (10) Business Days have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by [_____] 12 on the applicable Discounted Prepayment Effective Date.][At least three (3) Business Days have passed since the date [_____] 13 was notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of [_____] 14 ’s election not to accept any Solicited Discounted Prepayment Offers made by a Term Lender], provided , further , that any Term Loan that is prepaid will be automatically and irrevocably cancelled. 15
7 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
8 | List multiple tranches if applicable. |
9 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
10 | List multiple tranches if applicable. |
11 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
12 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
13 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
14 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
15 | Insert applicable representation. |
I- 2 |
[_____] 16 acknowledges that the Auction Agent and the relevant Term Lenders are relying on the truth and accuracy of the foregoing representations and warranties in connection with any Discount Range Prepayment Offer made in response to this Discount Range Prepayment Notice and the acceptance of any prepayment made in connection with this Discount Range Prepayment Notice.
[_____] 17 requests that the Auction Agent promptly notify each of the relevant Term Lenders party to the Credit Agreement of this Discount Range Prepayment Notice.
[Remainder of Page Intentionally Left Blank]
16 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
17 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
I- 3 |
IN WITNESS WHEREOF, the undersigned has executed this Discount Range Prepayment Notice as of the date first above written.
[______________] 18 | ||
By: | ||
Name: | ||
Title: |
Enclosure: Form of Discount Range Prepayment Offer
18 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
I- 4 |
EXHIBIT J
Form of Discount Range Prepayment Offer
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
Reference is made to (a) that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”), and (b) that certain Discount Range Prepayment Notice, dated ______, 201_, from [_____] 1 (the “ Discount Range Prepayment Notice ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Discount Range Prepayment Notice or, to the extent not defined therein, in the Credit Agreement.
The undersigned [Term Lender] [Lender] hereby gives you irrevocable notice, pursuant to Section 2.11(a)(ii)(C) of the Credit Agreement, that it is hereby offering to accept a Discounted Term Loan Prepayment on the following terms:
1. This Discount Range Prepayment Offer is available only for prepayment on the [Term Loans][and the [●, 20●] 2 tranche[s] of Term Loans] held by the undersigned.
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that may be made in connection with this offer shall not exceed (the “ Submitted Amount ”):
[Term Loans - $[●]]
[[●, 20●] 3 tranche[s] of Term Loans - $[●]]
3. The percentage discount to par value at which such Discounted Term Loan Prepayment may be made is [●]% in respect of the Term Loans [and [●]% in respect of the [●, 20●] 4 tranche[(s)] of Term Loans] (the “ Submitted Discount ”).
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | List multiple tranches if applicable. |
4 | List multiple tranches if applicable. |
J- 1 |
The undersigned [Term Lender] [Lender] hereby expressly consents and agrees to a prepayment of its [Term Loans] [[●, 20●] 5 tranche[s] of Term Loans] indicated above pursuant to Section 2.11(a)(ii)(C) of the Credit Agreement at a price equal to the Applicable Discount and in an aggregate outstanding amount not to exceed the Submitted Amount, as such amount may be reduced in accordance with the Discount Range Proration, if any, and as otherwise determined in accordance with and subject to the requirements of the Credit Agreement.
[Remainder of Page Intentionally Left Blank]
5 | List multiple tranches if applicable. |
J- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Discount Range Prepayment Offer as of the date first above written.
[ ] | ||
By: | ||
Name | ||
Title: | ||
By: | ||
Name | ||
Title: |
J- 3 |
EXHIBIT K
Form of Solicited Discounted Prepayment Notice
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
This Solicited Discounted Prepayment Notice is delivered to you pursuant to Section 2.11(a)(ii)(D) of that Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement.
Pursuant to Section 2.11(a)(ii)(D) of the Credit Agreement, [_____] 1 hereby requests that each Term Lender [and to each Lender of the [●, 20●] 2 tranche[s] of Term Loans] submit a Solicited Discounted Prepayment Offer. Any Discounted Term Loan Prepayment made in connection with this solicitation shall be subject to the following terms:
1. This Borrower Solicitation of Discounted Prepayment Offer is extended at the sole discretion of [_____] 3 to each Term Lender [and to each Lender of the [●, 20●] 4 tranche[s] of Term Loans].
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that will be made in connection with this solicitation is (the “ Solicited Discounted Prepayment Amount ”): 5
[Term Loans - $[●]]
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
4 | List multiple tranches if applicable. |
5 | Minimum of $1.0 million and whole increments of $500,000. |
K- 1 |
[[●, 20●] 6 tranche[s] of Term Loans - $[●]]
To make an offer in connection with this solicitation, you are required to deliver to the Administrative Agent a Solicited Discounted Prepayment Offer on or before 5:00 p.m. New York time on the date that is three (3) Business Days following delivery of this notice pursuant to Section 2.11(a)(ii)(D) of the Credit Agreement.
[_____] 7 requests that the Auction Agent promptly notify each of the relevant Term Lenders party to the Credit Agreement of this Solicited Discounted Prepayment Notice.
[Remainder of Page Intentionally Left Blank]
6 | List multiple tranches if applicable. |
7 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
K- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Solicited Discounted Prepayment Notice as of the date first above written.
[______________] 8 | ||
By: | ||
Name: | ||
Title: |
Enclosure: Form of Solicited Discounted Prepayment Offer
8 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
K- 3 |
EXHIBIT L
Form of Solicited Discounted Prepayment Offer
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
Reference is made to (a) that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”), and (b) that certain Solicited Discounted Prepayment Notice, dated ______, 201_, from [_____] 1 (the “ Solicited Discounted Prepayment Notice ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Solicited Discounted Prepayment Notice or, to the extent not defined therein, in the Credit Agreement.
To accept the offer set forth herein, you must submit an Acceptance and Prepayment Notice on or before the third Business Day following your receipt of this notice.
The undersigned [Term Lender] [Lender] hereby gives you irrevocable notice, pursuant to Section 2.11(a)(ii)(D) of the Credit Agreement, that it is hereby offering to accept a Discounted Term Loan Prepayment on the following terms:
1. This Solicited Discounted Prepayment Offer is available only for prepayment on the [Term Loans][[●, 20●] 2 tranche[s] of Term Loans] held by the undersigned.
2. The maximum aggregate outstanding amount of the Discounted Term Loan Prepayment that may be made in connection with this offer shall not exceed (the “ Offered Amount ”):
[Term Loans - $[●]]
[[●, 20●] 3 tranche[s] of Term Loans - $[●]]
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | List multiple tranches if applicable. |
L- 1 |
3. The percentage discount to par value at which such Discounted Term Loan Prepayment may be made is [●]% in respect of the Term Loans [and [●]% in respect of the [●, 20●] 4 tranche[(s)] of Term Loans] (the “ Offered Discount ”).
The undersigned [Term Lender] [Lender] hereby expressly consents and agrees to a prepayment of its [Term Loans] [[●, 20●] 5 tranche[s] of Term Loans] pursuant to Section 2.11(a)(ii)(D ) of the Credit Agreement at a price equal to the Acceptable Discount and in an aggregate outstanding amount not to exceed such Lender’s Offered Amount as such amount may be reduced in accordance with the Solicited Discount Proration, if any, and as otherwise determined in accordance with and subject to the requirements of the Credit Agreement.
[Remainder of Page Intentionally Left Blank]
4 | List multiple tranches if applicable. |
5 | List multiple tranches if applicable. |
L- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Solicited Discounted Prepayment Offer as of the date first above written.
[ ] | ||
By: | ||
Name | ||
Title: | ||
By: | ||
Name | ||
Title: |
L- 3 |
EXHIBIT M
Form of Acceptance and Prepayment Notice
Date: ______, 201_
To: [●], as Auction Agent
Ladies and Gentlemen:
This Acceptance and Prepayment Notice is delivered to you pursuant to Section 2.11(a)(ii)(D) of that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement.
Pursuant to Section 2.11(a)(ii)(D) of the Credit Agreement, [_____] 1 hereby irrevocably notifies you that it accepts offers delivered in response to the Solicited Discounted Prepayment Notice having an Offered Discount equal to or greater than [●]% in respect of the Term Loans [and [●]% in respect of the [●, 20●] 2 tranche[(s)] of Term Loans] (the “ Acceptable Discount ”) in an aggregate amount not to exceed the Solicited Discounted Prepayment Amount.
[_____] 3 expressly agrees that this Acceptance and Prepayment Notice shall be irrevocable and is subject to the provisions of Section 2.11(a)(ii)(D) of the Credit Agreement.
[_____] 4 hereby represents and warrants to the Auction Agent [and the Term Lenders][and the Term Lenders and each Lender of the [●, 20●] 5 tranche[s] of Term Loans] as follows:
1. [_____] 6 will not make a Borrowing of Revolving Loans to fund this Discounted Term Loan Prepayment.
1 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
2 | List multiple tranches if applicable. |
3 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
4 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
5 | List multiple tranches if applicable. |
6 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
M- 1 |
2. [At least ten (10) Business Days have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by [_____] 7 on the applicable Discounted Prepayment Effective Date.][At least three (3) Business Days have passed since the date [_____] 8 was notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of the [_____] 9 ’s election not to accept any Solicited Discounted Prepayment Offers made by a Term Lender]; provided , further , that any Term Loan that is prepaid will be automatically and irrevocably cancelled. 10
[_____] 11 acknowledges that the Auction Agent and the relevant Term Lenders are relying on the truth and accuracy of the foregoing representations and warranties in connection with the acceptance of any prepayment made in connection with a Solicited Discounted Prepayment Offer.
[_____] 12 requests that the Auction Agent promptly notify each of the relevant Term Lenders party to the Credit Agreement of this Acceptance and Prepayment Notice.
[Remainder of Page Intentionally Left Blank]
7 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
8 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
9 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
10 | Insert applicable representation. |
11 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
12 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
M- 2 |
IN WITNESS WHEREOF, the undersigned has executed this Acceptance and Prepayment Notice as of the date first above written.
[______________] 13 | ||
By: | ||
Name: | ||
Title: |
13 | To reflect Holdings, any Intermediate Parent, the Borrower, or any of their respective Subsidiaries, as applicable. |
M- 3 |
EXHIBIT N-1
Form of United States Tax Compliance
Certificate 1
(For Non-U.S. Lenders That Are Not Partnerships for U.S. Federal Income Tax Purposes)
Reference is made to that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.17(f) 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, (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a United States trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. person status on Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, or if a lapse in time or change in circumstances renders the information on this certificate obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform the Borrower and the Administrative Agent in writing and deliver promptly to the Borrower and the Administrative Agent an updated certificate or other appropriate documentation (including any new documentation prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax reasonably requested by the Borrower or the Administrative Agent) or promptly notify the Borrower and the Administrative Agent of its legal ineligibility to do so in writing, and (2) the undersigned has 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 at such times as are reasonably requested by the Borrower or the Administrative Agent.
[Remainder of Page Intentionally Left Blank]
N-1- 1 |
[Lender] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: ________________, 20[ ]
N-1- 2 |
EXHIBIT N-2
Form of United States Tax Compliance Certificate 2
(For Non-U.S. Lenders That Are Partnerships for U.S. Federal Income Tax Purposes)
Reference is made to that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.17(f) 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) it and/or 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) neither the undersigned nor any of its direct or indirect partners/members is a bank 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, (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its direct or indirect partners’/members’ conduct of a United States trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with Internal Revenue Service Form W-8IMY accompanied by one of the following forms from each of its direct or indirect partners/members claiming the portfolio interest exemption: (i) an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, or (ii) an Internal Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption, provided that, for the avoidance of doubt, the foregoing shall not limit the obligation of the Lender to provide, in the case of a partner/member not claiming the portfolio interest exemption, a Form W-8ECI, Form W-9 or Form W-8IMY (including if such document is Form W-8IMY, appropriate underlying certificates from each interest holder of such partner/member), in each case establishing such partner/member’s available exemption from U.S. federal withholding tax. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, or if a lapse in time or change in circumstances renders the information on this certificate obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform the Borrower and the Administrative Agent and deliver promptly to the Borrower and the Administrative Agent an updated certificate or other appropriate documentation (including any new documentation prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax reasonably requested by the Borrower or the Administrative Agent) or promptly notify the Borrower and the Administrative Agent of its legal ineligibility to do so, (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent in writing 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 at such times as are reasonably requested by either the Borrower or the Administrative Agent.
[Remainder of Page Intentionally Left Blank]
N-2- 1 |
[Lender] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: ________________, 20[ ]
N-2- 2 |
EXHIBIT N-3
Form of United States Tax Compliance Certificate 3
(For Non-U.S. Participants That Are Not Partnerships for U.S. Federal Income Tax Purposes)
Reference is made to that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.17(f) 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 Code Section 871(h)(3)(B), (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigned’s conduct of a United States trade or business.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. person status on Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, or if a lapse in time or change in circumstances renders the information on this certificate obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform such Lender in writing and deliver promptly to such Lender an updated certificate or other appropriate documentation (including any new documentation prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax reasonably requested by such Lender) or promptly notify such Lender in writing of its legal ineligibility to do so, 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 at such times as are reasonably requested by such Lender.
[Remainder of Page Intentionally Left Blank]
N-3- 1 |
[Participant] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: ________________, 20[ ]
N-3- 2 |
EXHIBIT N-4
Form of United States Tax Compliance Certificate 4
(For Non-U.S. Participants That Are Partnerships for U.S. Federal Income Tax Purposes)
Reference is made to that certain Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), the LENDERS party thereto and DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as Administrative Agent (the “ Administrative Agent ”). Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 2.17(f) 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) it and/or its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) neither the undersigned nor any of its direct or indirect partners/members is a bank 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 Code Section 871(h)(3)(B), (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigned’s or its direct or indirect partners’/members’ conduct of a United States trade or business.
The undersigned has furnished its participating Lender with Internal Revenue Service Form W-8IMY accompanied by one of the following forms from each of its direct or indirect partners/members claiming the portfolio interest exemption: (i) an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable or (ii) an Internal Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption, provided ; that, for the avoidance of doubt, the foregoing shall not limit the obligation of the undersigned to provide, in the case of a partner/member not claiming the portfolio interest exemption, a Form W-8ECI, Form W-9 or Form W-8IMY (including if such document is Form W-8IMY, appropriate underlying certificates from each interest holder of such partner/member), in each case establishing such partner/member’s available exemption from U.S. federal withholding tax. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, or if a lapse in time or change in circumstances renders the information on this certificate obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform such Lender in writing and deliver promptly to such Lender an updated certificate or other appropriate documentation (including any new documentation prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax reasonably requested by such Lender) or promptly notify such Lender in writing of its legal ineligibility to do so, 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 at such times as are reasonably requested by such Lender.
[Remainder of Page Intentionally Left Blank]
N-4- 1 |
[Participant] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: ________________, 20[ ]
N-4- 2 |
EXHIBIT O
Form of Note
PROMISSORY NOTE
U.S. $[●] | New York, New York |
[●], 20[_] |
FOR VALUE RECEIVED, the undersigned, GTCR VALOR COMPANIES, INC., a Delaware corporation, (the “ Borrower ”), hereby promises to pay [NAME OF LENDER] (the “ Lender ”) or its registered assigns, at the office of DEUTSCHE BANK AG NEW YORK BRANCH (the “ Administrative Agent ”) specified pursuant to the Credit Agreement (defined below), on the [Revolving][Term] Maturity Date (such term and each other capitalized term used but not otherwise defined herein having the meaning specified in the Second Lien Credit Agreement dated as of June 16, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), the Borrower, the Lenders from time to time party thereto and the Administrative Agent), in lawful money of the United States of America and in immediately available funds, the lesser of (a) the principal amount of $[●] and (b) the aggregate unpaid principal amount of all [Revolving][Term] Loans made by the Lender to the Borrower pursuant to the Credit Agreement and to pay interest from the date hereof on the principal amount hereof from time to time outstanding, in like funds, at said office, at the rate or rates per annum and payable on the dates, each as provided in the Credit Agreement.
Upon the occurrence and during the continuation of a Specified Event of Default, the Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates, in accordance with the terms set forth in the Credit Agreement, at the rate or rates provided in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this note (the “ Note ”) and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof, each pursuant to the terms of the Credit Agreement, shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof that shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided , however , that the failure of the holder hereof to make such notation or any error in such notation shall not affect the obligations of the Borrower under this Note.
This Note is one of the Notes referred to in the Credit Agreement, which, among other things, contains provisions for the acceleration of the maturity hereof upon the occurrence of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified. This Note is entitled to the benefits of the Credit Agreement and the other Loan Documents. This Note is secured by each Security Document and is entitled to the benefits of the guarantee under the Guarantee Agreement. This NOTE shall be construed in accordance with and governed by the laws of the State of New York.
O- 1 |
[ Signature page follows ]
LOANS AND PAYMENTS
Date |
Amount of
[Revolving][Term] Loan |
Payment of
Principal |
Payment of
Interest |
Unpaid Principal
Balance |
Name of Person
Making Notation |
|||||
O- 2 |
EXHIBIT P
Form of Solvency Certificate
SOLVENCY CERTIFICATE
[__], 201[_]
This Solvency Certificate (this “ Certificate ”) is delivered pursuant to Section 4.01(l) of the Second Lien Credit Agreement (the “ Credit Agreement ”), dated as of the date hereof among GTCR VALOR COMPANIES, INC., a Delaware corporation (the “ Borrower ”), CANYON COMPANIES S.À R.L., a private limited company organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand and ten United States Dollars ($20,010) and registered with the Luxembourg Register of Commerce and Companies under number B 187.216 (“ Holdings ”), CANYON GROUP S.À R.L., a private limited liability company organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand United States Dollars ($20,000) and registered with the Luxembourg Register of Commerce and Companies under number B 202.299 (“ Intermediate Lux Holdings ”), GTCR VALOR HOLDINGS, INC., a Delaware corporation (“ Intermediate U.S. Holdings ”), DEUTSCHE BANK AG NEW YORK BRANCH, (“ Deutsche Bank ”) as the Administrative Agent and the other Lenders parties thereto. Unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement.
1. I, Jack Pearlstein, the Chief Financial Officer of Borrower, solely in such capacity and not in an individual capacity, hereby certify that I am the Chief Financial Officer of Borrower and that I am generally familiar with the businesses and assets of Holdings and its Subsidiaries (taken as a whole), I have made such other investigations and inquiries as I have deemed appropriate and, pursuant to the Credit Agreement, I am duly authorized to execute this Certificate on behalf of Borrower and on behalf of Holdings pursuant to that certain written consent in lieu of a special meeting of the Board of Directors of Holdings dated June 16, 2016.
2. I further certify, solely in my capacity as Chief Financial Officer of Borrower, and not in my individual capacity, as of the date hereof and after giving effect to the Transactions and the incurrence of the indebtedness and obligations being incurred in connection with the Credit Agreement and the Transactions on the date hereof, that, (a) the sum of the Indebtedness (including contingent liabilities) of Holdings and its Subsidiaries, taken as a whole, does not exceed the present fair saleable value (on a going concern basis) of the assets of Holdings and its Subsidiaries, taken as a whole; (b) the capital of Holdings and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of Holdings and its Subsidiaries, taken as a whole, contemplated as of the date hereof; and (c) Holdings and its Subsidiaries, taken as a whole, do not intend to incur, or believe that they will incur, Indebtedness including current obligations beyond their ability to pay such Indebtedness as it matures in the ordinary course of business. For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5) in the ordinary course of business.
[Remainder of this page intentionally left blank.]
P- 1 |
IN WITNESS WHEREOF , I HAVE EXECUTED THIS Certificate as of the date first written above.
GTCR VALOR COMPANIES, INC. | ||
By: | ||
Name: Jack Pearlstein | ||
Title: Chief Financi al Officer |
P- 2 |
Exhibit 10.22
EXECUTION VERSION
INCREMENTAL FACILITY AMENDMENT
INCREMENTAL FACILITY AMENDMENT, dated as of March 16, 2017 (this “ Agreement ”), by and among, Canyon Valor Companies, Inc., a Delaware corporation, formerly known as GTCR Valor Companies, Inc. (the “ Borrower ”) and Peach Funding Corporation (the “ Incremental Term Loan Lender ”), and acknowledged by Deutsche Bank AG New York Branch, as the Administrative Agent and Collateral Agent.
RECITALS:
WHEREAS, reference is hereby made to the First Lien Credit Agreement, dated as of June 16, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Canyon Companies S.à r.l., a private limited liability company ( société à responsabilité limitée ) organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand and ten United States Dollars ($20,010) and registered with the Luxembourg Register of Commerce and Companies under number B 187.216 (“ Holdings ”), Canyon Group S.à r.l., a private limited liability company ( société à responsabilité limitée ) organized and established under the laws of Luxembourg, having its registered office at 6D, route de Trèves, L-2633 Senningerberg, Grand-Duchy of Luxembourg, with a share capital of twenty thousand United States Dollars ($20,000) and registered with the Luxembourg Register of Commerce and Companies under number B 202.299 (“ Intermediate Lux Holdings ”), Canyon Valor Holdings, Inc., a Delaware corporation (“ Intermediate U.S. Holdings ”), the Borrower, the lending institutions from time to time party thereto, and Deutsche Bank AG New York Branch, as the Administrative Agent and Collateral Agent (capitalized terms used but not defined herein having the meaning provided in the Credit Agreement); and
WHEREAS , subject to the terms and conditions of the Credit Agreement, the Borrower may establish an Incremental Term Increase by, among other things, entering into one or more Incremental Facility Amendments with Additional Term Lenders;
WHEREAS , the Incremental Term Loan Lender and the Borrower wish to establish an Incremental Term Increase on the terms set forth in this Agreement utilizing available capacity pursuant to clause (I) of the definition of Incremental Cap;
NOW, THEREFORE , in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:
The Incremental Term Loan Lender hereby commits to provide the Incremental Term Increase as set forth on Schedule A annexed hereto, on the terms and subject to the conditions set forth below.
The Incremental Term Loan Lender (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents and the exhibits thereto, together with copies of the most recent financial statements referred to in Section 5.01 of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Collateral Agent or any other Lender or Agent, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent or the Collateral Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender. This Agreement shall constitute (i) the notice required to be delivered by the Borrower to the Administrative Agent pursuant to Section 2.20(a) of the Credit Agreement and (ii) an “Incremental Facility Amendment” for purposes of Section 2.20(d) of the Credit Agreement.
Notwithstanding any provision to the contrary herein or in the Credit Agreement, the terms of the Incremental Term Increase (including without limitation the Applicable Rate and the principal payment terms applicable thereto) shall, except to the extent of fees expressly set forth in the Fee Letter (the “ Incremental Fee ”), be the same as the terms of the Initial Term Loans outstanding immediately prior to giving effect to this Agreement, and such Incremental Term Increase shall be deemed to constitute Initial Term Loans for all purposes of this Agreement and the Credit Agreement and shall constitute one tranche with, and be the same Class as, the Initial Term Loans made pursuant to Section 2.01 of the Credit Agreement. Following the Incremental Amendment Effective Date (as defined below) and the funding of the Incremental Term Increase, each reference to “Initial Term Loans” and Initial Term Loans made pursuant to Section 2.01(a) shall include the Incremental Term Increase and each reference to “Lender” shall include the Incremental Term Loan Lender hereunder, in each case, unless the context shall require otherwise. Each of the parties hereto hereby agrees that, with the consent of the Borrower (not to be unreasonably withheld), the Administrative Agent may take any and all action as may be reasonably necessary to ensure that all amounts of such Incremental Term Increase, when originally made, are Initial Term Loans for all purposes under the Loan Documents and are included in each Borrowing of outstanding Initial Term Loans on a pro rata basis. This may be accomplished at the discretion of the Administrative Agent by allocating a portion of each such Incremental Term Increase to each outstanding Eurodollar Loan that is a Term Loan of the same Class on a pro rata basis, even though as a result thereof such Incremental Term Increase may effectively have a shorter Interest Period than the Term Loans included in the Borrowing of which they are a part (and notwithstanding any other provision of the Credit Agreement that would prohibit such an initial Interest Period). The Incremental Term Increase shall not accrue interest for any period prior to the Incremental Amendment Effective Date and the Borrower shall not be required to pay interest on the Incremental Term Increase pursuant to Section 2.13 of the Credit Agreement for any period prior to the Incremental Amendment Effective Date.
The Incremental Term Loan Lender hereby agrees to make Incremental Term Increase on the following terms and conditions:
1. | Applicable Rate . For the avoidance of doubt, the Applicable Rate for ABR Loans or for Eurodollar Loans, as applicable, for the Incremental Term Increase shall mean, as of any date of determination, the applicable percentage per annum with respect to any Initial Term Loan as set forth in the definition of “Applicable Rate” in the Credit Agreement. All Interest Periods applicable to Initial Term Loans shall continue in effect after the Incremental Amendment Effective Date. The Incremental Term Increase shall be initially incurred pursuant to a single Borrowing of Eurodollar Loans, with such Borrowing to be subject to (x) Interest Periods which commence on the Incremental Amendment Effective Date and end on the last day of the Interest Period applicable to the Initial Term Loans and (y) the LIBO Rate applicable to the Initial Term Loans. From and after the Incremental Amendment Effective Date to the first Interest Payment Date to occur after the Incremental Amendment Effective Date, the Borrower shall make to Administrative Agent on such first Interest Payment Date (and Administrative Agent shall distribute to the applicable Lenders in accordance with the Credit Agreement) all payments in respect of interest on the Incremental Term Increase to the Term Lenders for amounts which have accrued on the Incremental Term Increase from the Incremental Amendment Effective Date to but excluding such Interest Payment Date. |
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2. | Amortization Payments . Subject to the adjustments pursuant to paragraph (c) of Section 2.10 of the Credit Agreement, the Borrower shall repay Initial Term Loans (including the Incremental Term Increase) on the last day of each March, June, September and December in the principal amount of Terms Loans as follows; provided that if any such date is not a Business Day, such payment shall be due on the next preceding Business Day: |
(A)
Payment Date |
(B)
Amortization Payment |
|||
March 31, 2017 | $ | 2,825,000 | ||
June 30, 2017 | $ | 2,825,000 | ||
September 30, 2017 | $ | 2,825,000 | ||
December 31, 2017 | $ | 2,825,000 | ||
March 31, 2018 | $ | 2,825,000 | ||
June 30, 2018 | $ | 2,825,000 | ||
September 30, 2018 | $ | 2,825,000 | ||
December 31, 2018 | $ | 2,825,000 | ||
March 31, 2019 | $ | 2,825,000 | ||
June 30, 2019 | $ | 2,825,000 | ||
September 30, 2019 | $ | 2,825,000 | ||
December 31, 2019 | $ | 2,825,000 | ||
March 31, 2020 | $ | 2,825,000 | ||
June 30, 2020 | $ | 2,825,000 | ||
September 30, 2020 | $ | 2,825,000 | ||
December 31, 2020 | $ | 2,825,000 | ||
March 31, 2021 | $ | 2,825,000 | ||
June 30, 2021 | $ | 2,825,000 | ||
September 30, 2021 | $ | 2,825,000 | ||
December 31, 2021 | $ | 2,825,000 | ||
March 31, 2022 | $ | 2,825,000 | ||
June 30, 2022 | $ | 2,825,000 | ||
September 30, 2022 | $ | 2,825,000 | ||
December 31, 2022 | $ | 2,825,000 | ||
March 31, 2023 | $ | 2,825,000 |
3. | Voluntary and Mandatory Prepayments . Scheduled installments of principal of the Incremental Term Increase set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Initial Term Loans in accordance with Section 2.11 of the Credit Agreement. |
4. | Ranking and Security . The Incremental Term Increase shall rank equal in right of payment and equal in right of security with the Initial Term Loans. |
5. | Proposed Borrowing . This Agreement represents a request by the Borrower to borrow the Incremental Term Increase from the Incremental Term Loan Lender as follows (the “ Proposed Borrowing ”): |
(a) | Date of Proposed Borrowing (which shall be a Business Day): March 16, 2017 |
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(b) | Aggregate Amount of Proposed Borrowing: $30,000,000 |
(c) | Type of Borrowing: Eurodollar Borrowing |
6. | Use of Proceeds . The proceeds of the Incremental Term Increase shall be used to fund the acquisition of Bulletin Intelligence and related transactions and to pay certain fees (including the Incremental Fee), costs and other expenses in connection with the Bulletin Intelligence acquisition and this Agreement or, at the sole discretion of the Borrower, for general corporate purposes and working capital purposes, including acquisitions, investments and repayments of debt but not including Restricted Payments, so long as such uses are not prohibited by the Credit Agreement. |
7. | Incremental Term Loan Lenders . The Incremental Term Loan Lender acknowledges and agrees that upon its execution of this Agreement and the Incremental Term Increase, that such Incremental Term Loan Lender shall become a “ Lender ” under, and for all purposes of, the Credit Agreement and the other Loan Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder and under the Intercreditor Agreements, as applicable, pursuant to Section 9.18 of the Credit Agreement. |
8. | Credit Agreement Governs . Except as set forth in this Agreement, the Incremental Term Increase shall otherwise be subject to the provisions of the Credit Agreement and the other Loan Documents. |
9. | Conditions to Effectiveness . The obligations of the Incremental Term Loan Lender to extend the Incremental Term Increase and the effectiveness of the Agreement is subject to the satisfaction, or waiver by the Incremental Term Loan Lender (the date of such satisfaction or waiver, the “ Incremental Amendment Effective Date ”), of the following conditions: |
(a) | Borrower Certifications . By its execution of this Agreement, the undersigned officer of the Borrower, to the best of his or her knowledge, hereby certifies, solely in his or her capacity as an officer of the Borrower and not in his or her individual capacity, that (i) no Event of Default exists on the Incremental Amendment Effective Date before or after giving Pro Forma Effect to the Incremental Term Increase contemplated hereby, (ii) the representations and warranties of the Borrower set forth in the Loan Documents are true and correct in all material respects on and as of the Incremental Amendment Effective Date; provided that to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date and (iii) immediately after the consummation of funding of the loans pursuant to the Incremental Term Increase to occur on the Incremental Amendment Effective Date, after taking into account all applicable rights of indemnity and contribution, (A) the sum of the debt (including contingent liabilities) of Holdings and its Subsidiaries, taken as a whole, does not exceed the present fair saleable value (on a going concern basis) of the assets of Holdings and its Subsidiaries, taken as a whole; (B) the capital of Holdings and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of Holdings and its Subsidiaries, taken as a whole, contemplated as of the date hereof; and (C) Holdings and its Subsidiaries, taken as a whole, do not intend to incur, or believe that they will incur, debts including current obligations beyond their ability to pay such debts as they mature in the ordinary course of business. For the purposes of clause (C) above, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5) in the ordinary course of business. |
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(b) | Delivery of Documents. The Incremental Term Loan Lender (or its counsel) shall have received each of the following, each dated the Incremental Amendment Effective Date unless otherwise indicated or agreed to by the Administrative Agent: |
(i) | from the Borrower and the Incremental Term Loan Lender, duly signed counterparts of this Agreement; |
(ii) | a customary written opinion of Kirkland & Ellis LLP, counsel to the Borrower, addressed to the Incremental Term Loan Lender, in form and substance reasonably satisfactory to the Incremental Term Loan Lender; |
(iii) | to the extent applicable in the relevant jurisdiction, certificates attesting to the good standing of the Borrower in its jurisdiction of formation or incorporation certified as of a recent date by the relevant Governmental Authority; and |
(iv) | a certificate, executed by any Responsible Officer of the Borrower (A) certifying as to the names and signatures of each officer of the Borrower executing and delivering this Agreement, (B) either (x) attaching the Organizational Documents of the Borrower certified, if applicable, by the relevant authority of its jurisdiction of organization or (y) certifying that there has been no change to such Organizational Document since last delivered to the Administrative Agent on the Incremental Amendment Effective Date and (C) attaching the resolutions of the Borrower’s board of directors or other appropriate governing body approving and authorizing the execution, delivery and performance of this Agreement. |
(c) | Fees. (i) Golub Capital LLC shall have received all fees required to be paid by the Borrower on the Incremental Amendment Effective Date pursuant to that certain Fee Letter, dated as of March 16, 2017, between the Borrower and Golub Capital LLC, and (ii) the Incremental Term Loan Lender shall have received, to the extent invoiced, reimbursement or other payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or any other Loan Document, including reimbursement or other payment of all reasonable and documented out-of-pocket expenses (including reasonable fees, charges and disbursements of Milbank, Tweed, Hadley & McCloy LLP) required to be reimbursed or paid by the Borrower hereunder or otherwise in connection with this Agreement. |
10. | Notice . For purposes of the Credit Agreement, the initial notice address of the Incremental Term Loan Lender shall be as set forth below its signature below. |
11. | Tax Forms . For the Incremental Term Loan Lender, delivered herewith to the Administrative Agent and the Borrower are such forms, certificates or other evidence with respect to United States federal income tax withholding matters as such Incremental Term Loan Lender may be required to deliver to the Administrative Agent and/or the Borrower pursuant to Section 2.17 of the Credit Agreement. |
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12. | Recordation of the New Loans . Upon execution and delivery hereof, the Administrative Agent will record the Incremental Term Increase, as the case may be, made by the Incremental Term Loan Lender in the Register. |
13. | Acknowledgement and Consent. The Borrower hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Agreement and consents to the amendment of the Credit Agreement effected pursuant to this Agreement, including without limitation, the making of the Incremental Term Increase. The Borrower hereby confirms that each Loan Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Loan Documents the payment and performance of all “Secured Obligations” under each of the Loan Documents to which it is a party (in each case as such terms are defined in the applicable Loan Document), including without limitation, the Incremental Term Increase. The Borrower acknowledges and agrees that any of the Loan Documents (as they may be modified by this Agreement) to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Agreement other than to the extent expressly contemplated hereby. |
14. | Amendment, Modification and Waiver . This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto. |
15. | Entire Agreement . This Agreement, the Credit Agreement, the Fee Letter dated of even date herewith between the Borrower and the Incremental Term Loan Lender (the “ Fee Letter ”) and the other Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof. |
16. | GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. |
17. | Severability . Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 17, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, then such provisions shall be deemed to be in effect only to the extent not so limited. |
18. | Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic means shall be effective as delivery of an original executed counterpart of this Agreement. |
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IN WITNESS WHEREOF , each of the undersigned has caused its duly authorized officer to execute and deliver this Agreement as of the date first set forth above.
PEACH FUNDING CORPORATION | ||
By: | GC Advisors LLC, Its Manager | |
By: | Robert Tuchscherer | |
Name: | Robert Tuchscherer | |
Title: | Managing Director |
Notice Address: | 150 S. Wacker Drive, Ste 800 | |
Chicago, IL 60606 | ||
Attention: | Robert G. Tuchscherer | |
Telephone: | (312) 205-5050 | |
Facsimile: | (312) 201-9167 |
CANYON VALOR COMPANIES, INC. | ||
By: | /s/ Jack Pearlstein | |
Name: | Jack Pearlstein | |
Title: | Chief Financial Officer | |
Acknowledged by: | ||
DEUTSCHE BANK AG NEW YORK BRANCH , | ||
as Administrative Agent | ||
By: | /s/ Anca Trifan | |
Name: | Anca Trifan | |
Title: | Managing Director | |
By: | /s/ Marcus Tarkington | |
Name: | Marcus Tarkington | |
Title: | Director |
SCHEDULE A
TO INCREMENTAL AGREEMENT
Name of Incremental Term Loan Lender |
Amount | |
Peach Funding Corporation | $30,000,000 | |
Total: $30,000,000 |
Exhibit 10.23
Execution Version
Confidential
SPONSOR SUPPORT AGREEMENT
This SPONSOR SUPPORT AGREEMENT (this " Support Agreement ") is dated as of March 19, 2017, by and among the Persons set forth on Schedule I hereto (each, a " Sponsor " and, together, the " Sponsors "), Capitol Acquisition Corp. III, a Delaware corporation (" Acquiror "), Canyon Holdings S.à r.L., a Luxembourg private limited liability company ( société à responsabilité limitée ), having its registered office at 6D, L-2633 Senningerberg, Grand Duchy of Luxembourg and registered with the RCS under number B 184599 (the " Company "), Capitol Acquisition Holding Company Ltd., an exempted company incorporated in the Cayman Islands with limited liability and wholly-owned subsidiary of Acquiror (" Holdings ") and Canyon Holdings (Cayman) L.P., a Cayman Islands exempted limited partnership (the " Cision Owner "). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement (as defined below).
RECITALS
WHEREAS, as of the date hereof, the Sponsors collectively are the holders of record and the "beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) of 8,125,000 Sponsor Shares and 8,250,000 Sponsor Warrants in the aggregate;
WHEREAS, contemporaneously with the execution and delivery of this Support Agreement, Acquiror, the Company, Holdings, Capitol Acquisition Merger Sub, Inc., a Delaware corporation (" Merger Sub "), and the Cision Owner, have entered into an Agreement and Plan of Merger (as amended or modified from time to time, the " Merger Agreement "), dated as of the date hereof, pursuant to which, among other transactions, (i) Holdings is to acquire 100% of the issued and outstanding equity interests of the Company and (ii) Merger Sub is to merge with and into Acquiror, with Acquiror continuing on as the surviving entity, in each case on the terms and conditions set forth therein;
WHEREAS, in connection with the transactions contemplated by the Merger Agreement, a portion of the Sponsor Shares and Sponsor Warrants will be cancelled as further specified in Section 2.03 of the Merger Agreement and in this Support Agreement;
WHEREAS, to the extent of any redemption or conversion of Acquiror Common Stock by any Converting Stockholders pursuant to the Offer (a " Redemption "), the Exchange Shares and Exchange Warrants will be reduced and an additional number of Sponsor Shares and Sponsor Warrants will be forfeited by the Sponsors, on the terms and conditions set forth herein; and
WHEREAS, as an inducement to the Company, the Cision Owner, Acquiror and Holdings to enter into the Merger Agreement and to consummate the transactions contemplated therein, the parties hereto desire to agree to certain matters as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE
I
SPONSOR SUPPORT AGREEMENT; COVENANTS
Section 1.1 Binding Effect of Merger Agreement; Cancellation of Sponsor Shares and Sponsor Warrants . Each Sponsor hereby acknowledges that it has read the Merger Agreement and this Support Agreement and has had the opportunity to consult with its tax and legal advisors. Each Sponsor shall be bound by and comply with Sections 2.03, 10.03(b) and 13.11 of the Merger Agreement (and any relevant definitions contained in any such Sections) as if such Sponsor were an original signatory to the Merger Agreement with respect to such provisions. Without limiting the generality of the foregoing, on the Closing Date and concurrent with the consummation of the Contribution and Exchange, but in any event immediately prior to the Merger, each Sponsor shall (and, subject only to the consummation of the Closing hereby does) irrevocably surrender, forfeit and consent to the termination and cancellation, in each case for no consideration and without further right, obligation or liability of any kind or nature on the part of Acquiror, Holdings, Merger Sub or the Company, of: (i) a number of Sponsor Shares equal to the amount set forth opposite such Sponsor's name on Schedule I hereto and (ii) a number of Sponsor Warrants equal to the amount set forth opposite such Sponsor's name on Schedule I hereto. Notwithstanding the foregoing, in the event there is any Redemption as of immediately prior to the Closing, the aggregate number of Sponsor Shares and Sponsor Warrants to be surrendered, forfeited, terminated and canceled pursuant to the foregoing sentence shall be increased as set forth in Section 2.2 hereof, and the number of Sponsor Shares and Sponsor Warrants to be surrendered and forfeited by each Sponsor for termination and cancellation shall be determined in accordance with each Sponsor's Sponsor Percentage (as defined below). Immediately prior to the consummation of the transactions contemplated by the Merger Agreement, each Sponsor shall cause to be delivered and surrendered for cancellation any stock certificates, warrants or any similar instruments or securities evidencing or representing the Sponsor Shares and Sponsor Warrants to be forfeit, terminated and cancelled pursuant to the preceding sentence.
Section 1.2 No Transfer . During the period commencing on the date hereof and ending on the earlier of (a) immediately prior to the consummation of the Closing and (b) the termination of the Merger Agreement pursuant to Article XII thereof, each Sponsor shall not (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, file (or participate in the filing of) a registration statement with the SEC (other than the Proxy Statement/Prospectus) or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any Acquiror Common Stock or Acquiror Warrants owned by such Sponsor, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any shares of Acquiror Common Stock or Acquiror Warrants owned by such Sponsor or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii); provided that the Sponsors shall be permitted to make transfers to Affiliates or family trusts, in each case for estate planning purposes, so long as (x) at least three Business Days prior to any such transfer, such transferring Sponsor shall deliver a written notice to Acquiror and the Cision Owner, which notice will disclose in reasonable detail the identity of such transferee and (y) as a condition to any such transfer, such transferee shall execute a joinder and acknowledgement reasonably satisfactory to the Cision Owner agreeing to be bound by and made a party to this Support Agreement and such other documents related to the ownership of the Sponsor Shares and/or Sponsor Warrants as the Cision Owner deems reasonably necessary; provided further that, any such transfer shall not relieve, discharge or otherwise modify the obligations of the transferring Sponsor under this Support Agreement. Notwithstanding the foregoing, during the period commencing on the date hereof and ending on the earlier of immediately prior to the consummation of the Closing and the termination of the Merger Agreement pursuant to Article XII thereof, the Sponsors shall at all times maintain ownership of a number of Sponsor Shares and Sponsor Warrants sufficient to satisfy the cancellation and forfeiture obligations set forth in Section 2.03 of the Merger Agreement and Section 2.2(a) hereof.
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Section 1.3 New Shares . In the event that (a) any shares of Acquiror Common Stock, Acquiror Warrants or other equity securities of Acquiror are issued to a Sponsor after the date of this Support Agreement pursuant to any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of Acquiror Common Stock of, on or affecting the Acquiror Common Stock owned by such Sponsor or otherwise, (b) a Sponsor purchases or otherwise acquires beneficial ownership of any shares of Acquiror Common Stock or other equity securities of Acquiror after the date of this Support Agreement, or (c) a Sponsor acquires the right to vote or share in the voting of any shares of Acquiror Common Stock or other equity securities of Acquiror after the date of this Support Agreement (such Acquiror Common Stock or other equity securities of Acquiror, collectively the " New Shares "), then such New Shares acquired or purchased by such Sponsor shall be subject to the terms of this Support Agreement to the same extent as if they constituted the Acquiror Common Stock owned by such Sponsor as of the date hereof.
Section 1.4 Termination of Existing Registration Rights Agreement . Acquiror and each Sponsor hereby consents to, and agrees that, conditioned upon the Closing of the Merger and effective as of the Effective Time, the Registration Rights Agreement, dated as of October 13, 2015 (the " Existing Registration Rights Agreement "), by and among Acquiror, the Sponsors and the other parties signatory thereto, shall terminate (and any amendment, notice or other action necessary to effectuate any such termination (including pursuant to Section 6.7 of the Existing Registration Rights Agreement) shall be deemed made pursuant to this Section 1.4 ) and such agreement shall be of no further force and effect.
Section 1.5 Closing Date Deliverables . On the Closing Date:
(a) Each of Capitol Acquisition Management 3 LLC and Capital Acquisition Founder 3 LLC (collectively, the " Founder Sponsors ") shall deliver to Holdings a duly executed joinder to that certain Registration Rights Agreement (the " Holdings Registration Rights Agreement "), by and among Holdings, the Cision Owner and the other parties signatories thereto, in substantially the form attached as Exhibit A to the Merger Agreement.
(b) Each of Holdings and Cision Owner shall deliver to the Founder Sponsors a duly executed copy of the Holdings Registration Rights Agreement.
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Section 1.6 Acquiror Agreements .
(a) Each Founder Sponsor shall comply with, and fully perform all of its obligations, covenants and agreements set forth in, (i) those certain Letter Agreements, dated as of October 13, 2015, by and among each Founder Sponsor and Acquiror (the " Voting Letter Agreements "), including the obligations of the Founder Sponsors pursuant to Section 1 therein to vote all shares beneficially owned by such Sponsor in favor of the transactions contemplated by the Merger Agreement and (ii) that certain Stock Escrow Agreement, dated as of October 13, 2015, between Acquiror, the Sponsors and the other parties thereto (the " CAP III Escrow Agreement ").
(b) Each Sponsor, other than the Founder Sponsors who are obligated to vote their shares pursuant to the Voting Letter Agreements, shall vote all shares beneficially owned by such Sponsor in favor of the transactions contemplated by the Merger Agreement.
(c) During the period commencing on the date hereof and ending on the earlier of the consummation of the Closing and the termination of the Merger Agreement pursuant to Article XII thereof, each Sponsor shall not modify or amend any Contract between or among such Sponsor, anyone related by blood, marriage or adoption to such Sponsor or any Affiliate of such Sponsor (other than Acquiror or any of its Subsidiaries), on the one hand, and the Acquiror or any of the Acquiror's Subsidiaries, on the other hand, including, for the avoidance of doubt, the Voting Letter Agreements and the CAP III Escrow Agreement; provided that nothing herein shall restrict the issuance of any new Stockholder Notes expressly permitted to be entered into pursuant to Section 9.03 of the Merger Agreement.
Section 1.7 Further Assurances . Each Sponsor shall take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary under applicable Laws to consummate the Merger and the other transactions contemplated by the Merger Agreement on the terms and subject to the conditions set forth therein and herein.
Section 1.8 No Inconsistent Agreement . Each Sponsor hereby represents and covenants that such Sponsor has not entered into, and shall not enter into, any agreement that would restrict, limit or interfere with the performance of such Sponsor's obligations hereunder.
Section 1.9 Payment of Expenses . Notwithstanding anything to the contrary in the Merger Agreement, to the extent the sum of (without duplication) (A)(i) the Outstanding Acquiror Expenses, plus (ii) to the extent not included in the Outstanding Acquiror Expenses, the sum of all outstanding deferred, unpaid or contingent underwriting, broker's or similar fees, commissions or expenses, franchise taxes or franchise fees owed by the Acquiror, the Sponsors or their respective Affiliates (to the extent Acquiror, Holdings or Merger Sub is responsible for or obligated to reimburse or repay any such amounts) to any Person, plus (iii) the aggregate amount outstanding under all Stockholder Notes, plus (iv) any ordinary course out-of-pocket expenses incurred in support of the transactions contemplated by the Merger Agreement by Acquiror, Holdings or Merger Sub (the sum of the foregoing clauses (i) through (iv), excluding any amounts incurred or paid in connection with a PIPE Investment after the date hereof and prior to the Closing, the " Expense Amount "), exceeds (B) $16,000,000.00 (the amount by which the Expense Amount exceeds $16,000,000.00, the " Excess Expense Amount "), the Founder Sponsors shall, on a several basis (in accordance with their relative Sponsor Percentages for Holdings Warrants), be solely responsible for (and none of the Cision Owner, the Company, Acquiror, Holdings, Merger Sub or their respective Subsidiaries shall have any obligation or liability with respect to) and pay or cause to be paid such Excess Expense Amount on the Closing Date or to the extent not paid on the Closing Date, promptly thereafter; provided that, to the extent the Trust Account accrues interest and/or investment income, such interest and income, together with any cash held by Acquiror in one or more operating accounts as of the date hereof, shall be offset against and deducted from any Excess Expense Amount. Any of the amounts set forth in the foregoing clauses (i) through (iv) which were paid by or on behalf of (with a corresponding obligation or liability to repay such amount on the part of Acquiror, Holdings or Merger Sub) Acquiror, Holdings or Merger Sub after the date hereof and prior to the Closing Date shall be taken into account in determining the amount of any Excess Expense Amount.
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ARTICLE
II
SHARE AND WARRANT ADJUSTMENTS
Section 2.1 Certain Definitions . The following terms shall have the following meanings:
(a) " Holdback Shares " means a number of Holdings Common Shares equal to the result of (i) the Redemption Percentage, multiplied by (ii) 8,125,000.
(b) " Holdback Warrants " means a number of Holdings Warrants equal to the result of (i) the Redemption Percentage, multiplied by (ii) 8,250,000.
(c) " Redemption Percentage " means the result (expressed as a percentage) of the number of shares of Acquiror Common Stock redeemed or converted by the Converting Stockholders pursuant to the Offer divided by 32,500,000 .
(d) " Remaining Shares " means a number of Holdings Common Shares equal to the result of (i) the number of Holdback Shares, minus (ii) the lesser of (x) the number of Holdback Shares and (y) the aggregate number of Holdings Common Shares issued by Holdings to any Person in accordance with Section 2.3 .
(e) " Remaining Warrants " means a number of Holdings Warrants equal to the result of (i) the number of Holdback Warrants, minus (ii) the lesser of (x) the number of Holdback Warrants and (y) the aggregate number of Holdings Warrants issued by Holdings to any Person in accordance with Section 2.3 .
(f) " Second Lien Debt " means the second lien credit agreement, dated as of June 16, 2016, by and among Canyon Companies S.à r.l., a private limited liability company ( société à responsabilité limitée ) organized and established under the laws of Luxembourg, Canyon Group S.à r.l., a private limited liability company ( société à responsabilité limitée ) organized and established under the laws of Luxembourg, GTCR Valor Holdings, Inc., a Delaware corporation, GTCR Valor Companies, Inc., a Delaware corporation, the Lenders party thereto and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent (each as defined therein) (such second lien credit agreement as amended or modified from time to time, together with the Indebtedness pursuant thereto, the " Second Lien Debt ").
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(g) " Sponsor Percentage " means, with respect to any Sponsor, the applicable percentage set forth next to such Sponsor's name on Schedule I hereto.
Section 2.2 Adjustments Resulting from Redemptions . In the event there is any Redemption:
(a) With respect to the Sponsors, (i) the number of Sponsor Shares to be terminated, forfeited and cancelled at the Closing (but prior to the Effective Time) pursuant to Section 2.03 of the Merger Agreement shall be increased by a number of Sponsor Shares equal to 6,525,000, multiplied by the Redemption Percentage and (ii) the number of Sponsor Warrants to be terminated, forfeited and cancelled at the Closing (but prior to the Effective Time) pursuant to Section 2.03 of the Merger Agreement shall be increased by a number of Sponsor Warrants equal to 6,250,000, multiplied by the Redemption Percentage, in each case in accordance with each Sponsor's respective Sponsor Percentage.
(b) With respect to the Cision Owner, (i) the number of Exchange Shares to be issued to the Cision Owner at the Closing in connection with the Contribution and Exchange shall be reduced by a number of Holdings Common Shares equal to 1,600,000 multiplied by the Redemption Percentage and (ii) the number of Exchange Warrants to be issued to Cision Owner at the Closing in connection with the Contribution and Exchange shall be reduced by a number of Holdings Warrants equal to 2,000,000 multiplied by the Redemption Percentage.
Section 2.3 Use of Holdback Shares and Holdback Warrants . During the one year period following the Closing, in the event Holdings seeks to or does obtain financing through a sale of its equity securities (which shall exclude any equity financing involving the sale of the equity securities of Holdings to the Cision Owner, the Sponsors or their respective Affiliates) for cash (an " Equity Financing "), Holdings may issue Holdings Common Shares and/or Holdings Warrants in connection with consummating such Equity Financing. Holdings is not obligated by this Support Agreement, the Merger Agreement or any other agreement entered into in connection with the foregoing to seek or undertake, or attempt to seek or undertake, any Equity Financing. Subject to any applicable provisions in the First Lien Credit Agreement, following the consummation of any Equity Financing that occurs prior to the Trigger Date (as defined below), Holdings shall use its commercially reasonable efforts to apply the net cash proceeds of such Equity Financing (after the payment of any fees, costs or expenses incurred by Holdings, its Affiliates or Subsidiaries in connection with arranging, negotiating, structuring or consummating such Equity Financing) received by Holdings to the repayment of the Second Lien Debt to the extent then outstanding. The maximum aggregate dollar amount of any Equity Financing subject to this Section 2.3 following the Closing and prior to the Trigger Date shall not materially exceed the sum of all payments made or to be made to Converting Stockholders as a result of Redemptions (if any) in the aggregate . Notwithstanding anything to the contrary herein, Holdings may elect that any Equity Financing will not be subject to this Section 2.3 and in such event any Holdings Common Shares and/or Holdings Common Warrants issued in such Equity Financing will not be treated as "issued by Holdings to any Person in accordance with Section 2.3 " for purposes of the definitions of Remaining Shares and Remaining Warrants and such Equity Financing will not count towards the dollar limit set forth in the prior sentence.
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Section 2.4 Remaining Shares and Warrants .
(a) Upon the earliest to occur of (the " Trigger Date ") (i) the repayment of all amounts outstanding under the Second Lien Debt, (ii) the consummation of a Change in Control and (iii) the first anniversary of the Closing Date, Holdings shall promptly (or in the case of a Change in Control, one Business day prior to such consummation) issue the Remaining Shares, if any, and the Remaining Warrants, if any, to the Cision Owner (or its designee(s)) and the Sponsors, in each case fully paid and free and clear of all Liens other than applicable federal and state securities law restrictions and any Contract with Holdings or any of its Subsidiaries to which the Cision Owner or the Sponsors might then be a party when so issued, as follows: (A) 50% to the Cision Owner (or its designee(s)) as additional consideration to the Cision Owner for the Contribution and Exchange and (B) 50% to the Sponsors (in accordance with their respective Sponsor Percentages) as additional consideration to the Sponsors with respect to (x) such Sponsors' Acquiror Common Shares converted by virtue of the Merger and (y) such Sponsors' Acquiror Warrants modified by virtue of the Merger.
(b) At all times following the Closing Date until the issuance of the Remaining Shares, if any, and Remaining Warrants, if any, pursuant to the preceding Section 2.4(a) , Holdings shall reserve and keep available for issuance a sufficient number of authorized but unissued Holdings Common Shares and Holdings Warrants to permit Holdings to satisfy its issuance obligations set forth in Section 2.4(a) and shall take all actions required to increase the authorized number of Holdings Common Shares or Holdings Warrants, as applicable, if at any time there shall be insufficient unissued Holdings Common Shares or Holdings Common Warrants to permit such reservation. Holdings shall take such actions as are reasonably requested by the Cision Owner and the Sponsors to evidence the issuances pursuant to Section 2.4(a) , including through the provision of a certified updated Register of Members showing such issuances (as certified by a director of Holdings or the applicable registrar or transfer agent) and, if requested, through the delivery of duly and validly executed certificates or instruments representing the Remaining Shares and Remaining Warrants.
ARTICLE
III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Sponsors . Each Sponsor represents and warrants as of the date hereof to Acquiror and the Company (solely with respect to itself, himself or herself and not with respect to any other Sponsor) as follows:
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(a) Organization; Due Authorization . If such Sponsor is not an individual, it is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, formed, organized or constituted, and the execution, delivery and performance of this Support Agreement and the consummation of the transactions contemplated hereby are within such Sponsor's corporate, limited liability company or organizational powers and have been duly authorized by all necessary corporate, limited liability company or organizational actions on the part of such Sponsor. If such Sponsor is an individual, such Sponsor has full legal capacity, right and authority to execute and deliver this Support Agreement and to perform his or her obligations hereunder. This Support Agreement has been duly executed and delivered by such Sponsor and, assuming due authorization, execution and delivery by the other parties to this Support Agreement, this Support Agreement constitutes a legally valid and binding obligation of such Sponsor, enforceable against such Sponsor in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors' rights and general principles of equity affecting the availability of specific performance and other equitable remedies). If this Support Agreement is being executed in a representative or fiduciary capacity, the Person signing this Support Agreement has full power and authority to enter into this Support Agreement on behalf of the applicable Sponsor.
(b) Ownership . Such Sponsor is the record and beneficial owner (as defined in the Securities Act) of, and has good title to, all of such Sponsor's Sponsor Shares and Sponsor Warrants, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Sponsor Shares or Sponsor Warrants (other than transfer restrictions under the Securities Act)) affecting any such Sponsor Shares or Sponsor Warrants, other than any Permitted Liens or pursuant to (i) this Support Agreement, (ii) the Acquiror Organizational Documents, (iii) the Merger Agreement, (iv) the Voting Letter Agreements, (v) the CAP III Escrow Agreement, or (vi) any applicable securities laws. Such Sponsor's Sponsor Shares and Sponsor Warrants are the only equity securities in Acquiror owned of record or beneficially by such Sponsor on the date of this Support Agreement, and none of such Sponsor's Sponsor Shares or Sponsor Warrants are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of such Sponsor Shares or Sponsor Warrants, except as provided hereunder and under the Voting Letter Agreements and the CAP III Escrow Agreement. Other than the Sponsor Warrants and the Merger Agreement, such Sponsor does not hold or own any rights to acquire (directly or indirectly) any equity securities of Acquiror or any equity securities convertible into, or which can be exchanged for, equity securities of Acquiror.
(c) No Conflicts . The execution and delivery of this Support Agreement by such Sponsor does not, and the performance by such Sponsor of his, her or its obligations hereunder will not, (i) if such Sponsor is not an individual, conflict with or result in a violation of the organizational documents of such Sponsor or (ii) require any consent or approval that has not been given or other action that has not been taken by any Person (including under any contract binding upon such Sponsor or such Sponsor's Sponsor Shares or Sponsor Warrants), in each case to the extent such consent, approval or other action would prevent, enjoin or materially delay the performance by such Sponsor of its, his or her obligations under this Support Agreement.
(d) Litigation . There are no Actions pending against such Sponsor, or to the knowledge of such Sponsor threatened against such Sponsor, before (or, in the case of threatened Actions, that would be before) any arbitrator or any Governmental Authority, which in any manner challenges or seeks to prevent, enjoin or materially delay the performance by such Sponsor of its, his or her obligations under this Support Agreement.
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(e) Brokerage Fees . Except for fees described on Schedule 7.07 of the Merger Agreement and except for arrangements entered into by the Company and/or the Cision Owner, no financial advisor, investment banker, broker, finder or other similar intermediary is entitled to any fee or commission from Acquiror, Holdings, the Company or any of their respective Affiliates in connection with the Merger Agreement, the agreements ancillary thereto, this Support Agreement or any of the respective transactions contemplated thereby and hereby in each case based upon any arrangement or agreement made by or, to the knowledge of such Sponsor, on behalf of such Sponsor, for which Acquiror, Holdings or the Company would have any obligations or liabilities of any kind or nature.
(f) Affiliate Arrangements . Except as set forth on Schedule II attached hereto, neither such Sponsor nor any anyone related by blood, marriage or adoption to such Sponsor or to the actual knowledge of such Sponsor any Person in which such Sponsor has a direct or indirect legal, contractual or beneficial ownership of 5% or greater is party to, or has any rights with respect to or arising from, any Contract, instrument, arrangement or understanding with Acquiror or its Subsidiaries.
(g) Acknowledgment . Such Sponsor understands and acknowledges that each of Acquiror and the Company is entering into the Merger Agreement in reliance upon such Sponsor's execution and delivery of this Support Agreement.
ARTICLE
IV
MISCELLANEOUS
Section 4.1 Termination . This Support Agreement and all of its provisions shall terminate and be of no further force or effect upon the termination prior to the Closing of the Merger Agreement in accordance with its terms. Upon such termination of this Support Agreement, all obligations of the parties under this Support Agreement will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party shall have any claim against another (and no person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof, provided however, that the termination of this Support Agreement shall not relieve any party from liability arising in respect of any breach prior to such termination. This ARTICLE IV shall survive the termination of this Agreement.
Section 4.2 Governing Law . This Support Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Support Agreement or the negotiation, execution or performance of this Support Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Support Agreement) will be governed by and construed in accordance with the internal Laws of the State of Delaware applicable to agreements executed and performed entirely within such State.
Section 4.3 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
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(a) THE PARTIES TO THIS SUPPORT AGREEMENT SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS LOCATED IN WILMINGTON, DELAWARE OR THE COURTS OF THE UNITED STATES LOCATED IN WILMINGTON, DELAWARE IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS SUPPORT AGREEMENT AND ANY RELATED AGREEMENT, CERTIFICATE OR OTHER DOCUMENT DELIVERED IN CONNECTION HEREWITH AND BY THIS SUPPORT AGREEMENT WAIVE, AND AGREE NOT TO ASSERT, ANY DEFENSE IN ANY ACTION FOR THE INTERPRETATION OR ENFORCEMENT OF THIS SUPPORT AGREEMENT AND ANY RELATED AGREEMENT, CERTIFICATE OR OTHER DOCUMENT DELIVERED IN CONNECTION HEREWITH, THAT THEY ARE NOT SUBJECT THERETO OR THAT SUCH ACTION MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SUCH COURTS OR THAT THIS SUPPORT AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS OR THAT THEIR PROPERTY IS EXEMPT OR IMMUNE FROM EXECUTION, THAT THE ACTION IS BROUGHT IN AN INCONVENIENT FORUM, OR THAT THE VENUE OF THE ACTION IS IMPROPER. SERVICE OF PROCESS WITH RESPECT THERETO MAY BE MADE UPON ANY PARTY TO THIS SUPPORT AGREEMENT BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS AS PROVIDED IN Section 4.8 .
(b) WAIVER OF TRIAL BY JURY . EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SUPPORT AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUPPORT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUPPORT AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS SUPPORT AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 4.3 .
Section 4.4 Assignment . This Support Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Support Agreement nor any of the rights, interests or obligations hereunder will be assigned (including by operation of law) without the prior written consent of the parties hereto; provided that, the Cision Owner may assigns its rights, in whole or in part, to receive its portion of the Remaining Shares and/or Remaining Warrants pursuant to Section 2.4 to any of its direct equity holders in connection with an in-kind distribution of all or a portion of the Holdings Common Shares or Holdings Warrants held by the Cision Owner as of the Closing, including as a result of any dissolution, winding up or similar transaction involving the Cision Owner and its direct equity holders.
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Section 4.5 Specific Performance . The parties agree that irreparable damage may occur in the event that any of the provisions of this Support Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Support Agreement and to enforce specifically the terms and provisions of this Support Agreement in the chancery court or any other state or federal court within the State of Delaware, this being in addition to any other remedy to which such party is entitled at law or in equity.
Section 4.6 Amendment . This Support Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by Holdings, the Cision Owner and the Founder Sponsors.
Section 4.7 Severability . If any provision of this Support Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Support Agreement will remain in full force and effect. Any provision of this Support Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
Section 4.8 Notices . All notices, consents, waivers and other communications under this Support Agreement must be in writing and will be deemed to have been duly given (a) if personally delivered, on the date of delivery; (b) if delivered by express courier service of national standing for next day delivery (with charges prepaid), on the Business Day following the date of delivery to such courier service; (c) if delivered by telecopy (with confirmation of delivery), on the date of transmission if on a Business Day before 5:00 p.m. local time of the recipient party (otherwise on the next succeeding Business Day); (d) if delivered by electronic mail, on the date of transmission if on a Business Day before 5:00 p.m. local time of the business address of the recipient party (otherwise on the next succeeding Business Day); and (e) if deposited in the United States mail, first-class postage prepaid, on the date of delivery, in each case to the appropriate addresses or facsimile numbers set forth below (or to such other addresses or facsimile numbers as a party may designate by notice to the other parties in accordance with this Section 4.8 ):
If to Acquiror or, prior to the Closing, Holdings :
Capitol Acquisition Corp. III
509 7th Street, N.W.
Washington, DC 20004
Attn: Mark D. Ein, Chairman & CEO, and Dyson Dryden, CFO
Facsimile: (202) 654-7070
E-mail: mark@capitolacquisition.com
dyson@capitolacquisition.com
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with a copy to (which will not constitute notice):
Latham & Watkins LLP
555 Eleventh Street, N.W.
Washington, DC 20004
Attention: Paul Sheridan
Facsimile: (202) 637-2201
E-mail: paul.sheridan@lw.com
If to the Company, the Cision Owner or, following
the Closing, Holdings
:
c/o Cision US, Inc.
130 East Randolph St. 7th Floor
Chicago, IL 60601
Attention: Jack Pearlstein
Facsimile: (301) 459-2827
E-mail: jack.pearlstein@cision.com
with a copy to (which will not constitute notice):
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
Attention: Stephen L. Ritchie, P.C. and Mark A. Fennell, P.C.
Facsimile: (312) 862-2200
E-mail: sritchie@kirkland.com
mfennell@kirkland.com
If to a Sponsor :
To such Sponsor's address set forth in Schedule I
with a copy to (which will not constitute notice):
Latham & Watkins LLP
555 Eleventh Street, N.W.
Washington, DC 20004
Attention: Paul Sheridan
Facsimile: (202) 637-2201
E-mail: paul.sheridan@lw.com
Section 4.9 Counterparts . This Support Agreement may be executed in two or more counterparts (any of which may be delivered by facsimile or electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.
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Section 4.10 Entire Agreement . This Support Agreement and the agreements referenced herein constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements or representations by or among the parties hereto to the extent they relate in any way to the subject matter hereof.
[ Signature Page Follows ]
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IN WITNESS WHEREOF, the Sponsors, Acquiror, the Company, Holdings and the Cision Owner have each caused this Sponsor Support Agreement to be duly executed as of the date first written above.
SPONSORS: | ||
CAPITOL ACQUISITION MANAGEMENT 3 LLC | ||
By: | /s/ Mark D. Ein | |
Name: Mark D. Ein | ||
CAPITOL ACQUISITION FOUNDER 3 LLC | ||
By: | /s/ L. Dyson Dryden | |
Name: L. Dyson Dryden | ||
Title: | ||
/s/ Richard Donaldson | ||
Name: | Richard Donaldson | |
/s/ Piyush Sodha | ||
Name: | Piyush Sodha | |
/s/ Lawrence Calcano | ||
Name: | Lawrence Calcano | |
/s/ Derek Apfel | ||
Name: | Derek Apfel | |
/s/ Alfheidur H. Saemundsson | ||
Name: | Alfheidur H. Saemundsson |
[Signature Page to Sponsor Support Agreement]
ACQUIROR: | ||
CAPITOL ACQUISITION CORP. III | ||
By: | /s/ Mark D. Ein | |
Name: Mark D. Ein | ||
Title: Chief Executive Officer | ||
HOLDINGS: | ||
CAPITOL ACQUISITION HOLDING COMPANY LTD. | ||
By: | /s/ Mark D. Ein | |
Name: Mark D. Ein | ||
Title: Authorized Signatory | ||
COMPANY: | ||
CANYON HOLDINGS S.À R.L. | ||
By: | /s/ Jeffrey Wright | |
Name: Jeffrey Wright | ||
Title: Class A Manager | ||
By: | /s/ Paul Brogan | |
Name: Paul Brogan | ||
Title: Class B Manager | ||
CISION OWNER: | ||
CANYON HOLDINGS (CAYMAN) LP | ||
By: | Canyon Partners, Ltd. | |
Its: | General Partner | |
By: | /s/ Jack Pearlstein | |
Name: Jack Pearlstein | ||
Title: Chief Financial Officer |
[Signature Page to Sponsor Support Agreement]
Schedule I
Sponsors & Sponsor Percentages
Sponsor | Sponsor Shares | Sponsor Warrants |
Sponsor
Percentage (for Holdings Common Shares) |
Sponsor
Percentage (for Holdings Warrants) |
||||||||||||
Capitol Acquisition Management 3 LLC | 1,168,985 | 1,390,909 | 73.0615 | % | 69.5455 | % | ||||||||||
c/o Mark D. Ein | ||||||||||||||||
509 7th Street, N.W. | ||||||||||||||||
Washington, D.C. 20004 | ||||||||||||||||
Capitol Acquisition Founder 3 LLC | 389,662 | 463,636 | 24.3538 | % | 23.1819 | % | ||||||||||
c/o L. Dyson Dryden | ||||||||||||||||
305 West Pennsylvania Avenue | ||||||||||||||||
Towson, MD 21204 | ||||||||||||||||
Richard C. Donaldson | 9,846 | 48,485 | 0.6154 | % | 2.4242 | % | ||||||||||
509 7th Street, N.W. | ||||||||||||||||
Washington, D.C. 20004 | ||||||||||||||||
Piyush Sodha | 9,846 | 48,485 | 0.6154 | % | 2.4242 | % | ||||||||||
509 7th Street, N.W. | ||||||||||||||||
Washington, D.C. 20004 | ||||||||||||||||
Lawrence Calcano | 9,846 | 48,485 | 0.6154 | % | 2.4242 | % | ||||||||||
509 7th Street, N.W. | ||||||||||||||||
Washington, D.C. 20004 | ||||||||||||||||
Derek Apfel | 7,877 | n/a | 0.4923 | % | 0.0000 | % | ||||||||||
509 7th Street, N.W. | ||||||||||||||||
Washington, D.C. 20004 | ||||||||||||||||
Alfheidur H. Saemundsson | 3,938 | n/a | 0.2462 | % | 0.0000 | % | ||||||||||
509 7th Street, N.W. | ||||||||||||||||
Washington, D.C. 20004 | ||||||||||||||||
Total | 1,600,000 | 2,000,000 | 100 | % | 100 | % |
Schedule II
Affiliate Agreements
Administrative Services Agreement, dated as of October 13, 2015, by and between Venturehouse Group, LLC, Dryden Capital Management, LLC and Acquiror
Voting Letter Agreements
CAP III Escrow Agreement
The Stockholder Notes
Consulting Agreement between Derek Apfel and Capitol Acquisition Corp. III, dated as of November 8, 2015
Consulting Agreement between Alfheidur H. Saemundsson and Capitol Acquisition Corp. III, dated as of October 14, 2015, as amended as of December 1, 2016
Funding Commitment Letter, dated November 9, 2016, from Lawrence Calcano to Capitol Acquisition Corp. III
Funding Commitment Letter, dated November 9, 2016, from Richard C. Donaldson to Capitol Acquisition Corp. III
Funding Commitment Letter, dated November 9, 2016, from L. Dyson Dryden to Capitol Acquisition Corp. III
Funding Commitment Letter, dated November 9, 2016, from Mark D. Ein to Capitol Acquisition Corp. III
Funding Commitment Letter, dated November 9, 2016, from Piyush Sodha to Capitol Acquisition Corp. III
EXHIBIT 21.1
Subsidiaries of Registrant
Name | Percentage Ownership | State of Organization | ||
Capitol Acquisition Merger Sub, Inc. | 100 | Delaware |
Exhibit 23.1
CON S ENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-4 (No. 333-217256) of Capitol Acquisition Holding Company Ltd. of our report dated April 11, 2017, relating to the financial statements of Canyon Holdings S.a.r.l, which appears in such Registration Statement. We also consent to the references to us under the headings “Experts” and "Selected Historical Financial Information” in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
May 15, 2017
Exhibit 23.2
Independent Registered Public Accounting Firm’s Consent
We consent to the inclusion in this Registration Statement of Capitol Acquisition Holding Company Ltd. on Amendment No. 1 to Form S-4, File No. 333-217256, of our report dated March 10, 2017 with respect to our audits of the financial statements of Capitol Acquisition Corp. III as of December 31, 2016 and 2015 and for the year ended December 31, 2016 and for the period from July 13, 2015 (inception) through December 31, 2015, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading “Experts” in such Prospectus.
/s/ Marcum llp
Marcum llp
New York, NY
May 15, 2017
Exhibit 23.4
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 7, 2014 with respect to the consolidated financial statements of Vocus, Inc. and subsidiaries, included in the Proxy Statement of Capitol Acquisition Holding Company Ltd., that is made a part of the Registration Statement (Amendment No.1 to Form S-4 No. 333-217256) and Prospectus of Capitol Acquisition Holding Company Ltd. for the registration of 61,525,000 shares of its common stock.
/s/ Ernst & Young LLP
McLean, VA
May 12, 2017
Exhibit 23.5
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the use of our reports dated October 21, 2015 and April 12, 2016 relating to the combined financial statements of PRN Group, included in the Proxy Statement of Capitol Acquisition Holding Company Ltd., that is made a part of the Registration Statement (Amendment No. 1 to Form S-4 No. 333-217256) and Prospectus of Capitol Acquisition Holding Company Ltd. for the registration of 61,525,000 shares of its common stock.
/s/ Ernst & Young LLP
Iselin, NJ
May 12, 2017
Exhibit 99.1
Pursuant to Rule 438 of Regulation C promulgated under the Securities Act of 1933, as amended, in connection with the Registration Statement on Form S-4 (as amended, the “ Registration Statement ”) of Capitol Acquisition Holding Company Ltd. (the “ Company ”), the undersigned hereby consents to being named and described in the Registration Statement and in any and all amendments or supplements thereto to be filed with the U.S. Securities and Exchange Commission as a person about to become a director of the Company and to the filing or attachment of this Consent with such Registration Statement and any amendment or supplement thereto.
/s/ Stephen P. Master | |
Stephen P. Master |
Date: 4/28/2017
Exhibit 99.2
Pursuant to Rule 438 of Regulation C promulgated under the Securities Act of 1933, as amended, in connection with the Registration Statement on Form S-4 (as amended, the “ Registration Statement ”) of Capitol Acquisition Holding Company Ltd. (the “ Company ”), the undersigned hereby consents to being named and described in the Registration Statement and in any and all amendments or supplements thereto to be filed with the U.S. Securities and Exchange Commission as a person about to become a director of the Company and to the filing or attachment of this Consent with such Registration Statement and any amendment or supplement thereto.
/s/ Stuart Yarbrough |
Stuart Yarbrough |
Date: 4/24/17
Exhibit 99.3
Pursuant to Rule 438 of Regulation C promulgated under the Securities Act of 1933, as amended, in connection with the Registration Statement on Form S-4 (as amended, the “ Registration Statement ”) of Capitol Acquisition Holding Company Ltd. (the “ Company ”), the undersigned hereby consents to being named and described in the Registration Statement and in any and all amendments or supplements thereto to be filed with the U.S. Securities and Exchange Commission as a person about to become a director of the Company and to the filing or attachment of this Consent with such Registration Statement and any amendment or supplement thereto.
/s/ Kevin Akeroyd |
Kevin Akeroyd |
Date: 4-26-2017
Exhibit 99.4
Pursuant to Rule 438 of Regulation C promulgated under the Securities Act of 1933, as amended, in connection with the Registration Statement on Form S-4 (as amended, the “ Registration Statement ”) of Capitol Acquisition Holding Company Ltd. (the “ Company ”), the undersigned hereby consents to being named and described in the Registration Statement and in any and all amendments or supplements thereto to be filed with the U.S. Securities and Exchange Commission as a person about to become a director of the Company and to the filing or attachment of this Consent with such Registration Statement and any amendment or supplement thereto.
/s/ Mark M. Anderson |
Mark M. Anderson |
Date: 4/25/2017
Exhibit 99.5
Pursuant to Rule 438 of Regulation C promulgated under the Securities Act of 1933, as amended, in connection with the Registration Statement on Form S-4 (as amended, the “ Registration Statement ”) of Capitol Acquisition Holding Company Ltd. (the “ Company ”), the undersigned hereby consents to being named and described in the Registration Statement and in any and all amendments or supplements thereto to be filed with the U.S. Securities and Exchange Commission as a person about to become a director of the Company and to the filing or attachment of this Consent with such Registration Statement and any amendment or supplement thereto.
/s/ Philip A. Canfield |
Philip A. Canfield |
Date: 4/25/2017
Exhibit 99.6
PRELIMINARY PROXY CARD
SUBJECT TO COMPLETION
CAPITOL ACQUISITION CORP. III
509 7
th
Street, N.W.
Washington, D.C. 20004
ANNUAL MEETING OF STOCKHOLDERS
[ · ] , 2017
YOUR VOTE IS IMPORTANT
FOLD AND DETACH HERE
CAPITOL ACQUISITION CORP. III
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
[ · ] , 2017
The undersigned, revoking any previous proxies relating to these shares, hereby acknowledges receipt of the Notice and Proxy Statement/Prospectus, dated [ · ], 2017, in connection with the Annual Meeting to be held at [ · ] a.m. EST on [ · ], 2017 at the offices of Graubard Miller, counsel to Capitol, at The Chrysler Building, 405 Lexington Avenue, New York, New York 10174, and hereby appoints Mark D. Ein and L. Dyson Dryden, and each of them (with full power to act alone), the attorneys and proxies of the undersigned, with power of substitution to each, to vote all shares of the common stock, of Capitol Acquisition Corp. III (“Capitol”) registered in the name provided, which the undersigned is entitled to vote at the Annual Meeting of Stockholders, and at any adjournments thereof, with all the powers the undersigned would have if personally present. Without limiting the general authorization hereby given, said proxies are, and each of them is, instructed to vote or act as follows on the proposals set forth in this Proxy Statement.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED “FOR” PROPOSAL 1 (THE MERGER PROPOSAL) BELOW, “FOR” EACH OF PROPOSALS 2A THROUGH 2C (THE CHARTER PROPOSALS) BELOW, “FOR” THE ELECTION OF ALL OF THE DIRECTORS IN PROPOSAL 3 BELOW, “FOR” PROPOSAL 4 (THE INCENTIVE PLAN PROPOSAL) BELOW AND “FOR” PROPOSAL 5 (THE ADJOURNMENT PROPOSAL) BELOW.
THE CAPITOL BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 1 (THE MERGER PROPOSAL) BELOW, “FOR” EACH OF PROPOSALS 2A THROUGH 2C (THE CHARTER PROPOSALS) BELOW, “FOR” THE ELECTION OF ALL OF THE DIRECTORS IN PROPOSAL 3 BELOW, “FOR” PROPOSAL 4 (THE INCENTIVE PLAN PROPOSAL) BELOW AND “FOR” PROPOSAL 5 (THE ADJOURNMENT PROPOSAL) BELOW.
PLEASE RETURN THIS PROXY AS SOON AS POSSIBLE.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on [ · ], 2017 : Capitol’s proxy statement/prospectus and annual report to security holders are available at http://www.cstproxy.com/capitolacquisition/2017.
PROXY
PLEASE MARK, DATE AND RETURN THIS PROXY PROMPTLY. ANY VOTES RECEIVED AFTER A MATTER HAS BEEN VOTED UPON WILL NOT BE COUNTED.
Dated: | 2017 | ||
Stockholder’s Signature | |||
Stockholder’s Signature |
Signature should agree with name printed hereon. If stock is held in the name of more than one person, EACH joint owner should sign. Executors, administrators, trustees, guardians, and attorneys should indicate the capacity in which they sign. Attorneys should submit powers of attorney.