Exhibit 4.1

 

SEE REVERSE FOR IMPORTANT NOTICE REGARDING OWNERSHIP AND TRANSFER RESTRICTIONS AND CERTAIN OTHER INFORMATION INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE CUSIP 498455 10 4 COMMON STOCK SEE REVERSE FOR CERTAIN DEFINITIONS SPECIMEN FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF THE PAR VALUE OF $0.0001 EACH OF transferable on the books of the Company in person or by duly authorized KLDiscovery attorney upon Inc. 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: DISCOVE K L R Y 2019 DE R E LAW A CHIEF FINANCIAL OFFICER

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.

KLDISCOVERY Inc.

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 stock 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 Certificate of Incorporation and all amendments thereto and resolutions of the Board of Directors (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 stock represented by the within Certificate, and do hereby irrevocably constitute and appoint

 

				Attorney

to transfer the said stock on the books of the within named Company will full power of substitution in the premises.

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).

The holder(s) of this certificate shall be entitled to receive a pro-rata portion of the funds from the trust account only in the event that (i) the Corporation is forced to liquidate because it does not consummate an initial business combination within the period of time set forth in the Corporation’s Amended and Restated Certificate of Incorporation, as the same may be amended from time to time (the “Charter”) or (ii) if the holder seeks to convert his shares upon consummation of, or sell his shares in a tender offer in connection with, an initial business combination or in connection with certain amendments to the Charter. In no other circumstances shall the holder(s) have any right or interest of any kind in or to the trust account.

Exhibit 4.2

 

SEE REVERSE SIDE FOR LEGEND) THIS WARRANT WILL BE VOID IF NOT EXERCISED PRIOR TO THE EXPIRATION DATE (DEFINED BELOW) CUSIP 498455 11 2 SPECIMEN THIS CERTIFIES THAT, for value received is the registered holder of a warrant or warrants (the “Warrant(s)”) of KLDiscovery Inc., a Delaware corporation (the “Company”), each expiring whole at 5:00 Warrant p.m. evidenced , New York by City this time, Warrant on December Certificate. 19, 2024 to purchase purchase from one the fully Company, paid and commencing non-assessable January share 31, of common 2020, such stock, number par value of Shares $0.0001 of the per Company share (“Shares”), at the Warrant of the Price Company (as defined for below), upon surrender of this Warrant Certificate and payment The of Warrant the Warrant entitles Price the at holder the office thereof or agency to of Company Continental be Stock required Transfer to net & cash Trust settle Company any warrant (the “Warrant exercise. Agent”), The Warrant but only Agreement subject provides to the conditions that upon set the forth occurrence herein and of certain in the Warrant events the Agreement Warrant Price between and the the Company number of and Shares Continental purchasable Stock hereunder, Transfer & set Trust forth Company. on the face In hereof, no event may, will the purchased at the time the Warrant is exercised. The initial Warrant Price per Share is equal subject to to $ 11.50 certain per conditions, share. No be fraction adjusted. of aThe Share term will “Warrant be issued Price” upon as any used exercise in this of Warrant a Warrant. Certificate If the holder refers to of the a Warrant price per would Share be at entitled which Shares to receive may a be fraction of a Share upon any exercise of a Warrant, the Company shall, upon such exercise, round up to the nearest whole number new Warrant the number Certificate of Shares covering to be issued the number to such of holder. Shares Upon for which any exercise the Warrant of the has Warrant not been for exercised. less than the total number of full Shares provided for herein, there shall be issued to the registered holder hereof or the Warrant registered Certificates, holder’s when assignee surrendered a at the office or agency of the Warrant Agent by the registered holder in person or by attorney duly authorized in writing, may be exchanged in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants. BY Upon due presentment for registration of transfer of the Warrant Certificate at the office or agency of the Warrant Agent, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall COUNTERSIGNED be issued to the transferee in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any applicable tax or other governmental charge. AND The Company and the Warrant Agent may deem and treat the registered holder as the absolute owner of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise CONTINENTAL hereof, of any distribution to the registered holder, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. This Warrant does not entitle the registered holder to any of the rights of the a stockholder Warrant is of exercisable, the Company. if the The last Company sale price reserves of the Shares the right has to been call at the least Warrant $18.00 at any per share time prior on each to its of exercise 20 trading with days a notice within of any call 30 in trading writing day to the period holders (the of “30-day record of trading the Warrant, period”) giving ending at on least the 30 third days’ business notice day of such prior call, to the at any date time on which while STOCK notice of such call is given and if, and only if, there is a current registration statement in effect with respect to the Shares underlying the Warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter REGISTERED: until the date of redemption. The call except price for of the Warrants is to be $0.01 per Warrant. Any Warrant either not exercised or tendered back to the Company by the end of the date specified in the notice of call shall be canceled on the books of the Company and have no further value the $0.01 call price. TRANSFER TRUST& DISCOVE K L R AUTHORIZED Y NEW WARRANT 2019 DE R E YORK, LAW A SIGNATURE AGENTNCOMPANY CHIEF EXCUTIVE OFFICER CHIEF FINANCIAL OFFICER .

SUBSCRIPTION FORM

To Be Executed by the Registered Holder in Order to Exercise Warrants

The undersigned Registered Holder irrevocably elects to exercise                      Warrants represented by this Warrant Certificate, and to purchase the Common Stock issuable upon the exercise of such Warrants, and requests that Certificates for such shares shall be issued in the name of

 

(PLEASE TYPE OR PRINT NAME AND ADDRESS)

(SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)

 

and be delivered to

(PLEASE PRINT OR TYPE NAME AND ADDRESS)

 

 

and, if such number of Warrants shall not be all the Warrants evidenced by this Warrant Certificate, that a new Warrant Certificate for the balance of such Warrants be registered in the name of, and delivered to, the Registered Holder at the address stated below:

 

Dated: _____________________
						(SIGNATURE)
						(ADDRESS)
						(TAX IDENTIFICATION NUMBER)

ASSIGNMENT

To Be Executed by the Registered Holder in Order to Assign Warrants

For Value Received, _______________________ hereby sell, assign, and transfer unto

 

(PLEASE TYPE OR PRINT NAME AND ADDRESS)

(SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)

 

and be delivered to

(PLEASE PRINT OR TYPE NAME AND ADDRESS)

                     of the Warrants represented by this Warrant Certificate, and hereby irrevocably constitute and appoint                         Attorney to transfer this Warrant Certificate on the books of the Company, with full power of substitution in the premises.

 

Dated: _________________________
				(SIGNATURE)

THE SIGNATURE TO THE ASSIGNMENT OF THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE NYSE AMERICAN, NASDAQ, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE, OR CHICAGO STOCK EXCHANGE.

Exhibit 4.4

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR OTHER JURISDICTION AND HAS BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS.

THIS SECURITY HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (WITHIN THE MEANING OF SECTION 1272 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). UPON WRITTEN REQUEST TO DAWN WILSON, CHIEF FINANCIAL OFFICER, AT 8201 GREENSBORO DR., SUITE 300, MCLEAN, VIRGINIA 22102, THE COMPANY WILL PROMPTLY MAKE AVAILABLE TO ANY HOLDER OF THIS SECURITY THE FOLLOWING INFORMATION: (1) THE ISSUE PRICE AND DATE OF THE SECURITY, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE SECURITY AND (3) THE YIELD TO MATURITY OF THE SECURITY.

Issue Date: December 19, 2019

Principal Amount: $[ 🌑 ]

Conversion Price (subject to adjustment as set forth herein): $18.00

8.00% CONVERTIBLE DEBENTURE DUE DECEMBER 19, 2024

THIS 8.00% CONVERTIBLE DEBENTURE is one of a series of 8.00% convertible debentures of KLDiscovery Inc. (f/k/a Pivotal Acquisition Corp.), a Delaware corporation (the “Company”), having its principal place of business at 8201 Greensboro Drive, McLean, Virginia 22102 (this debenture, as amended, restated, supplemented or otherwise modified from time to time, this “Debenture” and, collectively with the other debentures of such series, the “Debentures”).

FOR VALUE RECEIVED, the Company promises to pay to [ 🌑 ] or its registered assigns (the “Holder” and, together with the other holders of Debentures, the “Holders”), or shall have paid pursuant to the terms hereunder, the principal sum of $[ 🌑 ] on or prior to December 19, 2024 (subject, only for purposes of the date on which principal sums outstanding are due under this Debenture, to adjustment in accordance with the second paragraph of Section 4(a)) (the “Maturity Date”), or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then-outstanding principal amount of this Debenture (including any PIK Interest (as defined below) paid) in accordance with the provisions hereof. This Debenture was issued pursuant to the securities purchase agreement, dated December 16, 2019 among the Company, the Holder and the other Holders from time to time party thereto (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”).

Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:

“Additional Payment” means, with respect to clauses (i), (ii) and (iii) of Section 2(d) hereof, an amount equal to (a) $6,000,000, and (b) with respect to clause (iv) of Section 2(d) hereof, the Optional Redemption Additional Payment Amount, in each case, multiplied by a fraction (i) the numerator of which is the number of days elapsing since the last payment pursuant to Section 2(d) hereof (or the Issue Date if no payment has previously been made) and (ii) the denominator of which is 360; provided that the amount in clause (a) of this definition shall be decreased by an amount equal to the product of $6,000,000 and a fraction (x) the numerator of which is all original principal amounts of the Debentures previously redeemed and (y) the denominator of which is $200,000,000.

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Affiliate Transaction” shall have the meaning set forth in Section 7(a)(iii) hereof.

“Alternate Consideration” shall have the meaning set forth in Section 5(b) hereof.

“Annual Net Cash Proceeds Threshold” shall have the meaning set forth in Section 6(c)(i) hereof.

“Applicable Proceeds” shall have the meaning set forth in Section 6(c)(i) hereof.

“Attributable Indebtedness” means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

“Asset Sale Offer” shall have the meaning set forth in Section 6(c)(iv) hereof.

“Business Combination” means the transactions contemplated by the Merger Agreement and the related agreements and any of the other related transactions as more fully described in the proxy statement/prospectus filed with the SEC on November 20, 2019.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, New York City.

 

2

“Capitalized Lease” means, at the time any determination thereof is to be made, an obligation that is required to be classified and accounted for as a financing lease (and, for the avoidance of doubt, not a straight-line or operating lease) on both the balance sheet and income statement for financial reporting purposes in accordance with GAAP as in effect on the Issue Date, and the amount of Indebtedness represented thereby at such time shall be the amount of the liability in respect thereof that would at that time be required to be reflected as a liability on a balance sheet in accordance with GAAP as in effect on the Issue Date.

“Cash Equivalents” means any of the following types of investments, to the extent owned by the Company or any of its Restricted Subsidiaries:

 

(a)

U.S. dollars, Canadian dollars, Japanese yen, pounds sterling, euros or the national currency of any participating member state of the European Union (as it is constituted on the Issue Date) and, with respect to any foreign Subsidiaries, other currencies held by such foreign Subsidiary in the ordinary course of business;

 

(b)

readily marketable obligations issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof having maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of the United States is pledged in support thereof;

 

(c)

time deposits or eurodollar time deposits with, insured certificates of deposit, bankers’ acceptances or overnight bank deposits of, or letters of credit issued by, any domestic or foreign commercial bank that (i) issues (or the parent of which issues) commercial paper rated at least P-2 (or the then equivalent grade) by Moody’s or at least A-2 (or the then equivalent grade) by S&P and (ii) has combined capital and surplus of at least $250,000,000 (or the U.S. dollar equivalent thereof in a currency other than U.S. dollars as of the date of determination in the case of any non-U.S. banks) (any such bank being an “Approved Bank”), in each case with maturities of not more than 360 days 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 notes issued by, or guaranteed by a domestic 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 maturities of not more than 24 months from the date of acquisition thereof;

 

(e)

marketable short-term money market and similar funds (including such funds investing a portion of their assets in municipal securities) having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Company);

 

3

(f)

repurchase agreements entered into by any Person with a bank or trust company or recognized securities dealer having capital and surplus in excess of $250,000,000 (or the U.S. dollar equivalent thereof in a currency other than U.S. dollars as of the date of determination in the case of any non-U.S. banks) for direct obligations issued by or fully guaranteed or insured by the U.S. government or any agency or instrumentality of the United States in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations;

 

(g)

investments, classified in accordance with GAAP as consolidated current assets of the Company or any Restricted Subsidiary, in money market investment programs registered under the Investment Company Act of 1940, as amended, which are administered by financial institutions having capital of at least $250,000,000 (or the U.S. dollar equivalent thereof in a currency other than U.S. dollars as of the date of determination in the case of any non-U.S. banks), and the portfolios of which are limited such that substantially all of such investments are of the character, quality and maturity described in clauses (b) through (f) and (j) of this definition;

 

(h)

investment funds investing at least 95% of their assets in securities of the types (including as to credit quality and maturity) described in clauses (b) through (g) above;

 

(i)

solely with respect to any Restricted Subsidiary that is a foreign Subsidiary, (x) such local currencies in those countries in which such foreign Subsidiary transacts business from time to time in the ordinary course of business and (y) investments of comparable tenor and credit quality to those described in the foregoing clauses (b) through (h) customarily utilized in countries in which such foreign Subsidiary operates for short-term cash management purposes; and

 

(j)

securities with average maturities of 24 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or the equivalent thereof).

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (a) and (j) above; provided that such amounts are converted into any currency listed in clause (a) or (j) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

“Cash Interest” shall have the meaning set forth in Section 2(a) hereof.

 

4

“Cash Interest Rate” shall have the meaning set forth in Section 2(a) hereof.

“Cash Interest Payment Date” shall have the meaning set forth in Section 2(a) hereof.

“Cash Management Agreement” means any agreement to provide cash management services, including treasury, depository, overdraft, credit, purchasing or debit card, electronic funds transfer and other cash management arrangements to any the Company or any Restricted Subsidiary.

“Change of Control” means (a) for any reason whatsoever the Company shall cease to own, directly or indirectly, 50.1% of the Equity Interests of LD Topco, Inc., a Delaware corporation, (b) for any reason whatsoever LD Topco, Inc., a Delaware corporation, shall cease to own, directly or indirectly, 50.1% of the Equity Interests of each of LD Intermediate Holdings, Inc., a Delaware corporation and LD Lower Holdings, Inc., a Delaware corporation, (c) at any time prior to a Qualified IPO and for any reason whatsoever, the Permitted Holders shall cease to own, directly or indirectly, at least 50.1% of the Equity Interests of the Company having the power, directly or indirectly, to designate (and do so designate) a majority of the board of directors of the Company, (d) at any time after a Qualified IPO and for any reason whatsoever, any “person” or “group” (within the meaning of Rule 13d-5 of the Exchange Act as in effect on the Issue Date, but excluding any employee benefits plan of the Company or any of its Subsidiaries) other than the Permitted Holders shall beneficially own a percentage of the then-outstanding Voting Equity Interests of the Company that is more than the greater of (i) 35% of the outstanding Voting Equity Interests of the Company and (ii) the percentage of such Voting Equity Interests owned, directly or indirectly, by the Permitted Holders or (e) at any time, a Change of Control (as defined in the First Lien Credit Agreement or the Second Lien Credit Agreement, as applicable) shall have occurred (except with respect to clause (a) of the definition thereof).

“Change of Control Date” means the date on which a Change of Control is consummated.

“Change of Control Conversion Date” shall have the meaning set forth in Section 4(b) hereof.

“Change of Control Notice Date” shall have the meaning set forth in Section 4(b) hereof.

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

“Common Stock” means the Class A common stock, par value $0.0001 per share, of the Company, subject to Section 5(b) hereof.

“Common Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

5

“Company” shall have the meaning set forth in the Recitals.

“Consolidated EBITDA” means, as of any date for the applicable period ending on such date with respect to any Person and its Restricted Subsidiaries on a consolidated basis, the sum of:

 

(a)

Consolidated Net Income; plus

 

(b)

an amount which, in the determination of Consolidated Net Income for such period, has been deducted (and not added back) (or, in the case of amounts pursuant to clauses (vi), (x) or (xi) below, not already included in Consolidated Net Income), for, without duplication:

 

(i)

total interest expense determined in accordance with GAAP (including, to the extent deducted and not added back in computing Consolidated Net Income, (1) amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (2) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers’ acceptances, (3) non-cash interest payments, (4) the interest component of Capitalized Leases, (5) net payments, if any, made (less net amounts, if any, received) pursuant to interest rate Swap Contracts with respect to Indebtedness, (6) amortization or write-off of deferred financing fees, debt issuance costs, commissions, fees and expenses, including commitment, letter of credit and administrative fees and charges with respect to any Indebtedness permitted to be incurred hereunder and (7) any expensing of bridge, commitment and other financing fees, but excluding total interest expense associated with Synthetic Lease Obligations) and, to the extent not reflected in such total interest expense, any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income or gains on such hedging obligations, and costs of surety bonds in connection with financing activities (whether amortized or immediately expensed);

 

(ii)

provision for taxes based on income, profits or capital of the Company and its Restricted Subsidiaries, including corporate income tax, federal, state, franchise, excise and similar taxes and foreign withholding taxes paid or accrued during such period, including (1) penalties and interest related to such taxes or arising from any tax examinations and (2) in respect of repatriated funds;

 

6

(iii)

depreciation and amortization expense and impairment charges (including amortization of intangible assets (including goodwill), deferred financing fees or costs, capitalized software expenditures (including capitalized software development expenditures), customer acquisition costs and incentive payments, conversion costs and contract acquisition costs);

 

(iv)

other non-cash charges, expenses or losses (excluding any such non-cash charge, expense or loss to the extent that it represents an accrual of or reserve for cash expenses in any future period, an amortization of a prepaid cash expense that was paid in a prior period or write-off or write-down or reserves with respect to current assets, but including (1) any non-cash increase in expenses resulting from the revaluation of inventory (including any impact of changes to inventory valuation policy methods, including changes in capitalization and variances), (2) charges recognized in relation to post-retirement benefits or other charges necessary to adjust the defined benefit pension expense to reflect service cost only, (3) losses on minority interests owned by such Person, (4) the non-cash impact of accounting changes or restatements, (5) non-cash fair value adjustments in investments, (6) the non-cash portion of “straight line” rent expense and (7) any other non-cash losses and expenses resulting from fair value accounting required by the applicable standard under GAAP and related interpretations), all as determined on a consolidated basis;

 

(v)

restructuring charges, accruals or reserves and business optimization expenses, including any restructuring costs and integration costs incurred in connection with the Transactions and any acquisitions not prohibited hereby after the Issue Date, project start-up costs, losses, charges and expenses relating to any strategic initiatives (including any multi-year strategic initiatives), costs related to the closure, relocation, reconfiguration and/or consolidation of facilities, reconfiguration of fixed assets for alternative uses and costs to relocate employees, integration and transaction costs, retention charges, severance, contract termination costs, recruiting and signing bonuses and expenses, future lease commitments, systems establishment costs, conversion costs, excess pension charges (including curtailments and modifications to pensions and post-retirement employee benefit plans), and consulting fees, expenses attributable to the implementation of costs savings initiatives, costs associated with tax projects/audits and costs consisting of professional consulting or other fees relating to any of the foregoing;

 

7

(vi)

the amount of “run rate” net cost savings, operating expense reductions, other operating improvements and acquisition synergies, in each case, projected by the Company in good faith to be realized (calculated on a Pro Forma Basis as though such items had been realized on the first day of such period) as a result of specified actions taken, committed to be taken or with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Company), net of the amount of actual benefits realized during such period that are otherwise included in the calculation of Consolidated EBITDA from such actions; provided (1) the Company shall deliver a certificate by a Responsible Officer of the Company certifying that such cost savings, operating expense reductions, other operating improvements and synergies are, in the good faith judgment of the Company, (A) factually supportable and (B) reasonably anticipated to be realized within 18 months after the consummation of any operational change or the acquisition or disposition or the entry into any new agreements or amendments to existing agreements with customers or joint ventures, in each case, which is expected to result in such cost savings, expense reductions, operating improvements or synergies, as the case may be, (2) no cost savings, operating expense reductions, operating improvements and synergies shall be added pursuant to this clause (vi) to the extent duplicative of any expenses or charges otherwise added to Consolidated Net Income, whether through a pro forma adjustment or otherwise, for such period and (3) projected amounts (that are not yet realized) may no longer be added in calculating Consolidated EBITDA pursuant to this clause (vi) to the extent occurring more than six full fiscal quarters after the specified action taken, committed to be taken or with respect to which substantial steps have been taken or are expected to be taken in order to realize such projected cost savings, operating expense reductions, operating improvements and synergies; provided that, amounts added to Consolidated EBITDA pursuant to this clause (vi), other than to the extent in connection with the Transactions, shall not, when combined with amounts added to Consolidated EBITDA pursuant to the third paragraph of the definition of “Pro Forma Basis,” in the aggregate exceed 25% of Consolidated EBITDA (determined prior to giving effect to such amounts) in any four consecutive fiscal quarter period;

 

(vii)

non-cash expenses resulting from any employee benefit or management compensation plan or the grant of stock and stock options and other equity and equity-based interests to employees or other service providers of the Company or any Restricted Subsidiary pursuant to a written plan or agreement (including expenses arising from the grant of stock and stock options and other equity and equity-based interests prior to the Issue Date) or the treatment of such options and other equity and equity-based interests under variable plan accounting;

 

8

(viii)

(1) management, consulting and advisory fees, termination payments, transaction fees, indemnities and expenses permitted by Section 7(a)(iii) hereof and (2) the amount of expenses, if any, relating to payments made to holders of stock options or other compensatory equity-based awards in the Company in connection with, or as a result of, any distribution being made to equity holders or unit holders of such Person or its direct or indirect parent companies, which payments are being made to compensate such holders of compensatory equity-based awards as though they were shareholders or unit holders at the time entitled to share in such distribution, in each case to the extent not prohibited hereby;

 

(ix)

any costs or expenses incurred pursuant to any management equity plan or share or unit option plan or any other management, director or employee benefit plan or agreement or share or unit subscription or shareholder or similar agreement, to the extent such costs or expenses are funded with cash proceeds contributed to the capital of a Company or the Net Cash Proceeds of any issuance of Equity Interests (other than Disqualified Equity Interests) of the Company;

 

(x)

proceeds from business interruption insurance (to the extent not reflected as revenue or income in Consolidated Net Income and to the extent that the related loss was deducted in the determination of Consolidated Net Income);

 

(xi)

charges, losses, lost profits, expenses or write-offs to the extent indemnified or insured by a third party, including expenses covered by indemnification provisions in connection with the Transactions, any acquisition not prohibited hereby or any transaction not prohibited hereby, in each case, to the extent that coverage has not been denied and so long as such amounts are actually reimbursed to the Company or a Restricted Subsidiary in cash within one year after the related amount is first added to Consolidated EBITDA pursuant to this clause (xi) (and if not so reimbursed within one year, such amount shall be deducted from Consolidated EBITDA during the next measurement period);

 

(xii)

Synthetic Lease Obligations, to the extent deducted as an expense in such period;

 

(xiii)

any losses realized upon a disposition of property (including abandoned or discontinued operations or product lines) outside of the ordinary course of business;

 

(xiv)

cash receipts (or any netting arrangements resulting in reduced cash expenses) not included in Consolidated EBITDA in any period to the extent non-cash gains relating to such receipts were deducted in the calculation of Consolidated EBITDA pursuant to clause (c) of this definition for any previous period and not added back;

 

9

(xv)

net realized losses relating to amounts denominated in foreign currencies resulting from the application of the Financial Accounting Standards Board’s Accounting Standards Codification (“FASB ASC”) 830 (or any similar pronouncement) (including net realized losses from exchange rate fluctuations on intercompany balances and balance sheet items, net of realized gains from related Swap Contracts) (entered into in the ordinary course of business or consistent with past practice);

 

(xvi)

cash expenses relating to earn outs and similar obligations and any other earn-out obligations incurred connection with any acquisition, buyout or other investment paid or accrued during the applicable period, including any mark-to-market adjustments;

 

(xvii)

Initial Public Company Costs;

 

(xviii)

any loss relating to Swap Contracts (excluding Swap Contracts entered into in the ordinary course of business or consistent with past practice);

 

(xix)

the amount of any non-controlling interest expense consisting of Subsidiary income attributable to minority equity interests of third parties in any non-wholly owned Subsidiary deducted (and not added back) in such period in calculating Consolidated Net Income, excluding cash distributions in respect thereof; and

 

(xx)

compensation and reimbursement of expenses of non-management members of the board of directors (or similar body) of such Person (other than employees of the Sponsor); minus

 

(c)

an amount which, in the determination of Consolidated Net Income, has been included for:

 

(i)

other non-cash income or gains, including (1) any non-cash portion of “straight line” rent expense, (2) credits recognized in relation to post-retirement benefits or other credits necessary to adjust the defined benefit pension income to reflect service cost only, (3) gains on minority interests owned by any Person, (4) the non-cash impact of accounting changes or restatements, (5) non-cash fair value adjustments in investments, but excluding (x) accrual of revenue in the ordinary course, (y) any such items in respect of which cash was received in a prior period or will be received in a future period (and, in the case of cash that was received in a prior period, such amounts previously reduced Consolidated Net Income in a prior period (and would not have been required to be added back pursuant to clause

 

10

(b) of this definition)) or (z) any such items that represent the reversal in such period of any accrual of, or reserve for, anticipated cash charges in any prior period where such accrual or reserve is no longer required (and where such accrual or reserve previously reduced Consolidated Net Income in a prior period (and would not have been required to be added back pursuant to clause (b) of this definition)) and (6) any other non-cash gains and income resulting from fair value accounting required by the applicable standard under GAAP and related interpretations, all as determined on a consolidated basis;

 

(ii)

any gains realized upon the disposition of property (including abandoned or discontinued operations or product lines) outside of the ordinary course of business;

 

(iii)

the amount of cash received in such period in respect of any non-cash income or gain in a prior period (and such non-cash income or gain previously increased Consolidated Net Income in a prior period (and would not have been required to be deducted pursuant to clause (c)(i) of this definition));

 

(iv)

net realized gains relating to amounts denominated in foreign currencies resulting from the application of ASC 830 (or any similar pronouncement) (including net realized gains from exchange rate fluctuations on intercompany balances and balance sheet items, net of realized losses from related Swap Contracts) (entered into in the ordinary course of business or consistent with past practice); and

 

(v)

any gain related to Swap Contracts (excluding Swap Contracts entered into in the ordinary course of business or consistent with past practice).

“Consolidated Net Income” means, as of any date for the applicable period ending on such date with respect to any Person and its Restricted Subsidiaries on a consolidated basis, net income, excluding, without duplication:

 

(a)

extraordinary, unusual or non-recurring charges, expenses, losses or gains (including (i) accruals for amounts payable and payments under executive employment agreements, severance costs, relocation costs, signing, retention and completion bonuses and (ii) gains and losses realized on disposition of property outside of the ordinary course of business);

 

(b)

any amounts attributable to investments in any non-wholly owned Restricted Subsidiary, Unrestricted Subsidiary or Joint Venture (other than any Person at the Issue Date accounted for by the equity method of accounting; provided that to the extent not already excluded or deducted as minority interest expense, payments made in respect of interests of third parties shall be excluded) to the extent that such amounts have not been distributed in cash or Cash Equivalents to such Person and its Restricted Subsidiaries during such applicable period;

 

11

(c)

(i) any net unrealized gains and losses resulting from fair value accounting (including as a result of the mark-to-market of obligations of Swap Contracts and other derivative instruments) and (ii) any net unrealized gains and losses relating to mark-to-market of amounts denominated in foreign currencies (including net unrealized gains and losses from exchange rate fluctuations on intercompany balances and balance sheet items), in each case, to the extent included in Consolidated Net Income;

 

(d)

the income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary of the Company or is merged into or consolidated with the Company or any Restricted Subsidiary (except to the extent required for any calculation of Consolidated EBITDA on a Pro Forma Basis);

 

(e)

the cumulative effect of a change in or the adoption, application or modification of accounting principles or policies during such period, whether effected through a cumulative effect adjustment or a retroactive application;

 

(f)

effects of adjustments (including the effects of such adjustments pushed down to the Company and its Restricted Subsidiaries) in any line item in such Person’s consolidated financial statements resulting from the application of purchase accounting (including any step-ups with respect to re-valuing assets and liabilities) in relation to the Transactions and any investment, acquisition, merger or consolidation (or resulting from any reorganization or restructuring) that is consummated after the Issue Date or the depreciation, amortization or write-off of any amounts thereof;

 

(g)

Transaction Costs; and

 

(h)

transaction fees and expenses incurred, or amortization thereof, in connection with, to the extent permitted hereunder, any investment, any Debt Issuance, any Equity Issuance, any disposition, any casualty event, any recapitalization or any amendments or waivers of the Transaction Documents, documentation governing other securities, credit facilities or debt instruments (including, in each case listed above, any amendments or other modifications thereto) and Permitted Refinancings in connection therewith, in each case, whether or not consummated.

There shall be excluded from Consolidated Net Income for any period (a) the accounting effects of adjustments to inventory, property and equipment, software and other intangible assets and deferred revenue required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to

 

12

the Company and/or its Restricted Subsidiaries), as a result of any acquisition consummated prior to the Issue Date, the Transactions and any acquisitions or investments not prohibited hereby or the amortization or write-off of any amounts thereof and (b) any income (loss) for such period attributable to the early extinguishment of (i) Indebtedness, (ii) obligations under any Swap Contracts and (iii) other derivative instruments.

“Consolidated Total Assets” means, the consolidated total assets of the Company and its Restricted Subsidiaries as set forth on the consolidated balance sheet of the Company as of the most recent period for which financial statements were required to have been delivered pursuant to Section 9(a)(i)(1) or 9(a)(i)(2) hereof (and, in the case of any determination relating to any incurrence of Indebtedness or any investment, Restricted Payment or acquisition, on a Pro Forma Basis including any property or asset being acquired or disposed of in connection therewith) (or prior to such initial delivery hereunder, the most recent financial statements publicly filed with the SEC).

“Consulting Services Agreement” means those certain consulting services agreements between LDisc Holdings, LLC, on the one hand, and an affiliate of the Sponsor, on the other hand, dated as of December 22, 2015, as such consulting services agreements may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, but only to the extent that such amendments, supplements or modifications (a) do not increase the obligation of LDisc Holdings, LLC or any of its subsidiaries to make payments thereunder and (b) are otherwise permitted under the terms of the Transaction Documents.

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

“Control Investment Affiliate” means, as to any Person, any other Person that (a) directly or indirectly, is in Control of, is Controlled by or is under common Control with, such Person and (b) is organized by such Person primarily for the purpose of making equity investments in one or more companies.

“Conversion Date” shall have the meaning set forth in Section 4(a) hereof.

“Conversion Price” means $18.00 per share of Common Stock, subject to adjustment as set forth herein.

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof and the Purchase Agreement.

“Debenture” and “Debentures” shall each have the meaning set forth in the Recitals.

“Debenture Register” shall have the meaning set forth in Section 2(b) hereof.

 

13

“Debt Issuance” means the issuance by any Person of any Indebtedness for borrowed money.

“Debtor Relief Laws” means Title 11 of the United States Code, as amended, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Restricted Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith; provided, however, that “Disposition” and “Dispose” shall not be deemed to include any issuance by the Company of any of its Equity Interests to another Person.

“Disposition Transaction” means any Disposition, the Net Cash Proceeds of which are required to be applied to the repayment of First Lien Obligations under the First Lien Credit Agreement (as in effect on the Issue Date) and without giving effect to any amendment, waiver or other modification thereof.

“Distribution” shall have the meaning set forth in Section 5(a) hereof.

“Disqualified Equity Interest” means any Equity Interest which, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Equity Interests that are not Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale; provided that any purchase requirement triggered thereby may not become operative until compliance with provisions of this Debenture (including the purchase of any amount of this Debenture tendered pursuant thereto)), (b) is redeemable at the option of the holder thereof (except as a result of a change of control or asset sale; provided that any purchase requirement triggered thereby may not become operative until compliance with provisions of this Debenture (including the purchase of any amount of this Debenture tendered pursuant thereto)), in whole or in part, (c) provides for the scheduled payments of dividends in cash or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Maturity Date; provided that if such Equity Interests are issued pursuant to a plan for the benefit of employees or other service providers of the Company or any Restricted Subsidiary or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by the Company or any Restricted Subsidiary in order to satisfy applicable statutory or regulatory obligations or in connection with such employee’s or other service provider’s termination, death or disability.

 

14

“Equity Interests” means, with respect to any Person, all of the shares, interests, rights, participations or other equivalents (however designated) of capital stock of (or other ownership or profit interests or units in) such Person and all of the warrants, options or other rights for the purchase, acquisition or exchange from such Person of any of the foregoing (including through convertible securities); provided that any instrument evidencing Indebtedness convertible or exchangeable for Equity Interests shall not be deemed to be Equity Interests unless and until such instrument is so converted or exchanged.

“Equity Issuance” means any issuance by any Person to any other Person of (a) its Equity Interests for cash, (b) any of its Equity Interests pursuant to the exercise of options or warrants, (c) any of its Equity Interests pursuant to the conversion of any debt securities to equity or (d) any options or warrants relating to its Equity Interests.

“Event of Default” shall have the meaning set forth in Section 8(a) hereof.

“Exchange Act” means the U.S. Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Holder or required to be withheld or deducted from a payment to a Holder: (a) Taxes imposed on or measured by such Holder’s net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of such Holder being organized under the laws of or having its principal office in the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) any Taxes that are imposed as a result of any other present or former connection between such Holder and the jurisdiction imposing such Tax (other than connections arising from holding this Debenture); (b) any U.S. federal withholding Taxes imposed pursuant to applicable law (including any applicable tax treaty) in effect on the date on which such Holder becomes a Holder or changes its relevant lending office, except, in each case, to the extent that additional amounts with respect to such Taxes were payable to such Holder’s assignor immediately before such Holder became a party hereto; (c) Taxes attributable to a Holder’s failure to deliver documentation meeting the Tax Form Requirements; (d) Taxes imposed under FATCA; or (e) U.S. backup withholding Taxes.

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

“First Lien Credit Agreement” means that certain first lien credit agreement, dated as of December 9, 2016, among LD Intermediate Holdings, Inc. and LD Lower Holdings, Inc., as co-borrowers, LD Topco, Inc., as holdings, the lenders and other persons party thereto from time to time and Royal Bank of Canada, as administrative agent and collateral

 

15

agent, as the same may be amended, restated, modified, supplemented, extended, increased, renewed, refunded, replaced, restructured or refinanced from time to time in one or more agreements (in each case with the same or new lenders, investors or agents), including any agreement extending the maturity thereof or otherwise restructuring all or any portion of the Indebtedness thereunder or increasing the amount loaned or issued thereunder or altering the maturity thereof with new lenders or a different agent, in each case as and to the extent permitted by this Debenture.

“First Lien Incremental Loans” means the “New Term Loans,” any “Term Commitment Increase” or “Revolving Credit Commitment Increase,” each as defined in the First Lien Credit Agreement.

“First Lien Net Leverage Ratio” means, on any date of determination, with respect to the Company and its Restricted Subsidiaries on a consolidated basis, the ratio of (a) Funded First Lien Indebtedness (less the Unrestricted Cash of the Company and its Restricted Subsidiaries as of such date) of the Company and its Restricted Subsidiaries on such date to (b) Consolidated EBITDA of the Company and its Restricted Subsidiaries for the four fiscal quarter period most recently then ended.

“First Lien Incremental Notes” means the “New Incremental Notes” as defined in the First Lien Credit Agreement.

“First Lien Obligations” means the “Obligations” as defined in the First Lien Credit Agreement.

“Foreign Disposition” shall have the meaning set forth in Section 6(c)(iii) hereof.

“Fundamental Transaction” shall have the meaning set forth in Section 5(b) hereof.

“Funded First Lien Indebtedness” means Funded Indebtedness that is secured by a Lien on any asset or property of the Company or any Restricted Subsidiary; provided that such Funded Indebtedness (i) is not expressly subordinated pursuant to a written agreement in right of payment to the First Lien Obligations or (ii) is not secured by Liens on the collateral securing the First Lien Obligations that are expressly junior to the Liens securing the First Lien Obligations.

“Funded Indebtedness” means all Indebtedness of the type described in clauses (a), (b)(i), (f) and, without duplication, (h) of the definition of “Indebtedness” (to the extent relating to Indebtedness of the type described in clauses (a), (b)(i) or (f) of the definition thereof), of a Person and its Restricted Subsidiaries on a consolidated basis, in an amount that would be reflected on a balance sheet (in the case of such clause (h), of the Person whose Indebtedness is guaranteed) prepared as of such date on a consolidated basis in accordance with GAAP (but (x) subject to Section 10(b)(iii) hereof and (y) any Indebtedness that is issued at a discount to its initial principal amount shall be calculated based on the entire stated principal amount thereof, without giving effect to any discounts or upfront payments), excluding (i) obligations in respect of letters of credit, except to the extent of unreimbursed amounts thereunder that are not reimbursed within two Business Days after such amount is drawn and (ii) Attributable Indebtedness of the type described in clause (b) of the definition of Attributable Indebtedness. For the avoidance of doubt, it is understood that obligations (x) under Swap Contracts and Cash Management Agreements, and (y) owed by Unrestricted Subsidiaries, do not constitute Funded Indebtedness.

 

16

“Funded Senior Secured Indebtedness” means Funded Indebtedness that is secured by a Lien on any asset or property of the Company or any Restricted Subsidiary.

“GAAP” means generally accepted accounting principles in the United States as in effect from time to time.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guarantee” means, as to any Person, without duplication, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other monetary obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other monetary obligation of the payment or performance of such Indebtedness or other monetary obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other monetary obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other monetary obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness or other monetary obligation of any other Person, whether or not such Indebtedness or other monetary obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided that the term “Guarantee” shall not include endorsements for collection or deposit, in either case, in the ordinary course of business, or customary or reasonable indemnity obligations in effect on the Issue Date, or entered into in connection with any acquisition or disposition of assets not prohibited hereby (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 by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

“Holder” and “Holders” shall each have the meaning set forth in the Recitals.

 

17

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

 

(a)

all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(b)

the maximum amount of (i) all letters of credit (including standby and commercial), bankers’ acceptances and bank guaranties and (ii) surety bonds, performance bonds and similar instruments issued or created by or for the account of such Person;

 

(c)

net obligations of such Person under any Swap Contract;

 

(d)

all obligations of such Person to pay the deferred purchase price of property or services (other than (i) trade accounts payable in the ordinary course of business, (ii) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and is not yet paid after becoming due and payable, (iii) expenses accrued in the ordinary course of business and (iv) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller);

 

(e)

indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements and mortgage, industrial revenue bond, industrial development bond and similar financings), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)

all Attributable Indebtedness;

 

(g)

all obligations of such Person in respect of Disqualified Equity Interests; and

 

(h)

all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall (A) include the Indebtedness of any partnership or Joint Venture (other than a joint venture that is itself a corporation or limited liability company or the foreign equivalent thereof) in which such Person is a general partner or a joint venturer, (i) unless such Indebtedness is expressly made non-recourse to such Person or (ii) except to the extent such Person’s liability for such Indebtedness is otherwise limited in recourse or amount, but only up to the amount of the value of the assets to which recourse is limited or the amount of such limit and (B) in the case of the Company and its Restricted Subsidiaries, exclude all intercompany Indebtedness having a term not exceeding 364 days (inclusive of roll over or extensions of term). The amount of any net obligation under any Swap Contract on any date shall be

 

18

deemed to be the Swap Termination Value thereof as of such date. The amount of Indebtedness of any Person for purposes of clause (e) of this definition shall be deemed to be equal to the lesser of (x) the aggregate unpaid amount of such Indebtedness and (y) the fair market value of the property encumbered thereby as determined by such Person in good faith.

“Indemnified Liabilities” shall have the meaning set forth in Section 10(n) hereof.

“Indemnities” shall have the meaning set forth in Section 10(n) hereof.

“Immaterial Subsidiary” means any Subsidiary of the Company that, as of the date of the most recent financial statements required to be delivered pursuant to Section 9(a)(i)(1) or 9(a)(i)(2) hereof, (a) does not have (x) assets (when combined with the assets of all other Immaterial Subsidiaries, after eliminating intercompany obligations) in excess of 5.0% of Consolidated Total Assets or (y) revenues (when combined with the revenues of all other Immaterial Subsidiaries, after eliminating intercompany obligations) for the period of four consecutive fiscal quarters ending on such date in excess of 5.0% of the consolidated revenues of the Company and its Restricted Subsidiaries for such period or (b) whose contribution to Consolidated EBITDA (when combined with the contribution to Consolidated EBITDA of all other Immaterial Subsidiaries, after eliminating intercompany obligations) for the period of four consecutive fiscal quarters ending on such date does not exceed 5.0% of the Consolidated EBITDA of the Company and its Restricted Subsidiaries for such period (or prior to such initial delivery hereunder, the most recent financial statements publicly filed with the SEC).

“Indemnified Taxes” means all Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Company under this Debenture.

“Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged and that is independent of the Company and its Affiliates.

“Initial Public Company Costs” means, as to any Person, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and costs relating to compliance with the provisions of the Securities Act and the Exchange Act, as applicable to companies with equity securities held by the public, the rules of national securities exchange companies with listed equity, directors’ compensation, fees and expense reimbursement, costs relating to investor relations, shareholder meetings and reports to shareholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees and listing fees, in each case, to the extent arising solely by virtue of the initial listing of such Person’s equity securities on a national securities exchange and in connection with the consummation of the transactions contemplated by the Business Combination; provided that any such costs arising from the costs described above in respect of the ongoing operation of such Person as a result of its listed equity or

 

19

its listed debt securities following the initial listing of such Person’s equity securities or debt securities, respectively, on a national securities exchange and in connection with the consummation of the transactions contemplated by the Business Combination shall not constitute Initial Public Company Costs.

“Interest Payment Date” shall have the meaning set forth in Section 2(a) hereof.

“Interest Rate” shall have the meaning set forth in Section 2(a) hereof.

“Issue Date” means the date of the first issuance of this Debenture, regardless of any transfers of this Debenture and regardless of the number of instruments which may be issued to evidence this Debenture.

“Joint Venture” means (a) any Person that is not a Subsidiary of the Company that would constitute an “equity method investee” of the Company or any of its Restricted Subsidiaries and (b) any Person other than an individual or a Subsidiary of the Company in which the Company or any Restricted Subsidiary holds or acquires a beneficial ownership interest (by way of ownership of Equity Interests or other evidence of ownership) in such Person.

“Laws” means, collectively, all applicable international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

“LCA Election” shall have the meaning set forth in Section 7(e) hereof.

“Lien” means any mortgage, pledge, hypothecation, collateral assignment, deposit arrangement, encumbrance having the effect of security, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement or any Capitalized Lease having substantially the same economic effect as any of the foregoing).

“Limited Condition Acquisition” means any acquisition, including by way of merger, amalgamation or consolidation, by one or more of the Company and its Restricted Subsidiaries of any assets, business or Person not prohibited hereby whose consummation is not conditioned on the availability of, or on obtaining, third-party acquisition financing and which is designated as a Limited Condition Acquisition by the Company or such Restricted Subsidiary in writing to the Holder.

“Manulife” means Manulife Investment Management Limited.

“Market Disruption Event” means (a) a failure by the Trading Market to open for trading during its regular trading session or (b) the occurrence or existence prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating to the Common Stock.

 

20

“Maturity Date” shall have the meaning set forth in the Recitals.

“Maximum Rate” shall have the meaning set forth in Section 10(i) hereof.

“Merger Agreement” means that certain agreement and plan of reorganization, dated as of May 20, 2019, as amended by that certain amendment to agreement and plan of reorganization, dated as of October 30, 2019, and as further amended by that second amendment to agreement and plan of reorganization, dated as of December 16, 2019, by and among the Company, Pivotal Merger Sub Corp., LD Topco, Inc. and, solely in its capacity as representative of the stockholders of LD Topco, Inc., Carlyle Equity Opportunity GP, L.P., as the same may be amended, restated, supplemented or otherwise modified.

“MGG” means MGG Investment Group LP.

“Net Cash Proceeds” means:

 

(a)

with respect to the Disposition of any asset by the Company or any of its Restricted Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such Disposition (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received and including any proceeds received as a result of unwinding any related Swap Contract in connection with such related transaction) over (ii) the sum of (1) the principal amount of any Indebtedness that is secured by the asset subject to such Disposition and that is required to be repaid in connection with such Disposition, (2) the out-of-pocket expenses incurred by the Company or such Restricted Subsidiary in connection with such Disposition (including attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums and related search and recording charges, transfer Taxes, deed or mortgage recording Taxes, other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith), (3) income Taxes reasonably estimated to be payable in connection with such Disposition (or any Tax distribution the Company makes as a result of such Disposition) and any repatriation costs associated with receipt or distribution by the applicable taxpayer of such proceeds, (4) any costs associated with unwinding any related Swap Contract in connection with such transaction, (5) any reserve for adjustment in respect of (x) the sale price of the property that is the subject of such Disposition established in accordance with GAAP and (y) any liabilities associated with such property and retained by the Company or any of its Restricted Subsidiaries after such Disposition, including pension and other post-employment benefit liabilities and liabilities related

 

21

to environmental matters or against any indemnification obligations associated with such transaction, and (6) any customer deposits required to be returned as a result of such Disposition, and it being understood that “Net Cash Proceeds” shall include, without limitation, any cash or Cash Equivalents (x) received upon the Disposition of any non-cash consideration received by the Company or any of its Restricted Subsidiaries in any such Disposition and (y) upon the reversal (without the satisfaction of any applicable liabilities in cash in a corresponding amount) of any reserve described in clause (5) above;

 

(b)

with respect to the issuance of any Equity Interest by the Company or any of its Restricted Subsidiaries, the excess of (i) the sum of the cash and Cash Equivalents received in connection with such issuance and in connection with unwinding any related Swap Contract in connection therewith over (ii) the investment banking fees, underwriting discounts, premiums, commissions, Taxes, other out-of-pocket expenses and other customary expenses and fees related thereto, incurred by the Company or such Restricted Subsidiary in connection with such issuance and any costs associated with unwinding any related Swap Contract in connection therewith; and

 

(c)

with respect to the incurrence or issuance of any Indebtedness by the Company or any of its Restricted Subsidiaries, the excess, if any, of (i) the sum of the cash received in connection with such incurrence or issuance and in connection with unwinding any related Swap Contract in connection therewith over (ii) the investment banking fees, underwriting discounts and commissions, premiums, expenses, accrued interest and fees related thereto, Taxes reasonably estimated to be payable and other out-of-pocket expenses and other customary expenses, incurred by the Company or such Restricted Subsidiary in connection with such incurrence or issuance and any costs associated with unwinding any related Swap Contract in connection therewith and, in the case of Indebtedness of any foreign Subsidiary, deductions in respect of withholding Taxes that are or would otherwise be payable in cash if such funds were repatriated to the United States.

“New York Courts” shall have the meaning set forth in Section 10(f) hereof.

“Notice of Conversion” shall have the meaning set forth in Section 4(a) hereof.

“Offer Amount” shall have the meaning set forth in Section 6(c)(iv) hereof.

“Optional Redemption Additional Payment Amount” means $6,000,000 (as decreased pursuant to the proviso in the definition of “Additional Payment”) multiplied by a fraction (a) the numerator of which is the original principal amount of the Debentures being redeemed and (b) the denominator of which is $200,000,000.

 

22

“Optional Redemption Date” shall have the meaning set forth in Section 6(b) hereof.

“Optional Redemption Notice” shall have the meaning set forth in Section 6(a) hereof.

“OTPP” means 1397225 Ontario Limited.

“Permitted Affiliate Transactions” means:

 

(a)

transactions among the Company and its Restricted Subsidiaries (or any entity that becomes a Restricted Subsidiary as a result of such transaction);

 

(b)

the Transactions and the payment of fees and expenses in connection with the consummation of the Transactions (in the case of any deferred fees payable to the Sponsor, only so long as no Event of Default has occurred and is continuing);

 

(c)

so long as no Event of Default under Sections 8(a)(v) and (vi) hereof shall have occurred and be continuing, the payments pursuant to the Consulting Services Agreements (including upon the termination thereof) to the Sponsor plus related indemnities and reasonable expenses; provided that during the period that an Event of Default under Section 8(a)(v) and (vi) hereof shall have occurred or be continuing, such payments may accrue, but not be paid, and following cure of such Event of Default to the satisfaction of the Required Holders, such accrued payments may be paid to the Sponsor;

 

(d)

customary fees and indemnities may be paid to any directors or managers of the Company and its Restricted Subsidiaries and reasonable out-of-pocket costs of such Persons may be reimbursed;

 

(e)

the Company and its Restricted Subsidiaries may enter into employment and severance or other compensation arrangements with officers, directors, consultants and employees of the Company and its Restricted Subsidiaries (or any direct or indirect parent company of the Company and its Restricted Subsidiaries) in the ordinary course of business or as otherwise approved by the board of directors, board of managers or other equivalent governing body of the Company or such Restricted Subsidiary and transactions pursuant to stock option plans and employee benefit plans and arrangements in the ordinary course of business or as otherwise approved by the board of directors, board of managers or other equivalent governing body of the Company or such Restricted Subsidiary;

 

(f)

any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of any Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent Persons thereof) permitted hereby;

 

23

(g)

payments required to be made pursuant to the Merger Agreement;

 

(h)

transactions pursuant to agreements in existence on the Issue Date or any amendment thereto to the extent such an amendment is not materially adverse, taken as a whole, to the Holders in any material respect; provided that any such transactions in excess of $5,000,000 are set forth on Schedule 7(a)(iii) hereto;

 

(i)

transactions between the Company or any Restricted Subsidiary and any Person that is an Affiliate solely due to the fact that a director or manager of such Person is also a director or manager of the Company or a Restricted Subsidiary; provided, however, that such director or manager abstains from voting as a director of the Company or such Subsidiary, as the case may be, on any matter involving such other Person;

 

(j)

the issuance of Equity Interests to any Permitted Holder or the Sponsor, or to any former, current or future director, manager, officer, employee or consultant (or any spouses, former spouses, successors, executors, administrators, heirs, legatees, distributees or Affiliates of any of the foregoing) of the Company, any of its Subsidiaries or any direct or indirect parent thereof;

 

(k)

any issuance of Equity Interests, or other payments, awards or grants in cash, securities, Equity Interests or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the board of directors or board of managers of the Company, as the case may be;

 

(l)

transactions with wholly owned Subsidiaries for the purchase or sale of goods, products, parts and services entered into in the ordinary course of business;

 

(m)

investments by Affiliates in Indebtedness or preferred Equity Interests of the Company or any of its Subsidiaries (and/or such Affiliate’s exercise of any permitted rights with respect thereto), so long as non-Affiliates were also offered the opportunity to invest in such Indebtedness or preferred Equity Interests, and transactions with Affiliates solely in their capacity as holders of Indebtedness or preferred Equity Interests of the Company or any of its Subsidiaries, so long as such transaction is with all holders of such class (and there are such non-Affiliate holders) and such Affiliates are treated no more favorably than all other holders of such class generally;

 

24

(n)

reimbursement of reasonable out-of-pocket costs and expenses of the Sponsor by the Company and any Restricted Subsidiary incurred in connection with financial advisory, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions or divestitures, whether or not consummated), so long as such costs and expenses are approved by a majority of the members of the board of directors or a majority of the disinterested members of the board of directors, in each case, of the Company or such Restricted Subsidiary in good faith;

 

(o)

loans and other transactions among the Company and its Subsidiaries (to the extent any such Subsidiary that is not a Restricted Subsidiary is only an Affiliate as a result of investments by the Company and its Restricted Subsidiaries in such Subsidiary) to the extent not otherwise prohibited hereunder;

 

(p)

the payment of reasonable out-of-pocket costs and expenses and indemnities pursuant to any stockholders agreement or registration rights agreement (or amendments to such agreements) entered into on or after the Issue Date in connection therewith or similar equityholder’s agreements or limited liability company agreements;

 

(q)

transactions in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Holder a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view; and

 

(r)

payments to or from, and other transactions with, a Joint Venture (to the extent any such Joint Venture is only an Affiliate as a result of investments by the Company and its Restricted Subsidiaries in such Joint Venture) in the ordinary course of business and to the extent not otherwise prohibited hereunder.

“Permitted Holders” means the collective reference to (a) Permitted Transferees, (b) the Sponsor, (c) MGG, (d) OTPP, (e) Manulife and, in each case, their respective Control Investment Affiliates (but excluding any operating portfolio companies of the foregoing), managers and members of management of the Company or any of its Subsidiaries that have ownership interests in the Company and one or more third-party co-investors identified to the Holder prior to the Closing Date (it being understood any such managers or members of management and third-party co-investors shall only constitute “Permitted Holders” to the extent that the ownership interests held by any such managers or members of management and third-party co-investors collectively are less than the ownership interests held by the Sponsor, with any excess ownership interests being excluded from the ownership deemed held by Permitted Holders for purposes of determining whether a Change of Control has occurred).

 

25

“Permitted Indebtedness” means:

 

(a)

Indebtedness under (i) the First Lien Credit Agreement, including the Guarantees thereof and the issuance and creation of letters of credit, bankers’ acceptances and ancillary facilities thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof), (1) in an aggregate principal amount at any time outstanding not to exceed $370,000,000, plus the aggregate principal amount of any First Lien Incremental Loans or First Lien Incremental Notes incurred after the Issue Date and permitted to be incurred under the First Lien Credit Agreement, and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof) and (2) in respect of Secured Cash Management Agreements and Secured Hedge Agreements (each as defined in the First Lien Credit Agreement) incurred in accordance with the terms of the First Lien Credit Agreement, and (ii) the Second Lien Credit Agreement, including the Guarantees thereof and the issuance and creation of letters of credit, bankers’ acceptances and ancillary facilities thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof), in an aggregate principal amount at any time outstanding not to exceed $125,000,000, and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof);

 

(b)

Indebtedness evidenced by the Debentures and any Guarantees hereof and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof);

 

(c)

Indebtedness existing on the Issue Date (other than Indebtedness described in clause (a) or (b) of this definition that is incurred or existing on the Issue Date) and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof); provided that any such Indebtedness in excess of $5,000,000 is set forth on Schedule 7(a)(ii) hereto;

 

(d)

Guarantees incurred by the Company or any Restricted Subsidiary in respect of Indebtedness of the Company or any Restricted Subsidiary that is permitted to be incurred under this Debenture;

 

(e)

Indebtedness of (i) the Company owing to a Restricted Subsidiary (provided that such Indebtedness shall be subordinated in right of payment to the Company’s obligations with respect to this Debenture) and (ii) any Restricted Subsidiary owing to the Company or another Restricted Subsidiary;

 

(f)

(i) (1) Attributable Indebtedness (including Capitalized Leases) and purchase money obligations (including obligations in respect of mortgage, industrial revenue bond, industrial development bond and similar financings) to finance the purchase or other acquisition, repair or improvement of fixed or capital assets within the limitations of clause (i) of the definition of “Permitted Liens” and (2) any Permitted Refinancing in

 

26

respect thereof (or successive Permitted Refinancings thereof) (provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed the greater of (x) $15,000,000 and (y) 17.5% of Consolidated EBITDA) and (ii) Attributable Indebtedness arising out of sale-leaseback transactions not prohibited hereby and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof);

 

(g)

Indebtedness in respect of Swap Contracts incurred in the ordinary course of business and not for speculative purposes and Guarantees thereof;

 

(h)

Indebtedness representing deferred compensation or stock-based compensation to employees of the Company and its Restricted Subsidiaries;

 

(i)

Indebtedness consisting of promissory notes issued to current or former officers, managers, consultants, directors and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Company or any Restricted Subsidiary;

 

(j)

Indebtedness in respect of indemnification, purchase price adjustments or other similar adjustments incurred by the Company or any Restricted Subsidiary in connection with any investment, other acquisition or disposition not prohibited hereby under agreements that provide for the adjustment of the indemnification, purchase price or for similar adjustments;

 

(k)

Indebtedness consisting of obligations of the Company or any Restricted Subsidiary under deferred consideration (e.g., earn-outs, indemnifications, incentive non-competes and other contingent obligations) or other similar arrangements incurred by such Person in connection with the Transactions or any acquisition not prohibited hereby;

 

(l)

Indebtedness (i) assumed in connection with any acquisition (provided that such Indebtedness is not incurred in contemplation of such acquisition or any Permitted Refinancing thereof) or (ii) incurred to finance any acquisition; provided that after giving Pro Forma Effect to such acquisition and the assumption or incurrence of such Indebtedness, as applicable, (1) the Total Net Leverage Ratio (determined on a Pro Forma Basis) is no greater than 5.25 to 1.00, (2) if such Indebtedness is secured by a Lien on any asset or property of any Restricted Subsidiary on a pari passu basis with the First Lien Obligations, the First Lien Net Leverage Ratio (determined on a Pro Forma Basis) is no greater than 3.75 to 1.00 or (3) if such Indebtedness is secured by a Lien on any asset or property of any Restricted Subsidiary, the Senior Secured Net Leverage Ratio (determined on a Pro Forma Basis) is no greater than 5.25 to 1.00; provided, further, that in the cause of subclause (ii), (A) such Indebtedness does not mature prior to the Maturity Date of, or have a Weighted Average Life to Maturity less than the Weighted Average Life to Maturity of, this Debenture, and does not

 

27

require any scheduled amortization or other scheduled payments of principal prior to, the Maturity Date and (B) no Event of Default shall exist or result therefrom and, in each case, any Permitted Refinancing of such Indebtedness; provided, further, that, with respect to this clause (l), any identifiable proceeds of Indebtedness shall not qualify as “cash or Cash Equivalents” for the purposes of calculating any net obligations or liabilities for purposes of such incurrence;

 

(m)

Indebtedness in respect of netting services, overdraft protections, employee credit card programs, automatic clearinghouse arrangements, other cash management arrangements and similar arrangements, in each case, in connection with deposit accounts and Indebtedness arising 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; provided that any such Indebtedness is extinguished within 30 days;

 

(n)

Indebtedness in an aggregate principal amount not to exceed the greater of (x) $25,000,000 and (y) 30.0% of Consolidated EBITDA at any time outstanding;

 

(o)

Indebtedness incurred by the Company or any Restricted Subsidiary in respect of bank guarantees, letters of credit, bankers’ acceptances, warehouse receipts or similar instruments issued or created in the ordinary course of business, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers compensation claims;

 

(p)

obligations (including bank guarantees, letters of credit issued or similar investments) in respect of performance, bid, appeal and surety bonds, customer guarantees and performance and completion guarantees and similar obligations provided by the Company or any Restricted Subsidiary in the ordinary course of business;

 

(q)

Indebtedness consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

 

(r)

Indebtedness in an aggregate principal amount not to exceed the amount of cash that is contributed to the common equity of the Company or any Restricted Subsidiary after the Issue Date (other than, in the case of a Restricted Subsidiary, by the Company or any Restricted Subsidiary);

 

(s)

Indebtedness constituting Permitted Ratio Debt and any Permitted Refinancings thereof (or successive Permitted Refinancings thereof);

 

28

(t)

Indebtedness supported by a letter of credit issued under the First Lien Credit Agreement, in a principal amount not in excess of the stated amount of such letter of credit;

 

(u)

Indebtedness of the Company or any Restricted Subsidiary as an account party in respect of trade letters of credit issued in the ordinary course of business;

 

(v)

Guarantees incurred in the ordinary course of business in respect of obligations of or to suppliers, customers, franchisees, lessors, licensees and sublicensees;

 

(w)

unsecured Indebtedness in respect of intercompany obligations of the Company or any Restricted Subsidiary in respect of accounts payable incurred in connection with goods sold or services rendered in the ordinary course of business and not in connection with the borrowing of money;

 

(x)

(i) Indebtedness incurred in connection with any sale leaseback not prohibited hereby and (ii) any Permitted Refinancing in respect thereof (or successive Permitted Refinancings thereof);

 

(y)

to the extent constituting Indebtedness, customer deposits and advance payments (including progress payments) received in the ordinary course of business from customers for goods and services purchased in the ordinary course of business; and

 

(z)

all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (z) above.

“Permitted Liens” means:

 

(a)

(i) Liens pursuant to any Transaction Document and (ii) Liens securing Indebtedness and other obligations permitted under clause (a) of the definition of “Permitted Indebtedness,” including cash management obligations and hedging obligations secured ratably therewith and, in each case, any modifications, replacements, renewals, refinancings or extensions thereof;

 

(b)

Liens existing on the Issue Date (other than Liens described in clause (a)(ii) of this definition that are incurred or existing on the Issue Date), and, in each case, any modifications, replacements, renewals, refinancings or extensions thereof; provided that (i) the Lien does not encumber any property other than (1) property encumbered on the Issue Date, (B) after-acquired property that is affixed or incorporated into the property encumbered by such Lien on the Issue Date and (C) proceeds and products thereof and (ii) the modification, replacement, renewal, extension or refinancing of the obligations secured or benefited by such Liens, to the extent constituting Indebtedness, is permitted by Section 7(b) hereof; provided, further, that any such Liens in excess of $5,000,000 are set forth on Schedule 7(a)(i) hereto;

 

29

(c)

Liens for Taxes, assessments or governmental charges (i) which are not overdue for more than 30 days or which are not yet due or payable or (ii) which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP (or, with respect any foreign Subsidiaries, in conformity with generally accepted accounting principles that are applicable in their respective jurisdiction of organization);

 

(d)

statutory or common law Liens of landlords, carriers, warehousemen, mechanics, materialmen, repairmen, construction contractors or other like Liens arising in the ordinary course of business and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(e)

Liens incurred in the ordinary course of business (i) in connection with workers’ compensation, unemployment insurance and other social security legislation, (ii) securing liability for reimbursement or indemnification obligations of insurance carriers providing property, casualty or liability insurance to the Company or any Restricted Subsidiary or under self-insurance arrangements in respect of such obligations or (iii) securing obligations in respect of letters of credit that have been posted by the Company or any Restricted Subsidiary to support the payment of items set forth in subclauses (i) and (ii);

 

(f)

Liens to secure the performance of tenders, bids, trade contracts, utilities, governmental contracts, leases and other contracts (other than Indebtedness for borrowed money), statutory obligations, surety, stay, customs and appeal bonds, performance bonds, customer guarantees, performance and completion guarantees and other obligations of a like nature (including (i) those to secure health, safety and environmental obligations, (ii) those required or requested by any Governmental Authority and (iii) letters of credit or bank guarantees issued in lieu of any such bonds or guarantees to support the issuance thereof), in each case, incurred in the ordinary course of business;

 

(g)

easements, covenants, rights-of-way, restrictions (including zoning restrictions), encroachments, protrusions and other similar encumbrances and minor title defects affecting real property which, in the aggregate, do not in any case materially and adversely interfere with the ordinary conduct of the business of the Company and its Subsidiaries, taken as a whole;

 

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(h)

Liens (i) securing judgments for the payment of money not constituting an Event of Default under Section 8(a)(vii) hereof, (ii) arising out of judgments or awards against the Company or any Restricted Subsidiary with respect to which an appeal or other proceeding for review is then being pursued and (iii) notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings for which adequate reserves have been made;

 

(i)

Liens securing Indebtedness permitted under clause (f) of the definition of “Permitted Indebtedness”; provided that (i) such Liens (other than any Liens securing any Permitted Refinancing of the Indebtedness secured by such Liens (or successive Permitted Refinancings thereof)) attach concurrently with or within 270 days after the acquisition, repair, replacement, construction or improvement (as applicable) of the property subject to such Liens, (ii) such Liens do not at any time encumber any property (except for replacements, additions and accessions to such property) other than the property financed by such Indebtedness and the proceeds and the products thereof and customary security deposits and (iii) with respect to Capitalized Leases, such Liens do not at any time extend to or cover any assets other than the assets subject to such Capitalized Leases and the proceeds and products thereof and customary security deposits; provided that individual financings of equipment provided by one lender may be cross-collateralized to other financings of equipment provided by such lender on customary terms;

 

(j)

leases, licenses, subleases, sublicenses or other occupancy arrangements and terminations thereof granted to others in respect of real property in the ordinary course of business on which facilities owned or leased by the Company or any of its Restricted Subsidiaries are located;

 

(k)

Liens (i) 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 in the ordinary course of business or (ii) on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances or letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business;

 

(l)

Liens (i) of a collection bank arising under Section 4-208 of the UCC on items in the course of collection, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking or other financial institution arising as a matter of Law or under customary general terms and conditions encumbering deposits or other funds maintained with a financial institution (including the right of set-off) and which are within the general parameters customary in the banking industry;

 

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(m)

Liens (i) on cash or Cash Equivalents advances in favor of the seller of any property to be acquired in an investment not prohibited hereby to be applied against the purchase price for such investment or (ii) consisting of an agreement to dispose of any property in a disposition not prohibited hereby, 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;

 

(n)

Liens on property of any Restricted Subsidiary securing Indebtedness and other obligations in respect of Indebtedness of another Restricted Subsidiary;

 

(o)

Liens in favor of the Company or any Restricted Subsidiary securing Indebtedness permitted by clause (e) of the definition of “Permitted Indebtedness”;

 

(p)

Liens existing on property at the time of its acquisition or existing on the property of, or Equity Interests in, any Person that becomes a Subsidiary after the Issue Date and any modifications, replacements, renewals and extensions thereof (including Liens securing Permitted Refinancings of Indebtedness secured by such Liens (or successive Permitted Refinancings thereof)); provided that (i) such Lien was not created in contemplation of such acquisition or such Person becoming a Subsidiary, (ii) such Lien does not encumber any property other than property encumbered at the time of such acquisition or such Person becoming a Subsidiary and the proceeds and products thereof and (iii) the Indebtedness secured thereby is permitted under clause (f), (l) or (n) of the definition of “Permitted Indebtedness”;

 

(q)

Liens arising from (i) any UCC financing statement or filing filed against the Company or any Restricted Subsidiary not authorized by the Company or such Restricted Subsidiary (provided that the Company or such Restricted Subsidiary will promptly upon obtaining knowledge thereof use commercially reasonable efforts to have such financing statement terminated or corrected to the extent permitted by the UCC) and (ii) precautionary UCC financing statement filings (or other similar filings in non-U.S. jurisdictions) regarding leases, subleases, licenses or consignments entered into by the Company or any Restricted Subsidiary;

 

(r)

any interest or title, and all encumbrances and other matters affecting such interest or title, of a lessor, sublessor, licensee, sublicensee, licensor or sublicensor under any lease, sublease, license or sublicense agreement (including software and other technology licenses) in the ordinary course of business;

 

(s)

Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by the Company or any Restricted Subsidiary in the ordinary course of business;

 

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(t)

Liens deemed to exist in connection with investments in repurchase agreements not prohibited hereby;

 

(u)

Liens encumbering 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;

 

(v)

(i) survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights-of-way, servitudes, sewers, electric lines, drains, telegraph and telephone and cable television lines, gas and oil pipelines and other similar purposes, reservations of rights or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the ownership of its properties which do not in the aggregate materially adversely interfere with the ordinary conduct of the business of such Person, (ii) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business and (iii) zoning by-laws and other land use restrictions, including, without limitation, site plan agreements, development agreements and contract zoning agreements;

 

(w)

Liens on cash collateral in respect of letters of credit not prohibited hereby;

 

(x)

Liens that are customary contractual rights of setoff or rights of pledge (i) relating to the establishment of depository relations with banks or other financial institutions not given in connection with the incurrence of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Company or any Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Company or any Restricted Subsidiary or (iii) relating to purchase orders and other agreements entered into with customers of the Company or any Restricted Subsidiary in the ordinary course of business;

 

(y)

(i) zoning, building, entitlement and other land use regulations by Governmental Authorities with which the normal operation of the business of the Company and its Restricted Subsidiaries complies and (ii) any zoning or similar Law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole;

 

(z)

Liens solely on any cash earnest money deposits made by the Company or any Restricted Subsidiary in connection with any letter of intent or other agreement not prohibited hereby;

 

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(aa)

Liens on Equity Interests of Joint Ventures securing obligations of such Joint Venture;

 

(bb)

(i) deposits made in the ordinary course of business to secure liability to insurance carriers and (ii) Liens on insurance policies and the proceeds thereof securing the financing of insurance premiums with respect thereto;

 

(cc)

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;

 

(dd)

so long as no Default has occurred and is continuing at the time of granting such Liens, Liens on cash deposits securing any Swap Contract permitted hereunder in an aggregate amount not to exceed the greater of (x) $10,000,000 and (y) 12.5% of Consolidated EBITDA;

 

(ee)

Liens on cash and Cash Equivalents used to defease or to satisfy and discharge Indebtedness; provided that such defeasance or satisfaction and discharge is permitted hereunder;

 

(ff)

Liens securing obligations issued or incurred under any Permitted Ratio Debt and any Permitted Refinancings thereof (or successive Permitted Refinancings thereof) and (ii) Liens on any property of any Restricted Subsidiary securing obligations of any Restricted Subsidiary in respect of Permitted Ratio Debt and any documentation related thereto and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof);

 

(gg)

Liens on cash or Cash Equivalents (and the related escrow accounts) in connection with the issuance into (and pending the release from) escrow of any Indebtedness and, in each case, any Permitted Refinancing thereof (or successive Permitted Refinancings thereof);

 

(hh)

other Liens securing Indebtedness outstanding in an aggregate principal amount not to exceed the greater of (x) $25,000,000 and (y) 30.0% of Consolidated EBITDA at any time outstanding, and any modifications, replacements, renewals and extensions thereof (including Liens securing Permitted Refinancings of Indebtedness secured by such Liens (or successive Permitted Refinancings thereof));

 

(ii)

Liens arising out of any license, sublicense or cross license of, or other contractual obligation with respect to, intellectual property to or from the Company or any Restricted Subsidiary not prohibited hereby;

 

(jj)

Liens in respect of sale-leasebacks not prohibited hereby and general intangibles relevant thereto so long as such Liens attach only to the property sold and being leased in such transaction and related property;

 

34

(kk)

in the case of any non-wholly owned Restricted Subsidiary, any put and call arrangements or restrictions on disposition related to its Equity Interests set forth in its organizational documents or any related joint venture or similar agreement; and

 

(ll)

Liens consisting of contractual restrictions not prohibited hereby.

“Permitted Ratio Debt” means (a) unsecured Indebtedness, (b) secured Indebtedness secured by a Lien ranking pari passu to the Liens securing the First Lien Obligations of the Company or any Restricted Subsidiary, (iii) secured Indebtedness secured by a Lien junior to the Liens securing the First Lien Obligations of the Company or any Restricted Subsidiary or (iv) Indebtedness of the Company or any Restricted Subsidiary that is subordinated in right of payment to the obligations under this Debenture; provided, in each case, that immediately after giving Pro Forma Effect thereto and to the use of the proceeds thereof, (i) (1) in the case of Permitted Ratio Debt incurred to finance an investment or acquisition, no Event of Default shall exist on the date that the applicable the Company or the Restricted Subsidiary enters into a binding agreement with respect to such transaction and no Event of Default under Section 8(a)(i), 8(a)(v) or 8(a)(vi) hereof shall be continuing or result therefrom or (2) in all other cases, no Event of Default shall be continuing or result therefrom, (ii) (1) in the case of unsecured Permitted Ratio Debt, the Total Net Leverage Ratio (determined on a Pro Forma Basis) is no greater than 5.25 to 1.00 or (2), in the case of secured Permitted Ratio Debt, (x) the First Lien Net Leverage Ratio (determined on a Pro Forma Basis) is no greater than 3.75 to 1.00 if such secured Permitted Ratio Debt is ranked pari passu with the First Lien Obligations or (y) the Senior Secured Net Leverage Ratio (determined on a Pro Forma Basis) is no greater than 5.25 to 1.00 for all other secured Permitted Ratio Debt and (iii) with respect to any incurrence of Permitted Ratio Debt, any identifiable proceeds of Indebtedness incurred pursuant to clause (s) of the definition of “Permitted Indebtedness” shall not qualify as “cash or Cash Equivalents” for the purposes of calculating any net obligations or liabilities for purposes of such incurrence.

“Permitted Refinancing” means, with respect to any Person, any modification, refinancing, refunding, renewal, replacement, exchange 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, replaced, exchanged or extended except by an amount equal to accrued and unpaid interest and a reasonable premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred (including original issue discount and upfront fees), in connection with such modification, refinancing, refunding, renewal, replacement, exchange or extension and by an amount equal to any existing commitments unutilized thereunder;

 

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(b)

other than with respect to clause (f) of the definition of “Permitted Indebtedness,” such modification, refinancing, refunding, renewal, replacement, exchange or extension has a final maturity date equal to or later than the final maturity date of, and 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, replaced, exchanged or extended;

 

(c)

if the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended is subordinated in right of payment to the Debentures, such modification, refinancing, refunding, renewal, replacement, exchange or extension is subordinated in right of payment to the Debentures on terms, taken as a whole, as favorable in all material respects to the Holders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended or otherwise acceptable to the Required Holders;

 

(d)

if the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended is unsecured, such modification, refinancing, refunding, renewal, replacement, exchange or extension is unsecured;

 

(e)

the terms and conditions (including, if applicable, as to collateral) of any such modified, refinanced, refunded, renewed, replaced, exchanged or extended (other than to the extent permitted by any other clause of this definition or with respect to interest rate, optional prepayment premiums and optional redemption provisions) Indebtedness are, either (i) substantially identical to or less favorable to the investors providing such Permitted Refinancing, taken as a whole, than the terms and conditions of the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended, (ii) when taken as a whole (other than interest rate, prepayment premiums and redemption premiums), not more restrictive to the Company and its Restricted Subsidiaries than those set forth in this Debenture or are customary for similar indebtedness in light of current market conditions (provided that a certificate of a Responsible Officer of the Company delivered to the Holder in good faith at least five Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Company has determined in good faith that such terms and conditions satisfy the requirement set out in this clause (e), shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Holder provides notice to the Company of its objection during such five Business Day period (including a reasonable description of the basis upon which it objects)), in each case, except for terms and conditions only applicable to periods after the Maturity Date;

 

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(f)

such modification, refinancing, refunding, renewal, replacement, exchange or extension is incurred by the Person who is or would have been permitted to be the obligor or guarantor (or any successor thereto) on the Indebtedness being modified, refinanced, refunded, renewed, replaced or extended (it being understood that the roles of such obligors as a borrower or a guarantor with respect to such obligations may be interchanged); and

 

(g)

at the time thereof, other than with respect to a Permitted Refinancing in respect of Indebtedness pursuant to clauses (f) and (g) of the definition of “Permitted Indebtedness,” no Event of Default shall have occurred and be continuing.

“Permitted Transferee” means, in the case of any member of management, (a) his or her executor, administrator, testamentary trustee, legatee or beneficiaries, (b) his or her spouse, parents or siblings, members of his or her immediate family (including adopted children and step children) and/or direct lineal descendants or (c) a trust, the beneficiaries of which, or a corporation or partnership, the stockholders or partners of which, include only a member of management and his or her spouse, parents or siblings, members of his or her immediate family (including adopted children) and/or direct lineal descendants (in each case, for so long as the ownership interests held by such persons are less than the ownership interests held by the Sponsor).

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

“PIK Interest” shall have the meaning set forth in Section 2(a) hereof.

“PIK Interest Rate” shall have the meaning set forth in Section 2(a) hereof.

“PIK Interest Payment Date” shall have the meaning set forth in Section 2(a) hereof.

“Pro Forma Basis” and “Pro Forma Effect” means, in respect of a Specified Transaction, that such Specified Transaction and the following transactions in connection therewith (to the extent applicable) shall be deemed to have occurred as of the first day of the applicable period of measurement for the applicable covenant or requirement on the basis of the financial information most recently furnished to the Holder pursuant to Section 9(a)(i)(1) or 9(a)(i)(2) hereof (or prior to such initial delivery hereunder, the most recent financial statements publicly filed with the SEC): (a) historical income statement items (whether positive or negative) attributable to the property or Person, if any, subject to such Specified Transaction shall be (i) excluded (in the case of a disposition of all or substantially all Equity Interests in any Restricted Subsidiary or any division, product line or facility used for operations of the Company or any Restricted Subsidiary or a designation of a Subsidiary as an Unrestricted Subsidiary) and (ii) included (in the case of a purchase or other acquisition of all or substantially all of the property and assets or business of any Person, or of assets constituting a business unit, line of business or division of such Person, or of all or substantially all of the Equity Interests in a Person or a designation of a Subsidiary as a Restricted Subsidiary), (b) in the event that the Company or any Restricted Subsidiary incurs (including by assumption or guarantees) or repays (including by

 

37

redemption, repayment, retirement, discharge, defeasance or extinguishment) any Indebtedness included in the calculations of any financial ratio or test (in each case, other than Indebtedness incurred or repaid under any revolving credit facility in the ordinary course of business for working capital purposes), (i) during the applicable measurement period or (ii) subsequent to the end of the applicable measurement period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness, to the extent required, as if the same had occurred on the last day of the applicable measurement period; provided that (1) Pro Forma Basis and Pro Forma Effect in respect of any Specified Transaction shall be calculated in a reasonable and factually supportable manner and certified by a Responsible Officer of the Company and (2) any such calculation shall be subject to the applicable limitations set forth below.

Notwithstanding anything to the contrary herein, the First Lien Net Leverage Ratio, the Senior Secured Net Leverage Ratio, the Total Net Leverage Ratio and Consolidated EBITDA shall be calculated on a Pro Forma Basis with respect to each Specified Transaction occurring during the applicable four quarter period to which such calculation relates, and/or subsequent to the end of such four-quarter period but not later than the date of such calculation. The calculation of the First Lien Net Leverage Ratio, the Senior Secured Net Leverage Ratio, the Total Net Leverage Ratio and Consolidated EBITDA on a Pro Forma Basis for the purpose of determining if any action is permitted under an incurrence test hereunder shall be based on the financial statements that have been most recently furnished pursuant to Section 9(a)(i)(1) or 9(a)(i)(2) hereof (or prior to such initial delivery hereunder, the most recent financial statements publicly filed with the SEC).

Whenever Pro Forma Effect is to be given to a Specified Transaction, the amount of “run-rate” cost savings, operating expense reductions, other operating improvements and acquisition synergies projected by the Company in good faith to be realized (calculated on a Pro Forma Basis as though such items had been realized on the first day of such period and as if such items were realized during the entirety of such period) as a result of specified actions taken, committed to be taken or with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Company), with “run-rate” meaning the full recurring benefit for a period that is associated with any action taken or committed to be taken or with respect to which substantial steps have been taken or are expected to be taken (including any savings expected to result from the elimination of a public target’s compliance costs with public company requirements) net of the amount of actual benefits realized during such period from such actions, such adjustments shall be included in the initial pro forma calculations of such financial ratios or tests and during any subsequent measurement period in which the effects thereof are expected to be realized relating to such Specified Transaction; provided that (a) such cost savings, operating expense reductions, other operating improvements and synergies are factually supportable in the good faith judgment of the Company and as determined in good faith by the Company and are reasonably anticipated to be realized within 18 months after the consummation of any operational change or the acquisition or disposition which is expected to result in such cost savings, expense reductions, operating improvements or synergies, (b) no cost savings, operating expense reductions, operating improvements and synergies shall be added pursuant to this paragraph to the extent duplicative of any

 

38

expenses or charges otherwise added to Consolidated Net Income or Consolidated EBITDA, whether through a pro forma adjustment or otherwise, with respect to such period, (c) projected amounts (that are not yet realized) may no longer be added in calculating Consolidated EBITDA to the extent occurring more than six full fiscal quarters after the specified action taken in order to realize such projected cost savings, operating expense reductions, operating improvements and synergies and (d) amounts added to Consolidated EBITDA pursuant to this paragraph shall not, when combined with amounts added to Consolidated EBITDA pursuant to clause (b)(vi) of the definition thereof (other than to the extent in connection with the Transactions), in the aggregate exceed 25% of Consolidated EBITDA (determined prior to giving effect to such amounts) in any four consecutive fiscal quarter period.

“Purchase Agreement” shall have the meaning set forth in the Recitals.

“Purchase Date” shall have the meaning set forth in Section 6(c)(iv) hereof.

“Qualified IPO” means the issuance by the Company of its common Equity Interests in an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8), resulting in such Equity Interests being listed on a nationally recognized stock exchange in the applicable jurisdiction.

“Relevant Transaction” shall have the meaning set forth in Section 6(c)(i) hereof.

“Required Holders” means the Holders of a majority in aggregate principal amount of outstanding Debentures; provided, however, that such Required Holders shall include both an Affiliate of MGG and an Affiliate of OTPP.

“Responsible Officer” means the chief executive officer, representative, director, manager, president, vice president, executive vice president, chief financial officer, treasurer or assistant treasurer, secretary or assistant secretary, authorized signatory, attorney-in-fact (to the extent empowered by the board of directors or managers of the Company or such Restricted Subsidiary), or other similar officer of the Company or a Restricted Subsidiary. Any document delivered hereunder that is signed by a Responsible Officer of the Company or a Restricted Subsidiary shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Company or such Restricted Subsidiary, as applicable, and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Company or such Restricted Subsidiary, as applicable.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of any Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent Persons thereof).

 

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“Restricted Subsidiary” means any Subsidiary of the Company that is not an Unrestricted Subsidiary.

“SEC” means the U.S. Securities and Exchange Commission and any successor thereto.

“Second Lien Credit Agreement” means that certain second lien credit agreement, dated as of December 9, 2016, among LD Intermediate Holdings, Inc. and LD Lower Holdings, Inc., as co-borrowers, LD Topco, Inc., as holdings, the lenders party thereto from time to time and Royal Bank of Canada, as administrative agent and collateral agent, as the same may be amended, restated, modified, supplemented, extended, increased, renewed, refunded, replaced, restructured or refinanced from time to time in one or more agreements (in each case with the same or new lenders, investors or agents), including any agreement extending the maturity thereof or otherwise restructuring all or any portion of the Indebtedness thereunder or increasing the amount loaned or issued thereunder or altering the maturity thereof with new lenders or a different agent, in each case, as and to the extent permitted by this Debenture.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Senior Secured Net Leverage Ratio” means, on any date of determination, with respect to the Company and its Restricted Subsidiaries on a consolidated basis, the ratio of (a) Funded Senior Secured Indebtedness (less the Unrestricted Cash of the Company and its Restricted Subsidiaries as of such date) of the Company and its Restricted Subsidiaries on such date to (b) Consolidated EBITDA of the Company and its Restricted Subsidiaries for the four fiscal quarter period most recently then ended.

“Share Delivery Date” shall have the meaning set forth in Section 4(c)(ii) hereof.

“Specified Transaction” means any incurrence or repayment of Indebtedness or investment that results in a Person becoming a Subsidiary, any designation of a Subsidiary as a Restricted Subsidiary or as an Unrestricted Subsidiary, any acquisition or any disposition that results in a Restricted Subsidiary ceasing to be a Subsidiary of the Company, any investment constituting an acquisition of assets constituting a business unit, line of business or division of another Person or any disposition of a business unit, line of business or division of the Company or any of its Restricted Subsidiaries, in each case, whether by merger, consolidation, amalgamation or otherwise or any material restructuring of the Company or implementation of any initiative (including cost saving and operating expense reduction initiatives not in the ordinary course of business).

“Sponsor” means CEOF II DE AIV, L.P., a Delaware limited partnership, and each of its Control Investment Affiliates (but excluding any operating portfolio companies of the foregoing).

“Standard Settlement Period” shall have the meaning set forth in Section 4(c)(ii) hereof.

 

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“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity (a) of which a majority of the shares of securities or other Equity Interests having ordinary voting power for the election of directors, managers or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned or (b) the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person and, in the case of this clause (b), which is treated as a consolidated subsidiary for accounting purposes. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Company.

“Successor Entity” shall have the meaning set forth in Section 5(b) hereof.

“Swap Contract” 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, including any obligations or liabilities under any such master agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts.

“Synthetic Lease Obligation” means the monetary obligation of a Person under a so-called synthetic, off-balance sheet or tax retention lease as determined pursuant GAAP.

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

 

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“Total Net Leverage Ratio” means, on any date of determination, with respect to the Company and its Restricted Subsidiaries on a consolidated basis, the ratio of (a) Funded Indebtedness (less the Unrestricted Cash of the Company and its Restricted Subsidiaries as of such date) of the Company and its Restricted Subsidiaries on such date to (b) Consolidated EBITDA of the Company and its Restricted Subsidiaries for the four fiscal quarter period most recently then ended.

“Transaction Costs” has the meaning given to such term in the definition of “Transactions.”

“Transaction Documents” means, collectively, the Debentures, the Purchase Agreement and any other document designated as a Transaction Document by the Company.

“Transactions” means:

 

(a)

the consummation of the Business Combination;

 

(b)

the execution and delivery of the Transaction Documents to be entered into on the Issue Date and the issuance of this Debenture on the Issue Date; and

 

(c)

the payment of all fees, costs and expenses incurred in connection with the transactions described in the foregoing provisions of this definition (the “Transaction Costs”).

“UCC” means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York.

“Unrestricted Cash” means, as of any date of determination, the aggregate amount of all cash and Cash Equivalents on the consolidated balance sheet of the Company and its Restricted Subsidiaries that is not restricted for purposes of GAAP.

“Unrestricted Subsidiary” means (a) any Subsidiary of the Company designated as an Unrestricted Subsidiary hereunder; provided that the Company shall only be permitted to so designate an Unrestricted Subsidiary so long as (i) no Event of Default has occurred and is continuing or would result therefrom, (ii) no such Subsidiary or any of its Subsidiaries owns any Equity Interests, or owns or holds any Lien on any property of, the Company or any other Restricted Subsidiary that is not a Subsidiary of the Subsidiary to be so designated, (iii) such Unrestricted Subsidiary shall be capitalized (to the extent capitalized by the Company or any Restricted Subsidiary) through investments not prohibited hereby and such Unrestricted Subsidiary and any assets owned by such Unrestricted Subsidiary at the time of the initial designation thereof shall be valued at its fair market value (as determined by the Company in good faith) at the time of such designation, (iv) such Subsidiary shall have been or will promptly be designated an “unrestricted subsidiary” (or otherwise not be subject to the covenants) under the First Lien Credit Agreement and the Second Lien Credit Agreement and all Permitted Refinancings in respect thereof, and any Permitted Ratio Debt, in each case, with an aggregate outstanding principal amount in excess of $20,000,000 and (v) the Required Holders shall have otherwise given their prior written consent of such designation. The Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary for purposes of this

 

42

Debenture (each, a “Subsidiary Redesignation”); provided that (1) no Event of Default has occurred and is continuing or would result therefrom, (2) any Indebtedness of the applicable Subsidiary and any Liens encumbering its property existing as of the time of such Subsidiary Redesignation shall be deemed newly incurred or established, as applicable, at such time and (3) the Required Holders shall have otherwise given their prior written consent of such Subsidiary Redesignation; provided, further, that no Unrestricted Subsidiary that has been designated as a Restricted Subsidiary pursuant to a Subsidiary Redesignation may again be designated as an Unrestricted Subsidiary.

“Voting Equity Interests” means, with respect to any Person, the outstanding Equity Interests of a Person having the power, directly or indirectly, to designate the board of directors (or equivalent governing body) of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years (and/or portion thereof) 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; provided that the effects of any prepayments or amortization made on such Indebtedness shall be disregarded in making such calculation.

Section 2. Interest; Mandatory Prepayments.

(a) Payment of Interest. The Company shall pay interest on the aggregate unconverted and then-outstanding principal amount (including any PIK Interest paid) of this Debenture from the most recent Interest Payment Date or, if no interest has been paid, the Issue Date, at the rate of 8.00% per annum, paid 4.00% in cash (the “Cash Interest Rate” and such interest paid in cash, the “Cash Interest”) and 4.00% in kind (the “PIK Interest Rate” and, together with the Cash Interest Rate, the “Interest Rate”; and such interest paid in kind at the PIK Interest Rate, the “PIK Interest”). Cash Interest shall be payable quarterly on the last Business Day of each of March, June, September and December, beginning on March 31, 2020 (each such date, a “Cash Interest Payment Date”), and on the Conversion Date (subject to Section 3(a) hereof), each Optional Redemption Date and the Maturity Date. PIK Interest shall be payable quarterly on the last Business Day of each of March, June, September and December, beginning on March 31, 2020 (each such date, a “PIK Interest Payment Date,” and together with each Cash Interest Payment Date, an “Interest Payment Date”), and shall be paid in-kind by adding such interest on each PIK Interest Payment Date to the aggregate unconverted and then-outstanding principal amount of this Debenture; provided that accrued PIK Interest with respect to the principal amount being repaid shall be paid in cash on each Optional Redemption Date and the Maturity Date.

 

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(b) Interest Calculations. Interest on this Debenture shall be calculated on the basis of a 360-day year and the actual number of days elapsed. Interest shall accrue at the applicable Interest Rate from the most recent applicable Interest Payment Date or, if no interest has been paid, the Issue Date. Interest shall cease to accrue with respect to any principal amount (including any PIK Interest paid) of this Debenture converted. Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of this Debenture (the “Debenture Register”). If any Interest Payment Date, or other date on when any payment or other obligation hereunder shall be due, is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day, and no interest or other amounts shall accrue for the intervening period.

(c) Default Interest. Upon the occurrence and during the continuance of any Event of Default, the PIK Interest Rate shall be increased by 2.00% per annum (as permitted by law, and in no event shall the PIK Interest Rate exceed 6.00% per annum) (the “Default Interest”).

(d) Additional Payments. On (i) each yearly anniversary of the Issue Date (or if such day is not a Business Day, the next succeeding Business Day), (ii) the Maturity Date (immediately prior to payment), (iii) the Conversion Date and (iv) each Optional Redemption Date, the Company shall add to the unconverted and then-outstanding principal amount of the Debentures, on a pro rata basis, the Additional Payment. For the avoidance of doubt, to the extent any portion of the Additional Payment has been made in connection with an optional redemption in any year, then the Additional Payment shall be reduced by such portion of the Additional Payment made in that year.

Section 3. Registration of Transfers and Exchanges.

(a) Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount (including any PIK Interest paid) of Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.

(b) Investment Representations. This Debenture has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.

(c) Reliance on Debenture Register. Prior to due presentment for transfer to the Company of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

(d) Issuance of Debentures. Upon surrender for registration of transfer or exchange of this Debenture to the Company, and satisfaction of the requirements for such transfer set forth herein, the Company shall execute, in the name of the designated transferee or exchanging party, one or more new Debentures of any authorized denominations and of a like aggregate principal amount. All Debentures issued upon any registration of transfer or exchange of a Debenture in accordance with the terms hereof shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits as the Debenture surrendered upon such registration of transfer or exchange.

 

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Section 4. Conversion.

(a) Voluntary Conversion. From and after the Issue Date (or if Stockholder Approval is required by stock exchange rule or other Law, commencing on and following the Stockholder Approval Date) until the Change of Control Notice Date (unless the notice of the Change of Control is rescinded), the Holder may, at its option, require the Company to convert all (and not less than all) of the then-outstanding principal amount (including any PIK Interest paid) of this Debenture (and any or all accrued and unpaid interest thereon and all other amounts owing to the Holder under this Debenture, excluding any amounts owed under the indemnity provision set forth in Section 10(n) hereof) into shares of Common Stock. The Holder shall request a voluntary conversion under this Section 4(a) by delivering to the Company a notice of conversion, the form of which is attached hereto as Annex A (the “Notice of Conversion”), specifying therein that all principal amounts (including any PIK Interest paid) of this Debenture are to be converted and the date on which such conversion shall be effected (which date shall be a Business Day of the Holder’s choosing that is no more than ten or fewer than two Business Days after the Holder sends the Notice of Conversion) (such date, the “Conversion Date”) and the Share Delivery Date. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of the Notice of Conversion be required. Upon delivery of the Notice of Conversion, the Holder shall surrender this Debenture to the Company as promptly as is reasonably practicable without delaying or otherwise affecting the Company’s delivery of the Conversion Shares on the Share Delivery Date. A voluntary conversion under this Section 4(a) shall have the effect of terminating this Debenture and the obligations of the Company hereunder (other than, for the avoidance of doubt, delivery of the Conversion Shares on the Share Delivery Date), and interest shall cease to accrue on this Debenture on the Conversion Date.

(b) Voluntary Conversion in Connection with a Change of Control. Notwithstanding Section 4(a) hereof, from and after the Issue Date (or if Stockholder Approval is required by stock exchange rule or other Law, commencing on and following the Stockholder Approval Date), if the Company notifies the Holder of its intention to consummate a Change of Control (the date such notice is delivered to the Holder, the “Change of Control Notice Date”), the Holder may, at its option, require the Company to convert all (and not less than all) of the then-outstanding principal amount (including any PIK Interest paid) of this Debenture (and any or all accrued and unpaid interest thereon and all other amounts owing to the Holder under this Debenture, excluding any amounts owed under the indemnity provision set forth in Section 10(n) hereof) into shares of Common Stock. The notice delivered by the Company shall, to the extent determined, contain (i) the identity of the prospective purchaser, including (to the extent applicable) the ultimate beneficial holder thereof, (ii) the number and classes of shares of Common Stock proposed to be acquired by the prospective purchaser under the terms of the Change of Control, (iii) the form and consideration to be paid for such shares, (iv) the expected timing for

 

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completion of the Change of Control and (v) any definitive documentation relating to such Change of Control (provided, that if such documentation is not available at the time of the delivery of such notice, then such documentation shall be delivered promptly following its execution). The Holder shall request a voluntary conversion under this Section 4(b) by delivering to the Company a Notice of Conversion, no later than eight Business Days after the Change of Control Notice Date, specifying therein that all amounts (including any PIK Interest paid) of this Debenture are to be converted (the date such Notice of Conversion is delivered, the “Change of Control Conversion Date”). If, during the period from the Change of Control Conversion Date to the Share Delivery Date, there is a change in the information delivered by the Company to such Holder with respect to such Change of Control (other than (A) a change to the identity of the prospective purchaser to an affiliate of such prospective purchaser, (B) an immaterial change in the expected timing for completion of the Change of Control or (C) after the execution of a definitive agreement with respect to such Change of Control, a change in the expected timing for completion of the Change of Control solely due to the receipt of regulatory approvals), the Company shall promptly notify such Holder of such change (such notice, a “Subsequent Company Notice”), and such Holder, within two Business Days of receipt of such notice, shall, (1) if it has delivered a Notice of Conversion, notify the Company in writing of either its rescission of its Notice of Conversion or its intention to proceed with conversion or (2) if it has not delivered a Notice of Conversion, deliver a Notice of Conversion or provide written notice that such Holder intends not to convert its Debenture; provided, however, if the Subsequent Company Notice includes any change to the information referenced in sub-clauses (i), (ii) or (iii) above, which would, directly or indirectly, have a material impact or effect on the Holder in the proposed Change of Control transaction, then the Holder agrees to act in good faith to respond as set forth in sub-clauses (1) or (2) above as soon as possible and in any event no later than eight Business Days following of receipt of such Subsequent Company Notice. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of the Notice of Conversion be required. The Holder shall surrender this Debenture to the Company promptly on the Share Delivery Date. A voluntary conversion under this Section 4(b) shall have the effect of terminating this Debenture and the obligations of the Company hereunder (other than, for the avoidance of doubt, delivery of the Conversion Shares on the Share Delivery Date), and interest shall cease to accrue on this Debenture on the Share Delivery Date.

(c) Mechanics of Conversion.

(i) Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount (including any PIK Interest paid) of this Debenture to be converted, plus all accrued and unpaid interest thereon and all other amounts owing to the Holder under this Debenture (excluding any amounts owed under the indemnity provision set forth in Section 10(n) hereof) by (y) the Conversion Price.

 

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(ii) Delivery of Conversion Shares Upon Conversion. Not later than (1) in connection with a voluntary conversion pursuant to Section 4(a) hereof, the number of Trading Days comprising the Standard Settlement Period after each Conversion Date, and (2) in connection with a voluntary conversion pursuant to Section 4(b) hereof, a date designated by the Company that is no earlier than five Business Days prior to the Change of Control Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) the Conversion Shares and (B) a wire order in the amount of all amounts due to the Holder under Section 4(c)(iv) hereof (if the Company is required to pay such amounts in cash) to the account specified by the Holder no less than one Business Day prior to the Share Delivery Date. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Conversion.

(iii) Failure to Deliver Conversion Shares. If, (x) in the case of any Notice of Conversion delivered pursuant to Section 4(a) hereof, such Conversion Shares are not delivered to or as directed by the Holder by the Share Delivery Date, or (y) in the case of any Notice of Conversion delivered pursuant to Section 4(b) hereof the Company notifies the Holders in writing that the Change of Control will not be consummated (which the Company shall promptly provide notice of if the definitive agreement with respect to the Change of Control expires or is terminated) or such Change of Control ultimately is not consummated, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such Conversion Shares, to rescind such Notice of Conversion, in which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall promptly return to the Company the Conversion Shares issued to such Holder pursuant to the rescinded Notice of Conversion. If, in the case of any Notice of Conversion delivered pursuant to Section 4(b) hereof, the Company notifies the Holder in writing that the Change of Control will not be consummated, the Notice of Conversion will be deemed to be rescinded and the Company shall promptly return to the Holder any original Debenture delivered to the Company.

(iv) Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Debenture. As to any fraction of a share to which the Holder would otherwise be entitled upon a voluntary conversion under this Section 4, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price.

(v) Taxes and Expenses. The Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any Conversion Shares upon conversion in a name other than that of the Holder of this Debenture so converted, and the Company shall not be required to issue or deliver any such Conversion Shares to a Person other than the Holder of this Debenture so converted until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of the Notice of Conversion.

 

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(d) Reserve and Status of Common Stock Issued Upon Conversion.

(i) At all times from and after the Issue Date, when any Debentures are outstanding, the Company will reserve, out of its authorized but unissued and unreserved shares of Common Stock, a number of shares of Common Stock sufficient to permit the conversion of all then-outstanding Debentures, giving effect to any adjustment to the Conversion Price in accordance with Section 5 hereof.

(ii) The Conversion Shares shall have been duly authorized and, when issued and delivered to the Holder, the Conversion Shares will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Company’s Organizational Documents or under the Delaware General Corporation Law.

Section 5. Certain Adjustments.

(a) Stock Dividends and Stock Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend or otherwise makes a distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”) payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment with respect to, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction, of which (x) the numerator shall be the number of shares of Common Stock outstanding immediately before such event and (y) the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 5(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or Distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(b) Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders

 

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of Common Stock are permitted to sell, tender or exchange their shares of Common Stock for other securities, cash or property and has been accepted by the holders of more than 50.0% of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions, effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property or (v) the Company, directly or indirectly, in one or more related transactions, consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50.0% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each, a “Fundamental Transaction”), then, upon any subsequent conversion of this Debenture pursuant to Section 4(a), the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation (the “Successor Entity”) or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture is convertible immediately prior to such Fundamental Transaction. For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. The Company shall cause any Successor Entity to assume in writing all of the obligations of the Company under this Debenture and the other Transaction Documents in accordance with the provisions of this Section 5(b) pursuant to written agreements in form and substance reasonably satisfactory to the Holder prior to or concurrently with such Fundamental Transaction. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Debenture and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. If, in the case of any Fundamental Transaction, the Alternate Consideration includes shares of stock, securities or other property or assets of a Person other than the Successor Entity, then such other Person shall execute a letter agreement that shall contain such additional provisions to protect the interests of the Holder as deemed reasonable by the Company. The above provisions of this Section 5(b) shall similarly apply to successive Fundamental Transactions.

 

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(c) Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

(d) Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

Section 6. Optional Redemption; Mandatory Prepayments.

(a) Optional Redemption at Election of Company. The Company may, at any time and from time to time, deliver a notice to the Holders (an “Optional Redemption Notice”) of its election to redeem some or all of the then-outstanding principal amount (including any PIK Interest paid) of the Debentures for cash in an amount equal to the principal amount (including any PIK Interest paid) of that portion of the Debentures being redeemed, plus any accrued and unpaid interest on such principal amount (including any PIK Interest paid) being redeemed. Redemptions of amounts outstanding under the Debentures under this Section 6(a) shall be on a pro rata basis.

(b) Redemption Procedures. In connection with any optional redemption pursuant to Section 6(b) hereof, the Company shall deliver to the Holders an Optional Redemption Notice setting out the principal amount of the Debentures to be redeemed, any accrued and unpaid interest thereon and the date fixed for redemption (each, an “Optional Redemption Date”). Any optional redemption of any principal amount (including any PIK Interest paid) of the Debentures may, at the Company’s discretion, be subject to one or more conditions precedent. The Optional Redemption Date of any optional redemption that is subject to satisfaction of one or more conditions precedent may, in the Company’s discretion, be delayed until such time as any or all such conditions shall be satisfied (or waived by the Company in its sole discretion), or such optional redemption may not occur and any related Optional Redemption Notice may be modified or rescinded in the event that any or all such conditions shall not have been satisfied (or waived by the Company in its sole discretion) by the Optional Redemption Date, or by the Optional Redemption Date so delayed. In addition, such Optional Redemption Notice may be extended, if such conditions precedent have not been satisfied or waived by the Company, by providing notice to the Holders.

(c) Mandatory Prepayments.

(i) If the Company or any Restricted Subsidiary Disposes of any property or assets pursuant to a Disposition Transaction in any transaction or series of related transactions that results in the receipt by the Company or such Restricted Subsidiary of aggregate Net Cash Proceeds such that proceeds realized in any fiscal year exceed $5,000,000 (such annual amount, the “Annual Net Cash Proceeds Threshold”) (any such transaction or series of related transactions resulting in Net Cash Proceeds being a “Relevant Transaction”), (1) the Company shall give written notice to the Holder promptly after the date of receipt of such Net Cash Proceeds

 

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and (2) the Company shall, except to the extent the Company elects to apply all or a portion of such proceeds in accordance with Section 6(c)(ii) hereof, promptly make an Asset Sale Offer (subject to Section 6(c)(ii) hereof), in accordance with the procedures set forth in this Section 6, in an amount equal to such Net Cash Proceeds so realized or received in excess of the Annual Net Cash Proceeds Threshold (the “Applicable Proceeds”); provided, however, the references to “promptly” making an Asset Sale Offer in this Section 6(c) shall be deemed to mean promptly following the date of determining that such Applicable Proceeds shall be used (or required to be used) for an Asset Sale Offer in accordance with this Section 6(c) (but, in any case, no later than 15 Business Days following such determination).

(ii) With respect to any Applicable Proceeds realized or received with respect to any Relevant Transaction, at the option of the Company, the Company or any Restricted Subsidiary may (in lieu of making an Asset Sale Offer pursuant to the applicable provisions of this Section 6(c)) (1) reinvest (directly, or through one or more of its Restricted Subsidiaries) all or any portion of such Applicable Proceeds in the business within 365 days following receipt of such Applicable Proceeds (or, if the Company or the relevant Restricted Subsidiary, as applicable, has contractually committed within 365 days following receipt of such Applicable Proceeds to reinvest such Applicable Proceeds, then within 545 days following receipt of such Applicable Proceeds) or (2) utilize all or any portion of such Applicable Proceeds to repay or prepay secured Indebtedness, including debt under the First Lien Credit Agreement and the Second Lien Credit Agreement (provided that any prepayment or repayment of debt under a revolving facility shall be accompanied by a termination of the underlying commitments); provided that if any Applicable Proceeds are not so applied, subject to Sections 6(c)(i) and 6(c)(iii) hereof, the Company shall promptly make an Asset Sale Offer in accordance with the procedures set forth in this Section 6(c), in an amount equal to 100% of all remaining Applicable Proceeds realized or received to the extent the Company is then required to make an Asset Sale Offer pursuant to Section 6(c)(i) hereof. Pending the final application of any such amount of Applicable Proceeds, the Company or any of its Restricted Subsidiaries may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest or utilize such Applicable Proceeds in any manner not prohibited hereby.

(iii) Notwithstanding any other provisions of this Section 6(c), (1) to the extent that any or all of the Applicable Proceeds of any Disposition by a foreign Subsidiary or a Subsidiary of a foreign Subsidiary (a “Foreign Disposition”) giving rise to make an Asset Sale Offer pursuant to Section 6(c)(i) hereof are prohibited, restricted or delayed by applicable local law from being repatriated to the United States, an Asset Sale Offer with respect to the portion of such Applicable Proceeds will not be required to be made at the times provided in this Section 6(c) but may be retained by the applicable Subsidiary (and no Asset Sale Offer with respect to such amounts shall be required) so long as the applicable local law will not permit repatriation to the United States (the Company hereby agreeing to use commercially reasonable efforts to cause the applicable foreign Subsidiary to promptly take all

 

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actions reasonably required by the applicable local law to permit such repatriation), and once such repatriation of any of such affected Applicable Proceeds is permitted under the applicable local law, such repatriation will be immediately effected and an amount equal to such repatriated Applicable Proceeds will be promptly the subject (net of additional Taxes payable or reserved against as a result thereof) of an asset sale offer pursuant to this Section 6(c) to the extent provided herein and (2) to the extent that the Company has determined in good faith that repatriation of any or all of the Applicable Proceeds of any Foreign Disposition would have a material adverse Tax consequence (taking into account any foreign tax credit or benefit actually realized in connection with such repatriation) with respect to such Applicable Proceeds, the Applicable Proceeds so affected may be retained by the applicable Subsidiary (and no Asset Sale Offer with respect to such amounts shall be required); provided that, in the case of subclause (2), on or before the later of (x) the date on which the relevant adverse Tax consequence is no longer applicable and (y) the date on which an amount equal to any Applicable Proceeds so retained would otherwise have been required to be applied to reinvestments or prepayments pursuant to this Section 6(c), (x) the Company shall apply an amount equal to such Applicable Proceeds to such reinvestments or prepayments as if such Applicable Proceeds had been received by the Company rather than such Subsidiary, less the amount of additional Taxes that would have been payable or reserved against if such Applicable Proceeds had been repatriated (or, if less, the Applicable Proceeds that would be calculated if received by the Company or such Subsidiary) or (y) such Applicable Proceeds are applied to the repayment of Indebtedness of the Company or the applicable Subsidiary.

(iv) In the event that the Company shall be required pursuant to Sections 6(c)(i) through 6(c)(iii) hereof to commence an offer to the Holder to repurchase a portion of this Debenture (an “Asset Sale Offer”), it shall offer to repurchase such portion of this Debenture at a price in cash equal to the sum of (1) 100% of the principal amount (including any PIK Interest paid) of this Debenture being repurchased plus (2) accrued and unpaid interest, if any, on such principal amount (including any PIK Interest paid) of this Debenture being repaid to, but excluding, the Purchase Date. Each Asset Sale Offer shall remain open for a period of at least five Business Days following its commencement. Within five Business Days immediately after the termination of such period (the “Purchase Date”), the Company shall apply an amount equal to the remaining Applicable Proceeds (the “Offer Amount”) to purchase the principal amount (including any PIK Interest paid) of this Debenture validly tendered and not validly withdrawn and Indebtedness under (x) the other Debentures and, (y) if required by the terms of any other Indebtedness that is pari passu with this Debenture, such Indebtedness, properly tendered on a pro rata basis. The Company may satisfy its obligations under this Section 6(c) with respect to any Disposition by making an Asset Sale Offer at any time prior to the expiration of the reinvestment or repayment period set forth in Section 6(c)(ii) hereof.

 

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(v) Upon the commencement of an Asset Sale Offer, the Company shall send a notice to the Holder, which shall govern the terms of the Asset Sale Offer and which shall state the Offer Amount, the purchase price and the Purchase Date.

(vi) To the extent that the Offer Amount exceeds the aggregate principal amount (including any PIK Interest paid) of this Debenture, the other Debentures and other Indebtedness that is pari passu with this Debenture validly tendered and not validly withdrawn pursuant to an Asset Sale Offer, the Company and its Restricted Subsidiaries may retain such excess amount and/or apply such excess amount in any manner not inconsistent with the terms of this Debenture. Upon completion of any such Asset Sale Offer, the amount of Net Cash Proceeds required to be applied in accordance with this Section 6(c) shall be reset to zero.

Section 7. Negative Covenants.

(a) As long as any portion of this Debenture remains outstanding the Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly:

(i) create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than Permitted Liens;

(ii) create, incur, assume or suffer to exist any Indebtedness other than Permitted Indebtedness; provided that the any amounts incurred by any of the Company’s Restricted Subsidiaries in reliance on a dollar basket contained in the First Lien Credit Agreement shall be deducted, dollar-for-dollar, from the dollar baskets contained in this Debenture;

(iii) make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company involving aggregate consideration in excess of $10,000,000 (each of the foregoing, an “Affiliate Transaction”) other than Permitted Affiliate Transactions, unless (1) such Affiliate Transaction is on terms that are not materially less favorable to the Company or such Restricted Subsidiary than those that could have been obtained in a comparable transaction with an unrelated Person on an arm’s-length basis and (2) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $30,000,000, the Company delivers to the Holder a resolution adopted in good faith by the majority of the board of directors of the Company or such Restricted Subsidiary approving such Affiliate Transaction, together with a certificate signed by a Responsible Officer of the Company or such Restricted Subsidiary certifying that the board of directors of the Company or such Restricted Subsidiary determined or resolved that such Affiliate Transaction complies with clause (1);

 

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(iv) make a Restricted Payment in respect of the Company’s Equity Interests with assets of the Company or its Subsidiaries (including, without limitation, Equity Interests of a Subsidiary or Subsidiaries) other than in the form of cash or Equity Interests issued by the Company; or

(v) deem a Subsidiary to be an Unrestricted Subsidiary under the terms of this Debenture or make any investments in Subsidiaries which have been deemed to be Unrestricted Subsidiaries without the prior written consent of the Required Holders.

(b) The accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness shall not be deemed to be an incurrence of Indebtedness for purposes of this Section 7. The principal amount of any non-interest bearing Indebtedness or other discount security constituting Indebtedness at any date shall be the principal amount thereof that would be shown on a balance sheet of the Company dated such date prepared in accordance with GAAP. If any basket is exceeded solely as a result of fluctuations in applicable currency exchange rates or increases in the value of property securing Indebtedness after the last time such basket was utilized (including in connection with any Permitted Refinancing), such basket will not be deemed to have been exceeded solely as a result of such fluctuations in currency exchange rates. If any of the baskets set forth or referred to in this Section 7 are exceeded solely as a result of fluctuations to Consolidated EBITDA for the most recently completed fiscal quarter after the last time such baskets were calculated for any purpose under this Section 7, such baskets will not be deemed to have been exceeded solely as a result of such fluctuations. Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that are otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness.

(c) For purposes of determining compliance with this Section 7, in the event that an item of Indebtedness (or any portion thereof) or any Lien (or any portion thereof) meets the criteria of more than one of the categories of Permitted Indebtedness or Permitted Liens, as applicable, the Company may, in its sole discretion, classify and reclassify or later divide, classify or reclassify such item of Indebtedness (or any portion thereof) or Lien (or any portion thereof) and will only be required to include the amount and type of such Indebtedness under any combination of such categories (including in part under one such category and in part under any other such category); provided that all Indebtedness outstanding under the First Lien Credit Agreement will at all times be deemed to be outstanding in reliance only on clause (a)(i) of the definition of “Permitted Indebtedness” and all Indebtedness outstanding under the Second Lien Credit Agreement will at all times be deemed to be outstanding in reliance only on clause (a)(i) of the definition of “Permitted Indebtedness” and may not be reclassified under other clauses.

(d) In connection with any action being taken in connection with a Limited Condition Acquisition, except to the extent expressly set forth herein, for purposes of determining compliance with any provision of this Debenture that requires that no Default, Event of Default or specified Event of Default, as applicable, has occurred, is continuing or would result from any such action, as applicable, such condition shall be deemed

 

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satisfied, so long as no Default, Event of Default or specified Event of Default, as applicable, exists on the date the definitive agreements for such Limited Condition Acquisition are entered into after giving Pro Forma Effect to such Limited Condition Acquisition and the actions to be taken in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if such Limited Condition Acquisition and other actions had occurred on such date. For the avoidance of doubt, if the Company has exercised its option under the first sentence of this clause (e), and any Default or Event of Default occurs following the date the definitive agreements for the applicable Limited Condition Acquisition were entered into and prior to the consummation of such Limited Condition Acquisition, any such Default or Event of Default shall be deemed to not have occurred or be continuing solely for purposes of determining whether any action being taken in connection with such Limited Condition Acquisition is permitted hereunder. In connection with any action being taken solely in connection with a Limited Condition Acquisition, for purposes of:

(i) determining compliance with any provision of this Debenture which requires the calculation of the First Lien Net Leverage Ratio, the Senior Secured Net Leverage Ratio or the Total Net Leverage Ratio; or

(ii) testing availability under baskets set forth in this Debenture (including baskets measured as a percentage of Consolidated EBITDA);

in each case, at the option of the Company (the Company’s election to exercise such option in connection with any Limited Condition Acquisition, an “LCA Election”), the date of determination of whether any such action is permitted hereunder shall be deemed to be the date the definitive agreements for such Limited Condition Acquisition are entered into (the “LCA Test Date”), and if, after giving Pro Forma Effect to the Limited Condition Acquisition and the other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if they had occurred at the beginning of the most recent four consecutive fiscal quarters ending prior to the LCA Test Date for which consolidated financial statements of the Company are available, the Company could have taken such action on the relevant LCA Test Date in compliance with such ratio or basket, such ratio or basket shall be deemed to have been complied with. For the avoidance of doubt, if the Company has made an LCA Election and any of the ratios or baskets for which compliance was determined or tested as of the LCA Test Date are exceeded as a result of fluctuations in any such ratio or basket, including due to fluctuations in Consolidated EBITDA of the Company or the Person subject to such Limited Condition Acquisition, at or prior to the consummation of the relevant transaction or action, such baskets or ratios will not be deemed to have been exceeded as a result of such fluctuations. If the Company has made an LCA Election for any Limited Condition Acquisition, then in connection with any subsequent calculation of any ratio or basket availability with respect to the incurrence of Indebtedness or Liens, or the making of investments or Restricted Payments, mergers, the conveyance, lease or other transfer of all or substantially all of the assets of the Company, the prepayment, redemption, purchase, defeasance or other satisfaction of Indebtedness or the designation of an Unrestricted Subsidiary on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Acquisition is consummated or the definitive agreement for such

 

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Limited Condition Acquisition is terminated or expires without consummation of such Limited Condition Acquisition, any such ratio or basket shall be calculated on a Pro Forma Basis assuming such Limited Condition Acquisition and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated; provided that the calculation of Consolidated Net Income (and any defined term a component of which is Consolidated Net Income) shall not include the Consolidated Net Income of the Person or assets to be acquired in any Limited Condition Acquisition until such time as such Limited Condition Acquisition is actually consummated.

Section 8. Events of Default.

(a) Events of Default. Any of the following shall constitute an “Event of Default”:

(i) any default in the payment of (1) the principal amount of this Debenture (including any PIK Interest paid) or (2) interest and other amounts owing to the Holder on this Debenture, in each case, as and when the same shall become due and payable, which default, solely in clause (2), is not cured within five Business Days;

(ii) the Company (1) fails to perform or observe or perform any covenant or agreement contained in Section 7 of this Debenture or (2) fails to perform or observe any covenant or agreement (other than those specified in Section 8(a)(i) hereof and other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (ix) below)) contained in this Debenture in or in any other Transaction Document on its part to be performed or observed and, in the case of subclause (2), such failure continues for 30 days after notice thereof to the Company by Holders holding more than 25% of the outstanding aggregate principal amount of the outstanding Debentures;

(iii) any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Company in this Debenture or in any other Transaction Document, or in any document required to be delivered in connection herewith or therewith, shall be incorrect or misleading in any material respect (or in any respect if any such representation or warranty is already qualified by materiality) when made or deemed made;

(iv) the Company or any Restricted Subsidiary thereof (other than an Immaterial Subsidiary) (1) fails to make any payment beyond the applicable grace period with respect thereto, if any (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness (other than Indebtedness hereunder and intercompany Indebtedness) having an aggregate outstanding principal amount of more than $20,000,000 or (2) fails to observe or perform any other agreement or condition relating to any such Indebtedness, or any other event occurs, the effect of which default or other event

 

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is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) after the expiration of any applicable grace or cure period therefor to cause, with the giving of notice if required, such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, in each case, prior to its stated maturity; provided that this clause (iii)(2) shall not apply to (x) secured Indebtedness that becomes due as a result of the sale or transfer or other disposition (including a casualty event) of the property or assets securing such Indebtedness permitted hereunder and under the documents providing for such Indebtedness and such Indebtedness is repaid when required under the documents providing for such Indebtedness, (y) events of default, termination events or any other similar event under the documents governing Swap Contracts for so long as such event of default, termination event or other similar event does not result in the occurrence of an early termination date or any acceleration or prepayment of any amounts or other Indebtedness payable thereunder or (z) Indebtedness that upon the happening of any such default or event automatically converts into Equity Interests (other than Disqualified Equity Interest or preferred stock) in accordance with its terms; provided, further, that such failure is unremedied and is not validly waived by the holders of such Indebtedness in accordance with the terms of the documents governing such Indebtedness prior to any acceleration of the amounts owed under this Debenture pursuant to Section 8(b) hereof;

(v) the Company or any Restricted Subsidiary thereof (other than any Immaterial Subsidiary) institutes or consents to the institution of any proceeding under any Debtor Relief Law, a winding-up, an administration, a dissolution or a composition, or makes an assignment for the benefit of creditors or any other action is commenced (by way of voluntary arrangement, scheme of arrangement or otherwise); or appoints, applies for or consents to the appointment of any receiver, administrator, administrative receiver, trustee, custodian, conservator, liquidator, rehabilitator, judicial manager, provisional liquidator, administrator, receiver and manager, controller, monitor or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator, judicial manager, provisional liquidator, administrator, administrative receiver, receiver and manager, controller, monitor or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 days or any proceeding under any Debtor Relief Law relating to any such Person or to all or substantially all of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 days, or an order for relief is entered in any such proceeding;

(vi) (1) the Company or any Restricted Subsidiary thereof (other than any Immaterial Subsidiary) becomes unable or admits in writing its inability or fails generally to pay its debts as they become due or suspends making payments or enters into a moratorium or standstill arrangement in relation to its Indebtedness or is taken to have failed to comply with a statutory demand (or otherwise be presumed to be insolvent by applicable law) or (2) any writ or warrant of attachment or

 

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execution or similar process is issued, commenced or levied against all or substantially all of the property of any such Person and is not released, vacated or fully bonded within 60 days after its issue, commencement or levy, or any analogous procedure or step is taken in any jurisdiction;

(vii) there is entered against the Company or any Restricted Subsidiary thereof (other than any Immaterial Subsidiary) a final judgment or order for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $20,000,000 (to the extent not paid and not covered by (1) independent third-party insurance as to which the insurer has been notified of such judgment or order and does not deny coverage or (2) an enforceable indemnity to the extent that the Company or such Restricted Subsidiary shall have made a claim for indemnification and the applicable indemnifying party shall not have disputed such claim) and there is a period of 60 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect;

(viii) any material provision of any Transaction Document, at any time after its execution and delivery and for any reason, other than as expressly permitted hereunder or thereunder or satisfaction in full of all obligations under the Transaction Documents, ceases to be in full force and effect; or the Company contests in writing the validity or enforceability of any provision of any Transaction Document; or the Company denies in writing that it has any or further liability or obligation under any Transaction Document (other than as a result of repayment in full of all obligations under the Transaction Documents), or purports in writing to revoke or rescind any Transaction Document (except as otherwise expressly provided in the Transaction Documents); or

(ix) the Company shall fail for any reason to deliver Conversion Shares to a Holder prior to the fifth Trading Day after a Share Delivery Date pursuant to Section 4 or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Debentures in accordance with the terms hereof.

(b) Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount (including any PIK Interest paid) of this Debenture, plus accrued and unpaid interest to the extent required by Section 2 hereof and all other amounts owing in respect thereof through the date of acceleration, shall become, at the election of Holders holding more than 25% of the outstanding aggregate principal amount of the Debentures, immediately due and payable in cash. Upon the payment in full of all amounts due to the Holder under the Transaction Documents, the Holder shall promptly surrender this Debenture to or as directed by the Company. Such acceleration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

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Section 9. Miscellaneous.

(a) Reporting.

(i) Annual and Quarterly Financial Statements. So long as amounts due under this Debenture remain outstanding, the Company shall furnish to the Holder:

(1) within 90 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of any independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with GAAP; and

(2) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, beginning with the first full fiscal quarter following the Issue Date, a consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for the portion of the fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Company as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Company and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes, together with a customary management’s discussion and analysis of financial information.

(ii) Delivery. Notwithstanding the foregoing, (i) in the event that the Company files an annual report on Form 10-K (or equivalent report) for any fiscal year, or delivers to Holder such annual report in such form as would have been suitable for filing with the SEC, within 90 days after the end of such fiscal year, such Form 10-K shall satisfy all requirements of Section 9(a)(i)(1) hereof with respect to such fiscal year to the extent that it contains the information and report and opinion required by Section 9(a)(i)(1) hereof and (ii) in the event that the Company files a quarterly report on Form 10-Q (or equivalent report) for any fiscal quarter, or delivers to Holder such quarterly report in such form as would have been suitable for filing with the SEC, within 45 days after the end of such fiscal quarter, such Form 10-Q shall satisfy all requirements of Section 9(a)(i)(2) hereof with respect to such fiscal quarter to the extent that it contains the information required by Section 9(a)(i)(2) hereof.

 

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Section 10. Miscellaneous.

(a) Other Interpretive Provisions. With reference to this Debenture and each other Transaction Document, unless otherwise specified herein or in such other Transaction Document:

(i) the meanings of defined terms are equally applicable to the singular and plural forms of the defined terms;

(ii) the words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in any Transaction Document shall refer to such Transaction Document as a whole and not to any particular provision thereof.

(iii) references in this Debenture to an Exhibit, Schedule, Article, Section, clause or subclause refer (1) to the appropriate Exhibit or Schedule to, or Article, Section, clause or subclause in this Debenture or (B) to the extent such references are not present in this Debenture, to the Transaction Document in which such reference appears;

(iv) the term “including” is by way of example and not limitation;

(v) the term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form;

(vi) any reference herein to any Person shall be construed to include such Person’s successors and assigns; and

(vii) on the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including.”

(b) Accounting Terms.

(i) 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 the Transaction Documents shall be prepared in conformity with, GAAP, as in effect from time to time.

(ii) If at any time any change in GAAP or the application thereof would affect the computation or interpretation of any financial ratio, basket, requirement or other provision set forth in any Transaction Document, and the Company shall so request, the Holder and the Company shall negotiate in good faith to amend such ratio, basket, requirement or other provision to preserve the original intent thereof in light of such change in GAAP or the application thereof; provided that, until so amended, (1)(A) such ratio, basket, requirement or other provision shall continue

 

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to be computed or interpreted in accordance with GAAP or the application thereof prior to such change therein and (B) the Company shall provide to the Company a written reconciliation in form and substance reasonably satisfactory to the Required Holders, between calculations of such ratio, basket, requirement or other provision made before and after giving effect to such change in GAAP or the application thereof or (2) the Company may elect to fix GAAP (for purposes of such ratio, basket, requirement or other provision) as of another later date notified in writing to the Holder from time to time.

(iii) Notwithstanding anything to the contrary contained herein, all such financial statements shall be prepared, and all financial covenants contained herein or in any other Loan Document shall be calculated, in each case, without giving effect to any election under FASB ASC 825 (or any similar accounting principle) permitting a Person to value its financial liabilities at the fair value thereof.

(iv) Any reference to any specific pronouncement or principle herein not otherwise operative under GAAP shall be deemed to refer to any such similar pronouncement or principle as may be operative under GAAP.

(c) Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in writing and delivered personally, by facsimile or by email attachment or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth in the Purchase Agreement, or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 10(c). Any and all notices or other communications or deliveries to be provided by the Company hereunder, including, without limitation, the Notice of Conversion, shall be in writing and delivered personally, by facsimile or by email attachment or sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile number, email address or address of the Holder appearing on the books of the Company, or if no such facsimile number or email attachment or address appears on the books of the Company, at the principal place of business of the Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth in the Purchase Agreement prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth in the Purchase Agreement on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service and (iv) upon actual receipt by the party to whom such notice is required to be given.

(d) Absolute Obligation. Except as expressly provided in the Transaction Documents, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and accrued interest, as applicable, on this Debenture at the time, place and Interest Rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company.

 

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(e) Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount (including any PIK Interest paid) of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Debenture.

(f) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS DEBENTURE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(g) Amendments; Waivers. Any provision of this Debenture may be amended or waived, and consent to any departure by the Company of the terms of this Debenture may be granted, by a written instrument executed by the Company and the Required Holders; provided, that no such amendment, waiver or consent shall (i) waive or postpone any date fixed by this Debenture or any other Transaction Document for any payment of principal, interest or other amounts due to the Holder, including the Maturity

 

62

Date, (ii) reduce the principal of, or the rate of interest specified herein on, any Debenture, (iii) change the provisions requiring pro rata payments to the Holders set forth herein or (iv) change any provision of this Section 10(g) or the definition of “Required Holders” or any other provision hereof specifying the number or percentage of the Holders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, in each case, without the written consent of each Holder directly affected thereby. Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture on any other occasion.

(h) Severability. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.

(i) Usury. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election.

(j) Remedies; Other Obligations. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture and any of the other Transaction Documents at law or in equity, and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Debenture. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).

 

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(k) Transfer Restrictions. The transfer, assignment or participation of any amount of this Debenture is subject to the conditions specified in the Purchase Agreement, and the Company reserves the right to refuse to transfer, assign or grant a participation in this Debenture until such conditions have been fulfilled with respect to such transfer, assignment or participation.

(l) Tax Matters.

(i) On or prior to the date that it becomes a Holder hereunder, the Holder shall deliver to the Company documentation meeting the Tax Form Requirements.

(ii) Any amounts required to be delivered in connection with this Debenture shall be delivered free and clear of any deduction or withholding for Taxes, except as otherwise required by law. If any applicable law requires the deduction or withholding of any Tax from or in respect of any such amounts, then the Company shall make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, the sum payable by the Company shall be increased as necessary so that after all such deductions or withholdings of Indemnified Taxes have been made (including such deductions and withholdings applicable to additional sums payable under this Section 10(l)(ii)) the applicable Holder receives an amount equal to the sum it would have received had no such deduction or withholding of Indemnified Taxes been made.

(iii) Upon the Company’s receipt of a written request of a Holder or written request of a person certifying that it is an owner of a beneficial interest in this Debenture for the information described in United States Treasury Regulations Section 1.1275-3(b)(1)(i) that is applicable to such Holder or beneficial owner, the Company shall promptly provide to such requesting Holder or owner of a beneficial interest all of such information.

(m) Headings. The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit or affect any of the provisions hereof.

(n) Indemnification. The Company agrees to pay or reimburse the Holders for all reasonable documented out-of-pocket costs and expenses incurred in connection with the enforcement of any rights or remedies under this Debenture or the other Transaction Documents, any proceeding under any bankruptcy proceeding or in connection with any workout or restructuring, including the fees, disbursements and other charges of counsel (limited to the reasonable fees, disbursements and other charges of one counsel to the Holders, taken as a whole, and, if necessary, of one local counsel in each relevant jurisdiction (which may include a single special counsel acting in multiple jurisdictions) and of special counsel for each relevant specialty and, in the event of any actual or potential conflict of interest, one additional counsel in each relevant jurisdiction for each Holder

 

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subject to such conflict), in each case without duplication for any amounts paid (or indemnified) hereunder. The Company shall indemnify and hold harmless each Holder and its Affiliates and each partner, controlling person, director, officer, employee, counsel, agent and representative of the foregoing and, in the case of any funds, trustees and advisors and attorneys-in-fact (collectively, the “Indemnitees”) from and against (and will reimburse each Indemnitee, as and when incurred, for) any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgements, suits, costs (including settlement costs), disbursements and reasonable and documented or invoiced out-of-pocket fees and expenses (including the fees, disbursements and other charges of (i) one counsel to the Indemnitees taken as a whole, (ii) in the case of an actual or perceived conflict of interest, where the Indemnitee affected by such conflict informs the Company of such conflict and thereafter retains its own counsel, of another firm of counsel for each such affected Indemnitee in each relevant jurisdiction material to the interests of the Indemnitees and (iii) if necessary, one local counsel in each relevant jurisdiction (which may include a single special counsel acting in multiple jurisdictions and, solely in the event of an actual or perceived conflict of interest, one additional counsel in each applicable jurisdiction material to the interests of the affected Persons (or each group of affected Persons) taken as a whole) and special counsel for each relevant specialty) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted or awarded against such Indemnitee in any way relating to or arising out of or in connection with or by reason of any actual or prospective claim, litigation, investigation or proceeding in any way relating to, arising out of, or in connection with or by reason of any of the following, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, ligation or proceeding): (1) the execution, delivery, enforcement, performance or administration of any Transaction Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby or (2) the use or proposed use of the proceeds therefrom; provided that such indemnity shall not, as to such Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgements, suits, costs, disbursements, fees or expenses are determined by a court of competent jurisdiction in a final and non-appealable judgement to have resulted from (A) the bad faith, gross negligence or willful misconduct of such Indemnitee or any of its Affiliates or controlling persons or any of the officers, directors, employees, agents, advisors or members of any of the foregoing or (B) any dispute that is among Indemnitees that a court of competent jurisdiction has deemed in a final and non-appealable judgment did not involve actions or omissions of any direct or indirect parent or controlling person of the Company or its Subsidiaries (the “Indemnified Liabilities”), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee and regardless of whether such Indemnitee is a party thereto, and whether or not such proceedings are brought by the Company, its equityholders, its Affiliates, creditors or any other third person. No Indemnitee or the Company shall have any liability for any special, punitive, indirect or consequential damages relating to this Debenture or the other Transaction Documents; provided that such waiver of special, punitive, indirect or consequential damages shall not limit the indemnification obligations of the Company under this Section 10(n). In the case of an investigation, litigation or other proceeding to

 

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which the indemnity in this Section 10(n) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Company, its directors, shareholders or creditors or any Indemnitee or any other Person, and whether or not any Indemnitee is otherwise a party thereto. Should any investigation, litigation or proceeding be settled, or if there is a judgment against an Indemnitee in any such investigation, litigation or proceeding, the Company shall indemnify and hold harmless each Indemnitee in the manner set forth above; provided, that the Company shall not be liable for any settlement effected without the Company’s prior written consent (such consent not to be unreasonably withheld, delayed or conditioned). All amounts due under this Section 10(n) shall be payable within 30 days after demand therefore. For the avoidance of doubt, the payment, reimbursement or indemnification obligations of the Company pursuant to this Section 10(n) shall not apply to any income, withholding or similar taxes payable by or with respect to the Holder in connection with its ownership of this Debenture.

(o) Execution. In the event that any signature to this Debenture is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.

 

[Signature Page to Convertible Debenture]

SCHEDULE 7(a)(i)

LIENS

None.

SCHEDULE 7(a)(ii)

INDEBTEDNESS

None.

SCHEDULE 7(a)(iii)

AFFILIATE TRANSACTIONS

 

1.

Warrant Agreement, dated as of January 31, 2019, by and between Pivotal Acquisition Corp. and Continental Stock Transfer & Trust Company

 

2.

Registration Rights Agreement, dated as of December 19, 2019, by and among Pivotal Acquisition Corp., each of the Controlling Holders named therein and each other Holder from time to time party thereto

 

3.

Each Letter Agreement, dated as of January 31, 2019, from each of the initial stockholders, officers and directors of Pivotal Acquisition Corp., as amended by the Amendment to Insider Letter, Dated January 31, 2019

 

4.

Investment Management Trust Agreement, dated as of January 31, 2019, by and between Pivotal Acquisition Corp. and Continental Stock Transfer & Trust Company

 

5.

Registration Rights Agreement, dated as of January 31, 2019, by and among Pivotal Acquisition Corp. and each Investor from time to time party thereto

 

6.

Forward Purchase Agreement, dated as of January 31, 2019, by and between Pivotal Spac Funding LLC and Pivotal Acquisition Corp.

 

7.

Stockholders Agreement, dated as of December 19, 2019, by and among Pivotal Acquisition Corp. and the LD Topco Holders from time to time party thereto

ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert the 8.00% convertible debenture due December 19, 2024 (the “Debenture”) of KLDiscovery Inc. (f/k/a Pivotal Acquisition Corp.), a Delaware corporation (the “Company”), held by it into shares of Class A common stock, par value $0.0001 per share, of the Company (the “Common Stock”) according to the conditions contained in the Debenture, as of the date written below. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Debenture. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as required by the Debenture and the Purchase Agreement and as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

Conversion Information:

Conversion Date:

Principal Amount of Debenture:

Number of Shares of Common Stock to Be Issued:

Signature:

Name:

Address for Delivery of Common Stock Certificates:

or

DWAC Instructions:

Broker No:

Account No:

Exhibit 4.6

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of December 19, 2019 by and among Pivotal Acquisition Corp., a Delaware corporation (the “Company”), each of the Controlling Holders (as defined below), and each other Person identified on Schedule A attached hereto (the “Schedule of Investors”) as of the date hereof.

RECITALS

WHEREAS, the Company is party to that certain Agreement and Plan of Reorganization, dated as of May 20, 2019 (as amended, the “Merger Agreement”), by and among the Company, Pivotal Merger Sub Corp., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), LD Topco, Inc., a Delaware corporation (“LD Topco”), and Carlyle Equity Opportunity GP, L.P., a Delaware limited partnership, solely in its capacity as the initial Representative (as defined therein) thereunder, pursuant to which Merger Sub will merge with and into LD Topco (with LD Topco being the surviving entity) (the “Merger”) in exchange for LD Topco’s stockholders receiving shares of Class A common stock, par value $0.0001 per share, of the Company (the “Common Stock” and, such shares, the “Shares”) as provided by the Merger Agreement; and

WHEREAS, in connection with the transactions contemplated by the Merger Agreement, the Company has agreed to grant to the Holders (as defined below) certain rights with respect to the registration of the Registrable Securities (as defined below) on the terms and conditions set forth herein.

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

Section 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1:

“Acquired Common” has the meaning set forth in Section 9.

“Additional Investor” has the meaning set forth in Section 9, and shall be deemed to include each such Person’s Affiliates, immediate family members, heirs, successors and assigns who may succeed to such Person as a Holder hereunder.

“Affiliate” of any Person means any other Person controlled by, controlling or under common control with such Person; provided that the Company and its Subsidiaries shall not be deemed to be Affiliates of any Holder. As used in this definition, “control” (including, with its correlative meanings, “controlling,” “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities, by contract or otherwise).

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

“Automatic Shelf Registration Statement” has the meaning set forth in Section 2(a).

“Business Combination” means the acquisition of direct or indirect ownership through a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar type of transaction, of one or more businesses or entities.

“Business Day” means any day of the year on which national banking institutions in New York are open to the public for conducting business and are not required or authorized to close.

“Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock of such corporation (whether voting or nonvoting and whether common or preferred), (ii) with respect to any Person that is not a corporation, individual or governmental entity, any and all partnership, membership, limited liability company or other equity interests of such Person that confer on the holder thereof the right to receive a share of the profits and losses of, or the distribution of assets of, the issuing Person, and (iii) any and all warrants, rights (including conversion and exchange rights) and options to purchase any security described in the clause (i) or (ii) above.

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

“Controlling Holder” means each of CEOF II DE I AIV, L.P. and any of its investment vehicle Affiliates, so long as such Holder continues to hold Registrable Securities.

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

“End of Suspension Notice” has the meaning set forth in Section 2(e)(ii).

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

“FINRA” means the Financial Industry Regulatory Authority.

“Forward Purchase Agreement” means the agreement pursuant to which one of the Holders has committed to purchase up to $150,000,000 of Forward Purchase Securities upon consummation of a Business Combination.

“Founder Shares” means all of the outstanding shares of Common Stock of the Company issued prior to the consummation of its initial public offering.

“Free Writing Prospectus” means a free-writing prospectus, as defined in Rule 405.

“Holder” means any Person who is the registered holder of Registrable Securities.

“Holder Indemnified Parties” has the meaning set forth in Section 7(a).

“Joinder” has the meaning set forth in Section 9.

“LD Topco” has the meaning set forth in the recitals.

“Long-Form Registrations” has the meaning set forth in Section 2(a).

 

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“Merger” has the meaning set forth in the recitals.

“Merger Agreement” has the meaning set forth in the recitals.

“Merger Sub” has the meaning set forth in the recitals.

“MNPI” means material non-public information within the meaning of Regulation FD promulgated under the Exchange Act, which shall in any case include the receipt of the notice of a Demand Registration or Shelf Offering Notice pursuant to Section 2(a) or Section 2(d) and the information contained in such notice.

“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 governmental entity or any department, agency or political subdivision thereof.

“Piggyback Registrations” has the meaning set forth in Section 3(a).

“Private Warrants” means the Warrants certain Holders privately purchased simultaneously with the consummation of the Company’s initial public offering.

“Public Offering” means any sale or distribution to the public of Capital Stock of the Company pursuant to an offering registered under the Securities Act, whether by the Company, by Holders and/or by any other holders of the Company’s Capital Stock.

“Registrable Securities” means (i) any Common Stock issued by the Company in connection with the transactions contemplated by the Merger Agreement (including, for the avoidance of doubt, any Contingent Shares (as defined in the Merger Agreement), if and to the extent issued in accordance with Section 1.13 of the Merger Agreement), (ii) the Founder Shares, (iii) the Private Warrants (and underlying securities), (iv) any Capital Stock of the Company or of any Subsidiary of the Company issued or issuable with respect to the securities referred to in clauses (i) – (iii) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization, and (v) any other Shares owned or acquired after the date hereof by Persons that are the registered holders of securities described in clauses (i) through (iv) above. As to any particular Registrable Securities owned by any Person, such securities shall cease to be Registrable Securities on the date such securities 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 a Subsidiary of the Company. For purposes of this Agreement, a Person shall be deemed to be a Holder, and the Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire, directly or indirectly, such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a Holder hereunder; provided a Holder may only request that Registrable Securities in the form of Capital Stock of the Company that is registered or to be registered as a class under Section 12 of the Exchange Act be registered pursuant to this Agreement. Notwithstanding the foregoing, with the consent of the Company and the Controlling Holders, any Registrable Securities held by any Person that may be sold under Rule 144 shall not be deemed to be Registrable Securities upon notice from the Company to such Person.

 

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

“Rule 144,” “Rule 158,” “Rule 405” and “Rule 415” mean, in each case, such rule promulgated under the Securities Act (or any successor provision) by the Securities and Exchange Commission, as the same shall be amended from time to time, or any successor rule then in force.

“Schedule of Investors” has the meaning set forth in the preamble.

“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

“Shares” has the meaning set forth in the recitals.

“Shelf Offering” has the meaning set forth in Section 2(c)(ii).

“Shelf Offering Notice” has the meaning set forth in Section 2(c)(ii).

“Shelf Offering Request” has the meaning set forth in Section 2(c)(ii).

“Shelf Registrable Securities” has the meaning set forth in Section 2(c)(ii).

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

“Shelf Registration Notice” has the meaning set forth in Section 2(c)(i).

“Shelf Registration Participation Deadline” has the meaning set forth in Section 2(c)(i).

“Shelf Registration Request” has the meaning set forth in Section 2(c)(i).

“Shelf Registration Statement” has the meaning set forth in Section 2(c)(i).

“Short-Form Registrations” has the meaning set forth in Section 2(a).

“Subsidiary” means, with respect to the Company, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of Capital Stock of such Person entitled (without regard to the occurrence of any contingency) to vote in the election of directors or managers is at the time owned or controlled, directly or indirectly, by the Company, or (ii) if a limited liability company, partnership, association or other business entity, either (x) a majority of the Capital Stock of such Person entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or other oversight board vested with the authority to direct management of such Person is at the time owned or controlled, directly or indirectly, by the Company or (y) the Company or one of its Subsidiaries is the sole manager or general partner of such Person.

 

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“Suspension Event” has the meaning set forth in Section 2(e)(ii).

“Suspension Notice” has the meaning set forth in Section 2(e)(ii).

“Suspension Period” has the meaning set forth in Section 2(e)(i).

“Underwritten Takedown” has the meaning set forth in Section 2(c)(ii).

“Violation” has the meaning set forth in Section 7(a).

“WKSI” means a “well-known seasoned issuer” as defined under Rule 405.

“Working Capital Warrants” means any Warrants held by Holders, officers or directors of the Company or their affiliates which may have been issued in payment of working capital loans made to the Company.

Section 2. Demand Registrations.

(a) Requests for Registration. Subject to the terms and conditions of this Agreement, commencing on the date that is one (1) year following the date hereof (or earlier if authorized by a decision of the Company’s board of directors (without any dissenting vote from any member of the Company’s board of directors)), each Controlling Holder may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-1 or any similar long-form registration (“Long-Form Registrations”), and each Controlling Holder may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-3 or any similar short-form registration (“Short-Form Registrations”), if available. All registrations requested pursuant to this Section 2(a) are referred to herein as “Demand Registrations.” The Controlling Holder making a Demand Registration may request that the registration be made pursuant to Rule 415 under the Securities Act (a “Shelf Registration”) and, if the Company is a WKSI at the time any request for a Demand Registration is submitted to the Company, that such Shelf Registration be an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “Automatic Shelf Registration Statement”). Except to the extent that Section 2(c) applies, promptly upon receipt of a request for a Demand Registration (but in no event more than five (5) Business Days thereafter (or such shorter period as may be reasonably requested in connection with a Shelf Offering)), the Company shall give written notice of the Demand Registration to all other Holders and, subject to the terms of Section 2(d), shall include in such Demand Registration (and in all related registrations and qualifications under state blue sky laws and in any related underwriting) all Registrable Securities of each Holder with respect to which the Company has received a written request for inclusion therein within five (5) Business Days after the date the Company’s notice was delivered. Notwithstanding the foregoing, other than delivery to each Holder of the written notice in accordance with this Section 2(a), the Company shall not be required to take any action that would otherwise be required under this Section 2 if such action would violate Section 4(a) hereof or any similar provision contained in the underwriting agreement entered into in connection with any underwritten Public Offering.

 

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(b) Demand Registrations. The Controlling Holders shall be entitled to request no more than six (6) Demand Registrations in which the Company shall pay all Registration Expenses, regardless of whether any registration statement is filed or any such Demand Registration is consummated. Demand Registrations shall be Short-Form Registrations whenever the Company is permitted to use any applicable short form and the managing underwriters (if any) agree to the use of a Short-Form Registration. After the Company has become subject to the reporting requirements of the Exchange Act, the Company shall use its reasonable best efforts to make Short-Form Registrations available for the sale of Registrable Securities. All Long-Form Registrations shall be underwritten registrations unless otherwise approved by the applicable Controlling Holder.

(c) Shelf Registrations.

(i) Subject to the availability of required financial information, as promptly as practicable after the Company receives written notice of a request for a Shelf Registration (a “Shelf Registration Request”) and the expiration of the Shelf Registration Participation Deadline (as defined below), the Company shall file with the Securities and Exchange Commission a registration statement under the Securities Act for the Shelf Registration (a “Shelf Registration Statement”). As promptly as practicable, but no later than three (3) Business Days after receipt of a Shelf Registration Request, the Company shall give written notice (the “Shelf Registration Notice”) of such Shelf Registration Request to all other Holders. The Company, subject to Sections 2(d) and 8 hereof, shall include in such Shelf Registration (and in all related registrations and qualifications under state blue sky laws) all Registrable Securities of each Holder with respect to which the Company has received a written request for inclusion therein within two (2) Business Days after the Shelf Registration Notice was delivered (such deadline, the “Shelf Registration Participation Deadline”). The Company shall use its reasonable best efforts to cause any Shelf Registration Statement to be declared effective under the Securities Act as soon as practicable after the initial filing of such Shelf Registration Statement and, once effective, the Company shall use its reasonable best efforts to cause such Shelf Registration Statement to remain continuously effective for such time period as is specified in the request by the Holders, but for no time period longer than the period ending on the earliest of (A) the date on which all Registrable Securities covered by such Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement and (B) the date as of which there are no longer any Registrable Securities covered by such Shelf Registration Statement in existence. Notwithstanding anything to the contrary in Section 2(c)(ii), any Holder that is named as a selling securityholder in such Shelf Registration Statement may make a secondary resale under such Shelf Registration Statement without the consent of the Holders representing a majority of the Registrable Securities or any other Holder if such resale does not require a supplement to the Shelf Registration Statement.

(ii) In the event that a Shelf Registration Statement is effective, the Controlling Holders shall have the right at any time or from time to time to elect to offer and sell (including pursuant to an underwritten offering (an “Underwritten Takedown”)) Registrable Securities available for sale pursuant to such Shelf Registration Statement (“Shelf Registrable Securities”), so long as the Shelf Registration Statement remains effective, and the Company shall pay all Registration Expenses in connection therewith. The applicable Holders shall make such election by delivering to the Company a written

 

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request (a “Shelf Offering Request”) for such offering specifying the number of Shelf Registrable Securities that such Holders desire to sell pursuant to such offering (the “Shelf Offering”). As promptly as practicable, but no later than three (3) Business Days after receipt of a Shelf Offering Request, the Company shall give written notice (the “Shelf Offering Notice”) of such Shelf Offering Request to all other holders of Shelf Registrable Securities. The Company, subject to Sections 2(d) and 8 hereof, shall include in such Shelf Offering (and in all related registrations and qualifications under state blue sky laws and in any related underwriting) the Shelf Registrable Securities of any other Holder that shall have made a written request to the Company for inclusion in such Shelf Offering (which request shall specify the maximum number of Shelf Registrable Securities intended to be sold by such Holder) within two (2) Business Days after the receipt of the Shelf Offering Notice. The Company shall, as expeditiously as possible (and in any event within ten (10) days after the receipt of a Shelf Offering Request, unless a longer period is agreed to by the Controlling Holders that made the Shelf Offering Request), use its reasonable best efforts to facilitate such Shelf Offering.

(iii) If the Controlling Holders wish to engage in an underwritten block trade, variable price reoffer or overnight underwritten offering, in each case, off of a Shelf Registration Statement (either through filing an Automatic Shelf Registration Statement or through a take-down from an already existing Shelf Registration Statement), then, notwithstanding the time periods set forth in Section 2(c)(ii), such holders shall notify the Company not less than two (2) Business Days prior to the day such offering is to commence. The Company shall promptly notify other Holders of such offering, and such other Holders must elect whether or not to participate by the next Business Day (i.e., one (1) Business Day prior to the day such offering is to commence) (unless a longer period is agreed to by the holders of a majority of the Registrable Securities wishing to engage in the underwritten block trade), and the Company shall as expeditiously as possible use its reasonable best efforts to facilitate such offering (which may close as early as two (2) Business Days after the date it commences); provided that the Controlling Holders shall use commercially reasonable efforts to work with the Company and the underwriters prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the transaction.

(iv) The Company shall, at the request of Holders representing a majority of the Registrable Securities covered by a Shelf Registration Statement, file any prospectus supplement or, if the applicable Shelf Registration Statement is an Automatic Shelf Registration Statement, any post-effective amendments and otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by such Holders to effect such Shelf Offering.

(d) Priority on Demand Registrations and Shelf Offerings. The Company shall not include in any Demand Registration or Shelf Offering any securities that are not Registrable Securities without the prior written consent of Holders representing a majority of the Registrable Securities included in such registration or offering. If a Demand Registration or a Shelf Offering is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such offering exceeds the number of securities that can be sold in such offering without adversely affecting the

 

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marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such registration or offering, as applicable, prior to the inclusion of any securities which are not Registrable Securities, the number of Registrable Securities requested by Holders to be included that, in the opinion of such underwriters, can be sold without any such adverse effect, pro rata among the respective Holders thereof on the basis of the amount of Registrable Securities then owned by each such Holder that such Holder of Registrable Securities shall have requested to be included therein. Alternatively, if the number of Registrable Securities which can be included on a Shelf Registration Statement is otherwise limited by Instruction I.B.6 to Form S-3 (or any successor provision thereto), the Company shall include in such registration or offering, prior to the inclusion of any securities which are not Registrable Securities, the number of Registrable Securities requested to be included which can be included on such Shelf Registration Statement in accordance with the requirements of Form S-3, pro rata among the respective Holders thereof on the basis of the amount of Registrable Securities owned by each such Holder that such Holder of Registrable Securities shall have requested to be included therein.

(e) Restrictions on Demand Registration and Shelf Offerings.

(i) The Company shall not be obligated to effect more than four (4) Demand Registrations in any calendar year, nor shall the Company be obligated to effect a Demand Registration within thirty (30) days of a previous Demand Registration or a previous registration statement in which Registrable Securities were included and in which there was no reduction in the number of Registrable securities requested to be included. The Company may postpone, for up to sixty (60) days from the date of the request, the filing or the effectiveness of a registration statement for a Demand Registration or suspend the use of a prospectus that is part of a Shelf Registration Statement for up to sixty (60) days from the date of the Suspension Notice (as defined below) and therefore suspend sales of the Shelf Registrable Securities (such period, the “Suspension Period”) by providing written notice to the Holders if (A) the Company’s board of directors determines in its reasonable good faith judgment that the offer or sale of Registrable Securities would reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any Subsidiary to engage in any material acquisition of assets or stock (other than in the ordinary course of business) or any material merger, consolidation, tender offer, recapitalization, reorganization or other transaction involving the Company or any Subsidiary, or (B) upon advice of counsel, the sale of Registrable Securities pursuant to the registration statement would require disclosure of MNPI not otherwise required to be disclosed under applicable law, and either (x) the Company has a bona fide business purpose for preserving the confidentiality of such transaction or (y) disclosure of such MNPI would have a material adverse effect on the Company or the Company’s ability to consummate such transaction; provided that in such event, the Holders shall be entitled to withdraw such request for a Demand Registration or underwritten Shelf Offering and the Company shall pay all Registration Expenses in connection with such Demand Registration or Shelf Offering. The Company may delay a Demand Registration hereunder only once in any twelve (12)-month period, except with the consent of the applicable Controlling Holder.

 

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(ii) In the case of an event that causes the Company to suspend the use of a Shelf Registration Statement as set forth in paragraph (e)(i) above or pursuant to applicable subsections of Section 5(a)(vi) (a “Suspension Event”), the Company shall give a notice to the Holders of Registrable Securities registered pursuant to such Shelf Registration Statement (a “Suspension Notice”) to suspend sales of the Registrable Securities and such notice shall state generally the basis for the notice and that such suspension shall continue only for so long as the Suspension Event or its effect is continuing. If the basis of such suspension is nondisclosure of MNPI, the Company shall not be required to disclose the subject matter of such MNPI to Holders. A Holder shall not effect any sales of the Registrable Securities pursuant to such Shelf Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Company and prior to receipt of an End of Suspension Notice (as defined below). Each Holder agrees that it shall treat as confidential the receipt of the Suspension Notice and shall not disclose or use the information contained in such Suspension Notice without the prior consent of the Company until such time as the information contained therein is or becomes available to the public generally, other than as a result of disclosure by a Holder in breach of the terms of this Agreement. Holders may recommence effecting sales of the Registrable Securities pursuant to the Shelf Registration Statement (or such filings) following written notice to such effect (an “End of Suspension Notice”) from the Company, which End of Suspension Notice shall be given by the Company to the Holders promptly following the conclusion of any Suspension Event.

(iii) Notwithstanding any provision herein to the contrary, if the Company gives a Suspension Notice with respect to any Shelf Registration Statement pursuant to this Section 2(e), the Company agrees that it shall extend the period of time during which such Shelf Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from the date of receipt by the holders of the Suspension Notice to and including the date of receipt by the holders of the End of Suspension Notice and provide copies of any supplemented or amended prospectus necessary to resume sales, with respect to each Suspension Event.

(f) Selection of Underwriters. Holders representing a majority of the Registrable Securities included in any Demand Registration or Underwritten Takedown shall have the right to select the investment banker(s) and manager(s) to administer such offering (including assignment of titles). If any Shelf Offering is an underwritten offering, the Holders holding a majority of the Registrable Securities participating in such underwritten offering shall have the right to select the investment banker(s) and manager(s) to administer the offering relating to such Shelf Offering (including assignment of titles). The Company represents and warrants that no investment bankers are entitled to any rights that would conflict with the rights of the Holders under this Section 2.

(g) Other Registration Rights. The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any other Person with respect to any securities of the Company. Except as provided in this Agreement, the Company shall not grant to any Persons the right to request the Company or any Subsidiary to register any Capital Stock of the Company or of any Subsidiary, or any securities convertible or exchangeable into or exercisable for such securities, without the prior written consent of the Controlling Holders; provided that the Company may grant rights to other Persons to participate in Piggyback Registrations so long as such rights are subordinate to the rights of the Holders with respect to such Piggyback Registrations as set forth below.

 

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(h) Revocation of Demand Notice or Shelf Offering Notice. At any time prior to the effective date of the registration statement relating to a Demand Registration or the “pricing” of any offering relating to a Shelf Offering Notice, the Holders that provided such Demand Registration or Shelf Offering Notice may revoke such Demand Registration or Shelf Offering Notice on behalf of all Holders participating in such Demand Registration or Shelf Offering without liability to such Holders, in each case by providing written notice to the Company.

Section 3. Piggyback Registrations.

(a) Right to Piggyback. Commencing on the date that is one (1) year following the date hereof (or earlier if authorized by a decision of the Company’s board of directors (without any dissenting vote from any member of the Company’s board of directors)), whenever the Company proposes to register any of its securities under the Securities Act (other than (i) pursuant to a Demand Registration, (ii) in connection with registrations on Form S-4 or S-8 promulgated by the Securities and Exchange Commission or any successor or similar forms or (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice (in any event within two (2) Business Days after its receipt of notice of any request for registration on behalf of holders of the Company’s securities (other than under this Agreement)) to all Holders of its intention to effect such Piggyback Registration and, subject to the terms of Section 3(c) and Section 3(d), shall include in such Piggyback Registration (and in all related registrations or qualifications under blue sky laws and in any related underwriting) all Registrable Securities of each Holder with respect to which the Company has received a written request for inclusion therein within ten (10) days after delivery of the Company’s notice.

(b) Piggyback Expenses. The Registration Expenses of the Holders shall be paid by the Company in all Piggyback Registrations, whether or not any such registration became effective.

(c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the Holders on the basis of the number of Registrable Securities then owned by each such Holder that such Holder of Registrable Securities shall have requested to be included therein, and (iii) third, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.

 

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(d) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such registration (i) first, the Registrable Securities of Holders requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the Holders on the basis of the number of Registrable Securities then owned by each such Holder that such Holder of Registrable Securities shall have requested to be included therein, (ii) second, the securities requested to be included therein by the initial holders requesting such registration which, in the opinion of the underwriters, can be sold without any such adverse effect and (iii) third, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.

(e) Selection of Underwriters. If any Piggyback Registration is an underwritten offering, the selection of investment banker(s) and manager(s) for the offering must be approved by the Holders representing a majority of the Registrable Securities included in such Piggyback Registration, such approval not to be unreasonably withheld, conditioned or delayed.

(f) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 3 whether or not any Holder has elected to include securities in such registration. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 6.

Section 4. Holdback Agreements.

(a) Holders of Registrable Securities. Each and every Holder shall enter into lock-up agreements with the managing underwriter(s) of an underwritten Public Offering providing that, unless the underwriters managing such underwritten Public Offering otherwise agree in writing, subject to customary exceptions such Holder shall not (i) offer, sell, contract to sell, pledge or otherwise dispose of (including sales pursuant to Rule 144), directly or indirectly, any Capital Stock of the Company (including Capital Stock of the Company that may be deemed to be owned beneficially by such holder in accordance with the rules and regulations of the Securities and Exchange Commission) (collectively, “Securities”), (ii) enter into a transaction which would have the same effect as described in clause (i) above, (iii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences or ownership of any Securities, whether such transaction is to be settled by delivery of such Securities, in cash or otherwise (each of (i), (ii) and (iii) above, a “Sale Transaction”), or (iv) publicly disclose the intention to enter into any Sale Transaction, commencing on the earlier of the date on which the Company gives notice to the Holders that a preliminary prospectus has been circulated for such Public Offering or the “pricing” of such offering and continuing to the date that is ninety (90) days following the date of the final prospectus for such Public Offering (or such shorter period that is required by the managing underwriter(s)) (the “Holdback Period”).

(b) Exceptions. The foregoing holdback agreements in Section 4(a) shall not apply to a registration on Form S-8 or any successor or similar form or otherwise in connection with an employee benefit plan or in connection with any registration on Form S-4 or any successor or similar form in connection with any type of acquisition transaction or exchange offer.

 

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(c) The Company. The Company (i) shall not file any registration statement for a Public Offering or cause any such registration statement to become effective, or effect any public sale or distribution of its equity securities, or any securities, options or rights convertible into or exchangeable or exercisable for such securities, during any Holdback Period without the consent of the Controlling Holders and (ii) shall use its reasonable best efforts to cause (A) each holder of at least five percent (5%) (on a fully-diluted basis) of its shares of Common Stock, or any securities convertible into or exchangeable or exercisable for shares of Common Stock, and (B) each of its directors and executive officers, to agree not to effect any Sale Transaction during any Holdback Period, except as part of such underwritten registration, if otherwise permitted, unless the underwriters managing the Public Offering otherwise agree in writing.

Section 5. Registration Procedures.

(a) Whenever the Holders have requested that any Registrable Securities be registered pursuant to this Agreement or have initiated a Shelf Offering, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

(i) in accordance with the Securities Act and all applicable rules and regulations promulgated thereunder, prepare and file with the Securities and Exchange Commission a registration statement, and all amendments and supplements thereto and related prospectuses with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to the counsel selected by the Controlling Holders and the counsel selected by the Holders representing a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel);

(ii) notify each Holder of (A) the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose, (B) the receipt by the Company or its counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (C) the effectiveness of each registration statement filed hereunder;

(iii) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period ending when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of distribution by the sellers thereof set forth in such registration statement (but in any event not before the expiration

 

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of any longer period required under the Securities Act or, if such registration statement relates to an underwritten Public Offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sale of Registrable Securities by an underwriter or dealer) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

(iv) furnish to each seller of Registrable Securities thereunder such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), each Free Writing Prospectus and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

(v) use reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph or (B) subject itself to taxation in any such jurisdiction);

(vi) notify each seller of such Registrable Securities (A) promptly after it receives notice thereof, of the date and time when such registration statement and each post-effective amendment thereto has become effective or a prospectus or supplement to any prospectus relating to a registration statement has been filed and when any registration or qualification has become effective under a state securities or blue sky law or any exemption thereunder has been obtained, (B) promptly after receipt thereof, of any written comments by the Securities and Exchange Commission, or any request by the Securities and Exchange Commission or other federal or state governmental authority for amendments or supplements to such registration statement or such prospectus, or for additional information (whether before or after the effective date of the registration statement) or any other correspondence with the Securities and Exchange Commission relating to, or which may affect, the registration and (C) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, subject to Section 2(e), at the request of any such seller, the Company shall use its best efforts to prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

 

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(vii) use reasonable best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on a securities exchange and, without limiting the generality of the foregoing, to arrange for at least two (2) market makers to register as such with respect to such Registrable Securities with FINRA;

(viii) use reasonable best efforts to provide a transfer agent, registrar and CUSIP number for all such Registrable Securities not later than the effective date of such registration statement;

(ix) enter into and perform such customary agreements (including underwriting agreements in customary form), which may include indemnification provisions in favor of underwriters and other Persons in addition to the provisions of Section 7 hereof, make such representations and warranties to the Holders registering securities and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in public offerings similar to the offering then being undertaken, and take all such other actions as the Holders representing a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split, combination of shares, recapitalization or reorganization);

(x) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate and business documents and properties of the Company as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors, employees, agents, representatives and independent accountants to make themselves available to discuss the business of the Company and to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

(xi) use reasonable best efforts to ensure that any Free Writing Prospectus utilized in connection with any Demand Registration or Piggyback Registration hereunder complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, shall not 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;

(xii) otherwise use reasonable best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158;

 

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(xiii) to the extent that a Holder, in its sole and exclusive judgment, might be deemed to be an underwriter of any Registrable Securities or a controlling person of the Company, permit such Holder to participate in the preparation of such registration or comparable statement and allow such Holder to provide language for insertion therein, in form and substance reasonably satisfactory to the Company, which in the reasonable judgment of such Holder and its counsel should be included;

(xiv) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or the issuance of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Common Stock included in such registration statement for sale in any jurisdiction, use reasonable best efforts promptly to obtain the withdrawal of such order;

(xv) use reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities;

(xvi) cooperate with the Holders of Registrable Securities covered by such registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing the Registrable Securities to be sold under the registration statement and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriter, or agent, if any, or such Holders may request;

(xvii) cooperate with each Holder of Registrable Securities covered by such registration statement and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;

(xviii) use reasonable best efforts to make available the executive officers of the Company to participate with the Holders of Registrable Securities covered by such registration statement and any underwriters in any “road shows” or other selling efforts that may be reasonably requested by the Holders in connection with the methods of distribution for the Registrable Securities;

(xix) in the case of any underwritten Public Offering, use its reasonable best efforts to obtain one or more comfort letters from the Company’s independent certified public accountants (and, if necessary, any other independent certified public accountants or independent auditors of any Subsidiary of the Company or any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the registration statement) in customary form and covering such matters of the type customarily covered by comfort letters as the Holders representing a majority of the Registrable Securities being sold reasonably request;

 

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(xx) in the case of any underwritten Public Offering, use its reasonable best efforts to provide (i) a legal opinion of the Company’s outside counsel, dated the date of the closing under the underwriting agreement, the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature, which opinion shall be addressed to the underwriters and the Holders of such Registrable Securities being sold and (ii) a legal opinion of the Company’s general counsel, dated the date of the closing under the underwriting agreement, the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature, which opinion shall be addressed to the underwriters and the Holders of such Registrable Securities being sold;

(xxi) if the Company files an Automatic Shelf Registration Statement covering any Registrable Securities, use its reasonable best efforts to remain a WKSI (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act)) during the period during which such Automatic Shelf Registration Statement is required to remain effective and, if WKSI status is lost, to file an amendment to the Automatic Shelf Registration Statement to convert it into a Shelf Registration Statement as promptly as practicable;

(xxii) if the Company does not pay the filing fee covering the Registrable Securities at the time an Automatic Shelf Registration Statement is filed, pay such fee at such time or times as the Registrable Securities are to be sold;

(xxiii) if an Automatic Shelf Registration Statement has been outstanding for at least three (3) years, at the end of the third year, file a new Automatic Shelf Registration Statement covering the Registrable Securities, and, if at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, use its reasonable best efforts to refile the Shelf Registration Statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the period during which such registration statement is required to be kept effective;

(xxiv) provide all such other certificates, letters, opinions and other requested documents customarily provided in public offerings similar to the offering then being undertaken; and

(xxv) take all such other reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities in accordance with the terms of this Agreement.

(b) If the Company files any Automatic Shelf Registration Statement for the benefit of the holders of any of its securities other than the Holders, and the Holders do not request that their Registrable Securities be included in such Shelf Registration Statement, the Company agrees that, once it is eligible to rely on Rule 430B, at the request of the Holders holding a majority of the Registrable Securities, it shall include in such Automatic Shelf Registration Statement such disclosures as may be required by Rule 430B in order to ensure that the Holders may be added to such Shelf Registration Statement at a later time through the filing of a prospectus supplement rather than a posteffective amendment.

 

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(c) Any officer of the Company who is a Holder agrees that if and for so long as he or she is employed by the Company or any Subsidiary thereof, he or she shall participate fully in the sale process in a manner customary and reasonable for persons in like positions and consistent with his or her other duties with the Company and in accordance with applicable law, including the preparation of the registration statement and the preparation and presentation of any road shows.

(d) The Company may require each Holder requesting, or electing to participate in, any registration to furnish the Company such information regarding such Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably request in writing.

(e) If the Controlling Holders or any of their respective Affiliates seek to effectuate an in-kind distribution of all or part of their respective Registrable Securities to their respective direct or indirect equityholders, the Company shall, subject to any applicable lock-ups, use reasonable best efforts to facilitate such in-kind distribution in the manner reasonably requested.

Section 6. Registration Expenses.

(a) The Company’s Obligation. All expenses incident to the Company’s performance of or compliance with this Agreement (including, without limitation, (i) all registration, qualification and filing fees (including filings with the Securities and Exchange Commission and FINRA and the reasonable fees and disbursements of counsel for the underwriters in connection with FINRA qualification of the Registrable Securities), (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the underwriters in connection with blue sky qualification of the Registrable Securities), (iii) printing expenses (including expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depositary Trust Company and of printing prospectuses if the printing of prospectuses is requested by the managing underwriters or by the Holders representing a majority of the Registrable Securities included in such registration), (iv) messenger, telephone and delivery expenses, (v) fees and disbursements of custodians, (vi) any other reasonable fees and disbursements of underwriters customarily paid by issuers or sellers of securities (excluding underwriting discounts and commissions), (vii) all expenses related to the “road show” for any underwritten Public Offering, including the cost of any aircraft chartered for such purpose, (viii) fees and expenses of the transfer agent and registrar of the Company’s Common Stock and (ix) fees and disbursements of counsel for the Company and all independent certified public accountants (including the expenses of any special audit and comfort letters required by or incident to such performance) and other Persons retained by the Company) (all such expenses being herein called “Registration Expenses”), shall be borne by the Company, and the Company shall, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar

 

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securities issued by the Company are then listed or quotation of the Registrable Securities on any inter-dealer quotation system. Each Person that sells securities pursuant to a Demand Registration or Piggyback Registration hereunder shall bear and pay all underwriting discounts and commissions applicable to the securities sold for such Person’s account.

(b) Counsel Fees and Disbursements. In connection with each Demand Registration, each Piggyback Registration and each Shelf Offering that is an underwritten Public Offering, the Company shall reimburse the Holders of Registrable Securities included in such registration for the reasonable fees and disbursements of (i) one counsel chosen by the Controlling Holders and (ii) each additional counsel retained by any Holder for the purpose of rendering an opinion on behalf of such Holder in connection with any Demand Registration, Piggyback Registration or Shelf Offering that is an underwritten Public Offering, where the counsel referred to in clause (i) is unable or unwilling to render an opinion on behalf of such Holder.

(c) Security Holders. To the extent any expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder shall pay those expenses allocable to the registration of such holder’s securities so included in proportion to the aggregate selling price of the securities to be so registered.

Section 7. Indemnification and Contribution.

(a) By the Company. The Company shall indemnify and hold harmless, to the extent permitted by law, each Holder, such Holder’s officers, directors, managers, employees, agents, brokers, dealers and representatives, and each Person who controls such Holder (within the meaning of the Securities Act) (the “Holder Indemnified Parties”) against all losses, claims, actions, damages, liabilities and expenses (including with respect to actions or proceedings, whether commenced or threatened, and including reasonable attorney fees and expenses) caused by, resulting from, arising out of, based upon or related to any of the following statements, omissions or violations (each a “Violation”) by the Company: (i) any untrue or alleged untrue statement of material fact contained in (A) any registration statement, prospectus, preliminary prospectus or Free Writing Prospectus, or any amendment thereof or supplement thereto or (B) any application or other document or communication (in this Section 7, collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration under the securities laws thereof, (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance. In addition, the Company will reimburse such Holder Indemnified Party for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such losses. Notwithstanding the foregoing, the Company shall not be liable in any such case to the extent that any such losses result from, arise out of, are based upon, or relate to an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus, preliminary prospectus or Free Writing Prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written

 

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information prepared and furnished in writing to the Company by such Holder Indemnified Party expressly for use therein or by such Holder Indemnified Party’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such Holder Indemnified Party with a sufficient number of copies of the same. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors, and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holder Indemnified Parties.

(b) By Each Holder. In connection with any registration statement in which a Holder is participating, each such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, shall indemnify the Company, its officers, directors, managers, employees, agents and representatives, and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder expressly for use in such registration statement; provided that the obligation to indemnify shall be individual, not joint and several, for each Holder and shall be limited to the net amount of proceeds received by such Holder from the sale of Registrable Securities pursuant to such registration statement.

(c) Claim Procedure. Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall impair any Person’s right to indemnification hereunder only to the extent such failure has prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicted indemnified parties shall have a right to retain one separate counsel, chosen by the Holders representing a majority of the Registrable Securities included in the registration if such Holders are indemnified parties, at the expense of the indemnifying party.

 

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(d) Contribution. If the indemnification provided for in this Section 7 is held by a court of competent jurisdiction to be unavailable to, or is insufficient to hold harmless, an indemnified party or is otherwise unenforceable with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided that the maximum amount of liability in respect of such contribution shall be limited, in the case of each seller of Registrable Securities, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if the contribution pursuant to this Section 7(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account such equitable considerations. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to herein shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject hereof. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

(e) Release. No indemnifying party shall, except with the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. Notwithstanding anything to the contrary in this Section 7, an indemnifying party shall not be liable for any amounts paid in settlement of any loss, claim, damage, liability, or action if such settlement is effected without the consent of the indemnifying party, such consent not to be unreasonably withheld, conditioned or delayed.

(f) Non-exclusive Remedy; Survival. The indemnification and contribution provided for under this Agreement shall be in addition to any other rights to indemnification or contribution that any indemnified party may have pursuant to law or contract and shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of Registrable Securities and the termination or expiration of this Agreement.

Section 8. Underwritten Registrations.

(a) Participation. No Person may participate in any Public Offering hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to any over-allotment or “green shoe” option requested by the underwriters; provided that no Holder shall be required to sell more than the number of Registrable Securities such Holder has requested to include) and

 

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(ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements and that are consistent in all material respects with the documents to be completed and executed by the Controlling Holders; provided that no Holder included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder and such holder’s intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto that are materially more burdensome than those provided in Section 7 or those provided by the other Holders participating in such underwritten registration. Each Holder shall execute and deliver such other agreements as may be reasonably requested by the Company and the lead managing underwriter(s) that are consistent with such Holder’s obligations under Section 4, Section 5 and this Section 8(a) or that are necessary to give further effect thereto and that are consistent in all material respects with the documents to be completed and executed by the Controlling Holders. To the extent that any such agreement is entered into pursuant to, and consistent with, Section 4 and this Section 8(a), the respective rights and obligations created under such agreement shall supersede the respective rights and obligations of the Holders, the Company and the underwriters created pursuant to this Section 8(a).

(b) Price and Underwriting Discounts. In the case of an underwritten Demand Registration or Underwritten Takedown requested by Holders pursuant to this Agreement, the price, underwriting discount and other financial terms of the related underwriting agreement for the Registrable Securities shall be determined by the Holders representing a majority of the Registrable Securities included in such underwritten offering.

(c) Suspended Distributions. Each Person that is participating in any registration under this Agreement, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(a)(vi)(B) or (C), shall immediately discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by Section 5(a)(vi).

Section 9. Additional Parties; Joinder. Subject to the prior written consent of each Controlling Holder, the Company may make any Person who acquires Common Stock or rights to acquire Common Stock from the Company after the date hereof a party to this Agreement (each such Person, an “Additional Investor”) and to succeed to all of the rights and obligations of a Holder under this Agreement by obtaining an executed joinder to this Agreement from such Additional Investor in the form of Exhibit A attached hereto (a “Joinder”). Upon the execution and delivery of a Joinder by such Additional Investor, the Common Stock of the Company acquired by such Additional Investor or to which such Additional Investor has the right to acquire (the “Acquired Common”) shall be Registrable Securities to the extent provided herein, such Additional Investor shall be a Holder under this Agreement with respect to the Acquired Common, and the Company shall add such Additional Investor’s name and address to the Schedule of Investors and circulate such information to the parties to this Agreement.

 

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Section 10. Current Public Information. At all times after the Company has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Exchange Act, the Company shall file all reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as any Holder may reasonably request, all to the extent required to enable such Holders to sell Registrable Securities pursuant to Rule 144. Upon request, the Company shall deliver to any Holder a written statement as to whether it has complied with such requirements.

Section 11. Subsidiary Public Offering. If, after an initial Public Offering of the Capital Stock of one of its Subsidiaries (including the Company), the Company distributes securities of such Subsidiary to its equityholders, then the rights and obligations of the Company pursuant to this Agreement shall apply, mutatis mutandis, to such Subsidiary, and the Company shall cause such Subsidiary to comply with such Subsidiary’s obligations under this Agreement.

Section 12. MNPI Provisions.

(a) Each Holder acknowledges that (i) the provisions of this Agreement that require communications by the Company or other Holders to such Holder may result in such Holder and its Representatives (as defined below) acquiring MNPI (which may include, solely by way of illustration, the fact that an offering of the Company’s securities is pending or the number of Company securities or the identity of the selling Holders), and (ii) there is no limitation on the duration of time that such Holder and its Representatives may be in possession of MNPI and no requirement that the Company or other Holders make any public disclosure to cause such information to cease to be MNPI; provided that the Company will use reasonable best efforts to promptly notify each Holder if any proposed registration or offering for which a notice has been delivered pursuant to this Agreement has been terminated or aborted.

(b) Each Holder agrees that it will maintain the confidentiality of such MNPI and, to the extent such Holder is not a natural person, such confidential treatment shall be in accordance with procedures adopted by it in good faith to protect confidential information of third parties delivered to such Holder (“Policies”); provided that a Holder may deliver or disclose MNPI to (i) its directors, officers, employees, agents, attorneys, affiliates and financial and other advisors (collectively, the “Representatives”), but solely to the extent such disclosure reasonably relates to its evaluation of exercise of its rights under this Agreement and the sale of any Registrable Securities in connection with the subject of the notice, (ii) any federal or state regulatory authority having jurisdiction over such Holder, (iii) any Person if necessary to effect compliance with any law, rule, regulation or order applicable to such Holder, (iv) in response to any subpoena or other legal process, or (v) in connection with any litigation to which such Holder is a party; provided, further, that in the case of clause (i), the recipients of such MNPI are subject to the Policies or agree to hold confidential the MNPI in a manner substantially consistent with the terms of this Section 12 and that in the case of clauses (ii) through (v), such disclosure is required by law and such Holder promptly notifies the Company of such disclosure to the extent such Holder is legally permitted to give such notice.

(c) Each Holder, by its execution of a counterpart to this Agreement or of a Joinder, hereby acknowledges that it is aware that the U.S. securities laws prohibit any Person who has MNPI about a company from purchasing or selling, directly or indirectly, securities of such company (including entering into hedge transactions involving such securities), or from communicating such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities.

 

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(d) Each Holder shall have the right, at any time and from time to time (including after receiving information regarding any potential Public Offering), to elect not to receive any notice that the Company or any other Holders otherwise are required to deliver pursuant to this Agreement by delivering to the Company a written statement signed by such Holder that it does not want to receive any notices hereunder (an “Opt-Out Request”); in which case and notwithstanding anything to the contrary in this Agreement the Company and other Holders shall not be required to, and shall not, deliver any notice or other information required to be provided to Holders hereunder to the extent that the Company or such other Holders reasonably expect would result in a Holder acquiring MNPI. An Opt-Out Request may state a date on which it expires or, if no such date is specified, shall remain in effect indefinitely. A Holder who previously has given the Company an Opt-Out Request may revoke such request at any time, and there shall be no limit on the ability of a Holder to issue and revoke subsequent Opt-Out Requests; provided that each Holder shall use commercially reasonable efforts to minimize the administrative burden on the Company arising in connection with any such Opt-Out Requests.

Section 13. General Provisions.

(a) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended, modified or waived only with the prior written consent of the Company and each Controlling Holder; provided that no such amendment, modification or waiver that would adversely affect a Holder in a manner that is different from any other Holder (provided that the accession by any Additional Investor to this Agreement pursuant to Section 9 shall not be deemed to adversely affect any Holder), shall be effective against such Holder without the prior written consent of such Holder. The failure or delay of any Person to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such Person thereafter to enforce each and every provision of this Agreement in accordance with its terms. A waiver or consent to or of any breach or default by any Person in the performance by that Person of his, her or its obligations under this Agreement shall not be deemed to be a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person under this Agreement.

(b) Remedies. The parties to this Agreement and their successors and assigns shall be entitled to enforce their rights under this Agreement specifically (without posting a bond or other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto and their successors and assigns agree and acknowledge that a breach of this Agreement would cause irreparable harm and money damages would not be an adequate remedy for any such breach and that, in addition to any other rights and remedies existing hereunder, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.

(c) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited, invalid, illegal or unenforceable in any respect under any applicable law or regulation in any jurisdiction, such prohibition, invalidity, illegality or

 

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unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement in such jurisdiction or in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such prohibited, invalid, illegal or unenforceable provision had never been contained herein.

(d) Entire Agreement. Except as otherwise provided herein, this Agreement contains the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties hereto, written or oral, which may have related to the subject matter hereof in any way.

(e) Successors and Assigns. The rights to cause the Company to register Registrable Securities under this Agreement may be transferred or assigned by each Holder to one or more transferees or assignees of Registrable Securities; provided, that any such transferee or assignee is an Affiliate of, and after such transfer or assignment continues to be an Affiliate of, such Holder and that each such transferee or assignee assumes in writing responsibility for its portion of the obligations of such transferring Holder under this Agreement. This Agreement shall bind and inure to the benefit and be enforceable by the Company and its successors and assigns and the Holders and their respective successors and assigns (whether so expressed or not). In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit Holders are also for the benefit of, and enforceable by, any subsequent or successor Holder.

(f) Notices. Any notice, demand or other communication to be given under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given or delivered (i) when delivered personally to the recipient, (ii) when sent by confirmed electronic mail if sent during normal business hours of the recipient but, if not, then on the next Business Day, (iii) one Business Day after it is sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) three Business Days after it is mailed to the recipient by first class mail, return receipt requested. Such notices, demands and other communications shall be sent to the Company and the Controlling Holders at the addresses specified below and to any other party subject to this Agreement at such address as indicated on the Schedule of Investors, or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party or as is on file for such Person at the Company. Any party may change such party’s address for receipt of notice by providing prior written notice of the change to the sending party as provided herein. The Company’s address is:

Pivotal Acquisition Corp.

c/o Graubard Miller

The Chrysler Building

405 Lexington Avenue, 11^th Floor

New York, New York 10174

Attention: Jonathan J. Ledecky

E-mail: jledecky@hockeyny.com

 

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With a copy to:

Graubard Miller

The Chrysler Building

405 Lexington Avenue, 11^th Floor

New York, New York 10174

Attention: David Alan Miller / Jeffrey M. Gallant

E-mail: dmiller@graubard.com / jgallant@graubard.com

or to such other address or to the attention of such other Person as the Company has specified by prior written notice to the sending party.

The Controlling Holders’ address is:

c/o The Carlyle Group

520 Madison Avenue

New York, New York 10022

Attention: William Darman

Email: william.darman@carlyle.com

With a copy to:

Latham & Watkins LLP

555 Eleventh Street, N.W.

Washington, DC 20004

Attention: Paul Sheridan

Email: paul.sheridan@lw.com

or to such other address or to the attention of such other Person as the Controlling Holders have specified by prior written notice to the sending party.

(g) Business Days. If any time period for giving notice or taking action hereunder expires on a day that is not a Business Day, the time period shall automatically be extended to the immediately following Business Day.

(h) Governing Law. All issues and questions concerning the construction, validity, interpretation and enforcement of this Agreement and the exhibits and schedules hereto, and the relative rights of the Company and its stockholders hereunder, shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(i) MUTUAL WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

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(j) CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE PARTIES, AND EACH OF THEIR SUCCESSORS AND ASSIGNS, IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF DELAWARE, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES HERETO, AND EACH OF THEIR SUCCESSORS AND ASSIGNS, FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS PARAGRAPH. EACH OF THE PARTIES HERETO, AND EACH OF THEIR SUCCESSORS AND ASSIGNS, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(k) No Recourse. Notwithstanding anything to the contrary in this Agreement, the Company and each Holder agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement, shall be had against any current or future director, officer, employee, general or limited partner or member of any Holder or of any Affiliate or assignee thereof, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any Holder or any current or future member of any Holder or any current or future director, officer, employee, partner or member of any Holder or of any Affiliate or assignee thereof, as such for any obligation of any Holder under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

(l) Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than by limitation.

(m) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

 

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(n) Counterparts. This Agreement may be executed in multiple counterparts, any one of which need not contain the signature of more than one party, but all such counterparts taken together shall constitute one and the same agreement.

(o) Electronic Delivery. This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent executed and delivered by means of a photographic, photostatic, facsimile or similar reproduction of such signed writing using a facsimile machine or electronic mail shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

(p) Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each Holder shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactions contemplated hereby.

(q) No Inconsistent Agreements. The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the Holders in this Agreement.

(r) Dilution. If, from time to time, there is any change in the capital structure of the Company by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue.

* * * * *

 

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE A

Schedule of Investors

 

1.	CEOF II DE I AIV, L.P.

 

2.	CEOF II Coinvestment (DE), L.P.

 

3.	CEOF II Coinvestment B (DE), L.P.

 

4.	Revolution Growth III, LP

 

5.	Abramson Investment Management

 

6.	ACE Buyout II SPC on behalf of LD S.P.

 

7.	Antares Holdings LP

 

8.	Anthony J. DeJohn

 

9.	Atlantic Neptune Investment Holdings, LLC

 

10.	BGSL Holdings, LLC

 

11.	Brian J. Morley

 

12.	Brickman Partners, LP

 

13.	Christopher J. Weiler

 

14.	Compiled, LLC

 

15.	Conifer Partners LLC

 

16.	Dale Drury

 

17.	Daniel Akerson

 

18.	Daniel A. Zambito

 

19.	Daniel B. Balthaser

 

20.	Daniel Cilman

 

21.	Dennis Hall

 

22.	Dennis Liberson

 

23.	Donna S. Morea

 

24.	Douglas S. Strahan, transfer on death to Douglas S. Strahan Trust dated October 29, 1999, and amended by complete restatement on August 1, 2016, as it may be amended from time to time

 

25.	Edgar B. Harris

 

26.	Ferdinand Cami

 

27.	James Hallmark & Song H Pak JTWROS

 

28.	Jennifer Swensson

 

29.	John Krutsick

 

30.	Joseph K. Palosky

 

31.	KLD Investors LLC

 

32.	Kevin Caimi

 

33.	Krystina L. Jones

 

34.	Liberty Mutual Investment Holdings LLC

 

35.	Long Grove Capital, LLC